Empowerment

At Telkom, our commitment to Broad-Based Black Economic Empowerment (B-BBEE) goes beyond transforming the organisation’s culture and staff profile. Through our business dealings, our procurement and our engagement with stakeholders, we aim to promote a sustainable empowerment process that benefits South Africa and the ICT sector as a whole.

We are certified as a level 3 B-BBEE contributor by the National Empowerment Rating Agency. Recognition as a value-added supplier ensures that our clients and customers can recognise 137.5% of all procurement spent with us.

The categories listed below show how we scored against our transformation objectives over the 2013 financial year.

Employment equity, skills development and preferential procurement targets have been set at business unit level – Telkom South A frica, Telkom I nternational, Data Centre Operations and the Corporate Centre. All targets are monitored monthly at business unit level and quarterly at group level via an internally-developed BEE system across all B -BBEE ownership scorecard elements.

Telkom Group B-BBEE sustainability performance

The Telkom subsidiaries, Trudon and Swiftnet, achieved level 5 and level 6 contributor statuses, respectively. Telkom will continue to work with the management teams of both companies to support their efforts in improving their overall scores going forward.

Ownership points

Our equity ownership contribution declined marginally from 5.19 points in 2012 to 4.64 points in 2013 as a result of share dealing by black beneficiaries holding Telkom shares, directly or indirectly.

Management control points

Telkom has maintained its score of 11 points on the management control element.

Employment equity points

Our employment equity performance for 2013 improved to 5.81 points, from 5.52 points in 2012 as a result of increased recruitment at middle management level as well as a marginal improvement in the female to male employee ratio at this level. We will continue to focus on these areas while particular attention will need to be placed on the disabled employee category as we continued to score poorly in this area.

Skills development points

Our skills development score has deteriorated from 10.64 points in 2012 to 8.08 points in 2013.

Enterprise developments points

* ICT Sector Code

We maintained a maximum score of 11 points for enterprise development, spending a total of R 119 million on enterprise development initiatives during the 2013 financial year. This equated to enterprise development spend of 7.97% of net profit after tax against a target of 5% net profit after tax (NPAT) in line with ICT Sector Code. For more details refer to Procurement and supply chain section on pages 91 to 95.

Preferential procurement points

* ICT Sector Code

We were very pleased to record that our consistently high score on the preferential procurement element of the scorecard improved from 23.9 points to 24.46 points out of a possible 20 (excluding the bonus points). Telkom performed exceptionally well in this area during this reporting period. For more details refer to Procurement and supply chain section on pages 91 to 95.

Socio-economic development points

We maintained our maximum score in the socio-economic development category. The Telkom Foundation spent a total of R42 million on CSI projects in 2013. This equated to socio-economic spend of 2.57% of net profit after tax against a target of 1.5%. For more details see the CSI and value to society section on pages 96 and 97.

Telkom’s commitment to transformation is exemplified by the continued efforts to further our contribution to the country’s socio-economic objectives by improving our contribution level. Telkom has an approved B-BBEE policy and implementation plan which guides our transformation journey. In the 2013 reporting year, Telkom aimed to achieve a level 3 contributor status, which was determined by continuous benchmarking against competitors and companies across various industries.

Numerous changes to the B-BBEE legislative environment surfaced during the current reporting period. The Information Communication and Technology (ICT) Sector Codes were gazetted in June 2012 and were made applicable with immediate effect. Telkom was measured against the ICT Sector Code and achieved a level 3 B-BBEE rating for the 2013 financial period. The ICT Sector Codes enforce higher targets for the ownership, employment equity, skills development and preferential procurement elements with which Telkom must comply.

Telkom’s challenges remain the ownership, employment equity and skills development elements. Through various stakeholder engagements, research and benchmarking, we are continuously finding ideas to minimise some of our transformation challenges.

We continue to excel in our management control, preferential procurement, enterprise development and socio-economic development elements as we were able to achieve 76.98 points on the scorecard.

In October 2012, the Department of Trade and Industry launched the proposed amended Codes of Good Practice for public comment. Telkom, like many other companies, assessed its standings against the proposed changes.

Going forward

We will continue to engage with internal and external stakeholders on issues relating to Telkom’s transformation and underperformance in certain areas within the B-BBEE scorecard. We remain intent on maintaining or improving our high scores in all other categories.

The changing legislative environment poses significant challenges to compliance but also brings about opportunities for transformation. Our implementation plan will be reviewed and updated as needed to suit the current environment and to ensure that our targets and action plans for the 2014 financial period are achievable.