|
|
| |
| |
 |
| |
| Chairman's review |
| |
| It is with pleasure that I present to you my first review and introduce
myself to the Telkom Group shareholders as non-executive Chairman of
the Board of Directors as of November 1, 2006. |
| |
| Telkom preparing for a converged future |
| In the face of mounting competition, a rapidly changing
telecommunications landscape and investment of a network-wide
technological transformation, the Telkom Group delivered a reasonable
set of results in the year ending March 31, 2007 increasing revenue by
8.4%. Group operating expenses climbed 12.3% confirming our strategy
to focus on customers and deliver growth by both Telkom and Vodacom. |
| |
Despite the consequent pressure on EBITDA margins and the
42.9% increase in cash flows utilised in investing activities,
the Group maintained its commitment to delivering
shareholder returns through dividend payments and the
repurchase of shares.
On June 13, 2007, the Telkom Board of Directors declared
an ordinary annual dividend of 600 cents per share, and a
special dividend of 500 cents per share, which was paid to
shareholders on July 9, 2007 and in the year ended March
31, 2007, the Company repurchased 12.1 million shares to
the value of R1.6 billion (including costs). The Board
approved a further share buyback in terms of the share
buyback programme.
As previously communicated, it is Telkom's objective to pay
a steadily growing ordinary annual dividend. However, the
level of dividend will be based upon a number of factors,
including the assessment of financial results, available
growth opportunities, the Group's net debt level, interest
coverage and future expectations, including internal cash
flows and the repurchase of shares in the Company. |
| |
| Global telecommunications developments |
| |
Following the liberalisation of telecommunications markets in
most developed countries, fixed-line operators require
fundamental changes to achieve growth. In overseas markets,
the continued decline in traditional fixed-line voice revenue is
a result of fixed-mobile substitution, regulation, tariff declines,
increased competition and slowing broadband growth. This is
true for operators, across the Americas, Western Europe and
Asia-Pacific. Mobile operators also seek growth through the
provision of data services.
Global telecommunications operators are moving away
from technology-defined business units (mobile, fixed,
broadband) to customer focused segments (consumer,
business), independent of access technology. The strategy
leverages services, content, applications, sales and
customer relationships across all platforms and technologies,
to convergence (fixed, mobile, broadband and IPTV)
and integration.
Other key developments are the moves by operators to
expand their business internationally and to move
aggressively into the IT services market.
The pace of convergence is accelerating locally and
globally. Operators from all continents are embracing the
opportunities created by merging networks into a
converged Next Generation Network (NGN). Systems
convergence is an essential part of any forward looking NGN programme to cut costs through simplifying,
automating and integrating silo systems and processes.
Systems convergence also enables the launch of new
products and services which blend technologies and
platforms and communication devices. All is dependant on
the roll-out of a full Internet Protocol based network system. |
| |
| Strategic direction |
| |
| Global developments and conditions in South Africa and
the African continent inform Telkom's strategic direction.
Starting in 2006, Telkom is modernising and increasing the
capacity of its network at a cost of R30 billion over 5 years
in order to provide seamless, cost efficient converged
services to its customers. Telkom's expansion into Africa has
gained momentum through the acquisitions of Africa Online
and Multi-Links. |
| |
| Mobile strategy review |
| |
Telkom issued a cautionary announcement on September 3,
2007, which advised shareholders that discussions are
taking place with the Vodafone Group plc and MTN Group
Limited, in line with our mobile strategy review. It is our view
that the sustainability and prosperity of our business requires
an active strategy combining both fixed and mobile
telephony to mitigate the slower growth of fixed-line usage.
The Board is committed, through the mobile strategy review,
to explore all options to accelerate Telkom's long-term
sustainable growth strategy which is challenged by the
factors described above. |
| |
| Regulations |
| |
Telkom faces continued regulatory challenges as the market
is increasingly liberalised, in particular the implications of
the Electronic Communications Act are material to Telkom's
strategic direction. A discussion of key regulatory issues.
It is imperative that Telkom works with all stakeholders to
achieve a regulatory framework that is commercially sound,
rational, equitable, serves the economy as a whole and
strengthens the ICT industry. Telkom is actively engaged with
all stakeholders – the regulator, government, competitors,
suppliers and labour to ensure a management process that
acknowledges the uncertainties in the telecommunication's
environment.
The notion that Telkom is averse to market liberalisation is
unfounded. What is of concern however, is how new
entrants would profit from Telkom's considerable investment. |
| |
| |
| Page up |
| |
|
|
|
|
|
|
