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| Black Economic Empowerment |
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| Introduction |
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Telkom has always viewed South Africa's effective
transformation as imperative in its quest for sustainable
long-term growth. Telkom has taken a policy decision to
include Black Economic Empowerment (BEE) as part of the
Company's Group strategy with the aim of contributing to
the empowerment of South Africa's people and thus
creating a more sustainable marketplace in which Telkom
can participate.
Though part of Telkom's strategic intent, the challenge
remains in ensuring that BEE becomes entrenched as part of
Telkom's corporate culture. Telkom is committed to and
endeavours to participate in a business environment that is
all inclusive and fully reflective of the country's
demographics. One method that Telkom has always utilised
the sustainability of its efforts is in ensuring the delivery of
skills transfer and capacity building both through its
workforce as well as through its stakeholders. |
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| Procurement policy |
| Telkom has embraced the development of the Broad-Based
BEE Codes (BEE Codes) and the consultative approach
followed in their formulation. Telkom made its submissions to
the Department of Trade and Industry on the BEE Codes
based on the principle of a flexible and balanced approach
for the implementation of BEE. The submissions also
highlight the need for clear and predictable processes to
assess contributions to BEE and adaptability of these to the
various industry sectors. |
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| Highlights of Telkom’s BEE progress |
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| Incident |
2006 |
2007 |
| Total Black suppliers spend (Rm) |
1,894 |
3,029 |
| Black SMME supplier spend (Rm) |
873 |
1,485 |
| Black Large suppliers spend (Rm) |
1,021 |
1,544 |
| Significant/Empowered supplier |
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| spend (Rm) |
4,510 |
5,786 |
| Total BEE (including significant |
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| suppliers) spend (Rm) |
6,404 |
8,815 |
| Total Black spend as % of total |
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| procurement |
19.9% |
23.9% |
| Total BEE spend as % of total |
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| procurement |
67.4% |
69.6% |
| Black SMME suppliers trained |
1,181 |
1,666 |
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Procurement and enterprise development are key areas of
focus in contributing to BEE. In the 2007 financial year,
Telkom directed a total of R8.8 billion (2006: R6.4 billion)
to BEE suppliers, including suppliers with significant BEE
programmes. Notably, R1,485 million (2006: R873 million)
of this was spent on black small, medium and micro
enterprises (SMMEs). Telkom's processes drive preferential
procurement and enterprise development.
This pillar of BEE is a significant driver of Broad-Based
economic empowerment. As part of the Telkom processes,
preferential procurement policies include SMMEs preferential
treatment with respect to payment cycles; the exclusive
participation of SMME suppliers in tendering; preferential
prices when bidding and performance guarantees. |
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| Telkom's suppliers are required to comply with the BEE Act,
the Employment Equity Act, the Department of Trade and
Industry's Industrial Participation Programme, and the ICT
Charter. Telkom also supports SMMEs indirectly – by
encouraging suppliers to embrace and support emerging
SMMEs and directly – by targeting SMME suppliers in the
ICT sector. In line with Government policy, this approach
recognises the importance of SMMEs to the country's
economic growth. |
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| Enterprise development |
Telkom through its Centre for Learning actively participates
in supplier development programmes, training approximately
1,700 suppliers in the past financial year on health and
safety, Building Entrepreneurial Capacity, Business Process
Management and Flagship Training DC Power. This has
significantly improved the pool of service providers who are
able to service Telkom in its quest for customer centricity and
improved service delivery.
During the previous financial year a total of 28 Suppliers
were developed on Process Control Release (PCR) which is
Telkom's abridged ISO 9001 Quality Management
Programme. Suppliers go through a period of between 6 to
9 months of development where they are developed by
Telkom to the requirements of PCR. At the end of the
development period the supplier will be audited by Telkom
and, if successful, will be certified as having complied with
Telkom's PCR requirements. Implementing a Quality
Management System gives service providers competitive
advantage that enables them to reduce waste and costs,
increase their customer satisfaction and strive to be
world class.
One of the key drivers of enterprise development is to
ensure that organisations support SMMESs through
shorter payment terms. Telkom has embarked on a 15 day
payment cycle programme. |
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| Skills development |
Telkom's internal training initiatives totalled 219,541
training days, which resulted in approximately 8.5 training
days per employee. Total expenditure on training amounted
to R425.9 million for the year ended March 31, 2007.
Telkom has embarked on a structured programme to re-skill
and train its top talent and employees in positions identified
as requiring critical skills. Telkom's aim is to ensure that its
skills base keeps pace with the changes in the industry.
Telkom participates in various national skills development
initiatives for the benefit of the country's economy. For
instance, Telkom invests with other key industry players in
the Centres of Excellence at a number of tertiary institutions,
with the objective of developing the ICT sector. Additional
details on this can be found in the human capital section of
this report. |
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| In line with its disciplined policy for economic
empowerment, Telkom assists in training black and SMME
suppliers and supports their sustainable development in
various ways, including capacity building initiatives
and training. Telkom also offers courses in reading,
understanding and reacting to market dynamics on
networks as well as transmission and call centre training
to SMMEs. In the year ended March 31, 2007,
1,666 suppliers attended entrepreneurial courses in respect
of which Telkom has spent R7.2 million. |
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| Social responsibility |
| Telkom's social investment programme through the Telkom
Foundation has continued to contribute to the positive
transformation of disadvantaged communities through
social investments aimed at achieving sustainable
development. Telkom has spent, through the Telkom
Foundation R51.1 million (2006: R50.2 million) in the year
ended March 31, 2007. The social investment programmes
have continued to focus on the following three main areas: |
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Education and training; |
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Empowerment of women, children and people with
disabilities; and |
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ICT planning and infrastructure roll-out. |
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| The Telkom Group's involvement in social programmes is
also reflected in Vodacom's own involvement in the social
upliftment of communities in all the countries it operates in.
The Vodacom Corporate Social Responsibility and
Corporate Citizenship programme involves charitable
contributions towards community upliftment in conducting its
business in a socially responsible manner. In addition, the
Vodacom Group is in the process of finalising a R7.5 billion
BEE equity deal whereby both BEE partners and employees
have the opportunity to share in the success of Vodacom
South Africa going forward. The deal is expected to be
completed by the end of the 2008 financial year and it is
anticipated to make a significant contribution to the wellbeing
of the Vodacom Group and its employees. |
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