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| Financial review |
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| Results of operations |
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Telkom's operating structure comprises two segments, fixed-line
and mobile. Telkom's fixed-line segment provides fixed-line
voice and data communications services through
Telkom; directory services through its 64.9% owned
subsidiary, TDS Directory Operations; wireless data
services through its wholly-owned subsidiary, Swiftnet; and
internet services outside South Africa through its newly
acquired Africa Online subsidiary. Telkom's mobile segment
consists of its 50% interest in Vodacom.
Telkom proportionately consolidates Vodacom's results into
the Telkom Group's consolidated financial statements. |
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| This means that Telkom includes 50% of Vodacom's results
in each of the line items in the Telkom Group's consolidated
financial statements and in the period-to-period discussion
below. Telkom fully consolidates its TDS Directory
Operations, Swiftnet and Africa Online subsidiaries in the
Telkom Group's consolidated financial statements. |
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| Consolidated results |
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| The following table shows information related to Telkom's
operating revenue, operating expenses, operating profit,
profit for the year, profit margin, EBITDA and EBITDA
margin for the periods indicated. |
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| Telkom Group’s segmental results |
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Year ended March 31, |
2006/ |
2007/ |
|
2005 |
2006 |
2007 |
2005 |
2006 |
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|
% |
% |
| (in millions, except percentages) |
ZAR |
% |
ZAR |
% |
ZAR |
% |
change |
change |
| Operating revenue |
43,160 |
100.0 |
47,625 |
100.00 |
51,619 |
100.0 |
10.3 |
8.4 |
| Fixed-line |
31,457 |
72.9 |
32,749 |
68.8 |
33,295 |
64.5 |
4.1 |
1.7 |
| Mobile |
13,657 |
31.6 |
17,021 |
35.7 |
20,573 |
39.9 |
24.6 |
20.9 |
| Intercompany eliminations |
(1,954) |
(4.5) |
(2,145) |
(4.5) |
(2,249) |
(4.4) |
9.8 |
4.8 |
| Other income1 |
280 |
100.0 |
480 |
100.0 |
384 |
100.0 |
71.4 |
(20.0) |
| Fixed-line |
255 |
91.1 |
430 |
89.6 |
342 |
89.1 |
68.6 |
(20.5) |
| Mobile |
34 |
12.1 |
50 |
10.4 |
42 |
10.9 |
47.1 |
(16.0) |
| Intercompany eliminations |
(9) |
(3.2) |
– |
– |
– |
– |
– |
– |
| Operating expenses |
32,179 |
100.0 |
33,428 |
100.0 |
37,533 |
100.0 |
3.9 |
12.3 |
| Fixed-line |
23,691 |
73.6 |
22,937 |
68.6 |
24,597 |
65.5 |
(3.2) |
7.2 |
| Mobile |
10,451 |
32.5 |
12,636 |
37.8 |
15,185 |
40.5 |
20.9 |
20.2 |
| Intercompany eliminations |
(1,963) |
(6.1) |
(2,145) |
(6.4) |
(2,249) |
(6.0) |
9.3 |
4.8 |
| Operating profit2 |
11,261 |
100.0 |
14,677 |
100.0 |
14,470 |
100.0 |
30.3 |
(1.4) |
| Fixed-line |
8,021 |
71.2 |
10,242 |
69.8 |
9,040 |
62.5 |
27.7 |
(11.7) |
| Mobile |
3,240 |
28.8 |
4,435 |
30.2 |
5,430 |
37.5 |
36.9 |
22.4 |
| Operating profit margin (%) |
26.1 |
|
30.8 |
|
28.0 |
|
18.0 |
(9.1) |
| Fixed-line |
25.5 |
|
31.3 |
|
27.2 |
|
22.7 |
(13.1) |
| Mobile |
23.7 |
|
26.1 |
|
26.4 |
|
10.1 |
1.1 |
| Profit for the year attributable to equity holders of Telkom |
6,752 |
100.0 |
9,189 |
100.0 |
8,646 |
100.0 |
36.0 |
(5.9) |
| Profit margin (%) |
15.6 |
|
19.3 |
|
16.7 |
|
23.7 |
(13.5) |
| EBITDA2, 3 |
17,549 |
100.0 |
20,553 |
100.0 |
19,785 |
100.0 |
17.1 |
(3.7) |
| Fixed-line |
12,753 |
72.7 |
14,646 |
71.3 |
12,663 |
64.0 |
14.8 |
(13.5) |
| Mobile |
4,796 |
27.3 |
5,907 |
28.7 |
7,122 |
36.0 |
23.2 |
20.6 |
| EBITDA margin (%) |
40.7 |
|
43.2 |
|
38.3 |
|
6.1 |
(11.3) |
| 1 |
Other income includes profit on disposal of investments, property, plant and equipment and intangible assets. |
| 2 |
Total operating profit and EBITDA and mobile operating profit and EBITDA include Vodacom's 50% share of Vodacom's impairment of R268 million in respect of assets in Mozambique in the
2005 financial year, a reversal of Vodacom's impairment loss of R53 million in the 2006 financial year due to an increase in the fair value of the assets in Mozambique and an impairment
loss of R23 million in the 2007 financial year in respect of the assets in Mozambique due to a decrease in the fair value of the assets. |
| 3 |
Total EBITDA and mobile EBITDA represent profit for the year, which includes profit on sale of investments before taxation, finance charges, investment income and depreciation, amortisation,
impairments and Telkom's write-offs. |
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