Big payday for Telkom bosses after R10 billion loss – but no bonuses
Telkom’s directors did not get any bonuses in the latest financial year after the company’s dire financial performance delivered a R10 billion loss.
The telecommunications group has published its annual report for the 2023 financial year, including the remuneration report detailing executive pay.
Despite no bonus for the year, executives were still paid handsomely, taking home a cumulative R50 million among seven individuals – averaging R7 million per exec.
Chief executive officer, Serame Taukobong’s total pay amounted to R11 million for the year, including guaranteed pay of R9.5 million and a long-term incentive payout of R1.6 million, among other benefits.
Chief financial officer, Dirk Reyneke, received R6.7 million.
According to Eskom’s remuneration committee, the lack of short-term incentive (STI – or annual bonus) was because Telkom’s executive team failed to trigger the 95% achieved threshold for the group’s financial targets for the year.
The group noted that bonuses are paid out on the actual financial targets achieved by the company, and that the profits after tax (PAT) and earnings before interest, tax, depreciation and amortisation (EBITDA) targets hat to be hit.
The other metrics taken into consideration are revenue and free cash flow.
Of the four key financial targets, Telkom only managed to achieve a positive result in revenue, achieving 95% of the targetted R45.4 billion (FY23: R43.1 billion).
Group EBITDA was targeted for R12.34 billion; however, Telkom reported EBITDA of only R8.5 billion in its annual results.
Profits after tax were targeted at R2.4 billion, but the group reported an annual loss of R10 billion.
Free cash flow, meanwhile, was targetted at R274 million for the year – and instead fell to -R2.7 billion.
Had the executive team managed to hit the various targets set by the board, their total pay could have been far higher – with even as much as a R14.2 million STI payout possible for the CEO.
Financial performance
Telkom SA has published its abridged annual results for the year ended 31 March 2023 in mid-June, detailing its massive loss for the year.
Group revenue increased by 0.9% from R43.138 billion, up from R42.756 billion the year prior, with earnings before interest, taxation, depreciation and amortisation (EBITDA) dropping 19.8%.
According to Telkom’s summarised consolidated statement of profit and loss, it made a profit of R346 million over the period compared to R2.6 billion the year prior.
However, it noted that certain financial information presented in the results constituted pro forma financial information based on assumptions on future performance and hypothetical data.
Telkom said that the pro forma adjustments for the financial year in question include the impact of impairment of R13.071 billion and the related tax impact of R3.47 billion, restricting costs of R1.065 billion and the related tax impact of R288 million, and the invested capital write-up of BCX and Gyro of R10.479 billion.
Taking all of this into account, the group suffered a R9.97 billion loss.
The group attributed the loss to challenging trading conditions.
“The migration of revenues from legacy to newer technologies, our investment in the mobile post-paid base to drive higher annuity revenue, and the impact of sustained load shedding put pressure on our operating costs,” it said.
Taukobong noted in particular that competition increased in the mobile, fibre and IT services businesses.
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