1

Agenda

• Introduction and opening - Mr. Chose Choeu

remarks• Performance Review - Mr. Motlatsi Nzeku • Financial Highlights - Mr. Kaushik Patel• Telkom Foundation - Ms. Nkhetheleng Vokwana• Legislation & Regulations - Mr. Victor Moche• Concluding Remarks - Mr. Victor Moche

Question and Answer Session

2

Motlatsi NzekuPerformance Review

3

Group operational structure

Wireless data

Mobile Vodacom

Swiftnet

Wireless

Segment Business line

Wireline

Directories

Fixed-line(Voice & Data)

Telkom

Telkom Directory Services

Legal entity

Cumulative licence targets achieved for 5 years ended 7 May 20024

Six line roll-out targets

Target Actual Achieved

Lines (excl payphones) 2 690 000 2 673 552 Payphones 120 000 132 990 Under-serviced 1 676 000 1 787 968 Priority customers 20 246 25 577 Villages 3 204 2 699 Replacement lines 1 252 000 1 159 668

Licence targets achieved at 7 May 20025

Ten service quality targetsTarget Actual Achieved

Faults per 1 000 lines: Business 370 288 Faults per 1 000 lines: Residential 390 547 % faults cleared within 48 hours: Business 86% 96% % faults cleared within 48 hours: Residential 78% 94% Service of public payphones

Coin telephones 90% 95% Card telephones 95% 98%

Business orders met within 28 days 90% 97% Business orders met within 90 days 98% 99.85% Residential orders met within 28 days 80% 95% Residential orders met within 120 days 98% 99.79%

Source: Tariffica6

3 Minute local call1.29

1.06 1.030.99

0.87 0.870.81 0.79 0.76 0.75

0.62

0.51 0.51

0.32 0.3

0

0.2

0.4

0.6

0.8

1

1.2

1.4

7

3 Minute long distance call

8.65

7.81

6.346.10

5.835.57

5.104.19

4.63

4.14

3.18 3.18

2.322.03

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Te

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ZAR

Source: Tariffica July 2002, Telkom current rates, exchange rate 18/2/028

Residential connection

1,504

1,334 1,3151,269

1,118

1,042

918

843

716 716 705

556

293257

226 210 196

-

200

400

600

800

1,000

1,200

1,400

1,600Te

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ep

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Tele

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Five year CAGR of 16% in payphones9

Payphones increasing accessibility

10% growth in payphones in 2002

178 113173 064153 476

127 272

195 399

1998 1999 2000 2001 2002

Developing solutions to meet customer demands10

Launch of new products

Managed networks

Leased lines

ISDN

IP

Packet

Data Transport

Enhanced Data

IT Services

VSAT

Multi-media

Internet access

Fixed Voice

Postpaid

Prepaid

Coin payphone

Enhanced Voice

Talkplus

Card payphone

Wireless

Contract

Vodago

Community phones

4U

Community containers

VIPLink

VIPDial

LAN services

Hosting

Security

CyberTrade Xchange

Myring

Ringback

PD Connect

Cellsaver

11

Satisfied Customers

81

87

77

83

79

91

70 75 80 85 90 95

2001

2002

Consumer

Corporate

Business

Top 3 Box Scores

Percentage of satisfied customers

12

Highlights in 2002

• Completed licence obligations on 7 May 2002• Substantially completed tariff rebalancing• Renegotiated interconnection agreements• Group operating cash flow grew by 16% to

R11.3bn• Group revenues grew by 8% to R34.0bn• Group capex decreased by 7%• EPS grew by 17% to 343.8 cents

13

Achievements• World class network• Launch of Afrolinque (SAT-3/WASC/SAFE)• Vodacom acquired 51% interest in a company holding

a GSM licence in Democratic Republic of Congo• Vodacom acquired a licence in Mozambique and

established a new company with 98% shareholding• Switched hubbing and transit traffic growth of 70%• ISDN channels growth of 25% • Prepaid subscriber growth of 47% • Payphone unit growth of 10%• Launched ADSL in August 2002• Advanced preparations of IPO

Markinor / SundayTimes Top Brand Survey

• 1998 Voted “Most Admired Company”

• 1999 – 2002 Voted“The second most admired Company”

• 2002 Voted“Most Loved South African Company”

15

Financial Highlights

Kaushik Patel

16

Group income statement% change2001

(6)617580Investment income

151 7091 972PAT

7(742)(792)Taxation

1(3 041)(3 066)Finance charges

84 8755 250EBIT

5(4 987)(5 243)Depreciation and amortisation

69 86210 493EBITDA

831 45733 970Revenue

31 March (Rm)

(16)6857Minority interests

171 6411 915Net income for year

2002

17

Group revenue – 31 March 2002

Group revenue growth 2002 fiscal year is as a result of: Increased pre-paid and

payphone services Increased data connectivity Increased mobile

subscribers and revenue

31,457

33,970

2001 2002

Group revenue (Rm)

Group Revenue growth 8%

31 March 2002 SA GAAP, auditedAfter inter-company eliminations

18

Wireline segment revenue

26,16327,331

2001 2002

Wireline revenue (Rm)

Wireline segment revenue growth 4%

SA GAAP, auditedAfter inter-company eliminations

19

Segment contribution

Operating profit 31 March 2002

80%20%

Wireline Wireless

Revenues 31 March 2002

SA GAAP, auditedAfter inter-company eliminations

SA GAAP, auditedAfter inter-company eliminations

62%

38%

Wireline Wireless

20

32 9393 031Provisions and deferred taxation

552 54855 014Equity and liabilities¹

79 73410 431Current liabilities

(5)24 96023 818Interest-bearing debt

1814 79717 398Capital and reserves

552 54855 014Total assets

(11)12 71611 325Current assets

1039 83243 689Non-current assets

Group balance sheet% change2001200231 March (Rm)

1. Minority interest included

Telkom Foundation

Nkhetheleng Vokwana

22

BackgroundBackground

Telkom SA is deeply committed to the South African democracy

and good corporate citizenship. Core to the company’s philosophy

is a desire to improve the quality of life of all South Africans. In

1998, with a budget of R 100 million over five years, the company

launched The Telkom Foundation, which enables Telkom to play a

more active role in the socio-economic development of South

Africa. Its principal objective is to contribute to the transformation

of disadvantaged communities through sustainable development

programmes. These programmes help address the disparities

between the rich and the poor and between urban and rural

communities.

23

The Telkom Foundation’s Mission is to identify,

develop and implement community development

initiatives geared towards sustainable development

and a culture of Empowerment

Telkom Foundation - MissionTelkom Foundation - Mission

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• To promote Maths, Science and Technology at the different levels of our educational system in order to help grow South Africa’s skills base

• To provide funding and other resources for effective education and training to: 100 supercentre schools 45 institutions for people with disabilities which include

community centres 102 dedicated (Maths and Science) schools (Dinaledi) 200 Thintana Schools and 18 MSTP Hubs

• To provide financial and other resources to groups with disabilities

Telkom Foundation – Objectives 1/Telkom Foundation – Objectives 1/

25

• To develop a culture of empowerment and sustainable economic growth

• To provide financial and other resources to disadvantaged communities in order to ensure sustainable development

• To nurture and develop the youth of our rural and poor communities

• To assist in disaster relief efforts

Telkom Foundation – Objectives 2/Telkom Foundation – Objectives 2/

26

Telkom Foundation – Focus Areas

Telkom Exporatorium

Maths, Science and Technology

Education and Training

Empowerment of Women, children and people with

disabilities

27

• 102 Dedicated Schools (Dinaledi)

• Telkom Department of Communications World Internet Laboratories (DOCWILS)

• Telkom Super Centre Computer Labs

• Think Quest

• University of the North (disabled person project)

Maths, Science and TechnologyMaths, Science and Technology

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• Education Africa Forum• I-Africa Entsha• Maths, Science Teacher of the Year• Rally to Read• Sunday Times ReadRight• Most improved Schools Awards• Telkom Careers and Training 2002 Expo• Sediba• Ikaleng

Education and TrainingEducation and Training

29

• People with disabilities/Special Schools Projects

• Enterprise

• Gateway

• National Plan of Action (NPA)

• Telkom Family Helpline

• Ucingo

Empowerment ProjectsEmpowerment Projects

30

• Ad hoc/New Projects

• Adopt A Project

• Exploratorium

• Disaster Relief

General ProjectsGeneral Projects

31

• For 2002/2003 the Telkom Foundation will focus on:

102 Dedicated Schools

People with disabilities/ Community Centre

Going ForwardGoing Forward

Telkom Foundation planned spending ratio for 2003 financial year32

Telkom Foundation – Budget Distribution

General15%

Education11%

Empowerment32%

Science and Technology

42%

33

Economic EmpowermentEconomic Empowerment

240598838

1564

4960

1916

1437

891

476

8952

2663

2433

2170

1088

13912

4579

3870

3061

0 5000 10000 15000

1998

1999

2000

2001

2002

Total

Total BEE spend (Rm)

Suppliers with BEE programmes (Rm)

Total Spend with Black companies (Rm)

Legislation &Regulations

Victor Moche

35

Key Legislation impacting Telkom

• Telecommunications Amendment Act of 2001

• Regulation of Interception of Communications and Provision of Communication related Information Bill

• Promotion of Access to Information Act

• SITA Amendment Bill

• Electronic and Communications Transactions Act

• Electronic Communications Security (Pty) Ltd Bill

36

Telecoms Amendment Act 2001

• Managed liberalisation• Facility-based competition• Licencing of new operators

A second network operator (SNO)An international “carrier of carriers” licence

(Sentech)A multimedia licence (Sentech)Under serviced area licences (SMME)

• Edu-net Discount Rate

37

Competitive EnvironmentCompetitive Environment

Telkom Competitors

2005?2005? VANSVANS

SMME’sSMME’s

CellularCellular

SNOSNO

PTN’sPTN’s

SENTECHSENTECH

38

Regulations: Carrier Pre-Selection

• Carrier pre-selection to be phased in by no later than 31 December 2003?

• Assumed that most per operator and per subscriber set-up costs (including maintenance costs) and all system set-up costs are recovered.

• Costs may not be fully recovered.

• Significant additional CAPEX required

• Premature introduction will discourage infrastructure build-out

39

Interconnection with SMMEs

• Draft Regulations and corrections have been published

• Asymmetrical termination charges with a minimum differential of 30% in favour of USAL for national long distance services

• Symmetrical termination charges for telecoms services within licensed area

• Symmetrical termination charges to mobile cellular

operators

40

Regulation of Interception of Communications and Provision of Communications Related Information Bill

Synopsis of BillTo regulate authorised interception and monitoring of

communications for national security and law enforcement

and to prohibit telecommunications that cannot be

monitored.

Impact on Telkom Period and storage of information Costs and Cost Recovery Prescription of Tariffs & Technology Collection of Consumer Details

41

Promotion of Access to Information Act

Synopsis of the Act

To give effect to constitutional right of access to any

information held by the State and any other person that is

required for the exercise and protection of any rights.

Impact on TelkomCompile information manuals (as public & private)Appointment of information officersTelephone directory entries Information to the Human Rights Commission

42

SITA Amendment Bill

Synopsis of BillTo improve service delivery to the public and to promote the

efficiency of departments and organs of state through the use

of IT

Impact on Telkom SITA Exclusivity on authentication SITA Monopoly on Govt PTNs Cost effective and efficient service?

43

Electronic Communications and Transactions Act• Synopsis of Act

To facilitate and regulate electronic communications and

transactions. To entrench the legitimacy, trust, security and

integrity of electronic communications and transactions whilst at

the same time safeguarding the interests of consumers against

commercial malpractice and exploitation

• Impact on Telkom Delayed provisioning of services – cooling off period Effects of the Interception and Monitoring Act – ID verification Increased administration of critical databases Cost of compliance with regulations – infrastructural and

procedural rules

44

Electronic Comms Security (Pty) Ltd

Synopsis of the BillTo ensure the protection and security of governmentelectronic communications.Impact on Telkom

Encroachment on PSTS domainLicensing and tariffs at variance with

Telecommunications ActEquity in other companies – industrial biasApplication of the Bill to private sector – critical

communications infrastructureVerification and approval of electronic communication

products and services by Comsec

45

Major Costs-Implication Legislation and Regulation• E-Rate• Free Calls• Number Portability• Carrier Pre-selection• Frequency Spectrum • Universal Service Fund Contribution• Rate Regime/Price Control• COA/CAM Compliance• USAL Interconnection• Regulation of Interception of Communications and

Provision of CRI – Storage & Hardware

Concluding Remarks

Victor Moche

47

Strategic goals and objectives

• Our two primary strategic goals continue to focus overall priorities within the group Increase shareholder value Position the group for increased competition

• Key strategic objectives support long-term goals Expand integrated service offerings Grow and successfully compete in core markets Achieve greater customer satisfaction Improve corporate performance Continue to invest in employees

48

Positioned for the future

• Telkom is ready to operate in a more competitive environment We have a world-class network We are creating a competitive culture We have strong international partners We are constantly improving the customer experience

• We have what it takes to be the communications provider of choice

• We continue to reduce costs and achieve greater efficiencies to derive higher returns for shareholders