1. Telkom Presentation to Parliament 22 October 2002

2. 2 Agenda Introduction-Mr. Chose Choeu Performance Review-Ms Nombulelo Moholi Financial Highlights-Mr. Anthony Lewis Legislation & RegulationsMr. Victor Moche Concluding Remarks -Ms. Nombulelo Moholi Question and Answer Session

3. 3 Introduction Telkom Chairman - Ms Nomazizi Mtshotshisa

4. 4 Executive management Chian Khai Tan Chief Executive Officer Sizwe Nxasana Chief Strategic Officer Anthony Lewis Chief Financial Officer Pinky Moholi Chief Sales & Marketing Officer Reuben September Chief Technical Officer Chief Operating Officer Shawn McKenzie

5. 5 Telkom Foundation Chief Executive Officer Mrs Nkhetheleng Vokwana

6. Performance Review Nombulelo Moholi

7. 7 Group operational structure Wireless data Mobile Vodacom Swiftnet Wireless SegmentBusiness line Wireline Directories Fixed-line (Voice & Data) Telkom Telkom Directory Services Legal entity

8. 8 Six line roll-out targets TargetActualAchieved Lines (excl payphones)2 690 0002 673 552  Payphones120 000132 990 Under-serviced1 676 0001 787 968 Priority customers20 24625 577 Villages3 2042 699  Replacement lines1 252 0001 159 668 

9. 9 Ten service quality targets TargetActualAchieved Faults per 1 000 lines: Business 370288 Faults per 1 000 lines: Residential 390547  % 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%

10. 10 Highlights in 2002 Completed licence obligations on 7 May 2002 Substantially completed tariff rebalancing Renegotiated interconnection agreements Group operating cash flow grew by 10% to R8.7bn Group revenues grew by 8% to R34.0bn Group capex decreased by 7% EPS grew by 17% to 338.9 cents

11. 11 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

12. Financial Highlights Anthony Lewis

13. 13 Group revenue Group revenue growth over past three years is as a result of:  Increased fixed-to-mobile traffic revenues  Increased data connectivity  Increased mobile subscribers and revenue Group Revenue (Rm) at 31 March 31 March 2002 SA GAAP, audited After inter-company eliminations

14. 14 Segment contribution Operating profit 31 March 2002 Revenues 31 March 2002 SA GAAP, audited After inter-company eliminations SA GAAP, audited After inter-company eliminations

15. 15 Fixed-line segment (Rm) Revenue increase of 5%Operating profit decrease of 9.5% Capex (Rbn) decrease of 15%Total assets(Rbn) 1 increase of 9% 1. Excluding investments, financial and tax assets SA GAAP, audited, before inter-company eliminations

16. 16 Fixed-line revenue SA GAAP, audited Before inter-company eliminations 7.8% 5.2%

17. 17 Group income statement % change2001 (6)617580Investment income 15151 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

18. Strategic Review Victor Moche

19. 19 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

20. 20 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

21. 21 Competitive Environment Telkom Competitors 2005? VANS SMME’s Cellular SNO PTN’s SENTECH

22. 22 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

23. 23 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

24. 24 Regulation of Interception of Communications and Provision of Communications Related Information Bill Synopsis of Bill To 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

25. 25 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 Telkom  Compile information manuals (as public & private)  Appointment of information officers  Telephone directory entries  Information to the Human Rights Commission

26. 26 SITA Amendment Bill Synopsis of Bill To 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?

27. 27 Electronic Communications and Transactions Act Synopsis of Bill 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

28. 28 Electronic Comms Security (Pty) Ltd Synopsis of the Act To ensure the protection and security of government electronic communications. Impact on Telkom  Encroachment on PSTS domain  Licensing and tariffs at variance with Telecommunications Act  Equity in other companies – industrial bias  Application of the Bill to private sector – critical communications infrastructure  Verification and approval of electronic communication products and services by Comsec

29. 29 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

30. Conclusion Nombulelo Moholi

31. 31 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

32. 32 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

33. Questions

35. 35 3 Minute local call Source Tariffica

36. Is Telkom Out of Line? 36 Residential connection

37. Is Telkom Out of Line? 37 Three-minute long distance call

38. 38 Satisfied Customer Top 3 Box Scores % Satisfied

39. 39 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 % change20012002 31 March ( Rm) 1. Minority interest included

40. Competition and the Public Good 40 Governments have conflicting objectives from liberalisation which must be balanced Create healthy competition Continued incumbent profitability Viable and sustainable Second Network Operator Improve “public good” Expanded access Reduced consumer prices with improved service Employment growth, transformation and new business opportunity Increased foreign investment Provision of leading edge services

41. Regulatory Environment 41 Critical Success Factors Sustainable profitable sector for incumbent and new operators Ensure SNO has opportunity to obtain critical mass Appropriate application of regulatory tools to create the right market structure Regulatory framework must be transparent and predictable Regulatory framework must have clear and consistent guidelines