Telkom Sa Soc Ltd. · JSE:TKG
Telkom Sa Soc — Telkom — FY2004 Earnings Presentation
40 slides from Telkom Sa Soc's earnings presentation, Jul 30, 2004
Slide 1: Vodacom Group Proprietary Limited
Vodacom Group Proprietary Limited For the year ended March 31, 2004 June 7, 2004
Slide 2: Content
Content Alan Knott-Craig Group Chief Executive Officer Operational highlights Leon Crouse Group Finance Director Financial review:
Slide 3: Operational highlights
vodacom PA gS Operational highlights Alan Knott-Craig Group Chief Executive Officer
Slide 4: Group highlights
Group highlights s 4 Total customers Revenue 11.2 million R23.5 billion 297% 18.7% 9 EBITDA R7.8 billion 15.9% 80 i Net profit Customers per employee R3.0 billion 2,433 36.9% *. 23.9% . Capex as a % of revenue 12.3% 4.9%pts » Launch of Vodacom Mozambique iy Operational structure streamlined
Slide 5: Consistent delivery on strategy
Consistent delivery on strategy =e ae vodacom Revenue growth Margin management e Market penetration e Leveraging our economies of Vodafone alliance scale * The continuous introduction * Control of customers of new high-utility services ¢ Optimising efficiencies — Look4me, Call Sponsor « Synergy betw
Slide 6: New products and services
New products and services ¢ Top Up contract/prepaid hybrid Foon) Cen) ¢ Office Anywhere Ce « Look4me ® licck « Look4it i e YeboS prepaid voucher ¢ Call Sponsor e Corporate GPRS APN access
Slide 7: BEE — an economic imperative in South Africa
BEE — an economic imperative in South Africa e Equity - HCI transaction Purchased for R91 million, sold for R1.5 billion e Employment equity -79% of workforce in SA from designated groups e Procurement -60% of total commercial spend with BEE companies e Enterprise development -Community services pho
Slide 8: South Africa — impressive market growth
South Africa — impressive market growth o g 18 16 a g 214 5 ® 212 c & = 5 2 10 o 2 2 2 E | g 8 2 Lal 3 s e 3 “ “ s 8 “ ws 44, 8 2 oO 2001 2002 2003 2004 = Other operators #Vodacom «Total
Slide 9: South Africa — market share 54%
South Africa — market share 54% n 42.7 million, pen 141 % 2003 2004 change * Total customers 7.9 million 9.7 million 235% * EBITDA 6,423 million 7,536 million 173% * Customers per employee 2,017 2,527 23% © Capex as a % of revenue 13.4% 7.5% s.o%pts iy Pressures unchanged
Slide 10: Vodacom SA customers and gross connections
¢ Gross connections up Vodacom SA customers 43.0% to a new high of 5.0 million e Customers up 23.5% to 9.7 million ¢ Total traffic increased ‘Thousands by 17.3% to 12.3 billion 2001 2002 2003 2004 minutes * Number of SMSs up Vodacom SA gross connections 33.3% to 2.0 billion 4.998 2001 2002 2003 ©200
Slide 11: Higher SA ARPUs, stable contract churn
Higher SA ARPUs, stable contract churn ¢ Contract churn at all-time low of 10.1% e Prepaid churn increased to 41.3% e Prepaid ARPU stable ¢ Increased contract ARPU ¢ Overall ARPU declined because of higher prepaid mix % SA churn history 2000 2001 2002 2003 2004 eTotal churn —e-Contiact Prepaid Vodac
Slide 12: Potential for further growth in South Africa
Potential for further growth in South Africa Vvédacom Potential for further growth South African market share —Data focus —SA market estimated at 25 to 30 million 00 oo ¢ Vodacom is strategically 80 placed for continued WO] ot dominance 60 a —Lowest-cost operator $50 — Extensive distribution 46 —Mar
Slide 13: Tanzania — market share 57%
Tanzania —- market share 57% million, pen % 2003 2004 change * Total customers 447,000 684,000 53.0% * EBITDA R334 million R278 million 160% § * Customers per employee 1,997 2,165 e4% © Capex as a % of revenue 36.7% 40.5% 3.8%pts fF iy Competitive market 13
Slide 14: DRC — market share 47%
DRC - market share 47% iilion, penetr (100% of vodacom Gongo) Bode 2004 change * Total customers 248,000 670,000 170.2% © Capex as a % of revenue 199.2% 83.0% i16.2%pts Note: Vodacom Group proportionally consolidates only 5196 of Vedacarn Congo iy Market position entrenched 44
Slide 15: Lesotho — market share 80%
— market share 80% n 5.1% % 2003 2004 change * Total customers 78,000 80,000 2.6% * EBITDA R26 million R27 million 3.0% * Customers per employee 1,047 1,176 12.3% © Capex as a % of revenue 75.0% 5.9% so.1%pt & iy Operation has stabilised 45
Slide 16: Mozambique — market share 11%
Mozambique - market share 11% a ion 17.5 million, pene vodacom 2004 © Total customers + EBITDA (R71 million) * Customers per employee 1,349 iy Faster roll-out 16
Slide 17: Slowing SA capex, increasing other African operations capex
Slowing SA capex, increasing other African operations capex Capex composition — 2003 Capex composition — 2004 Capex R3,399 million Capex R2,891 million 15.200 2:96 16.5% avs 9.50% 12.79% ie 12.196 = South Afiica Tanzania = Congo (51%) + Lesotho and holding companies = South Affica Tanzania = Congo (
Slide 18: Financial review
SF vodacom Financial review Leon Crouse Group Finance Director
Slide 19: Group results
Group results % change 2002 2003 2004 04/03 Revenue 16,151 19,779 Operating expenses excluding depreciation and amortization (10,460) (13,075) 20.2 EBITDA 5,691 6,704 : 15.9 Depreciation and amortization (2,070) (2,374) 2 67 Profit from operations 3,621 4,330 : 20.9 Net finance costs (28) (804) : (4
Slide 20: Group revenue analysis
Group revenue analysis B % change 2002 2003 2004 04/03 South Africa 15,410 18,544 Tanzania 657 880 be (1.5) DRC (51%) 14 259 : 83.8 Mozambique = = = Lesotho 70 96 24.0 Halding companies ey 2 ss Vodacom Group 16,151 19,779 band 18.7 Other African operation’s contribution: 6.4% (2003: 6.2%) 20
Slide 21: Group revenue analysis by revenue type
Group revenue analysis By revenue type Revenue analysis — 2003 R19,779 million ai ee 26.0% 53.00% 22% Airtime = Data revenue Interconnection = Equipment sales Intemational airtime» Other sales and services Revenue analysis — 2004 R23,478 million taa% 2.8% 15% 24.60% aa Airtime = Data revenue Interco
Slide 22: (Rm) z & ¢ ye . a 150.0% sis a CI Lesotho # Tanzania
(Rm) z & ¢ 8 2 ye . a 150.0% 95 sis a CI 2002 2003 2004 Lesotho # Tanzania mSouth Africa 22
Slide 23: wn = oO c oO < (a) ma ira) Lu a fo fe} =
2 wn = oO c oO < (a) ma ira) Lu a fo 3 fe} = O buntry on ao an ag 56 = 3 S N 2 3 ro N 173 6,423 5,567 South Africa (16.8) 334 231 Tanzania (49) (12) DRC (51%) Mozambique 38 26 at Lesotho (233.3) (30) (126) Halding companies 5.9 6,704 5,691 Vodacom Group 33.9 334 (0.8) pts 35.2 EBITDA margin (%) 23
Slide 24: EBITDA growth and margin pressure
EBITDA growth and margin pressure 36.2% (am) 2 ° 3 S 4,000 3,462 6,704 5,691 2000 2001 2002 2003 ‘= EBITDA EBITDA margin 2004 40.0 35.0 30.0 25.0 20.0 # 15.0 10.0 5.0 0.0 24
Slide 25: Group operating expenses
Group operating expenses By expense type Operating expense analysis 2003 R15,449 million 95.90% 14.4% 1 Other direct network operating costs = Payments to other operators = Depreciation and amortization 1 Staffexpenses * Other Operating expense analysis 2004 R18,244 million 7.3% 16.49% 1 Other direc
Slide 26: Group profit from operations analysis
Group profit from operations analysis South Africa Tanzania DRC (51%) Mozambique Lesotho Halding companies Vodacom Group Profit fram operations margin (%) % change 2002 2003 2004 04/03 3,627 4,476 134 187 (24.6) (20) (117) 2 = 12 4 (75.0) (132) (220) (34.1) 3,621 4,330 20.9 22.4 219 22.3 O.4pts 26
Slide 27: Factors affecting the trends
Factors affecting the trends a Vodacom ¢ Currency influence — Current capex cheaper in Rand —Depreciation of US$ historical capex lower —Translated US$ revenue lower —Rand-based and local currency expenses higher e Adjusted profit after tax shows the real trend and excludes IAS 39 adjustments —Effec
Slide 28: Factors affecting the trends
Factors affecting the trends e Change in traffic mix in SA negatively affected operating profit e Fluctuating, low margin equipment sales affect revenue and margins e More competition demanded higher direct costs and incentives Equipment sales + + tt 2,098 sia ' 264 aa ™ 2000 2001 2002 2003 2004 SA
Slide 29: Improved efficiencies
Improved efficiencies Customers per employee per country 3,000 2,527 2,500 2,165 2,017 1,997 2,006 2,000 1,000 500 South Africa Tanzania DRC Lesotho Mozambique 1,215 1,176 1,349 1,047 = 2003 = 2004 or
Slide 30: Improved efficiencies
Improved efficiencies Capex as % of revenue 30.0 24.0 25.3 25.0 24.4 20.0 17.2 #£15.0 12.3 10.0 5.0 0.0 2000 2001 2002 2003 2004 30
Slide 31: Strong cash generation
Strong cash generation (Rm) 10,000 8,000 6,000 4,000 2,000 Operating cash flow ass ‘ 32.7% a . a A ca ‘ z 46.6% 7 ~ 3 $ i a 4 a ce 2000 2001 2002 2003 2004 31
Slide 32: Strong cash generation
(Rm) g cash generation Free cash flow 62.7% . 5 a ca 5 3 bs 8 g 3 ; - ; 8 5 = 2000 2001 2002 2003 2004 32
Slide 33: Net debt maturity profile
Net debt maturity profile Total 2004] 2003 885 SA finance leases Vodacom Tanzania 66 es 110 @7 76 592 Vodacom Congo (51%) 745 = s - - ee one Vodacom Lesotho 4 = = = e s 4 $A shareholder loans = 7 e ea #8 : 920 Debt excluding bank : eed e44 1360189201270 e 3,098 Less net benk and cash (648) lances Ne
Slide 34: Debt composition
Debt composition Gross debt composition Gross debt composition including including bank overdrafts bank overdrafts and off-balance sheet commitments R2,833 million R3,752 million 27% 2878 250% = tive 27% aes 240% + Foreign denortinatad, ring-fenced + Foreign denominated, Hing-fenced * Foreign denomi
Slide 35: Shareholder distributions
Shareholder distributions ¢ Repaid R920 million in Dividends and interest on shareholder loans shareholder loans ¢ Paid interim dividend of »s00 R600 million ’ ¢ Declared final dividend of Stic R1.5 billion ‘ e Dividend expected to be 4,500 increased because of not a entering Nigeria 1,000 500 2000
Slide 36: Questions?
vodacom Questions?
Slide 37: Disclaimer
Disclaimer * This presentation has been prepared and published by Vodacom Group (Proprietary) Limite: * Vodacom Group (Proprietary) Limited is a private company and as such is not required by the Companies Act of 61 of 1973, as arnended, to publish its results. * Vodacom Group (Proprietary) Limited
Slide 38: Group income statements
Group income statements extracts for the years ended March 31 % change 2002 2003 2004 04/03 Revenue 16,151 19,779 Operating expenses excluding depreciation and amortization (10,460) (13,075) 20.2 EBITDA 5,691 6,704 ‘ 15.9 Depreciation and amortization (2,070) (2,374) : 67 Profit from operations 3,62
Slide 39: Group balance sheets
Group balance sheets extracts as at March 31 % change 2002 | 2003 2004 04/03 ASSETS Non-current assets 11429 12,276 4 75 Current assets 4,145 4,690 ‘ 47.2 Total assets 15,574 16,966 ee 18.5 EQUITY AND LIABILITIES Capital and reserves 5,464 6,897 oo 112 Minority interest iL 88 : 57 Nan-current liabil
Slide 40: Searchable text section of graphics
Searchable text section of graphics shown above [ LOG O] [GRAPHIC] Vodacom Group Proprietary Limited For the year ended March 31, 2004 June 7, 2004 [GRAPHIC] Con tent [LOGO] Alan Knott-Craig [GRAPHIC] Group Chief Executive Officer Operational highlights Leon Crouse [GRAPHIC] Group Finance Director F