Slide 1: Telkom SA Limited Group annual results
Telkom SA Limited Group annual results For the year ended March 31, 2004 www.telkom.co.za
Slide 2: Cautionary language concerning forward-looking statements
Cautionary language concerning forward-looking statements All statements contained herein, as well as oral statements that may be made by us or by officers, directors or employees acting on behalf of the Telkam Group, that are not statements of historical fact constitute “forward-looking statements"
Slide 3: Group highlights
Section 1 Group highlights www.telkom.co.za
Slide 4: Excellent earnings growth
Excellent earnings growth Headline earnings per share in ZAR cents Strong cash flow growth Operating free cash flow! In ZAR millions 2003 2004 Excluding release of Telcordia provision, adjusted HEPS ‘would be 800 cants per share, 186¥sarowth 2003 2004
Slide 5: Group revenue growth and key ratios
> 9% group revenue growth > 40% group EBITDA margins > Group capex 13% of revenues > Group return on assets of 18% > Net debt to equity of 61% »Total dividend of 200 cents per share
Slide 6: Fixed-line and Mobile segment results
Fixed-line Mobile 50% interest in Vodacom 1. Segmontraautr befor inireegmentaatiminatons Mobs rw rpr a. vodacom Maren 34 In ZA ition Revenue EBITDA EBITOAmargn () capex Capexto revenue CB) Mareh 34 In ZAR ition Revenue EBITDA EBITDA margin () Capex Capexto revenue (8) 2008 178 3.882 2 1805 12 % chan
Slide 7: Sustaining the development of our marketplace
a =n 3. Sustaining the development of our marketplace | => Deliver growing returns to shareholders
Slide 8: Fixed-line data: the fixed-line growth engine
> Fixed-line data’ contributes 12% to group revenues » Data revenue growth of 14%" » Deploying new technologies such as VPN Supreme 18% growth in leased line revenue’ In ZAR millions 3,496 | — the fixed-line growth engine 7729 17% growth in managed data network sites 2003 2008 2003 2008
Slide 9: Growth in internet, ISDN and ADSL subscribers
44% growth in 17% growth in 661% growth in internet subscribers ISDN channels ADSL subscribers 52,708 258 2003 2008 2003 2004 2003 2004
Slide 10: Voice traffic and services
» Over 968,000 voicemail accounts ®» New calling plans » Xtratime launched in March 2004 » Rate education campaigns = Price advantage of fixed-line » 14 international call centre customers ® Investigating opportunities for services to African operators Flat traffic minutes’ Million minutes 32,868 20
Slide 11: Convenience and credit management
Convenience Connect/Reconnect campaigns > Online ardering and payments > TelkomDirect retail outlets >Vodashop deals > View bills online > Get connected — 60% discount campaigns > Project transfer > Lengthened PrepaidFone suspensian times Property development details > Smart maves (launched with ABS
Slide 12: Vodacom subscriber growth
bscriber growth 54% market share 24% growth in customers In thousands 192 183 —_” 7,874 6,557 2002 2003 2008 customers —s-ARPUS. Highest level of gross connections ever at 5 million ‘At opsrtonal numbers ar 19% of odacom,Tolhom only contol 50%
Slide 13: Vodacom DRC and other African growth
» Aggressive mobile rollout in DRC 93% growth in other African = Market share at 47% mobile customers In thousands » Launched Vodacom Mozambique in Dec 2003 » Opportunity for fixed-line to increase revenue from Africa = Traffic hubbing = Network management = Professional services = Data services 773
Slide 14: Group financial highlights
Section 2 Group financial highlights www.telkom.co.za
Slide 15: Margin expands by five percentage points
largin expands by five centage points Group EBITDA margins (%) Segment EBITDA contribution = 34 36 Fixed.tine Mobile Group 12003 m2004
Slide 16: Fixed-line operating costs
Fixed-line operating costs In ZAR millions Gb 6.743 6,633 6,053 2003 2004 Other controllable costs Employee expenses Payments to operators gal othe Tors provion of #35 1 4% reduction in services rendered 1 8% reduction in operating leases 1 6% reduction in materials and maintenance
Slide 17: Productivity improvements per employee
9% improvement in lines per 24% improvement in mobile employee customers per employee 1,963 288 4817 4353 a8 2002 2003 2004 2002 2003 2004 a Fixedine employees —e-Fixed linesper employes Savobile employees —-Cusdomers per employee
Slide 18: Investing capital for growth
Investing capital for growth Group capital expenditure 42% of fixed-line capex for In ZAR millions. growth 5,712 4013 Growth 42% | Fixed-tine Mobile Group 22003 2004 Group capex at 13% of revenue
Slide 19: Reduction in group net debt and interest expense
34% reduction in group net 13% reduction in group debt interest expense or 3,186 2,869 21,966 2002 2003 2004 2002 2003 2004 Net dete —a-Net dete toequity Net debt to equity target Fange of 50-70%
Slide 20: Growth in group operating free cash flow and medium term targets
123% growth in group operating free cash flowt Medium term targets Expand group \ EBITDA margins to 40% ZAR millions 4042 7s ee) [3799 2000 2001 2002 2003 2004 In outer netamance anarge sana taestonbeor alana) Maintain group | capex between 12% — 15% of revenues Maintain group net \ debt to equity b
Slide 21: Strong growth in final dividend
» Strong growth in final dividend to 110 cents per share = Total dividend of 200 cents per share (payout ratio 25%) » Shareholder approval granted to repurchase shares » Financial flexibility to participate in future share liquidity events 22% growth of final dividend compared to special In ZAR cent
Slide 22: Outlook
Section 3 Outlook www.telkom.co.za
Slide 23: Customer growth, efficiencies and marketplace development
Customer growth and retention Operational efficiencies and innovation Sustaining the development of the marketplace > o> > Aggressively grow data business Grow SA mobile subscribers Seek opportunities in Africa Reduce fixed-line headcount Optimise fixed-line fleet and properties Gain control of mobi
Slide 24: Regulatory and legal update
Regulatory update » Licensing = Second National Operator not yet licensed = Four under service area licences (USALs) approved by the Minister » Competitive regulations = Cartier pre-selection submitted by ICASA to minister » COAICAM = Accounts to be presented in June 2004 on historic cost basis » Ta
Slide 25: Customer growth and retention
1. 2. 3. Customer growth and retention Operational efficiencies and innovation Sustaining the development of the marketplace
Slide 26: Investor relations
Investor relations telkomir@telkom.co.za Tel: +27 12 311 5720 Fax: +27 12 311 5721 www.telkom.co.za Listed on the AVA JSE MAS. ‘SECURITIES EXCHANGE SOUTH AFRICA NYSE New York Stock Exchange
Slide 27: Background overview
Background Overview www.telkom.co.za
Slide 28: Telkom shareholding structure
pTELEKOM 60% 40% Govemment: Freefloat 38.3% 30% 31.7% » Government and Thintana hold class A and B shares respectively which have special rights » Government and Thintana were subject to underwriters’ lock-up. until September 2003 » Government is subject to a further 545 days lock-up ending March 20
Slide 29: Fixed-line penetration
Fixed-line penetration % of population B " " " 2000 200120022003 2008 % March 31 2004 change Fixed access lines (thousands) 4,821 ry ISDN 656 7 ADSL 20 661 Total trate (ition minutes)' 329 02 Internet customers (thousands) 142 a4 Managed data networks 9,061 7 » Telkom — incumbent fixed-line operator
Slide 30: Searchable text section of graphics
Searchable text section of graphics shown above Tel kom SA Limited Group annual results For the year ended March 31, 2004 [GRAPHIC] www.telkom.co.za [LOGO] Cau tionary language concerning forward-looking statements All statements contained herein, as well as oral statements that may be made by us or