Telkom SA SOC Limited

BCX Acquisition

June 2014

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Strategic Rationale

The ICT technology landscape is converging› Cloud is becoming a reality;

› Value is increasingly shifting from basic communication services to industry- and customer-specific services;

› IP and IT are increasingly interdependent,

› End-user devices, LAN, WAN, and data centre services are coming together in UC, etc. etc.

The market is consolidating › “One-trick” companies will come under increasing pressure in a market which looks for end-to-end service levels,

› We have seen NTT buy Dimension Data; Vodacom is buying Neotel; MTN has just announced the acquisition of Afrihost; EOH has thrived through acquisition.

› Both Telkom and BCX need to find the right partners to prosper in this changing market.

Telkom, with its market leading communications offer; and BCX, as the market leader in managed IT infrastructure services, are a very good fit in this context

By combining the capabilities of Telkom Business and BCX we believe we will be able to create a market leader in converged Unified Communications and “IT-as-a-Service”’ we will be able to transform the way IT is delivered, through the cloud

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Our intention for BCX in Telkom

“Reverse Integrate” Cybernest into BCX.

Retain BCX as a distinct operating unit in the Telkom Retail stable, alongside Telkom Business.

Through appropriate incentives and structures, retain key leadership and talent in BCX thereby preserving the value of the asset we are acquiring and retaining the distinct IT culture in BCX as opposed to our “Telco” culture.

Ensure that we deliver the above mentioned strategic rationale by aligning three main operational areas:› Go-to-market - to ensure we have a single account-management approach to customers and a coherent value

proposition between the Communications and IT operating units;

› Portfolio - with BCX “owning” the IT product and service portfolio and Telkom Business “owning” the communications product and service portfolio, but still ensuring compatibility and synergy between the two portfolios;

› Service Management - to ensure we can offer a single point of engagement for service delivery, integrated service management and end-to-end SLAs.

These three areas of operational alignment will require formal operating model, structures and rules of engagement.

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Next steps

Formal Submission of the Circular to the JSE – 11 June 2014

Posting of the Circular to the BCX Shareholders – 17 June 2014

Filing with Competition Commission – 20 June 2014

BCX Shareholders Meeting – 17 July 2014

Thank you