GroupProvisionalAnnualResultsfortheyearended31March2017

TelkomSASOCLimited

Introduction

3

Toughtradingenvironment

EconomicEnvironment

> LimitedGDPgrowth

> Sovereignratingdowngrade

> Consumersunderpressure

Regulatoryenvironment

> Spectrum

> ICTPolicy

> Costtocommunicate

Competitivelandscape

> Increasednumberoffibreplayers

> Competitioninthewholesalespace

> Consolidationinthemarket

Introduction

4

Keyactionslaidgroundworkforgrowth

Keyissuestoaddress

> Costandcapitalefficiencies

> SustainabilityofTelkomMobile

> Uncertainregulatoryandpolicyenvironment

> Corebusiness

> Capability

> Brandperceptionandcustomerservice

Keyactionstaken

> Stabiliseorganisation,clearturnaroundstrategy

> Sustainablecostefficiency;disciplinedcapitalallocation

> De-riskedmobilebusiness

> Proactiveregulatoryinteraction

> Growingnewprofitpools(Fibre,LTE,BCX,mobiledata)

> Executionofstrategy,skills,culturechange,systems,processes

> Resettingthebrandandongoingimprovementofcustomerexperience

Introduction

5

Newfitforpurposeoperatingmodel

Introduction

Group

6

Relentlessfocusoncost Capabilityandtalent Performanceculture Systemsandprocesses

> Instilarelentlessfocusondrivingdowncosts

> Ensurecostsefficienciesachievedarenottemporary

> Setupsystemsandprocessestoenableoperationsandcreatetransparencyonperformance

> Placetherightindividualsintherightroles

> Empowerindividualswiththerighttrainingandsupport

> Createcultureofperformance,groundedinFoundersMentality(i.e.ownershipmindset,insurgency,frontlineobsession)

Criticalenablersofthenewoperatingmodel

Introduction

Businessperformance

8

Groupfinancialhighlights

Businessperformance

*ThefiguresexcludevoluntaryearlyretirementandseverancepackagecostofR66millionandtherelatedtaximpactofR13million.ThecomparativenumbersexcludevoluntaryearlyretirementandseverancepackagecostofR2193millionandtherelatedtaximpactofR517million.

Capextorevenue21.1%

EBITDAmargin26.7%*

Annualdividendup56.3%

Operatingrevenueup9.8%

HEPSup12.4%*

Mobileservice

revenueup38.4%

9

Performanceagainstfocusstrategicareas

Businessperformance

> Mobilegrowththroughdata

> Highspeedbroadbandgrowth

> ContentandVAS

> Modernisethenetwork

> Commercialisethenetwork

> Servicedeliverytransformation

> Cloudcomputing

> Unifiedcommunications

> Bigdataanalytics

> InternetofThings

> Security

> MobileAdExchange

> ExpandingOmni-channelofferings

> Establishe-commercemarketplace

> ExpandpartnershiptoOTT

Keyfocusareas

ModernisenetworkCommercialisethenetworkTransformingservicedelivery

11

Modernisethenetwork–fibredeployment

Businessperformance

Passedover2.2millionpremises

Fibretothehome

219825up169.7%

Fibretothecabinet

1991449up37.2%

Fibrenetworkof

>149000kmdeployedtodate

12

Modernisethenetwork–POTN*deployment

Businessperformance

Oneofthe1st commercialdeploymentsintheworld

> Simplifiedoperationsthroughcommoninterworkingplatforms

> Improvedcostforhighbandwidths

> Increasedefficiencythroughmulti-layerutilisationbydelayeringthenetwork

*Packetopticalnetwork

13

Commercialisethenetwork–increasednetworkconsumption

Businessperformance

Fixedlinebroadband1

1.Accesslinks

Fibretothebusiness

52755endpointsterminating

Fibretothebasestations

5928basestations

Fibretothehome

18%connectivityrate

340472

632

0

100

200

300

400

500

600

700

FY2015 FY2016 FY2017

Tera

byt

es

33.8%

14

Transformingservicedelivery

Businessperformance

Optimiseservicedeliveryandcostefficiency

> Improvedispatchingmethodologythroughbundling

> IndividualincentivesthroughPerformancePays

Digitaliseandautomatebusinessprocesses

> Introductionofdigitaltechnician

> PhotoqualityAppandnewWorkforceManagementsolution“Click”

Continuouslyimprovecustomerexperience

> “RightFirstTime”approach

> Pro-activemaintenanceofthenetwork

Keyfocusareas

CloudcomputingUnifiedcommunicationsConvergedcommunicationsBigdataanalyticsInternetofThingsSecurity

16Businessperformance

Benefitsoftheintegration

R14.0billionTotalrevenue

15.1%EBITDAmargin

R1.8billionOperatingprofit

Financialprofile– 31March2017

> NewExco

> Onesalesforceteam

People

Resources> Unmatcheddatacentrescapabilities

> Strongfixednetwork

> GroupITtobemanagedbyBCX

> Offerend-to-endsolutions

> Convergedproductsandservices

> Increasedscaleandscopeofproducts,servicesandbusinesssolutions

Productoffering

17

Deliveredagainstkeyfocusareas

Businessperformance

CloudComputing

> LaunchedEnterpriseBusinessCriticalCloud

> EnhancedBCXCloud.com

> LaunchedSAPHANAEnterpriseCloud(HEC)

> StrengthenedOraclecapability

UnifiedCommunications(UC)

> MigratedcustomersontoNGNsuchasfibre,VoIP

> ExpandedUCofferstoincludefullsuiteofoptionsi.e.IPT,UC

> LaunchedCiscohostedcollaborationsolution

> LaunchedSkypeforBusinessUCpractice

> Launchedabroadbandsatelliteservices

BigDataAnalytics

> Abusinessunitwasset-up

> Bigdataplatformsdeployedfordatascientiststomineandmonetisedata

> AnalyticsasaService

> DataasaService

> IntegratedintoBCXIntelligentSolutions(Cloud,IoT,Digital,BigData)

18

Deliveredagainstkeyfocusareas(continued)

Businessperformance

Security

> FastnetPaymentCardIndustrySecurityStandardv3.2certification

> ISO27001certification

InternetofThings

> ContinuedgrowthwithintheIoTindustrialandretailecosystems

> ProductsdeliveredfocussedonthemanagementoftheIoTdataanddeviceecosystem

> EnabledabilityviaCloudserviceprovidertohostinAzureviaBCXCloud.com

19

DigitalTechnologyOrganisationthroughcollaboration,innovationandservicefocused

Businessperformance

CustomerFirstProgramstrengthenedtodrive:

> customerinsights

> capabilitytomanagecustomerlifecycles

> AbilitytoofferselfhelponcorecloudservicesatBCXCloud.com

CustomerRelationshipManagementsystemtoeffectivelymanage:

> Pipelineandopportunities

> GatherleadsfromBCXCloud.comviaautomatedticketingsystem

Keyfocusareas> Mobilegrowththrough

data-ledpropositions> Highspeedbroadbandgrowth

- LTE&fibre> Digitalservices> ContentandVAS

21Businessperformance

Solidexecutionbymobilebusiness

-684

-43

660

-1 000

-500

0

500

1 000

FY2015 FY2016 FY2017

Rm

1 8152 528

3 498

0

1 000

2 000

3 000

4 000

FY2015 FY2016 FY2017

Rm

38.4% 47.7%

1 608 1 9122 772

579794

1 227

0

1 000

2 000

3 000

4 000

5 000

FY2015 FY2016 FY2017

Pre-paid Post-paid

21872707

3999

EBITDA

Customergrowth(‘000)Servicerevenue

> Strongsubscribergrowthsupportedbynetworkrollout

> 2G/3Gbasestationsgrowthfrom2663FY2016to2986FY2017

• Ofwhichthereare2607re-farmedsitesand

• 1677LTEsites

22Businessperformance

Mobilebroadband

988

1 575

2 356

0

500

1 000

1 500

2 000

2 500

FY2015 FY2016 FY2017

R’m

Broadbandrevenue

Broadbandsubscribers 44.6%

390 511 724940

1313

1 913

0

500

1 000

1 500

2 000

2 500

3 000

FY2015 FY2016 FY2017

‘000

Dataonly Smartphoneusers

49.6%

Highspeedbroadband

> UptakeofFixedBroadband:

• Significantdemandforfibre

• MigrationfromADSL/VDSLtofibre

• Fixedbroadbanduncappedstrategyyieldingresults

> PartnershipswithShowMaxandotherOTTproviders

1330

1824

2638

23

Ongoingimprovementtocustomerexperience

Systemupgrades

> Reducedtimetocapture,process&vetting

> Paperlessapplications

> Digital&self-help

Storeinitiatives

> Queuemanagementsystem

> Customercallbacksupport

> V-Docs:paperlessapplicationprocess

Callcentres

> Improvedfirsttimeresolutions

> Reducedcallvolumes

> Livechat

Businessperformance

Keyfocusareas

MobileAdExchange

ExpandingOmni-channelofferings

Establishe-commercemarketplace

ExpandpartnershiptoOTT

25

Establishe-commercemarketplaces

Businessperformance

> Launchedwebandmobileapps(iOS&Android)inJanuary2017

> Agiledeliveryofbusinesscriticalfeaturesonamonthlybasis

> 8xleadsgeneratedperserviceprovider

> 100%trafficgrowthpermonth

> 200%growthintraffic

> 663117leadsgenerated

> 1000000consumersreached

> LaunchedfirstBlackFridayandCyberMondaydeals

26

MobileAdExchange

Businessperformance

OTTpartnership

NewPartners

34%GrowthinGoogle

Revenues> 997 deployedforprojects

> 1000registered> Innegotiationsfordeploymentof

1PrivateNetwork

27

ExpandingOmni-channelofferings

Businessperformance

100daysFromconcepttogo-live

75000newBusinessesAdded

15%ImprovementinNPS

CustomerandProcessImprovements

> 118000quotessenttobusiness

> 4000 appointmentssenttobusiness

> 50000consumersservicedindigitalqueue

Humanandsocialcapital

29

HR- Focusingonattractingandgrowingtalent

Humanandsocialcapital

Performancebasedincentives

> PerformancePays– upto12%

> PerformanceManagement

Recruitment

> BrightYoungMinds

> WeThinkCode

Leadership&development

> Talentmanagement&succession

> FemaleLeadership

30Humanandsocialcapital

CSR- Empoweringyouththrougheducationandentrepreneurship

Foundation–Mainfocusisoneducation

FutureMakers–EnterpriseandSupplierDevelopmentFund

R85millionallocatedtoeducation

9770Learnersbenefitedfromsupplementaryteaching

4140teacherstrainedinICT

R234millioninvestedintotheFutureMakersfund

40 blackownedbusinessesthroughourIFTprogrammewhointurnemployed

364 technicians

1102newjobscreatedbyFutureMakersbeneficiaries

Foundationoverthepast3yearsFutureMakersinvestmentsince7May2015

Financialoverview

32

DevelopmentsinFY2017

Financialoverview

Mobile MobileEBITDAprofitability

Acceleratedcapex

deployment120%growthincapexdeploymenttopriorityareas

BCX BCXinclusionforthefullyearandtheintegrationofEnterprisewithBCX

DividendIntroductionofinterimdividendanddividendpolicy

33

FY2017 FY2016 %

Profitforthe year 3854 2 321 66.0

VERP/VSPcost 66 2 193 (97.0)

TaxonVERP/VSPcost (13) (517) 97.5

ProfitfortheyearexcludingVERPs andVSPs 3907 3997 (2.3)

HeadlineearningspershareexcludingVERPsandVSPs*(cents pershare) 731.4 650.9 12.4

EarningsexcludingVERPsandVSPs

Financialoverview

*R217millionprofitonsaleofassetsinthecurrentyear(March2016:R704million)

34

FY2017 FY2016 %

Operating revenue 40970 37325 9.8

Netrevenue 31854 29521 7.9

Operatingexpenses 21647 19833 (9.1)

EBITDA 10941 10969 (0.3)

Capital investments 8 654 6040 43.3

Freecash flow (137) 3900 (103.5)

KeyfinancialindicatorsexcludingVERPsandVSPs

Financialoverview

35Financialoverview

Creatingadiversifiedrevenuebase

19%

20%

9%30%

18%

4% VoiceusageandinterconnectionSubscriptions

CustomerpremisesequipmentData

Informationtechnology

Other

FY2017

22%

22%

9%

31%

12%4%

FY2016

36

NetrevenuemovementR’m

29521 31854

3124

1526

199(1449)

(1067)

FY2016Netrevenue Informationtechnology Mobile Other Costofsales Voiceandinterconnection FY2017Netrevenue

Solidgrowthinfuturerevenuestreams

Financialoverview

R2333m7.9%

1. ITbusinessrevenueofR767million(March2016:R314million)previouslyreportedasfixeddataisnowdisclosedasinformationtechnology.

1

37

635736 677527 707379

FY2015 FY2016 FY2017

DatalinesSubscribers

Financialoverview

Growthinpriorityareas

-

8129 39640

FY2015 FY2016 FY2017

4.4%

387.6%FibreSubscribers

38

3346 4721 6531

FY2015 FY2016 FY2017

Metro-EthernetSubscribers

Financialoverview

Growthinpriorityareas(continued)

44.6%

340225 471958 631569

FY2015 FY2016 FY2017

1330 1824 2638

FY2015 FY2016 FY2017

21700 3730785770

FY2015 FY2016 FY2017

129.9%

38.3%

33.8%

MobilebroadbandSubscribers‘000

BroadbandtrafficvolumesTerabytes

MobiledatatrafficvolumesTerabytes

39

Goodperformanceinnewgrowthareas

Financialoverview

Rm

4430

25283353 3139 3410

14450

7554

3498 3501 3119 3171

13553

Informationtechnology Mobileservicerevenue Nextgenerationandfibrebased

Otherfixeddata Legacydata Fixedvoiceandsubscriptions

6.9%

2016 2017

70.5%

1. ITbusinessrevenueofR767million(March2016:R314million)previouslyreportedasfixeddataisnowdisclosedasinformationtechnology.

1

7.0%0.6%~

38.4% 4.4%

Fixed data

1.1%~

1

40

NormalisedEBITDAmovementRm

EBITDA

Financialoverview

10969 10941

2333151

(1441)(547) (524)

FY2016EBITDA Netrevenue Other SG&A Otherincome Employeeexpenses FY2017EBITDA

1. Theincreaseinselling,generalandadministrativeexpensesislargelyattributabletotheinclusionofthefullyearexpenseofBCXaswellasincreasedoutsourcingcosts.

2. TheincreaseinemployeeexpensesislargelyattributabletotheinclusionofthefullyearexpenseofBCXwhichamountedtoanyearonyearincreaseofR1.9billion.

R28m0.3%

ExcludinggainsonsaleofassetsEBITDAincreased4.5%

1 2

41

FY2017 FY2016 %

Fibre1 2 392 1 310 82.6

Mobile 1 936 660 193.3

OSS/BSSprogramme 741 544 36.2

Network rehabilitation/sustainment 567 674 (15.9)

Serviceondemand 1 251 1 540 (18.8)

Corenetwork 962 273 252.4

Increasedcapitalexpenditureinpriorityareas

Financialoverview

1. Includesaccessandbackboneexpenditure Ourcapexisscalableandallocationdependantongrowth

42

FY2017 FY2016 %Cashsources

Opening cashbalance 2542 3 642 (30.2)

Cash flowfromoperatingactivities 5542 6 701 (17.3)

Significantcashapplications

Dividend paid (2171) (1 402) (54.9)

BCXacquisition - (2 654) -

VERPsandVSPspaid (629) (1688) 62.7

Cashpaidoncapitalexpenditure (8479) (5 891) (43.9)

Cashattheendoftheyear 1519 2542 (40.2)

Discretionaryinvestments 2514 3989 (37.0)

Strongcashposition– Platformtosupportgrowth

Financialoverview

43

FY2017guidance

FY2017Actual

FY2018guidance

Netrevenue Modest growth 7.9% N/A

Operatingrevenue Mid-singledigits

EBITDA margin 23%- 25% 26.5%* 23%- 25%

Capextorevenue 15% - 18% 21.1% 17%- 20%

NetdebttoEBITDA ≤1 0.5 ≤1

MobileEBITDAbreakeven Achieve R660 million N/A

Guidance

Financialoverview

ü

ü

ü

ü

Annualdividendincreased56.3%to422.0centspershare

ü

*IncludesVERPandVSPcosts

44

Conclusion

Financialoverview

> Secondyearofsolidfinancialresults

> Shareholdershandsomelyrewarded=Totalshareholderreturn=38%

> Strongbalancesheet• 43.3%growthincapital

expendituretoR8 654million

• R2.1billiondividendpayment

• R629millionVSPandVERPpayments

> Enteringgrowthphaseofourtransformation

> Challengingenvironment• Lowgrowth• Highunemployment• Effectofdowngradeand

resultantimpactonkeyeconomicaldrivers

> Weareprepared• Measuredandfocused

capitalexpenditureagoodplatformforgrowth

• Wehavedevelopedanexecutionandinnovationmindset andculture.

• Strongbalancesheet

Outlook

46

An‘extrememakeover’tothriveinthechanginglandscape

Outlook

> Shiftingconsumerdemographics

> Increasinglycompetitiveindustry

> Deviceproliferationincreasingdataconsumption

> Newtechnologiesproviding“moreforless”toendusers

> ‘Nextfrontier’opportunitiesandtheriseofplatforms

> RegulatoryBest-in-Class

CorporateCentre

> MobileAdExchange

> ExpandingOmni-Channelofferings

> EstablishE-Commercemarketplace

> ExpandpartnershiptoOTT

> CloudComputing

> UnifiedCommunicationsandCollaboration

> ConvergedConnectivity

> Bigdataanalytics

> InternetofThings

> Security

> Mobilegrowththroughdataledpropositions

> Highspeedbroadbandgrowth- LTE&Fibre

> ContentandVAS

> Modernisethenetwork

> Commercialisethenetwork

> Servicedeliverytransformation

> Unlockvaluethroughcommercialisingpropertyportfolio

> Extractvaluefromexcessbuildingcapacity

> Enablesmartbuildingsolutions

> Diversifyincomestreams

…Wearerespondingwithan‘extrememakeover’Inachanginglandscape…

Strategy&BusinessPerformance

Risk,Control&Compliance

TalentManagement

CorporateFinancialEngineering

Best-in-ClassCorporateCentre

47

WhoisGyro

PropertyDevelopment> Optimisetheutilisationofthe

existingpropertyportfolio

> Leadtheendtoenddevelopmentofexistingproperties

Mast&Towers> Improvetenancyof

Masts&Towersassetbase

> EfficientlymaintainTelkomMasts&Towersportfolio

> EfficientmanagementofnewbuildMasts&Towers

PropertyServicesManagement> Continuouslyimproveexisting

TelkomCRES*

> Providepropertymanagementservicesto3rdparties

> ImprovedcostefficiencyandreducedcarbonfootprintofenergysupplyinTelkomownedproperties

Outlook

*Corporaterealestateservices

Thank youQuestions