BOTSWANA TELECOMMUNICATIONS …

1 BOTSWANA TELECOMMUNICATIONSCORPORATION ANNUAL report 2009timelinesbOTswANA TELECOMMUNICATIONS cORPORATiON1999 BTC Group records an all time high profit of Pula million. BTC Group enters into interconnect and backhaul network agreement with mobile operators. Customer connections increased to 144 195 resolution of billing system problems, net profit declines to Pula million. Wireless technology introduced in the local loop. BTC Group realises that it has lost significant market share to mobile operators. Introduces pre-paid technology introduced. Measures to improve technology and quality introduced2005 BTC adopts Intelligent Network Platforms strategy and refocuses its strategy based on broadband data. Broad band is rolled out with ADSL in Gaborone.

2 Profitability returns to million. 2007 BTC Group awarded a Public TELECOMMUNICATIONS Operator licence. 2000 BTC Group looses market share. The new billing system creates doubts. BTC s image slide. Mobile operators sky rocket with their of Ireland is invited to steady BTC Group. Restructuring commences with 600 staff retrenched, staff numbers dropping to less than 1,000. Government engages BTC Group for its Rural Development Programme (Nteletsa Project). BTC Group records an all time high loss of Pula 39 million2004 Profitability returns. Total restructuring cost Pula million. International connectivity established through SAT 3 through South Africa. BTC Group endorses Government of BOTSWANA s ICT plan Maitlamo liberalisation announcement by the minister responsible for Science, Communication and Group launches its mobile service under the brand name be Mobile 2009 Aggressive rollout of the beMOBILE Network.

3 Successful launch of converged product offering and expansion of broadband to entire BOTSWANA contentsCorporate Profile 1 Organisational Structure 2 Vision and Mission 3 Board of Directors 4 Executive Management 6 Chairman s report 8 Chief Executive Officer s report 1210 Year Review 16 Business Review 18 Corporate Governance 30 Enterprise Risk Management 50 Brand Management 56 Regulatory report 60 Human Resources Review 64 Sustainability Reporting 68 Corporate Social Responsibility 74 Environmental Relations and Issues 76 Economic Performance 78 Customer Relations 80 Community Relations 82 Employee Relations 84 Supplier Relations 88 Financial Review 102 Caution Regarding ForwardLooking Statements 104 Financial Review andManagement Discussion 106 report of The Finance andAudit Committee 131 Annual Financial Statements 134botswana TELECOMMUNICATIONS corporationabout this reportbotswana TELECOMMUNICATIONS corporationbotswana TELECOMMUNICATIONS corporationgroup highlightsgroup highlightsgroup financialsfor the year ended 31 March 2009 (Pula millions) Group EBIDTA up Pula million to Pula million Profit for the year Pula millionnet incomeoperating revenuesale of Goods and services ebidta - net operating cash Flowearnings before interest Depreciation and taxationtotal assets Recommending dividend of thebe per share up %.

4 Robust balance sheet at Pula billion We are confident about our prospects for 2009/10 2008/09 2007/08 change main driversSales + New sources such as mobile, data, networks increasing together with stabilisation of traditional fixed and voice lines. EBIDTA + An increasingly efficient business with margin progressions. Gross margin at same level as at percentage points. Operating costs as a percentage of sales down percentage points to EBIDTA margin up percentage points. Depreciation and amortisation - Managed capital expenditure Finance income - Lower cash balances Finance expense - Lower loans Net profit / income + Reduced restructuring costsdumela!

5 Once againBTC today is a company confidently moving forward, thanks to the essential changes we made since 2006. We have now become a leaner company striving to be more responsive to our country s and customer needs. We are more than ever before determined to realise our goal: to be the communications company of this annual reportIt is that time of the year again when we report on our performance for the financial year. This is our twenty-ninth annual report since our humble beginning! In this report , we invite you to share our successes, failures, difficulties, achievements and our dreams for the future, the way we see it. Despite the difficult trading conditions in BOTSWANA resulting from the world economic down turn, we are pleased to report yet another milestone performance for the year 2008 are some of the highlights for the year.

6 Successful launch of bemoBIlE, our mobile service coupled with one tariff structure Expansion of broadband to entire BOTSWANA launch of Nteletsa II Sustained financial performance16014012010080604020010008006 0040020003002502001501005001700165016001 5501500145014001350 Pula millionPula millionPula millionPula million05 Year ended 31 marchYear ended 31 marchYear ended 31 marchYear ended 31 march05050508080808070707070606060609090 909 Other sales & serviceTelephone - InternationalData & private circuitsCustomer premises equipmentTelephone - NationalLocal & access servicesstrategic initiativesand business targetsbotswana TELECOMMUNICATIONS corporationarea strategic initiatives achievements in 2008/09 business target For 2009 / 10 Services Increase revenue streams by Enhanced

7 Broadband services; Entry into mobile market and new Strengthen our support for BTC outlets; Set up customer promoting customer retention tariff plans; Free weekend calling for customers; Reduced rate centres where they can get assistance; Offer batteries for high through flat rate schemes; for, between fixed and fixed, and fixed and mobile. usage customers; Focus on customer lifestyle and establish Improve bundled packages; long-term value plays; Customer satisfaction surveys. Special billing plans; Enhanced handsets subsidies. Network Continue building a superior Expanded metropolitan network; Currently working on Nteletsa II Continue with network availability and quality; Better network network to handle expanded data in northern BOTSWANA ; Improved network resilience and reliability management; Developed managed data services.

8 Handling ability. through rigourous testing ( % availability). Tariff New billing plans (flat structures Introduced bundled tariff packages such as dual play By offering further discount services foster long-term for longer-term commitment); (voice and data) triple play (voice, data and mobility) etc. relationship with our customers; Improved handsets which Bundled tariff plans; Loyalty Upgraded internet packages. can handle multiple sims. benefits; Handset subsidisation. New Business Continuously explore new traffic Mobile services; Additional broadband customers. Mobile services; Additional broadband customers. insensitive growth areas with other service providers such as banks, shopping outlets. operating costs Reduce technology and handset Further headcount reduction; Rationalised expenditure; Opex to revenue down - Expenditure to match businesscontainment costs.

9 Shared services. outcomes and strategies with further reductions in real terms; Further savings in opex through better process and accountability; Shared Continue to build superior Rationalised capital expenditure and generate cash for investment. Capital expenditure will continue to maintain quality ofexpenditure network to achieve service networks. differentiation and competitive advantage. Transformation Continue business transformation. Business demonstrated resilience; Hold voice revenue stream. One BTC HistOryBTC Group is a public corporation constituted under the BTC Act 1980 and later amended in 1996. It s mandate is to provide national and international telephony on sound commercial its humble beginning in 1980 with about 6,500 access lines provided mostly by electro mechanical switches linked by analogue radio microwave systems, today it boasts of more than 144,000 access lines all connected by digital switches with thousands of kilometers of fibre optic and digital microwave technology.

10 BTC Group provides services nationally. It has two regional offices, four districts offices and a number of customer care centres. It also publishes the BOTSWANA Telephone Directory and provides a countrywide directory assistance Group is run by a Board, appointed in terms of the BTC Act, supported by an Executive Management Committee. BTC Group is known for its corporate governance practices and is in the forefront of fair corporate reporting in BusinessBTC Group s core business is voice and data services through a broad spectrum of modern network platforms. Currently BTC Group is the only fixed line operator in BOTSWANA . BTC Group provides both national and international voice telephony both fixed line and mobile, toll free services, public payphones, internet wholesale access, data services including leased circuits, private wires, very small aperture terminals (VSATs), managed networks and switched data services, customer equipment etc.