Telkom SA SOC Limited Group Annual Results

1 Group Annual ResultsFor the year ended 31 March2016 Telkom SA SOC LimitedSOUTHAFRICANSSEAMLESSLY CONNECTINGTO A BETTER LIFESOUTHAFRICANSTO A BETTER LIFESEAMLESSLY CONNECTINGC ontentsOverviewOperational data Financial performanceCondensed consolidatedprovisional financial statementsToday s presentation010203 04 0508343650 98 The information contained in this document is also available on Telkom s investor relations website SA SOC Ltd(Registration number 1991/005476/30)JSE share code: TKG ISIN: ZAE000044897 Group secretaryE MotlhammeTransfer secretariesComputershare Investor Services Proprietary LimitedPO Box 61051 Marshalltown, 2107 SponsorThe Standard Bank of South Africa LimitedStandard Bank Centre30 Baker Street, Rosebank, 2196 DirectorsJA Mabuza (Chairman), SN Maseko ( Group chief executive officer), DJ Fredericks (Chief financial officer)

2 , S Botha, G Dempster, T Dingaan, N Kapila, I Kgaboesele, K Kweyama, K Mzondeki, N Ntshingila, F Petersen-Lurie, R Tomlinson, LL Von Zeuner54 Group Annual resultsfor the year ended 31 March 2016 Telkom SA SOC Limited (Registration number 1991/005476/30)JSE share code: TKG ISIN: ZAE000044897 All statements, other than statements of historical facts, including, among others, statements regarding our convergence and other strategies, future financial position and plans, objectives, capital expenditures, projected costs and anticipated cost savings and financing plans, as well as projected levels of growth in the communications market, are forward-looking statements.

3 Forward-looking statements can generally be identified by the use of terminology such as may , will , should , expect , envisage , intend , plan , project , estimate , anticipate , believe , hope , can , is designed to or similar phrases, although the absence of such words does not necessarily mean that a statement is not forward looking. These forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause our actual Results and outcomes to be materially different from historical Results or from any future Results expressed or implied by such forward-looking statements.

4 Factors that could cause our actual Results or outcomes to differ materially from our expectations include but are not Limited to those risks identified in Telkom s most recent Annual report, which is available on Telkom s website at caution you not to place undue reliance on these forward-looking statements. All written and verbal forward-looking statements attributable to us, or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Moreover, unless we are required by law to update these statements, we will not necessarily update any of these statements after the date of this document, so that they conform either to the actual Results or to changes in our information contained in this document is also available on Telkom s investor relations website SA SOC Limited is listed on the JSE Limited .

5 Information may be accessed on Reuters under the symbol and on Bloomberg under the symbol Information contained on Reuters and Bloomberg is provided by a third party and is not incorporated by reference herein. Telkom has not approved or verified such information and does not accept any liability for the accuracy of such note regarding forward-looking of the statements included in this document, as well as verbal statements that may be made by us or by officers, directors or employees acting on our behalf, constitute or are based on forward-looking commentary, messaging and indicators in this report for the current year exclude voluntary early retirement and severance package costs of R2 193 million and the related tax impact of R517 million.

6 The comparative numbers exclude a voluntary early retirement and severance package cost of R591 million and the related tax impact of R165 million, as well as the tax benefit on the post-retirement medical aid payment of R546 million. 4 Auditors reportThis summarised report is extracted from audited information, but is not itself audited. The Annual financial statements were audited by Ernst & Young Inc. who expressed an unmodified opinion thereon. The audited Annual financial statements and the auditors report thereon are available for inspection at the Company s registered office. The directors take full responsibility for the preparation of the preliminary, provisional or abridged report and the financial information has been correctly extracted from the underlying Annual financial approvalThe condensed consolidated provisional Annual financial statements were authorised for issue by the board of directors of Telkom (Board) on 3 June 2016.

7 Preparer and supervisor of condensed consolidated provisional Annual financial statementsThese condensed consolidated provisional Annual financial statements were prepared by Mrs Gladys Machinjike (Executive Financial Accounting and Reporting) and supervised by Mr Robin Coode ( Group Executive Accounting).67 Improvements Active customer growth of with improved blended ARPU of R89 81 503 homes passed with fibre LTE integrated sites up to 1 448 Group salient features for the year ended 31 March highlightsAchievements Operating revenue up to billion EBITDA up * with EBITDA margin of * BEPS up * to cents HEPS up * to cents Capex up with capex to revenue of Dividend declared up to 270 cents per share * Excluding voluntary early retirement and severance package cost of R2 193 million and the related tax

8 Impact of R517 million. The comparative number also excludes voluntary early retirement and severance package cost of R591 million and the related tax impact of R165 million, as well as the tax benefit on the post-retirement medical aid payment of R546 million.* Excluding voluntary early retirement and severance package cost of R2 193 million and the related tax impact of R517 million. The comparative number also excludes voluntary early retirement and severance package cost of R591 million and the related tax impact of R165 Voice and subscription revenue down Leased line revenue down offset by higher capacity from Mega lines and Metro- Ethernet Increased competition Group net revenue up Group data revenue up Mobile service revenue up reduction in Mobile EBITDA loss to R43 million Telkom company employee expense down * Profit after tax up *EBITDAR million 40 00030 00020 00010 0000 Operating revenue10 32532 7609

9 20151050 Return on invested capital million 40 00030 00020 00010 0000 Telkom company operating 88023 071R million4 0003 0002 0001 0000 Free cash flow3 9003 898 Thousands3 0002 0001 0005000 Revenue generating mobile 7072 187R million8006004002000 Mobile EBITDA service and subscriptions revenueR million4 0003 0002 0001 8152 528 Keyindicators8901 OverviewGroup Annual Results 2016 Johannesburg, South Africa 6 June 2016, Telkom SA SOC Limited (JSE: TKG) today announced Group Annual Results for the year ended 31 March execution of our turnaround strategy; the business is now ready for growth.

10 Message from Group CEO: Sipho MasekoThis financial year marks the end of the turnaround phase of our business. I am very pleased with what we have achieved despite the challenges we encountered over the period. Our solid performance demonstrates the strong execution capability we have developed over our turnaround journey. We have executed well on the targets we set for ourselves three years ago which included: de-risking the mobile business, managing traditional revenue decline, focusing on operational and capital efficiencies and improving customer experience. The mobile business has been a star performer over this phase reducing its EBITDA loss from billion three years ago to R43 million this year.