Telkom SOC : Group Annual Results for the year ended March 31, 2017

Telkom SA SOC Limited

(Registration number 1991/005476/30) JSE share code: TKG

ISIN: ZAE000044897

GROUP PROVISIONAL ANNUAL RESULTS

for the year ended 31 March 2017

Special note regarding forward-looking statements

Many 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 statements.

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. 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. Factors that could cause our actual results or outcomes to differ materially from 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 www.telkom.co.za/ir.

We 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 expectations.

The information contained in this document is also available on Telkom's investor relations website www.telkom.co.za/ir.

Telkom SA SOC Limited is listed on the JSE Limited. Information contained on financial market platforms 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 information.

Board approval

The condensed consolidated provisional annual financial statements were authorised for issue by the board of directors of Telkom (board) on 1 June 2017.

Auditors' report

This summarised report is extracted from audited information, but is not itself audited. The annual financial statements were jointly audited by Ernst & Young Inc and Nkonki 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 statements.

Preparer and supervisor of condensed consolidated provisional annual financial statements.

These prepared condensed consolidated provisional annual financial statements were supervised by the group chief financial officer, DJ Fredericks, CA(SA), Bcompt(Hons), ACMA(UK), Honours in Business Management.

MESSAGE FROM GROUP CEO: SIPHO MASEKO

Overview of our business

We made significant strides in a difficult operating environment which was characterised by regulatory uncertainty, increased competition and a weak economic environment.

I am pleased with our solid performance, which was boosted by the integration of BCX and the robust performance of our Mobile business. We accelerated our capital investment to ensure future growth, focusing on fibre roll-out and our Mobile business. We have now created the implementation capability to support our strategic growth areas.

Openserve continues to lead in the fibre market with more than 2.2 million premises passed with fibre. This is underpinned by increased investment, improved operational efficiencies in network roll-out and more streamlined processes. We will continue to focus on upgrading the legacy network to state of

the art new technologies.

The Mobile business continued to be the star performer of the group, and delivered service revenue growth of 38.4 percent and EBITDA of R660 million after four years of recording EBITDA losses. This was a result of an expansion in our network, extension of our distribution channels and the launch of innovative products.

BCX remains a key growth platform for the group. The integration of our Enterprise business with BCX is complete and a new brand, "BCX", was launched. We have a singular sales team and a unified go-to-market strategy. We began to win new customers in the public, retail, banking and financial services sectors against credible competitors as we leveraged off our ability to offer end-to-end solutions. BCX consolidated the basic cloud services and created a single platform to deliver cloud services. BCX strengthened its data centre capabilities to include Oracle and launched Cisco hosted collaboration solutions and SAP HANA Enterprise cloud services.

Customer experience remains important to us and is an ongoing journey. We continued to focus on our systems and processes to improve customer experience. Our improved IT systems contributed in enhancing customer experience by reducing systems response time, increasing self service via mobile apps, and reducing the multiple steps in the approval process for customers. The process redesign enabled us to improve our assurance, fulfilling and billing