Financial Results

Operational Overview

Voice revenue

Voice revenues declined 5.4% to R8,266 million as a result of lower minutes of use due to mobile substitution, migration of customers to calling plans and, to a lesser extent, lower tariffs. Most categories of voice revenue declined and we expect traditional voice revenue to continue declining.

Interconnection revenue

Interconnection revenue increased 1.1% to R843 million reflecting an increase in international interconnection tariffs. There is a plethora of capacity in the international connectivity market and prices are expected to continue declining.

Broadband and data revenue

Total data revenue increased 3.0% to R5,210 million as a result of higher data sales, which were partly offset by lower margins.

ADSL subscribers increased 5.8% to 841,831 when compared to the 30 September 2011 reporting period. We are enabling our target offering through high speeds and caps which include consistently greater value for the same price and an uncapped offerings.

We have simplified and streamline our product offerings and communication. Additionally we offered the first converged products to the market during July. We have taken steps to increase our retail footprint and to improve our billing systems.

Operating Expenses

Operating expenditure increased 1.6% to R15,630 million. This was largely as a result of the provision for the penalty handed down by the Competition Tribunal and the average annual salary increases of 6.5%. This was partially offset by the R445 million goodwill impairment of iWayAfrica included in the comparative period and a decrease in payments to other operators due to the decrease in mobile termination rates.