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27 March 2009

100% Approval by Telkom shareholders for Vodacom transaction

Telkom's strategic focus on growth in the area of mobile capability received a major boost at the Company's Special General Meeting held at Gallagher Estate yesterday, when Telkom shareholders gave a 100% nod of approval for the sale of 15% of Telkom's stake in Vodacom to the UK's Vodafone Group.

The transaction, valued at R22.5 billion, will result in Telkom listing its remaining 35% in Vodacom and distributing the shares to Telkom shareholders by way of an unbundling.

Commenting on the positive shareholder response, Telkom CEO, Reuben September, said that "a new era has dawned for the Telkom Group".

"We have identified a need to improve our competitive ability in the mobile space, but have been prohibited from doing so by the shareholders' agreement which had placed severe restrictions on us," said September.

The shareholders' agreement had prevented Telkom from offering mobile voice services in South Africa and expanding into Africa, south of the equator.

"The rapid pace of change in communications technology meant that the inability to deliver mobile and converged services had blunted Telkom's competitiveness. Yesterday's shareholder's approval means that we are now truly free to compete so that we are able to maintain our leadership position in South Africa while building a strong footprint on the continent," stated September.

"Going forward, we will act swiftly and decisively to execute our strategies in the areas of mobile services, integrated solutions and the provision of converged fixed-line, mobile and data solutions," he added.

September emphasised that the Telkom shareholder's vote also freed the Company from the geographic limitations previously imposed by the shareholder's agreement.

He explained that no one stands to benefit more than Telkom's customers. "With its own mobile operations, Telkom will have the ability to provide converged solutions to both residential and corporate customers and to deploy wireless access solutions, even in under-serviced areas. We will also be able to offer fully converged services (fixed, mobile and data) through bundles which will offer significant value to customers as well as leverage our employee and network strength."

"In essence," concluded September, "with the proceeds from the sale of our Vodacom stake, Telkom will be able to speed up investments to execute its strategy, not only to create shareholder value but to allow it to become stronger, more competitive and more technologically enhanced within an ICT landscape that's become increasingly competitive. We will therefore act prudently in our approach to capital investments with our priority remaining the maximisation of our value from existing investments."

For further enquiries, please contact:

Pynee Chetty

Senior Specialist: Media Relations

Group Communication

Tel:+27 12 642 1716

Mobile: +27 81 389 7874

Email: chettpr2@telkom.co.za

 OR

Leigh-Ann Francis

Specialist: Media Relations

Group Communication

Tel: +27 12 642 1728

Mobile: +27 81 391 4780

Email: francilm@telkom.co.za

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ABOUT TELKOM:

Telkom is a leading communications services provider in South Africa. We had consolidated operating revenue of R16.8 billion and normalised profit after tax of R1, 683 million for the period ended 30 September 2015. Total assets amounted to R41.9 billion and equity attributable to the owners of Telkom to R23.5 billion as of 30 September 2015. The group generated normalised free cash flow of R1.4 billion for the period ended 30 September 2015.

As of 30 September 2015, we had approximately 3.3 million telephone access lines in service and 1,030,441 ports connected via MSAN access. We offer business, residential and payphone customers a wide range of services and products, including:

  • fixed-line retail voice services using PSTN (Public Switched Telephone Network) lines, including ISDN (Integrated Services Digital Network) lines, and the sale of subscription based value-added voice services and calling plans;
  • fixed-line customer premises equipment rental and sales services both voice and data needs and these include PABX, Computers, Routers, Modems, Telephone handsets and other ancillary equipment;
  • interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;
  • fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL (Asymmetrical Digital Subscriber Line) services, packet-based services, managed data networking services and internet access and related information technology services;
  • Data Centre Operations includes e-commerce, application service provider, hosting, data storage, e-mail and security services;
  • W-CDMA (Wideband Code Division Multiple Access), a 3G next generation network, including fixed voice services, data services and nomadic voice services;
  • mobile communication services, including voice services, data services and handset sales through our mobile navbar-brand called Telkom Mobile;
  •  information and communication services including cloud services, infrastructure services, workspace services, global service integration management and hardware and network equipment sales locally, in seven African countries, the UK and Dubai through Business Connexion Group; and
  • other services including directory services, through Trudon (Pty) Ltd, wireless data services, through Swiftnet (Pty) Ltd.

Convergence is one of our key strategic initiatives in building a sustainable future for Telkom.  We will lead the provision of converged services in South Africa in support of our mission statement: Seamlessly connecting people to a better life.