Johannesburg, South Africa - November 23, 2009, Telkom SA Limited (JSE: TKG) today announced Group interim results for the six months ended September 30, 2009.

The reported results for the period are distorted by the accounting for the sale and unbundling of our 50% stake in Vodacom and related transactions, the sale of Telkom Media and the impairment of the goodwill of Multi-Links. Unless otherwise indicated, the discussion below is based on adjusted results, excluding the items above, and is based on continuing operations as reconciled in the reconciliation of adjusted group statement of comprehensive income.

Segment structure

The Telkom South Africa segment provides fixed-line access and voice services, fixed-mobile and data communications services through Telkom South Africa. The Multi-Links segment provides fixed, mobile, data and international communications services in Nigeria through our Multi-Links subsidiary. The other segment is split geographically between international and South Africa. Other international category provides internet services outside South Africa, through our Africa Online and MWEB Africa subsidiaries and management services through our Telkom Management Services Company. The Other South African category includes the Trudon Group, formerly known as TDS Directory Operations, and the Group's corporate centre.

Our 50% share of Vodacom's results, Telkom Media and Swiftnet's results are disclosed as discontinued operations in terms of IFRS5 in the Telkom Group's consolidated financial statements.

Group financial salient features for the six months ended September 30, 2009

• Vodacom transaction accounts for profit of R40.4 billion.
• Impairment of Multi-Links goodwill of R2,148 million.
• Operating revenue up 4.0% to R18.7 billion.
• Headline earnings per share from continuing operations decreased by 37.9% to 242.2 cents.
• Basic earnings per share decreased 141.2% to a loss of 150.2 cents per share.
• Group EBITDA margin decreased to 27.3% from 32.3%.
• Total dividends paid out during the reporting period of R11.2 billion.
• Net debt reduced by R8.7 billion decreasing annualised net debt to EBITDA from 1.4 times to 0.8 times.
• Group restructuring into distinct profit centres 85% complete.
• New data centre operation business unit launched - branded Cybernest.
• 51.1% increase in Do broadband subscribers.

Group operating revenue from continuing operations increased 4.0% to R18.7 billion, while EBITDA decreased 12.2% to R5.1 billion. The Group EBITDA margin decreased to 27.3% as at September 30, 2009, compared to 32.3% at September 30, 2008, mainly due to higher operating expenditure of Telkom South Africa which decreased the Telkom South Africa EBITDA margin to 35.2% as at September 30, 2009 (September 30, 2008: 39.9%).

Headline earnings from continuing operations decreased by 37.9% to 242.2 cents per share as a result of increased operating expenditure in Telkom South Africa and the corporate centre, partially offset by higher revenue. Basic earnings per share decreased 141.2% at a loss of 150.2 cents per share for the six months ended September 30, 2009, compared to earnings of 364.5 cents per share at September 30, 2008. The reduced basic earnings per share can mainly be attributed to the impairment of the goodwill of Multi-Links.

Annualised return on assets before taxation decreased from 17.4% to 12.9% due to the lower operating profit and a lower asset base excluding cash balances.

Statement by Reuben September, Chief Executive Officer:

"The impact of competition and the weaker economic environment are evident in the Telkom Group's financial results for the six months ended September 30, 2009. The negative effect of growing competition and fixed to mobile substitution is starkly highlighted in the 9.0% decrease in Telkom South Africa's traffic revenue. This continuing trend justifies the imperative for our Group to enter the mobile market and particularly the mobile data market. Our continued efforts to move traditional traffic revenues into annuity type products and data products exacerbates the decline. In addition, data revenue posted more modest revenue growth of 8.7% as a result of increased competition and pricing pressures in this segment of our business. Our group operating expenditure grew 12.0% reflecting higher than inflationary increases as a result of higher payments to international operators, salary increases, provisioning for slow moving inventory and higher operating leases in Multi-Links. The restructuring of Telkom and optimisation of its balance sheet to create leaner, focused business units was expected to incur restructuring costs in the short term. On the positive side, the Group exhibited strong management of the capital expenditure programme and an extremely healthy net debt position with annualised net debt to EBITDA of 0.8 times.

Our strategy seeking to re-position the Telkom Group is imperative given the tough operating environment. Similar to the strategies of other leading operators in the world, we are focusing on growing other revenue streams to compensate for the decline in fixed voice revenues. We are expanding into other geographic markets and into other domestic markets, for example our data centre operations and mobile strategy. We are improving our execution in current growth markets.

In addition, we are strongly focused on reducing our costs in order to protect our profits and we remain committed to a 10% reduction in operating expenses by the 2011/12 financial year. While control of discretionary expenditure is showing immediate reduction, other areas under focus require careful planning and execution to ensure long term success. These areas include supplier negotiations, improved inventory management, IT costs, maintenance costs and synergies through mobile capabilities and data centre operations.

Telkom Renaissance, dealing with the remodeling, reorganisation, revitalisation and re-engineering of Telkom is gaining traction and we have achieved important milestones. The reorganisation of Telkom South Africa into new business units is 85% complete. Specific work streams are focused on business process engineering and cost efficiencies. The business plans for both the mobile strategy and data centre operations have been approved by the board of directors after extensive market research. Multi-Links remains a major concern but is beginning to show slight improvements to its operating performance and the integration of Africa Online and MWEB Africa is proceeding well.

Despite the difficulties, the commitment of my team to positioning Telkom to aggressively compete in the South African and African markets is gaining momentum. Our data centre operation, branded Cybernest, was launched on November 19, 2009. This initiative is further evidence of our drive to diversify and grow our revenue streams and take costs out of our current operations. Free cash flow generation is critical to the valuation of Telkom and everything we are doing is aimed at this target. It is a long term process requiring harsh reviews of our capital expenditure programme and business processes.

I am confident that the strength inherent in the fixed-line network and the business leadership and operations skills of our employees will allow us to offer our markets simple, quality, cost effective services that will be competitive in our markets."