Telkom preliminary audited Annual Results

Contingencies

Third parties
These amounts represent sundry disputes against third parties that are not individually significant and that the company does not envisage settling. Guarantee of employee housing loans
Telkom guarantees to settle a certain portion of employees housing loans. The amount guaranteed differs depending on factors such as employment period and salary rates. When an employee leaves the employment of Telkom, any housing debt guaranteed by the company is settled before any payment can be made over to the employee.

The maximum amount of the guarantee in the event of default is disclosed above.

Supplier dispute
Expenditure of R594 million was incurred up to March 31, 2002 for the development and the installation of an integrated end-to-end customer assurance and activation system to be supplied by Telcordia.In the 2001 financial year, the agreement with Telcordia was terminated and the company wrote-off R119 million of this investment in the fixed-line business. Following an assessment of the viability of the assets relating to the Telcordia initiative, the balance of the assets was written-off in the 2002 financial year. During March 2001, the dispute was taken to arbitration, where Telcordia was seeking approximately US$130 million plus interest at a rate of 15,5% per year for money outstanding and damages. In September 2002, a partial ruling was issued by the arbitrator in favour of Telcordia. Telkom has since brought an application to the High Court in August 2003. Telcordia also petitioned the United States District Court to confirm the parital finding, which petition Telkom has resisted. A hearing date for this petition has been scheduled for June 25, 2003. The arbitration proceedings and the amounts of Telkoms liability are not expected to be finalised until late 2003 or early 2004. Telkoms provision of US$44 million for its estimate of probable liabilities, including interest, was recognized as at March 31, 2003.

Site restoration costs
The group has a constructive, but not legal, obligation to incur site restoration costs. No sites have been identified that would require material restoration to be performed in the foreseeable future.

Vodacom Congo (R.D.C.) S.P.R.L.
The group has a 51% equity interest through Vodacom in Vodacom Congo (R.D.C.) S.P.R.L. (Vodacom Congo), which commenced business on December 11, 2001. Vodacom, in terms of the shareholders agreement, is ultimately responsible for the funding of the operations of Vodacom Congo for the first three years. The 49% portion attributable to the joint venture partner of the liabilities and losses were as follows:

Accordingly, the group exposure is 50% of the above amounts.

Capital commitments

These commitments are expected to be financed mainly from internally generated cash and other borrowings.

Related party transactions With joint venture (Vodacom - 50% share)

March 31, 2003
Mr Eric Molobi resigned as a director of Telkom on July 31, 2002 and was no longer the Chairman of the board of Directors at March 31, 2003.

Ms Nomazizi Mtshotshisa, Chairman of the board of directors at March 31, 2003, is a director of Beslyn Investments, a company that has a contract to supply Telkom with protective clothing.

Mr Eric Molobi, the Chairman of the board of directors on March 30, 2002, had the following interests as Chief Executive Officer of Kagiso Trust Investments (Proprietary) Limited:

• A 25% holding by Kagiso Trust Investments (Proprietary) Limited in BUA Telecoms, a company that is a vendor to the group.
• A 25% holding by Kagiso Trust Investments (Proprietary) Limited in debis Fleet Management (Proprietary) Limited, a fleet management company to which the group has outsourced its vehicle fleet.
• A 50,1% holding by Kagiso Trust Investments (Proprietary) Limited in Kagiso Treasury Services (Proprietary) Limited who manages Telkoms treasury function.

Subsequent events
On September 1, 2002, Telkom issued an information memorandum inviting potential investors to provide preliminary submissions to purchase a substantial portion of the fixed-line property portfolio and lease that property back to us. On May 23, 2003, Telkom announced that it had terminated its information memorandum relating to the proposed sale and lease-back transaction. The directors are not aware of any other matter or circumstance since the financial year-end, not otherwise dealt with in the financial statements, which significantly affects the financial position of the group and the results of operation.

Negative working capital
For the year ended March 31, 2003, and 2002, the groups current liabilities are greater than the current assets. Current liabilities will be financed from operating cash flows, new borrowings and existing credit facilities.

Comparative
Certain comparatives have been reclassified in accordance with current period classification and presentation.

Special note regarding forward-looking statements
All statements contained herein, as well as oral statements that may be made by Telkom or by officers, directors or employees acting on behalf of the Telkom group, that are not statements of historical fact constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, specifically Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Among the factors that could cause our actual results or outcomes to differ materially from our expectations are those risks identified under the caption Risk Factors contained in the prospectus relating to Telkoms initial public offering filed with the U.S. Securities Exchange Commission and available on Telkoms website at www.telkom.co.za, including, but not limited to, increased competition in the South African fixed-line and mobile communications markets; developments in the regulatory environment; Telkoms ability to reduce expenditure; the outcome of arbitration or litigation proceedings with Telcordia Technologies Incorporated; general economic, political, social and legal conditions in South Africa and in other countries where Vodacom invests; fluctuations in the value of the Rand; and other matters not yet known to us or not currently considered material by us. You should not place undue reliance on these forward-looking statements. All written and oral 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 press release, either to conform them to actual results or to changes in our expectations.

Johanesburg
23 June 2003
Date: 23/06/2003 08:00:34 AM Produced by the JSE SENS Department

23/06/2003 Source: JSE NEWS SERVICE