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Moody's Upgrades Telkom SA Limited's Rating

Moody's yesterday upgraded Telkom's senior unsecured long term foreign currency debt rating to Baa1 from Baa3, with a stable outlook. The upgrade reflects Telkom's continuing operational progress with further scope for improvement. Moody's believes that Telkom will continue to develop its operational cash flow in the medium term.

Moody's does not expect the soon-to-be-licensed second network operator to have an initial major competitive impact, although it may reduce Telkom's market share and operating margins, particularly in segments such business customers and data services. Moody's however believes a combination of efficiency and service improvements strongly positions Telkom to meet new competition.

Moody's does not factor any South African Government's support into Telkom's rating.

Ratings affected by the review are EUR 500 million, 7.125% Eurobonds due on 12 April 2005.

21 July 2004
Johannesburg