Telkom SA Limited has filed its September 2005 tariff adjustments with the Independent
Communications Authority of South Africa (ICASA), in accordance with the Telecommunications Act,
103 of 1996, and the Price Control regulation. The Price Control regulation imposes a price cap
formula on a basket of specified services, including installations; prepaid and postpaid line rental;
local, long distance and international calls; fixed-to-mobile calls; public payphone calls; ISDN services;
the Diginet product; ADSL products and services and the Megaline product.
Currently, the overall tariffs for all services in the basket may not be increased by more than 3.5% below inflation in South Africa, based on the consumer price index (CPI) and measured using revenue for the services in the basket at constant volumes for the prior year. In addition, the price of any individual product or service included in the basket may not be increased by more than 5% above inflation in South Africa in any year. Inflation is based on the year on year movement in CPI measured for April. CPI was 3.4% for April 2005.
The Price Control regulation also makes provision for the carry over of allowable rate benefits that were not used in the prior filing, in terms of the general Price Control formula, to be claimable in the next filing. In the January 2005 annual tariff increases Telkom did not utilise the full allowable rate benefits. The amount carried over to the September 2005 tariff increases has a 0.2% impact on the allowable increase in tariffs.
Based on CPI and the carry over allowance from the prior year, Telkom's allowable tariff adjustment for the regulated basket of services is an increase in revenue of 0.1%. However, the significant price reductions in certain services will result in an overall price decrease of 3%, if approved by ICASA.
The price adjustments for ADSL and international private leased circuits will be effective from August 1, 2005. All other price adjustments proposed will be effective September 1, 2005, if approved by ICASA.
Key tariff changes
The following tables set forth subscription and connection tariffs as of September 1, 2005 and January 1, 2005. Residential and business installation and monthly rental tariffs for PSTN postpaid and prepaid services will increase 8.4% and 6.0% respectively from September 1, 2005. ISDN basic rate monthly rental tariffs will remain unchanged.