Johannesburg, South Africa – 13 June 2011, Telkom SA Limited (JSE: TKG) today announced Group annual results for the year ended 31 March 2011.

Segment structure

The Group's reporting segments are business units that are separately managed. The Group consist of three reportable segments. The Telkom South Africa segment provides fixed-line access and data communications services through Telkom South Africa. The Mobile segment provides mobile voice services, data services and handsets sales through 8•ta. These services were launched on 14 October 2010. The Multi-Links continuing operations segment provides fixed-line and data communications services in Nigeria through our Multi-Links subsidiary.

Following the decision to exit the CDMA business in Nigeria, this portion of the Multi-Links results are presented as discontinued operations.

The "other" category is a reconciling item which is split geographically between International and South Africa. Telkom International category provides internet services outside South Africa, through the iWayAfrica subsidiary.The South African category includes Trudon Group, Swiftnet, Data Centre Operations and the Group's corporate centre.

The Data Centre Operations was shown as part of the Telkom South Africa segment in the March 2010 results as the information was still in the process of being split out. Although information is now available, the results of the Data Centre Operations were moved to the other category as it does not meet the quantitative thresholds for disclosure as a separate segment.

Group salient features for the year ended 31 March 2011

• Normalised operating revenue down 5.2% to R33.4 billion.
  • Voice revenue decreased 16.8% to R13.7 billion.
  • Data revenue increased 7.7% to R10.7 billion.
    • ADSL subscribers increased 16.1% to 751,625.
    • Calling plan subscribers increased 9.5% to 783,193.
    • Managed data network sites increased 2.8% to 34,163.
• Normalised operating expenses decreased 1.5% to R29.7 billion.
• Normalised free cash flow decreased 36.8% to R3.5 billion.
• Normalised EBITDA margin decreased to 27.4% from 29.3%.
• Normalised headline earnings per share from continuing operations decreased by 35.2% to 444.9 cents.
• Normalised basic earnings per share decreased 29.9% to 448.1 cents per share

Financial highlights

Normalised Group operating revenue from continuing operations decreased 5.2% to R33.4 billion, while EBITDA decreased 11.4% to R9.2 billion. The normalised Group EBITDA margin decreased to 27.4% as at 31 March 2011, compared to 29.3% at 31 March 2010, mainly due to mobile start-up costs and voluntary severance package expenses incurred.

Normalised headline earnings from continuing operations decreased 35.2% to 444.9 cents per share mainly as a result of the effect of the reduction in mobile termination rates, mobile business start-up costs and the voluntary severance package expenses incurred. Normalised basic earnings per share decreased 29.9% from 639.5 cents per share to 448.1 cents per share at 31 March 2011.

Statement by Nombulelo Moholi, Group Chief Executive Officer:

"The year under review has been tough with revenue declining 5.2% to R33.4 billion. Competition, pricing pressures and regulatory intervention have all had an impact on our revenue. The declines seen in our traditional fixed-line voice revenue are set to continue. Operating expenditure decreased 1.5% to R29.7 billion despite the 10.3% growth in employee expenditure to R9.7 billion and mobile start-up expenditure of R1.2 billion. This decrease is largely as a result of the drop in termination rates payable to the other mobile operators.

The years of investment in our network has allowed our data revenue to grow 7.7% to R10.7 billion. This is a good achievement given the muted economic conditions and intensifying competition.

These basic dynamics demand that we focus our efforts on those areas where we are growing and can differentiate from our competitors. The decision to exit the Multi-Links CDMA business in Nigeria is but one of the key decisions taken in the past financial year. We have conducted an extensive review of our network to ensure that any capital allocation is prefaced on customer requirements, commercial returns and the ability to differentiate. The restraint in our capital expenditure is visible in the 27.2% decline in Telkom South Africa's capital expenditure to R2.8 billion. Capital expenditure going into the future will be aimed at growing our ability to service enterprise customers and other value clusters and providing far superior broadband speeds. It is about increased capacity and connectivity. We have to capitalise on Telkom's strength – the network and relationships with business – to provide higher speeds and end to end reliability that cannot be matched by our competitors.

Our focus areas continue to be as follows:

• Leadership and organisation – stable, quality management, the right structures and enforcing accountability
• EBITDA and cash flow focus – challenge the status quo and demand innovation; drive revenue through our exclusive differentiators; continued commitment to cost efficiency; efficient capital allocation to drive revenue growth
• 8•ta – provide innovative packages that allow people to talk more and take advantage of the full range of telecommunication service that only an integrated fixed and mobile operator can offer
• Drive broadband – through convergence and bundling
• Africa – consolidate existing subsidiaries, exit the Multi-Links business

We were extremely pleased to have launched 8•ta during the past financial year. It is an exciting venture for Telkom and provides an essential tool for providing customers with a differentiated service through our ability to provide the full suite of communication tools. It has not been easy. The growth of our network and distribution channels has encountered delays. It is coming together though and we look forward to turning our network on and launching services into the enterprise market during the coming year."

Declaration of ordinary dividend

The ordinary dividend has been calculated with reference to Telkom's current and expected future debt and cash flow levels. The level of dividend payments going forward will continue to be based on a number of factors, including the consideration of the financial results, capital and operating expenditure requirements, the Group's debt level, interest coverage, internal cash flows, prospects and available growth opportunities.

Ordinary dividend number 16 of 145 cents per share (2010: 125 cents) in respect of the financial year ended 31 March 2011 have been declared payable on Monday, 11 July 2011 to shareholders recorded in the register of the company at close of business on Friday, 8 July 2011.

Holders of ordinary shares

Salient dates with regard to the ordinary dividend 2011

Share certificates may not be dematerialised or rematerialised between Monday, 4 July 2011 and Friday, 8 July 2011, both days inclusive.

On Monday, 11 July 2011, dividends due to holders of certificated securities on the South African register will either be transferred electronically to shareholders' bank accounts or, in absence of suitable mandates, dividend cheques will be posted to such shareholders.

Dividends in respect of dematerialised shareholders will be credited to shareholders' accounts with their relevant CSDP or broker