Johannesburg, South Africa - 22 November 2010, Telkom SA Limited (JSE: TKG) today announced Group interim results for the six months ended 30 September 2010.

Segment structure

The Group's reporting segments are business units that are separately managed. The Group consists of two reportable segments. The Telkom South Africa segment provides fixed-line access, 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 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. As the 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 Six Months Ended 30 September 2010

• Normalised operating revenue down 5.4% to R17.6 billion.
  • Voice revenue decreased 19.1% to R6.9 billion.
  • Data revenue increased 14.9% to R5.6 billion.
    • ADSL subscribers increased 16.0% to 699,368.
    • Calling plan subscribers increased 17.0% to 762,070.
    • Managed data network sites increased 10.7% to 33,023.
• Normalised operating expenses decreased 6.3% to R15.1 billion.
• Normalised free cash flow increased 2.0% to R623 million.
• Normalised fixed-line free cash flow increased 136.0% to R1,442 million.
• Normalised EBITDA margin increased to 28.9% from 27.5%.
• Normalised headline earnings per share from continuing operations decreased by 5.3% to 265.7 cents.
• Normalised basic earnings per share from continuing operations decreased 6.8% to 260.2 cents per share.

Statement by Jeffrey Hedberg, Acting Group Chief Executive Officer:

"The six months under review have been challenging but exciting. The crowning achievements are Telkom's delivery of the Soccer World Cup 2010 and the build up to the launch of 8ta, our new mobile service. The South African telecommunications industry is becoming more competitive and the regulatory environment continues to pose challenges to all operators. It is imperative that Telkom changes the way it operates in order to defend its revenue and grow into new revenue streams. This is an enormous task given the complexity of Telkom's systems, networks and human resources. In addition, Telkom has had to deal with significant management changes. These dynamics create an excellent opportunity for new management to stabilise the business and then execute on its plan to improve the financial performance of the Telkom Group.

We intend to focus on the following key areas:

• Leadership and organisation - communicate deliverable decisions and enforce accountability.
• EBITDA and cash flow focus - challenge the status quo and demand innovation; drive revenue through our exclusive differentiators; continued commitment to cost efficiencies; efficient capital allocation to drive revenue growth.
• 8ta - provide innovative packages that allow people to talk more, are difficult to replicate and take advantage of the full range of telecommunication services that only an integrated fixed and mobile operator can offer.
• Drive broadband - through convergence and bundling; take advantage of the network built for the Soccer World Cup 2010.
• Multi-Links - exit the CDMA business.

While not exhaustive, the above five focus areas provide clarity for the organisation, demand transparency, responsiveness, courage and resilience and most importantly, are measurable.

Telkom's results for the six months ended 30 September 2010 paint a picture of an organisation under pressure with revenue down 5.4% to R17.6 billion, EBITDA down 0.6% to R5.1 billion and profit from continuing operations down 9.3% to R1.4 billion.

It is essential to stabilise the business, which we are doing through exiting the CDMA business in Nigeria, and focusing iWayAfrica mainly on corporate customers. This allows us to allocate capital to those areas that will drive revenue growth and promote cost efficiencies.

The introduction of our mobile service, 8ta, provides Telkom with an essential tool for retaining and growing our customer base. It is expected to assist in both revenue growth and cost efficiencies. We are excited by the response this emotive brand has generated and look forward to it complementing our suite of competitive products and services."