Johannesburg, South Africa - 21 November 2011, Telkom SA Limited (JSE: TKG) today announced Group interim results for the six months ended 30 September 2011.

Segment structure

The Group's reporting segments are business units that are separately managed. The Group consists of two reportable segments. The fixed-line segment provides fixed-line access and data communications services through Telkom South Africa. The mobile segment provides mobile voice services, data services and handset sales through 8•ta.

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.

Comparative information has been restated to reflect the internal restructuring between the Telkom fixed-line segment and the corporate centre.

The Multi-Links results are presented as discontinued operations.

Group salient features for the six months ended 30 September 2011

• ADSL subscribers increased 13.7% to 795,419.
• Calling plan subscribers increased 4.7% to 797,827.
• Internet all access subscribers increased 3.9% to 556,886.
• Managed data network sites increased 12.6% to 37,181.
• Active mobile subscribers of 1,140,289 with a blended ARPU of R63.32
• Operating revenue down 3.2% to R16.4 billion.
• Voice revenue decreased 5.5% to R6.6 billion.
• Data revenue decreased 7.9% to R5.1 billion.
• Operating expenses increased 8.2% to R15.4 billion.
• Fixed-line operating expenses decreased 3.9% to R11.7 billion.
• EBITDA margin decreased to 26.9% from 31.3%.
• Basic earnings per share decreased 70.8% to 85.2 cents per share.
• Headline earnings per share from continuing operations decreased by 35.5% to 191.7 cents.
• Free cash flow of R1.5 billion.

Statement by Nombulelo Moholi, Group Chief Executive Officer:

"The six months under review have been very challenging. The traditional fixed-line market is shrinking as fixed-line voice moves to mobile and into less profitable data revenue streams and as price competition intensifies particularly in the data market. Line losses continue, self provisioning is growing which negatively impacts our wholesale revenues and regulatory intervention through termination rate cuts impacts our revenue streams. In addition, our mobile business is taking longer than expected to reach our targets. Operating revenue for the reporting period declined 3.2% to R16.4 billion.

Operating expenditure increased 8.2% to R15.4 billion. The increase in operating expenditure is largely as a result of the R445 million impairment of iWayAfrica, higher depreciation which reflects our on-going investment in the network and mobile start-up expenditure after intercompany eliminations of R1.4 billion. The fixed-line business kept costs in check with operating expenditure decreasing 3.9% to R11.7 billion. Growing the EBITDA margin in the fixed-line business from 37.5% to 39.1% given current market conditions is an achievement. Cost control will remain a key area of focus.

As a result of declining revenue and increasing costs, our EBITDA margin declined to 26.9% from 31.3% in the previous reporting period. Our headline earnings per share decreased 35.5% to 191.7 cents.

Our results paint a tough picture of current operations.

It is therefore imperative that we move into select adjacent markets to grow our revenue streams. We are transforming our network to allow us to move further into the mobile and select value-added ICT markets. Capital allocation is prefaced on customer requirements, commercial returns and the ability to differentiate. For Telkom, full convergence, an aggressive move into the broadband arena and improving performance of the mobile business will be the hallmarks of the successful execution of our strategy."