Further detailed cautionary announcement as Telkom and MTN sign heads of agreement to extend their existing roaming agreement to include reciprocal roaming and outsourcing of the operation of Telkom's radio access network (the "Proposed Transaction")
Further to the cautionary announcement dated Thursday, 6 March 2014, shareholders of Telkom are advised that Telkom and MTN South Africa ("MTN") ("the Parties") have entered into a heads of agreement ("the HoA") regarding the Proposed Transaction in terms of which:
The telecoms industry, in both South Africa and globally, is facing an unprecedented shift from traditional voice towards data. In order to meet this demand the Parties have entered into the Proposed Transaction.
Telkom should be able to provide its customers with effective access to the latest state-of-the-art national voice, 2G, 3G and LTE networks without having to incur the significant capital expenditure needed to achieve such national coverage. Furthermore, the adjustable nature of the roaming fees will assist in moving Telkom's operating cost base from being fixed to being more variable in nature.
As a result of the Proposed Transaction, the range of services available to customers will increase, the customer experience will be enhanced and significant scale efficiencies, beneficial to both Parties and their customers, would be realised.
The Proposed Transaction is subject to conclusion by the Parties of various binding commercial agreements to give effect to the Proposed Transaction, and various other approvals, including approvals by regulatory authorities as may be required for the implementation of the Proposed Transaction.
Shareholders of Telkom are advised to continue to exercise caution when dealing in Telkom shares until a further announcement in this regard is made.
07 March 2014
The Standard Bank of South Africa Limited