6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of:  June 2008

001-31609

(Commission File Number)

Telkom SA Limited
(Translation of registrant’s name into English)

Telkom Towers North

152 Proes Street

Pretoria 0002

The Republic of South Africa

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ý Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Indicate by check mark whether by furnishing the information contained on this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No ý

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_____.

            On June 9, 2008, Telkom SA Limited (“Telkom”) announced its group annual results for the year ended March 31, 2008. A copy of the announcement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The announcement contains forward-looking statements and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

On June 9, 2008, Telkom presented its group annual results for the year ended March 31, 2008. A copy of the presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The presentation contains forward-looking statements and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

On June 9, 2008, Telkom issued its summarized group annual results for the year ended March 31, 2008. A copy of the summarized group annual results is attached hereto as Exhibit 99.3 and is incorporated herein by reference. The summarized group annual results contain forward-looking statements and include cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

On June 9, 2008, Vodacom Group (Proprietary) Limited (“Vodacom”) (unlisted), in which Telkom has a 50% holding, announced its annual results for the year ended March 31, 2008. A copy of the announcement is attached hereto as Exhibit 99.4 and is incorporated herein by reference. The announcement contains forward-looking statements and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

On June 9, 2008, Vodacom presented its annual results for the year ended March 31, 2008. A copy of the presentation is attached hereto as Exhibit 99.5 and is incorporated herein by reference. The presentation contains forward-looking statements and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

On June 9, 2008, Vodacom issued its summarized annual results for the year ended March 31, 2008. A copy of the summarized annual results is attached hereto as Exhibit 99.6 and is incorporated herein by reference. The summarized annual results contain forward-looking statements and include cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

All of the statements contained herein and in the exhibits incorporated by reference herein, as well as oral statements that may be made by Telkom or Vodacom, or by officers, directors or employees acting on their behalf, that are not statements of historical facts constitute or are based on forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995, specifically Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended.

These forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause Telkom’s or Vodacom’s actual results and outcomes to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Among the factors that could cause Telkom’s or Vodacom’s actual results or outcomes to differ materially from their expectations are those risks identified in Item 3. “Key Information-Risk Factors” contained in Telkom’s most recent Annual Report on Form 20-F filed with the US Securities and Exchange Commission (SEC) and its other filings and submissions with the SEC which are available on Telkom’s website at www.telkom.co.za/ir, including, but not limited to, any changes to Telkom’s mobile strategy and Vodacom holdings and its ability to successfully implement such strategy and organizational changes thereto, increased competition in the South African fixed-line, mobile and data communications markets; our ability to implement our strategy of transforming from basic voice and data connectivity to fully converged solutions, developments in the regulatory environment; continued mobile growth and reductions in Vodacom’s and Telkom’s net interconnect margins; Telkom's and Vodacom’s ability to expand their operations and make investments and acquisitions in other African countries and the general economic, political, social and legal conditions in South Africa and in other countries where Telkom and Vodacom invest; our ability to improve and maintain our management information and other systems; our ability to attract and retain key personnel and partners; our inability to appoint a majority of Vodacom’s directors and the consensus approval rights at Vodacom may limit our flexibility and ability to implement our preferred strategies; Vodacom’s continued payment of dividends or distributions to us; our negative working capital; changes in technology and delays in the implementation of new technologies; our ability to reduce theft, vandalism, network and payphone fraud and lost revenue to non-licensed operators; the amount of damages Telkom is ultimately required to pay to Telcordia Technologies Incorporated; the outcome of regulatory, legal and arbitration proceedings, including tariff approvals, and the outcome of Telkom’s hearings before the Competition Commission and others; any requirements that we unbundle the local loop; our ability to negotiate favorable terms, rates and conditions for the provision of interconnection services and facilities leasing services or if ICASA finds that Telkom or Vodacom have significant market power or otherwise imposes unfavorable terms and conditions on us; our ability to implement and recover the substantial capital and operational costs associated with carrier pre-selection, number portability and the monitoring, interception and customer registration requirements contained in the South African Regulation of Interception of Communications and Provisions of Communication – Related Information Act and the impact of these requirements on our business; Telkom’s ability to comply with the South African Public Finance Management Act and South African Public Audit Act and the impact of the Municipal Property Rates Act and the impact of these requirements on our business; fluctuations in the value of the Rand and inflation rates; the impact of unemployment, poverty, crime, HIV infection, labor laws and labor relations, exchange control restrictions and power outages in South Africa; and other matters not yet known to us or not currently considered material by us.

We caution you not to place undue reliance on these forward-looking statements. All written and oral forward-looking statements attributable to Telkom or Vodacom, or persons acting on their behalf, are qualified in their entirety by these cautionary statements. Moreover, unless Telkom or Vodacom is required by law to update these statements, they will not necessarily update any of these statements after the date hereof, either to conform them to actual results or to changes in their expectations.
 

Exhibit	Description
99.1	Announcement, dated June 9, 2008, issued by Telkom SA Limited (“Telkom”), regarding its group annual results for the year ended March 31, 2008.
99.2	Presentation, made by Telkom on June 9, 2008, regarding its group annual results for the year ended March 31, 2008.
99.3	Summarized group annual results, issued by Telkom on June 9, 2008, for the year ended March 31, 2008.
99.4	Announcement, issued by Vodacom Group (Proprietary) Limited (“Vodacom”) on June 9, 2008, regarding its annual results for the year ended March 31, 2008.
99.5	Presentation, made by Vodacom on June 9, 2008, regarding its annual results for the year ended March 31, 2008.
99.6	Summarized annual results, issued by Vodacom on June 9, 2008, for the year ended March 31, 2008.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TELKOM SA LIMITED

By:        /s/ Deon Fredericks                  

Name:   Deon Fredericks

Title:     Acting Chief of Finance

Date:   July 2, 2008

EX-99.1

 Exhibit 99.1

Telkom Group annual provisional results – March 2008

Telkom SA Limited Registration no. 1991/005476/06

JSE and NYSE share code: TKG

ISIN: ZAE000044897

Special note regarding forward-looking statements

All of the statements included in this document, as well as oral statements that may be made by us or by officers, directors or employees acting on behalf of us, that are not statements of historical facts, including but not limited to financial targets and prospects, constitute or are based on forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995, specifically Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. These forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause our actual results and outcomes to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Among the factors that could cause our actual results or outcomes to differ materially from our expectations are those risks identified in Item 3. “Key Information-Risk Factors,” of Telkom’s most recent Annual Report on Form 20-F filed with the US Securities and Exchange Commission (SEC) and its other filings and submissions with the SEC which are available on Telkom’s website at www.telkom.co.za/ir, including, but not limited to, any changes to our mobile strategy and Vodacom holdings and our ability to impact such strategy and organizational changes thereto, increased competition in the South African fixed-line, mobile and data communications markets; our ability to impact our strategy of transforming from basic voice and data connectivity to fully converged solutions, developments in the regulatory environment; continued mobile growth and reductions in Vodacom’s and Telkom’s net interconnect margins; Telkom’s and Vodacom’s ability to expand their operations and make investments and acquisitions in other African countries and the general economic, political, social and legal conditions in South Africa and in other countries where Telkom and Vodacom invest; our ability to improve and maintain our management information and other systems; our ability to attract and retain key personnel and partners; our inability to appoint a majority of Vodacom’s directors and the consensus approval rights at Vodacom may limit our flexibility and ability to implement our preferred strategies; Vodacom’s continued payment of dividends or distributions to us; our negative working capital; changes in technology and delays in the implementation of new technologies; our ability to reduce theft, vandalism, network and payphone fraud and lost revenue to non-licensed operators; the amount of damages Telkom is ultimately

required to pay to Telcordia Technologies Incorporated; the outcome of regulatory, legal and arbitration proceedings, including tariff approvals, and the outcome of Telkom’s hearings before the Competition Commission and others; any requirements that we unbundle the local loop, our ability to negotiate favorable terms, rates and conditions for the provision of interconnection services and facilities leasing services or if ICASA finds that we or Vodacom have significant market power or otherwise imposes unfavorable terms and conditions on us; our ability to implement and recover the substantial capital and operational costs associated with carrier pre-selection, number portability and the monitoring, interception and customer registration requirements contained in the South African Regulation of Interception of Communications and Provisions of Communication-Related Information Act and the impact of these requirements on our business; Telkom’s ability to comply with the South African Public Finance Management Act and South African Public Audit Act and the impact of the Municipal Property Rates Act; fluctuations in the value of the Rand and inflation rates; the impact of unemployment, poverty, crime, HIV infection, labor laws and labor relations, exchange control restrictions, and power outages in South Africa; and other matters not yet known to us or not currently considered material by us.

We caution you not to place undue reliance on these forward-looking statements. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Moreover, unless we are required by law to update these statements, we will not necessarily update any of these statements after the date hereof, either to confirm them to actual results or to changes in our expectation.

Index

1.	Overview
2.	Operational overview
3.	Group performance
4.	Group balance sheet
5.	Group cash flow
6.	Group capital expenditure
7.	Segment performance
8.	Employees
9.	Condensed consolidated annual financial statements
10.	Supplementary information

1 Overview

Johannesburg, South Africa – June 9, 2008, Telkom SA Limited (JSE and NYSE: TKG), today announced group annual results for the year ended March 31, 2008.

GROUP KEY FINANCIAL PERFORMANCE AREAS FOR THE YEAR ENDED MARCH 31, 2008

Operating revenue up 9.0% to R56.3 billion

Group EBITDA increased by 4.2% to R20.6 billion

Group EBITDA margin decreased from 38.3% to 36.6%

Operating profit increased by 0.1% to R14.5 billion

Net debt to equity increased to 49.9% from 31.3% at March 31, 2007

Cash generated from operations increased by 3.6% to R21.3 billion

Headline earnings per share decreased by 4.4% to 1634.8 cents per share

Ordinary dividend increased by 10.0% to 660 cents per share payable on July 7, 2008.

Statement by Reuben September, Chief Executive Officer:

“As such competition is intensifying, price pressures are a business and regulatory reality and inflation is rising. Growth was impacted with the Group delivering 9.0% growth in revenue, the fixed-line business delivering 0.7% growth in revenue to R32.6 billion and the mobile business impressing with 17.1% revenue growth to R48.2 billion of which 50% is consolidated. The drop in Group EBITDA margin from 38.3% to 36.6% is mainly attributable to flat revenue in the fixed-line business. Attributable net profit declined by 7.7% to R8.0 billion largely as a result of the fixed-line’s decreasing operating profit margin and increased finance charges. The Group reported a 4.4% decrease in headline earnings per share to 1,634.8 cents and declared an ordinary dividend of 660 cents per share, an increase of 10.0% from the ordinary dividend of 600 cents per share in the 2007 financial year, a continuation of our commitment to progressively grow the ordinary dividend. Unlike in the past no special dividend was declared due to an increased investment in our expansion programme and pressure on the fixed-line’s EBITDA margin. In the next few years, in line with our strategy, Telkom will be aggressively funding the expansion of our African subsidiaries and our network in South Africa.

Both the fixed-line and mobile segments are operating in changing and challenging business environments. As mobile voice growth slows, the mobile segment is aggressively expanding into data and particularly corporate data. The fixed-line is challenged with increased competition and pricing pressures in its traditional high margin, predominantly retail markets. The above business developments, amongst others, are evident in the drop in fixed-line domestic local and long distance voice revenue from R7.6 billion at March 31, 2007 to R6.3 billion at March 31, 2008. The growth in demand is in the lower margin, wholesale and data markets. This necessitates increased investments in the provisioning of backbone networks and support systems.

The fixed-line segment is gearing up to deliver the full suite of converged services to a far greater extent in South Africa and Africa. Given its ubiquity and network management capabilities, we believe the fixed-line segment is well positioned to deliver data and value-added data managed services at speeds and quality levels superior to its competitors. As we continue to deploy the Next Generation Network, this competitive advantage will be enhanced.

The execution of our strategic initiatives is gaining momentum. We have completed the preparation for building out the fixed wireless and mobile data networks. As announced, we intend to roll-out networks in selected areas and to seek a suitable partner for roaming of our mobile services. Telkom has well entrenched relationships with corporate customers and as the provider of mobile backbone network in South Africa, is ideally positioned to offer a full bouquet of solutions to its customers. The shareholders agreement with Vodafone has prevented Telkom from entering into the mobile voice market. The discussion with Vodafone Plc regarding the sale of our 50% stake in Vodacom, as announced, is intended to remove this impediment. We are determined to put ourselves in a position where we can forcefully drive the creation of value for our shareholders.

We are also moving into gaining data hosting abilities to bolster our ability to deliver the full bundle of data services to our customers.

We have taken the decision to aggressively work on our cost profile and are now beginning the process of consolidating our service provider profile in order to reap the benefits of scale and are working towards outsourcing non-core services with the intent of reducing operational expenditure. The building of the fixed wireless network and mobile data network in selected areas should reduce our access costs and improve customer service on ADSL in particular. Losses due to cable theft are increasing and it is no longer economical to replace copper with copper. We are implementing wireless. A wireless data network will allow us to provide 3G services while ADSL is being installed. This should be hugely beneficial to our customer service.

Telkom has a challenging but exciting few years ahead of us. A compelling differentiation strategy is in place that we believe will deliver substantial value to all stakeholders as it is progressively executed, setting the scene for both organic and acquisitive growth. We are committed to build the Telkom Group in the years to come towards being an African based, globally competitive, formidable force within the ICT industry and are looking forward to reaping the benefits in the future.”

FINANCIAL PERFORMANCE

Group operating revenue increased 9.0% to R56,285 million, while operating profit increased marginally by 0.1% to R14,482 million. The Group EBITDA margin decreased to 36.6% as at March 31, 2008, compared to 38.3% at March 31, 2007, mainly due to higher fixed-line operating expenditure which decreased the fixed-line EBITDA margin by 1.4% to 36.3% as at March 31, 2008 (March 31, 2007: 37.7%). The EBITDA margin for the mobile segment decreased from 34.6% to 34.0% for the year ended March 31, 2008, primarily due to declining ARPUs as a result of increased lower spending customers connected.

Headline earnings per share decreased by 4.4% to 1,634.8 cents per share and basic earnings per share decreased by 6.9% to 1,565.0 cents per share. The reduced earnings is attributable to a decrease in operating profit due to an increase in operating expenses, and 60.3% increase in finance charges partially offset by a 9% increase in operating revenue.

Cash generated from Group operations increased by 3.6% to R21,256 million and facilitated Group capital expenditure of R11,657 million, the acquisition of Multi-Links for R1,985 million and the repurchase of 12.1 million Telkom shares to the value of R1.6 billion.

SUMMARY GROUP PROVISIONAL FINANCIAL RESULTS

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	47,625	51,619	56,285	8.4	9.0
Operating profit	14,677	14,470	14,482	(1.4)	0.1
EBITDA 1	20,553	19,786	20,612	(3.7)	4.2
Capital expenditure 2	7,506	10,246	11,900	36.5	16.1
Operating free cash flow	7,104	3,728	2,150	(47.5)	(42.3)
Net debt	6,828	10,026	16,617	46.8	65.7
Basic EPS (ZAR cents)	1,746.1	1,681.0	1,565.0	(3.7)	(6.9)
Headline EPS (ZAR cents)	1,728.6	1,710.7	1,634.8	(1.0)	(4.4)
Operating profit margin (%)	30.8	28.0	25.7
EBITDA margin (%)	43.2	38.3	36.6
Net debt to equity (%)	23.2	31.3	49.9
After tax operating return on assets (%)	25.6	22.7	18.3
Capex to revenue	15.8	19.8	21.1

 (%)

1. EBITDA and headline earnings have been reconciled to net profit

2. Including spend on intangible assets.

OPERATIONAL DATA

	Year ended March 31,			% variance
	2006	2007	2008	06/07	07/08
Fixed-line data
Fixed access lines (’000) 1	4,708	4,642	4,532	(1.4)	(2.4)
Postpaid – PSTN	2,996	2,971	2,893	(0.8)	(2.6)
Postpaid – ISDN channels	693	718	754	3.6	5.0
Prepaid	854	795	743	(6.9)	(6.5)
Payphones	165	158	143	(4.2)	(9.5)
Fixed-line penetration rate (%)	10.0	9.8	9.5	(2.0)	(3.1)
Revenue per fixed access line (ZAR)	5,304	5,275	5,250	(0.5)	(0.5)
Total fixed-line traffic (millions of minutes)	31,015	29,344	26,499	(5.4)	(9.7)
Local	18,253	16,153	13,145	(11.5)	(18.6)
Long distance	4,446	4,641	4,614	(4.4)	(0.6)
Fixed-to-mobile	4,064	4,103	4,168	1.0	1.6
International outgoing	515	558	634	8.3	13.6
International VoIP	83	38	43	(54.2)	13.2
Interconnection	3,654	3,740	3,895	2.4	4.1
Mobile interconnection	2,299	2,419	2,502	5.2	3.4
International interconnection	1,355	1,321	1,280	(2.5)	(3.1)
Fixed domestic	-	-	113	-	-
Managed data network sites	16,887	21,879	25,112	29.6	14.8
Internet subscribers 2	284,908	305,013	358,066	7.1	17.4
ADSL subscribers 3	143,509	255,633	412,190	78.1	61.2
Calling plan subscribers	62,803	288,881	471,742	360.0	63.3
Fixed-line employees (excluding subsidiaries)	25,575	25,864	24,879	1.1	(3.8)
Fixed access lines per fixed-line	184	180	182	(2.2)	1.1

employee 4
Mobile data 5
Total customers (’000)	23,520	30,150	33,994	28.2	12.8
South Africa
Mobile customers (’000)	19,162	23,004	24,821	20.1	7.9
Contract customers	2,362	3,013	3,541	27.6	17.5
Prepaid customers	16,770	19,896	21,177	18.6	6.4
Community services telephones	30	95	103	216.7	8.4
Mobile churn (%)	17.7	33.8	42.3	91.0	25.2
Contract churn	10.0	9.7	8.3	(3.0)	(14.4)
Prepaid churn	18.8	37.5	47.9	99.5	27.7
Estimated mobile market share (%)6	57.9	57.7	55.0	(0.3)	(4.7)
Mobile penetration (%)	70.6	84.2	94.3	19.3	12.0
Total mobile traffic (millions of minutes) 7	17,066	20,383	22,769	19.4	11.7
Mobile ARPU (ZAR)	139	125	125	(10.1)	0.0
Contract ARPU	572	517	486	(9.6)	(6.0)
Prepaid ARPU	69	63	62	(8.7)	(1.6)
Community services	1,796	902	689	(49.8)	(23.6)
Number of mobile employees 8	4,305	4,727	4,849	9.8	2.6
Mobile customers per mobile employee	4,451	4,867	5,119	9.4	5.2
Other African countries
Mobile customers (‘000)	4,358	7,146	9,173	64.0	28.4
Number of mobile employees	1,154	1,522	1,992	31.9	30.9
Number of mobile customers per mobile employee 6	3,776	4,695	4,605	24.3	(1.9)
Other data Africa Online - Number of subscribers	-	14,452	14,393	-	(1.0)
Multi-Links - Number of subscribers	-	185,619	813,392	-	338.2

1. Excludes Telkom internal lines of 109,501 (2007:107,719 and 2006: 103,740).

2. Includes Telkom Internet ADSL, satellite and dial-up subscribers.

3. Excludes Telkom internal lines of 751 (2007:523 and 2006: 249).

4. Based on number of fixed-line employees, excluding subsidiaries.

5. 100% of Vodacom data.

6. Based on Vodacom estimates.

7. Traffic for the year ended March 31, 2008.

8. Includes Holding company and Mauritius employees.

2 Operational overview – Defend and grow

Telkom’s strategy continuous to focus on defending and growing our traditional voice base. Our growth strategies focus on adding revenue through developing a fixed-mobile capability giving us a larger share of the voice revenue pie, aggressively building our data, broadband and converged services offering and expanding geographically into high growth markets.

Traffic revenue has decreased 4.7% to R15.9 billion with local traffic revenue decreasing 15.6% to R4.1 billion while local minutes decreased by 18.6% to 13.1 billion minutes. This is primarily due to continuing fixed to mobile substitution. Telkom has reclassified subscription revenue from calling plans into a separate revenue line item – subscription based calling plans – to easily identify revenue from calling plans. Total traffic minutes decreased by 9.4% to 26.5 billion minutes. Revenue from subscription based calling plans has increased by 98.7% to R1.1 billion.

Long distance revenue decreased by 17.6% to R2.3 billion with a decrease in volumes of 0.6% to 4.6 billion minutes and a 10% decrease in call charges effective August 1, 2007. The effect of the 17.1% decrease in long distance calls’ effective tariff for the year is clearly evident. Fixed to mobile revenue decreased by 1.2% to R7.6 billion with an increase in volumes of 1.6% to 4.2 billion minutes offset the 2.7% effective tariff reduction for the year. International traffic revenue decreased by 0.2% to R986 million. The 12.2% effective tariff decrease for the year in international tariffs was largely offset by the 13.7% increase in international traffic volumes to 677 million minutes. Interconnection revenue increased by 7.2% assisted by volume increases of 4.2% to 3.9 billion minutes and an effective tariff increase of 2.7%.

The Closer packages have performed exceptionally well, increasing by 69.4% to 451,122 plans. Supreme call packages, targeted at the SMME segment, have increased by 149.2% to 12,916 packages. Telkom continues to be successful in tying in large corporate customers to term and volume discount plans. During the 2008 financial year, term and volume discount plans to the value of R3.4 billion was sold. Annuity revenue streams, which exclude line installations, reconnection fees and CPE sales have increased by 14.1% to R6.9 billion from R6.0 billion in the 2007 financial year. Telkom will

seek to continue converting revenue streams to annuity revenues. This will be done largely through bundling call minutes with access line rental in attractive subscription based value propositions. This is an important strategy for delivering greater value to our customers.

Pricing is a key element of the value proposition and our pricing strategy is aimed at improving our competitiveness in areas where competition is expected to intensify and where arbitrage opportunities exist. Telkom’s strategy to counter pricing pressures is as follows:

Actively offering value based calling plans and bundles to extend value and savings to our customers.

Rebalancing standard/Callmore local rates for better alignment with international norms and to improve our competitive position.

Reducing and rebalancing national and international data prices to improve our competitive position.

Essentially, we are implementing a differentiation strategy that aligns our core competencies to the drivers of customer value in order to achieve competitive advantages. Customers will be kept constantly informed about Telkom and its products.

Data

As a result of Telkom’s strategy to grow our data business, data revenues increased a very pleasing 10.9% to R8.3 billion. This is also indicative of the growth in bandwidth demand from corporates and mobile operators as a result of 3G and HSDPA. Data connectivity revenue increased 4.5% to R4.5 billion. Mobile leased line revenue increased 11.1% to R1.8 billion. Internet access revenues increased 29.1% to R1.2 billion and we are proud of the fact that managed network services revenue increased 36.2% to R728.5 million. VPN services revenue increased 46.6% to R500 million.

Telkom’s focus on bringing new innovative products to the market that cater for increased data usage and converged services has seen our new VPN products gain increasing traction in the market. We have increased VPN sites by 58.0% to 12,741. Our VPN Lite products which is delivered over the ADSL network include advanced self-help and online charging solutions. This product was launched during November 2007. Telkom is in the process of building on a culture of research and innovation and fast time to market in order to cater for customers who are increasingly looking for innovative, easy to use products.

Telkom has previously stated that moving further into the converged service offering environment with a specific focus on value added data services is vital to growing our revenue. It is difficult to make data centre acquisitions in South Africa. Telkom is pursuing the acquisition of a data centre business outside of South Africa as we move up the converged ICT value chain. The ability to increase the support we provide to our corporate customers is expected to further entrench relationships.

The data centre business is used effectively by telecommunication companies to stimulate the use of bandwidth over their networks. In addition, the convergence of IT and telecommunications are driving customer demand for one-stop solutions for their telecommunication and IT infrastructure requirements. Data centres are believed to be, the next logical step in the value chain for a telecommunication company that is already well positioned with basic data services as well as managed WAN/VPN services and LAN services.

The data centre business is one of the fastest growing areas in the IT space as a result of:

Customers realising that it is very expensive to host IT infrastructure on site – prime office space is used in many cases;

Regulators insisting that data is protected properly and assisting with carbon footprint reduction;

Improvement of efficiencies by moving from basic machine hosting to shared resources in the data centre;

Being in a position to up sell into value added IT services such as Software as a Service (SaaS); and

Leveraging the fit that exists between communication infrastructure and data centre services

Broadband and converged services

Telkom is aggressively expanding its ADSL footprint, increasing the bandwidth in order to host applications such as video services and using the next generation network to facilitate innovative solutions. The ADSL footprint now covers 92% of Telkom’s total network and our coverage in underserviced areas is 76%. ADSL subscribers grew 61.2% to 412,190, excluding Telkom internal lines. We fell short of our aggressive target of 420,000. Nevertheless, this strong growth was achieved through the commoditisation of ADSL, Do Broadband, the Self Install Option, DSL port automation and wholesale services. Do Broadband packages increased by 245.6% to 119,288. Wholesale ADSL services grew to 18,722. Telkom remains committed to achieving our targeted ADSL

penetration of 15%-20% of fixed access lines by 2010/11. This will continue to offset the decrease in access lines which have decreased by 2.4% to 4,531,752 access lines.

ADSL Average Time To Install (ATTI) has improved to 19 days from the 23 days achieved at March 31, 2007. The ADSL Self Install option is expected to continue to improve the ATTI. As of March 31, 2008, 57% of all ADSL installations were being done through the Self Install Option.

In extending and complimenting our ADSL footprint, Telkom has increased its WIMAX base stations from 27 sites at September 30, 2007 to the current 56 sites. Telkom remains committed to its target of 71 WIMAX base stations.

Geographic expansion

The aim is to establish Telkom as a regional voice and data player through the provisioning of a range of hosting services, managed solutions, mobile voice and wireless broadband services. Telkom is also entering the field of professional consulting to operators. In addition, we are positioning Telkom as a wholesale facilities and infrastructure enabler for regional incumbents.

Our expansion to date has been through Multi-Links, a private telecommunications operator operating in Nigeria, and Africa Online, an internet services provider with its head-office in Kenya and operating in 8 other African countries.

Multi-Links

Telkom owns 75% of Multi-Links, a private telecommunications operator with a Universal Access License in Nigeria. Multi-Links performed well in growing its subscriber base from 262,431 at September 30, 2007. We placed an aggressive subscriber target of 812,000 for the year ending March 31, 2008 on the company. Multi-Links exceeded this target and delivered 813,392 subscribers to March 31, 2008. By May 31, 2008, Multi-Links had a subscriber base of 1,000,251 customers. 

Multi-Links reported revenue of R845.4 million, a loss before tax of R63.5 million and a profit after tax of R49 million. Multi-Links’ pioneer tax status, that ended on December 31, 2007 resulted in deferred tax credits due to capital expenditures incurred prior to this date, now being eligible for deduction from taxable income. The company is now liable to pay tax of 30% and an educational levy of 2% going forward, subject to the utilization of tax credits. Voice and data revenue contributed 81% to total revenue, handset sales 12%, interconnect revenue 6.8% and SMS 0.2%. Operating expenses were R941.8 million with payment to other

operators contributing 66%, selling general and administrative expenses contributing 15%, employee expenses 4%, operating leases 4%, services rendered 2% and depreciation 9%. Multi-Links subsidises handsets which was the largest contributor to SG&A expenses.

The majority of new subscribers were added in late February 2008 and March 2008 as a result of equipment being delayed by the logistic constraints. The ARPU achieved for the 11 months ended 31 March 2008, was $32. It is however expected that ARPU will drop to below $30 during the 2009 financial year.

Multi-Links has now installed 269 base stations, 223 towers and grown its fibre deployment to 2500kms. In addition, Multi-Links has commissioned a Huawei packet exchange in Abuja with capacity of 300,000 subscribers, extended the Lagos switch capacity by 250,000 subscribers and established a new main network site in Gbagada, Lagos. The Lagos Metro Ethernet ring has now been completed and Abuja is near to completion. Plans are underway for the deployment of Metro Ethernet rings in Kanu, Kaduna and the Delta region. Six NGN nodes are planned to be built in the 2009 financial year greatly extending Multi-Links’ ability to provide data products to corporate customers. In May 2008, an IPLC services was commissioned for a corporate customer connecting South Africa and Nigeria. Multi-Links expects more corporate customers to come on board in the near future.

The prospects for Multi-Links are strong and the company intends to capitalise on Telkom’s brand and access to international data connectivity. The resilience and quality of international connectivity provides great opportunities in servicing the corporate, wholesale and retail markets.

Africa Online

Africa Online increased its revenue from R46 million in the six months ended September 30, 2007 to R110 million at March 31, 2008. The major contributors to revenue were dial up, consumer wireless and dedicated corporate links. EBITDA margin declined from 2.2% in the six months ended September 30, 2007 to x% in the year ended March 31, 2008. The decline in EBITDA margin was largely as a result of the Telkom management fee, payments to other operators and selling, general and administrative expenses. The company reported an operating loss of R63.2 million largely as a result of the interest paid on Telkom funding.

Africa Online’s infrastructure roll out has not progressed as speedily as hoped due to the long equipment lead times and unrest in Kenya during December 2007 and January 2008. However, Africa Online has capitalised on its relationship with Telkom in the

pursuit of multi-national clients and now has 124 Pan-African multi-national customers.

Telkom has migrated 115 corporate VSAT sites to African Online. The target remains 171. This has allowed for the joint tendering of business to large multinational customers and opened up the Southern African region to Africa Online. The company is also now in a position to compete with the likes of Mweb and AFSAT.

In addition to the current affiliates that Africa Online works with in Senegal, Benin, Nigeria, Angola, Botswana and Mozambique, new affiliates have been signed up in Malawi, Mauritius and Sudan including additional affiliates in Nambia, Angola and Mozambique. The company is extending its coverage in Africa in order to aggressively target the Pan-African corporate market.

Telkom management services company (TMSC)

The board of directors has given their approval for the establishing of the Telkom management services company.  Opportunities exist in sub-Saharan Africa for a reputable and acknowledged telecommunications operator to provide telecommunications management services. The target markets for such services are the:

State-owned incumbent operators in sub-Saharan Africa; and

numerous new entrants in the ICT industry, i.e. green field entrants that need operational expertise to scale up and be effective operators. There are few consultants in the ICT industry with relevant expertise and support from reputable telecommunications operators that understand the African operational environment and are able to provide such services.

It is envisaged that TMSC will be a wholly owned subsidiary providing the full range of strategic and operational services. The relationship with Telkom brings advantages in terms of expertise in technology innovation and integration, independence from equipment manufacturers, experience of a large number of supplier platforms as well as first hand experience in transforming from a state owned monopoly, through commercialisation to privatisation and listing.

The management contracts of Multi-Links and Africa Online will be handled by TMSC.

Other developments

Mobile strategy developments

Telkom announced on June 2, 2008 that it is in negotiations with Vodafone regarding the potential sale and unbundling of its stake in Vodacom.

Telkom is facing active competition from mobile operators in the voice market and increasingly so in the data market. We believe that an integrated fixed-mobile operator is better positioned to react to and take advantage of the challenges that lie ahead. Having an integrated fixed-mobile offering will allow Telkom to leverage our customer base, marketing, distribution and logistics channels to increase our share of voice revenue. In addition, Internet access demands are increasingly requiring mobility. An integrated bundled offering would offer superior speeds and quality through the fixed-line, including the advantages of mobility when required by the customer. In the future we also anticipate that content demands will require an element of mobility although not in the short term. And, very importantly, we believe that having a coherent, integrated and synergistic fixed-mobile capability will greatly enhance Telkom’s ability to successfully compete for international acquisitions.

Fixed wireless and mobile data network

Telkom has decided to use W-CDMA technology and has appointed Huawei as our vendor to build out our fixed wireless and mobile data network.

W-CDMA technology will provide Telkom with the following benefits:

Provide Telkom with a mobile data as well as fixed and a nomadic voice capability;

As W-CDMA does have the capability of supporting full mobility, the above services can be further augmented with mobile voice should Telkom be successful in concluding its mobile strategy and no longer be bound to the current Shareholders Agreement with Vodafone; and

Alleviate the negative impact of Thefts, Breakages and Incidences (TBIs) on service delivery. In order to satisfy demand for services in high theft and high maintenance areas, Telkom has acquired W-CDMA to decrease exposure to the losses being incurred.

In addition, the cost per customer should be attractive when compared to the cost of using current point to multi-point radio based systems.

Key next generation network (NGN), capacity and product developments

Telkom is in the third year of its NGN build out programme. Customer demands and global standards necessitate the provision of services and particularly bandwidth that is only possible utilising the intelligence of an NGN system.

Our NGN build out achievements are as follows:

An increase of the ADSL footprint to 2,660 DSLAMs, covering 92% of Telkom’s existing customer footprint.

84 Metro Ethernet nodes have been deployed in major cities using 10Gbit and 1Gbit line systems.

The first system of Dense Wave Division Multiplexing (DWDM) system capable of forty 10Gbit/s signals over a single pair of fibre has been deployed between Gauteng and Durban. This has significantly increased transport bandwidth capability. A significant rollout of this system between all major cities in SA is currently in the build phase, and planned for completion during the 2009 financial year.

Automatic self-healing re-routing of bandwidth on the national layer has commenced.

The national and local transport network increased by 377 nodes, growing the network bandwidth by 1.2 Tbit/s, which is a growth of 21%.

Total international bandwidth has increased to 4.5Gbit/s, which is a growth of 88%.

ATM network available bandwidth on the core and metro layers has increased to a combined 147 Gbits/s, which is a growth of 41%.

National IP Network bandwidth has increased to 32.2 Gbit/s, which is a growth of 11%.

A Network Interactive Voice Response Systems have been deployed which offers advanced speech services. Automated speech recognition and text-to-speech application enable corporate customers and Telkom to enhance their voice systems.

Diginet and Diginet Plus network bandwidth has increased to 27Gbit/s, which is a growth of 20%.

237 WiFi hotspots have been deployed at strategic partner locations.

Fibre deployment has increased by 8.7%.

IMAX has been introduced into the system and is ready to carry traffic. IMAX has the ability to carry narrowband and broadband services for wire line legacy and converged services.

Cost, efficiency and productivity management

Faced with competition eroding our revenue base, cost management is a key element in creating shareholder value. Telkom is proud of its achievements in this regard. The Telkom fixed-line business

managed to contain its operating expense growth to a 3.6% increase, despite the high inflationary environment with CPIX recorded at 10.1% in March 2008. Employee expenses increased by 4.2% to R7.4 billion, selling general and administrative expenses decreased by 7.4% to R3.7 billion, service fees increased by 9.4% to R2.4 billion and operating leases decreased by 18.8% to R619 million. Depreciation, amortisation, impairment and write-offs increased by 10.2% to R3.9 billion.  Telkom did not achieve its fixed-line EBITDA margin target of 37% - 40% with the EBITDA margin at 36.3% decreasing from 37.7% at March 31, 2007.

Our continued focus on cost management, efficiency and productivity management has resulted in Telkom developing a Capability Management programme. Professional services have grown in maturity throughout the world, particularly in the information technology and telecoms environments. This allows Telkom to focus on services that differentiate us from competitors such as:

an increased focus on customer service;

the faster delivery of improved services to the market;

improving cost management and capital productivity; and

increasing shareholder returns.

Telkom is currently using approximately 100 service providers to deliver network services. These contracts are expiring at the end of June 2008. A critical factor in the new contract process is to ensure that Telkom moves towards a more consolidated interface to the service provider market and obtains maximum efficiencies through creating scale and volume.

In addition to service provider consolidation, a capability management process is under way to identify partners for network operations, information technology management and Telkom Direct Shops which entails that certain elements will be outsourced to professional service providers. Telkom has commenced with issuing a closed Request For Proposals for professional services in this regard. 

To ensure that capability management, which includes elements of outsourcing, is legitimate, we are engaging with organised labour in line with transparency and labour regulations. Many interactions have taken place with union leadership over the past few months to achieve the appropriate levels of awareness, education and strategic insight on the aspects of capability management and outsourcing. This included international benchmarking visits to other operators and professional services providers in Germany, Australia, New Zealand and Brazil.

Sustained employability and well being of Telkom staff is of paramount importance.

Customer service

Improved customer service is vital to the success of Telkom into the future. Sustainable and profitable growth in the customer base requires creating and strengthening capabilities focused on managing customer relationships and learning from acquired customer information. This will allow Telkom to better manage the customer experience and anticipate customer needs.

Customer segmentation based on value should enable Telkom to understand customer equity better in order to give additional value and services to customers. Understanding an individual customer’s breakeven point and anticipating their future requirements will allow Telkom to intelligently determine value enhancers and cross selling opportunities.

A call centre masterplan has been designed to compliment customer segmentation through dedicated agents for high value customers, upfront identification and routing of complex calls to the specialised agents and upfront resolution of high volume simple calls by universal agents. This is a vital element in making it easier for our customers to do business with us.

We have consolidated all call centre operations under one structure creating a single point of accountability. In addition, we have ensured redundancy through the interconnection of call centres allowing a reduction of bottlenecks and rerouting of overflow traffic.

In areas of high cost, high maintenance and high theft occurrence, particularly copper and fibre cable theft, Telkom is deploying a wireless network using W-CMDA to restore and improve service quality.

The table below illustrates some key customer service metrics and targets for the year ending March 31, 2009. We anticipate that our customer centricity project will be complete by March 31, 2011 by which time we will be able to deliver on our customer expectations as set out in the Customer Satisfaction Surveys.

	Year ended March 31,			Target
	2006	2007	2008	2009
Residential
% cleared in 24 hours	47	50	38	40
Faults per 1,000 lines	470	785	476	423
% installed in 5 days	49	81	54	61
Business voice
% cleared in 24 hours	61	66	50	51
Faults per 1,000 lines	300	328	264	250

% installed in 5 days	63	83	63	72
Data subrate
% cleared in 24 hours	92	84	93	95
Faults per 1,000 lines	801	870	875	830
% installed in 10 days	40	41	19	25
ADSL Business
% cleared in 24 hours	54	33	42	46
Faults per 1,000 lines	480	575	575	540
% installed in 20 days	56	76	56	67

Telkom media and content services

Telkom announced on March 31, 2008 that it will reduce its shareholding in Telkom Media substantially. A potential anchor investor has been identified to take over a substantial portion of Telkom’s investment in Telkom Media. Telkom is awaiting a proposal from the investor which the investor has indicated will be received towards the end of June 2008.

Telkom acknowledges that the expansion of the content rich services is crucial as it will drive future revenue and act as a major product differentiator in a crowded broadband market space. Content can however be sourced from other operators and Telkom is in the process of investigating options with respect to acquiring content from a number of content providers. 

Vodacom results

Vodacom again demonstrated strong performance in the twelve months to March 31, 2008 delivering 17.1% growth in revenue to R48.2 billion with an estimated South African market share of approximately 55%. Vodacom increased its profit from operations by 15.0% to R12.5 billion and increased net profit after tax by 22% to R8.0 billion and, in the face of declining ARPUs as a result of lower income segment customer connections and aggressive drives to attract and retain customers, admirably delivered a 34.0% EBITDA margin down 1.7% from the 34.6% EBITDA margin achieved for the year ended March 31, 2007.

Vodacom’s total customer base increased by 12.7% to 34.0 million customers as at March 31, 2008. South African mobile customers increased by 7.9% to 24.8 million. Customers grew by 29.6% to 4.2 million in Tanzania, by 25.0% to 3.3 million in the Democratic Republic of Congo, by 41.6% to 395,000 in Lesotho, and by 29.8% to 1.3 million in Mozambique. Vodacom’s other African operations reported customers of 9.2 million and contributed 6.6% to data revenue, down from 6.9% contribution in the 2007 financial year.

South African prepaid churn increased to 47.9% for the year ended March 31, 2008 from 37.5% for the year ended March 31, 2007. The increase in the churn ratio was due in part to disconnection rules being amended to classify SIM cards whose only activity was call

forwarding to voice mail for an uninterrupted period of 13 months as inactive. Vodacom believes this rule change provides a better reflection of active prepaid SIM cards on the network and results in higher Average Revenue Per User (ARPU). Vodacom’s focus on customer care and retention saw South African contract churn improve to 8.3% from the 9.7% recorded in the year ended March 31, 2007. The blended South African ARPU remained stable over the year at R125 with contract ARPU decreasing 6.0% to R486 and pre-paid ARPU decreasing to R62 from R63 in at March 31, 2007.

Vodacom’s data revenue increased by 49.7% to R5,002 million for the twelve months ended March 31, 2008 contributing 10.4% to mobile operating revenue. The data contribution has increased from 8.1% recorded at March 31, 2007. The superb performance of Vodacom’s data products is as a result of higher penetration levels and more affordable product offerings.

Telkom refers shareholders to the SENS announcements published on March 10, 2008 and April 25, 2008 concerning Vodacom’s proposed Broad Based Black Economic Empowerment transaction. Telkom remains fully supportive of this R7.5 billion transaction.

The regulatory environment

Telkom faces continuous regulatory challenges covering inter alia competition issues and changes in policies. Through constructive dialogue, the Company endeavours to achieve a regulatory framework that is realistic, equitable and beneficial to the industry. The following details the main changes to the regulatory environment affecting the industry and Telkom during the year.

Electronic communications (EC) act

ICASA had to address the task of developing the market regulation framework. ICASA has issued since December 2007 some 10 draft regulations, dealing with the identification and definition of the various relevant markets, the methodologies for analysing these markets to determine the level of competition, or lack thereof, proposed rules on the leasing of communication facilities, on interconnection, on the special treatment of facilities that are deemed to be "essential" and on the owners thereof. Telkom will, of course, be affected for the most part by all these developments.

Regarding the pro competition regulations, in March 2008 ICASA published draft regulations on the processes and methodologies that ICASA will use for the definition of the relevant markets, for determining the effectiveness of competition in markets, for the identification of licensees having significant market power, and for ensuring that pro-competitive remedies imposed are reasonable and proportionate in addressing market failure.

Licence conversion

ICASA has started a process of converting our licenses to the new licensing framework. Regulations providing the framework to convert our PSTS and VANS licenses have been published by ICASA, including the standard terms and conditions that will apply to all electronic communications services and all electronic communications network services licenses, including ours. ICASA has proposed draft additional conditions applicable to the electronic communications service and electronic communications network service licences that will be issued to existing licensees, including Telkom. ICASA, after taking into account the comments received, is expected to publish final proposed terms and conditions for public comment. It is, however not likely that ICASA will complete the licence conversion process before the end of July. We presume that the technology neutrality of the Electronic Communications Act will result in us being able to explore new horizons; how far we will be allowed to go, however, and at what cost, is not yet clear.

Telkom continuously engages in negotiations for interconnection, shared access and facilities leasing agreements. Interconnectivity agreements with Neotel and the majority of VANS have been concluded.

Number portability (NP)

Mobile number portability has been in operation since 2006. Anecdotal evidence is that mobile porting in South Africa was slower than it was expected to be, although the high cost of implementation has duly materialised. Fixed-line porting, essentially between Telkom and Neotel, has not yet happened. Negotiations are advancing and some form of portability is expected to soon be in place. The existence of very active VoIP service providers has led to further competition for our fixed-line network. Carrier pre-selection between Telkom and Neotel has also not yet been established, for essentially the same reasons.

Local loop unbundling (LLU)

Telkom is required, in terms of existing legislation, to provide Neotel with shared access to its local loop. Although the Telecommunications Act, 103 of 1996, provided that no general local loop unbundling would be required after the first two years of operation of Neotel, the EC Act, which repeals the Telecommunications Act, makes provision for unbundling of the local loop, subject to ICASA making the necessary regulations. The Minister of Communications published policy decisions that the process of unbundling the local loop in South Africa should be urgently implemented and completed by 2011. On May 23, 2007, the Local Loop Unbundling Committee set up by the Minister of Communications to develop appropriate policies for the unbundling

of the local loop in South Africa recommended, amongst other things:

three forms of local loop unbundling to be considered, full unbundling of the metallic loop, line sharing and wholesale bit stream access; and

the regulatory process, with full industry participation should commence as soon as possible and be completed in 2011.

Defining end-to-end leased lines and other wholesale markets

The market review process undertaken by ICASA is aimed at determining the scope and boundaries of various fixed-line wholesale and retail markets (e.g. local access, national long distance, international, etc.).  In terms of the process, ICASA is expected to:

define the relevant markets;

assess Telkom’s market power and dominance in each market; and

propose pro-competition regulations on Telkom.

Conclusion

Telkom is confident that it is well placed to deal with all regulatory issues. Telkom actively engages with both policymakers (Parliamentary Committees) and the regulator (ICASA) and plans and analyses multiple regulatory scenarios to ensure that it is prepared for changes in regulation.

Prospects

Telkom’s strategy is designed to deliver sustainable, profitable growth going forward and is benchmarked against global best practice. The creation of shareholder value is the underlying driver of every decision made. Telkom’s board of directors and management team are well aware that the price of the share has not been reflecting the underlying value of the fixed-line business and are committed to addressing this.

The next couple of years will focus on transforming the business to deal with competition, concentrating on delivering innovative products and services to our customers, expanding our network and bedding down our growth drivers. We expect that competition will continue to constrain revenue growth over the next three years. Targets in a transforming industry such as ours are inherently risky, particularly in later years and investors should not place undue reliance on such targets. We are targeting a compound average growth rate (CAGR) of revenue over the following three years in the 5% to 10% range as increased revenues from our data,

broadband and converged business and our newly acquired subsidiaries are projected to mitigate the impacts of increased competition.

The EBITDA margin relating to fixed-line and other segments is targeted to range between 32% and 36% over the next three years. This margin range reflects the increased operational expenditure that goes hand in hand with an aggressive customer service improvement and expansion programme, an increased contribution from lower margin business and the decline in local and national voice traffic revenue. The early stages of development in Multi-Links and Africa Online add to the expected decrease in the EBITDA margin. We expect to see improvements in the EBITDA margin within the range towards the end of our three year planning period.

Capital expenditure for the fixed line and other segments will range between 23% and 27% of revenue over the next two years. In year three capex is targeted to range between 18% and 22%. Capital expenditure is expected to be R11.3 billion in the 2009 financial year.

The net debt to EBITDA for the fixed-line and other segments is targeted to be 1.3 times.

Targets in a transforming industry such as ours are inherently risky, particularly in later years and investors should not place undue reliance on such targets.

Our dividend policy remains that we progressively grow the ordinary dividend each year. Given the investment in our network, expansion in current businesses, the potential acquisitions and pressure on the fixed-line and other segments’ EBIDTA margin, no special dividend will be paid in respect of the 2008 financial year. The level of dividend going forward will be based on a number of factors including the consideration of the financial results, available growth opportunities, the group’s debt level, interest coverage, internal cash flows and resources, the repurchase of Telkom shares and other future expectations.

Declaration of ordinary dividend No 13

Notice is hereby given that ordinary dividend number 13 of 660 cents per share (2007:600 cents) in respect of the financial year ended 31 March 2008 has been declared payable on Monday 7 July 2008 to shareholders recorded in the register of the company at close of business on Friday 4 July 2008.

Holders of ordinary shares

Salient dates 2008

Last date to trade cum dividend Friday 27 June

Shares trade ex dividend	Monday 30 June
Record date	Friday 4 July
Payment date	Monday 7 July

Share certificates may not be dematerialised or rematerialised between Monday 30 June 2008 and Friday 4 July 2008 both days inclusive.

On Monday 7 July 2008, dividends due to holders of certificated securities on the South African register will either be transferred electronically to shareholders’ bank accounts or, in the 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.

Holders of American Depositary Shares

	2008
Ex dividend on New York Stock Exchange	Friday 27 June
Record date	Friday 4 July
Approximate date for currency conversion into US dollars	Monday 7 July
Approximate date for payment of dividend	Monday 21 July

3 Group performance

GROUP OPERATING REVENUE

Group operating revenue increased by 9.0% to R56,285 million (March 31, 2007: R51,619 million) in the year ended March 31, 2008. Fixed-line operating revenue, before inter-segmental eliminations, increased by 0.7% to R32,572 million primarily due to increased data services, interconnection and subscriptions and connections revenue partially offset by a decline in traffic revenue. Mobile operating revenue, before inter-segmental eliminations, increased by 17.1% to R24,089 million primarily due to significant customer growth, offset in part by declining ARPU’s.

GROUP OPERATING EXPENSES

Group operating expenses increased by 12.8% to R42,337 million (March 31, 2007: R37,533 million) in the year ended March 31, 2008, primarily due to a 17.9% increase in operating expenses in the mobile segment to R17,898 million (before inter-segmental eliminations). Fixed-line operating expenditure increased by 3.7% to R24,962 million (before inter-segmental eliminations) due to increased employee expenses, payments to other operators, depreciation, amortisation, impairment and write-offs and services rendered, partially offset by a decrease in operating leases and selling, general and administrative expenses. The increase in mobile operating expenses of 17.9%, before inter segmental

eliminations, was primarily due to increase in employee expenses and gross connections resulting in increased cost to connect customers to the network. Mobile payments to other operators also increased as a result of the increased outgoing traffic and the higher volume growth of more expensive outgoing traffic terminating on other mobile networks when compared to traffic terminating on the lower cost fixed-line network.

INVESTMENT INCOME

Investment income consists of interest received on short-term investments and bank accounts. Investment income decreased by 16.2% to R197 million (March 31, 2007: R235 million), largely as a result of lower interest received from fixed deposits primarily due to lower cash balances.

FINANCE CHARGES

Finance charges include interest paid on local and foreign borrowings, amortised discounts on bonds and commercial paper bills, fair value gains and losses on financial instruments and foreign exchange gains and losses on foreign currency denominated transactions and balances. Finance charges increased by 60.3% to R1,803 million (March 31, 2007: R1,125 million) in the year ended March 31, 2008, due to a 42.0% increase in interest expense to R1,885 million (March 31, 2007: R1,327 million) as a result of the 65.7% increase in net debt to R16,617 million (March 31, 2007: R10,026 million).  Net debt increased mainly as a result of the issuance of commercial debt paper debt with a nominal value R18,806 million during the year, as well as an increase in Vodacom’s net debt for the year. This was partly offset by the repayment of R15,773 million nominal value of commercial paper bills.  In addition to the increase in the interest expense, net fair value and exchange movements on financial instruments resulted in a loss of R82 million for the year ended March 31, 2008 (March 31, 2007: Gain of R202 million)

TAXATION

Consolidated tax expense reduced to R4,704 million (March 31, 2007: R4,731 million) in the year ended March 31, 2008. The consolidated effective tax rate for the year ended March 31, 2008, was 36.5% (March 31, 2007: 34.8%). Telkom Company’s effective tax rate was 24.6% for the year ended March 31, 2008 (March 31, 2007: 24.3%). Vodacom’s effective tax rate decreased to 34.1% (March 31, 2007: 36.9%) mainly as a result of a decrease in the secondary taxation on companies(STC) liability due to the decrease in the STC rate from 12.5% to 10.0% effective October 1, 2007.

PROFIT FOR THE YEAR AND EARNINGS PER SHARE

Profit for the year attributable to the equity holders of the Group decreased by 7.8% to R7,975 million (March 31, 2007: R8,646 million) for the year ended March 31, 2008.

Group basic earnings per share decreased by 6.9% to 1,565.0 cents (March 31, 2007: 1,681.0 cents) and Group headline earnings per share decreased by 4.4% to 1,634.8 cents (March 31, 2007: 1,710.7 cents).

4. Group balance sheet

Net debt, after financial assets and liabilities, increased by 65.7% to R16,617 million (March 31, 2007: R10,026 million) as at March 31, 2008, resulting in a net debt to equity of 49.9% from 31.3% at March 31,2007. On March 31, 2008, the Group had cash balances of R1,134 million (March 31, 2007: R749 million).

During the year ended March 31, 2008, 12.1 million shares were repurchased for R1.65 billion, to be cancelled from the issued share capital by the Registrar of Companies. As at March 31, 2008, 4,444,138 of these shares have not yet been cancelled.

Interest-bearing debt, including credit facilities utilised, increased by 58.0% to R17,075 million (March 31, 2007: R10,805 million) in the year ended March 31, 2008. The Group raised commercial paper bills with a nominal value of R18,806 million for the year ended March 31, 2008 of which R15,773 million was redeemed by March 31, 2008. Credit facilities from our subsidiaries increased by R901 million, and Telkom’s portion of Vodacom’s interest bearing debt increased by R490 million.

5. Group cash flow

Cash flows from operating activities increased by 13.3% to R10,603 million (March 31, 2007: R9,356 million), mainly due to lower taxation as well as an increase in cash generated from operations of R21,256 million (March 31, 2007: R20,520 million), partly offset by higher dividends paid.  Cash flows utilised in investing activities increased by 35.5% to R14,106 million (March 31, 2007: R10,412 million), primarily due to increased capital expenditure in both the fixed-line and mobile segments, as well as cash utilised for the purchase of Multi-Links Telecommunications (Proprietary) Limited.  Cash flows from financing activities of R2,943 million (March 31, 2007: (R2,920) million) was mostly due to the R1,647 million paid for share repurchases, the repayment of the TK01 bond with a nominal value of R4,680 million on March 31, 2008 and maturing commercial paper debt of R15,773 million nominal value during the year.  This was offset by the issuance of R18,806 million nominal value commercial paper bills, as well as entering into call and term loans of R5,600 million to fund the redemption of the TK01 bond and other cash flows from investing activities.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Cash generated from operations	19,724	20,520	21,256	4.0	3.6
Cash from operating activities
(after tax, interest, dividends)	9,506	9,356	10,603	(1.6)	13.3
Investing activities	(7,286)	(10,412)	(14,106)	(42.9)	(35.5)
Financing activities	(258)	(2,920)	2,943	(1,031.8)	200.8
Net increase/(decrease) in cash	1,962	(3,976)	(560)	(302.7)	85.9

6 Group capital expenditure

Group capital expenditure increased by 16.1% to R11,900 million (March 31, 2007: R10,246 million) and represents 21.1% of Group revenue (March 31, 2007: 19.8%).

GROUP CAPITAL EXPENDITURE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Fixed-line	4,900	6,594	6,794	34.6	3.0
Mobile	2,571	3,608	3,460	40.3	(4.1)
Other	35	44	1,646	25.7	–
	7,506	10,246	11,900	36.5	16.1

FIXED-LINE CAPITAL EXPENDITURE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Baseline	2,128	3,409	4,039	60.2	18.5
Portfolio	2,756	2,997	2,718	8.7	(9.3)
Revenue generating	374	159	57	(57.5)	(64.2)
Network evolution	330	784	1,092	137.6	39.3
Sustainment	596	416	277	(30.2)	(33.4)
Effectiveness and efficiency	1,080	1,141	841	5.6	(26.3)
Support	376	497	451	32.2	(9.3)
Regulatory	17	188	37	1,005.9	(80.3)
Other	0	0	0	0.0	0.0
	4,901	6,594	6,794	34.5	3.0

Fixed-line capital expenditure, which includes spending on intangibles, increased by 3.0 % to R6,794 million (March 31, 2007: R6,594 million) and represents 20.9% of fixed-line revenue (March 31,2007: 20.4%). Baseline and revenue generating capital expenditure of R4,096 million (March 31, 2007: R3,568 million) was largely for the deployment of technologies to support the growing data services business (including ADSL footprint), links to the mobile cellular operators and expenditure for access line deployment in selected high growth residential areas. The continued focus on rehabilitating the access network and increasing the efficiencies in the transport network contributed to the network evolution and sustainment capital expenditure of R1,369 million (March 31, 2007: R1,200 million).

Telkom continues to focus on its operations support system investment with current emphasis on workforce management, provisioning and fulfilment, assurance and customer care, hardware technology upgrades on the billing platform and performance and service management. During the year ended March 31, 2008, R841 million (March 31, 2007: R1,141 million) was spent on the implementation of systems.

MOBILE CAPITAL EXPENDITURE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
South Africa	2,192	2,730	2,135	24.5	(21.8)
Other African countries	379	878	1,326	131.7	51.0
	2,571	3,608	3,461	40.3	(4.1)

Mobile capital expenditure (50% of Vodacom’s capital expenditure) decreased by 4.1% to R3,461 million (March 31, 2007: R3,608 million) and represents 14.4% of mobile revenue (March 31, 2007: 17.5%) which was mainly spent on the cellular network infrastructure consisting of radio, switching and transmission network infrastructure and computer software. The decrease in capital expenditure in other African countries was largely as a result of decreased investment in Tanzania, Democratic Republic of the Congo and Mozambique offset by an increase in investment in Lesotho.

OTHER CAPITAL EXPENDITURE

In ZAR millions	2006	2007	2008	06/07	07/08
Other	35	44	1,646	25.7	3,640.9

Other capital expenditure consists of additions to property, plant and equipment for our subsidiaries TDS Directory Operations (Proprietary) Limited, Swiftnet (Proprietary) Limited, Telkom Media (Proprietary) Limited, Africa Online Limited and Multi-Links Telecommunications Limited. Other capital expenditure, which

includes spending on intangible assets, increased to R1,646 million (March 31, 2007: R44 million) and represents 84.9% of other revenue (March 31, 2007: 4.5%).

7 Segment performance

Telkom’s operating structure comprises three segments, fixed-line, mobile and other. The fixed-line segment provides fixed-line voice and data communications services through Telkom. The mobile segment provides mobile services through our 50% joint venture interest in Vodacom. The other segment provides directory services through our 64.9% owned subsidiary, TDS Directory Operations, wireless data services through our wholly owned subsidiary, Swiftnet, internet services in Cote d'Ivoire, Ghana, Kenya, Namibia, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe, through our wholly owned subsidiary, Africa Online Limited and fixed, mobile, data, long distance and international telecommunications services throughout Nigeria, through our 75% owned subsidiary, Multi-Links, as well as Telkom Media.

Vodacom’s results are proportionately consolidated into the Telkom Group’s consolidated financial statements. This means that we include 50% of Vodacom’s results in each of the line items in the Telkom Group consolidated financial statements.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	47,625	51,619	56,285	8.4	9.0
Fixed-line	31,832	32,346	32,572	1.6	0.7
Mobile	17,021	20,573	24,089	20.9	17.1
Other	952	979	1,939	2.8	98.1
Inter-segmental eliminations	(2,180)	(2,279)	(2,315)	4.5	1.6
Operating profit	14,677	14,470	14,482	(1.4)	0.1
Fixed-line	9,843	8,597	8,107	(12.7)	(5.7)
Mobile	4,436	5,430	6,211	22.4	14.4
Other	398	444	164	11.6	(63.1)
Inter-segmental eliminations	0	(1)	0	0	0
Operating profit margin	30.8	28.0	25.7	(9.1)	(8.2)
Fixed-line	30.9	26.6	24.9	(13.9)	(6.4)
Mobile	26.1	26.4	25.8	1.1	(2.3)
Other	41.8	45.4	8.5	8.6	(81.3)
EBITDA	20,553	19,786	20,612	(3.7)	4.2
Fixed-line	14,207	12,180	11,839	(14.3)	(2.8)
Mobile	5,908	7,122	8,181	20.6	14.9
Other	438	484	307	10.3	(36.6)
EBITDA margin	43.2	38.3	36.6	(11.3)	(4.4)

Fixed-line	44.6	37.7	36.3	(15.5)	(3.7)
Mobile	34.7	34.6	34.0	(0.3)	(1.7)
Other	46.0	49.4	15.8	7.4	(68.0)

FIXED-LINE SEGMENT

The fixed-line segment accounted for 57.9% (March 31, 2007: 62.7%) of Group operating revenues (before inter-segmental eliminations) and 56.0% (March 31, 2007: 59.4%) of Group operating profit at March 31, 2008.

The financial information presented below for the fixed-line segment is before inter-segmental eliminations.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Revenue	31,832	32,346	32,572	1.6	0.7
Operating profit	9,843	8,597	8,107	(12.7)	(5.7)
EBITDA	14,207	12,180	11,839	(14.3)	(2.8)
Capital expenditure 1	4,901	6,594	6,794	34.6	3.0
Operating profit margin (%)	30.9	26.6	24.9	(13.9)	(6.4)
EBITDA margin (%)	44.6	37.7	36.3	(15.5)	(3.7)
Capex to revenue (%)	15.4	20.4	20.9	32.5	2.5

1. Including spend on intangible assets

FIXED-LINE OPERATING REVENUE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Subscriptions and connections	5,803	6,286	6,330	8.3	0.7
Traffic	17,563	16,740	15,949	(4.7)	(4.7)
Local	5,753	4,832	4,076	(16.0)	(15.6)
Long distance	3,162	2,731	2,251	(13.6)	(17.6)
Fixed-to-mobile	7,647	7,646	7,557	(0.0)	(1.2)
International outgoing	1,001	988	986	(1.3)	(0.2)
Subscription based calling plans	-	543	1,079	-	98.7
Interconnection	1,654	1,639	1,757	(0.9)	7.2
Mobile operators	760	816	838	7.4	2.7
Fixed operators	-	-	28	-	–
International operators	894	823	891	(7.9)	8.3
Data	6,674	7,489	8,308	12.2	10.9
Leased lines and other data	5,304	5,828	6,460	9.9	10.8
Mobile leased facilities	1,371	1,664	1,848	21.4	11.1

Directories and other	138	191	228	38.4	18.9
	31,832	32,345	32,572	1.6	0.7

Operating revenue from the fixed-line segment, before inter-segmental eliminations, increased by 0.7% to R32,572 million (March 31, 2007: R32,345 million) primarily due to the increase in data services, interconnection, subscriptions and connection revenue, partially offset by a decline in traffic revenue.

Subscription and connections revenue grew by 0.7% to R6,330 million (March 31, 2007: R6,286 million), largely as a result of increased rental tariffs, increased subscribers on Telkom Closer and SupremeCall, increase in the number of PABX’s and higher penetration of value-added services.

Traffic revenue decreased by 4.7% to R15,949 million (March 31, 2007: R16,740 million), as a result of the acceleration of broadband adoption and the resultant loss of internet dial-up minutes as well as the increasing substitution of calls placed using mobile services rather than fixed-line services. Traffic, including VoIP traffic but excluding interconnection traffic, decreased by 11.4% to 22,561 million minutes (March 31, 2007: 25,455 million minutes).

Interconnection revenue increased by 7.2% to R1,757 million (March 31, 2007: R1,639 million) largely as a result of an increase of 8.3% in international interconnection revenue. The increased interconnection revenue from international operators is mainly as a result of higher exchange rates partially offset by a 3.1% decrease in international interconnection traffic minutes to 1,280 million minutes (March 31, 2007: 1,321 million minutes).

Mobile interconnection revenue increased by 2.7% to R838 million (March 31, 2007: R816 million) primarily due to increased interconnection traffic from domestic mobile operators and increased average tariff increases for call termination partially offset by lower average tariffs on mobile international outgoing calls. Mobile interconnection traffic minutes increased by 3.4% to 2,502 million minutes (March 31, 2007: 2,419 million minutes) in the year ended March 31, 2008.

Data revenue increased by 10.9% to R8,308 million (March 31, 2007: R7,492 million) mainly due to higher demand for data services, including ADSL, connectivity and SAIX, internet access, and managed data networks, including VPN Supreme and increased revenue from leased line facilities from mobile operators. These increases were partially offset by decreased tariffs for leased line facilities to mobile operators and data connectivity services.

FIXED-LINE OPERATING EXPENSES

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Employee expenses	6,314	7,096	7,397	12.4	4.2
Salaries and wages	4,466	5,095	5,509	14.1	8.1
Benefits	2,383	2,673	2,671	12.2	(0.1)
Workforce  reduction expenses	85	24	3	(71.8)	(87.5)
Employee related expenses capitalised	(620)	(696)	(786)	12.3	12.9
Payments to other network operators	6,140	6,461	6,902	5.2	6.8
Payment to mobile operators	5,220	5,425	5,697	3.9	5.0
Payment to international operators	920	1,036	1,205	12.6	16.3
SG&A	2,836	3,975	3,899	40.2	(1.9)
Materials and maintenance	1,608	1,900	1,996	18.2	5.1
Marketing	378	604	583	59.8	(3.5)
Bad debts	154	137	217	(11.0)	58.4
Other	696	1,334	1,103	91.7	(17.3)
Services rendered	2,045	2,206	2,413	7.9	9.4
Property management	1,109	1,141	1,222	2.9	7.1
Consultants and     security	936	1,065	1,191	13.8	11.8
Operating leases	755	762	619	0.9	(18.8)
Depreciation, amortisation, impairment and write-offs	4,364	3,583	3,732	(17.9)	4.2
	22,454	24,083	24,962	7.3	3.6

Fixed-line operating expenses, before inter-segmental eliminations, increased by 3.6% in the year ended March 31, 2008 to R24,962 million (March 31, 2007: R24,083 million), primarily due to increased employee expenses, payment to other operators, services rendered and depreciation, amortisation, impairment and write-offs in part offset by a decrease in operating leases and selling, general and administrative expenses.

Employee expenses increased by 4.2% in the year ended March 31, 2008 to R7,397 million (March 31, 2007: R7,096 million), largely due to increased payments to part-time employees and contractors employed to meet Telkom’s customer centricity focus; the deployment of the NGN objectives and annual salary increases,

including related benefits due to an average annual salary increases of 7.0%.

Benefits decreased in the 2008 financial year primarily as a result of the annuity policy qualifying as a plan asset in June 2006, a lower provision for leave as a result of the decrease in the number of employees and lower training expenses, partially offset by higher share compensation expenses as a result of the higher number of shares allocated during the year.

Payments to other network operators increased by 6.8% to R6,902 million (March 31, 2007: R6,461 million) as a result of increased payments to mobile and international operators. Payments to mobile operators increased by 5.0% to R5,697 million (March 31, 2007: R5,425 million), largely as a result of a 1.6% increase in fixed-to-mobile traffic. Payments to international operators increased by 16.3% to R1,205 million (March 31, 2007: R1,036 million), primarily due to an increase in volumes in switched hubbing and a 13.6% increase in international outgoing traffic volumes, arising from our reduced average international tariffs and a weaker exchange rate.

Selling, general and administrative expenses decreased by 1.9% to R3,899 million (March 31, 2007: R3,975 million), primarily as a result of a decrease in marketing expenses and other selling, general and administration expenses offset in part by an increase in material and maintenance expenses due to new technology roll-out and higher fuel cost and higher bad debts.

Services rendered increased by 9.4% to R2,413 million (March 31, 2007: R2,206 million), with property management expenses increasing by 7.1% primarily as a result of increased electricity, rates and taxes. Consultants and security costs increased by 11.8% primarily as a result of increased cost to explore local and international investment and expansion opportunities as well as higher security and legal costs.

Operating leases decreased by 18.8% to R619 million (March 31, 2007: R762 million) primarily due to a discount received on our renegotiated Debis contract effective August 1, 2007 as well as 9.3% reduction in vehicle fleet from 9,694 vehicles at March 31, 2007 to 8,792 vehicles at March 31, 2008.

The 4.2% increase in depreciation, amortisation, impairment and write-offs to R3,732 million (March 31, 2007: R3,583 million) was mainly as a result of higher amortisation of intangibles and increased depreciation due to ongoing investment in telecommunications network equipment and data processing equipment, partially offset by lower asset write-offs.

Fixed-line operating profit decreased by 5.7% to R8,107 million (March 31, 2007: R8,597 million) with an operating profit margin of 24.9% (March 31, 2007: 26.6%). EBITDA decreased by 2.8% to R11,839 million (March 31, 2007: R12,180 million), with EBITDA margins decreasing to 36.3%. (March 31, 2007: 37.7%).

MOBILE SEGMENT

The mobile segment accounted for 42.8% of Group operating revenue (March 31, 2007: 39.8%) (before inter-segmental eliminations) and 42.9% of Group operating profits (March 31, 2007: 37.5%). Vodacom’s operational statistics are presented below at 100%, but all financial figures represent the 50% that is proportionately consolidated in the Group and presented before inter-segmental eliminations.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	17,021	20,573	24,089	20.9	17.1
Operating profit	4,436	5,430	6,211	22.4	14.4
EBITDA	5,908	7,122	8,181	20.5	14.9
Capital expenditure	2,571	3,608	3,460	40.3	(4.1)
Operating profit margin (%)	26.1	26.4	25.8	1.1	(2.3)
EBITDA margin (%)	34.7	34.6	34.0	(0.3)	(1.7)
Capex to revenue (%)	15.1	17.5	14.4	15.9	(17.7)

MOBILE OPERATING REVENUE

		Year ended March 31,				% variance
In ZAR millions	2006		2007	2008	06/07		07/08
Airtime and access	10,043		11,854	13,548	18.0		14.3
Data	1,019		1,671	2,501	64.0		49.7
Interconnect	3,348		3,918	4,443	17.0		13.4
Equipment sales	1,993		2,350	2,526	17.9		7.5
International airtime	486		653	918	34.4		40.6
Other	132		127	153	(3.8)		20.5
	17,021		20,573	24,089	20.9		17.1

Operating revenue from the mobile segment increased by 17.1%, before inter-segmental eliminations, to R24,089 million (March 31, 2007: R20,573 million), primarily driven by customer growth and partially offset by declining Average Monthly Revenue Per User (ARPUs) in all operations. Revenue from Vodacom’s operations outside of South Africa increased by 30.3% to R2,697 million (March 31, 2007: R2,070 million) for the year ended March 31, 2008.

The growth in revenue can largely be attributed to a 12.7% increase in Vodacom’s total customers to 33,994 million as of March 31, 2008, (March 31, 2007: 30,150 million), resulting from strong growth in prepaid and contract customers in South Africa and 28.4% growth in customers outside of South Africa. In South Africa, total Average Monthly Revenue Per User (ARPUs) remained stable at R125. Contract ARPUs decreased by 6.0% to R486 (March 31, 2007: R517) and prepaid ARPUs decreased by 1.6% to R62 (March 31, 2007: R63) but had a positive impact on ARPU.

Vodacom’s continued focus on implementation of upgrade and retention policies in the year ended March 31, 2008, ensured an improvement in the South Africa contract churn to 8.3% (March 31, 2007: 9.7%) for the year ended March 31, 2008. South Africa’s prepaid churn of 47.9% for the year ended March 31, 2008, (March 31, 2007: 37.5%) was largely as a result of a once-off rule change that will disconnect inactive prepaid SIM cards after 13 months of being kept in an active state by call forwarding to voicemail and having not had any other revenue generating activity on the Vodacom network. This rule has led to the disconnection of an additional 2.9 million prepaid SIM cards in September 2007. The blended South African ARPU over the year ended March 31, 2008 was Rx (March 31, 2007: Rx) supported in part by the clean-up of the subscriber base.

Data revenue increased by 49.7% and represents 10.4% of mobile revenue for the year ended March 31, 2008 (March 31, 2007: 8.1%). The growth was largely due to the popularity of SMS and data initiatives such as 3G, HSDPA, Blackberry“, Vodafone Live! as well as other data products. Vodacom South Africa transmitted 4.7 billion (March 31, 2007: 4.5 billion) messages over its network during the year ended March 31, 2008. The number of active data users on the South African network as at March 31, 2008, was: 1.4 million MMS users (March 31, 2007: 1.2 million); 4.7 million GPRS users (March 31, 2007: 2.8 million); 1.3 million 3G/HSDPA devices (March 31, 2007: 584 thousand); 1,421 thousand Vodafone Live! users (March 31, 2007: 899 thousand) and 31 thousand Unique Mobile TV users (March 31, 2007: 33 thousand).

Mobile interconnect revenue increased by 13.4% to R4,443 million for the year ended March 31, 2008 (March 31, 2007: R3,918 million), primarily due to an increase in the number of fixed-line calls terminating on Vodacom’s network as a result of the increased number of Vodacom customers.

Equipment sales increased by 7.5% to R2,526 million for the year ended March 31, 2008 (March 31, 2007: R2,350 million) primarily due to the growth of the customer base and cheaper handsets combined with added functionality of new phones based on new technologies. South African handset sales volume increased by

10.9% to 5,1 million units (March 31, 2007: 4.6 million units) during the year ended March 31, 2008.

Vodacom’s international airtime revenue consists largely of international calls by Vodacom’s customers, roaming revenue from Vodacom customers making and receiving calls while abroad and revenue from international customers roaming on Vodacom’s network.

MOBILE OPERATING EXPENSES

		Year ended March 31,				% variance
In ZAR millions	2006		2007	2008	06/07		07/08
Employee expenses	1,019		1,186	1,483	16.4		25.0
Payments to other operators1	2,317		2,818	3,279	21.6		16.4
SG&A	7,328		8,778	10,436	19.8		18.9
Services rendered	65		82	115	26.2		40.2
Operating leases2	435		629	615	44.6		(2.2)
Depreciation, amortisation, impairment and write offs	1,472		1,692	1,970	14.9		16.4
	12,636		15,185	17,898	20.2		17.9

Mobile operating expenses, before inter-segmental eliminations, increased by 17.9% to R17,898 million for the year ended March 31, 2008 (March 31, 2007: R15,185 million), primarily due to increased selling and distribution costs, payments to other operators, employee expenses, depreciation, amortisation, impairment and write offs and services rendered partially offsets by lower operating leases.

Mobile employee expenses increased by 25.0% to R1,483 million for the year ended March 31, 2008 (March 31, 2007: R1,186 million), primarily due to a 5.5% increase in the number of employees to 6,247, to support the growth in operations as well as annual salary increases (including related benefits) and an increase in the provision for Vodacom’s deferred bonus schemes due to increased profits. Vodacom increased the total number of its employees, including agency temporary employees, by 14.3% in its other African operations to 1,540 employees and by 2.9% in its operations in South Africa to 4,707 employees, including agency temporary-holding company and Mauritius employees as at March 31, 2008.

Employee productivity in South Africa and other African countries, as measured by customers per employee including agency temporary employees, increased by 6.9% to 5,442 customers per employee as at March 31, 2008.

Mobile payments to other operators increased by 16.4% to R3,279 million (March 31, 2007: R2,818 million) for the year ended March 31, 2008, primarily as a result of increased outgoing traffic terminating on the other mobile networks due to the increased number of South African mobile users relative to traffic terminating on the fixed-line networks.

Mobile selling, general and administrative expenses increased by 18.9% to R10,436 million (March 31, 2007: R8,778 million), in the year ended March 31, 2008, primarily due to an increase in selling, distribution and marketing expenses mainly driven by new technologies and enhancing brand presence in all operations to support the growth in South African and other African operations.

Mobile depreciation, amortisation, impairment and write-offs increased by 16.4% to R1,970 million (March 31, 2007: R1,692 million) in the year ended March 31, 2008, primarily as a result of increased capital expenditure on network equipment with the roll-out of 3G/HSPDA networks.

Telkom’s 50% share of Vodacom’s profit from operations increased by 14.4% to R6,211 million for the year ended March 31, 2008 (March 31, 2007: R5,430) and the mobile operating profit margin decreased to 25.8% (March 31, 2007: 26.4%). Mobile EBITDA increased by 14.9% to R8,181 million (March 31, 2007: R7,122 million), with EBITDA margins decreasing to 34.0% (March 31, 2007: 34.6%).

OTHER SEGMENT

The other segment accounted for 3.4% of Group operating revenue (March 31, 2007: 1.9%) (before inter-segmental eliminations) and 1.1% of Group operating profits (March 31, 2007: 3.1%).

SUMMARY

	Year ended March 31,				% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	952	979	1,939	2.8	98.1
Operating profit	398	444	164	11.6	(63.1)
EBITDA	438	484	307	10.5	(36.6)
Capital Expenditure	35	44	1,646	25.7	–
Operating profit margin (%)	41.8	45.4	8.5	8.6	(81.3)
EBITDA margin (%)	46.0	49.4	15.8	7.4	(68.0)
Capex to revenue (%)	3.7	4.5	84.9	21.6	–

OTHER OPERATING REVENUE
	Year ended March 31,				% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Other	952	979	1,939	2.8	98.1

Other operating revenue before inter segmental eliminations increased by 98.1% for the year ended March 31, 2008 to R1,939 million (March 31, 2007: R979 million) primarily driven by the inclusion in the current period of revenue generated by our newly acquired subsidiaries, Multi-links and Africa Online.

OTHER OPERATING EXPENSES

		Year ended March 31,				% variance
In ZAR millions	2006		2007	2008	06/07		07/08
Employee expenses	156		173	340	10.9		96.5
Payments to other operators	9		10	698	11.1		6,880.0
SG&A	326		336	544	3.1		61.9
Services rendered	5		5	45	-		800.0
Operating leases	28		25	72	(10.7)		188.0
Depreciation, amortisation, impairment and write offs	40		40	143	-		257.5
	564		589	1,842	4.4		212.7

Other operating expenses, before inter-segmental eliminations, increased by 212.7% to R1,842 million (March 31, 2007: R589 million) for the year ended March 31, 2008 primarily due to the inclusion of operating expenses relating to our newly acquired subsidiaries, Multi-Links and Africa Online and the creation of Telkom Media resulting in significant increases across all expenditure categories. Multi-links was the main contributor to the increases in payments to other operators and Multi-Links and TDS Operations were the main contributors to selling, general and administrative expenditure.

8 Employees

FIXED-LINE

		Year ended March 31,				% variance
	2006		2007	2008	06/07		07/08
Fixed-line employees	25,575		25,864	24,879	1.1		(3.8)
Lines per employee	184		180	182	(2.2)		1.1

MOVEMENT IN FIXED-LINE EMPLOYEES

Telkom Company only, excluding subsidiaries

	Year ended March 31,
	2006	2007	2008
Opening balance	28,972	25,575	25,864
Appointments	686	1,486	891

Employee losses	(4,083)	(1,197)	(1,876)
Workforce reductions	(2,990)	(20)	(4)
Voluntary early retirement	(674)	(7)	(2)
Voluntary severance	(2,295)	(13)	(2)
Involuntary reductions	(21)	-	-
Natural attrition	(1,093)	(1,177)	(1,872)
Closing balance	25,575	25,864	24,879

MOBILE EMPLOYEES 

	Year ended March 31,			% variance
	2006	2007	2008	06/07	07/08
South Africa1, 2	4,305	4,727	4,849	9.8	2.6
Customers per employee1, 2	4,451	4,867	5,119	9.3	5.2
Other African countries2	1,154	1,522	1,992	31.9	30.9
Customers per employee2	3,776	4,695	4,605	24.3	(1.9)
Vodacom Group1, 2	5,459	6,249	6,841	14.5	9.5
Customers per employee1, 2	4,308	4,825	4,969	12.0	3.0

1 Includes Holding Company and Mauritius employees

2 Includes Agency temporary employees

OTHER

	Year ended March 31,			% variance
	2006	2007	2008	06/07	07/08
Multi-Links		3	680
Africa Online		317	379		19.6
Telkom Media			142
Swiftnet	67	76	85	13.4	11.8
TDS Directory Services	514	549	610	6.8	11.1

9 Condensed consolidated annual financial statements

Separately presented

REPORT ON REVIEW OF CONDENSED CONSOLIDATED PROVISIONAL ANNUAL FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF TELKOM SA LIMITED

Introduction

We have reviewed the accompanying condensed consolidated provisional balance sheet of Telkom SA Limited as at 31 March 2008 and the related condensed consolidated provisional statements of

income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies  and other explanatory notes.

Management is responsible for the preparation and fair presentation of these condensed consolidated provisional annual financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (“IAS 34”). Our responsibility is to express a conclusion on these condensed consolidated provisional annual financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated provisional annual financial information does not present fairly, in all material respects, the financial position of the entity as at 31 March 2008, and of its financial performance and its cash flows for the year then ended in accordance with IAS 34.

Registered Auditor

6 June 2008

Pretoria

Condensed consolidated provisional income statement

for the three years ended March 31, 2008

		2006	2007	2008
	Notes	Rm	Rm	Rm
Total revenue	3.1	48,260	52,157	56,865
Operating revenue	3.2	47,625	51,619	56,285
Other income	4	480	384	534
Operating expenses		33,428	37,533	42,337
Employee expenses	5.1	7,489	8,454	9,220
Payments to other operators	5.2	6,826	7,590	9,169
Selling, general and administrative expenses	5.3	10,273	12,902	14,409
Service fees	5.4	2,114	2,291	2,571
Operating leases	5.5	850	981	838
Depreciation, amortisation, impairment and write-offs	5.6	5,876	5,315	6,130
Operating profit		14,677	14,470	14,482
Investment income		397	235	197
Finance charges and fair value movements		1,223	1,125	1,803
Interest		1,346	1,327	1,885
Foreign exchange and fair value movement		(123)	(202)	(82)
Profit before taxation		13,851	13,580	12,876
Taxation	6	4,523	4,731	4,704
Profit for the year		9,328	8,849	8,172
Attributable to:
Equity holders of Telkom		9,189	8,646	7,975
Minority interest		139	203	197
		9,328	8,849	8,172
Basic earnings per share (cents)	8	1,746.1	1,681.0	1,565.0
Diluted earnings per share (cents)	8	1,736.6	1,676.3	1,546.9
Dividend per share (cents)	8	900.0	900.0	1,100.0

Condensed consolidated provisional balance sheet

at March 31, 2008

		2006	2007	2008
	Notes	Rm	Rm	Rm
Assets
Non-current assets		44,813	48,770	57,763
Property, plant and equipment	10	37,274	41,254	46,815
Intangible assets	11	3,910	5,111	8,468
Investments		2,894	1,384	1,448
Deferred expenses		254	270	221
Finance lease receivables		–	158	206
Deferred taxation	12	481	593	605
Current assets		12,731	10,376	12,609
Short-term investments		69	77	51
Inventories	13	814	1,093	1,287
Income tax receivable	6	–	520	9
Current portion of deferred expenses		226	287	362
Current portion of finance lease receivables		–	88	166
Trade and other receivables		6,399	7,303	8,986
Other financial assets		275	259	614
Cash and cash equivalents	14	4,948	749	1,134
Total assets		57,544	59,146	70,372
Equity and liabilities
Equity attributable to equity holders of Telkom		29,165	31,724	32,815
Share capital and premium	15	6,791	5,329	5,208
Treasury shares	16	(1,809)	(1,774)	(1,638)
Share-based compensation reserve	17	151	257	643
Non-distributable reserves		1,128	1,413	1,292
Retained earnings		22,904	26,499	27,310
Minority interest		301	284	522
Total equity		29,466	32,008	33,337
Non-current liabilities		12,391	8,554	15,104
Interest-bearing debt	18	7,655	4,338	9,403
Other financial liabilities		–	36	919
Provisions		2,677	1,443	1,675
Deferred revenue		991	1,021	1,128
Deferred taxation	12	1,068	1,716	1,979
Current liabilities		15,687	18,584	21,931
Trade and other payables		6,103	7,237	8,771
Shareholders for dividend	7	4	15	20
Current portion of interest-bearing debt	18	3,468	6,026	6,330
Current portion of provisions		1,660	2,095	2,181
Current portion of deferred		1,975	1,983	2,593

revenue
Income tax payable	6	1,549	594	323
Other financial liabilities		235	193	371
Credit facilities utilised	14	693	441	1,342
Total liabilities		28,078	27,138	37,035
Total equity and liabilities		57,544	59,146	70,372

Condensed consolidated provisional statement of changes in equity

for the three years ended March 31, 2008

	Attributable to equity holders of Telkom			Attributable to equity holders of Telkom
				Share- based	Non-
	Share	Share	Trea- sury	compensa tion	distribu table
	capital	premium	shares	reserve	reserves
	Rm	Rm	Rm	Rm	Rm
Balance at April 1, 2005	5,570	2,723	(1,812)	68	360
Total income and expense for the year					52
Profit for the year
Foreign currency translation reserve (net of tax of RNil)					52
Dividend declared (refer to note 7)
Transfer to non-distributable reserves*					716
Shares vested and re-issued (refer to note 16 and 17)			3	(3)
Net increase in Share-based compensation reserve
(refer to note 17)				86
Acquisition of subsidiary
Shares bought back and cancelled (refer to note 15)	(121)	(1,381)
Balance at March 31, 2006	5,449	1,342	(1,809)	151	1,128

Total income and expense for the year					46
Profit for the year
Foreign currency translation reserve (net of tax of R4 million)					46
Dividend declared (refer to note 7)
Transfer to non- distributable reserves*					239
Net increase in Share-based compensation reserve
(refer to note 17)				141
Shares vested and re-issued (refer to note 16 and 17)			35	(35)
Acquisition of subsidiaries and minorities
Shares bought back and cancelled (refer to note 15)	(120)	(1,342)
Balance at March 31, 2007	5,329	–	(1,774)	257	1,413
Total income and expense for the year					529
Profit for the year
Revaluation of available-for-sale investment
(net of tax of R1 million)					8
Foreign currency translation reserve (net of tax of R6 million)					521
Dividend declared (refer to note 7)
Transfer to non- distributable reserves*					11
Net increase in Share-based compensation

reserve
(refer to note 17)				522
Shares vested and re-issued (refer to note 16 and 17)			136	(136)
Acquisition of subsidiaries and minorities (refer to note 19)
Shares bought back and cancelled (refer to note 15)	(121)
Minority put option (refer to note 19)					(661)
Balance at March 31, 2008	5,208	–	(1,638)	643	1,292

Condensed consolidated provisional statement of changes in equity (continued)

for the three years ended March 31, 2008

	Attributable to equity holders of Telkom
	Retained		Minority	Total
	earnings	Total	interest	equity
	Rm	Rm	Rm	Rm
Balance at April 1, 2005	19,232	26,141	220	26,361
Total income and expense for the year	9,189	9,241	132	9,373
Profit for the year	9,189	9,189	139	9,328
Foreign currency translation reserve (net of tax of RNil)		52	(7)	45
Dividend declared (refer to note 7)	(4,801)	(4,801)	(78)	(4,879)
Transfer to non- distributable reserves*	(716)	–		–
Shares vested and re-issued (refer to note 16 and 17)		–		–
Net increase in Share-based compensation reserve
(refer to note 17)		86		86
Acquisition of subsidiary		–	27	27
Shares bought back and cancelled (refer to note 15)		(1,502)		(1,502)
Balance at March 31, 2006	22,904	29,165	301	29,466
Total income and expense for the year	8,646	8,692	217	8,909
Profit for the year	8,646	8,646	203	8,849

Foreign currency translation reserve (net of tax of R4 million)		46	14	60
Dividend declared (refer to note 7)	(4,678)	(4,678)	(166)	(4,844)
Transfer to non-distributable reserves*	(239)	–		–
Net increase in Share-based compensation reserve
(refer to note 17)		141		141
Shares vested and re-issued (refer to note 16 and 17)		–		–
Acquisition of subsidiaries and minorities		–	(68)	(68)
Shares bought back and cancelled (refer to note 15)	(134)	(1,596)		(1,596)
Balance at March 31, 2007	26,499	31,724	284	32,008
Total income and expense for the year	7,975	8,504	226	8,730
Profit for the year	7,975	7,975	197	8,172
Revaluation of available-for-sale investment
(net of tax of R1 million)		8		8
Foreign currency translation reserve (net of tax of R6 million)		521	29	550
Dividend declared (refer to note 7)	(5,627)	(5,627)	(65)	(5,692)
Transfer to non- distributable reserves*	(11)	–		–
Net increase in Share-based compensation reserve
(refer to note 17)		522		522
Shares vested and re-issued (refer to note 16 and 17)		–		–
Acquisition of subsidiaries and minorities (refer to note 19)		–	77	77
Shares bought back and cancelled (refer to note 15)	(1,526)	(1,647)		(1,647)
Minority put option (refer to note 19)		(661)		(661)
Balance at March 31, 2008	27,310	32,815	522	33,337

*The earnings from the Group’s cell captives are recognised in the income statement and then transferred to non-distributable reserves.

Condensed consolidated provisional cash flow statement

for the three years ended March 31, 2008

		2006	2007	2008
	Notes	Rm	Rm	Rm
Cash flows from operating activities		9,506	9,356	10,603
Cash receipts from customers		46,958	50,979	55,627
Cash paid to suppliers and employees		(27,234)	(30,459)	(34,371)
Cash generated from operations		19,724	20,520	21,256
Interest received		482	422	433
Dividends received		50	3	–
Finance charges paid		(1,316)	(1,115)	(1,077)
Taxation paid	6	(4,550)	(5,690)	(4,277)
Cash generated from operations before
dividend paid		14,390	14,140	16,335
Dividend paid	7	(4,884)	(4,784)	(5,732)
Cash flows from investing activities		(7,286)	(10,412)	(14,106)
Proceeds on disposal of property, plant and
equipment and intangible assets		92	54	169
Proceeds on disposal of investments		493	77	8
Additions to property, plant and equipment
and intangible assets		(7,396)	(10,037)	(11,657)
Acquisition of subsidiaries and minorities	19	–	(445)	(2,462)
Additions to other investments		(475)	(61)	(164)
Cash flows from financing activities		(258)	(2,920)	2,943
Loans raised		4,123	5,624	23,877
Loans repaid		(7,399)	(6,922)	(19,315)
Shares bought back and cancelled		(1,502)	(1,596)	(1,647)
Finance lease capital repaid		(24)	(37)	(61)
Decrease in net financial assets		4,544	11	89
Net increase/(decrease) in cash and cash equivalents		1,962	(3,976)	(560)
Net cash and cash

equivalents at beginning
of year		2,301	4,255	308
Effect of foreign exchange rate differences		(8)	29	44
Net cash and cash equivalents at
end of year	14	4,255	308	(208)

Notes to the condensed consolidated provisional annual financial statements

for the three years ended March 31, 2008

1. Corporate Information

Telkom SA Limited (‘Telkom’) is a company incorporated and domiciled in the Republic of South Africa (‘South Africa’) whose shares are publicly traded. The main objective of Telkom, its subsidiaries and joint ventures (‘the Group’) is to supply telecommunication, broadcasting, multimedia, technology, information and other related information technology services to the general public, as well as mobile communication services through the Vodacom Group (Proprietary) Limited (‘Vodacom’) in South Africa and certain other African countries. The Group’s services and products include:

•fixed-line subscription and connection services to post-paid, prepaid and private payphone customers using PSTN lines, including ISDN lines, and the sale of subscription based value-added voice services and customer premises equipment rental and sales;

•fixed-line traffic services to post-paid, prepaid and payphones customers, including local, long distance, fixed-to-mobile, international outgoing and international voice-over-internet protocol traffic services;

•interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;

•fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL services, packet-based services, managed data networking services and internet access and related information technology services;

•e-commerce, including internet access service provider, application service provider, hosting, data storage, e-mail and security services;

•mobile communications services, including voice services, data services, value-added services and handset sales through Vodacom and;

•other services include directory services, through our TDS Directory Operations Group, wireless data services, through our Swiftnet (Proprietary) Limited subsidiary, internet services outside South Africa, through our Africa Online Limited subsidiary and information, communication and telecommunication operating services in Nigeria, through our newly acquired Multi-Links Telecommunications (Proprietary) Limited subsidiary.

2. Basis of preparation and accounting policies

Basis of preparation

The condensed consolidated provisional annual financial statements have been prepared in accordance with IAS34 Interim Financial Reporting and in compliance with the South African Companies Act, 1973.

The financial statements are prepared on the historical cost basis, with the exception of certain financial instruments and share-based payments which are measured at fair value.

Significant accounting policies

The Group’s significant accounting polices and methods of computation are consistent with those applied in the previous financial year except for the following:

•adoption of amendment to IAS1;

•adoption of IFRS7, IFRIC8, IFRIC9, IFRIC10, IFRIC11 and Circular 8/2007; and

• identification of an additional segment.

The principal effects of these changes are discussed below.

Amendment to IAS1 Presentation of Financial Statements

This amendment is effective for annual periods beginning on or after January 1, 2007. As a result of the pronouncement of IFRS7 Financial Instruments: Disclosures, IAS1 has been amended to require the disclosure of the entity’s objective, policies and processes for managing capital, quantitative data about what the entity regards as capital, whether the entity has complied with any capital requirements and if it has not complied, the consequences of such non-compliance. The impact of this standard is to expand on certain disclosures relating to financial instruments and requires additional disclosures not previously disclosed. The effect of this amendment will be included in the consolidated annual financial statements for the year ended March 31, 2008 and has no effect on the disclosure in the condensed consolidated provisional annual financial statements.

IFRS7 Financial Instruments: Disclosures

The standard is effective for annual periods beginning on or after January 1, 2007. IFRS7 supersedes disclosure in IAS32. All financial instruments disclosures will now be provided in terms of IFRS7. One of the main disclosure requirements added by IFRS7 is that an entity must group its financial instruments into classes of similar instruments, and when disclosures are required, make disclosures by class. IFRS7 also requires information about the significance of financial instruments and information about the nature and extent of risks arising from financial instruments. The impact of this standard is to expand on certain disclosures relating to financial instruments and requires additional disclosures not previously disclosed. The effect of this standard will be included in the consolidated annual financial statements for the year ended March 31, 2008.

IFRIC8 Scope of IFRS2

The interpretation is effective for annual periods beginning on or after May 1, 2006. The interpretation clarifies that IFRS2 applies to transactions in which an entity receives goods or services as consideration for equity instruments of the entity. This includes transactions in which the entity cannot identify specifically some or all of the goods or services received. The impact of this interpretation on the condensed consolidated provisional annual financial statements is not material since the Group has not transacted with third parties using equity as a purchase consideration for the transaction, other than those paid to employees in share-based payment transactions.

IFRIC9 Reassessment of Embedded Derivatives

The interpretation is effective for annual periods beginning on or after June 1, 2006. The interpretation clarifies that an entity is required to separate an embedded derivative from the host contract and account for it as a derivative when the entity first becomes a party to the contract. It further clarifies that reassessment is only allowed when there is a change in the terms of the contract which significantly modifies the cash flows that would otherwise be required under the contract. The interpretation does not have an impact on the condensed consolidated provisional annual financial statements.

IFRIC10 Interim Financial Reporting and Impairment

The interpretation is effective for annual periods beginning on or after November 1, 2006. The interpretation clarifies that an entity should not reverse an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument classified as available-for-sale or financial asset carried at cost. The impact of this interpretation

on the condensed consolidated provisional annual financial statements is not material.

IFRIC11 IFRS2 – Group and Treasury Share Transactions

The interpretation is effective for annual periods beginning on or after March 1, 2007. The interpretation clarifies that regardless of whether the entity chooses or is required to buy equity instruments from another party to satisfy its obligations to its employees under the share-based payment arrangement by delivery of its own shares, the transaction should be accounted for as equity settled. This interpretation also applies regardless of whether the employee’s rights to the equity instruments were granted by the entity itself or by its shareholders or was settled by the entity itself or its shareholders. Share-based payments involving the Group’s own equity instruments in which the Group chooses or is required to buy its own equity instruments to settle the share-based payment obligation are currently accounted for as equity-settled share-based payment transactions under IFRS2. The interpretation has no further impact on the condensed consolidated provisional annual financial statements.

Circular 8/2007 Headline earnings

The circular was issued by the South African Institute of Chartered Accountants (‘SAICA’) and is applicable for financial periods ending on or after August 31, 2007. Circular 8/2007 supersedes Circular 7/2002 and it defines rules for calculating headline earnings per share, which is an additional per share measure permitted by IAS33 Earnings per Share. It further requires a disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the calculation of basic earnings per share in accordance with the requirements of IAS33. The Group adopted the provisions of Circular 8/2007 in the reporting period beginning on April 1, 2007 and the adoption has had no impact other than additional disclosure as required by the Circular, which will be included in the consolidated annual financial statements for the year ended March 31, 2008.

Segmental reporting

As of the beginning of the year the Group has identified a new segment called ‘Other’ and is now managed in three business segments, which form the primary segment reporting basis: Fixed-line, Mobile and Other. The Other business segment includes newly acquired Multi-Links Telecommunications (Proprietary) Limited and Africa Online Limited, as well as recently formed Telkom Media Group. It also includes TDS Directory Operations Group and Swiftnet (Proprietary) Limited, which were previously included in the Fixed-line segment.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

			2006	2007	2008
			Rm	Rm	Rm
3. Revenue
	3.1	Total revenue	48,260	52,157	56,865
		Operating revenue	47,625	51,619	56,285
		Other income (excluding profit on disposal of property, plant and equipment and investments, refer to note 4)	238	303	383
		Investment income	397	235	197
	3.2	Operating revenue	47,625	51,619	56,285
		Fixed-line	31,832	32,345	32,572
		Mobile	17,021	20,573	24,089
		Other	952	979	1,939
		Eliminations	(2,180)	(2,278)	(2,315)
		Fixed-line	31,832	32,345	32,572
		Subscriptions, connections and other usage	5,803	6,286	6,330
		Traffic	17,563	16,740	15,950
		Domestic (local and long distance)	8,915	7,563	6,328
		Fixed-to-mobile	7,647	7,646	7,557
		International (outgoing)	1,001	988	986
		Subscription based calling plans*	–	543	1,079
		Interconnection	1,654	1,639	1,757
		Data	6,674	7,489	8,308
		Sundry revenue	138	191	227

*The Group has reclassified calling plans from domestic traffic into a separate revenue line item to disclose revenue earned from subscription based calling plans. Amounts for the year ended March 31, 2006 were not restated as they were considered to be immaterial.

Fixed-line revenue has been restated as a result of changes in the segment structure.

4. Other income		480	384	534
	Other income (included in Total revenue, refer to note 3)	238	303	383
	Interest received from trade

receivables	136	190	257
Sundry income	102	113	126
Profit on disposal of property, plant and equipment and intangible assets	79	29	147
Profit on disposal of investment	163	52	4

Sundry income includes rental received for the

partial sub-letting of commercial properties.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

			2006	2007	2008
			Rm	Rm	Rm
5. Operating expenses
	Operating expenses comprise:
	5.1	Employee expenses	7,489	8,454	9,220
		Salaries and wages	5,566	6,362	7,144
		Medical aid contributions	371	385	417
		Retirement contributions	435	496	598
		Post-retirement and pension benefits	(58)	33	5
		Post-retirement medical aid	361	330	277
		Telephone rebates	19	104	27
		Share-based compensation expense
		(refer to note 17)	127	141	522
		Other benefits*	1,288	1,299	1,016
		Employee expenses capitalised	(620)	(696)	(786)
		*Other benefits include skills development, annual leave, performance incentive and service bonuses.
	5.2	Payments to other operators	6,826	7,590	9,169
		Payments to other network operators consist of expenses in respect of interconnection with other network operators.
	5.3	Selling, general and administrative expenses	10,273	12,902	14,409
		Selling and administrative expenses	7,240	9,248	10,352
		Maintenance	1,928	2,286	2,508
		Marketing	899	1,215	1,249
		Bad debts	206	153	300
	5.4	Service fees	2,114	2,291	2,571
		Facilities and property management	1,110	1,142	1,228

Consultancy services	182	266	291
Security and other	772	821	982
Auditors’ remuneration	50	62	70
Audit services	38	61	69
Company auditors	28	48	46
Current year	26	47	43
Prior year underprovision	2	1	3
Other auditors – current year	10	13	23
Audit related services	9	–	1
Other services	3	1	–

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

			2006	2007	2008
			Rm	Rm	Rm
5. Operating expenses (continued)
	5.5	Operating leases	850	981	838
		Land and buildings	221	284	170
		Transmission and data lines	42	63	187
		Equipment	78	80	50
		Vehicles	509	554	431
	5.6	Depreciation, amortisation, impairment and write-offs	5,876	5,315	6,130
		Depreciation of property, plant and equipment	5,154	4,483	4,855
		Amortisation of intangible assets	560	536	746
		Impairment of property, plant and equipment and intangible assets	–	12	244
		Reversal of impairment of property, plant and equipment and intangible assets	(26)	–	–
		Write-offs of property, plant and equipment and intangible assets	188	284	285

In recognition of the changed usage patterns of certain items of property, plant and equipment and intangible assets, the Group reviewed their remaining useful lives as at March 31. The assets affected were certain items included in, Support equipment and Intangible assets.

	Previous life	Revised life
	Years	Years
Property, plant and equipment
Support equipment	8-13	5-13

Intangible assets
Subscriber bases	3- 8	4-10

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
6.	Taxation	4,523	4,731	4,704
	South African normal company taxation	3,763	3,528	3,756
	Deferred taxation	173	516	219
	Secondary tax on companies ('STC')	585	670	678
	Foreign taxation	2	17	51
	The net deferred taxation expense results mainly from the extension of useful lives which is offset slightly by STC tax credits.
	STC is provided for at a rate of 10% (12.5% before October 1, 2007) on the amount by which dividends declared by Telkom exceeds dividends received.
	Taxation paid	(4,550)	(5,690)	(4,277)
	Net liability at beginning of year	(1,711)	(1,549)	(74)
	Taxation expense	(3,795)	(3,545)	(3,807)
	Foreign currency translation reserve	–	–	(32)
	Secondary tax on companies	(585)	(670)	(678)
	Business combination	(8)	–	–
	Net taxation liability at end of year	1,549	74	314
7.	Dividends paid	(4,884)	(4,784)	(5,732)
	Dividends payable at beginning of year	(7)	(4)	(15)
	Declared during the year - Dividends on ordinary shares	(4,801)	(4,678)	(5,627)
	Final dividend for 2005: 400 cents	(2,134)	–	–
	Special dividend for 2005: 500 cents	(2,667)	–	–
	Final dividend for 2006: 500 cents	–	(2,599)	–
	Special dividend for 2006: 400 cents	–	(2,079)	–
	Final dividend for 2007: 600

cents	–	–	(3,069)
Special dividend for 2007: 500 cents	–	–	(2,558)
Dividends paid to minority shareholders	(80)	(117)	(110)
Dividends payable at end of year	4	15	20

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
8.	Earnings and dividend per share
	Basic earnings per share (cents)	1,746.1	1,681.0	1,565.0
	The calculation of earnings per share is based on profit attributable to equity holders of Telkom for the year of R7,975 million (2007: R8,646 million; 2006: R9,189 million) and 509,595,090 (2007: 514,341,282; 2006: 526,271,093) weighted average number of ordinary shares in issue.
	Diluted earnings per share (cents)	1,736.6	1,676.3	1,546.9
	The calculation of diluted earnings per share is based on earnings for the year of R7,975 million (2007: R8,646 million; 2006: R9,189 million) and 515,541,966 diluted weighted average number of ordinary shares (2007: 515,763,579; 2006: 529,152,318). The adjustment in the

weighted average number of shares is as a result of the expected future vesting of shares already allocated to employees under the Telkom Conditional Share Plan.
Headline earnings per share (cents)*	1,728.6	1,710.7	1,634.8
The calculation of headline earnings per share is based on headline earnings of R8,331 million (2007:  R8,799 million; 2006: R9,097 million) and 509,595,090 (2007: 514,341,282; 2006: 526,271,093) weighted average number of ordinary shares in issue.
Diluted headline earnings per share (cents)*	1,719.2	1,706.0	1,616.0
The calculation of diluted headline earnings per share is based on headline earnings of R8,331 million (2007: R8,799 million; 2006: R9,097 million) and 515,541,966 (2007: 515,763,579; 2006: 529,152,318) diluted weighted average number of ordinary shares in issue. The adjustment in the weighted average number of shares is as a result of the expected future vesting of shares already allocated to employees under the Telkom Conditional

Share Plan.
Reconciliation of weighted average number of ordinary shares:
Ordinary shares in issue (refer to note 15)	557,031,819	544,944,899	532,855,528
Weighted average number of shares bought back	(7,211,710)	(7,442,253)	(1,594,241)
Weighted average number of treasury shares	(23,549,016)	(23,161,364)	(21,666,197)
Weighted average number of shares outstanding	526,271,093	514,341,282	509,595,090

*The disclosure of headline earnings is a requirement of the JSE Limited and is not a recognised measure under IFRS. It has been calculated in accordance with the South African Institute of Chartered Accountants’ circular issued in this regard.

The effect of the increase in the interest expense as a result of the increase in borrowings is a reduction in the basic earnings per share of 63.4 cents and a reduction in the headline earnings per share of 62.7 cents.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
8.	Earnings and dividend per share (continued)
	Reconciliation between earnings and headline earnings:
	Earnings as reported	9,189	8,646	7,975
	Adjustments:
	Profit on disposal of investments (Available-for-sale)	(163)	(52)	(4)
	Profit on disposal of property, plant and equipment and intangible assets	(79)	(29)	(147)
	Impairment of property, plant, equipment and

	intangible assets	–	12	244
	Reversal of impairment of property, plant, equipment and intangible assets	(26)	–	–
	Write-offs of property, plant and equipment	188	284	285
	Acquisition of subsidiary	(35)	–	–
	Tax effects	23	(62)	(26)
	Minority interest	–	–	4
	Headline earnings	9,097	8,799	8,331
	Reconciliation of diluted weighted average number of ordinary shares:
	Weighted average number of shares outstanding	526,271,093	514,341,282	509,595,090
	Expected future vesting of shares	2,881,225	1,422,297	5,946,876
	Diluted weighted average number of shares outstanding	529,152,318	515,763,579	515,541,966
	Dividend per share (cents)	900.0	900.0	1,100.0
	The calculation of dividend per share is based on dividends of R5,627 million (2007: R4,678 million; 2006: R4,801 million) declared on June 8, 2007 and 511,513,237 (2007: 519,711,236; 2006: 533,465,571) number of ordinary shares outstanding on the date of dividend declaration. The reduction in the number of shares represents the number of treasury shares held on date of payment.
9.	Net asset value per share (cents)	5,593.5	6,223.2	6,570.3

The calculation of net asset value per share at March 31, is based on net assets of R32,815 million (2007: R31,724 million; 2006: R29,165 million) and 499,441,985 (2007: 509,769,454; 2006: 521,408,320) number of ordinary shares outstanding.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
10.	Property, plant and equipment
	Additions	6,310	8,648	10,108
	Disposals	(56)	(290)	(122)
	A major portion of this capital expenditure relates to the expansion of existing networks and services across the Telkom Group. An extensive build program with focus on Next Generation Network technologies at Telkom has resulted in an increase in property, plant and equipment additions which is expected to continue over the next few years.
11.	Intangible assets
	Additions (including business combinations)	1,324	1,841	3,720
	Disposals	(19)	–	–
	Included in the additions is R1,731 million goodwill and R202 million for other intangible assets recognised as a result of the acquisition of Multi-Links Telecommunications (Proprietary) Limited by Telkom International (Proprietary) Limited, as well as R475 million goodwill as a result of the acquisition of the minorities of Smartphone SP (Proprietary) Limited and Smartcom (Proprietary) Limited by the Vodacom Group (refer to note 19). The remaining additions and disposals relate to the software intangible asset class.
12.	Deferred taxation	(587)	(1,123)	(1,374)
	Deferred tax assets	481	593	605
	Deferred tax liabilities	(1,068)	(1,716)	(1,979)

The major part of the deferred tax asset relates to taxation losses, provisions and deferred income recognised in the Vodacom Group. The deferred tax asset also includes STC credits on past dividends received that are available to be utilised against dividends declared. It is considered probable, given Telkom’s dividend policy, that these credits will be utilised. The asset will be released as a tax expense when the dividends are declared.

The deferred tax liability increased mainly due to the increase in the temporary differences between the carrying value and tax base of assets, resulting from the change in the estimate of useful lives, as well as from the acquisition of Multi-Links Telecommunications (Proprietary) Limited.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
13.	Inventories	814	1,093	1,287
	Gross inventories	916	1,275	1,535
	Write-down of inventories to net realisable value	(102)	(182)	(248)
	Inventories consist of the following categories:	814	1,093	1,287
	Installation material, maintenance material and network equipment	487	811	895
	Merchandise	327	282	392
14.	Net cash and cash equivalents	4,255	308	(208)
	Cash shown as current assets	4,948	749	1,134
	Cash and bank balances	1,853	649	664
	Short-term deposits	3,095	100	470
	Credit facilities utilised	(693)	(441)	(1,342)
	Undrawn borrowing facilities	9,519	8,658	7,565

The undrawn borrowing facilities are unsecured, when drawn bear interest at a rate linked to the prime interest rate, have no specific maturity date and are subject to annual review. The facilities are in place to ensure liquidity.

Borrowing powers

To borrow money, Telkom’s directors may mortgage or encumber Telkom’s property or any part thereof and issue debentures, whether secured or unsecured, whether outright as a security or debt, liability or obligation of Telkom or any third party. For this purpose the borrowing powers of Telkom are unlimited, but are subject to the restrictive financial covenants of the TL20 loan as well as the conditions and covenants of the Bridge Loan facility.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
15.	Share capital and premium
	Issued and fully paid	6,791	5,329	5,208
	520,784,182 (2007: 532,855,526;
	2006: 544,944,897) ordinary shares of R10 each	5,449	5,329	5,208
	1 (2007: 1; 2006: 1) Class A ordinary share of R10	–	–	–
	1 (2007: 1; 2006: 1) Class B ordinary share of R10	–	–	–
	Share premium	1,342	–	–
	The following table illustrates the movement within the number of shares issued:
		Number of	Number of	Number of
		shares	shares	shares
	Shares in issue at beginning of year	557,031,819	544,944,899	532,855,528
	Shares bought back*	(12,086,920)	(12,089,371)	(12,071,344)
	Shares in issue at end of year	544,944,899	532,855,528	520,784,184

The rights of class A and class B shares rank equally with the ordinary shares in respect of rights to dividends but differ in respect of the right to appoint directors. Full details of the voting rights of ordinary class A and class B shares are documented in the Articles of Association of Telkom.

The directors have been given authority by the shareholders to buy back Telkom's own shares up to a limit of 20% of the issued share capital as at October 26, 2007. This authority expires at the next Annual General Meeting.

Share buy-back

During the year, Telkom bought back 12,071,344 ordinary shares for a total consideration of R1,647 million. This reduced Share capital by R121 million and Retained earnings by R1,526 million.

During the year ended March 31, 2007, Telkom bought back 12,089,371 ordinary shares at a total consideration of R1,596 million. This reduced the Share capital by R120 million, Share premium by R1,342 million and Retained earnings by R134 million.

During the year ended March 31, 2006, Telkom bought back 12,086,920 ordinary shares at a total consideration of R1,502 million. This reduced the Share capital by R121 million and the Share premium by R1,381 million.

*4,444,138 ordinary shares bought back are in the process of being cancelled from the issued share capital by the Registrar of Companies.

		2006	2007	2008
		Rm	Rm	Rm
16.	Treasury shares	(1,809)	(1,774)	(1,638)

At March 31, 2008, 10,493,141 (2007: 12,237,016; 2006: 12,687,521) and 10,849,058 (2007: 10,849,058; 2006: 10,849,058) ordinary shares in Telkom, with a fair value of R1,377 million (2007: R2,031 million; 2006: R2,038 million) and R1,423 million (2007: R1,801 million; 2006: R1,743 million) are held as treasury shares by its subsidiaries Rossal No 65 (Proprietary) Limited and Acajou Investments (Proprietary) Limited, respectively.

The shares held by Rossal No 65 (Proprietary) Limited are reserved for issue in terms of the Telkom Conditional Share Plan (‘TCSP’). In addition, the Board of directors agreed that, subject to the JSE Listing requirements, the treasury shares held by Acajou Investments (Proprietary) Limited be made available to the TCSP to make up for the current shortfall in the share scheme after the additonal grants during the current financial year (refer to note 17).

The reduction in the treasury shares is due to 1,743,875 (2007: 450,505; 2006: 29,669) shares that vested in terms of the TCSP during the current year.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

17. Share-based compensation reserve

This reserve represents the cumulative fair value of the equity-settled share-based payment transactions recognised in employee expenses during the vesting period of the equity instruments granted to employees in terms of the Telkom Conditional Share Plan.

The Telkom Board approved the fourth enhanced allocation of shares to employees on September 4, 2007, with a grant date of September

27, 2007, the day that the employees and Telkom shared a common understanding of the terms and conditions of this grant. A total of 6,089,810 shares were granted. No consideration is payable on the shares issued to employees, but performance criteria will need to be met in order for the granted shares to vest. The ultimate number of shares that will vest may differ based on certain individual and Telkom performance conditions being met. The related compensation expense is recognised over the vesting period of shares granted, commencing on the grant date.

The Board also approved an enhanced allocation for the November 2006 grant on September 4, 2007, with a grant date of September 27, 2007. The number of additional shares granted with respect to the 2006 allocation is 4,966,860.

	2006	2007	2008
	Rm	Rm	Rm
The following table illustrates the movement within the Share-based compensation reserve:
Balance at beginning of year	68	151	257
Net increase in equity	83	106	386
Employee cost*	120	141	522
Accelerated vesting of shares	(37)	–	–
Vesting and transfer of shares	–	(35)	(136)
Balance at end of year	151	257	643
*The increase in the employee cost for the current financial year is mainly as a result of the additional share allocations.
The principal assumptions used in calculating the expected number of shares that will vest are as follows:
Employee turnover (%)	5	5	5
Meeting specified performance criteria (%)	100	100	100

At March 31, 2008 the estimated total compensation expense to be recognised over the vesting period was R2,151 million (2007: R580 million; 2006: R381 million), of which R522 million (2007: R141 million; 2006: R120 million) was recognised in employee expenses.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
18.	Interest-bearing debt
	Long-term portion of interest-	7,655	4,338	9,403

bearing debt
Local debt	6,296	2,359	6,875
Foreign debt	127	820	1,441
Finance leases	1,232	1,159	1,087
Current portion of interest-bearing debt	3,468	6,026	6,330
Local debt	2,642	5,772	6,001
Foreign debt	786	193	202
Finance leases	40	61	127

Movements in borrowings for the year are as follows:

Local debt

The increase in local debt is mainly attributable to the increase in Commercial Paper Bills and Money Market Fixed Term Borrowings which were acquired in order to finance capital expenditure.

Repayments/refinancing

Commercial Paper Bills with a nominal value of R15,773 million were redeemed in the current financial year including the R1,350 million nominal value that was outstanding at March 31, 2007. These redemptions were mainly financed with cash flows from operations. Commercial Paper Bills with a nominal value of R18,806 million were issued during the current financial year. The R6,109 million nominal value of debt as at March 31, 2008 is expected to be repaid/refinanced from cash flows from operations and the issue of new debt instruments upon maturity. The TK01 bond which had a nominal value of R4,680 million was redeemed at March 31, 2008.

Repayments/refinancing of current portion of interest-bearing debt

The repayment/refinancing of R6,203 million of the current portion of interest-bearing debt will depend on the market circumstances at the time of repayment.

Management believes that sufficient funding facilities will be available at the date of repayment/refinancing.

Loans raised and loans repaid on the cash flow statement increased due to raising and redemption of the Commercial Paper Bills in Telkom, as well as newly acquired Asset Backing finance in Vodacom.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

	2007	2008
19. Acquisitions and disposals of	Rm	Rm

subsidiaries and minorities
	19.1	Acquisitions
		By Telkom
		Africa Online Limited (‘Africa Online’)
		On February 23, 2007 Telkom acquired a 100% shareholding of Africa Online Limited from African Lakes Corporation for a total cost of R150 million, with a resulting goodwill of R145 million.
		Africa Online is an internet service provider active in Cote d’Ivoire, Ghana, Kenya, Namibia, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. Africa Online is incorporated in Mauritius.
		The process of calculating a fair value of the identified assets, liabilities and contingent liabilities continued after the preceding year end and has now been finalised.
		The fair value of the assets and liabilities acquired were determined as follows:
		Fair value of intangible assets	43
		Less: Deferred taxation raised on intangible assets	(12)
		Less: Net liabilities acquired (excluding fair value of intangible assets)
			(26)
		Fair value of assets	5
		Goodwill	145
		Purchase price	150
		The goodwill has been allocated to the various cash-generating units representative of the countries in which Africa Online Limited operates. An impairment loss of R12 million was recognised in order to write down goodwill to the recoverable amount.
		By the Group’s 50% joint venture, Vodacom
		Smartphone SP (Proprietary) Limited and subsidiaries (‘Smartphone SP’)
		On August 31, 2007, the Vodacom Group increased its interest in the

equity of Smartphone SP from 70% to 100%. The acquisition was accounted for using the parent entity extension method.
Minority interest acquired	3
Goodwill	466
Purchase price (including capitalised cost)	469
Capitalised cost payable	(1)
Purchase price	468

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

			2007	2008
			Rm	Rm
19. Acquisitions and disposals of subsidiaries and minorities (continued)
	19.1	Acquisitions (continued)
		Smartcom (Proprietary) Limited (‘Smartcom’)
		On September 1, 2007, the Vodacom Group increased its interest in the equity of Smartcom from 88% to 100%. The acquisition was accounted for using the parent entity extension method.
		Minority interest acquired (<R1 million)		–
		Goodwill		9
		Purchase price		9

By the Group’s subsidiaries

One Africa Television (Proprietary) Limited (‘One Africa Television’) and Downlink (Proprietary) Limited (‘Downlink’)

On August 13, 2007, Telkom Media acquired a 49% shareholding in One Africa Television and Downlink respectively, two companies registered in the Republic of Namibia, for a total cost of R18 million.

Telkom Media has management control and therefore the entities are consolidated into the Telkom Media Group.

The purchase price allocation will be completed in the 2009 financial year. Goodwill has not been tested for impairment as the

accounting is provisional and has not been allocated to the various cash-generating units.

Multi-Links Telecommunications (Proprietary) Limited (‘Multi-Links Telecommunications’)

On May 1, 2007 Telkom acquired a 75% shareholding in Multi-Links Telecommunications through Telkom International, a wholly owned South African subsidiary, for a total cost of R1,985 million.

Multi-Links Telecommunications is a Nigerian Private Telecommunications Operator with a Unified Access License providing fixed, mobile, data, long distance and international telecommunications services throughout Nigeria. Multi-Links is domiciled and incorporated in Nigeria.

At this stage Telkom has not taken a decision to dispose of any operations as a result of the combination.

The purchase price allocation has been completed during the current year under review, and has resulted in goodwill being adjusted.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

			2007	2008
			Rm	Rm
19. Acquisitions and disposals of subsidiaries and minorities (continued)
	19.1	Acquisitions (continued)
		Multi-Links Telecommunications (Proprietary) Limited (continued)
		The following intangible assets were identified and fair valued at year end:
		Customer relationships		61
		Licences		36
		Brand		105
				202
		The fair value of the assets and liabilities acquired were determined as follows:
		Net asset value acquired (excluding fair value of intangible assets)		236
		Fair value of intangible assets		202
		Less: Deferred taxation raised on intangible assets		(65)

	Less: Contingencies recognised	(35)
	Fair value of net assets acquired	338
	Less: Minority interests	(84)
	Goodwill	1,731
	Purchase price	1,985
	Revenue amounting to R845 million and a profit of R23 million are included in the condensed consolidated provisional annual financial statements.
	The factors that lead to goodwill recognised is a combination of a premium paid and intangible assets not separately identifiable at acquisition.
19.2	Disposals of Subsidiaries
	By the Group’s 50% joint venture, Vodacom
	Ithuba Smartcall (Proprietary) Limited (‘Ithuba Smartcall’)
	On September 3, 2007, the Group disposed of its 52% interest in Ithuba Smartcall. The fair value of the assets and liabilities disposed of was less than R1 million.
	Stand 13 Eastwood Road Dunkeld (Proprietary) Limited
	On September 3, 2007, the Group disposed of its 100% interest in Stand 13 Eastwood Road Dunkeld (Proprietary) Limited. The fair value of the assets and liabilities disposed was as follows:
	Carrying amount of net assets disposed of:	4
	Gain on disposal	4
	Selling price	8

The consideration was received on September 6, 2007.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

19. Acquisitions and disposals of subsidiaries

and minorities (continued)

19.3Minority put options

Congolese Wireless Network s.p.r.l. put option

In terms of a shareholder agreement, the minority shareholder in Vodacom Congo (RDC) s.p.r.l., Congolese Wireless Network s.p.r.l., has a put option which came into effect three years after the

commencement date, December 1, 2001, and for a maximum of five years thereafter. The option price will be the fair market value of the related shares at the date the put option is exercised. The option was reclassified from trade and other payables to other financial liabilities. The option liability’s value increased to R396 million (Group share: R198 million) (March 31, 2007: R249 million (Group share: R125 million)). The liability is reflected as a short-term financial liability.

Multi-Links put option

In terms of the sale agreement signed on May 1, 2007 between Telkom and the previous shareholders of Multi-Links, the minorities have been granted a put option that requires Telkom to purchase all of the minorities’ shares in Multi-Links, if the minorities put their shares to Telkom. The put option is exercisable within 90 days of the second anniversary of signing the sales agreement. A liability of R918 million has been recognised in this regard and is included in other non-current financial liabilities. R661 million was initially recognised directly in equity, R257 million subsequent measurement through finance charges and fair value movements.

		2006	2007	2008
		Rm	Rm	Rm
20.	Commitments
	Capital commitments
	Capital commitments authorised	10,265	11,167	15,698
	Fixed-line	6,500	7,000	7,500
	Mobile	3,746	4,159	5,211
	Other	19	8	2,987
	Commitments against authorised capital expenditure	842	1,099	3,504
	Fixed-line	197	506	652
	Mobile	642	591	800
	Other	3	2	2,052
	Authorised capital expenditure not yet contracted	9,423	10,068	12,194
	Fixed-line	6,302	6,494	6,848
	Mobile	3,104	3,568	4,411
	Other	17	6	935

Capital commitments comprise of commitments for property, plant and equipment and intangible assets.

Management expects these commitments to be financed from internally generated cash and other borrowings.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

20. Commitments (continued)

2010 FIFA World Cup Commitment

The FIFA World Cup commitment is an executory contract which requires the Group to develop the fixed-line components of the necessary telecommunications infrastructure needed to broadcast this event to the world. This encompasses the provisioning of the fixed-line telecommunications related products and services and, where applicable, the services of qualified personnel necessary for the planning, management, delivery, installation and de-installation, operation, maintenance and satisfactory functioning of these products and services. Furthermore as a National Supporter, Telkom owns a tier 3 sponsorship that grants Telkom a package of advertising, promotional and marketing rights that are exercisable within the borders of South Africa. The total value of the commitment amounted to USD35 million.

		2006	2007	2008
		Rm	Rm	Rm
21.	Contingencies
	Third parties	35	28	27
	Fixed-line	27	19	18
	Mobile	3	4	4
	Other	5	5	5

Third parties

These amounts represent sundry disputes with third parties that are not individually significant and that the Group does not intend to settle.

Supplier dispute

Expenditure of R594 million was incurred up to March 31, 2002 for the development and installation of an integrated end-to-end customer assurance and activation system to be supplied by Telcordia. In the 2001 financial year, the agreement with Telcordia was terminated and in that year, Telkom wrote off R119 million of this investment. Following an assessment of the viability of the project, the balance of the Telcordia investment was written off in the 2002 financial year. During March 2001, the dispute was taken to arbitration where Telcordia was seeking approximately USD130 million plus interest at a rate of 15.5% per year which was subsequently increased to USD172 million plus interest at a rate of 15.5% per year for money outstanding and damages.

The parties have since reached an advanced stage in their preparation to determine the quantum payable by Telkom to Telcordia. Following the ruling by the Constitutional Court, two hearings were held at the International Dispute Resolutions Centre

 (‘IDRC’). The first hearing was held in London on May 21, 2007 and was a ‘directions hearing’ in terms of which the parties consented to a ruling by the arbitrator setting out a consolidated list of proposals and issues to form part of the quantum hearing.

In the second hearing in London at the IDRC on June 25 and 26 2007 the arbitrator set out a list of issues for determination at the quantum hearing.

At a subsequent hearing during July 2007 in London the arbitrator ruled that the rate in terms of the Prescribed Rate of Interest will apply on both damages and debt claims, permitted Telcordia to a further amount to Telcordia’s existing claims, permitted VAT to be claimed on Telcordia’s claim, where applicable, and set out an agreed timetable for the future conduct of proceedings. A full hearing is expected to take place during the second quarter of 2008 in South Africa and a further argument is expected to take place thereafter in London.

A mediation was concluded, without success, on February 26, 2008. Since then the focus has been on dealing with various interlocutory/procedural issues that required resolution prior to the main substantive arbitration hearings due to take place.

The Arbitrator has in the interim directed that the main hearings scheduled for April 28 to May 23, 2008 and June 9 to June 20, 2008 would not take place. An interlocutory hearing was directed by the Arbitrator to resolve the various interlocutory/procedural issues in London from April 28, 2008 to May 2, 2008. Only once the interlocutory issues have been finalised will dates for the main hearings be scheduled.

A provision has been raised based on management’s best estimate of the probable payments in this regard.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

21.	Contingencies (continued)
		2006	2007	2008
		Rm	Rm	Rm
	Supplier dispute liability included in current portion of provisions	–	527	569

The provision has increased from March 31, 2007 due to finance costs and exchange rate movements.

Competition Commission

The following are updates of cases that have been brought to the Competition Commission. A maximum administrative penalty of up to 10%, for any of the following cases, calculated with reference to Telkom’s annual turnover, excluding the turnover of subsidiaries and joint ventures, for the financial year prior to the complaint date, may be imposed if it is found that Telkom has committed a prohibited practice as set out in the Competition Act, 1998 (as amended). The Competition Commission has to date not imposed the maximum penalty on any offender.

The South African Value Added Network Services (‘SAVA’)

SAVA filed a complaint against Telkom regarding alleged anti- competitive practices on the part of Telkom.

Telkom filed its replying affidavit on August 1, 2007. The application review of the matter has been set down for hearing in the second quarter of 2008. The matter is being held over pending decision by the High Court regarding the jurisdiction of the Competition Tribunal to hear the matter.

Omnilink

Omnilink alleged that Telkom was abusing its dominance by discriminating in its price for Diginet services as against those charged to VANS and the price charged to customers who apply for a Telkom IVPN solution. The Competition Commission conducted an enquiry and subsequently referred the complaint, together with the SAVA complaint, to the Competition Tribunal for adjudication.

Orion/Telkom (Standard Bank and Edcon): Competition Tribunal

Orion filed a complaint against Telkom concerning offering discounts on Public Switch Telecommunication Services to Corporate Customers.

Telkom has not yet filed its answering affidavit in the main complaint before the Tribunal and it appears as if Orion is not actively pursuing this matter any further.

The Internet Service Providers Association (‘ISPA’)

ISPA filed complaint against Telkom regarding alleged anti- competitive practices in relation to the cost of access to SA internet exchange.

The Competition Commission has formally requested Telkom to provide it with certain records of orders placed for certain services, in an attempt to first investigate the latter aspects of the complaint. Telkom has provided the records requested and no further activity has occurred since.

M-Web and Internet Solutions (‘IS’)

‘IS’ filed a complaint against Telkom regarding pricing including ADSL retail products and IP connect products.

To date there has been no further movement on this matter, either in the filing of a replying affidavit by IS/M-Web in the interim relief application or in the investigation of the matter by the Competition Commission.

M-Web

On June 5, 2007 M-Web brought an application against Telkom for interim relief at the Competition Tribunal in regard to the manner in which Telkom provides wholesale ADSL internet connections. M-Web requested the Competition Tribunal to grant an order of interim relief against Telkom to charge M-Web a wholesale price for the provision of ADSL internet connections which is not higher than the lowest retail price. M-Web further applied for an order that Telkom implement the migration of end customers from Telkom PSTS (ADSL access) to M-Web without interruption of the service. Although Telkom raised the objection that the Competition Tribunal does not have jurisdiction to hear the matter in its answering affidavit filed at the Competition Tribunal, Telkom has also filed an application in the Transvaal Provincial Division of the High Court on July 3, 2007 for an order declaring that the Competition Tribunal does not have jurisdiction to hear the application made to it by M-Web.

The application has been set down for hearing during the second quarter of 2008. The main matter is being held over pending the outcome of the application in the High Court. As is the case with the SAVA matter, only if the High Court decides that the Competition Tribunal does have jurisdiction to hear the matter, will the matter again be set down for hearing.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

21. Contingencies (continued)

Salary negotiations

The Group has a long term suspensive agreement with bargaining unit (employees) which fixes the salary increase for a period of 3 years. The agreement comes to an end March 31, 2009, as a result the group and the unions are currently in negotiation over whether the current increases in CPIX index should lead to an amendment of the agreement.

The Group’s exposure is 50% of the following items:

Retention incentives

The Vodacom Group has committed a maximum R1,317 million (2007: R652 million; 2006: R456 million) in respect of customers already beyond their normal 24 month contract period, but who have not yet upgraded into new contracts, and therefore have not utilised the incentive available for such upgrades. The Group has not provided for this liability, as no legal obligation exists, since the customers have not yet entered into new contracts.

Put and call options

In terms of various shareholders’ agreements, put and call options exist for the acquisition of shares in various companies. Except as disclosed in note 19.3, none of the put and call options have any value at any of the periods presented as the conditions set out in the agreements have not been met.

Customer registration

The telecommunications industry in the Democratic Republic of the Congo is subject to a recently promulgated ministerial decree requiring the registration of the entire customer base of all network operators. This decree requires prescribed particulars of all customers to be obtained and maintained by June 30, 2008. The sanction for non-compliance by any operator who has not identified its customers in accordance with the requirements of this decree within three months from March 28, 2008 could result in:

• a fine equivalent to between USD5 thousand and USD10 thousand per customer;

• suspension of the licence for a period not exceeding three months in the event of repetition; and

• suspension of the licence in the event of a likely disturbance of law and order/safety.

The Group is making every effort to obtain the required information but management believes it is unlikely that the Group will meet all the requirements as prescribed in this decree by June 30, 2008. Management is engaging with the relevant ministries on this matter and are presently unable to reliably assess the potential impact on the Group in the event of non-compliance with this decree.

Contingent asset

Litigation is being instituted for the recovery of certain fees paid by the Vodacom Group. The information usually required by IAS 37: Provisions, Contingent Liabilities and Contingent Assets, is not disclosed on the grounds that it can be expected to prejudice seriously the outcome of the litigation. The directors are of the opinion that a claim may be successful and that the amount recovered could be significant.

Negative working capital ratio

At each of the financial years ended March 31, 2008, 2007 and 2006 Telkom had a negative working capital ratio. A negative working capital ratio arises when current liabilities are greater than current assets. Current liabilities are intended to be financed from operating cash flows, new borrowings and borrowings available under existing credit facilities.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
22.	Segment information
	Eliminations represent the inter-segmental transactions that have been eliminated against segment results.
	Business Segment
	Consolidated operating revenue	47,625	51,619	56,285
	Fixed-line	31,832	32,345	32,572
	Elimination	(737)	(772)	(774)
	Mobile	17,021	20,573	24,089
	Elimination	(1,435)	(1,494)	(1,519)
	Other	952	979	1,939
	Elimination	(8)	(12)	(22)
	Consolidated other income	480	384	534
	Fixed-line	465	334	497
	Elimination	(45)	(46)	(50)
	Mobile	50	42	20
	Elimination	–	–	–
	Other	10	54	67
	Elimination	–	–	–
	Consolidated operating expenses	33,428	37,533	42,337
	Fixed-line	22,454	24,083	24,962
	Elimination	(1,443)	(1,495)	(1,538)
	Mobile	12,635	15,185	17,898
	Elimination	(710)	(755)	(805)
	Other	564	589	1,842
	Elimination	(72)	(74)	(22)
	Consolidated operating profit	14,677	14,470	14,482
	Fixed-line	9,843	8,596	8,107
	Elimination	661	677	714
	Mobile	4,436	5,430	6,211
	Elimination	(725)	(739)	(714)
	Other	398	444	164

Elimination	(2,398)	(2,850)	(3,832)
Mobile	64	36	27
Other	11	8	27
Consolidated finance charges	1,223	1,125	1,803
Fixed-line	839	856	1,277
Mobile	384	269	240
Other	–	–	286

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
22.	Segment information (continued)
	Consolidated taxation	4,523	4,731	4,704
	Fixed-line	2,836	2,652	2,630
	Mobile	1,542	1,918	2,055
	Other	145	161	19
	Minority interests	139	203	197
	Fixed-line	–	–	–
	Mobile	58	109	73
	Other	81	94	124
	Profit attributable to equity holders of Telkom	9,189	8,646	7,975
	Fixed-line	8,888	8,129	8,175
	Elimination	(1,737)	(2,173)	(3,118)
	Mobile	2,516	3,170	3,870
	Elimination	(725)	(739)	(714)
	Other	183	197	(238)
	Elimination	64	62	–
	Consolidated assets	54,306	57,426	68,259
	Fixed-line	43,121	44,224	47,829
	Elimination	(1,598)	(1,547)	(1,604)
	Mobile	12,263	14,026	16,743
	Elimination	(258)	(353)	(278)
	Other	905	1,188	5,734
	Elimination	(127)	(112)	(165)
	Investments	2,963	1,461	1,499
	Fixed-line	3,093	1,621	4,917
	Elimination	(232)	(341)	(3,607)
	Mobile	102	181	176
	Other	–	–	13
	Other financial assets	275	259	614
	Fixed-line	256	230	445
	Mobile	19	28	169
	Other	–	1	–

Total assets	57,544	59,146	70,372
Consolidated liabilities	15,171	15,951	19,689
Fixed-line	10,285	10,154	11,892
Elimination	(351)	(458)	(495)
Mobile	6,466	7,416	8,871
Elimination	(1,441)	(1,468)	(1,542)
Other	319	374	971
Elimination	(107)	(67)	(8)

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
22.	Segment information (continued)
	Interest-bearing debt	11,123	10,364	15,733
	Fixed-line	9,888	9,082	13,362
	Mobile	1,234	1,278	1,815
	Other	1	4	556
	Other financial liabilities	235	229	1,290
	Fixed-line	205	58	167
	Mobile	30	158	204
	Other	–	13	919
	Tax liabilities	1,549	594	323
	Fixed-line	1,186	–	7
	Mobile	315	556	290
	Other	48	38	26
	Total liabilities	28,078	27,138	37,035
	Other segment information
	Capital expenditure for property, plant and equipment	6,310	8,648	10,108
	Fixed-line	3,926	5,545	6,044
	Mobile	2,350	3,069	2,475
	Other	34	34	1,589
	Capital expenditure for intangible assets	1,196	1,598	1,792
	Fixed-line	974	1,049	750
	Mobile	221	539	985
	Other	1	10	57
	Depreciation and amortisation	5,714	5,019	5,601
	Fixed-line	4,176	3,298	3,470
	Mobile	1,498	1,681	1,955
	Other	40	40	176
	Impairment and asset write-offs	162	296	529
	Fixed-line	187	284	263
	Mobile	(26)	12	15
	Other	1	–	251
	Workforce reduction expense - Fixed-line	88	24	3

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
23.	Related parties
	Details of material transactions and balances with related parties not disclosed separately in the condensed consolidated provisional annual financial statements were as follows:
	With joint venture:
	Vodacom Group (Proprietary) Limited
	Related party balances
	Trade receivables	48	61	51
	Trade payables	(256)	(353)	(346)
	Related party transactions
	Revenue	(710)	(755)	(816)
	Expenses	1,435	1,494	1,525
	Audit fees	3	3	3
	Revenue includes interconnect fees and lease and installation of transmission lines
	Expenses mostly represent interconnect expenses
	With shareholders:
	Government
	Related party balances
	Trade receivables	247	271	326
	Related party transactions
	Revenue	(2,304)	(2,458)	(2,623)
	With entities under common control:
	Major public entities
	Related party balances
	Trade receivables	39	59	28
	Trade payables	(2)	(6)	(25)
	The outstanding balances are unsecured and will be settled in cash in the ordinary course of business
	Related party transactions
	Revenue	(370)	(435)	(486)
	Expenses	172	238	243
	Rent received	(17)	(29)	(21)
	Rent paid	56	27	22

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

		2006	2007	2008
		Rm	Rm	Rm
23.	Related parties (continued)
	Key management personnel compensation:
	(Including directors’ emoluments)
	Related party transactions
	Short-term employee benefits*	157	176	232
	Post employment benefits	7	14	8
	Termination benefits	12	–	28
	Equity compensation benefits	6	8	42
	Other long term benefits	16	27	9

*The comparatives for March 31, 2006 were restated to include directors’ emoluments of Vodacom which were previously excluded, as well as to reclassify certain amounts to other long-term benefits.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties of telecommunication services are made at arms length prices. Except as  indicated above, outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for related party receivables or payables. Except as indicated above for the year ended March 31, 2008, the Group has not made any impairment of amounts owed by related parties (2007: R Nil; 2006: R Nil ). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

24. Significant events

Swiftnet (Proprietary) Limited

Telkom is in the process of selling a 30% shareholding in its subsidiary Swiftnet (Proprietary) Limited (‘Swiftnet’) in order to comply with existing licence requirements from the Independent Communications Authority of South Africa (‘ICASA’). The 30% shareholding has in principle been sold to empowerment investors, the Radio Surveillance Consortium (‘RSC’), for R55 million. The transaction however is still subject to an ICASA approval process.

Telkom Media (Proprietary) Limited

On August 31, 2006 Telkom created of a new subsidiary, Telkom Media (Proprietary) Limited, with a Black Economic Empowerment (‘BEE’) shareholding. ICASA awarded Telkom Media a commercial

satellite and cable subscription broadcast licence on September 12, 2007.

Telkom has decided to significantly reduce its investment in Telkom Media (Proprietary) Limited in the future and will be investigating all opportunities to do this in the best interest of Telkom shareholders and all other stakeholders.

Mobile Strategy

Telkom is supportive of the BBBEE (Broad-Based Black Economic Empowerment) transaction proposed by Vodacom but is not in a position to comment on the impact of the proposed transaction on Telkom as the details relating to the transaction have not been finalised.

Notes to the condensed consolidated provisional annual financial statements (continued)

for the three years ended March 31, 2008

25. Subsequent events

Dividends

The Telkom Board declared an annual dividend of R3,437 million or 660 cents per share on June 6, 2008 payable on July 7, 2008 for shareholders registered on July 4, 2008 which will fully utilise the deferred tax asset on STC credits and result in an additional STC charge of R161 million.

Mobile strategy and unlocking shareholder value

Telkom shareholders are informed that on Friday, May 30, 2008, Telkom received a non-binding proposal from a wholly-owned subsidiary of Vodafone Group Plc (‘Vodafone’) to acquire a portion of Telkom’s stake in Vodacom Group (Proprietary) Limited (‘Vodacom’) subject to, inter alia, the Company unbundling its remaining stake in Vodacom to Telkom shareholders.

Separately, on Friday, May 30, 2008, Telkom received a letter from a consortium comprising Mvelaphanda Holdings (Proprietary) Limited, affiliated funds of Och-Ziff Capital Management Group and other strategic funders (‘the Consortium’), which states that the Consortium is considering making an offer for the entire issued share capital of Telkom. The letter makes it clear that the offer will only be made if a number of pre-conditions are met including, inter alia, confirmation by the Telkom Board that it will unbundle Telkom’s entire 50% stake in Vodacom as part of the offer.

The discussions with Vodafone commenced on Wednesday, May 14, 2008 and are independent from the approach from the Consortium.

The Board of Telkom, in accordance with its fiduciary duties, will evaluate all bona fide offers with a view to maximising

shareholder value. No transaction will be entered into without requisite shareholder approvals.

Telkom will advise shareholders of further developments in this regard in due course.

Other matters

The directors are not aware of any other matter or circumstance since the financial year ended March 31, 2008 and the date of this report, not otherwise dealt with in the financial statements, which significantly affects the financial position of the Group and the results of its operations.

10. Supplementary information

In connection with the US Securities Exchange Commission Rules relating to “Conditions for use of Non-GAAP Financial Measures”, EBITDA and headline earnings have been reconciled to net profit below:

	Year ended March 31,
	2006	2007	2008
EBITDA
Earnings before interest, taxation, depreciation and amortisation (EBITDA) can be reconciled as follows:
EBITDA	20,553	19,785	20,612
Depreciation, amortisation, impairment and write-offs	(5,876)	(5,315)	(6,130)
Investment income	397	235	197
Finance charges	(1,223)	(1,125)	(1,803)
Taxation	(4,523)	(4,731)	(4,704)
Minority interests	(139)	(203)	(197)
Net profit	9,189	8,646	7,975
Headline earnings
The disclosure of headline earnings is a requirement of the JSE Securities Exchange, South Africa and is not a recognised measure under US GAAP
Headline earnings can be reconciled as follows:
Earnings as reported	9,189	8,646	7,975
Profit on disposal of investment	(163)	(52)	(4)
Profit on disposal of property, plant and equipment and intangible assets	(79)	(29)	(147)
Impairment/(reversal of impairment) of property, plant and equipment and	(26)	12	244

intangible assets
Write-offs of property, plant and equipment	188	284	285
Acquisition of subsidiary	(35)	–	–
Tax and minority interest effects	23	(62)	(22)
Headline earnings	9,097	8,799	8,331

We believe that EBITDA provides meaningful additional information to investors since it is widely acceptable by analysts and investors as a basis for comparing a company’s underlying operating profitability with that of other companies as it is not influenced by past capital expenditures or business acquisitions, a company’s capital structure or the relevant tax regime.

EBITDA is not a US GAAP or IFRS measure. You should not construe EBITDA as an alternative to operating profit or cash flows from operating activities determined in accordance with US GAAP or IFRS or as a measure of liquidity.

US DOLLAR CONVENIENCE
March 31,
	2008
Operating revenue	6,915
Operating profits	1,779
Net profit	980
EBITDA	2,532
EPS (cents)	192.3
Net debt	2,041
Total assets	8,645
Cash flow from operating activities	1,303
Cash flow used in investing activities	(1,733)
Cash flow used in financing activities	362
Exchange rate
Period end 1
US$1 = ZAR	8.14

1.Noon buying rate.

EX-99.2

Exhibit 99.2

Telkom SA Limited

Group Annual Results
for the year ended March 31, 2008

June 9, 2008

Changing the way we do business

Cautionary statement on forward looking statements

All of the statements included in this document, as well as oral statements that may be made by us or by officers, directors or employees acting on
behalf of us, that are not statements of historical facts, including but not limited to financial targets and prospects, constitute or are based on
forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995, specifically Section 27A of the US
Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. These forward-looking statements
involve a number of known and unknown risks, uncertainties and other factors that could cause our actual results and outcomes to be materially
different from historical results or from any future results expressed or implied by such forward-looking statements. Among the factors that could
cause our actual results or outcomes to differ materially from our expectations are those risks identified in Item 3. “Key Information-Risk Factors,” of
Telkom’s most recent Annual Report on Form 20-F filed with the US Securities and Exchange Commission (SEC) and its other filings and
submissions with the SEC which are available on Telkom’s website at www.telkom.co.za/ir, including, but not limited to, any changes to our mobile
strategy and Vodacom holdings and our ability to impact such strategy and organizational changes thereto, increased competition in the South
African fixed-line, mobile and data communications markets; our ability to implement our strategy of transforming from basic voice and data
connectivity to fully converged solutions, developments in the regulatory environment; continued mobile growth and reductions in Vodacom’s and
Telkom’s net interconnect margins; Telkom’s and Vodacom’s ability to expand their operations and make investments and acquisitions in other
African countries and the general economic, political, social and legal conditions in South Africa and in other countries where Telkom and Vodacom
invest; our ability to improve and maintain our management information and other systems; our ability to attract and retain key personnel and
partners; our inability to appoint a majority of Vodacom’s directors and the consensus approval rights at Vodacom may limit our flexibility and ability
to implement our preferred strategies; Vodacom’s continued payment of dividends or distributions to us; our negative working capital; changes in
technology and delays in the implementation of new technologies; our ability to reduce theft, vandalism, network and payphone fraud and lost
revenue to non-licensed operators; the amount of damages Telkom is ultimately required to pay to Telcordia Technologies Incorporated; the
outcome of regulatory, legal and arbitration proceedings, including tariff approvals, and the outcome of Telkom’s hearings before the Competition
Commission and others; any requirements that we unbundle the local loop, our ability to negotiate favorable terms, rates and conditions for the
provision of interconnection services and facilities leasing services or if ICASA finds that we or Vodacom have significant market power or otherwise
imposes unfavorable terms and conditions on us; our ability to implement and recover the substantial capital and operational costs associated with
carrier pre-selection, number portability and the monitoring, interception and customer registration requirements contained in the South African
Regulation of Interception of Communications and Provisions of Communication-Related Information Act and the impact of these requirements on
our business; Telkom’s ability to comply with the South African Public Finance Management Act and South African Public Audit Act and the impact
of the Municipal Property Rates Act; fluctuations in the value of the Rand and inflation rates; the impact of unemployment, poverty, crime, HIV
infection, labor laws and labor relations, exchange control restrictions, and power outages in South Africa; and other matters not yet known to us or
not currently considered material by us.

We caution you not to place undue reliance on these forward-looking statements. All written and oral forward-looking statements attributable to us,
or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Moreover, unless we are required by law to update
these statements, we will not necessarily update any of these statements after the date hereof, either to confirm them to actual results or to changes
in our expectation.

2 

Reuben September

Overview

Financial summary

•Group operating revenue increased by 9.0% to
R56.3 billion

•Group EBITDA increased by 4.2% to R20.6 billion

•Net debt to equity increased to 49.9% from 31.3%
at March 31, 2007

•Cash generated from operations increased by
3.6% to R21.1 billion

•HEPS decreased by 4.0% to 1634.5 cents
per share

•Ordinary dividend increased by 10.0% to
660 cents per share payable on July 7, 2008

•No special dividend declared - investing in
South African and African operations

4

Strategy overview - defend and grow

Changing the way we do business

Fixed Mobile

Geographic

Data

•Core strategy remains defend
and grow

•Telkom continues to move up
the value added data services
chain

•We continue to pursue
acquisition opportunities in fast
growing emerging markets

•We aim to establish Telkom as a
regional ICT player

•Leveraging our core strengths to
be a full play service provider

5

Traditional voice

•Annuity revenue increased 14.1% to R6.9 billion

•Telkom Closer packages increased 63.3% to 471,742

•Supreme call packages increased 121.4% to 12,777

•Term & Volume discount plans of R3.4 billion signed in FY2008

Defensive strategies are successful

•Continue converting revenue streams to
annuity revenues

•Bundling call minutes with access line rental
in attractive subscription based value
propositions

6

*

Pricing initiatives

•Offering value-based calling plans

•Rebalancing tariffs to reduce arbitrage opportunities

•Driving the penetration of bundles to increase annuity based revenues

Offering value to remain competitive

7

Data

•Data revenues climbed 10.9% to R8.3 billion

•Focus on innovative products such as VPN Lite

•Ethos of innovation and speed to market being fostered

Data connectivity	Rbn4.5	4.5%
Mobile leased lines	Rbn1.9	11.1%
Internet access	Rbn1.2	29.1%
Managed network services	Rm728.5	36.2%
VPN services	Rm500.0	46.6%

Data continues to grow in importance

8

Data centre business

•Increase Telkom’s share of the ICT revenue pie

•Stimulate use of bandwidth over our network

•Towards one-stop solutions as IT and
telecommunications converge

•Regulators insisting that data is properly protected

•Improving efficiencies through shared resources

•Telkom is pursuing the acquisition of a data centre
business outside South Africa

Moving up the value added services data chain

9

Broadband and converged services

•ADSL footprint now covering 92% of the network

•Coverage in township areas - 69%

•ADSL subscribers grown 61.2% to 412,190

•Do Broadband packages increased by 245.6% to
119,288

•Wholesale ADSL services have grown to 18,740 from
2,545 at September 2007

•ATTI has improved to 19 days from 23 days at
March 31, 2007

•57% of all ADSL installation done through self-install
option

•Targeting 592,000 ADSL subscribers for FY 2009

Targeting ADSL penetration of 15% - 20% of fixed-access lines
by FY 2010/11

10

Results to March 31, 2008

•Revenue of R845.4 million

•Profit after tax - R49.0 million

•ARPU for 11 months ended March 31, 2008 - $32

•Subscribers at March 31, 2008 - 813,392

•Subscribers at May 31, 2008 - 1,000,251

Strong operational performance

11

Fast becoming a serious competitor in Nigeria

12

•Ability to deliver complex data products to corporates growing

•Planned capex expenditure

–Further Metro Ethernet rings to be build in
Abuja, Lagos, Kano, Kadunaand Delta

–Six NGN nodes to be built during FY 2009

•Aggressively pursuing opportunities in the
growing markets of Nigeria

13

•Targeted EBITDA margin range 17% - 22% at March 31, 2009

•Targeted base station growth 2009 - 1,150

•Targeted fibre deployment 2009 - 2,000km

•Targeted customer growth 2009 - 3.5 million

Multi-Links will be substantial contributor to Telkom

14

Ghana

Namibia

Swaziland

Zimbabwe

Uganda

Tanzania

Cote D’Ivoire

Kenya

Small company with big opportunities

15

Telkom Management Services Company

•Opportunities in sub-Saharan Africa for reputable
operator to provide management services

•Target market - -

–State owned incumbent operators

–Numerous new entrants in ICT industry

•Telkom has first hand experience of privatisation

•Leveraging experience with technology innovation,
equipment manufacturers, operator support
systems,business planning, support services and
IT solutions

TMSC will provide total management solutions

16

Potential corporate action announced on June 2, 2008

Binding proposals subject to requisite shareholder approval

•Proposal received from Vodafone:

–Vodafone would acquire a portion of Telkom’s stake in Vodacom; and

–Telkom would unbundle its remaining shareholding in Vodacom to Telkom
shareholders

•Letter received from consortium lead by Mvelaphanda Holdings

–Consortium is considering making an offer for the entire issued share capital
of Telkom;

–Offer will only be made if a number of pre-conditions are met;

–Proposal contemplates that Telkom will unbundle or sell its entire 50% stake
in Vodacom;

–In effect, the Consortium would acquire Telkom’s fixed line business

–Vodafone discussions are independent from the approach from the Consortium

•Telkom aims to continuously and expeditiously seek ways to unlock value

•To this end:

–Board and management evaluating the above proposals;

–Discussions are being held and clarifications are being obtained;

–Further announcement will be made when appropriate

17

Fixed mobile and mobile data network

Getting ready to compete aggressively

•W-CDMA, capable of full mobility, to be deployed
in selective areas

•Huawei approved as exclusive vendor - scale
benefits with Multi-Links

•Alleviate losses and service impacts of theft,
breakages and incidences

•Replacing high cost of copper in vulnerable areas

•Business case - R1.7 billion over 3 years with IRR
in excess of 20%

•First customers to be connected in September
2008

18

Key NGN and capacity achievements

•84 Metro Ethernet nodes deployed

•Dense Wave Division Multiplexing System deployed between Gauteng and
Durban - - significant increase in transport bandwidth capability

•Automatic self-healing rerouting of bandwidth has commenced

•National and local bandwidth increased by 1.2 Tbit/s - 21% increase

•International bandwidth increased to 4.5 Gbit/s - 88% increase

•41% increase in bandwidth on ATM network

•National IP network bandwidth increased to 32.2 Gbit/s - 11% increase

•Diginet and Diginet Plus has increased to 27 Gbit/s - 20% increase

•237 WiFi hotspots deployed

•WiMax - 56 base stations now installed

Telkom fulfilling commitment to dramatically increase bandwidth

19

Capability management

No need to own resources in order to use them

•Redesign of Telkom’s operations model to address rapidly changing technology,
speed of technology deployment and fluctuating demand in the most cost
efficient manner

•Includes outsourcing, out-tasking,consolidation and in-tasking

•Aim is to:

–Increase focus on customer service

–Deliver new differentiated services to the market faster

–Facilitate smoother and more rapid technology transition

–Facilitate risk and benefit sharing model

–Complete roll-out over two years

•Sustained employability and wellbeing of Telkom staff is of paramount importance

20

Capability management (cont.)

Moving towards a nimble, efficient organisation

•Capability management is in progress

–Commenced with issuing closed request for proposals for the
provisioning of professional services

–Information sharing with unions started in July 2007, consultation
in April 2008

–Joint union and management team conducted benchmark studies
in Germany, Australia, New Zealand and Brazil

•Reducing number of contractors providing similar services currently

–Commenced with service provider consolidation process

21

Customer service quality improvement initiatives

Call Centre Operations - improving customer service

•Restructured all call centres under one structure

•Active traffic load distribution among call centres

•Selected single supplier of temporary staff

–Standardised remuneration

–Created temporary staff development path

•Automated credit note on theft affected services

•Enhanced alternate fault reporting via web

Vital to enhance customer service

22

Customer service quality improvement initiatives

Customer centricity starting to bear fruit

Focus on improving customer service

•Various initiatives in the Call Centres and Field
Operations resulted in:

–Faults dropped from peak in February by 47%

–Reduction of theft by 15% from January

–Customer Fault Handling capacity improved
by 22%

–ADSL call handling capacity improved by 37%
over last 3 months

–Corporate fault management improved by 8%

–Corporate calls answered in 20 seconds
improved from 54% to 74%

23

•On March 31, 2008 Telkom announced its intention to substantially
reduce its shareholding in Telkom Media

•A potential investor has been identified

•A definite proposal is expected to be received end June 2008

•Expansion of content rich services is crucial

•Content acts as a revenue driver and product differentiator in crowded
broadband market

•Content can be sourced from other operators

Fast resolution of Telkom Media issue

24

Financial overview

Deon Fredericks

Group income statement

ZAR million	2007	2008	%
Operating revenue	51,619	56,285	9.0
Other income	384	534	39.1
Operating expenses	(37,533)	(42,337)	12.8
Operating profit	14,470	14,482	0.1
Investment income	235	197	16.2
EBITDA	19,786	20,612	4.2
Finance charges	(1,125)	(1,803)	60.3
Taxation	(4,731)	(4,704)	0.6
Net profit	8,849	8,172	(7.7)
Basic earnings per share (cents)	1,681.0	1,565.0	(6.9)
Dividend per share	900.0	1,100	22.2

EBITDA margin

  %

 HEPS

  Cents

Business environment changing - margin pressure continues

26

Group balance sheet

ZAR million	2007	2008	%
Non-current assets	48,770	57,763	18.4
Current assets	10,376	12,609	21.5
Total assets	59,146	70,372	19.0
Capital & reserves	32,008	33,337	4.2
Non-current liabilities	8,554	15,104	76.6
Current liabilities	18,584	21,931	18.0
Total equity & liabilities	59,146	70,372	19.0
Net debt	10,026	16,617	65.7

50% net debt to equity

%

Balance sheet remains strong

18% return on assets

%

27

Group cash flow

ZAR millions	2007	2008	%
Cash generated from operations	20,520	21,256	3.6
Dividend paid	(4,784)	(5,732)	19.8
Cash generated from operating activities	9,356	10,603	13.3
Investing activities	10,412	(14,106)	35.5
Financing activities	(2,920)	2,943	(200.8)
Net increase/(decrease) in cash	(3,976)	(560)	(85.9)
Cash at the end of the year	308	(208)	(167.5)
Free cash flow	3,728	2,150	(42.3)

Investing for future revenue growth

28

Segmental contribution

after inter-segmental eliminations

Operating revenue

Operating profit

EBITDA

Fixed line remains the major contributor

Mobile

Fixed-Line

Other

1%

38%

3%

56%

40%

3%

36%

29

Fixed-line income statement

ZAR million	2007	2008	%
Operating revenue	32,346	32,572	0.7
Other income	334	497	48.8
Operating expenses	(24,083)	(24,962)	3.6
Operating profit	8,597	8,107	(5.7)
Investment income	3,041	3,975	30.7
EBITDA	12,179	12,058	(1.0)
Finance charges	(856)	(1,277)	49.2
Taxation	(2,652)	(2,630)	(0.8)
Net profit	8,130	8,175	0.6

EBITDA margin

%

EBIT margin

%

Excluding Telkom Media provision - EBITDA margin 37%

30

Fixed-line operating profit drivers

(R490 million)

ZAR million

31

Fixed-line revenue

ZAR million

7.2%

(4.7%)

0.7%

0.7%

10.9%

Strong data revenue growth

2007

2008

32

Fixed-line traffic

ZAR millions

Millions of minutes

(1.2%)

(15.6%)

(17.6%)

(0.2%)

(18.6)%

13.6%

(0.6%)

Traditional traffic declines, calling plans show strong growth

2007

2008

98.7%

1.6%

33

Fixed-line annuity revenue

ZAR millions	2007	2008	%
Line rental	4,503	4,731	5.1
Calling plans/packages	543	1,079	98.7
CPE rental	682	755	10.7
Value added services	315	330	4.8
International other	20	22	10.0
Total	6,063	6,917	14.1

Recurring revenue continues to grow

•Annuity revenue includes all subscription revenue. It does not include usage or traffic related
revenue from calling plans/bundles, line installations, reconnection fees and CPE sales

34

Fixed-line revenue (continued)

ZAR millions	2007	2008	%
Mobile	816	838	2.7
Fixed domestic		28	-
International	823	891	8.3
Interconnection revenue	1,639	1,757	7.2

ZAR millions	2007	2008	%
Leased lines	5,825	6,460	10.9
Mobile leased facilities	1,664	1,848	11.1
Data revenue	7,489	8,308	10.9

Interconnection

Data

4.1%

61.2%

Millions of minutes

Subscribers

35

Fixed-line operating expenses

3.6%

ZAR millions	2007	2008	%
Employee expenses	7,096	7,397	4.2
Payments to other operators	6,461	6,902	6.8
SG&A	3,975	3,899	(1.9)
Services rendered	2,206	2,413	9.4
Operating leases	762	619	(18.8)
Depreciation, amortisation, impairment and write-offs	3,583	3,732	4.2

Total

(Rm)

Operating expenses well contained in high inflationary environment

36

Fixed-line capex

ZAR millions	2007	2008	%
Baseline expansion	4,352	5,188	19.2
Sustainment	416	277	(33.4)
Efficiencies & improvements	1,141	841	(26.3)
Support	501	451	(10.0)
Regulatory	188	37	(79.9)
Total	6,598	6,794	3.0

Telkom continues to build for the future

37

•Capex Planof R30bn over 5 years from FY 2006 - FY 2010

•As at the end of the 2007/08 financial year R18,4bn (61%) of the R30bn
has been invested

•An additional R2bn is planned for the last 2 years of the program

•The main drivers of the additional R2bn investment:

–FIFA 2010 requirements

–Fixed Wireless deployment

–International cable expansion

–Acceleration of a portion of the master plan

Investment in support of the strategy

Unpacking the R30bn 5 year capital expenditure program

38

Mobile financial highlights

Operating revenue

Operating profit

ZAR million

ZAR million

ZAR million

ZAR million

17.1%

17.8%

(4.0)%

15.0%

100% Vodacom (50% consolidated)

1. Including intangibles

Strong revenue growth

2007

2008

39

Leading the South African mobile market

Customers

ARPU1

Churn

Thousands

Thousands

ZAR

%

7.9%

10.9%

25.2%

1. Blended ARPU

ARPU remains stable

40

Performance in other African countries

ARPU1

ZAR

28%

30%

30%

25%

42%

1. Blended ARPU

Strong subscriber growth in African countries

2007

2008

41

Guidance for the next 3 financial years

Fixed-line and other

Constant revenue growth: CAGR to range between 5% - 10%

Capex to range between 23% and 27% of revenue over the
next 2 years and between 18% and 22% of revenue in the
2011 financial year

EBITDA margin to range between 32% and 36% - expect to see
improvement within the range towards the end of the 2011
financial year

Targeting net debt to EBITDA1.3x

42

Thank you

Investor Relations

Nicola White

Tel: +27 12 311 5720

Fax: +27 12 311 5721

E-mail: whitenh@telkom.co.za

Telkom SA Limited

43

EX-99.3

Exhibit 99.3

TELKOM SA LIMITED

(Registration number 1991/005476/06)  JSE and NYSE share code: TKG ISIN: ZAE000044897

GROUP ANNUAL RESULTS

Provisional results for the year ended March 31, 2008

Special note regarding forward-looking statements

All of the statements included in this document, as well as oral statements that may be made by us or by officers, directors or employees acting on behalf of us, that are not statements of historical facts, including but not limited to financial targets and prospects, constitute or are based on forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995, specifically Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. These forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause our actual results and outcomes to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Among the factors that could cause our actual results or outcomes to differ materially from our expectations are those risks identified in Item 3. “Key Information-Risk Factors,” of Telkom’s most recent Annual Report on Form 20-F filed with the US Securities and Exchange Commission (SEC) and its other filings and submissions with the SEC which are available on Telkom’s website at www.telkom.co.za/ir, including, but not limited to, any changes to our mobile strategy and Vodacom holdings and our ability to impact such strategy and organisational changes thereto, increased competition in the South African fixed-line, mobile and data communications markets; our ability to implement our strategy of transforming from basic voice and data connectivity to fully converged solutions, developments in the regulatory environment; continued mobile growth and reductions in Vodacom’s and Telkom’s net interconnect margins; Telkom’s and Vodacom’s ability to expand their operations and make investments and acquisitions in other African countries and the general economic, political, social and legal conditions in South Africa and in other countries where Telkom and Vodacom invest; our ability to improve and maintain our management information and other systems; our ability to attract and retain key personnel and partners; our inability to appoint a majority of Vodacom’s directors and the consensus approval rights at Vodacom may limit our flexibility and ability to implement our preferred strategies; Vodacom’s continued payment of dividends or distributions to us; our negative working capital; changes in technology and delays in the implementation of new technologies; our ability to reduce theft, vandalism, network and payphone fraud and lost revenue to non-licensed operators; the amount of damages Telkom is ultimately required to pay to Telcordia Technologies Incorporated; the outcome of regulatory, legal and arbitration proceedings, including tariff approvals, and the outcome of Telkom’s hearings before the Competition Commission and others; any requirements that we unbundle the local loop, our ability to negotiate favorable terms, rates and conditions for the provision of interconnection services and facilities leasing services or if ICASA finds that we or Vodacom have significant market power or otherwise imposes unfavorable terms and conditions on us; our ability to implement and recover the substantial capital and operational costs associated with carrier pre-selection, number portability and the monitoring, interception and customer registration requirements contained in the South African Regulation of Interception of Communications and Provisions of Communication-Related Information Act and the impact of these requirements on our business; Telkom’s ability to comply with the South African Public Finance Management Act and South African Public Audit Act and the impact of the Municipal Property Rates Act; fluctuations in the value of the Rand and inflation rates; the impact of unemployment, poverty, crime, HIV infection, labor laws and labor relations, exchange control restrictions, and power outages in South Africa; and other matters not yet known to us or not currently considered material by us.

We caution you not to place undue reliance on these forward-looking statements. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are qualified in their entirety by these cautionary statements. Moreover, unless we are required by law to update these statements, we will not necessarily update any of these statements after the date hereof, either to confirm them to actual results or to changes in our expectation.

1. Overview

Johannesburg, South Africa – June 9, 2008, Telkom SA Limited (JSE and NYSE: TKG), today announced group annual results for the year ended March 31, 2008.

GROUP KEY FINANCIAL PERFORMANCE AREAS FOR THE YEAR ENDED MARCH 31, 2008

• Operating revenue up 9.0% to R56.3 billion.

• Group EBITDA increased by 4.2% to R20.6 billion.

• Group EBITDA margin decreased from 38.3% to 36.6%.

• Operating profit increased by 0.1% to R14.5 billion.

• Net debt to equity increased to 49.9% from 31.3% at March 31, 2007.

• Cash generated from operations increased by 3.6% to R21.3 billion.

• Headline earnings per share decreased by 4.4% to 1,634.8 cents per share.

• Ordinary dividend increased by 10.0% to 660 cents per share payable on July 7, 2008.

Statement by Reuben September, Chief Executive Officer:

“As such competition is intensifying, price pressures are a business and regulatory reality and inflation is rising. Growth was impacted with the Group delivering 9.0% growth in revenue, the fixed-line business delivering 0.7% growth in revenue to R32.6 billion and the mobile business impressing with 17.1% revenue growth to R48.2 billion of which 50% is consolidated. The drop in Group EBITDA margin from 38.3% to 36.6% is mainly attributable to flat revenue in the fixed-line business. Attributable net profit declined by 7.7% to R8.0 billion largely as a result of the fixed-line’s decreasing operating profit margin and increased finance charges. The Group reported a 4.4% decrease in headline earnings per share to 1,634.8 cents and declared an ordinary dividend of 660 cents per share, an increase of 10.0% from the ordinary dividend of 600 cents per share in the 2007 financial year, a continuation of our commitment to progressively grow the ordinary dividend. Unlike in the past no special dividend was declared due to an increased investment in our expansion programme and pressure on the fixed-line’s EBITDA margin. In the next few years, in line with our strategy, Telkom will be aggressively funding the expansion of our African subsidiaries and our network in South Africa.

Both the fixed-line and mobile segments are operating in changing and challenging business environments. As mobile voice growth slows, the mobile segment is aggressively expanding into data and particularly corporate data. The fixed-line is challenged with increased competition and pricing pressures in its traditional high margin, predominantly retail markets. The above business developments, amongst others, are evident in the drop in fixed-line domestic local and long distance voice revenue from R7.6 billion at March 31, 2007 to R6.3 billion at March 31, 2008. The growth in demand is in the lower margin, wholesale and data markets. This necessitates increased investments in the provisioning of backbone networks and support systems.

The fixed-line segment is gearing up to deliver the full suite of converged services to a far greater extent in South Africa and Africa. Given its ubiquity and network management capabilities, we believe the fixed-line segment is well positioned to deliver data and value-added data managed services at speeds and quality levels superior to its competitors. As we continue to deploy the Next Generation Network, this competitive advantage will be enhanced.

The execution of our strategic initiatives is gaining momentum. We have completed the preparation for building out the fixed wireless and mobile data networks. As announced, we intend to roll-out

networks in selected areas and to seek a suitable partner for roaming of our mobile services. Telkom has well entrenched relationships with corporate customers and as the provider of mobile backbone network in South Africa, is ideally positioned to offer a full bouquet of solutions to its customers. The shareholders agreement with Vodafone has prevented Telkom from entering into the mobile voice market. The discussion with Vodafone Plc regarding the sale of our 50% stake in Vodacom, as announced, is intended to remove this impediment. We are determined to put ourselves in a position where we can forcefully drive the creation of value for our shareholders.

We are also moving into gaining data hosting abilities to bolster our ability to deliver the full bundle of data services to our customers.

We have taken the decision to aggressively work on our cost profile and are now beginning the process of consolidating our service provider profile in order to reap the benefits of scale and are working towards outsourcing non-core services with the intent of reducing operational expenditure. The building of the fixed wireless network and mobile data network in selected areas should reduce our access costs and improve customer service on ADSL in particular. Losses due to cable theft are increasing and it is no longer economical to replace copper with copper. We are implementing wireless. A wireless data network will allow us to provide 3G services while ADSL is being installed. This should be hugely beneficial to our customer service.

Telkom has a challenging but exciting few years ahead of us. A compelling differentiation strategy is in place that we believe will deliver substantial value to all stakeholders as it is progressively executed, setting the scene for both organic and acquisitive growth. We are committed to build the Telkom Group in the years to come towards being an African based, globally competitive, formidable force within the ICT industry and are looking forward to reaping the benefits in the future.

FINANCIAL PERFORMANCE

Group operating revenue increased 9.0% to R56,285 million, while operating profit increased marginally by 0.1% to R14,482 million. The Group EBITDA margin decreased to 36.6% as at March 31, 2008, compared to 38.3% at March 31, 2007, mainly due to higher fixed-line operating expenditure which decreased the fixed-line EBITDA margin by 1.4% to 36.3% as at March 31, 2008 (March 31, 2007: 37.7%). The EBITDA margin for the mobile segment decreased from 34.6% to 34.0% for the year ended March 31, 2008, primarily due to declining ARPUs as a result of increased lower spending customers connected.

Headline earnings per share decreased by 4.4% to 1,634.8 cents per share and basic earnings per share decreased by 6.9% to 1,565.0 cents per share. The reduced earnings is attributable to a decrease in operating profit due to an increase in operating expenses, and 60.3% increase in finance charges partially offset by a 9.0% increase in operating revenue.

Cash generated from Group operations increased by 3.6% to R21,256 million and facilitated Group capital expenditure of R11,657 million, the acquisition of Multi-Links for R1,985 million and the repurchase of 12.1 million Telkom shares to the value of R1.6 billion.

SUMMARY GROUP FINANCIAL RESULTS

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	47,625	51,619	56,285	8.4	9.0
Operating profit	14,677	14,470	14,482	(1.4)	0.1
EBITDA1	20,553	19,786	20,612	(3.7)	4.2
Capital expenditure2	7,506	10,246	11,900	36.5	16.1
Operating free cash flow	7,104	3,728	2,150	(47.5)	(42.3)
Net debt	6,828	10,026	16,617	46.8	65.7
Basic EPS (ZAR cents)	1,746.1	1,681.0	1,565.0	(3.7)	(6.9)
Headline EPS (ZAR cents)	1,728.6	1,710.7	1,634.8	(1.0)	(4.4)
Operating profit margin (%)	30.8	28.0	25.7
EBITDA margin (%)	43.2	38.3	36.6
Net debt to equity (%)	23.2	31.3	49.9
After tax operating return on assets (%)	25.6	22.7	18.3
Capex to revenue (%)	15.8	19.8	21.1

1. EBITDA and headline earnings have been reconciled to net profit – Refer to page 58.

2. Including spend on intangible assets.

[INSERT GRAPH1.JPG]

[INSERT GRAPH2.JPG]

OPERATIONAL DATA

	Year ended March 31,			% variance
	2006	2007	2008	06/07	07/08
Fixed-line data
Fixed access lines (’000)1	4,708	4,642	4,532	(1.4)	(2.4)
Postpaid – PSTN	2,996	2,971	2,893	(0.8)	(2.6)
Postpaid – ISDN channels	693	718	754	3.6	5.0
Prepaid	854	795	743	(6.9)	(6.5)
Payphones	165	158	143	(4.2)	(9.5)
Fixed-line penetration rate (%)	10.0	9.8	9.5	(2.0)	(3.1)
Revenue per fixed access line (ZAR)	5,304	5,275	5,250	(0.5)	(0.5)
Total fixed-line traffic (millions of minutes)	31,015	29,344	26,499	(5.4)	(9.7)
Local	18,253	16,153	13,145	(11.5)	(18.6)
Long distance	4,446	4,641	4,614	(4.4)	(0.6)
Fixed-to-mobile	4,064	4,103	4,168	1.0	1.6
International outgoing	515	558	634	8.3	13.6
International VoIP	83	38	43	(54.2)	13.2
Interconnection	3,654	3,740	3,895	2.4	4.1
Mobile interconnection	2,299	2,419	2,502	5.2	3.4
International interconnection	1,355	1,321	1,280	(2.5)	(3.1)
Fixed domestic	–	–	113	–	–
Managed data network sites	16,887	21,879	25,112	29.6	14.8
Internet subscribers2	284,908	305,013	358,066	7.1	17.4
ADSL subscribers3	143,509	255,633	412,190	78.1	61.2
Calling plan subscribers	62,803	288,881	471,742	360.0	63.3
Fixed-line employees (excluding
subsidiaries)	25,575	25,864	24,879	1.1	(3.8)
Fixed access lines per fixed-line
employee4	184	180	182	(2.2)	1.1
Mobile data5
Total customers (’000)	23,520	30,150	33,994	28.2	12.8
South Africa
Mobile customers (’000)	19,162	23,004	24,821	20.1	7.9
Contract customers	2,362	3,013	3,541	27.6	17.5
Prepaid customers	16,770	19,896	21,177	18.6	6.4
Community services telephones	30	95	103	216.7	8.4
Mobile churn (%)	17.7	33.8	42.3	91.0	25.2
Contract churn	10.0	9.7	8.3	(3.0)	(14.4)
Prepaid churn	18.8	37.5	47.9	99.5	27.7
Estimated mobile market share (%)6	57.9	57.7	55.0	(0.3)	(4.7)
Mobile penetration (%)	70.6	84.2	94.3	19.3	12.0
Total mobile traffic (millions of minutes)7	17,066	20,383	22,769	19.4	11.7

Mobile ARPU (ZAR)	139	125	125	(10.1)	0.0
Contract ARPU	572	517	486	(9.6)	(6.0)
Prepaid ARPU	69	63	62	(8.7)	(1.6)
Community services	1,796	902	689	(49.8)	(23.6)
Number of mobile employees8	4,305	4,727	4,849	9.8	2.6
Mobile customers per mobile employee	4,451	4,867	5,119	9.4	5.2
Other African countries
Mobile customers (‘000)	4,358	7,146	9,173	64.0	28.4
Number of mobile employees	1,154	1,522	1,992	31.9	30.9
Number of mobile customers per
mobile employee6	3,776	4,695	4,605	24.3	(1.9)
Other data
Africa Online – Number of subscribers	–	14,452	14,393	–	(1.0)
Multi-Links – Number of subscribers	–	185,619	813,392	–	338.2

1. Excludes Telkom internal lines of 109,501 (2007:107,719 and 2006:103,740).

2. Includes Telkom Internet ADSL, satellite and dial-up subscribers.

3. Excludes Telkom internal lines of 751 (2007:523 and 2006: 249).

4. Based on number of fixed-line employees, excluding subsidiaries.

5. 100% of Vodacom data.

6. Based on Vodacom estimates.

7. Traffic for the year ended March 31, 2008.

8. Includes Holding company and Mauritius employees.

2. Operational overview

Telkom’s strategy continues to focus on defending and growing our traditional voice base. Our growth strategies focus on adding revenue through developing a fixed-mobile capability giving us a larger share of the voice revenue pie, aggressively building our data, broadband and converged services offering and expanding geographically into high growth markets.

Traffic revenue has decreased 4.7% to R15.9 billion with local traffic revenue decreasing 15.6% to R4.1 billion while local minutes decreased by 18.6% to 13.1 billion minutes. This is primarily due to continuing fixed to mobile substitution. Telkom has reclassified subscription revenue from calling plans into a separate revenue line item – subscription based calling plans – to easily identify revenue from calling plans. Total traffic minutes decreased by 9.4% to 26.5 billion minutes. Revenue from subscription based calling plans has increased by 98.7% to R1.1 billion.

Long distance revenue decreased by 17.6% to R2.3 billion with a decrease in volumes of 0.6% to 4.6 billion minutes and a 10% decrease in call charges effective August 1, 2007. The effect of the 17.1% decrease in long distance calls’ effective tariff for the year is clearly evident. Fixed to mobile revenue decreased by 1.2% to R7.6 billion with an increase in volumes of 1.6% to 4.2 billion minutes offset the 2.7% effective tariff reduction for the year. International traffic revenue decreased by 0.2% to R986 million. The 12.2% effective tariff decrease for the year in international tariffs was largely offset by the 13.7% increase in international traffic volumes to 677 million minutes. Interconnection revenue increased by 7.2% assisted by volume increases of 4.2% to 3.9 billion minutes and an effective tariff increase of 2.7%.

The Closer packages have performed exceptionally well, increasing by 69.4% to 451,122 plans. Supreme call packages, targeted at the SMME segment, have increased by 149.2% to 12,916 packages. Telkom continues to be successful in tying in large corporate customers to term and volume discount plans. During the 2008 financial year, term and volume discount plans to the value of R3.4 billion was sold. Annuity revenue streams, which exclude line installations, reconnection fees and CPE sales have increased by 14.1% to R6.9 billion from R6.0 billion in the 2007 financial year. Telkom will seek to continue converting revenue streams to annuity revenues. This will be done largely through bundling call minutes with access line rental in attractive subscription based value propositions. This is an important strategy for delivering greater value to our customers.

Pricing is a key element of the value proposition and our pricing strategy is aimed at improving our competitiveness in areas where competition is expected to intensify and where arbitrage opportunities exist. Telkom’s strategy to counter pricing pressures is as follows:

•   Actively offering value based calling plans and bundles to extend value and savings to our customers.

•   Rebalancing standard/Callmore local rates for better alignment with international norms and to improve our competitive position.

•   Reducing and rebalancing national and international data prices to improve our competitive position.

Essentially, we are implementing a differentiation strategy that aligns our core competencies to the drivers of customer value in order to achieve competitive advantages. Customers will be kept constantly informed about Telkom and its products.

DATA

As a result of Telkom’s strategy to grow our data business, data revenues increased a very pleasing 10.9% to R8.3 billion. This is also indicative of the growth in bandwidth demand from corporates and mobile operators as a result of 3G and HSDPA. Data connectivity revenue increased 4.5% to R4.5 billion. Mobile leased line revenue increased 11.1% to R1.8 billion. Internet access revenues increased 29.1% to R1.2 billion and we are proud of the fact that managed network services revenue increased 36.2% to R728.5 million. VPN services revenue increased 46.6% to R500 million.

Telkom’s focus on bringing new innovative products to the market that cater for increased data usage and converged services has seen our new VPN products gain increasing traction in the market. We have increased VPN sites by 58.0% to 12,741. Our VPN Lite products, which is delivered over the ADSL network, include advanced self-help and online charging solutions. This product was launched during November 2007. Telkom is in the process of building on a culture of research and innovation and fast time to market in order to cater for customers who are increasingly looking for innovative, easy to use products.

Telkom has previously stated that moving further into the converged service offering environment with a specific focus on value added data services is vital to growing our revenue. It is difficult to make data centre acquisitions in South Africa. Telkom is pursuing the acquisition of a data centre business outside of South Africa as we move up the converged ICT value chain. The ability to increase the support we provide to our corporate customers is expected to further entrench relationships.

The data centre business is used effectively by telecommunication companies to stimulate the use of bandwidth over their networks. In addition, the convergence of IT and telecommunications are driving customer demand for one-stop solutions for their telecommunication and IT infrastructure requirements. Data centres are believed to be, the next logical step in the value chain for a telecommunication company that is already well positioned with basic data services as well as managed WAN/VPN services and LAN services.

The data centre business is one of the fastest growing areas in the IT space as a result of:

•   Customers realising that it is very expensive to host IT infrastructure on site – prime office space is used in many cases;

•   Regulators insisting that data is protected properly and assisting with carbon footprint reduction;

•   Improvement of efficiencies by moving from basic machine hosting to shared resources in the data centre;

•   Being in a position to up sell into value added IT services such as Software as a Service (SaaS); and

•   Leveraging the fit that exists between communication infrastructure and data centre services.

BROADBAND AND CONVERGED SERVICES

Telkom is aggressively expanding its ADSL footprint, increasing the bandwidth in order to host applications such as video services and using the next generation network to facilitate innovative solutions. The ADSL footprint now covers 92% of Telkom’s total network and our coverage in underserviced areas is 76%. ADSL subscribers grew 61.2% to 412,190, excluding Telkom internal lines. We fell short of our aggressive target of 420,000. Nevertheless, this strong growth was achieved through the commoditisation of ADSL, Do Broadband, the Self Install Option, DSL port automation and wholesale services. Do Broadband packages increased by 245.6% to 119,288. Wholesale ADSL services grew to 18,722. Telkom remains committed to achieving our targeted ADSL penetration of 15%-20% of fixed access lines by the end of the 2011 financial year. This will continue to offset the decrease in access lines which have decreased by 2.4% to 4,531,752 access lines.

ADSL Average Time To Install (ATTI) has improved to 19 days from the 23 days achieved at March 31, 2007. The ADSL Self Install option is expected to continue to improve the ATTI. As of March 31, 2008, 57% of all ADSL installations were being done through the Self Install Option.

In extending and complimenting our ADSL footprint, Telkom has increased its WiMAX base stations from 27 sites at September 30, 2007 to the current 56 sites. Telkom remains committed to its target of 71 WiMAX base stations.

GEOGRAPHIC EXPANSION

The aim is to establish Telkom as a regional voice and data player through the provisioning of a range of hosting services, managed solutions, mobile voice and wireless broadband services. Telkom is also entering the field of management consulting to operators. In addition, we are positioning Telkom as a wholesale facilities and infrastructure enabler for regional incumbents.

Our expansion to date has been through Multi-Links, a private telecommunications operator operating in Nigeria, and Africa Online, an internet services provider with its head-office in Kenya and operating in 8 other African countries.

MULTI-LINKS

Telkom owns 75% of Multi-Links, a private telecommunications operator with a Universal Access License in Nigeria. Multi-Links performed well in growing its subscriber base from 262,431 at September 30, 2007. We placed an aggressive subscriber target of 812,000 for the year ending March 31, 2008 on the company. Multi-Links exceeded this target and delivered 813,392 subscribers to March 31, 2008. By May 31, 2008, Multi-Links had a subscriber base of 1,000,251 customers.

Multi-Links reported revenue of R845.4 million, a loss before tax of R63.5 million and a profit after tax of R49 million. Multi-Links’ pioneer tax status, that ended on December 31, 2007 resulted in deferred tax credits due to capital expenditures incurred prior to this date, now being eligible for deductions from taxable income. The company is now liable to pay tax of 30% and an educational levy of 2% going forward, subject to the utilisation of tax credits. Voice and data revenue contributed 81% to total revenue, handset sales 12%, interconnect revenue 6.8% and SMS 0.2%. Operating expenses were R941.8 million with payment to other operators contributing 66%, selling general and administrative expenses contributing 15%, employee expenses 4%, operating leases 4%, services rendered 2% and depreciation 9%. Subsidised handsets was the largest contributor to SG&A expenses.

The majority of new subscribers were added in late February 2008 and March 2008 as a result of equipment being delayed by the logistic constraints. The ARPU achieved for the 11 months ended 31 March 2008, was $32. It is however expected that ARPU will drop to below $30 during the 2009 financial year.

Multi-Links has now installed 269 base stations, 223 towers and grown its fibre deployment to 2,500kms. In addition, Multi-Links has commissioned a Huawei packet exchange in Abuja with capacity of 300,000 subscribers, extended the Lagos switch capacity by 250,000 subscribers and established a new main network site in Gbagada, Lagos. The Lagos Metro Ethernet ring has now been completed and Abuja is near to completion. Plans are underway for the deployment of Metro Ethernet rings in Kanu, Kaduna and the Delta region. Six NGN nodes are planned to be built in the 2009 financial year greatly extending Multi-Links’ ability to provide data products to corporate customers. In May 2008, an IPLC services was commissioner for a corporate customer connecting South Africa and Nigeria. Multi-Links expects more corporate customers to come on board in the near future. The prospects for Multi-Links are strong and the company intends to capitalise on Telkom’s brand and access to international data connectivity. The resilience and quality of international connectivity provides great opportunities in servicing the corporate, wholesale and retail markets.\

AFRICA ONLINE

Africa Online increased its revenue from R46 million in the six months ended September 30, 2007 to R110 million at March 31, 2008. The major contributors to revenue were dial up, consumer wireless and dedicated corporate links. The decline in EBITDA margin was largely as a result of the Telkom management fee, payments to other operators and selling, general and administrative expenses. The company reported an operating loss of R63.2 million largely as a result of the interest paid on Telkom funding.

Africa Online’s infrastructure roll out has not progressed as speedily as hoped due to the long equipment lead times and unrest in Kenya during December 2007 and January 2008. However, Africa Online has capitalised on its relationship with Telkom in the pursuit of multi-national clients and now has 124 Pan-African multi-national customers.

Telkom has migrated 115 corporate VSAT sites to African Online. The target remains 171. This has allowed for the joint tendering of business to large multinational customers and opened up the Southern African region to Africa Online. The company is also now in a position to compete with the likes of M-Web and AFSAT.

In addition to the current affiliates that Africa Online works with in Senegal, Benin, Nigeria, Angola, Botswana and Mozambique, new affiliates have been signed up in Malawi, Mauritius and Sudan including additional affiliates in Namibia, Angola and Mozambique. The company is extending its coverage in Africa in order to aggressively target the Pan-African corporate market.

TELKOM MANAGEMENT SERVICES COMPANY (TMSC)

The board of directors has given their approval for the establishing of the Telkom management services company. Opportunities exist in sub Saharan Africa for a reputable and acknowledged telecommunications operator to provide telecommunications management services. The target markets for such services are the:

•  state owned incumbent operators in sub Saharan Africa; and

•   numerous new entrants in the ICT industry, i.e. green field entrants that need operational expertise to scale up and be effective operators. There are few consultants in the ICT industry with relevant expertise and support from reputable telecommunications operators that understand the African operational environment and are able to provide such services.

It is envisaged that TMSC will be a wholly owned subsidiary providing the full range of strategic and operational services. The relationship with Telkom brings advantages in terms of expertise in technology innovation and integration, independence from equipment manufacturers, experience of a large number of supplier platforms as well as first hand experience in transforming from a state owned monopoly, through commercialisation to privatisation and listing.

The management contracts of Multi-Links and Africa Online will be handled by TMSC.

OTHER DEVELOPMENTS

MOBILE STRATEGY DEVELOPMENTS

Telkom announced on June 2, 2008 that it is in negotiations with Vodafone regarding the potential sale and unbundling of its stake in Vodacom.

Telkom is facing active competition from mobile operators in the voice market and increasingly so in the data market. We believe that an integrated fixed-mobile operator is better positioned to react to and take advantage of the challenges that lie ahead. Having an integrated fixed-mobile offering will allow Telkom to leverage our customer base, marketing, distribution and logistics channels to increase our share of voice revenue. In addition, Internet access demands are increasingly requiring mobility. An integrated bundled offering would offer superior speeds and quality through the fixed-line, including the advantages of mobility when required by the customer. In the future we also anticipate that content demands will require an element of mobility although not in the short term. And, very importantly, we believe that having a coherent, integrated and synergistic fixed-mobile capability will greatly enhance Telkom’s ability to successfully compete for international acquisitions.

FIXED WIRELESS AND MOBILE DATA NETWORK

Telkom has decided to use W-CDMA technology and has appointed Huawei as our vendor to build out our fixed wireless and mobile data network.

W-CDMA technology will provide Telkom with the following benefits:

•   Provide Telkom with a mobile data as well as fixed and a nomadic voice capability;

•   As W-CDMA does have the capability of supporting full mobility, the above services can be further augmented with mobile voice should Telkom be successful in concluding its mobile strategy and no longer be bound to the current Shareholders Agreement with Vodafone; and

•   Alleviate the negative impact of Thefts, Breakages and Incidences (TBIs) on service delivery. In order to satisfy demand for services in high theft and high maintenance areas, Telkom has acquired W-CDMA to decrease exposure to the losses being incurred.

In addition, the cost per customer should be attractive when compared to the cost of using current point to multi-point radio based systems.

KEY NEXT GENERATION NETWORK (NGN), CAPACITY AND PRODUCT DEVELOPMENTS

Telkom is in the third year of its NGN build out programme. Customer demands and global standards necessitate the provision of services and particularly bandwidth that is only possible utilising the intelligence of an NGN system.

Our NGN build out achievements are as follows:

•   An increase of the ADSL footprint to 2,660 DSLAMs, covering 92% of Telkom’s existing customer footprint.

•   84 Metro Ethernet nodes have been deployed in major cities using 10 Gbit and 1 Gbit line systems.

•   The first system of Dense Wave Division Multiplexing (DWDM) system capable of forty 10 Gbit/s signals over a single pair of fibre has been deployed between Gauteng and Durban. This has significantly increased transport bandwidth capability. A significant rollout of this system between all major cities in SA is currently in the build phase, and planned for completion during the 2009 financial year.

•   Automatic self-healing re-routing of bandwidth on the national layer has commenced.

•   The national and local transport network increased by 377 nodes, growing the network bandwidth by 1.2 Tbit/s, which is a growth of 21%.

•   Total international bandwidth has increased to 4.5 Gbit/s, which is a growth of 88%.

•   ATM network available bandwidth on the core and metro layers has increased to a combined 147 Gbit/s, which is a growth of 41%.

•   National IP Network bandwidth has increased to 32.2 Gbit/s, which is a growth of 11%.

•   A Network Interactive Voice Response Systems have been deployed which offers advanced speech services. Automated speech recognition and text-to-speech application enable corporate customers and Telkom to enhance their voice systems.

•   Diginet and Diginet Plus network bandwidth has increased to 27 Gbit/s, which is a growth of 20%.

•  237 WiFi hotspots have been deployed at strategic partner locations.

•  Fibre deployment has increased by 8.7%.

•   IMAX has been introduced into the system and is ready to carry traffic. IMAX has the ability to carry narrowband and broadband services for wire line legacy and converged services.

COST, EFFICIENCY AND PRODUCTIVITY MANAGEMENT

Faced with competition eroding our revenue base, cost management is a key element in creating shareholder value. Telkom is proud of its achievements in this regard. The Telkom fixed-line business managed to contain its operating expense growth to a 3.6% increase, despite the high inflationary environment with CPIX recorded at 10.1% in March 2008. Employee expenses increased by 4.2% to R7.4 billion, selling general and administrative expenses decreased by 7.4% to R3.7 billion, service fees increased by 9.4% to R2.4 billion and operating leases decreased by 18.8% to R619 million. Depreciation, amortisation, impairment and write-offs increased by 10.2% to R3.9 billion. Telkom did not achieve its fixed-line EBITDA margin target of 37% – 40% with the EBITDA margin at 36.3% decreasing from 37.7% at March 31, 2007.

Our continued focus on cost management, efficiency and productivity management has resulted in Telkom developing a Capability Management programme. Professional services have grown in maturity throughout the world, particularly in the information technology and telecoms environments. This allows Telkom to focus on services that differentiate us from competitors such as:

• an increased focus on customer service;

• the faster delivery of improved services to the market;

• improving cost management and capital productivity; and

• increasing shareholder returns.

Telkom is currently using approximately 100 service providers to deliver network services. These contracts are expiring at the end of June 2008. A critical factor in the new contract process is to ensure that Telkom moves towards a more consolidated interface to the service provider market and obtains maximum efficiencies through creating scale and volume. In addition to service provider consolidation, a capability management process is under way to identify partners for network operations, information technology management and Telkom Direct shops which entails that certain elements will be outsourced to professional service providers. Telkom has commenced with issuing a closed Request for Proposals for professional services in this regard.

To ensure that capability management, which includes elements of outsourcing, is legitimate, we are engaging with organised labour in line with transparency and labour regulations. Many interactions have taken place with union leadership over the past few months to achieve the appropriate levels of awareness, education and strategic insight on the aspects of capability management and outsourcing. This included international benchmarking visits to other operators and professional services providers in Germany, Australia, New Zealand and Brazil.

Sustained employability and well being of Telkom staff is of paramount importance.

CUSTOMER SERVICE

Improved customer service is vital to the success of Telkom into the future. Sustainable and profitable growth in the customer base requires creating and strengthening capabilities focused on managing customer relationships and learning from acquired customer information. This will allow Telkom to better manage the customer experience and anticipate customer needs.

Customer segmentation based on value should enable Telkom to understand customer equity better in order to give additional value and services to customers. Understanding an individual customer’s breakeven point and anticipating their future requirements will allow Telkom to intelligently determine value enhancers and cross selling opportunities.

A call centre master plan has been designed to compliment customer segmentation through dedicated agents for high value customers, upfront identification and routing of complex calls to the specialised agents and upfront resolution of high volume simple calls by universal agents. This is a vital element in making it easier for our customers to do business with us.

We have consolidated all call centre operations under one structure creating a single point of accountability. In addition, we have ensured redundancy through the interconnection of call centres allowing a reduction of bottlenecks and rerouting of overflow traffic.

In areas of high cost, high maintenance and high theft occurrence, particularly copper and fibre cable theft, Telkom is deploying a wireless network using W-CMDA to restore and improve service quality.

The table below illustrates some key customer service metrics and targets for the year ending March 31, 2009. We anticipate that our customer centricity project will be complete by March 31, 2011 by which time we will be able to deliver on our customer expectations as set out in the Customer Satisfaction Surveys.

	Year ended March 31,
	2006	2007	2008	Target
Residential
% cleared in 24 hours	47	50	38	40
Faults per 1,000 lines	470	785	476	423
% installed in 5 days	49	81	54	61
Business voice
% cleared in 24 hours	61	66	50	51
Faults per 1,000 lines	300	328	264	250
% installed in 5 days	63	83	63	72
Data subrate
% cleared in 24 hours	92	84	93	95
Faults per 1,000 lines	801	870	875	830
% installed in 10 days	40	41	19	25
ADSL Business
% cleared in 24 hours	54	33	42	46
Faults per 1,000 lines	480	575	575	540
% installed in 20 days	56	76	56	67

TELKOM MEDIA AND CONTENT SERVICES

Telkom announced on March 31, 2008 that it will reduce its shareholding in Telkom Media substantially. A potential anchor investor has been identified to take over a substantial portion of Telkom’s investment in Telkom Media. Telkom is awaiting a proposal from the investor which the investor has indicated will be received towards the end of June 2008.

Telkom acknowledges that the expansion of the content rich services is crucial as it will drive future revenue, and act as a major product differentiator in a crowded broadband market space. Content can however be sourced from other operators and Telkom is in the process of investigating options with respect to acquiring content from a number of content providers.

VODACOM RESULTS

Vodacom again demonstrated strong performance in the twelve months to March 31, 2008 delivering 17.1% growth in revenue to R48.2 billion with an estimated South African market share of approximately 55%. Vodacom increased its profit from operations by 15.0% to R12.5 billion and increased net profit after tax by 21.3% to R8.0 billion and, in the face of declining ARPUs as a result of lower income segment customer connections and aggressive drives to attract and retain customers, admirably delivered a 34.2% EBITDA margin down 1.7% from the 34.6% EBITDA margin achieved for the year ended March 31, 2007.

Vodacom’s total customer base increased by 12.7% to 34.0 million customers as at March 31, 2008. South African mobile customers increased by 7.9% to 24.8 million. Customers grew by 29.6% to 4.2 million in Tanzania, by 25.0% to 3.3 million in the Democratic Republic of Congo, by 41.6% to 395,000 in Lesotho, and by 29.8% to 1.3 million in Mozambique. Vodacom’s other African operations reported customers of 9.2 million and contributed 6.6% to data revenue, down from 6.9% contribution in the 2007 financial year.

South African prepaid churn increased to 47.9% for the year ended March 31, 2008 from 37.5% for the year ended March 31, 2007. The increase in the churn ratio was due in part to disconnection rules being amended to classify SIM cards whose only activity was call forwarding to voice mail for an uninterrupted period of 13 months as inactive. Vodacom believes this rule change provides a better reflection of active prepaid SIM cards on the network and results in higher Average Revenue Per User (ARPU). Vodacom’s focus on customer care and retention saw South African contract churn improve to 8.3% from the 9.7% recorded in the year ended March 31, 2007. The blended South African ARPU remained stable over the year at R125 with contract ARPU decreasing 6.0% to R486 and pre-paid ARPU decreasing to R62 from R63 in at March 31, 2007. Telkom refers shareholders to the SENS announcements published on March 10, 2008 and April 25, 2008 concerning Vodacom’s proposed Broad Based Black Economic Empowerment transaction. Telkom remains fully supportive of this R7.5 billion transaction.

THE REGULATORY ENVIRONMENT

Telkom faces continuous regulatory challenges covering inter alia competition issues and changes in policies. Through constructive dialogue, the Company endeavours to achieve a regulatory framework that is realistic, equitable and beneficial to the industry. The following details the main changes to the regulatory environment affecting the industry and Telkom during the year.

ELECTRONIC COMMUNICATIONS (EC) ACT

ICASA had to address the task of developing the market regulation framework. ICASA has issued since December 2007 some 10 draft regulations, dealing with the identification and definition of the various relevant markets, the methodologies for analysing these markets to determine the level of competition, or lack thereof, proposed rules on the leasing of communication facilities, on interconnection, on the special treatment of facilities that are deemed to be "essential" and on the owners thereof. Telkom will, of course, be affected for the most part by all these developments.

Regarding the pro competition regulations, in March 2008 ICASA published draft regulations on the processes and methodologies that ICASA will use for the definition of the relevant markets, for determining the effectiveness of competition in markets, for the identification of licensees having significant market power, and for ensuring that pro-competitive remedies imposed are reasonable and proportionate in addressing market failure.

Licence conversion

ICASA has started a process of converting our licenses to the new licensing framework. Regulations providing the framework to convert our PSTS and VANS licenses have been published by ICASA, including the standard terms and conditions that will apply to all electronic communications services and all electronic communications network services licenses, including ours. ICASA has proposed draft additional conditions applicable to the electronic communications service and electronic communications network service licences that will be issued to existing licensees, including Telkom. ICASA, after taking into account the comments received, is expected to publish final proposed terms and conditions for public comment. It is, however not likely that ICASA will complete the licence conversion process before the end of July. We presume that the technology neutrality of the Electronic Communications Act will result in us being able to explore new horizons; how far we will be allowed to go, however, and at what cost, is not yet clear.

Telkom continuously engages in negotiations for interconnection, shared access and facilities leasing agreements. Interconnectivity agreements with Neotel and the majority of VANS have been concluded.

Number portability (NP)

Mobile number portability has been in operation since 2006. Anecdotal evidence is that mobile porting in South Africa was slower than it was expected to be, although the high cost of implementation has duly materialised. Fixed-line porting, essentially between Telkom and Neotel, has not yet happened. Negotiations are advancing and some form of portability is expected to soon be in place. The existence of very active VoIP service providers has led to further competition for our fixed-line network. Carrier pre-selection between Telkom and Neotel has also not yet been established, for essentially the same reasons.

Local loop unbundling (LLU)

Telkom is required, in terms of existing legislation, to provide Neotel with shared access to its local loop. Although the Telecommunications Act, 103 of 1996, provided that no general local loop unbundling would be required after the first two years of operation of Neotel, the EC Act, which repeals the Telecommunications Act, makes provision for unbundling of the local loop, subject to ICASA making the necessary regulations. The Minister of Communications published policy decisions that the process of unbundling the local loop in South Africa should be urgently implemented and completed by 2011. On May 23, 2007, the Local Loop Unbundling Committee set up by the Minister of Communications to develop appropriate policies for the unbundling of the local loop in South Africa recommended, amongst other things:

•   three forms of local loop unbundling to be considered, full unbundling of the metallic loop, line sharing and wholesale bit stream access; and

•   the regulatory process, with full industry participation should commence as soon as possible and be completed in 2011.

Defining end-to-end leased lines and other wholesale markets

The market review process undertaken by ICASA is aimed at determining the scope and boundaries of various fixed-line wholesale and retail markets (e.g. local access, national long distance, international, etc.). In terms of the process, ICASA is expected to:

• define the relevant markets:

• assess Telkom’s market power and dominance in each market: and

• propose pro-competition regulations on Telkom.

CONCLUSION

Telkom is confident that it is well placed to deal with all regulatory issues. Telkom actively engages with both policymakers (Parliamentary Committees) and the regulator (ICASA) and plans and analyses multiple regulatory scenarios to ensure that it is prepared for changes in regulation.

PROSPECTS

Telkom’s strategy is designed to deliver sustainable, profitable growth going forward and is benchmarked against global best practice. The creation of shareholder value is the underlying driver of every decision made. Telkom’s board of directors and management team believe that the price of the share has not been reflecting the underlying value of the fixed-line business and are committed to addressing this.

The next couple of years will focus on transforming the business to deal with competition, concentrating on delivering innovative products and services to our customers, expanding our network and bedding down our growth drivers. We expect that competition will continue to constrain revenue growth over the next three years. Targets in a transforming industry such as ours are inherently risky, particularly in later years and investors should not place undue reliance on such targets. We are targeting a compound average growth rate (CAGR) of revenue over the following three years in the 5% to 10% range as increased revenues from our data, broadband and converged business and our newly acquired subsidiaries are projected to mitigate the impacts of increased competition.

The EBITDA margin relating to fixed-line and other segments is targeted to range between 32% and 36% over the next three years. This margin range reflects the increased operational expenditure that goes hand in hand with an aggressive customer service improvement and expansion programme, an increased contribution from lower margin business and the decline in local and national voice traffic revenue. The early stages of development in Multi-Links and Africa Online add to the expected decrease in the EBITDA margin. We expect to see improvements in the EBITDA margin within the range towards the end of our three year planning period.

Capital expenditure for the fixed line and other segments will range between 23% and 27% of revenue over the next two years. In year three capex is targeted to range between 18% and 22%. Capital expenditure is expected to be R11.3 billion in the 2009 financial year.

The targeted net debt to EBITDA for the fixed-line and other segments will be 1.3 times.

Targets in a transforming industry such as ours are inherently risky, particularly in later years and investors should not place undue reliance on such targets.

Our dividend policy remains that we progressively grow the ordinary dividend each year. Given the investment in our network, expansion in current businesses, the potential acquisitions and pressure on the fixed-line and other segments’ EBIDTA margin, no special dividend will be paid in respect

of the 2008 financial year. The level of dividend going forward will be based on a number of factors including the consideration of the financial results, available growth opportunities, the group’s debt level, interest coverage, internal cash flows and resources, the repurchase of Telkom shares and other future expectations.

DECLARATION OF ORDINARY DIVIDEND NO 13

Notice is hereby given that ordinary dividend number 13 of 660 cents per share (2007: 600 cents) in respect of the financial year ended March 31, 2008 has been declared payable on Monday, July 7, 2008 to shareholders recorded in the register of the company at close of business on Friday, July 4, 2008.

Holders of ordinary shares

Salient dates	2008
Last date to trade cum dividend	Friday 27 June
Shares trade ex dividend	Monday 30 June
Record date	Friday 4 July
Payment date	Monday 7 July

Share certificates may not be dematerialised or rematerialised between Monday, June 30, 2008 and Friday, July 4, 2008 both days inclusive.

On Monday, July 7, 2008, dividends due to holders of certificated securities on the South African register will either be transferred electronically to shareholders’ bank accounts or, in the 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.

Holders of American Depositary Shares

	2008
Ex dividend on New York Stock Exchange	Friday 27 June
Record date	Friday 4 July
Approximate date for currency conversion into US dollars	Monday 7 July
Approximate date for payment of dividend	Monday 21 July

3. Group performance

GROUP OPERATING REVENUE

Group operating revenue increased by 9.0% to R56,285 million (March 31, 2007: R51,619 million) in the year ended March 31, 2008. Fixed-line operating revenue, before inter-segmental eliminations, increased by 0.7% to R32,572 million primarily due to increased data services, interconnection and subscriptions and connections revenue partially offset by a decline in traffic revenue. Mobile operating revenue, before inter-segmental eliminations, increased by 17.1% to R24,089 million primarily due to significant customer growth, offset in part by declining ARPU’s.

GROUP OPERATING EXPENSES

Group operating expenses increased by 12.8% to R42,337 million (March 31, 2007: R37,533 million) in the year ended March 31, 2008, primarily due to a 17.9% increase in operating expenses in the mobile segment to R17,898 million (before inter-segmental eliminations). Fixed-line operating expenditure increased by 3.7% to R24,962 million (before inter-segmental eliminations) due to increased employee expenses, payments to other operators, depreciation, amortisation, impairment and write-offs and services rendered, partially offset by a decrease in operating leases and selling, general and administrative expenses. The increase in mobile operating expenses of 17.9%, before inter segmental eliminations, was primarily due to increase in employee expenses and gross connections resulting in increased cost to connect customers to the network. Mobile payments to other operators also increased as a result of the increased outgoing traffic and the higher volume growth of more expensive outgoing traffic terminating on other mobile networks when compared to traffic terminating on the lower cost fixed-line network.

INVESTMENT INCOME

Investment income consists of interest received on short-term investments and bank accounts. Investment income decreased by 16.2% to R197 million (March 31, 2007: R235 million), largely as a result of lower interest received from fixed deposits primarily due to lower cash balances.

FINANCE CHARGES

Finance charges include interest paid on local and foreign borrowings, amortised discounts on bonds and commercial paper bills, fair value gains and losses on financial instruments and foreign exchange gains and losses on foreign currency denominated transactions and balances. Finance charges increased by 60.3% to R1,803 million (March 31, 2007: R1,125 million) in the year ended March 31, 2008, due to a 42.0% increase in interest expense to R1,885 million (March 31, 2007: R1,327 million) as a result of the 65.7% increase in net debt to R16,617 million (March 31, 2007: R10,026 million).  Net debt increased mainly as a result of the issuance of commercial debt paper debt with a nominal value R18,806 million during the year, as well as an increase in Vodacom’s net debt for the year. This was partly offset by the repayment of R15,773 million nominal value of commercial paper bills.  In addition to the increase in the interest expense, net fair value and exchange movements on financial instruments resulted in a loss of R82 million for the year ended March 31, 2008 (March 31, 2007: Gain of R202 million).

TAXATION

Consolidated tax expense reduced to R4,704 million (March 31, 2007: R4,731 million) in the year ended March 31, 2008. The consolidated effective tax rate for the year ended March 31, 2008, was 36.5% (March 31, 2007: 34.8%). Telkom Company’s effective tax rate was 24.6% for the year ended March 31, 2008 (March 31, 2007: 24.3%). Vodacom’s effective tax rate decreased to 34.2%

(March 31, 2007: 36.9%) mainly as a result of a decrease in the secondary taxation on companies(STC) liability due to the decrease in the STC rate from 12.5% to 10.0% effective October 1, 2007.

PROFIT FOR THE YEAR AND EARNINGS PER SHARE

Profit for the year attributable to the equity holders of the Group decreased by 7.8% to R7,975 million (March 31, 2007: R8,646 million) for the year ended March 31, 2008.

Group basic earnings per share decreased by 6.9% to 1,565.0 cents (March 31, 2007: 1,681.0 cents) and Group headline earnings per share decreased by 4.4% to 1,634.8 cents (March 31, 2007: 1,710.7 cents).

4. GROUP BALANCE SHEET

Net debt, after financial assets and liabilities, increased by 65.7% to R16,617 million (March 31, 2007: R10,026 million) as at March 31, 2008, resulting in a net debt to equity of 49.9% from 31.3% at March 31, 2007. On March 31, 2008, the Group had cash balances of R1,134 million (March 31, 2007: R749 million).

During the year ended March 31, 2008, 12.1 million shares were repurchased for R1.65 billion, to be cancelled from the issued share capital by the Registrar of Companies. As at March 31, 2008, 4,444,138 of these shares have not yet been cancelled.

Interest-bearing debt, including credit facilities utilised, increased by 58.0% to R17,075 million (March 31, 2007: R10,805 million) in the year ended March 31, 2008. The Group raised commercial paper bills with a nominal value of R18,806 million for the year ended March 31, 2008 of which R15,773 million was redeemed by March 31, 2008. Credit facilities from our subsidiaries increased by R901 million, and Telkom’s portion of Vodacom’s interest bearing debt increased by R490 million.

5. GROUP CASH FLOW

Cash flows from operating activities increased by 13.3% to R10,603 million (March 31, 2007: R9,356 million), mainly due to lower taxation as well as an increase in cash generated from operations of R21,256 million (March 31, 2007: R20,520 million), partly offset by higher dividends paid. Cash flows utilised in investing activities increased by 35.5% to R14,106 million (March 31, 2007: R10,412 million), primarily due to increased capital expenditure in both the fixed-line and mobile segments, as well as cash utilised for the purchase of Multi-Links Telecommunications (Proprietary) Limited. Cash flows from financing activities of R2,943 million (March 31, 2007: (R2,920) million) was mostly due to the R1,647 million paid for share repurchases, the repayment of the TK01 bond with a nominal value of R4,680 million on March 31, 2008 and maturing commercial paper debt of R15,773 million nominal value during the year. This was offset by the issuance of R18,806 million nominal value commercial paper bills, as well as entering into call and term loans of R5,600 million to fund the redemption of the TK01 bond and other cash flows from investing activities.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Cash generated from operations	19,724	20,520	21,256	4.0	3.6
Cash from operating activities
(after tax, interest, dividends)	9,506	9,356	10,603	(1.6)	13.3
Investing activities	(7,286)	(10,412)	(14,106)	(42.9)	(35.5)
Financing activities	(258)	(2,920)	2,943	(1,031.8)	200.8
Net increase/(decrease) in cash	1,962	(3,976)	(560)	(302.7)	85.9

6. GROUP CAPITAL EXPENDITURE

Group capital expenditure increased by 16.1% to R11,900 million (March 31, 2007: R10,246 million) and represents 21.1% of Group revenue (March 31, 2007: 19.8%).

GROUP CAPITAL EXPENDITURE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Fixed-line	4,900	6,594	6,794	34.6	3.0
Mobile	2,571	3,608	3,460	40.3	(4.1)
Other	35	44	1,646	25.7	–
	7,506	10,246	11,900	36.5	16.1

FIXED-LINE CAPITAL EXPENDITURE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Baseline	2,128	3,409	4,039	60.2	18.5
Portfolio	2,756	2,997	2,718	8.7	(9.3)
Revenue generating	374	159	57	(57.5)	(64.2)
Network evolution	330	784	1,092	137.6	39.3
Sustainment	596	416	277	(30.2)	(33.4)
Effectiveness and efficiency	1,080	1,141	841	5.6	(26.3)
Support	376	497	451	32.2	(9.3)
Regulatory	17	188	37	1,005.9	(80.3)
Other	0	0	0	0.0	0.0
	4,901	6,594	6,794	34.5	3.0

Fixed-line capital expenditure, which includes spending on intangibles, increased by 3.0 % to R6,794 million (March 31, 2007: R6,594 million) and represents 20.9% of fixed-line revenue (March 31,2007: 20.4%). Baseline and revenue generating capital expenditure of R4,096 million (March 31, 2007: R3,568 million) was largely for the deployment of technologies to support the growing data services business (including ADSL footprint), links to the mobile cellular operators and expenditure for access line deployment in selected high growth residential areas. The continued focus on rehabilitating the access network and increasing the efficiencies in the transport network contributed to the network evolution and sustainment capital expenditure of R1,369 million (March 31, 2007: R1,200 million).

Telkom continues to focus on its operations support system investment with current emphasis on workforce management, provisioning and fulfillment, assurance and customer care, hardware technology upgrades on the billing platform and performance and service management. During the year ended March 31, 2008, R841 million (March 31, 2007: R1,141 million) was spent on the implementation of systems.

MOBILE CAPITAL EXPENDITURE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
South Africa	2,192	2,730	2,135	24.5	(21.8)
Other African countries	379	878	1,326	131.7	51.0
	2,571	3,608	3,461	40.3	(4.1)

Mobile capital expenditure (50% of Vodacom’s capital expenditure) decreased by 4.1% to R3,461 million (March 31, 2007: R3,608 million) and represents 14.4% of mobile revenue (March 31, 2007: 17.5%) which was mainly spent on the cellular network infrastructure consisting of radio, switching and transmission network infrastructure and computer software. The decrease in capital expenditure in other African countries was largely as a result of decreased investment in Tanzania, Democratic Republic of the Congo and Mozambique offset by an increase in investment in Lesotho.

OTHER CAPITAL EXPENDITURE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Other	35	44	1,646	25.7	3,640.9

Other capital expenditure consists of additions to property, plant and equipment for our subsidiaries TDS Directory Operations (Proprietary) Limited, Swiftnet (Proprietary) Limited, Telkom Media (Proprietary) Limited, Africa Online Limited and Multi-Links Telecommunications Limited. Other capital expenditure, which includes spending on intangible assets, increased to R1,646 million (March 31, 2007: R44 million) and represents 84.9% of other revenue (March 31, 2007: 4.5%).

7. SEGMENT PERFORMANCE

Telkom’s operating structure comprises three segments, fixed-line, mobile and other. The fixed-line segment provides fixed-line voice and data communications services through Telkom. The mobile segment provides mobile services through our 50% joint venture interest in Vodacom. The other segment provides directory services through our 64.9% owned subsidiary, TDS Directory Operations, wireless data services through our wholly owned subsidiary, Swiftnet, internet services in Cote d'Ivoire, Ghana, Kenya, Namibia, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe, through our wholly owned subsidiary, Africa Online Limited and fixed, mobile, data, long distance and international telecommunications services throughout Nigeria, through our 75% owned subsidiary, Multi-Links, as well as Telkom Media.

Vodacom’s results are proportionately consolidated into the Telkom Group’s consolidated financial statements. This means that we include 50% of Vodacom’s results in each of the line items in the Telkom Group consolidated financial statements.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	47,625	51,619	56,285	8.4	9.0
Fixed-line	31,832	32,346	32,572	1.6	0.7
Mobile	17,021	20,573	24,089	20.9	17.1
Other	952	979	1,939	2.8	98.1
Inter-segmental eliminations	(2,180)	(2,279)	(2,315)	4.5	1.6
Operating profit	14,677	14,470	14,482	(1.4)	0.1
Fixed-line	9,843	8,597	8,107	(12.7)	(5.7)
Mobile	4,436	5,430	6,211	22.4	14.4
Other	398	444	164	11.6	(63.1)
Inter-segmental eliminations	0	(1)	0	0	0
Operating profit margin	30.8	28.0	25.7	(9.1)	(8.2)
Fixed-line	30.9	26.6	24.9	(13.9)	(6.4)
Mobile	26.1	26.4	25.8	1.1	(2.3)
Other	41.8	45.4	8.5	8.6	(81.3)
EBITDA	20,553	19,786	20,612	(3.7)	4.2
Fixed-line	14,207	12,180	11,839	(14.3)	(2.8)
Mobile	5,908	7,122	8,181	20.5	14.9
Other	438	484	307	10.5	(36.6)
EBITDA margin	43.2	38.3	36.6	(11.3)	(4.4)
Fixed-line	44.6	37.7	36.3	(15.5)	(3.7)
Mobile	34.7	34.6	34.0	(0.3)	(1.7)
Other	46.0	49.4	15.8	7.4	(68.0)

FIXED-LINE SEGMENT

The fixed-line segment accounted for 57.9% (March 31, 2007: 62.7%) of Group operating revenues (before inter-segmental eliminations) and 56.0% (March 31, 2007: 59.4%) of Group operating profit at March 31, 2008.

The financial information presented below for the fixed-line segment is before inter-segmental eliminations.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Revenue	31,832	32,346	32,572	1.6	0.7
Operating profit	9,843	8,597	8,107	(12.7)	(5.7)
EBITDA	14,207	12,180	11,839	(14.3)	(2.8)
Capital expenditure1	4,901	6,594	6,794	34.6	3.0
Operating profit margin (%)	30.9	26.6	24.9	(13.9)	(6.4)
EBITDA margin (%)	44.6	37.7	36.3	(15.5)	(3.7)
Capex to revenue (%)	15.4	20.4	20.9	32.5	2.5

1. Including spend on intangible assets.

FIXED-LINE OPERATING REVENUE
	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Subscriptions and connections	5,803	6,286	6,330	8.3	0.7
Traffic	17,563	16,740	15,949	(4.7)	(4.7)
Local	5,753	4,832	4,076	(16.0)	(15.6)
Long distance	3,162	2,731	2,251	(13.6)	(17.6)
Fixed-to-mobile	7,647	7,646	7,557	(0.0)	(1.2)
International outgoing	1,001	988	986	(1.3)	(0.2)
Subscription based calling plans	–	543	1,079	–	98.7
Interconnection	1,654	1,639	1,757	(0.9)	7.2
Mobile operators	760	816	838	7.4	2.7
Fixed operators	–	–	28	–	–
International operators	894	823	891	(7.9)	8.3
Data	6,675	7,492	8,308	12.2	10.9
Leased lines and other data	5,304	5,828	6,460	9.9	10.8
Mobile leased facilities	1,371	1,664	1,848	21.4	11.1
Directories and other	137	189	228	38.0	20.6
	31,832	32,346	32,572	1.6	0.7

Operating revenue from the fixed-line segment, before inter-segmental eliminations, increased by 0.7% to R32,572 million (March 31, 2007: R32,346 million) primarily due to the increase data services, interconnection and subscriptions and connection revenue, partially offset by a decline in traffic revenue.

Subscription and connections revenue grew by 0.7% to R6,330 million (March 31, 2007: R6,286 million), largely as a result of increased rental tariffs, increased subscribers on Telkom Closer and SupremeCall, increase in the number of PABX’s and higher penetration of value-added services.

Traffic revenue decreased by 4.7% to R15,949 million (March 31, 2007: R16,740 million), as a result of the acceleration of broadband adoption and the resultant loss of internet dial-up minutes as well as the increasing substitution of calls placed using mobile services rather than fixed-line services. Traffic, including VoIP traffic but excluding interconnection traffic, decreased by 11.4% to 22,561 million minutes (March 31, 2007: 25,455 million minutes).

Interconnection revenue increased by 7.2% to R1,757 million (March 31, 2007: R1,639 million) largely as a result of an increase of 8.3% in international interconnection revenue. The increased interconnection revenue from international operators is mainly as a result of higher exchange rates partially offset by a 3.1% decrease in international interconnection traffic minutes to 1,280 million minutes (March 31, 2007: 1,321 million minutes).

Mobile interconnection revenue increased by 2.7% to R838 million (March 31, 2007: R816 million) primarily due to increased interconnection traffic from domestic mobile operators and increased average tariff increases for call termination partially offset by lower average tariffs on mobile

international outgoing calls. Mobile interconnection traffic minutes increased by 3.4% to 2,502 million minutes (March 31, 2007: 2,419 million minutes) in the year ended March 31, 2008.

Data revenue increased by 10.9% to R8,308 million (March 31, 2007: R7,492 million) mainly due to higher demand for data services, including ADSL, connectivity and SAIX, internet access, and managed data networks, including VPN Supreme and increased revenue from leased line facilities from mobile operators. These increases were partially offset by decreased tariffs for leased line facilities to mobile operators and data connectivity services.

FIXED-LINE OPERATING EXPENSES

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Employee expenses	6,314	7,096	7,397	12.4	4.2
Salaries and wages	4,466	5,095	5,509	14.1	8.1
Benefits	2,383	2,673	2,671	12.2	(0.1)
Workforce reduction expenses	85	24	3	(71.8)	(87.5)
Employee related expenses capitalised	(620)	(696)	(786)	12.3	12.9
Payments to other network operators	6,140	6,461	6,902	5.2	6.8
Payment to mobile operators	5,220	5,425	5,697	3.9	5.0
Payment to international operators	920	1,036	1,205	12.6	16.3
SG&A	2,836	3,975	3,899	40.2	(1.9)
Materials and maintenance	1,608	1,900	1,996	18.2	5.1
Marketing	378	604	583	59.8	(3.5)
Bad debts	154	137	217	(11.0)	58.4
Other	696	1,334	1,103	91.7	(17.3)
Services rendered	2,045	2,206	2,413	7.9	9.4
Property management	1,109	1,141	1,222	2.9	7.1
Consultants and security	936	1,065	1,191	13.8	11.8
Operating leases	755	762	619	0.9	(18.8)
Depreciation, amortisation, impairment
and write-offs	4,364	3,583	3,732	(17.9)	4.2
	22,454	24,083	24,962	7.3	3.6

Fixed-line operating expenses, before inter-segmental eliminations, increased by 3.6% in the year ended March 31, 2008 to R24,962 million (March 31, 2007: R24,083 million), primarily due to increased employee expenses, payment to other operators, services rendered and depreciation, amortisation, impairment and write-offs in part offset by a decrease in operating leases and selling, general and administrative expenses.

Employee expenses increased by 4.2% in the year ended March 31, 2008 to R7,397 million (March 31, 2007: R7,096 million), largely due to increased payments to part-time employees and contractors employed to meet Telkom’s customer centricity focus; the deployment of the NGN objectives and annual salary increases, including related benefits due to an average annual salary increases of 7.0%.

Benefits decreased in the 2008 financial year primarily as a result of the annuity policy qualifying as a plan asset in June 2006, a lower provision for leave as a result of the decrease in the number of

employees and lower training expenses, partially offset by higher share compensation expenses as a result of the higher number of shares allocated during the year.

Payments to other network operators increased by 6.8% to R6,902 million (March 31, 2007: R6,461 million) as a result of increased payments to mobile and international operators. Payments to mobile operators increased by 5.0% to R5,697 million (March 31, 2007: R5,425 million), largely as a result of a 1.6% increase in fixed-to-mobile traffic. Payments to international operators increased by 16.3% to R1,205 million (March 31, 2007: R1,036 million), primarily due to an increase in volumes in switched hubbing and a 13.6% increase in international outgoing traffic volumes, arising from our reduced average international tariffs and a weaker exchange rate.

Selling, general and administrative expenses decreased by 1.9% to R3,899 million (March 31, 2007: R3,975 million), primarily as a result of a decrease in marketing expenses and other selling, general and administration expenses offset in part by an increase in material and maintenance expenses due to new technology roll-out and higher fuel cost and higher bad debts.

Services rendered increased by 9.4% to R2,413 million (March 31, 2007: R2,206 million), with property management expenses increasing by 7.1% primarily as a result of increased electricity, rates and taxes. Consultants and security costs increased by 11.8% primarily as a result of increased cost to explore local and international investment and expansion opportunities as well as higher security and legal costs.

Operating leases decreased by 18.8% to R619 million (March 31, 2007: R762 million) primarily due to a discount received on our renegotiated Debis contract effective August 1, 2007 as well as 9.3% reduction in vehicle fleet from 9,694 vehicles at March 31, 2007 to 8,792 vehicles at March 31, 2008.

The 4.2% increase in depreciation, amortisation, impairment and write-offs to R3,732 million (March 31, 2007: R3,583 million) was mainly as a result of higher amortisation of intangibles and increased depreciation due to ongoing investment in telecommunications network equipment and data processing equipment, partially offset by lower asset write-offs.

Fixed-line operating profit decreased by 5.7% to R8,107 million (March 31, 2007: R8,597 million) with an operating profit margin of 24.9% (March 31, 2007: 26.6%). EBITDA decreased by 2.8% to R11,839 million (March 31, 2007: R12,180 million), with EBITDA margins decreasing to 36.3% (March 31, 2007: 37.7%).

MOBILE SEGMENT

The mobile segment accounted for 42.8% of Group operating revenue (March 31, 2007: 39.8%) (before inter-segmental eliminations) and 42.9% of Group operating profits (March 31, 2007: 37.5%). Vodacom’s operational statistics are presented below at 100%, but all financial figures represent the 50% that is proportionately consolidated in the Group and presented before inter-segmental eliminations.

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	17,021	20,573	24,089	20.9	17.1
Operating profit	4,436	5,430	6,211	22.4	14.4
EBITDA	5,908	7,122	8,181	20.5	14.9
Capital expenditure	2,571	3,608	3,460	40.3	(4.1)
Operating profit margin (%)	26.1	26.4	25.8	1.1	(2.3)
EBITDA margin (%)	34.7	34.6	34.0	(0.3)	(1.7)
Capex to revenue (%)	15.1	17.5	14.4	15.9	(17.7)

MOBILE OPERATING REVENUE

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07		07/08
Airtime and access	10,043	11,854	13,548	18.0	14.3
Data	1,019	1,671	2,501	64.0	49.7
Interconnect	3,348	3,918	4,443	17.0	13.4
Equipment sales	1,993	2,350	2,526	17.9	7.5
International airtime	486	653	918	34.4	40.6
Other	132	127	153	(3.8)	20.5
	17,021	20,573	24,089	20.9	17.1

Operating revenue from the mobile segment increased by 17.1%, before inter-segmental eliminations, to R24,089 million (March 31, 2007: R20,573 million), primarily driven by customer growth and partially offset by declining Average Monthly Revenue Per User (ARPUs) in all operations. Revenue from Vodacom’s operations outside of South Africa increased by 30.3% to R2,697 million (March 31, 2007: R2,070 million) for the year ended March 31, 2008.

The growth in revenue can largely be attributed to a 12.7% increase in Vodacom’s total customers to 33,994 million as of March 31, 2008, (March 31, 2007: 30,150 million), resulting from strong growth in prepaid and contract customers in South Africa and 28.4% growth in customers outside of South Africa. In South Africa, total Average Monthly Revenue Per User (ARPUs) remained stable at R125. Contract ARPUs decreased by 6.0% to R486 (March 31, 2007: R517) and prepaid ARPUs decreased by 1.6% to R62 (March 31, 2007: R63) but had a positive impact on ARPU.

Vodacom’s continued focus on implementation of upgrade and retention policies in the year ended March 31, 2008, ensured an improvement in the South Africa contract churn to 8.3% (March 31, 2007: 9.7%) for the year ended March 31, 2008. South Africa’s prepaid churn of 47.9% for the year ended March 31, 2008, (March 31, 2007: 37.5%) was largely as a result of a once-off rule change

that will disconnect inactive prepaid SIM cards after 13 months of being kept in an active state by call forwarding to voicemail and having not had any other revenue generating activity on the Vodacom network. This rule has led to the disconnection of an additional 2.9 million prepaid SIM cards in September 2007.

Data revenue increased by 49.7% and represents 10.4% of mobile revenue for the year ended March 31, 2008 (March 31, 2007: 8.1%). The growth was largely due to the popularity of SMS and data initiatives such as 3G, HSDPA, Blackberry“, Vodafone Live! as well as other data products. Vodacom South Africa transmitted 4.7 billion (March 31, 2007: 4.5 billion) messages over its network during the year ended March 31, 2008. The number of active data users on the South African network as at March 31, 2008, was: 1.4 million MMS users (March 31, 2007: 1.2 million); 4.7 million GPRS users (March 31, 2007: 2.8 million); 1.3 million 3G/HSDPA devices (March 31, 2007: 584 thousand); 1,421 thousand Vodafone Live! users (March 31, 2007: 899 thousand) and 31 thousand Unique Mobile TV users (March 31, 2007: 33 thousand).

Mobile interconnect revenue increased by 13.4% to R4,443 million for the year ended March 31, 2008 (March 31, 2007: R3,918 million), primarily due to an increase in the number of fixed-line calls terminating on Vodacom’s network as a result of the increased number of Vodacom customers.

Equipment sales increased by 7.5% to R2,526 million for the year ended March 31, 2008 (March 31, 2007: R2,350 million) primarily due to the growth of the customer base and cheaper handsets combined with added functionality of new phones based on new technologies. South African handset sales volume increased by 10.9% to 5.1 million units (March 31, 2007: 4.6 million units) during the year ended March 31, 2008.

Vodacom’s international airtime revenue consists largely of international calls by Vodacom’s customers, roaming revenue from Vodacom customers making and receiving calls while abroad and revenue from international customers roaming on Vodacom’s network.

MOBILE OPERATING EXPENSES

		Year ended March 31,			% variance
In ZAR millions	2006		2007	2008	06/07	07/08
Employee expenses	1,019		1,186	1,483	16.4	25.0
Payments to other operators	2,317		2,818	3,279	21.6	16.4
SG&A	7,328		8,778	10,436	19.8	18.9
Services rendered	65		82	115	26.2	40.2
Operating leases	435		629	615	44.6	(2.2)
Depreciation, amortisation, impairment
and write offs	1,472		1,692	1,970	14.9	16.4
	12,636		15,185	17,898	20.2	17.9

Mobile operating expenses, before inter-segmental eliminations, increased by 17.9% to R17,898 million for the year ended March 31, 2008 (March 31, 2007: R15,185 million), primarily due to increased, selling and distribution costs, payments to other operators, employee expenses, depreciation, amortisation, impairment and write offs and services rendered partially offsets by lower operating leases.

Mobile employee expenses increased by 25.0%,to R1,483 million for the year ended March 31, 2008 (March 31, 2007: R1,186 million), primarily due to a 5.5% increase in the number of employees to 6,247, to support the growth in operations as well as annual salary increases (including related benefits) and an increase in the provision for Vodacom’s deferred bonus schemes due to increased profits. Vodacom increased the total number of its employees, including agency temporary employees, by 14.3% in its other African operations to 1,540 employees and by 2.9% in its operations in South Africa to 4,707 employees, including agency temporary-holding company and Mauritius employees as at March 31, 2008.

Employee productivity in South Africa and other African countries, as measured by customers per employee including agency temporary employees, increased by 6.9% to 5,442 customers per employee as at March 31, 2008.

Mobile payments to other operators increased by 16.4% to R3,279 million (March 31, 2007: R2,818 million) for the year ended March 31, 2008, primarily as a result of increased outgoing traffic terminating on the other mobile networks due to the increased number of South African mobile users relative to traffic terminating on the fixed-line networks.

Mobile selling, general and administrative expenses increased by 18.9% to R10,436 million (March 31, 2007: R8,778 million), in the year ended March 31, 2008, primarily due to an increase in selling, distribution and marketing expenses mainly driven by new technologies and enhancing brand presence in all operations to support the growth in South African and other African operations.

Mobile depreciation, amortisation, impairment and write-offs increased by 16.4% to R1,970 million (March 31, 2007: R1,692 million) in the year ended March 31, 2008, primarily as a result of increased capital expenditure on network equipment with the roll-out of 3G/HSPDA networks.

Telkom’s 50% share of Vodacom’s profit from operations increased by 14.4% to R6,211 million for the year ended March 31, 2008 (March 31, 2007: R5,430) and the mobile operating profit margin decreased to 25.8% (March 31, 2007: 26.4%). Mobile EBITDA increased by 14.9% to R8,181 million (March 31, 2007: R7,122 million), with EBITDA margins decreasing to 34.0% (March 31, 2007: 34.6%).

OTHER SEGMENT

The other segment accounted for 3.4% of Group operating revenue (March 31, 2007: 1.9%) (before inter-segmental eliminations) and 1.1% of Group operating profits (March 31, 2007: 3.1%).

SUMMARY

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Operating revenue	952	979	1,939	2.8	98.1
Operating profit	398	444	164	11.6	(63.1)
EBITDA	438	484	307	10.5	(36.6)
Capital Expenditure	35	44	1,646	25.7	–
Operating profit margin (%)	41.8	45.4	8.5	8.6	(81.3)
EBITDA margin (%)	46.0	49.4	15.8	7.4	(68.0)
Capex to revenue (%)	3.7	4.5	84.9	21.6	–

OTHER OPERATING REVENUE
	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008	06/07	07/08
Other	952	979	1,939	2.8	98.1

Other operating revenue before inter segmental eliminations increased by 98.1% for the year ended March 31, 2008 to R1,939 million (March 31, 2007: R979 million) primarily driven by the inclusion in the current period of revenue generated by our newly acquired subsidiaries, Multi-links and Africa Online.

OTHER OPERATING EXPENSES

	Year ended March 31,			% variance
In ZAR millions	2006	2007	2008		06/07	07/08
Employee expenses	156	173	340		10.9	96.5
Payments to other operators	9	10	698		11.1	6,880.0
SG&A	326	336	544		3.1	61.9
Services rendered	5	5	45		–	800.0
Operating leases	28	25	72		(10.7)	188.0
Depreciation, amortisation, impairment
and write offs	40	40	143		–	257.5
	564	589	1,842		4.4	212.7

Other operating expenses, before inter-segmental eliminations, increased by 212.7% to R1,842 million (March 31, 2007: R589 million) for the year ended March 31, 2008 primarily due to the inclusion of operating expenses relating to our newly acquired subsidiaries, Multi-Links and Africa Online and the creation of Telkom Media resulting in significant increases across all expenditure categories. Multi-links was the main contributor to the increases in payments to other operators and Multi-Links and TDS Operations were the main contributors to selling, general and administrative expenditure.

8. EMPLOYEES

FIXED-LINE

	Year ended March 31,			% variance
	2006	2007	2008		06/07	07/08
Fixed-line employees	25,575	25,864	24,879		1.1	(3.8)
Lines per employee	184	180	182		(2.2)	1.1

MOVEMENT IN FIXED-LINE EMPLOYEES

Telkom Company only, excluding subsidiaries

	Year ended March 31,
	2006	2007	2008
Opening balance	28,972	25,575	25,864
Appointments	686	1,486	891
Employee losses	(4,083)	(1,197)	(1,876)
Workforce reductions	(2,990)	(20)	(4)
Voluntary early retirement	(674)	(7)	(2)
Voluntary severance	(2,295)	(13)	(2)
Involuntary reductions	(21)	–	–
Natural attrition	(1,093)	(1,177)	(1,872)
Closing balance	25,575	25,864	24,879

MOBILE EMPLOYEES

	Year ended March 31,			% variance
	2006	2007	2008	06/07	07/08
South Africa1, 2	4,305	4,727	4,849	9.8	2.6
Customers per employee1, 2	4,451	4,867	5,119	9.3	5.2
Other African countries2	1,154	1,522	1,992	31.9	30.9
Customers per employee2	3,776	4,695	4,605	24.3	(1.9)
Vodacom Group1, 2	5,459	6,249	6,841	14.5	9.5
Customers per employee1, 2	4,308	4,825	4,969	12.0	3.0

1. Includes Holding Company and Mauritius employees.

2. Includes Agency temporary employees.

OTHER

	Year ended March 31,			% variance
	2006	2007	2008	06/07	07/08
Multi-Links	–	3	680	–	–
Africa Online	–	317	379	–	19.6
Telkom Media	–	–	142	–	–
Swiftnet	67	76	85	13.4	11.8
TDS Directory Services	514	549	610	6.8	11.1

9. CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

REPORT ON REVIEW OF CONDENSED CONSOLIDATED PROVISIONAL ANNUAL FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF TELKOM SA LIMITED

Introduction

We have reviewed the accompanying condensed consolidated provisional balance sheet of Telkom SA Limited as at 31 March 2008 and the related condensed consolidated provisional statements of income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation and fair presentation of these condensed consolidated provisional annual financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (“IAS 34”). Our responsibility is to express a conclusion on these condensed consolidated provisional annual financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated provisional annual financial information does not present fairly, in all material respects, the financial position of the entity as at 31 March 2008, and of its financial performance and its cash flows for the year then ended in accordance with IAS 34.

Registered Auditor

June 06, 2008

Pretoria

CONDENSED CONSOLIDATED PROVISIONAL INCOME STATEMENT

for the three years ended March 31, 2008

		2006	2007	2008
	Notes	Rm	Rm	Rm
Total revenue	3.1	48,260	52,157	56,865
Operating revenue	3.2	47,625	51,619	56,285
Other income	4	480	384	534
Operating expenses		33,428	37,533	42,337
Employee expenses	5.1	7,489	8,454	9,220
Payments to other operators	5.2	6,826	7,590	9,169
Selling, general and administrative expenses	5.3	10,273	12,902	14,409
Service fees	5.4	2,114	2,291	2,571
Operating leases	5.5	850	981	838
Depreciation, amortisation, impairment and write-offs	5.6	5,876	5,315	6,130
Operating profit		14,677	14,470	14,482
Investment income		397	235	197
Finance charges and fair value movements		1,223	1,125	1,803
Interest		1,346	1,327	1,885
Foreign exchange and fair value movement		(123)	(202)	(82)
Profit before taxation		13,851	13,580	12,876
Taxation	6	4,523	4,731	4,704
Profit for the year		9,328	8,849	8,172
Attributable to:
Equity holders of Telkom		9,189	8,646	7,975
Minority interest		139	203	197
		9,328	8,849	8,172
Basic earnings per share (cents)	8	1,746.1	1,681.0	1,565.0
Diluted earnings per share (cents)	8	1,736.6	1,676.3	1,546.9
Dividend per share (cents)	8	900.0	900.0	1,100.0

CONDENSED CONSOLIDATED PROVISIONAL BALANCE SHEET

at March 31, 2008

		2006	2007	2008
	Notes	Rm	Rm	Rm
ASSETS
Non-current assets		44,813	48,770	57,763
Property, plant and equipment	10	37,274	41,254	46,815
Intangible assets	11	3,910	5,111	8,468
Investments		2,894	1,384	1,448
Deferred expenses		254	270	221
Finance lease receivables		–	158	206
Deferred taxation	12	481	593	605
Current assets		12,731	10,376	12,609
Short-term investments		69	77	51
Inventories	13	814	1,093	1,287
Income tax receivable	6	–	520	9
Current portion of deferred expenses		226	287	362
Current portion of finance lease receivables		–	88	166
Trade and other receivables		6,399	7,303	8,986
Other financial assets		275	259	614
Cash and cash equivalents	14	4,948	749	1,134
Total assets		57,544	59,146	70,372

EQUITY AND LIABILITIES
Equity attributable to equity holders of Telkom		29,165	31,724	32,815
Share capital and premium	15	6,791	5,329	5,208
Treasury shares	16	(1,809)	(1,774)	(1,638)
Share-based compensation reserve	17	151	257	643
Non-distributable reserves		1,128	1,413	1,292
Retained earnings		22,904	26,499	27,310
Minority interest		301	284	522
Total equity		29,466	32,008	33,337
Non-current liabilities		12,391	8,554	15,104
Interest-bearing debt	18	7,655	4,338	9,403
Other financial liabilities		–	36	919
Provisions		2,677	1,443	1,675
Deferred revenue		991	1,021	1,128
Deferred taxation	12	1,068	1,716	1,979
Current liabilities		15,687	18,584	21,931
Trade and other payables		6,103	7,237	8,771
Shareholders for dividend	7	4	15	20
Current portion of interest-bearing debt	18	3,468	6,026	6,330
Current portion of provisions		1,660	2,095	2,181
Current portion of deferred revenue		1,975	1,983	2,593
Income tax payable	6	1,549	594	323
Other financial liabilities		235	193	371
Credit facilities utilised	14	693	441	1,342
Total liabilities		28,078	27,138	37,035
Total equity and liabilities		57,544	59,146	70,372

CONDENSED CONSOLIDATED PROVISIONAL STATEMENT OF CHANGES IN EQUITY

for the three years ended March 31, 2008

	Attributable to equity holders of Telkom
	Share	Share	Treasury
	capital	premium	shares
	Rm	Rm	Rm
Balance at April 1, 2005	5,570	2,723	(1,812)
Total income and expense for the year
Profit for the year
Foreign currency translation reserve (net of tax of RNil)
Dividend declared (refer to note 7)
Transfer to non-distributable reserves*
Shares vested and re-issued (refer to note 16 and 17)			3
Net increase in Share-based compensation reserve
(refer to note 17)
Acquisition of subsidiary
Shares bought back and cancelled (refer to note 15)	(121)	(1,381)
Balance at March 31, 2006	5,449	1,342	(1,809)
Total income and expense for the year
Profit for the year
Foreign currency translation reserve (net of tax of R4 million)
Dividend declared (refer to note 7)
Transfer to non-distributable reserves*
Net increase in Share-based compensation reserve
(refer to note 17)
Shares vested and re-issued (refer to note 16 and 17)			35
Acquisition of subsidiaries and minorities
Shares bought back and cancelled (refer to note 15)	(120)	(1,342)
Balance at March 31, 2007	5,329	–	(1,774)
Total income and expense for the year
Profit for the year

Revaluation of available-for-sale investment
(net of tax of R1 million)
Foreign currency translation reserve (net of tax of R6 million)
Dividend declared (refer to note 7)
Transfer to non-distributable reserves*
Net increase in Share-based compensation reserve
(refer to note 17)
Shares vested and re-issued (refer to note 16 and 17)			136
Acquisition of subsidiaries and minorities (refer to note 19)
Shares bought back and cancelled (refer to note 15)	(121)
Minority put option (refer to note 19)
Balance at March 31, 2008	5,208	–	(1,638)

	Attributable to equity holders of Telkom
	Share-based	Non-
	compensation	distributable	Retained		Minority	Total
	reserve	reserves	earnings	Total	interest	equity
	Rm	Rm	Rm	Rm	Rm	Rm
Balance at April 1, 2005	68	360	19,232	26,141	220	26,361
Total income and expense for the year		52	9,189	9,241	132	9,373
Profit for the year			9,189	9,189	139	9,328
Foreign currency translation reserve (net of tax of RNil)		52		52	(7)	45
Dividend declared (refer to note 7)			(4,801)	(4,801)	(78)	(4,879)
Transfer to non-distributable reserves*		716	(716)	–		–
Shares vested and re-issued (refer to note 16 and 17)	(3)			–		–
Net increase in Share-based compensation reserve
(refer to note 17)	86			86		86

Acquisition of subsidiary				–	27	27
Shares bought back and cancelled (refer to note 15)				(1,502)		(1,502)
Balance at March 31, 2006	151	1,128	22,904	29,165	301	29,466
Total income and expense for the year		46	8,646	8,692	217	8,909
Profit for the year			8,646	8,646	203	8,849
Foreign currency translation reserve (net of tax of R4 million)		46		46	14	60
Dividend declared (refer to note 7)			(4,678)	(4,678)	(166)	(4,844)
Transfer to non-distributable reserves*		239	(239)	–		–
Net increase in Share-based compensation reserve
(refer to note 17)	141			141		141
Shares vested and re-issued (refer to note 16 and 17)	(35)			–		–
Acquisition of subsidiaries and minorities				–	(68)	(68)
Shares bought back and cancelled (refer to note 15)			(134)	(1,596)		(1,596)
Balance at March 31, 2007	257	1,413	26,499	31,724	284	32,008
Total income and expense for the year		529	7,975	8,504	226	8,730
Profit for the year			7,975	7,975	197	8,172
Revaluation of available-for-sale investment
(net of tax of R1 million)		8		8		8
Foreign currency translation reserve (net of tax of R6 million)		521		521	29	550
Dividend declared (refer to note 7)			(5,627)	(5,627)	(65)	(5,692)
Transfer to non-distributable reserves*		11	(11)	–		–

Net increase in Share-based compensation reserve
(refer to note 17)	522			522		522
Shares vested and re-issued (refer to note 16 and 17)	(136)			–		–
Acquisition of subsidiaries and minorities (refer to note 19)				–	77	77
Shares bought back and cancelled (refer to note 15)			(1,526)	(1,647)		(1,647)
Minority put option (refer to note 19)		(661)		(661)		(661)
Balance	643	1,292	27,310	32,815	522	33,337

*The earnings from the Group’s cell captives are recognised in the income statement and then transferred to non-distributable reserves.

CONDENSED CONSOLIDATED PROVISIONAL CASH FLOW STATEMENT

for the three years ended March 31, 2008

		2006	2007	2008
	Notes	Rm	Rm	Rm
Cash flows from operating activities		9,506	9,356	10,603
Cash receipts from customers		46,958	50,979	55,627
Cash paid to suppliers and employees		(27,234)	(30,459)	(34,371)
Cash generated from operations		19,724	20,520	21,256
Interest received		482	422	433
Dividends received		50	3	–
Finance charges paid		(1,316)	(1,115)	(1,077)
Taxation paid	6	(4,550)	(5,690)	(4,277)
Cash generated from operations before
dividend paid		14,390	14,140	16,335
Dividend paid	7	(4,884)	(4,784)	(5,732)
Cash flows from investing activities		(7,286)	(10,412)	(14,106)
Proceeds on disposal of property, plant
and equipment and intangible assets		92	54	169
Proceeds on disposal of investments		493	77	8
Additions to property, plant and equipment
and intangible assets		(7,396)	(10,037)	(11,657)
Acquisition of subsidiaries and minorities	19	–	(445)	(2,462)
Additions to other investments		(475)	(61)	(164)
Cash flows from financing activities		(258)	(2,920)	2,943
Loans raised		4,123	5,624	23,877
Loans repaid		(7,399)	(6,922)	(19,315)
Shares bought back and cancelled		(1,502)	(1,596)	(1,647)
Finance lease capital repaid		(24)	(37)	(61)
Decrease in net financial assets		4,544	11	89
Net increase/(decrease) in cash and
cash equivalents		1,962	(3,976)	(560)
Net cash and cash equivalents at beginning of year		2,301	4,255	308

Effect of foreign exchange rate differences		(8)	29	44
Net cash and cash equivalents at end of year	14	4,255	308	(208)

NOTES TO THE CONDENSED CONSOLIDATED PROVISIONAL ANNUAL FINANCIAL STATEMENTS

for the three years ended March 31, 2008

1. CORPORATE INFORMATION

Telkom SA Limited (‘Telkom’) is a company incorporated and domiciled in the Republic of South Africa (‘South Africa’) whose shares are publicly traded. The main objective of Telkom, its subsidiaries and joint ventures (‘the Group’) is to supply telecommunication, broadcasting, multimedia, technology, information and other related information technology services to the general public, as well as mobile communication services through the Vodacom Group (Proprietary) Limited (‘Vodacom’) in South Africa and certain other African countries. The Group’s services and products include:

•   fixed-line subscription and connection services to post-paid, prepaid and private payphone customers using PSTN lines, including ISDN lines, and the sale of subscription based value-added voice services and customer premises equipment rental and sales;

•   fixed-line traffic services to post-paid, prepaid and payphones customers, including local, long distance, fixed-to-mobile, international outgoing and international voice-over-internet protocol traffic services;

•   interconnection services, including terminating and transiting traffic from South African mobile operators, as well as from international operators and transiting traffic from mobile to international destinations;

•   fixed-line data services, including domestic and international data transmission services, such as point-to-point leased lines, ADSL services, packet-based services, managed data networking services and internet access and related information technology services;

•   e-commerce, including internet access service provider, application service provider, hosting, data storage, e-mail and security services;

•   mobile communications services, including voice services, data services, value-added services and handset sales through Vodacom and;

•   other services include directory services, through our TDS Directory Operations Group, wireless data services, through our Swiftnet (Proprietary) Limited subsidiary, internet services outside South Africa, through our Africa Online Limited subsidiary and information, communication and telecommunication operating services in Nigeria, through our newly acquired Multi-Links Telecommunications (Proprietary) Limited subsidiary.

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of preparation

The condensed consolidated provisional annual financial statements have been prepared in accordance with IAS34 Interim Financial Reporting and in compliance with the South African Companies Act, 1973.

The financial statements are prepared on the historical cost basis, with the exception of certain financial instruments and share-based payments which are measured at fair value.

Significant accounting policies

The Group’s significant accounting polices and methods of computation are consistent with those applied in the previous financial year except for the following:

• adoption of amendment to IAS1;

• adoption of IFRS7, IFRIC8, IFRIC9, IFRIC10, IFRIC11 and Circular 8/2007; and

• identification of an additional segment.

The principal effects of these changes are discussed below.

Amendment to IAS1 Presentation of Financial Statements

This amendment is effective for annual periods beginning on or after January 1, 2007. As a result of the pronouncement of IFRS7 Financial Instruments: Disclosures, IAS1 has been amended to require the disclosure of the entity’s objective, policies and processes for managing capital, quantitative data about what the entity regards as capital, whether the entity has complied with any capital requirements and if it has not complied, the consequences of such non-compliance. The impact of this standard is to expand on certain disclosures relating to financial instruments and requires additional disclosures not previously disclosed. The effect of this amendment will be included in the consolidated annual financial statements for the year ended March 31, 2008 and has no effect on the disclosure in the condensed consolidated provisional annual financial statements.

IFRS7 Financial Instruments: Disclosures

The standard is effective for annual periods beginning on or after January 1, 2007. IFRS7 supersedes disclosure in IAS32. All financial instruments disclosures will now be provided in terms of IFRS7. One of the main disclosure requirements added by IFRS7 is that an entity must group its financial instruments into classes of similar instruments, and when disclosures are required, make disclosures by class. IFRS7 also requires information about the significance of financial instruments and information about the nature and extent of risks arising from financial instruments. The impact of this standard is to expand on certain disclosures relating to financial instruments and requires additional disclosures not previously disclosed. The effect of this standard will be included in the consolidated annual financial statements for the year ended March 31, 2008.

IFRIC8 Scope of IFRS2

The interpretation is effective for annual periods beginning on or after May 1, 2006. The interpretation clarifies that IFRS2 applies to transactions in which an entity receives goods or services as consideration for equity instruments of the entity. This includes transactions in which the entity cannot identify specifically some or all of the goods or services received. The impact of this interpretation on the condensed consolidated provisional annual financial statements is not material since the Group has not transacted with third parties using equity as a purchase consideration for the transaction, other than those paid to employees in share-based payment transactions.

IFRIC9 Reassessment of Embedded Derivatives

The interpretation is effective for annual periods beginning on or after June 1, 2006. The interpretation clarifies that an entity is required to separate an embedded derivative from the host contract and account for it as a derivative when the entity first becomes a party to the contract. It further clarifies that reassessment is only allowed when there is a change in the terms of the contract which significantly modifies the cash flows that would otherwise be required under the contract.

The interpretation does not have an impact on the condensed consolidated provisional annual financial statements.

IFRIC10 Interim Financial Reporting and Impairment

The interpretation is effective for annual periods beginning on or after November 1, 2006. The interpretation clarifies that an entity should not reverse an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument classified as available-for-sale or financial asset carried at cost. The impact of this interpretation on the condensed consolidated provisional annual financial statements is not material.

IFRIC11 IFRS2 – Group and Treasury Share Transactions

The interpretation is effective for annual periods beginning on or after March 1, 2007. The interpretation clarifies that regardless of whether the entity chooses or is required to buy equity instruments from another party to satisfy its obligations to its employees under the share-based payment arrangement by delivery of its own shares, the transaction should be accounted for as equity settled. This interpretation also applies regardless of whether the employee’s rights to the equity instruments were granted by the entity itself or by its shareholders or was settled by the entity itself or its shareholders. Share-based payments involving the Group’s own equity instruments in which the Group chooses or is required to buy its own equity instruments to settle the share-based payment obligation are currently accounted for as equity-settled share-based payment transactions under IFRS2. The interpretation has no further impact on the condensed consolidated provisional annual financial statements.

Circular 8/2007 Headline earnings

The circular was issued by the South African Institute of Chartered Accountants (‘SAICA’) and is applicable for financial periods ending on or after August 31, 2007. Circular 8/2007 supersedes Circular 7/2002 and it defines rules for calculating headline earnings per share, which is an additional per share measure permitted by IAS33 Earnings per Share. It further requires a disclosure of a detailed reconciliation of headline earnings to the earnings numbers used in the calculation of basic earnings per share in accordance with the requirements of IAS33. The Group adopted the provisions of Circular 8/2007 in the reporting period beginning on April 1, 2007 and the adoption has had no impact other than additional disclosure as required by the Circular, which will be included in the consolidated annual financial statements for the year ended March 31, 2008.

Segmental reporting

As of the beginning of the year the Group has identified a new segment called ‘Other’ and is now managed in three business segments, which form the primary segment reporting basis: Fixed-line, Mobile and Other. The Other business segment includes newly acquired Multi-Links Telecommunications (Proprietary) Limited and Africa Online Limited, as well as recently formed Telkom Media Group. It also includes TDS Directory Operations Group and Swiftnet (Proprietary) Limited, which were previously included in the Fixed-line segment.

			2006	2007	2008
			Rm	Rm	Rm
3.	REVENUE
	3.1	Total revenue	48,260	52,157	56,865
		Operating revenue	47,625	51,619	56,285
		Other income (excluding profit on disposal
		of property, plant and equipment and
		investments, refer to note 4)	238	303	383
		Investment income	397	235	197
	3.2	Operating revenue	47,625	51,619	56,285
		Fixed-line	31,832	32,345	32,572
		Mobile	17,021	20,573	24,089
		Other	952	979	1,939
		Eliminations	(2,180)	(2,278)	(2,315)
		Fixed-line	31,832	32,345	32,572
		Subscriptions, connections and other usage	5,803	6,286	6,330
		Traffic	17,563	16,740	15,950
		Domestic (local and long distance)	8,915	7,563	6,328
		Fixed-to-mobile	7,647	7,646	7,557
		International (outgoing)	1,001	988	986
		Subscription based calling plans*	–	543	1,079
		Interconnection	1,654	1,639	1,757
		Data	6,674	7,489	8,308
		Sundry revenue	138	191	227
	*The Group has reclassified calling plans from domestic traffic into a separate revenue line item to disclose revenue earned from subscription based calling plans. Amounts for the year ended March 31, 2006 were not restated as they were considered to be immaterial.
Fixed-line revenue has been restated as a result of changes in the segment structure.

		2006	2007	2008
		Rm	Rm	Rm
4.	OTHER INCOME	480	384	534
	Other income (included in Total revenue, refer to note 3)	238	303	383
	Interest received from trade receivables	136	190	257
	Sundry income	102	113	126
	Profit on disposal of property, plant and equipment
	and intangible assets	79	29	147
	Profit on disposal of investment	163	52	4
	Sundry income includes rental received for the partial sub-letting of commercial properties.

			2006	2007	2008
			Rm	Rm	Rm
5.	OPERATING EXPENSES
	Operating expenses comprise:
	5.1	Employee expenses	7,489	8,454	9,220
		Salaries and wages	5,566	6,362	7,144
		Medical aid contributions	371	385	417
		Retirement contributions	435	496	598
		Post-retirement and pension benefits	(58)	33	5
		Post-retirement medical aid	361	330	277
		Telephone rebates	19	104	27
		Share-based compensation expense
		(refer to note 17)	127	141	522
		Other benefits*	1,288	1,299	1,016
		Employee expenses capitalised	(620)	(696)	(786)
		*Other benefits include skills development,
		annual leave, performance incentive and service bonuses.
	5.2	Payments to other operators	6,826	7,590	9,169
		Payments to other network operators consist
		of expenses in respect of interconnection with other network operators.

5.3	Selling, general and administrative
	expenses	10,273	12,902	14,409
	Selling and administrative expenses	7,240	9,248	10,352
	Maintenance	1,928	2,286	2,508
	Marketing	899	1,215	1,249
	Bad debts	206	153	300
5.4	Service fees	2,114	2,291	2,571
	Facilities and property management	1,110	1,142	1,228
	Consultancy services	182	266	291
	Security and other	772	821	982
	Auditors’ remuneration	50	62	70
	Audit services	38	61	69
	Company auditors	28	48	46
	Current year	26	47	43
	Prior year underprovision	2	1	3
	Other auditors – current year	10	13	23
	Audit related services	9	–	1
	Other services	3	1	–
5.5	Operating leases	850	981	838
	Land and buildings	221	284	170
	Transmission and data lines	42	63	187
	Equipment	78	80	50
	Vehicles	509	554	431
5.6	Depreciation, amortisation,
	impairment and write-offs	5,876	5,315	6,130
	Depreciation of property, plant and equipment	5,154	4,483	4,855
	Amortisation of intangible assets	560	536	746
	Impairment of property, plant and
	equipment and intangible assets	–	12	244
	Reversal of impairment of property, plant
	and equipment and intangible assets	(26)	–	–
	Write-offs of property, plant and equipment
	and intangible assets	188	284	285

In recognition of the changed usage patterns of certain items of property, plant and equipment and intangible assets, the Group reviewed their remaining useful lives as at March 31. The assets affected were certain items included in Support equipment and Intangible assets.

	Previous life	Revised life
	Years	Years
Property, plant and equipment
Support equipment	8–13	5–13
Intangible assets
Subscriber bases	3–8	4–10

		2006	2007	2008
		Rm	Rm	Rm
6.	TAXATION	4,523	4,731	4,704
	South African normal company taxation	3,763	3,528	3,756
	Deferred taxation	173	516	219
	Secondary tax on companies (‘STC’)	585	670	678
	Foreign taxation	2	17	51
	The net deferred taxation expense results mainly
	from the extension of useful lives which is offset
	slightly by STC tax credits.
	STC is provided for at a rate of 10% (12.5% before
	October 1, 2007) on the amount by which dividends
	declared by Telkom exceeds dividends received.
	Taxation paid	(4,550)	(5,690)	(4,277)
	Net liability at beginning of year	(1,711)	(1,549)	(74)
	Taxation expense	(3,795)	(3,545)	(3,807)
	Foreign currency translation reserve	–	–	(32)
	Secondary tax on companies	(585)	(670)	(678)
	Business combination	(8)	–	–
	Net taxation liability at end of year	1,549	74	314

		2006	2007	2008
		Rm	Rm	Rm
7.	DIVIDENDS PAID	(4,884)	(4,784)	(5,732)
	Dividends payable at beginning of year	(7)	(4)	(15)
	Declared during the year – Dividends on ordinary shares	(4,801)	(4,678)	(5,627)
	Final dividend for 2005: 400 cents	(2,134)	–	–
	Special dividend for 2005: 500 cents	(2,667)	–	–
	Final dividend for 2006: 500 cents	–	(2,599)	–
	Special dividend for 2006: 400 cents	–	(2,079)	–
	Final dividend for 2007: 600 cents	–	–	(3,069)
	Special dividend for 2007: 500 cents	–	–	(2,558)
	Dividends paid to minority shareholders	(80)	(117)	(110)
	Dividends payable at end of year	4	15	20

		2006	2007	2008
8.	EARNINGS AND DIVIDEND PER SHARE
	Basic earnings per share (cents)	1,746.1	1,681.0	1,565.0
	The calculation of earnings per share is based on profit attributable to equity holders of Telkom for the year of R7,975 million (2007: R8,646 million; 2006: R9,189 million) and 509,595,090 (2007: 514,341,282; 2006: 526,271,093) weighted average number of ordinary shares in issue.
	Diluted earnings per share (cents)	1,736.6	1,676.3	1,546.9
	The calculation of diluted earnings per share is based on earnings for the year of R7,975 million (2007: R8,646 million; 2006: R9,189 million) and 515,541,966 diluted weighted average number of ordinary shares (2007: 515,763,579; 2006: 529,152,318). The adjustment in the weighted average number of shares is as a result of the expected future vesting of shares already allocated to employees under the Telkom Conditional Share Plan.
	Headline earnings per share (cents)*	1,728.6	1,710.7	1,634.8
	The calculation of headline earnings per share is based on headline earnings of R8,331 million (2007:  R8,799 million; 2006: R9,097 million) and 509,595,090 (2007: 514,341,282; 2006: 526,271,093) weighted average number of ordinary shares in issue.
	Diluted headline earnings per share (cents)*	1,719.2	1,706.0	1,616.0
	The calculation of diluted headline earnings per share is based on headline earnings of R8,331 million (2007: R8,799 million; 2006: R9,097 million) and 515,541,966 (2007: 515,763,579; 2006: 529,152,318) diluted weighted average number of ordinary shares in issue. The adjustment in the weighted average number of shares is as a result of the expected future vesting of shares already allocated to employees under the Telkom

Conditional Share Plan.
Reconciliation of weighted average number of ordinary shares
Ordinary shares in issue (refer to note 15)	557,031,819	544,944,899	532,855,528
Weighted average number of shares bought back	(7,211,710)	(7,442,253)	(1,594,241)
Weighted average number of treasury shares	(23,549,016)	(23,161,364)	(21,666,197)
Weighted average number of shares outstanding	526,271,093	514,341,282	509,595,090

*The disclosure of headline earnings is a requirement of the JSE Limited and is not a recognised measure under IFRS. It has been calculated in accordance with the South African Institute of Chartered Accountants’ circular issued in this regard.

The effect of the increase in the interest expense as a result of the increase in borrowings is a reduction in the basic earnings per share of 63.4 cents and a reduction in the headline earnings per share of 62.7 cents.

	2006	2007	2008
	Rm	Rm	Rm
Reconciliation between earnings and headline earnings
Earnings as reported	9,189	8,646	7,975
Adjustments:
Profit on disposal of investments (Available-for-sale)	(163)	(52)	(4)
Profit on disposal of property, plant and equipment
and intangible assets	(79)	(29)	(147)
Impairment of property, plant, equipment and
intangible assets	–	12	244
Reversal of impairment of property, plant,
equipment and intangible assets	(26)	–	–
Write-offs of property, plant and equipment	188	284	285
Acquisition of subsidiary	(35)	–	–
Tax effects	23	(62)	(26)
Minority interest	–	–	4
Headline earnings	9,097	8,799	8,331

Reconciliation of diluted weighted average
number of ordinary shares:
Weighted average number of shares outstanding	526,271,093	514,341,282	509,595,090
Expected future vesting of shares	2,881,225	1,422,297	5,946,876
Diluted weighted average number of shares
outstanding	529,152,318	515,763,579	515,541,966
Dividend per share (cents)	900.0	900.0	1,100.0
The calculation of dividend per share is based on dividends of R5,627 million (2007: R4,678 million; 2006: R4,801 million) declared on June 8, 2007 and 511,513,237 (2007: 519,711,236; 2006: 533,465,571) number of ordinary shares outstanding on the date of dividend declaration. The reduction in the number of shares represents the number of treasury shares held on date of payment.

9. NET ASSET VALUE PER SHARE (CENTS) 5,593.5 6,223.2 6,570.3

The calculation of net asset value per share at March 31, is based on net assets of R32,815 million (2007: R31,724 million; 2006: R29,165 million) and 499,441,985 (2007: 509,769,454; 2006: 521,408,320) number of ordinary shares outstanding.

		2006	2007	2008
		Rm	Rm	Rm
10.	PROPERTY, PLANT AND EQUIPMENT
	Additions	6,310	8,648	10,108
	Disposals	(56)	(290)	(122)
	A major portion of this capital expenditure relates to the expansion of existing networks and services across the Telkom Group. An extensive build program with focus on Next Generation Network technologies at Telkom has resulted in an increase in property, plant and equipment additions which is expected to continue over the next few years.

		2006	2007	2008
		Rm	Rm	Rm
11.	INTANGIBLE ASSETS
	Additions (including business combinations)	1,324	1,841	3,720
	Disposals	(19)	–	–
	Included in the additions is R1,731 million goodwill and R202 million for other intangible assets recognised as a result of the acquisition of Multi-Links Telecommunications (Proprietary) Limited by Telkom International (Proprietary) Limited, as well as R475 million goodwill as a result of the acquisition of the minorities of Smartphone SP (Proprietary) Limited and Smartcom (Proprietary) Limited by the Vodacom Group (refer to note 19). The remaining additions and disposals relate to the software intangible asset class.
12.	DEFERRED TAXATION	(587)	(1,123)	(1,374)
	Deferred tax assets	481	593	605
	Deferred tax liabilities	(1,068)	(1,716)	(1,979)
	The major part of the deferred tax asset relates to taxation losses, provisions and deferred income recognised in the Vodacom Group. The deferred tax asset also includes STC credits on past dividends received that are available to be utilised against dividends declared. It is considered probable, given Telkom’s dividend policy, that these credits will be utilised. The asset will be released as a tax expense when the dividends are declared. The deferred tax liability increased mainly due to the increase in the temporary differences between the carrying value and tax base of assets, resulting from the change in the estimate of useful lives, as well as from the acquisition of Multi-Links Telecommunications (Proprietary) Limited.

		2006	2007	2008
		Rm	Rm	Rm
13.	INVENTORIES	814	1,093	1,287
	Gross inventories	916	1,275	1,535
	Write-down of inventories to net realisable value	(102)	(182)	(248)
	Inventories consist of the following categories:	814	1,093	1,287
	Installation material, maintenance material and network equipment	487	811	895
	Merchandise	327	282	392

14.	NET CASH AND CASH EQUIVALENTS	4,255	308	(208)
	Cash shown as current assets	4,948	749	1,134
	Cash and bank balances	1,853	649	664
	Short-term deposits	3,095	100	470
	Credit facilities utilised	(693)	(441)	(1,342)
	Undrawn borrowing facilities	9,519	8,658	7,565

The undrawn borrowing facilities are unsecured, when drawn bear interest at a rate linked to the prime interest rate, have no specific maturity date and are subject to annual review. The facilities are in place to ensure liquidity.

Borrowing powers

To borrow money, Telkom’s directors may mortgage or encumber Telkom’s property or any part thereof and issue debentures, whether secured or unsecured, whether outright as a security or debt, liability or obligation of Telkom or any third party. For this purpose the borrowing powers of Telkom are unlimited, but are subject to the restrictive financial covenants of the TL20 loan as well as the conditions and covenants of the Bridge Loan facility.

			2006	2007	2008
			Rm	Rm	Rm
15.	SHARE CAPITAL AND PREMIUM
	Issued and fully paid		6,791	5,329	5,208
	520,784,182 (2007: 532,855,526;
	2006: 544,944,897) ordinary shares of R10 each		5,449	5,329	5,208
	1 (2007: 1; 2006: 1) Class A ordinary share of R10		–	–	–
	1 (2007: 1; 2006: 1) Class B ordinary share of R10		–	–	–
	Share premium		1,342	–	–
	The following table illustrates the movement within the number of shares issued:
		Number of		Number of	Number of
		shares		shares	shares
	Shares in issue at beginning of year	557,031,819		544,944,899	532,855,528
	Shares bought back*	(12,086,920)		(12,089,371)	(12,071,344)
	Shares in issue at end of year	544,944,899		532,855,528	520,784,184
	The rights of class A and class B shares rank equally with the ordinary shares in respect of rights to dividends but differ in respect of the right to appoint directors. Full details of the voting rights of ordinary class A and class B shares are documented in the Articles of Association of Telkom.
	The directors have been given authority by the shareholders to buy back Telkom’s own shares up to a limit of 20% of the issued share capital as at October 26, 2007. This authority expires at the next Annual General Meeting.
	Share buy-back
	During the year, Telkom bought back 12,071,344 ordinary shares for a total consideration of R1,647 million. This reduced Share capital by R121 million and Retained earnings by R1,526 million.
	During the year ended March 31, 2007, Telkom bought back 12,089,371 ordinary shares at a total consideration of R1,596 million. This reduced the Share capital by R120 million, Share premium by R1,342 million and Retained earnings by R134 million.
	During the year ended March 31, 2006, Telkom bought back 12,086,920 ordinary shares at a total consideration of R1,502 million. This reduced the Share capital by R121 million and the Share premium by R1,381 million.
	*4,444,138 ordinary shares bought back are in the process of being cancelled from the issued share capital by the Registrar of Companies.

		2006	2007	2008
		Rm	Rm	Rm
16.	TREASURY SHARES	(1,809)	(1,774)	(1,638)
	At March 31, 2008, 10,493,141 (2007: 12,237,016; 2006: 12,687,521) and 10,849,058 (2007: 10,849,058; 2006: 10,849,058) ordinary shares in Telkom, with a fair value of R1,377 million (2007: R2,031 million; 2006: R2,038 million) and R1,423 million (2007: R1,801 million; 2006: R1,743 million) are held as treasury shares by its subsidiaries Rossal No 65 (Proprietary) Limited and Acajou Investments (Proprietary) Limited, respectively.
	The shares held by Rossal No 65 (Proprietary) Limited are reserved for issue in terms of the Telkom Conditional Share Plan (‘TCSP’). In addition, the Board of directors agreed that, subject to the JSE Listing requirements, the treasury shares held by Acajou Investments (Proprietary) Limited be made available to the TCSP to make up for the current shortfall in the share scheme after the additional grants during the current financial year (refer to note 17).
	The reduction in the treasury shares is due to 1,743,875 (2007: 450,505; 2006: 29,669) shares that vested in terms of the TCSP during the current year.

17.   SHARE-BASED COMPENSATION RESERVE

This reserve represents the cumulative fair value of the equity-settled share-based payment transactions recognized in employee expenses during the vesting period of the equity instruments granted to employees in terms of the Telkom Conditional Share Plan.

The Telkom Board approved the fourth enhanced allocation of shares to employees on September 4, 2007, with a grant date of September 27, 2007, the day that the employees and Telkom shared a common understanding of the terms and conditions of this grant. A total of 6,089,810 shares were granted. No consideration is payable on the shares issued to employees, but performance criteria will need to be met in order for the granted shares to vest. The ultimate number of shares that will vest may differ based on certain individual and Telkom performance conditions being met. The related compensation expense is recognized over the vesting period of shares granted, commencing on the grant date.

The Board also approved an enhanced allocation for the November 2006 grant on September 4, 2007, with a grant date of September 27, 2007. The number of additional shares granted with respect to the 2006 allocation is 4,966,860.

	2006	2007	2008
	Rm	Rm	Rm
The following table illustrates the movement within the Share-based compensation reserve:
Balance at beginning of year	68	151	257
Net increase in equity	83	106	386
Employee cost*	120	141	522
Accelerated vesting of shares	(37)	–	–
Vesting and transfer of shares	–	(35)	(136)
Balance at end of year	151	257	643
*The increase in the employee cost for the current financial year is mainly as a result of the additional share allocations
The principal assumptions used in calculating the expected number of shares that will vest are as follows:
Employee turnover (%)	5	5	5
Meeting specified performance criteria (%)	100	100	100

At March 31, 2008 the estimated total compensation expense to be recognised over the vesting period was R2,151 million (2007: R580 million; 2006: R381 million), of which R522 million (2007: R141 million; 2006: R120 million) was recognised in employee expenses.

		2006	2007	2008
		Rm	Rm	Rm
18.	INTEREST-BEARING DEBT
	Long-term portion of interest-bearing debt	7,655	4,338	9,403
	Local debt	6,296	2,359	6,875
	Foreign debt	127	820	1,441
	Finance leases	1,232	1,159	1,087
	Current portion of interest-bearing debt	3,468	6,026	6,330
	Local debt	2,642	5,772	6,001
	Foreign debt	786	193	202
	Finance leases	40	61	127

Movements in borrowings for the year are as follows:

Local debt

The increase in local debt is mainly attributable to the increase in Commercial Paper Bills and Money Market Fixed Term Borrowing which were acquired in order to finance capital expenditure.

Repayments/refinancing

Commercial Paper Bills with a nominal value of R15,773 million were redeemed in the current financial year including the R1,350 million nominal value that was outstanding at March 31, 2007. These redemptions were mainly financed with cash flows from operations. Commercial Paper Bills with a nominal value of R18,806 million were issued during the current financial year. The R6,109 million nominal value of debt as at March 31, 2008 is expected to be repaid/refinanced from cash flows from operations and the issue of new debt instruments upon maturity. The TK01 bond which had a nominal value of R4,680 million was redeemed at March 31, 2008.

Repayments/refinancing of current portion of interest-bearing debt

The repayment/refinancing of R6,203 million of the current portion of interest-bearing debt will depend on the market circumstances at the time of repayment.

Management believes that sufficient funding facilities will be available at the date of repayment/refinancing.

Loans raised and loans repaid on the cash flow statement increased due to raising and redemption of the Commercial Paper Bills in Telkom, as well as newly acquired Asset Backing finance in Vodacom.

			2007	2008
			Rm	Rm
19.	ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND MINORITIES
	19.1	Acquisitions
		By Telkom
		Africa Online Limited (‘Africa Online’)
		On February 23, 2007 Telkom acquired a 100% shareholding of Africa Online Limited from African Lakes Corporation for a total cost of R150 million, with a resulting goodwill of R145 million.
		Africa Online is an internet service provider active in Cote d’Ivoire, Ghana, Kenya, Namibia, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. Africa Online is incorporated in Mauritius.
		The process of calculating a fair value of the identified assets, liabilities and contingent liabilities continued after the preceding year end and has now been finalised.
		The fair value of the assets and liabilities acquired were determined as follows:
		Fair value of intangible assets	43
		Less: Deferred taxation raised on intangible assets	(12)
		Less: Net liabilities acquired (excluding fair value of intangible assets)	(26)
		Fair value of assets	5
		Goodwill	145
		Purchase price	150
		The goodwill has been allocated to the various cash-generating units representative of the countries in which Africa Online Limited operates. An impairment loss of R12 million was recognised in order to write down goodwill to the recoverable amount.
		By the Group’s 50% joint venture, Vodacom
		Smartphone SP (Proprietary) Limited and subsidiaries (‘Smartphone SP’)
		On August 31, 2007, the Vodacom Group increased its interest in the equity of Smartphone SP from 70% to 100%. The acquisition was accounted for using the parent entity extension method.

Minority interest acquired	3
Goodwill	466
Purchase price (including capitalised cost)	469
Capitalised cost payable	(1)
Purchase price	468
Smartcom (Proprietary) Limited (‘Smartcom’)
On September 1, 2007, the Vodacom Group increased its interest in the equity of Smartcom from 88% to 100%. The acquisition was accounted for using the parent entity extension method.
Minority interest acquired (<R1 million)	-
Goodwill	9
Purchase price	9

By the Group’s subsidiaries

One Africa Television (Proprietary) Limited (‘One Africa Television’) and Downlink (Proprietary) Limited (‘Downlink’)

On August 13, 2007, Telkom Media acquired a 49% shareholding in One Africa Television and Downlink respectively, two companies registered in the Republic of Namibia, for a total cost of R18 million.

Telkom Media has management control and therefore the entities are consolidated into the Telkom Media Group.

The purchase price allocation will be completed in the 2009 financial year. Goodwill has not been tested for impairment as the accounting is provisional and has not been allocated to the various cash-generating units.

Multi-Links Telecommunications (Proprietary) Limited (‘Multi-Links Telecommunications’)

On May 1, 2007 Telkom acquired a 75% shareholding in Multi-Links Telecommunications through Telkom International, a wholly owned South African subsidiary, for a total cost of R1,985 million.

Multi-Links Telecommunications is a Nigerian Private Telecommunications Operator with a Unified Access License providing fixed, mobile, data, long distance and international telecommunications services throughout Nigeria. Multi-Links is domiciled and incorporated in Nigeria.

At this stage Telkom has not taken a decision to dispose of any operations as a result of the combination.

The purchase price allocation has been completed during the current year under review, and has resulted in goodwill being adjusted.

		2007	2008
		Rm	Rm
	Multi-Links Telecommunications (Proprietary) Limited (continued)
	The following intangible assets were identified and fair valued at year end:
	Customer relationships	61
	Licences	36
	Brand	105
		202
	The fair value of the assets and liabilities acquired were determined as follows:
	Net asset value acquired (excluding fair value of intangible assets)	236
	Fair value of intangible assets	202
	Less: Deferred taxation raised on intangible assets	(65)
	Less: Contingencies recognised	(35)
	Fair value of net assets acquired	338
	Less: Minority interests	(84)
	Goodwill	1,731
	Purchase price	1,985
	Revenue amounting to R845 million and a profit of R23 million are included in the condensed consolidated provisional annual financial statements.
	The factors that lead to goodwill recognised is a combination of a premium paid and intangible assets not separately identifiable at acquisition.
19.2	Disposals of Subsidiaries
	By the Group’s 50% joint venture, Vodacom
	Ithuba Smartcall (Proprietary) Limited (‘Ithuba Smartcall’)
	On September 3, 2007, the Group disposed of its 52% interest in Ithuba Smartcall. The fair value of the assets and liabilities disposed of was less than R1 million.
	Stand 13 Eastwood Road Dunkeld (Proprietary) Limited
	On September 3, 2007, the Group disposed of its 100% interest in Stand 13 Eastwood Road Dunkeld

	(Proprietary) Limited. The fair value of the assets and liabilities disposed was as follows:
	Carrying amount of net assets disposed of:	4
	Gain on disposal	4
	Selling price	8
	The consideration was received on September 6, 2007.
19.3	Minority put options
	Congolese Wireless Network s.p.r.l. put option In terms of a shareholder agreement, the minority shareholder in Vodacom Congo (RDC) s.p.r.l., Congolese Wireless Network s.p.r.l., has a put option which came into effect three years after the commencement date, December 1, 2001, and for a maximum of five years thereafter. The option price will be the fair market value of the related shares at the date the put option is exercised. The option was reclassified from trade and other payables to other financial liabilities. The option liability’s value increased to R396 million (Group share: R198 million) (March 31, 2007: R249 million (Group share: R125 million)). The liability is reflected as a short-term financial liability.
	Multi-Links put option In terms of the sale agreement signed on May 1, 2007 between Telkom and the previous shareholders of Multi-Links, the minorities have been granted a put option that requires Telkom to purchase all of the minorities’ shares in Multi-Links, if the minorities put their shares to Telkom. The put option is exercisable within 90 days of the second anniversary of signing the sales agreement. A liability of R918 million has been recognised in this regard and is included in other non-current financial liabilities. R661 million was initially recognised directly in equity, R257 million subsequent measurement through finance charges and fair value movements.

		2006	2007	2008
		Rm	Rm	Rm
20.	COMMITMENTS
	Capital commitments
	Capital commitments authorised	10,265	11,167	15,698
	Fixed-line	6,500	7,000	7,500
	Mobile	3,746	4,159	5,211
	Other	19	8	2,987
	Commitments against authorised capital expenditure	842	1,099	3,504
	Fixed-line	197	506	652
	Mobile	642	591	800
	Other	3	2	2,052
	Authorised capital expenditure not yet contracted	9,423	10,068	12,194
	Fixed-line	6,302	6,494	6,848
	Mobile	3,104	3,568	4,411
	Other	17	6	935
	Capital commitments comprise of commitments for property, plant and equipment and intangible assets.
	Management expects these commitments to be financed from internally generated cash and other borrowings.

2010 FIFA World Cup Commitment

The FIFA World Cup commitment is an executory contract which requires the Group to develop the fixed-line components of the necessary telecommunications infrastructure needed to broadcast this event to the world. This encompasses the provisioning of the fixed-line telecommunications related products and services and, where applicable, the services of qualified personnel necessary for the planning, management, delivery, installation and de-installation, operation, maintenance and satisfactory functioning of these products and services. Furthermore as a National Supporter, Telkom owns a tier 3 sponsorship that grants Telkom a package of advertising, promotional and marketing rights that are exercisable within the borders of South Africa. The total value of the commitment amounted to USD35 million.

		2006	2007	2008
		Rm	Rm	Rm
21.	CONTINGENCIES
	Third parties	35	28	27
	Fixed-line	27	19	18
	Mobile	3	4	4
	Other	5	5	5

Third parties

These amounts represent sundry disputes with third parties that are not individually significant and that the Group does not intend to settle.

Supplier dispute

Expenditure of R594 million was incurred up to March 31, 2002 for the development and installation of an integrated end-to-end customer assurance and activation system to be supplied by Telcordia. In the 2001 financial year, the agreement with Telcordia was terminated and in that year, Telkom wrote off R119 million of this investment. Following an assessment of the viability of the project, the balance of the Telcordia investment was written off in the 2002 financial year. During March 2001, the dispute was taken to arbitration where Telcordia was seeking approximately USD130 million plus interest at a rate of 15.5% per year which was subsequently increased to USD172 million plus interest at a rate of 15.5% per year for money outstanding and damages.

The parties have since reached an advanced stage in their preparation to determine the quantum payable by Telkom to Telcordia. Following the ruling by the Constitutional Court, two hearings were held at the International Dispute Resolutions Centre (‘IDRC’). The first hearing was held in London on May 21, 2007 and was a ‘directions hearing’ in terms of which the parties consented to a ruling by the arbitrator setting out a consolidated list of proposals and issues to form part of the quantum hearing.

In the second hearing in London at the IDRC on June 25 and 26 2007 the arbitrator set out a list of issues for determination at the quantum hearing.

At a subsequent hearing during July 2007 in London the arbitrator ruled that the rate in terms of the Prescribed Rate of Interest will apply on both damages and debt claims, permitted Telcordia to a further amount to Telcordia’s existing claims, permitted VAT to be claimed on Telcordia’s claim, where applicable, and set out an agreed timetable for the future conduct of proceedings. A full hearing is expected to take place during the second quarter of 2008 in South Africa and a further argument is expected to take place thereafter in London.

A mediation was concluded, without success, on February 26, 2008. Since then the focus has been on dealing with various interlocutory/procedural issues that required resolution prior to the main substantive arbitration hearings due to take place.

The Arbitrator has in the interim directed that the main hearings scheduled for April 28 to May 23, 2008 and June 9 to June 20, 2008 would not take place. An interlocutory hearing was

directed by the Arbitrator to resolve the various interlocutory/procedural issues in London from April 28, 2008 to May 2, 2008. Only once the interlocutory issues have been finalised will dates for the main hearings be scheduled.

A provision has been raised based on management’s best estimate of the probable payments in this regard.

	2006	2007	2008
	Rm	Rm	Rm
Supplier dispute liability included in current portion of provisions	-	527	569

The provision has increased from March 31, 2007 due to finance costs and exchange rate movements.

Competition Commission

The following are updates of cases that have been brought to the Competition Commission. A maximum administrative penalty of up to 10%, for any of the following cases, calculated with reference to Telkom’s annual turnover, excluding the turnover of subsidiaries and joint ventures, for the financial year prior to the complaint date, may be imposed if it is found that Telkom has committed a prohibited practice as set out in the Competition Act, 1998 (as amended). The Competition Commission has to date not imposed the maximum penalty on any offender.

The South African Value Added Network Services (‘SAVA’)

SAVA filed a complaint against Telkom regarding alleged anti-competitive practices on the part of Telkom. Telkom filed its replying affidavit on August 1, 2007. The application review of the matter has been set down for hearing in the second quarter of 2008. The matter is being held over pending decision by the High Court regarding the jurisdiction of the Competition Tribunal to hear the matter.

Omnilink

Omnilink alleged that Telkom was abusing its dominance by discriminating in its price for Diginet services as against those charged to VANS and the price charged to customers who apply for a Telkom IVPN solution. The Competition Commission conducted an enquiry and subsequently referred the complaint, together with the SAVA complaint, to the Competition Tribunal for adjudication.

Orion/Telkom (Standard Bank and Edcon): Competition Tribunal

Orion filed a complaint against Telkom concerning offering discounts on Public Switch Telecommunication Services to corporate customers. Telkom has not yet filed its answering affidavit in the main complaint before the Tribunal and it appears as if Orion is not actively pursuing this matter any further.

The Internet Service Providers Association (‘ISPA’)

ISPA filed complaints against Telkom regarding alleged anti-competitive practices in relation to the cost of access to SA Internet Exchange. The Competition Commission has formally requested Telkom to provide it with certain records of orders placed for certain

services, in an attempt to first investigate the latter aspects of the complaint. Telkom has provided the records requested and no further activity has occurred since.

M-Web and Internet Solutions (‘IS’)

‘IS’ filed a complaint against Telkom regarding pricing including ADSL retail products and IP connect products. To date there has been no further movement on this matter, either in the filing of a replying affidavit by IS/M-Web in the interim relief application or in the investigation of the matter by the Competition Commission.

M-Web

On June 5, 2007 M-Web brought an application against Telkom for interim relief at the Competition Tribunal in regard to the manner in which Telkom provides wholesale ADSL internet connections. M-Web requested the Competition Tribunal to grant an order of interim relief against Telkom to charge M-Web a wholesale price for the provision of ADSL internet connections which is not higher than the lowest retail price. M-Web further applied for an order that Telkom implement the migration of end customers from Telkom PSTS (ADSL access) to M-Web without interruption of the service. Although Telkom raised the objection that the Competition Tribunal does not have jurisdiction to hear the matter in its answering affidavit filed at the Competition Tribunal, Telkom has also filed an application in the Transvaal Provincial Division of the High Court on July 3, 2007 for an order declaring that the Competition Tribunal does not have jurisdiction to hear the application made to it by M-Web.

The application has been set down for hearing during the second quarter of 2008. The main matter is being held over pending the outcome of the application in the High Court. As is the case with the SAVA matter, only if the High Court decides that the Competition Tribunal does have jurisdiction to hear the matter, will the matter again be set down for hearing.

Salary negotiations

The Group has a long term suspensive agreement with bargaining unit (employees) which fixes the salary increase for a period of 3 years. The agreement comes to an end March 31, 2009, as a result the group and the unions are currently in negotiation over whether the current increases in CPIX index should lead to an amendment of the agreement.

The Group’s exposure is 50% of the following items:

Retention incentives

The Vodacom Group has committed a maximum R1,317 million (2007: R652 million; 2006: R456 million) in respect of customers already beyond their normal 24 month contract period, but who have not yet upgraded into new contracts, and therefore have not utilised the incentive available for such upgrades. The Group has not provided for this liability, as no legal obligation exists, since the customers have not yet entered into new contracts.

Put and call options

In terms of various shareholders’ agreements, put and call options exist for the acquisition of shares in various companies. Except as disclosed in note 19.3, none of the put and call options have any value at any of the periods presented as the conditions set out in the agreements have not been met.

Customer registration

The telecommunications industry in the Democratic Republic of the Congo is subject to a recently promulgated ministerial decree requiring the registration of the entire customer base of all network operators. This decree requires prescribed particulars of all customers to be obtained and maintained by June 30, 2008. The sanction for non-compliance by any operator who has not identified its customers in accordance with the requirements of this decree within three months from March 28, 2008 could result in:

• a fine equivalent to between USD5 thousand and USD10 thousand per customer;

• suspension of the licence for a period not exceeding three months in the event of repetition; and

• suspension of the licence in the event of a likely disturbance of law and order/safety.

The Group is making every effort to obtain the required information but management believes it is unlikely that the Group will meet all the requirements as prescribed in this decree by June 30, 2008. Management is engaging with the relevant ministries on this matter and are presently unable to reliably assess the potential impact on the Group in the event of non-compliance with this decree.

Contingent asset

Litigation is being instituted for the recovery of certain fees paid by the Vodacom Group. The information usually required by IAS 37: Provisions, Contingent Liabilities and Contingent Assets, is not disclosed on the grounds that it can be expected to prejudice seriously the outcome of the litigation. The directors are of the opinion that a claim may be successful and that the amount recovered could be significant.

Negative working capital ratio

At each of the financial years ended March 31, 2008, 2007 and 2006 Telkom had a negative working capital ratio. A negative working capital ratio arises when current liabilities are greater than current assets. Current liabilities are intended to be financed from operating cash flows, new borrowings and borrowings available under existing credit facilities.

		2006	2007	2008
		Rm	Rm	Rm
22.	SEGMENT INFORMATION
	Eliminations represent the inter-segmental transactions
	that have been eliminated against segment results.
	Business Segment
	Consolidated operating revenue	47,625	51,619	56,285
	Fixed-line	31,832	32,345	32,572
	Elimination	(737)	(772)	(774)
	Mobile	17,021	20,573	24,089
	Elimination	(1,435)	(1,494)	(1,519)
	Other	952	979	1,939
	Elimination	(8)	(12)	(22)
	Consolidated other income	480	384	534
	Fixed-line	465	334	497
	Elimination	(45)	(46)	(50)
	Mobile	50	42	20
	Elimination	–	–	–
	Other	10	54	67
	Elimination	–	–	–
	Consolidated operating expenses	33,428	37,533	42,337
	Fixed-line	22,454	24,083	24,962
	Elimination	(1,443)	(1,495)	(1,538)
	Mobile	12,635	15,185	17,898
	Elimination	(710)	(755)	(805)
	Other	564	589	1,842
	Elimination	(72)	(74)	(22)
	Consolidated operating profit	14,677	14,470	14,482
	Fixed-line	9,843	8,596	8,107
	Elimination	661	677	714
	Mobile	4,436	5,430	6,211
	Elimination	(725)	(739)	(714)
	Other	398	444	164
	Elimination	64	62	–
	Consolidated investment income	397	235	197
	Fixed-line	2,720	3,041	3,975
	Elimination	(2,398)	(2,850)	(3,832)
	Mobile	64	36	27
	Other	11	8	27

Consolidated finance charges	1,223	1,125	1,803
Fixed-line	839	856	1,277
Mobile	384	269	240
Other	–	–	286
Consolidated taxation	4,523	4,731	4,704
Fixed-line	2,836	2,652	2,630
Mobile	1,542	1,918	2,055
Other	145	161	19
Minority interests	139	203	197
Fixed-line	–	–	–
Mobile	58	109	73
Other	81	94	124
Profit attributable to equity holders of Telkom	9,189	8,646	7,975
Fixed-line	8,888	8,129	8,175
Elimination	(1,737)	(2,173)	(3,118)
Mobile	2,516	3,170	3,870
Elimination	(725)	(739)	(714)
Other	183	197	(238)
Elimination	64	62	–
Consolidated assets	54,306	57,426	68,259
Fixed-line	43,121	44,224	47,829
Elimination	(1,598)	(1,547)	(1,604)
Mobile	12,263	14,026	16,743
Elimination	(258)	(353)	(278)
Other	905	1,188	5,734
Elimination	(127)	(112)	(165)
Investments	2,963	1,461	1,499
Fixed-line	3,093	1,621	4,917
Elimination	(232)	(341)	(3,607)
Mobile	102	181	176
Other	–	–	13
Other financial assets	275	259	614
Fixed-line	256	230	445
Mobile	19	28	169
Other	–	1	–
Total assets	57,544	59,146	70,372

Consolidated liabilities	15,171	15,951	19,689
Fixed-line	10,285	10,154	11,892
Elimination	(351)	(458)	(495)
Mobile	6,466	7,416	8,871
Elimination	(1,441)	(1,468)	(1,542)
Other	319	374	971
Elimination	(107)	(67)	(8)
Interest-bearing debt	11,123	10,364	15,733
Fixed-line	9,888	9,082	13,362
Mobile	1,234	1,278	1,815
Other	1	4	556
Other financial liabilities	235	229	1,290
Fixed-line	205	58	167
Mobile	30	158	204
Other	–	13	919
Tax liabilities	1,549	594	323
Fixed-line	1,186	–	7
Mobile	315	556	290
Other	48	38	26
Total liabilities	28,078	27,138	37,035
Other segment information
Capital expenditure for property, plant and equipment	6,310	8,648	10,108
Fixed-line	3,926	5,545	6,044
Mobile	2,350	3,069	2,475
Other	34	34	1,589
Capital expenditure for intangible assets	1,196	1,598	1,792
Fixed-line	974	1,049	750
Mobile	221	539	985
Other	1	10	57
Depreciation and amortisation	5,714	5,019	5,601
Fixed-line	4,176	3,298	3,470
Mobile	1,498	1,681	1,955
Other	40	40	176
Impairment and asset write-offs	162	296	529
Fixed-line	187	284	263
Mobile	(26)	12	15
Other	1	–	251
Workforce reduction expense - Fixed-line	88	24	3

		2006	2007	2008
		Rm	Rm	Rm
23.	RELATED PARTIES
	Details of material transactions and balances with related parties not disclosed separately in the condensed consolidated provisional annual financial statements were as follows:
	With joint venture:
	Vodacom Group (Proprietary) Limited
	Related party balances
	Trade receivables	48	61	51
	Trade payables	(256)	(353)	(346)
	Related party transactions
	Revenue	(710)	(755)	(816)
	Expenses	1,435	1,494	1,525
	Audit fees	3	3	3
	Revenue includes interconnect fees and lease
	and installation of transmission lines
	Expenses mostly represent interconnect expenses
	With shareholders:
	Government
	Related party balances
	Trade receivables	247	271	326
	Related party transactions
	Revenue	(2,304)	(2,458)	(2,623)
	With entities under common control:
	Major public entities
	Related party balances
	Trade receivables	39	59	28
	Trade payables	(2)	(6)	(25)
	The outstanding balances are unsecured and will
	be settled in cash in the ordinary course of business
	Related party transactions
	Revenue	(370)	(435)	(486)
	Expenses	172	238	243
	Rent received	(17)	(29)	(21)
	Rent paid	56	27	22
	Key management personnel compensation:
	(Including directors’ emoluments)
	Related party transactions
	Short-term employee benefits*	157	176	232
	Post employment benefits	7	14	8
	Termination benefits	12	–	28
	Equity compensation benefits	6	8	42
	Other long term benefits	16	27	9

*The comparatives for March 31, 2006 were restated to include directors’ emoluments of Vodacom which were previously excluded, as well as to reclassify certain amounts to other long-term benefits.

Terms and conditions of transactions with related parties

The sales to and purchases from related parties of telecommunication services are made at arms length prices. Except as  indicated above, outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for related party receivables or payables. Except as indicated above for the year ended March 31, 2008, the Group has not made any impairment of amounts owed by related parties (2007: R Nil; 2006: R Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

24. SIGNIFICANT EVENTS

Swiftnet (Proprietary) Limited

Telkom is in the process of selling a 30% shareholding in its subsidiary Swiftnet (Proprietary) Limited (‘Swiftnet’) in order to comply with existing licence requirements from the Independent Communications Authority of South Africa (‘ICASA’). The 30% shareholding has in principle been sold to empowerment investors, the Radio Surveillance Consortium (‘RSC’), for R55 million. The transaction however is still subject to an ICASA approval process.

Telkom Media (Proprietary) Limited

On August 31, 2006 Telkom created of a new subsidiary, Telkom Media (Proprietary) Limited, with a Black Economic Empowerment (‘BEE’) shareholding. ICASA awarded Telkom Media a commercial satellite and cable subscription broadcast licence on September 12, 2007.

Telkom has decided to significantly reduce its investment in Telkom Media (Proprietary) Limited in the future and will be investigating all opportunities to do this in the best interest of Telkom shareholders and all other stakeholders.

Mobile Strategy

Telkom is supportive of the BBBEE (Broad-Based Black Economic Empowerment) transaction proposed by Vodacom but is not in a position to comment on the impact of the proposed transaction on Telkom as the details relating to the transaction have not been finalised.

25.  SUBSEQUENT EVENTS

Dividends

The Telkom Board declared an annual dividend of R3,437 million or 660 cents per share on June 6, 2008 payable on July 7, 2008 for shareholders registered on July 4, 2008 which will fully utilise the deferred tax asset on STC credits and result in an additional STC charge of R161 million.

Mobile strategy and unlocking shareholder value

Telkom shareholders are informed that on Friday, May 30, 2008, Telkom received a non-binding proposal from a wholly-owned subsidiary of Vodafone Group Plc (‘Vodafone’) to acquire a portion of Telkom’s stake in Vodacom Group (Proprietary) Limited (‘Vodacom’) subject to, inter alia, the Company unbundling its remaining stake in Vodacom to Telkom shareholders.

Separately, on Friday, May 30, 2008, Telkom received a letter from a consortium comprising Mvelaphanda Holdings (Proprietary) Limited, affiliated funds of Och-Ziff Capital Management Group and other strategic funders (‘the Consortium’), which states that the Consortium is considering making an offer for the entire issued share capital of Telkom. The letter makes it clear that the offer will only be made if a number of pre-conditions are met including, inter alia, confirmation by the Telkom Board that it will unbundle Telkom’s entire 50% stake in Vodacom as part of the offer.

The discussions with Vodafone commenced on Wednesday, May 14, 2008 and are independent from the approach from the Consortium.

The Board of Telkom, in accordance with its fiduciary duties, will evaluate all bona fide offers with a view to maximising shareholder value. No transaction will be entered into without requisite shareholder approvals.

Telkom will advise shareholders of further developments in this regard in due course.

Other matters

The directors are not aware of any other matter or circumstance since the financial year ended March 31, 2008 and the date of this report, not otherwise dealt with in the financial statements, which significantly affects the financial position of the Group and the results of its operations.

10. SUPPLEMENTARY INFORMATION

In connection with the US Securities Exchange Commission Rules relating to “Conditions for use of Non-GAAP Financial Measures”, EBITDA and headline earnings have been reconciled to net profit below:

	Year ended March 31,
	2006	2007	2008
EBITDA
Earnings before interest, taxation, depreciation
and amortisation (EBITDA) can be reconciled as follows:
EBITDA	20,553	19,785	20,612
Depreciation, amortisation, impairment and write-offs	(5,876)	(5,315)	(6,130)
Investment income	397	235	197
Finance charges	(1,223)	(1,125)	(1,803)
Taxation	(4,523)	(4,731)	(4,704)
Minority interests	(139)	(203)	(197)
Net profit	9,189	8,646	7,975
Headline earnings
The disclosure of headline earnings is a requirement
of the JSE Securities Exchange, South Africa and is
not a recognised measure under US GAAP
Headline earnings can be reconciled as follows:
Earnings as reported	9,189	8,646	7,975
Profit on disposal of investment	(163)	(52)	(4)
Profit on disposal of property, plant and
equipment and intangible assets	(79)	(29)	(147)
Impairment/(reversal of impairment) of property,
plant and equipment and intangible assets	(26)	12	244
Write-offs of property, plant and equipment	188	284	285
Acquisition of subsidiary	(35)	–	–
Tax and minority interest effects	23	(62)	(22)
Headline earnings	9,097	8,799	8,331

We believe that EBITDA provides meaningful additional information to investors since it is widely acceptable by analysts and investors as a basis for comparing a company’s underlying operating profitability with that of other companies as it is not influenced by past capital expenditures or business acquisitions, a company’s capital structure or the relevant tax regime.

EBITDA is not a US GAAP or IFRS measure. You should not construe EBITDA as an alternative to operating profit or cash flows from operating activities determined in accordance with US GAAP or IFRS or as a measure of liquidity.

US DOLLAR CONVENIENCE
	March 31,
	2008
Operating revenue	6,915
Operating profits	1,779
Net profit	980
EBITDA	2,532
EPS (cents)	192.3
Net debt	2,041
Total assets	8,645
Cash flow from operating activities	1,267
Cash flow used in investing activities	(1,733)
Cash flow used in financing activities	362
Exchange rate
Period end1
US$1 = ZAR	8.14
1. Noon buying rate

CONTACTS

Investor relations	Retail investors
Nicola White	Computershare
+27 12 311 5720	086 110 0948
whitenh@telkom.co.za

The information contained in this document is also available on Telkom’s investor relations website

http://www.telkom.co.za/ir

Telkom SA Limited is listed on the JSE Limited and the New York Stock Exchange. Information may be accessed on Reuters under the symbols TKG.J and TKG.N and on Bloomberg under the symbol TKG.JH.

www.telkom.co.za

EX-99.4

Exhibit 99.4

HIGHLIGHTS 2008
Total customers increased by 12.7% to 34.0 million
  Customers increased by 7.9% to 24.8 million in South Africa
  Customers increased by 29.6% to 4.2 million in Tanzania
  Customers increased by 25.0% to 3.3 million in the Democratic
  Republic of Congo
  Customers increased by 41.6% to 395 thousand in Lesotho
  Customers increased by 29.8% to 1.3 million in Mozambique
Revenue increased by 17.1% to R48.2 billion
Profit from operations increased by 15.0% to R12.5 billion
EBITDA increased by 15.7% to R16.5 billion
Net profit after taxation increased by 21.3% to R8.0 billion
Cash generated from operations increased by 17.8% to R16.3 billion
Dividends declared to group shareholders increased by 10.0% to R5.9 billion


COMMENTARY

Vodacom Group (Proprietary) Limited, South Africa's market leader in the
provision of cellular services announces its results for the year ended March
31, 2008.

SOUTH AFRICA
Customers
The total number of customers increased by 7.9% to 24.8 million (2007: 23.0
million). The number of prepaid customers has increased by 6.4% to 21.2 million,
while the number of contract customers has increased by 17.5% to 3.5 million.

The strong growth in customers was a direct result of the number of gross
connections achieved, with continued levels of handset support to service
providers in respect of the contract base, combined with decreased churn in the
contract base.

Contract gross connections increased by 17.4% to 782 thousand (2007: 666
thousand), and prepaid gross connections increased by 11.1% to 11.2 million
(2007: 10.1 million), bringing the total number of connections for the year to
12.0 million (2007: 10.9 million).

Loyalty and retention programmes continue to play an integral role in achieving
the strategy of retaining market share and attracting new customers.

ARPU
During the period under review, total ARPU remained stable at R125 (2007: R125)
per month mainly as a result of the implementation of the supplementary
disconnection rule during September 2007.

Contract customer ARPU has decreased by 6.0% to R486 (2007: R517) per month. The
main contributing factor to this decrease was the rapid growth in data customers
as well as in the low end top up 
 
 
packages.

The developing market segment, through the prepaid service continued to drive
market penetration in 2008 with the prepaid service making up 93.4% (2007:
93.2%) of all gross connections. The prepaid customer ARPU remained stable at
R62 (2007: R63) per month.

Community services ARPU decreased by 23.6% to R689 (2007: R902) per month due to
increased competition.

Churn
The cost of acquiring contract customers in a highly developed market is
considerable. Vodacom implemented upgrade and retention policies over the last
few years to retain its customers. Through the continued high level of handset
support to service providers and an improvement in service to customers,
contract churn remained low at 8.3% (2007: 9.7%).

The prepaid market is characterised by low acquisition costs due to the
flexibility required by this market to access services. Prepaid churn increased
during the year under review to 47.9% (2007: 37.5%) due to the supplementary
disconnection rule implemented on prepaid customers. This change increased
prepaid churn, but provides a better reflection of active prepaid SIM cards on
the network.

Traffic and minutes of use
Total traffic increased with 11.7% to 22.8 billion (2007: 20.4 billion) minutes.
This growth was due mainly to the 7.9% growth in the total customer base from
23.0 million to a base of 24.8 million at the end of March 31, 2008. Customer
calling patterns continued the trend of the last few years where total
mobile-to-mobile traffic increased with 13.5% while total mobile-to-fixed and
fixed-to-mobile traffic only increased with 3.5%.

Minutes of use is reflective of voice trends outside and in excess of the bundle
and showed a stabilised trend for the year under review. Contract minutes showed
an 8.5% decrease to 172 (2007: 188) minutes per customer per month for 2008, as
a result of high sales in hybrid products at the low end of the market; prepaid
minutes showed a 2.1% decrease to 46 (2007: 47) minutes per customer per month
in 2008.

Estimated market share
Despite strong competition, Vodacom remained the leader in the South African
market with an estimated 55% (2007: 58%) market share as at March 31, 2008. The
decline in market share is a result of increased deletions on the prepaid
customer base and renewed efforts by the existing competitors to increase their
share of the gross connections of both contract and prepaid customers. The
cellular industry in South Africa has grown by an estimated 10% since March
2007. The market penetration of the 
 
 
cellular industry is now an estimated 94% (2007: 84%) of the population with a 
total cellular market of approximately 45 million (2007: 40 million) customers. 
Prepaid customers continue to dominate the market and comprise an estimated 83% 
(2007: 83%) of the total cellular market.

NON-SOUTH AFRICAN OPERATIONS
Vodacom's non-South African operations provide world-class communication
services to 9.2 million customers (2007: 7.1 million). Profit from these
operations increased by 51.6% to R790 million.

Vodacom Tanzania achieved a milestone in its customer base. The customer base
increased by 29.6% to 4.2 million (2007: 3.2 million) at March 31, 2008. The
Tanzanian market remains highly competitive, but low mobile penetration,
estimated at 20% of the population combined with current economic growth signals
further potential. Vodacom Tanzania's estimated market share decreased slightly
to 52% (2007: 55%) at March 31, 2008.

Vodacom Congo increased its customer base by 25.0% to 3.3 million (2007: 2.6
million) at March 31, 2008. Vodacom Congo retained its market lead with an
estimated market share of 41% (2007: 47%) at March 31, 2008. The lower market
share is the result of competitors cutting retail prices and offering various
packages to attract new connections. The DRC has the lowest estimated mobile
penetration of all Vodacom's operations at 12% (2007: 9%) of the population.

Vodacom Lesotho is a small operation, but its estimated 80% market share at
March 31, 2008 enables it to achieve high levels of profitability. Vodacom
Lesotho increased its customer base by 41.6% to 395 thousand (2007: 279
thousand). Mobile penetration in Lesotho is now estimated at 26% (2006:17%).

Vodacom Mozambique increased its customer base by 29.8% to 1,282 thousand (2007:
988 thousand) at March 31, 2008. Vodacom Mozambique increased its estimated
market share to 40% (2007: 35%) despite tough economic conditions, by being the
value leader in the market. Mobile penetration is estimated at 16% (2007: 14%).


REVENUE
Geographical split
                                Rand millions           % change
Year ended March 31,        2006    2007    2008     06/07   07/08
South Africa, including
holding companies         31,069  37,007  42,784      19.1    15.6
Tanzania                   1,312   1,729   2,354      31.8    36.1
DRC                        1,334   1,914   2,297      43.5    20.0
Lesotho                      170     227     309      33.5    36.1
Mozambique                   158     269     434      70.3    61.3
Revenue                   34,043  41,146  48,178      20.9    17.1
 
Revenue composition
                                                  Rand millions
Year ended March 31,                      2006      2007      2008
Airtime, connection and access          20,085    23,708    27,095
Data                                     2,038     3,342     5,002
Interconnection                          6,697     7,835     8,887
Equipment sales                          3,986     4,699     5,052
International airtime                      971     1,306     1,836
Other sales and services                   266       256       306
Revenue                                 34,043    41,146    48,178

Revenue composition
                              % of total                % change
Year ended March 31,     2006    2007    2008       06/07    07/08

Airtime, connection
and access               58.9    57.7    56.2        18.0     14.3
Data                      6.0     8.1    10.4        64.0     49.7
Interconnection          19.7    19.0    18.5        17.0     13.4
Equipment sales          11.7    11.4    10.5        17.9      7.5
International airtime     2.9     3.2     3.8        34.5     40.6
Other sales and services  0.8     0.6     0.6        (3.8)    19.5
Revenue                 100.0   100.0   100.0        20.9     17.1

Revenue increased by 17.1% for the year to March 31, 2008 boosted by a 49.7%
increase in data revenue. The increase in revenue was mainly driven by a 12.7%
increase in the customer base to 34.0 million customers. Prepaid customers
represent 88.8% (2007: 89.4%) of the total customer base.

Data revenue
Geographical split
                                                Rand millions
Year ended March 31,                      2006      2007      2008
South Africa                             1,886     3,113     4,669
Tanzania                                   108       146       207
DRC                                         25        52        79
Lesotho                                     16        23        31
Mozambique                                   3         8        16
Data revenue                             2,038     3,342     5,002

Data revenue
Geographical split
                              % of total                % change
Year ended March 31,     2006    2007    2008       06/07    07/08
South Africa             92.6    93.1    93.4        65.1     50.0
Tanzania                  5.3     4.4     4.1        35.2     41.8
DRC                       1.2     1.6     1.6       108.0     51.9
Lesotho                   0.8     0.7     0.6        43.8     34.8
Mozambique                0.1     0.2     0.3       166.7    100.0
Data revenue            100.0   100.0   100.0        64.0     49.7

Airtime, connection and access
Vodacom's airtime, connection and access revenue increased primarily due to the
number of customers increasing by 12.7% to 34.0 million.

Data
Vodacom's data revenue increased mainly due to higher penetration levels, but
also due to more affordable product offerings. Vodacom South Africa transmitted
4.7 billion (2007: 4.5 billion) SMSs over its network during the year ended
March 31, 2008. The number of active data users includes: MMS users 1.4 million
(2007: 1.2 million); data card and USB modem users 370 thousand (2007: 149
thousand); 3G/HSDPA handsets 1.3 million (2007: 584 thousand); Vodafone live!
users 1,421 thousand (2007: 899 thousand); unique Mobile TV users 31 thousand
(2007: 33 thousand).

Data revenue now constitutes 11.9% (2007: 9.4%) of service revenue (service
revenue excludes equipment sales, starter pack sales and non-recurring revenue).
Data revenue in all countries increased substantially, reaffirming the increased
consumer connectivity needs.

Interconnection
Vodacom's interconnection revenue increased by 13.4%, predominantly due to the
growth in the customer base and the related increase in airtime traffic.

Equipment sales
In South Africa, handset sale volumes increased by 10.9% to 5.1 million (2007:
4.6 million) units. The growth in equipment unit sales was mainly driven by
growth in customer bases, phone upgrades by customers and lower overall prices
of new handsets due to more suppliers focusing on more affordable handsets. The
average price per handset sold was R1,052 compared to R1,067 in the previous
financial year.

International airtime
International airtime revenue of R1.8 billion, which increased by 40.6% year on
year, comprises international calls by Vodacom customers, roaming revenue from
Vodacom's customers making and receiving calls whilst abroad and revenue from
international visitors roaming on Vodacom's networks.

Other sales and services
Revenue from other sales and services includes revenue from Vodacom's cell
captive insurance vehicle, wireless application service provider ("WASP")
revenue, site sharing rental income as well as other revenue from non-core
operations.


PROFIT FROM OPERATIONS
Geographical split
 
                                Rand millions           % change
Year ended March 31,          2006    2007    2008   06/07  07/08

South Africa                 8,602  10,293  11,669    19.7   13.4
Tanzania                       263     346     460    31.6   32.9
DRC                            117     277     364   136.8   31.4
Lesotho                         51      75     123    47.1   64.0
Mozambique                    (144)   (177)   (157)  (22.9)  11.3
Holding companies              (23)     46      32  >200.0  (30.4)
Profit from operations       8,866  10,860  12,491    22.5   15.0

Profit from operations
margin (%)                    26.0    26.4    25.9     0.4   (0.5)

Profit from operations for the Group increased by 15.0% to R12.5 billion, based
on revenue growth of 17.1% which was offset by cost increases in all operations
in a rising inflationary environment and the start up costs of Vodacom Business.
Operating expenses increased by 17.8% compared to revenue growth of 17.1%,
resulting in Vodacom's profit from operations margin decreasing to 25.9% (2007:
26.4%).

The Mozambique loss from operations includes an impairment of assets of R29.9
million (2007: R22.9 million).


EBITDA
Geographical split
                                Rand millions           % change
Year ended March 31,          2006    2007    2008   06/07  07/08

South Africa                11,053  12,963  14,790    17.3   14.1
Tanzania                       465     584     765    25.6   31.0
DRC                            373     603     745    61.7   23.5
Lesotho                         67      97     139    44.8   43.3
Mozambique                    (129)    (69)    (32)   46.5   53.6
Holding companies              (20)     49      56  >200.0   14.3
EBITDA                      11,809  14,227  16,463    20.5   15.7

EBITDA margin (%)             34.7    34.6    34.2    (0.1)  (0.4)
EBITDA margin excluding
equipment sales (%)           39.9    39.9    39.3       -   (0.6)

Vodacom's EBITDA margin adjusted for the impact of low margin cellular phone and
equipment sales at 39.3% was 0.6% lower than the previous year at 39.9%.


OPERATING EXPENSES
Operating expenses composition
                                 Rand millions         % change
Year ended March 31,          2006    2007    2008   06/07  07/08
Depreciation, amortisation
and impairment               2,943   3,384   3,941    15.0   16.5
Payments to other network
Operators                    4,634   5,636   6,557    21.6   16.3
Other direct network
operating costs             13,663  16,804  19,743    23.0   17.5
Staff expenses               2,042   2,373   2,976    16.2   25.4
Marketing and advertising      977   1,146   1,264    17.3   10.3
Other operating expenditure  1,043   1,064   1,362     2.0   28.0
Other operating income        (125)   (120)   (156)    4.0  (30.0)
Operating expenses          25,177  30,287  35,687    20.3   17.8

Operating expenses as a
% of revenue (%)              74.0    73.6    74.1    (0.4)   0.5

Depreciation, amortisation and impairment
The depreciation expense is largely driven by capital expenditure on upgrading
and expanding the Group's networks. Capital expenditure on network equipment has
increased in recent years with the implementation and expansion of 3G/HSDPA
networks, but also through coverage strategies followed in the international
operations.

The implementation of IAS 16: Property, Plant and Equipment, during the 2006
financial year, contributed to a lower depreciation charge for that year.
Depreciation and amortisation increased by 16.5% (2007: 15.0%) to R3,941 million
for the current financial year. Mozambique's asset impairment amounted to R29.9
million (2007: R22.9 million).

Payments to other network operators
Payments to other network operators increased as a result of an increased amount
of outgoing traffic terminating on other cellular networks, rather than on
fixed-line networks. As the cost of terminating calls on other cellular networks
is materially higher than calls terminating on fixed-line networks and as mobile
substitution increases with the growing number of total mobile users in South
Africa, interconnection charges will continue increasing, putting pressure on
margins.

Other direct network operating costs
Other direct network operating costs include the cost to connect customers onto
the network as well as expenses such as cost of equipment and accessories sold,
commissions paid to the distribution channels, customer retention expenses,
regulatory and licence fees, distribution expenses, transmission rental costs as
well as site and maintenance costs.

Staff expenses
Staff expenses increased primarily as a result of an increase in permanent
headcount of 5.5% to 6,247 (2007: 5,920) employees in 2008. The headcount
increase is mainly the result of the expansion of customer care operations, the
strengthening of senior 
 
 
management structures to support the growth in ongoing operations and the launch 
of Vodacom Business. Annual salary increases and increased provisions for long-term 
incentive schemes also contributed to the increase in staff expenses.

Employee productivity has improved in all of Vodacom's operations, as measured
by customers per employee, improving with 6.9% to 5,442 (2007: 5,093) customers
per employee.

Marketing and advertising
Marketing and advertising expenses are mainly driven by advertising related to
new technology products and enhancing brand presence in all operations.

Other operating expenditure
The increase in other operating expenditure was primarily due to inflationary
factors and the growth in the business. Other operating expenditure comprise of
expenses such as accommodation, information technology costs, office
administration, consultant expenses, social economic investment and insurance.

Other operating income
Other operating income comprises income that Vodacom does not consider as part
of its core activities such as cost recoveries for risk management and
consultancy services, franchise fees and rent received.


INTEREST, DIVIDENDS AND OTHER FINANCIAL INCOME AND FINANCE COSTS
Net gains/(losses) on financial instruments analysed by category, is as follows:

                                 Rand millions         % change
Year ended March 31,        2006    2007    2008    06/07   07/08

Finance income               130      75      72    (42.3)   (4.0)
Finance expenses            (246)   (369)   (681)   (50.0)  (84.6)
Gain/(loss) on foreign
Exchange forward contract
Revaluation                 (261)    468     346   >200.0   (26.1)
Loss on revaluation of
foreign denominated
liabilities                 (225)   (642)   (162)  (185.3)   74.8
(Loss)/gain on
revaluation of foreign
denominated assets           (27)     10     (15)   137.0 (>200.0)
Loss on interest rate swap
Revaluation                   (7)    (10)    (10)   (42.9)      -
Gain/(loss) on sale of
Investments                   (3)     (1)      2     66.7  >200.0
Gain on revaluation of
foreign denominated cash
and cash equivalents           -       6      24        -  >200.0
 
Total net losses on
financial instruments       (639)   (463)   (424)    27.5     8.4


Remeasurement of foreign exchange contracts ("FECs"), asset and liability
revaluations, interest rate swaps, cash and cash equivalents, and a gain/loss on
sale of investments resulted in a net gain of R185.1 million (2007: losses of
R169.1 million).

In terms of a shareholders agreement, the minority shareholder in Vodacom Congo
(RDC) s.p.r.l., Congolese Wireless Network s.p.r.l. ("CWN") has a put option
which comes into effect three years after the commencement date, December 1,
2001, and for a maximum of five years thereafter. In terms of the option, CWN
shall be entitled to put to Vodacom International Limited such number of shares
in and claims on loan account against Vodacom Congo (RDC) s.p.r.l. as constitute
19% of the entire issued share capital of that company. CWN can exercise this
option in a maximum of three tranches and each tranche must consist of at least
5% of the entire issued share capital of Vodacom Congo (RDC) s.p.r.l. The option
price will be the fair market value of the related shares at the date the put
option is exercised. The put option has a nil value as at March 31, 2008 and
2007. The option liability had a value of R396.5 million (2007: R249.3 million)
as at March 31, 2008.

Finance costs increased by 84.6% to R681.3 million mainly due to higher bank
overdraft levels utilised to fund working capital. The net debt to equity ratio
increased to 93.1% (2007: 72.8%) at March 31, 2008.

TAXATION
The taxation expense increased by 7.1% to R4.1 billion (2007: R3.8 billion) for
the year ended March 31, 2008, mainly due to higher South African normal
taxation paid on higher profits. Vodacom's effective tax rate however decreased
to 34.1% (2007: 36.9%) primarily due to a decrease in the secondary taxation on
companies ("STC") liability incurred as a result of the reduction in the STC
rate from 12.5% to 10.0% effective October 1, 2007.

GROUP SHAREHOLDER DISTRIBUTIONS
Dividends declared for the 2008 financial year totalled R5,940.0 million (2007:
R5,400.0 million), an increase of 10.0%. The final dividend of R3,190.0 million
was paid on April 3, 2008.


CAPITAL EXPENDITURE
Capital expenditure additions
Geographical split
                                                Rand millions
Year ended March 31,                      2006      2007      2008
South Africa                             4,384     4,993     4,252
Tanzania                                   318       957       713
DRC                                        273       506       658
 
Lesotho                                     26        25        36
Mozambique                                 121        85       111
Holding companies                           16       182       146
Capital expenditure for the year         5,138     6,748     5.916

Capital expenditure additions (including
software) as a % of revenue (%)           15.1      16.4      12.3

CAPITAL EXPENDITURE
Capital expenditure additions
Geographical split
                                  % of total           % change
Year ended March 31,         2006    2007    2008   06/07   07/08
South Africa                 85.3    73.9    71.8    13.9   (14.8)
Tanzania                      6.2    14.2    12.1  >200.0   (25.5)
DRC                           5.3     7.5    11.1    85.3    30.0
Lesotho                       0.5     0.4     0.6    (3.8)   44.0
Mozambique                    2.4     1.3     1.9   (29.8)   30.6
Holding companies             0.3     2.7     2.5  >200.0   (19.8)
Capital expenditure
for the year                100.0   100.0   100.0    31.3   (12.3)

Capital expenditure
additions (including
software) as a % of
revenue (%)                     -       -       -     1.3    (4.1)


The Group's investment in infrastructure amounted to R5.9 billion (2007: R6.7
billion) of which R4.9 billion (2007: R6.1 billion) relates to property, plant
and equipment and R1.0 billion (2007: R0.6 billion) to computer software.


Closing capital expenditure investment at cost
Geographical split
                                 2007                  2008
Year ended March 31,    R billions   Foreign  R billions   Foreign

South Africa (R billions)     27.3         -        31.2         -
Tanzania (TSH billions)        2.7     456.7         3.8     579.1
DRC (US$ millions)             2.9     391.3         3.9     483.4
Lesotho (Maloti millions)      0.2     184.1         0.2     219.6
Mozambique (MT millions)       0.8   2,961.2         1.1   3,358.0
Holding companies (R billions) 0.2         -         0.1         -
Closing capital expenditure
investment at cost            34.1         -        40.3         -


Property, plant and equipment (including software) that was sold and scrapped,
amounted to R706.2 million (2007: R1,956.9 million).

Foreign currency translation differences for 2008 increased cumulative capital
expenditure by R1,042.1 million (2007: R793.0 million).

It is Vodacom's policy to hedge foreign denominated commitments of South African
operations above a certain minimum level. However, Vodacom does not qualify for
hedge accounting in terms of IAS 39 and therefore, all capital expenditure in
South Africa is recorded at the exchange rate ruling at the date of acceptance
of the equipment. Capital expenditure of Vodacom's non-South African operations
is translated at the average exchange rate of the Rand against the operation's
reporting currency for the period, while closing capital expenditure is
translated at the closing exchange rate of the Rand against the reporting
currency. For this reason, Vodacom's capital expenditure in any given year
cannot be properly evaluated without taking the exchange rate movements against
the Rand into account, which are shown under the section "Financial instruments
and risk management".


FINANCIAL STRUCTURE AND FUNDING
Vodacom's net debt position increased to R5.2 billion (2007: R2.7 billion) as at
March 31, 2008. The Group's net debt to EBITDA ratio was 52.6% (2007: 42.4%)
while Vodacom's net debt to equity ratio increased to 93.1% (2007: 72.8%).

Debt includes the final dividend of R3.2 billion (2007: R2.9 billion) payable to
the Group's shareholders and the STC thereon, due to these dividends being paid
very soon after year-end and the materiality thereof. In addition, in terms of
covenant calculations, certain intangible assets as well as minority interest
are excluded from equity.

Funding sources
Vodacom's ongoing objective is to fund all its non-South African operations by
means of project finance, structured such that there is no recourse to our South
African operations. Strong South African cash flows would then be utilised
principally to pay dividends and make new growth-enhancing investments. The
Group utilises its own funds and supported funding structures, subject to South
African Reserve Bank approval to fund offshore investments in the initial stages
of the investment, until the project is able to support project funding.
Non-recourse funding for non-South African operations is not always suitable to
high customer growth environments that require substantial capital expenditure.

While Vodacom Tanzania repaid its project funding on March 31, 2008, Vodacom
Congo and Vodacom Mozambique are still substantially dependent on funding and
guarantees from South Africa. These operations are funded by a mix of market
priced direct loans as well as security to facilitate their own credit lines.
 

In South Africa, debt consists primarily of finance lease liabilities, a
long-term funding loan and short- term money market borrowings at variable
interest rates.

Financial instruments and risk management
Subject to central bank regulations in the various countries as well as local
market condition restrictions, Vodacom manages foreign currency risk, interest
rate risk, credit risk and liquidity risk on an ongoing basis. The Group's risk
management procedures are described fully in the Group's Annual Financial
Statements.
Foreign exchange rates

                            Rand exchange rate        % change
Year ended March 31,       2006    2007    2008    06/07    07/08

US Dollar
Average                    6.40    7.05    7.11     10.2      0.9
Closing                    6.19    7.29    8.13     17.8     11.5
Tanzanian Shilling
Average                  180.72  182.02  171.95      0.7     (5.5)
Closing                  198.03  170.83  151.99    (13.7)   (11.0)
Mozambican Metical
Average                    3.89    3.73    3.57     (4.1)    (4.3)
Closing                    4.37    3.63    2.99    (16.9)   (17.6)


CASH FLOW
Vodacom had a positive free cash flow before shareholder distributions and
financing activities of R3.4 billion (2007: R3.7 billion), a decrease of 8.0%
when compared to the previous year due to investments in Smart companies
amounting to R956.5 million. The cash generated from operations of R16.3 billion
had a positive variance of R2.5 billion (2007: positive variance of R2.8
billion) compared to the previous year.

CONCLUSION
As the Vodacom Group embraces the opportunities of a new era of electronic
communications, we face exciting yet challenging times. We will nurture and grow
our traditional mobile telephony business in five countries of operation while
entering the wider world of providing convergence infrastructure and services.


Oyama Mabandla
Non-executive Chairman

Alan Knott-Craig
Chief Executive Officer
 

SEGMENT KEY OPERATIONAL INDICATORS
VODACOM SOUTH AFRICA

                         Year ended March 31,         % change
KEY INDICATORS           2006    2007    2008     06/07     07/08
Customers
(thousands) 1          19,162  23,004  24,821      20.1       7.9
Contract                2,362   3,013   3,541      27.6      17.5
Prepaid                16,770  19,896  21,177      18.6       6.4
Community services         30      95     103    >200.0       8.4
Gross connections
(thousands)             9,140  10,859  12,040      18.8      10.9
Contract                  506     666     782      31.6      17.4
Prepaid                 8,618  10,124  11,248      17.5      11.1
Community services         16      69      10    >200.0    (85.5)
Inactives (3 months - %)  8.7    10.7    10.3   2.0 pts  (0.4 pts)
Contract                  2.4     3.1     4.0   0.7 pts   0.9 pts
Prepaid                   9.6    11.8    11.4   2.2 pts  (0.4 pts)
Churn (%) 2              17.7    33.8    42.3  16.1 pts   8.5 pts
Contract                 10.0     9.7     8.3  (0.3 pts) (1.4 pts)
Prepaid                  18.8    37.5    47.9  18.7 pts  10.4 pts
Traffic (millions of
minutes) 3             17,066  20,383  22,769      19.4      11.7
Outgoing               11,354  13,638  15,323      20.1      12.4
Incoming                5,712   6,745   7,446      18.1      10.4
ARPU (Rand per
month) 4                  139     125     125     (10.1)        -
Contract                  572     517     486      (9.6)     (6.0)
Prepaid                    69      63      62      (8.7)     (1.6)
Community services      1,796     902     689     (49.8)    (23.6)
Minutes of use per
month 5                    74      69      66      (6.8)     (4.3)
Contract                  206     188     172      (8.7)     (8.5)
Prepaid                    49      47      46      (4.1)     (2.1)
Community services      2,327   1,151     883     (50.5)    (23.3)
Gross capex spend
(Rand millions) 6       4,384   4,993   4,251      13.9     (14.9)
Capex as a % of
revenue (%)              14.1    13.5     9.9  (0.6 pts) (3.6 pts)
Cumulative capex
(Rand millions) 6      24,095  27,310  30,742      13.3      12.6
Capex per customer
(Rand)                  1,257   1,187   1,239      (5.6)      4.4
Number of employees     4,148   4,388   4,504       5.8       2.6
Customers per employee  4,619   5,242   5,511      13.5       5.1
Estimated mobile
penetration (%) 7          71      84      94    13 pts    10 pts
Estimated mobile
market share (%) 7         58      58      55         -  (3.0 pts)

Notes
1. Customer totals are based on the total number of customers registered on
Vodacom's network, which have not been disconnected, 
 
 
including inactive customers, as at the end of the period indicated.
2. Churn is calculated by dividing the average monthly number of disconnections
during the period by the average monthly total reported customer base during the
period.
3. Traffic comprises total traffic registered on Vodacom's network, including
bundled minutes, outgoing international roaming calls and calls to free
services, but excluding national roaming and incoming international roaming
calls.
4. ARPU is calculated by dividing the average monthly revenue during the period
by the average monthly total reported customer base during the period. ARPU
excludes revenue from equipment sales, other sales and services and revenue from
national and international users roaming on Vodacom's networks.
5. Minutes of use per month is calculated by dividing the average monthly
minutes during the period by the average monthly total reported customer base
during the period. Minutes of use exclude calls to free services, bundled
minutes and data minutes.
6. Cumulative capital expenditure ("capex") includes software.
7. Estimated mobile penetration and market share is calculated based on
Vodacom's total reported customers and the estimated total reported customers of
MTN and Cell C.


VODACOM TANZANIA
                         Year ended March 31,         % change
KEY INDICATORS           2006    2007    2008      06/07     07/08

Customers
(thousands) 1           2,091   3,247   4,207      55.3      29.6
Contract                    7      14      16     100.0      14.3
Prepaid                 2,081   3,223   4,181      54.9      29.7
Community services          3      10      10    >200.0         -
Gross connections
(thousands)             1,353   2,092   2,645      54.6      26.4
Churn (%)                28.5    35.6    45.5   7.1 pts   9.9 pts
ARPU (Rand) 2              67      52      49     (22.4)     (5.8)
Gross capex spend
(Rand millions)           318     957     713    >200.0     (25.5)
Capex as a % of
revenue (%)              24.3    55.3    30.3  31.0 pts (25.0 pts)
Cumulative capex
(Rand millions)         1,503   2,674   3,810      77.9      42.5
Number of employees 3     438     527     618      20.3      17.3
Customers per employee  4,774   6,161   6,807      29.1      10.5
Estimated mobile
penetration (%) 4           9      16      20     7 pts     4 pts
Estimated mobile
market share (%) 4         58      55      52    (3 pts)   (3 pts)

Notes
1. Customer totals are based on the total number of customers registered on
Vodacom's network, which have not been disconnected, 
 
 
including inactive customers, as at the end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the period
by the average monthly total reported customer base during the period. ARPU
excludes revenue from equipment sales, other sales and services and revenue from
national and international users roaming on Vodacom's networks.
3. Headcount includes secondees.
4. Estimated mobile penetration and market share is calculated based on Vodacom
estimates.


VODACOM CONGO
                         Year ended March 31,         % change
KEY INDICATORS           2006    2007    2008      06/07     07/08

Customers
(thousands) 1           1,571   2,632   3,289      67.5      25.0
Contract                   14      17      21      21.4      23.5
Prepaid                 1,538   2,587   3,209      68.2      24.0
Community services         19      28      59      47.4     110.7
Gross connections
(thousands)               892   1,688   2,141      89.2      26.8
Churn (%)                28.1    30.4    48.0   2.3 pts  17.6 pts
ARPU (Rand) 2              86      77      59     (10.5)    (23.4)
Gross capex spend
(Rand millions)           273     506     658      85.3      30.0
Capex as a % of
revenue (%)              20.5    26.4    28.7   5.9 pts   2.3 pts
Cumulative capex
(Rand millions)         2,000   2,852   3,928      42.6      37.7
Number of employees 3     479     627     691      30.9      10.2
Customers per employee  3,279   4,198   4,759      28.0      13.4
Estimated mobile
penetration (%) 4           6       9      12     3 pts     3 pts
Estimated mobile
market share (%) 4         48      47      41     (1 pt)   (6 pts)

Notes
1. Customer totals are based on the total number of customers registered on
Vodacom's network, which have not been disconnected, including inactive
customers, as at the end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the period
by the average monthly total reported customer base during the period. ARPU
excludes revenue from equipment sales, other sales and services and revenue from
national and international users roaming on Vodacom's networks.
3. Headcount includes secondees.
4. Estimated mobile penetration and market share is calculated based on Vodacom
estimates.
 

VODACOM LESOTHO
                         Year ended March 31,         % change
KEY INDICATORS           2006    2007    2008      06/07     07/08

Customers
(thousands) 1             206     279     395      35.4      41.6
Contract                    3       3       4         -      33.3
Prepaid                   200     272     383      36.0      40.8

Community services          3       4       8      33.3     100.0
Gross connections
(thousands)                98     119     176      21.4      47.9
Churn (%)                22.3    19.0    17.8  (3.3 pts) (1.2 pts)
ARPU (Rand) 2              78      75      73      (3.8)     (2.7)
Gross capex spend
(Rand millions)            26      25      36      (3.8)     44.0
Capex as a % of
revenue (%)              15.2    11.0    11.6  (4.2 pts)  0.6 pts
Cumulative capex
(Rand millions)           225     184     220     (18.2)     19.6
Number of employees 3      67      60      70     (10.4)     16.7
Customers per employee  3,071   4,644   5,642      51.2      21.5
Estimated mobile
penetration (%) 4          13      17      26     4 pts     9 pts
Estimated mobile
market share (%) 4         80      80      80         -         -

Notes
1. Customer totals are based on the total number of customers registered on
Vodacom's network, which have not been disconnected, including inactive
customers, as at the end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the period
by the average monthly total reported customer base during the period. ARPU
excludes revenue from equipment sales, other sales and services and revenue from
national and international users roaming on Vodacom's networks.
3. Headcount includes secondees.
4. Estimated mobile penetration and market share is calculated based on Vodacom
estimates.


VODACOM MOZAMBIQUE
                        Year ended March 31,         % change
KEY INDICATORS         2006    2007    2008       06/07      07/08

Customers
(thousands) 1           490     988   1,282      101.6       29.8
Contract                  8      15      21       87.5         40
Prepaid                 482     973   1,250      101.9       28.5
 
Community services        -       -      11        n/a        n/a
Gross connections
(thousands)             342     797     951      133.0       19.3
Churn (%)              32.2    41.7    58.7    9.5 pts   17.0 pts
ARPU (Rand) 2            36      28      29      (22.2)       3.6
Gross capex spend
(Rand millions)         121      85     111      (29.8)      30.6
Capex as a % of
revenue (%)            76.8    31.7    25.7  (45.1 pts)  (6.0 pts)
Cumulative capex
(Rand millions)         605     816   1,123       34.9       37.6
Number of employees 3   170     129     157      (24.1)      21.7
Customers per
employee              2,885   7,659   8,168      165.5        6.6
Estimated mobile
penetration (%) 4         8      14      16      6 pts      2 pts
Estimated mobile
market share (%) 4       30      35      40      5 pts      5 pts

Notes
1. Customer totals are based on the total number of customers registered on
Vodacom's network, which have not been disconnected, including inactive
customers, as at the end of the period indicated.
2. ARPU is calculated by dividing the average monthly revenue during the period
by the average monthly total reported customer base during the period. ARPU
excludes revenue from equipment sales, other sales and services and revenue from
national and international users roaming on Vodacom's networks.
3. Headcount includes secondees.
4. Estimated mobile penetration and market share is calculated based on Vodacom
estimates.


CONSOLIDATED INCOME STATEMENTS

for the three years ended March 31, 2008
                                      2006        2007        2008
                                        Rm          Rm          Rm

Revenue                          34,042.5    41,146.4    48,177.8
Other operating income              125.1       119.8       155.6
Direct network operating cost   (18,297.2)  (22,439.8)  (26,299.5)
Depreciation                     (2,651.6)   (2,901.8)   (3,366.0)
Staff expenses                   (2,042.1)   (2,372.5)   (2,975.4)
Marketing and advertising
expenses                           (976.9)   (1,146.4)   (1,264.3)
Other operating expenses         (1,042.7)   (1,063.6)   (1,362.4)
Amortisation of intangible assets  (344.2)     (459.4)     (545.2)
Impairment of assets                 52.8       (22.9)      (29.9)
Profit from operations            8,865.7    10,859.8    12,490.7
Finance income                      129.9        74.5        72.3
Finance costs                      (246.0)     (369.3)     (681.3)
 
Gains/(Losses) on remeasurement
and disposal of financial
instruments                        (523.1)     (169.0)      185.1
Profit before taxation            8,226.5    10,396.0    12,066.8
Taxation                         (3,083.7)   (3,836.0)   (4,109.2)
Net profit                        5,142.8     6,560.0     7,957.6
Attributable to:
Equity shareholders               5,026.1     6,342.4     7,811.4
Minority interests                  116.7       217.6       146.2

                                      2006        2007        2008
                                         R           R           R
Basic and diluted earnings
per share                          502,610     634,240     781,140
Dividend per share                 450,000     540,000     594,000


CONSOLIDATED BALANCE SHEETS
as at March 31, 2008
                                      2006        2007        2008
                                        Rm          Rm          Rm
ASSETS
Non-current assets               16,079.2    20,844.3     24,468.3
Property, plant and equipment    13,386.6    17,073.2     19,119.6
Intangible assets                 1,954.9     2,700.3      4,224.1
Financial assets                     92.1       209.5        244.2
Deferred taxation                   297.6       386.1        455.1
Deferred cost                       311.2       396.4        333.3
Lease assets                         36.8        78.8         92.0

Current assets                    8,688.6     7,625.9      9,706.9
Deferred cost                       451.8       574.8        705.9
Financial assets                    149.3       207.5        444.9
Inventory                           454.3       364.3        636.9
Trade and other receivables       4,474.0     5,675.0      6,801.1
Lease assets                         13.1        32.9        140.5
Cash and cash equivalents         3,146.1       771.4        977.6
Total assets                     24,767.8    28,470.2     34,175.2

EQUITY AND LIABILITIES
Ordinary share capital                  *           *            *
Retained earnings                 8,583.0     9,523.2     11,392.9
Non-distributable reserves         (194.0)      (97.4)         8.8
Equity attributable to equity
holders of the parent             8,389.0     9,425.8     11,401.7
Minority interests                  283.3       221.2        403.6
Total equity                      8,672.3     9,647.0     11,805.3

Non-current liabilities           2,236.6     3,812.1      4,788.2
Interest bearing debt               819.2     2,051.4      3,025.8
Non-interest bearing debt               -         3.0          6.0
Deferred taxation                   602.3       757.3        776.5
Deferred revenue                    320.3       412.3        358.8
 
Provisions                          372.3       377.5        373.7
Other non-current liabilities       122.5       210.6        247.4

Current liabilities              13,858.9    15,011.1     17,581.7
Trade and other payables          5,104.7     6,874.4      7,561.3
Deferred revenue                  1,604.5     1,904.8      2,229.9
Taxation payable                    630.2     1,112.7        580.5
Non-interest bearing debt             4.3           -            -
Interest bearing debt             1,645.5       501.0        502.9
Provisions                          623.0       741.8        909.5
Dividends payable                 2,800.0     2,990.0      3,190.0
Derivative financial liabilities     60.9         7.2         10.8
Bank borrowings                   1,385.8       879.2      2,596.8
Total equity and liabilities     24,767.8    28,470.2     34,175.2

* Share capital R100


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the three years ended March 31, 2008

                           Attributable to equity shareholders
                        Share    Retained          Non-      Total
                      Capital    earnings   distributable
                                             Reserves
                           Rm         Rm            Rm          Rm

Balance at March 31, 2005   *    8,059.1        (299.9)   7,759.2
Net profit for the period   -    5,026.1             -    5,026.1
Dividends declared          -   (4,500.0)            -   (4,500.0)
Business combinations and
other acquisitions          -          -             -          -
Minority shares of VM,
S.A.R.L.                    -          -             -          -
Contingency reserve         -       (2.2)          2.2          -
Net gains and losses
not recognised in the
income statement
   Foreign currency
   translation reserve      -          -         103.9      103.9
   Revaluation of available-
   for-sale investments     -          -          (0.2)      (0.2)

Balance at March 31, 2006   *    8,583.0        (194.0)   8,389.0
Net profit for the period   -    6,342.4             -    6,342.4
Dividends declared          -   (5,400.0)            -   (5,400.0)
Business combinations and
other acquisitions          -          -             -          -
Contingency reserve         -       (2.2)          2.2          -
Net gains and losses
not recognised in the
income statement
   Foreign currency
 
 
   translation reserve      -          -          94.4       94.4

Balance at March 31, 2007   *    9,523.2         (97.4)   9,425.8
Net profit for the period   -    7,811.4             -    7,811.4
Dividends declared          -   (5,940.0)            -   (5,940.0)
Business combinations and
other acquisitions          -          -             -          -
Disposal of subsidiaries    -          -             -          -
Minority shares of VM,
S.A.R.L.                    -          -             -          -
Contingency reserve         -       (1.7)          1.7          -
Net gains and losses
not recognised in the
income statement
   Foreign currency
   translation reserve      -          -          87.7       87.7
   Revaluation of available-
   for-sale investment       -         -          16.8       16.8

Balance at March 31, 2008    *  11,392.9           8.8   11,401.7

* Share capital R100


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the three years ended March 31, 2008
                                          Minority           Total
                                         interests          equity
                                                Rm              Rm

Balance at March 31, 2005                   128.7         7,887.9
Net profit for the period                   116.7         5,142.8
Dividends declared                           (0.9)       (4,500.9)
Business combinations and
other acquisitions                           46.5            46.5
Minority shares of VM, S.A.R.L.               8.0             8.0
Contingency reserve                             -               -
Net gains and losses not
recognised in the income statement
   Foreign currency translation reserve     (15.6)           88.3
   Revaluation of available-for-sale
   investments                               (0.1)           (0.3)

Balance at March 31, 2006                   283.3         8,672.3
Net profit for the period                   217.6         6,560.0
Dividends declared                         (170.8)       (5,570.8)
Business combinations and
other acquisitions                         (136.4)         (136.4)
Contingency reserve                             -               -
Net gains and losses not
recognised in the income statement
   Foreign currency translation reserve      27.5           121.9
 

Balance at March 31, 2007                   221.2         9,647.0
Net profit for the period                   146.2         7,957.6
Dividends declared                           (0.6)       (5,940.6)
Business combinations and
other acquisitions                           (6.1)           (6.1)
Disposal of subsidiaries                     (0.3)           (0.3)
Minority shares of VM, S.A.R.L.               0.8             0.8
Contingency reserve                             -               -
Net gains and losses not
recognised in the income statement
   Foreign currency translation reserve      42.4           130.1
   Revaluation of available-for-sale
   investments                                  -            16.8
Balance at March 31, 2008                   403.6        11,805.3



CONSOLIDATED CASH FLOW STATEMENTS
for the three years ended March 31, 2008
                                    2006         2007         2008
                                      Rm           Rm           Rm

CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers   33,132.7     40,380.0     47,409.6
Cash paid to suppliers and
employees                     (22,042.4)   (26,513.9)   (31,076.1)

Cash generated from
operations                     11,090.3     13,866.1     16,333.5
Finance costs paid               (214.3)      (326.6)      (669.6)
Finance income received           124.1         41.7         74.3
Realised net losses on
remeasurement and disposal
of financial instruments          (17.6)       (38.8)      (151.0)
Taxation paid                  (2,980.3)    (3,303.3)    (4,721.5)
Dividends paid - equity
shareholders                   (3,500.0)    (5,300.0)    (5,650.0)
Dividends paid - minority
shareholders                       (0.9)       (80.8)       (90.6)
Net cash flows from operating
activities                      4,501.3      4,858.3      5,125.1

CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant
and equipment and intangible
assets                         (4,788.4)    (5,955.3)    (6,540.6)
Proceeds on disposal of
property, plant and equipment
and intangible assets              31.2          98.3        10.2
Business combinations and other
acquisitions                       (0.1)       (591.2)     (956.5)
Disposal of subsidiaries              -             -        15.7
Other investing activities        (33.5)       (135.7)      (31.0)
 
 
Net cash flows utilised in
investing activities           (4,790.8)     (6,583.9)   (7,502.2)

CASH FLOW FROM FINANCING ACTIVITIES
Non-interest bearing debt
incurred                              -           3.0           -
Non-interest bearing debt repaid      -             -        (3.0)
Interest bearing debt incurred     32.3           6.0     1,000.0
Interest bearing debt repaid      (89.7)       (141.3)     (117.5)
Finance lease capital repaid      (50.2)        (67.7)     (108.9)
Bank borrowings                       -             -     2,456.0
Share capital and premium
movement of minority shareholders     -             -         7.2
Net cash flows from/(utilised)
in financing activities          (107.6)       (200.0)    3,233.8

NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS                 (397.1)     (1,925.6)      856.7
(Bank borrowings)/cash and
cash equivalents at the
beginning of the year           2,173.0       1,760.3      (107.8)
Effect of foreign exchange
rate changes                      (15.6)         57.5        87.9


CASH AND CASH EQUIVALENTS/
(BANK BORROWINGS) AT THE END
OF THE YEAR                     1,760.3        (107.8)      836.8


DISCLAIMER
This presentation has been prepared and published by Vodacom Group (Proprietary)
Limited. Vodacom Group (Proprietary) Limited is a private company and as such is
not required by the Companies Act 61 of 1973, as amended, to publish its
results.

Vodacom Group (Proprietary) Limited makes no guarantee, assurance,
representation and/or warranty as to the accuracy of the information contained
in this presentation and will not be held liable for any reliance placed on the
information contained in this presentation.

The information contained in this presentation is subject to change without
notice and may be incomplete or condensed. In addition, this presentation may
not contain all material information pertaining to Vodacom Group (Proprietary)
Limited and its subsidiaries.

Without in any way derogating from the generality of the foregoing, it should be
noted that:

Many of the statements included in this presentation are forward-
 
 
looking statements that involve risks and/or uncertainties and caution must be 
exercised in placing any reliance on these statements. Moreover, Vodacom Group
(Proprietary) Limited will not necessarily update any of these statements after
the date of this presentation either to conform them to actual results or to
changes in its expectations.

Insofar as the shareholders of Vodacom Group (Proprietary) Limited are listed
and offer their shares publicly for sale on recognised stock exchanges locally
and/or internationally, potential investors in the shares of Vodacom Group
(Proprietary) Limited's shareholders are cautioned not to place undue reliance
on this presentation.


        
        
      

EX-99.5

Exhibit 99.5

Vodacom Group (Pty) Ltd

Annual Financial Results

March 31, 2008

Operational highlights

Alan Knott-Craig

Chief Executive Officer

Total customers

34.0 million

12.7%

High gross connections: increase of 15.4% year on year to 18.0 million

Revenue

R48.2 billion

17.1%

Profit from operations
(Statutory operating profit)

R12.5 billion

15.0%

EBITDA

R16.5 billion

15.7%

Net profit after tax

R8.0 billion

21.3%

Dividends

R5.9 billion

10.0%

EBITDA margin: 34.2% (2007: 34.6%)

Group highlights
For the year ended March 31, 2008 vs. prior year

10.0%
year on
year

To date R23.0 billion in dividends has been distributed to shareholders

20.0%
year on
year

32.4%
year on
year

Group shareholder distributions

(after tax)

Group shareholder returns
March2008 and results for the past 4 years

Profit from operations and net profit after tax
March2008 and results for the past 4 years

Profit from operations margin and net profit after tax margin
March2008 and results for the past 4 years

	2008
• Total customers	24.8 million
• Gross connections	12.0 million
• Churn % *	42.3%
• Estimated SIM card penetration %	94%
• Profit from operations	R11.7 billion

7.9%

10.9%

10 pts

13.4%

8.5 pts

* Supplementary disconnection rule implemented during September 2007

	2008
• Total customers	4.2 million
• Gross connections	2.6 million
• Churn %	45.5%
• Estimated SIM card penetration %	20%
• Profit from operations	R460 million

29.6%

26.4%

4 pts

32.9%

9.9 pts

	2008
• Total customers	3.3 million
• Gross connections	2.1 million
• Churn %	48.0%
• Estimated SIM card penetration %	12%
• Profit from operations	R364 million

25.0%

26.8%

3 pts

31.4%

17.6 pts

Democratic Republic of Congo (DRC)

	2008
• Total customers	395 thousand
• Gross connections	176 thousand
• Churn %  1.2 pts	17.8%
• Estimated SIM card penetration %	26%
• Profit from operations	R123 million

41.6%

47.9%

64.0%

9 pts

Lesotho

	2008
• Total customers	1.3 million
• Gross connections	951 thousand
• Churn %	58.7%
• Estimated SIM card penetration %	16%
• Loss from operations   11.3%	R157 million
• Loss from operations    excluding impairment 17.5%	R127 million

29.8%

19.3%

2 pts

17.0 pts

Mozambique

New acquisitions and investments

•In order to ensure horizontal growth within our area of focus, Vodacom made investments in
the following companies:

–Increased investments in G-Mobile Holdings Ltd (Wi-Fi business)

–Invested in Xlink Communications (Pty) Ltd (service provider of wireless data transfer systems and
services)

–Launched Vodacom Business

•Effective September 13, 2006, Vodacom Service Provider Company (Pty) Ltd acquired the
contract customer base of approximately 160 thousand from Smartcom (Pty) Ltd. Group
also increased its effective equity interest in Smartcom (Pty) Ltd from 61.6% to 100%

•Acquired the customer base from Global Telematics SA (Pty) Ltd, effective April 1, 2008

•Increased equity interest in Smartphone SP (Pty) Ltd and Cointel VAS (Pty) Ltd from 70% to
100% during September 2007

New acquisitions and investments

Vodacom Business

•Vodacom Business was launched in
February 2008

–To offer the market a full set of
converged communications services

•Developed a service portfolio that
includes:

–Next-generation Internet Protocol ISP
and voice services

–Managed networks and infrastructure
services

–Access services

–Hosting and applications

•Platforms, systems and organisation
created and prepared to sell and bill
products

–Service portfolio coming on line during
the course of the year

Managed enterprise voice, VOIP and
VOIP gateway

•To be launched on July 1, 2008

•Launched on May 1, 2008

Hosting security and backup

ISPs

•‘Dedicated Internet’ access launched

April 7, 2008

•‘Broadband Internet’ access to be
launched in second quarter

Managed MPLS VPN service

•‘MPLS VPN’ launched on April 7, 2008

Mobile TV / DVB-H

•31 thousand Mobile TV users

•22 TV channels

Vodafone live!, 3G / HSDPA

•Over 1.4 million Vodafone live! users
(2007: 899 thousand)

•370 thousand data card and modem users
(2007: 149 thousand)

Data revenue

Data revenue as a % of service
revenue

50.0%
year on
year

Innovative South Africa non-voice products

• Mobile TV Playa: provides TV streaming

• Music station: live radio streaming

• Prepaid data bundles: data usage for prepaid

• MEEP: 18,666 PC and 7,665 handset users

• Reverse charge: call charged to receiving party

• Mobile advertising: R24.1 m in revenue to date

New products and services

•Vodaworld still the largest one-stop mobile
telecommunications mall

•Vodacom currently has 980 dealers and
franchises, including 39 Vodacare outlets

•More than 14 thousand retail outlets

•Currently 7 walk in customer care centres across
the country

Customer care and service

New products, services and customer care outlets - South Africa

•Commercially launched 3G / HSDPA

•Commercially launched WiMax

•Launched a consumer loyalty program, Tuzo points and Tuzo draws

Tanzania

New innovative products and services

•500MT: Free on-net calls for December upon recharging with a 500MT voucher

•Vodakool: a WAP Portal that enables customers to access services like vodamail and jokes

•Market leader in data services: Voted best cellular network for the second consecutive year

Mozambique

New innovative products and services

•Vodacom plans to have the deal concluded and implemented by the fourth quarter of 2008

•Royal Bafokeng Holdings (Pty) Ltd and Thebe Investment Corporation (Pty) Ltd chosen as
preferred partners in R7.5 billion BBBEE deal

•Grouping structure of deal:

- 25% for all South African employees of Vodacom

- 30% for black South Africans and business partners via a Public Offer

- 45% for black strategic partners

BBBEE

Broad Based Black Economic Empowerment (BBBEE)

•Focus on horizontal growth and expansion

•Seek out new associated business opportunities in South Africa

•Further expansion into television and radio

•To play a significant role in international data transmission (Seacom, Eassy
Cable, etc)

•Focus on improving customer service and loyalty

•Focus on electronic communications, spearheaded by Vodacom Business

Way forward

Financial review

Johan van der Watt

Acting Chief Financial Officer

(106.4%)

(609)

(295)

(116)

Net finance costs

21.3%

7,958

6,560

5,143

Net profit

(7.1%)

(4,109)

(3,836)

(3,084)

Taxation

(17.8%)

(31,715)

(26,919)

(22,234)

Operating expenses excluding depreciation,
amortisation, impairment and other

15.7%

16,463

14,227

11,809

EBITDA

(18.0%)

(3,972)

(3,367)

(2,943)

Depreciation, amortisation, impairment and
other

15.0%

12,491

10,860

8,866

Profit from operations

>200.0%

185

(169)

(523)

Net gain / (loss) on revaluations

16.1%

12,067

10,396

8,227

Profit before tax

17.1%

48,178

41,146

34,043

Revenue

2007

%

change

2008

2006

R million

Effective tax rate 34.1% vs. 36.9% prior year

DRC option liability R396.5 million (2007: R249.3 million)

Group income statement
Extract for the years ended March 31,

Gross connections

Customers

Group operational indicators

•Gross connections up
15.4% year on year to
18.0 million

•Customers up 12.7% year on
year to 34.0 million

•Total traffic in South Africa
increased by 11.7% year on
year to 22.8 billion minutes

ARPU per month

ARPU by country

•SA remained stable at R125

•DRC decreased 23.4% to R59

•Lesotho decreased 2.7% to R73

•Tanzania decreased 5.8% to R49

•Mozambique increased 3.6% to
R29

•Vodacom Group consolidated
ARPU decreased 4.5% year on
year from R111 to R106

South Africa ARPU per month

South Africa ARPU

•Contract ARPU decreased
6.0% year on year to R486

•Prepaid ARPU decreased
1.6% year on year to R62

•Total ARPU remained stable
year on year at R125

•Prepaid ARPU stable as a result of
implementation of supplementary
disconnection rule

•Increase in bulk sms

•Customer mix kept total ARPU stable

•Usage decreased slightly by 4.3% to
66 minutes of use per month per customer

20.0%

2,297

1,914

1,334

DRC

15.6%

42,784

37,007

31,069

South Africa, including holding companies

17.1%

48,178

41,146

34,043

61.3%

434

269

158

Mozambique

36.1%

309

227

170

Lesotho

36.1%

2,354

1,729

1,312

Tanzania

2007

%
change

2008

2006

R million

Revenue driven by strong customer growth

Non-South African operations contributing 11.2% (2007: 10.1%)

Data revenue increased by 49.7% or R1.7 billion (2007: R1.3 billion)

Group revenue
By country

40.6%

1,836

1,306

971

International airtime

7.5%

5,052

4,699

3,986

Equipment sales

13.4%

8,887

7,835

6,697

Interconnection

14.3%

27,095

23,708

20,085

Airtime, connection and access

17.1%

48,178

41,146

34,043

19.5%

306

256

266

Other sales and services

49.7%

5,002

3,342

2,038

Data revenue

2007

%
change

2008

2006

R million

Revenue growth, excluding equipment sales was 18.3% (2007: 21.3%)

Data revenue as a % of service revenue was 11.9% (2007: 9.4%)

Group revenue
Revenue composition

Revenue analysis - 2008

R43,126 million (excluding equipment sales)

Revenue analysis - 2007

R36,447 million (excluding equipment sales)

Interconnection contribution down 0.9% points to 20.6%

Data revenue contribution up 2.4% points to 11.6%

Group revenue (excluding equipment sales)
By revenue type

EBITDA margin by country

•Group EBITDA performance

–Increased 15.7% year on year to R16.5 billion

–EBITDA margin decreased 0.4% points year on year to
34.2%

–EBITDA margin 39.3%, when excluding cellular phone
and equipment sales

•South Africa EBITDA

–Increased 14.1% year on year to R14.8 billion

–EBITDA margin decreased 0.4% points year on year to
34.6%

•EBITDA for non-South African operations

–Increased 33.1% year on year to R1.6 billion

–Non-South African operations contributed 9.8% of total
(2007: 8.5%)

–Mozambique’s negative EBITDA decreased from
R69 million to R32 million

15.7%
year on
year

EBITDA

EBITDA and margin analysis

31.4%

364

277

117

DRC

(30.4%)

32

46

(23)

Holding companies

32.9%

460

346

263

Tanzania

(0.5% pts)

25.9%

26.4%

26.0%

Profit from operations margin (%)

15.0%

12,491

10,860

8,866

11.3%

(157)

(177)

(144)

Mozambique

64.0%

123

75

51

Lesotho

13.4%

11,669

10,293

8,602

South Africa

2007

%
change

2008

2006

R million

Customer growth of 12.7% to 34.0 million

Revenue growth of 17.1% to R48.2 billion

Group profit from operations
By country

South Africa net interconnect

11.7%
year on
year

1.1%
year on
year

Factors affecting trends and margins

•South Africa traffic mix

–Outgoing traffic increased 12.4% year on
year to 15.3 billion minutes

–Incoming traffic increased 10.4% year on
year to 7.5 billion minutes

–Total traffic increased 11.7% year on year to
22.8 billion minutes

Gross capex additions as a % of revenue

Gross capex additions as a % of revenue

Productivity measures

•Consolidated customers
per employee

Increased 6.9% year on year to 5,442
based on 6,247 employees

•Consolidated gross capex
additions as a % of revenue
decreased to 12.3% from 16.4%
in theprevious financial year

•Gross capex additions was
R5.9 billion vs. R6.7 billion in the
previous financial year

Cash generated from operations

Free cash flow

•Taxation increased by 43.0% to R4.7 billion

•Net capex additions increased by 11.5% to
R6.5 billion

•Net finance costs increased by 130.2% to
R746 million

•Buy-out of all minority shareholders in the
Smartphone group for R956.5 million

Cash generation

•EBITDA increased by R2.2 billion

•Cash generated from operations
increased 17.8% to R16.3 billion

•Free cash flow decreased
8.0% to R3.4 billion

•Current facilities amount to
R5.8 billion

•Utilisation after final dividend -
R5.7 billion

Capex gross additions - 2008
R5,916 million

Capex gross additions - 2007
R6,748 million

South Africa capex gross additions decreased by 14.8% to R4.3 billion

Non-South African capex gross additions decreased by 3.5% to R1.5 billion

At March 31, 2008, capex contracted but not yet incurred amounted to R1.6 billion

Capex additions and composition
Including software

Gross debt composition
including bank overdrafts - 2008

R6,131 million

Gross debt composition
including bank overdrafts - 2007

R3,435 million

Net debt (excluding dividends and STC): R5,154 million (2007: R2,664 million)

Net debt to equity ratio 93.1% (2007: 72.8%) (including dividends and STC)

Net debt to EBITDA ratio 52.6% (2007: 42.4%) (including dividends and STC)

Debt composition

17.1%

17,582

15,011

13,860

Current liabilities

20.0%

34,175

28,470

24,768

Total equity and liabilities

25.6%

4,788

3,812

2,236

Non-current liabilities

22.4%

11,805

9,647

8,672

EQUITY AND LIABILITIES

Capital and reserves

20.0%

34,175

28,470

24,768

Total assets

27.3%

9,707

7,626

8,689

Current assets

17.4%

24,468

20,844

16,079

ASSETS

Non-current assets

2007

%
change

2008

2006

R million

Group balance sheetExtract at March 31,

>200.0%

837

(108)

1,760

Cash and cash equivalents at the
end of the year

51.7%

88

58

(16)

Effect of foreign exchange rate changes

(106.1%)

(108)

1,760

2,173

Cash and cash equivalents at the
beginning of the year

144.5%

857

(1,926)

(397)

Net increase in cash and cash
equivalents

>200.0%

3,234

(200)

(107)

Net cash flows utilised in
financing activities

(13.9%)

(7,502)

(6,584)

(4,791)

Net cash flows utilised in investing
activities

5.5%

5,125

4,858

4,501

Net cash flows from operating activities

17.8%

16,334

13,866

11,090

Cash generated from operations

2007

%
change

2008

2006

R million

Group cash flow statementExtract for the years ended March 31,

Disclaimer

•This presentation has been prepared and published by Vodacom Group (Pty) Ltd.

•Vodacom Group (Pty) Ltd is a private company and as such is not required by the Companies
Act 61 of 1973, as amended, to publish its results.

•Vodacom Group (Pty) Ltd makes no guarantee, assurance, representation and/or warranty as
to the accuracy of the information contained in this presentation and will not be held liable for
any reliance placed on the information contained in this presentation.

•The information contained in this presentation is subject to change without notice and may be
incomplete or condensed. In addition, this presentation may not contain all material
information pertaining to Vodacom Group (Pty) Ltd and its subsidiaries.

•Without in any way derogating from the generality of the foregoing, it should be noted that:

–Many of the statements included in this presentation are forward-looking statements that
involve risks and/or uncertainties and caution must be exercised in placing any reliance on
these statements. Moreover, Vodacom Group (Pty) Ltd will not necessarily update any of
these statements after the date of this presentation either to conform them to actual
results or to changes in its expectations.

–Insofar as the shareholders of Vodacom Group (Pty) Ltd are listed and offer their shares
publicly for sale on recognised stock exchanges locally and/or internationally, potential
investors in the shares of Vodacom Group (Pty) Ltd’s shareholders are cautioned not to
place undue reliance on this presentation.

Thank you

EX-99.6

Exhibit 99.6

Total customers increased by 12.7% to 34.0 million

•  Customers increased by 7.9% to 24.8 million in South Africa

•  Customers increased by 29.6% to 4.2 million in Tanzania

•  Customers increased by 25.0% to 3.3 million in the Democratic Republic of Congo

•  Customers increased by 41.6% to 395 thousand in Lesotho

•  Customers increased by 29.8% to 1.3 million in Mozambique

Revenue increased by 17.1% to R48.2 billion

Profit from operations increased by 15.0% to R12.5 billion

EBITDA increased by 15.7% to R16.5 billion

Net profit after taxation increased by 21.3% to R8.0 billion

Cash generated from operations increased by 17.8% to R16.3 billion

Dividends declared to Group shareholders increased by 10.0% to R5.9 billion

Vodacom Group (Proprietary) Limited, South Africa’s market leader in the provision of cellular services announces its results for the year ended March 31, 2008.

SOUTH AFRICA

Customers

The total number of customers increased by 7.9% to 24.8 million (2007: 23.0 million). The number of prepaid customers has increased by 6.4% to 21.2 million, while the number of contract customers has increased by 17.5% to 3.5 million.

The strong growth in customers was a direct result of the number of gross connections achieved, with continued levels of handset support to service providers in respect of the contract base, combined with decreased churn in the contract base.

Contract gross connections increased by 17.4% to 782 thousand (2007: 666 thousand), and prepaid gross connections increased by 11.1% to 11.2 million (2007: 10.1 million), bringing the total number of connections for the year to 12.0 million (2007: 10.9 million).

Loyalty and retention programmes continue to play an integral role in achieving the strategy of retaining market share and attracting new customers.

ARPU

During the period under review, total ARPU remained stable at R125 (2007: R125) per month mainly as a result of the implementation of the supplementary disconnection rule during September 2007.

Contract customer ARPU has decreased by 6.0% to R486 (2007: R517) per month. The main contributing factor to this decrease was the rapid growth in data customers as well as in the low end top up packages.

The developing market segment, through the prepaid service continued to drive market penetration in 2008 with the prepaid service making up 93.4% (2007: 93.2%) of all gross connections. The prepaid customer ARPU remained stable at R62 (2007: R63) per month.

Community services ARPU decreased by 23.6% to R689 (2007: R902) per month due to increased competition.

Churn

The cost of acquiring contract customers in a highly developed market is considerable. Vodacom implemented upgrade and retention policies over the last few years to retain its customers. Through the continued high level of handset support to service providers and an improvement in service to customers, contract churn remained low at 8.3% (2007: 9.7%).

The prepaid market is characterised by low acquisition costs due to the flexibility required by this market to access  services. Prepaid churn increased during the year under review to 47.9% (2007: 37.5%) due to the supplementary disconnection rule implemented on prepaid customers. This change increased prepaid churn, but provides a better reflection of active prepaid SIM cards on the network.

Traffic and minutes of use

Total traffic increased with 11.7% to 22.8 billion (2007: 20.4 billion) minutes. This growth was due mainly to the 7.9% growth in the total customer base from 23.0 million to a base of 24.8 million at the end of March 31, 2008. Customer calling patterns continued the trend of the last few years where total mobile-to-mobile traffic increased with 13.5% while total mobile-to-fixed and fixed-to-mobile traffic only increased with 3.5%.

Minutes of use is reflective of voice trends outside and in excess of the bundle and showed a stabilised trend for the year under review. Contract minutes showed an 8.5% decrease to 172 (2007: 188) minutes per customer per month for 2008, as a result of high sales in hybrid products at the low end of the market; prepaid minutes showed a 2.1% decrease to 46 (2007: 47) minutes per customer per month in 2008.

Estimated market share

Despite strong competition, Vodacom remained the leader in the South African market with an estimated 55% (2007: 58%) market share as at March 31, 2008. The decline in market share is a result of increased deletions on the prepaid customer base and renewed efforts by the existing competitors to increase their share of the gross connections of both contract and prepaid customers. The cellular industry in South Africa has grown by an estimated 10% since March 2007. The market penetration of the cellular industry is now an estimated 94% (2007: 84%) of the population with a total

cellular market of approximately 45 million (2007: 40 million) customers. Prepaid customers continue to dominate the market and comprise an estimated 83% (2007: 83%) of the total cellular market.

NON-SOUTH AFRICAN OPERATIONS

Vodacom’s non-South African operations provide world-class communication services to 9.2 million customers (2007: 7.1 million). Profit from these operations increased by 51.6% to R790 million.

Vodacom Tanzania achieved a milestone in its customer base. The customer base increased by 29.6% to 4.2 million (2007: 3.2 million) at March 31, 2008. The Tanzanian market remains highly competitive, but low mobile penetration, estimated at 20% of the population combined with current economic growth signals further potential. Vodacom Tanzania’s estimated market share decreased slightly to 52% (2007: 55%) at March 31, 2008.

Vodacom Congo increased its customer base by 25.0% to 3.3 million (2007: 2.6 million) at March 31, 2008. Vodacom Congo retained its market lead with an estimated market share of 41% (2007: 47%) at March 31, 2008. The lower market share is the result of competitors cutting retail prices and offering various packages to attract new connections. The DRC has the lowest estimated mobile penetration of all Vodacom’s operations at 12% (2007: 9%) of the population.

Vodacom Lesotho is a small operation, but its estimated 80% market share at March 31, 2008 enables it to achieve high levels of profitability. Vodacom Lesotho increased its customer base by 41.6% to 395 thousand (2007: 279 thousand). Mobile penetration in Lesotho is now estimated at 26% (2006:17%).

Vodacom Mozambique increased its customer base by 29.8% to 1,282 thousand (2007: 988 thousand) at March 31, 2008. Vodacom Mozambique increased its estimated market share to 40% (2007: 35%) despite tough economic conditions, by being the value leader in the market. Mobile penetration is estimated at 16% (2007: 14%).

REVENUE

Geographical split

	Rand millions			% change
Year ended March 31,	2006	2007	2008	06/07	07/08
South Africa, including holding companies	31,069	37,007	42,784	19.1	15.6
Tanzania	1,312	1,729	2,354	31.8	36.1
DRC	1,334	1,914	2,297	43.5	20.0
Lesotho	170	227	309	33.5	36.1
Mozambique	158	269	434	70.3	61.3
Revenue	34,043	41,146	48,178	20.9	17.1

Revenue composition

	Rand millions				% of total			% change
Year ended March 31,	2006	2007	2008	2006		2007	2008		06/07	07/08
Airtime, connection and access	20,085	23,708	27,095	58.9		57.7	56.2		18.0	14.3
Data	2,038	3,342	5,002	6.0		8.1	10.4		64.0	49.7
Interconnection	6,697	7,835	8,887	19.7		19.0	18.5		17.0	13.4
Equipment sales	3,986	4,699	5,052	11.7		11.4	10.5		17.9	7.5
International airtime	971	1,306	1,836	2.9		3.2	3.8		34.5	40.6
Other sales and services	266	256	306	0.8		0.6	0.6		(3.8)	19.5
Revenue	34,043	41,146	48,178	100.0		100.0	100.0		20.9	17.1

Revenue increased by 17.1% for the year to March 31, 2008 boosted by a 49.7% increase in data revenue. The increase in revenue was mainly driven by a 12.7% increase in the customer base to 34.0 million customers. Prepaid customers represent 88.8% (2007: 89.4%) of the total customer base.

Data revenue

Geographical split

	Rand millions			% of total			% change
Year ended March 31,	2006	2007	2008	2006	2007	2008	06/07	07/08
South Africa	1,886	3,113	4,669	92.6	93.1	93.4	65.1	50.0
Tanzania	108	146	207	5.3	4.4	4.1	35.2	41.8
DRC	25	52	79	1.2	1.6	1.6	108.0	51.9
Lesotho	16	23	31	0.8	0.7	0.6	43.8	34.8
Mozambique	3	8	16	0.1	0.2	0.3	166.7	100.0
Data revenue	2,038	3,342	5,002	100.0	100.0	100.0	64.0	49.7

Airtime, connection and access

Vodacom’s airtime, connection and access revenue increased primarily due to the number of customers increasing by 12.7% to 34.0 million.

Data

Vodacom’s data revenue increased mainly due to higher penetration levels, but also due to more affordable product offerings. Vodacom South Africa transmitted 4.7 billion (2007: 4.5 billion) SMSs over its network during the year ended March 31, 2008. The number of active data users includes: MMS users 1.4 million (2007: 1.2 million); data card and USB modem users 370 thousand (2007: 149 thousand); 3G/HSDPA handsets 1.3 million (2007: 584  thousand); Vodafone live! users 1,421 thousand (2007: 899 thousand); unique Mobile TV users 31 thousand (2007: 33 thousand).

Data revenue now constitutes 11.9% (2007: 9.4%) of service revenue (service revenue excludes equipment sales, starter pack sales and non-recurring revenue). Data revenue in all countries increased substantially, reaffirming the increased consumer connectivity needs.

Interconnection

Vodacom’s interconnection revenue increased by 13.4%, predominantly due to the growth in the customer base and the related increase in airtime traffic.

Equipment sales

In South Africa, handset sale volumes increased by 10.9% to 5.1 million (2007: 4.6 million) units. The growth in equipment unit sales was mainly driven by growth in customer bases, phone upgrades by customers and lower overall prices of new handsets due to more suppliers focusing on more affordable handsets. The average price per handset sold was R1,052 compared to R1,067 in the previous financial year.

International airtime

International airtime revenue of R1.8 billion, which increased by 40.6% year on year, comprises international calls by Vodacom customers, roaming revenue from Vodacom’s customers making and receiving calls whilst abroad and revenue from international visitors roaming on Vodacom’s networks.

Other sales and services

Revenue from other sales and services includes revenue from Vodacom’s cell captive insurance vehicle, wireless application service provider (“WASP”) revenue, site sharing rental income as well as other revenue from non-core operations.

PROFIT FROM OPERATIONS

Geographical Split

	Rand millions			% change
Year ended March 31,	2006	2007	2008	06/07	07/08
South Africa	8,602	10,293	11,669	19.7	13.4
Tanzania	263	346	460	31.6	32.9
DRC	117	277	364	136.8	31.4
Lesotho	51	75	123	47.1	64.0
Mozambique	(144)	(177)	(157)	(22.9)	11.3
Holding companies	(23)	46	32	>200.0	(30.4)
Profit from operations	8,866	10,860	12,491	22.5	15.0
Profit from operations margin (%)	26.0	26.4	25.9	0.4	(0.5)

Profit from operations for the Group increased by 15.0% to R12.5 billion, based on revenue growth of 17.1% which was offset by cost increases in all operations in a rising inflationary environment and the start up costs of Vodacom Business. Operating expenses increased by 17.8% compared to revenue growth of 17.1%, resulting in Vodacom’s profit from operations margin decreasing to 25.9% (2007: 26.4%).

The Mozambique loss from operations includes an impairment of assets of R29.9 million (2007: R22.9 million).

EBITDA

Geographical split

	Rand millions			% change
Year ended March 31,	2006	2007	2008	06/07	07/08
South Africa	11,053	12,963	14,790	17.3	14.1
Tanzania	465	584	765	25.6	31.0
DRC	373	603	745	61.7	23.5
Lesotho	67	97	139	44.8	43.3
Mozambique	(129)	(69)	(32)	46.5	53.6
Holding companies	(20)	49	56	> 200.0	14.3
EBITDA	11,809	14,227	16,463	20.5	15.7
EBITDA margin (%)	34.7	34.6	34.2	(0.1)	(0.4)
EBITDA margin excluding equipment sales (%)	39.9	39.9	39.3	-	(0.6)

Vodacom’s EBITDA margin adjusted for the impact of low margin cellular phone and equipment sales at 39.3% was 0.6% lower than the previous year at 39.9%.

OPERATING EXPENSES

Operating expenses composition

	Rand millions			% change
Year ended March 31,	2006	2007	2008	06/07	07/08
Depreciation, amortisation and impairment	2,943	3,384	3,941	15.0	16.5
Payments to other network operators	4,634	5,636	6,557	21.6	16.3
Other direct network operating costs	13,663	16,804	19,743	23.0	17.5
Staff expenses	2,042	2,373	2,976	16.2	25.4
Marketing and advertising	977	1,146	1,264	17.3	10.3
Other operating expenditure	1,043	1,064	1,362	2.0	28.0
Other operating income	(125)	(120)	(156)	4.0	(30.0)
Operating expenses	25,177	30,287	35,687	20.3	17.8
Operating expenses as a % of revenue (%)	74.0	73.6	74.1	(0.4)	0.5

Depreciation, amortisation and impairment

The depreciation expense is largely driven by capital expenditure on upgrading and expanding the Group’s networks. Capital expenditure on network equipment has increased in recent years with the implementation and expansion of  3G/HSDPA networks, but also through coverage strategies followed in the international operations.

The implementation of IAS 16: Property, Plant and Equipment, during the 2006 financial year, contributed to a lower depreciation charge for that year. Depreciation and amortisation increased by 16.5% (2007: 15.0%) to R3,941 million for the current financial year. Mozambique’s asset impairment amounted to R29.9 million  (2007: R22.9 million).

Payments to other network operators

Payments to other network operators increased as a result of an increased amount of outgoing traffic terminating on other cellular networks, rather than on fixed-line networks. As the cost of terminating calls on other cellular networks is materially higher than calls terminating on fixed-line networks and as mobile substitution increases with

the growing number of total mobile users in South Africa, interconnection charges will continue increasing, putting pressure on margins.

Other direct network operating costs

Other direct network operating costs include the cost to connect customers onto the network as well as expenses such as cost of equipment and accessories sold, commissions paid to the distribution channels, customer retention expenses, regulatory and licence fees, distribution expenses, transmission rental costs as well as site and maintenance costs.

Staff expenses

Staff expenses increased primarily as a result of an increase in permanent headcount of 5.5% to 6,247 (2007: 5,920) employees in 2008. The headcount increase is mainly the result of the expansion of customer care operations, the strengthening of senior management structures to support the growth in ongoing operations and the launch of Vodacom Business. Annual salary increases and increased provisions for long-term incentive schemes also contributed to the increase in staff expenses.

Employee productivity has improved in all of Vodacom’s operations, as measured by customers per employee, improving with 6.9% to 5,442 (2007: 5,093) customers per employee.

Marketing and advertising

Marketing and advertising expenses are mainly driven by advertising related to new technology products and enhancing brand presence in all operations.

Other operating expenditure

The increase in other operating expenditure was primarily due to inflationary factors and the growth in the business. Other operating expenditure comprise of expenses such as accommodation, information technology costs, office administration, consultant expenses, social economic investment and insurance.

Other operating income

Other operating income comprises income that Vodacom does not consider as part of its core activities such as cost recoveries for risk management and consultancy services, franchise fees and rent received.

INTEREST, DIVIDENDS AND OTHER FINANCIAL INCOME AND FINANCE COSTS

Net gains/(losses) on financial instruments analysed by category, is as follows:

	Rand millions			% change
Year ended March 31,	2006	2007	2008	06/07	07/08
Finance income	130	75	72	(42.3)	(4.0)
Finance expenses	(246)	(369)	(681)	(50.0)	(84.6)
Gain/(loss) on foreign exchange
forward contract revaluation	(261)	468	346	>200.0	(26.1)
Loss on revaluation of foreign denominated liabilities	(225)	(642)	(162)	(185.3)	74.8
(Loss)/gain on revaluation of foreign denominated assets	(27)	10	(15)	137.0	(>200.0)
Loss on interest rate swap revaluation	(7)	(10)	(10)	(42.9)	-
Gain/(loss) on sale of investments	(3)	(1)	2	66.7	>200.0
Gain on revaluation of foreign denominated cash and cash equivalents	-	6	24	-	>200.0
Total net losses on financial instruments	(639)	(463)	(424)	27.5	8.4

Remeasurement of foreign exchange contracts (“FECs”), asset and liability revaluations, interest rate swaps, cash and cash equivalents, and a gain/loss on sale of investments resulted in a net gain of R185.1 million  (2007: losses of R169.1 million).

In terms of a shareholders agreement, the minority shareholder in Vodacom Congo (RDC) s.p.r.l., Congolese Wireless Network s.p.r.l. (“CWN”) has a put option which comes into effect three years after the commencement date,  December 1, 2001, and for a maximum of five years thereafter. In terms of the option, CWN shall be entitled to put to Vodacom International Limited such number of shares in and claims on loan account against Vodacom Congo (RDC) s.p.r.l. as constitute 19% of the entire issued share capital of that company. CWN can exercise this option in a maximum of three tranches and each tranche must consist of at least 5% of the entire issued share capital of Vodacom Congo (RDC) s.p.r.l. The option

price will be the fair market value of the related shares at the date the put option is exercised. The put option has a nil value as at March 31, 2008 and 2007. The option liability had a value of R396.5 million (2007: R249.3 million) as at

March 31, 2008.

Finance costs increased by 84.6% to R681.3 million mainly due to higher bank overdraft levels utilised to fund working capital. The net debt to equity ratio increased to 93.1% (2007: 72.8%) at March 31, 2008.

TAXATION

The taxation expense increased by 7.1% to R4.1 billion (2007: R3.8 billion) for the year ended March 31, 2008, mainly due to higher South African normal taxation paid on higher profits. Vodacom’s effective tax rate however decreased to 34.1% (2007: 36.9%) primarily due to a decrease in the secondary taxation on companies (“STC”) liability incurred as a result of the reduction in the STC rate from 12.5% to 10.0% effective October 1, 2007.

GROUP SHAREHOLDER DISTRIBUTIONS

Dividends declared for the 2008 financial year totalled R5,940.0 million (2007: R5,400.0 million), an increase of 10.0%. The final dividend of R3,190.0 million was paid on April 3, 2008.

CAPITAL EXPENDITURE

Capital expenditure additions

Geographical split

	Rand millions			% of total			% change
Year ended March 31,	2006	2007	2008	2006	2007	2008	06/07	07/08
South Africa	4,384	4,993	4,252	85.3	73.9	71.8	13.9	(14.8)
Tanzania	318	957	713	6.2	14.2	12.1	>200.0	(25.5)
DRC	273	506	658	5.3	7.5	11.1	85.3	30.0
Lesotho	26	25	36	0.5	0.4	0.6	(3.8)	44.0
Mozambique	121	85	111	2.4	1.3	1.9	(29.8)	30.6
Holding companies	16	182	146	0.3	2.7	2.5	>200.0	(19.8)
Capital expenditure for the year	5,138	6,748	5,916	100.0	100.0	100.0	31.3	(12.3)
Capital expenditure additions (including software) as a % of revenue (%)	15.1	16.4	12.3	-	-	-	1.3	(4.1)

The Group’s investment in infrastructure amounted to  R5.9 billion (2007: R6.7 billion) of which R4.9 billion (2007: R6.1 billion) relates to property, plant and equipment and R1.0 billion (2007: R0.6 billion) to computer software.

Closing capital expenditure investment at cost

Geographical split

	2007		2008
Year ended March 31,	R billions	Foreign	R billions	Foreign
South Africa (R billions)	27.3	-	31.2	-
Tanzania (TSH billions)	2.7	456.7	3.8	579.1
DRC (US$ millions)	2.9	391.3	3.9	483.4
Lesotho (Maloti millions)	0.2	184.1	0.2	219.6
Mozambique (MT millions)	0.8	2,961.2	1.1	3,358.0
Holding companies (R billions)	0.2	-	0.1	-
Closing capital expenditure investment at cost	34.1	-	40.3	-

Property, plant and equipment (including software) that was sold and scrapped, amounted to  R706.2 million (2007: R1,956.9 million).

Foreign currency translation differences for 2008 increased cumulative capital expenditure by R1,042.1 million  (2007: R793.0 million).

It is Vodacom’s policy to hedge foreign denominated commitments of South African operations above a certain minimum level.  However, Vodacom does not qualify for hedge accounting in terms of IAS 39  and therefore, all capital expenditure in South Africa is recorded at the exchange rate ruling at the date of acceptance of the equipment. Capital expenditure of Vodacom’s non-South African operations is translated at the average exchange rate of the Rand against the operation’s reporting currency for the period, while closing capital expenditure is translated at the closing exchange rate of the  Rand against the reporting currency. For this reason, Vodacom’s capital expenditure in any given year cannot be properly evaluated without taking the exchange rate movements against the Rand into account, which are shown under the section “Financial instruments and risk management”.

FINANCIAL STRUCTURE AND FUNDING

Vodacom’s net debt position increased to R5.2 billion  (2007: R2.7 billion) as at  March 31, 2008. The Group’s net debt to EBITDA ratio was 52.6%  (2007: 42.4%) while Vodacom’s net debt to equity ratio increased to  93.1% (2007: 72.8%).

Debt includes the final dividend of R3.2 billion (2007: R2.9 billion) payable to the Group’s shareholders and the STC thereon, due to these dividends being paid very soon after year-end and the materiality thereof. In addition, in terms of covenant calculations, certain intangible assets as well as minority interest are excluded from equity.

Funding sources

Vodacom’s ongoing objective is to fund all its non-South African operations by means of project finance, structured such that there is no recourse to our South African operations. Strong South African cash flows would then be utilised principally to pay dividends and make new growth-enhancing investments. The Group utilises its own funds and supported funding structures, subject to  South African Reserve Bank approval to fund offshore investments in the initial stages of the investment, until the project is able to support project funding. Non-recourse funding for non-South African operations is not always suitable to high customer growth environments that require substantial capital expenditure.

While Vodacom Tanzania repaid its project funding on  March 31, 2008, Vodacom Congo and Vodacom Mozambique are still substantially dependent on funding and guarantees from South Africa. These operations are funded by a mix of market priced direct loans

as well as security to facilitate their own credit lines.

In South Africa, debt consists primarily of finance lease liabilities, a long-term funding loan and short- term money market borrowings at variable interest rates.

Financial instruments and

Risk management

Subject to central bank regulations in the various countries as well as local market condition restrictions, Vodacom manages foreign currency risk, interest rate risk, credit risk and liquidity risk on an ongoing basis. The Group’s risk management procedures are described fully in the Group’s Annual Financial Statements.

Foreign exchange rates

	Rand exchange rate			% change
Year ended March 31,	2006	2007	2008		06/07	07/08
US Dollar
Average	6.40	7.05	7.11		10.2	0.9
Closing	6.19	7.29	8.13		17.8	11.5
Tanzanian Shilling
Average	180.72	182.02	171.95		0.7	(5.5)
Closing	198.03	170.83	151.99		(13.7)	(11.0)
Mozambican Metical
Average	3.89	3.73	3.57		(4.1)	(4.3)
Closing	4.37	3.63	2.99		(16.9)	(17.6)

CASH FLOW

Vodacom had a positive free cash flow before shareholder distributions and financing activities of R3.4 billion  (2007: R3.7 billion), a decrease of 8.0% when compared to the previous year due to investments in Smart companies amounting to R956.5 million. The cash generated from operations of R16.3 billion had a positive variance of R2.5 billion

(2007: positive variance of  R2.8 billion) compared to the previous year.

CONCLUSION

As the Vodacom Group embraces the opportunities of a new era of electronic communications, we face exciting yet challenging times. We will nurture and grow our traditional mobile telephony business in five countries of operation while entering the wider world of providing convergence infrastructure  and services.

Oyama Mabandla

Non-executive Chairman

Alan Knott-Craig

Chief Executive Officer

  VODACOM SOUTH AFRICA

	Year ended March 31,			% change
KEY INDICATORS	2006	2007	2008	06/07	07/08
Customers (thousands) 1	19,162	23,004	24,821	20.1	7.9
Contract	2,362	3,013	3,541	27.6	17.5
Prepaid	16,770	19,896	21,177	18.6	6.4
Community services	30	95	103	>200.0	8.4
Gross connections (thousands)	9,140	10,859	12,040	18.8	10.9
Contract	506	666	782	31.6	17.4
Prepaid	8,618	10,124	11,248	17.5	11.1
Community services	16	69	10	>200.0	(85.5)
Inactives (3 months - %)	8.7	10.7	10.3	2.0 pts	(0.4 pts)
Contract	2.4	3.1	4.0	0.7 pts	0.9 pts
Prepaid	9.6	11.8	11.4	2.2 pts	(0.4 pts)
Churn (%) 2	17.7	33.8	42.3	16.1 pts	8.5 pts
Contract	10.0	9.7	8.3	(0.3 pts)	(1.4 pts)
Prepaid	18.8	37.5	47.9	18.7 pts	10.4 pts
Traffic (millions of minutes) 3	17,066	20,383	22,769	19.4	11.7
Outgoing	11,354	13,638	15,323	20.1	12.4
Incoming	5,712	6,745	7,446	18.1	10.4
ARPU (Rand per month) 4	139	125	125	(10.1)	-
Contract	572	517	486	(9.6)	(6.0)
Prepaid	69	63	62	(8.7)	(1.6)
Community services	1,796	902	689	(49.8)	(23.6)
Minutes of use per month 5	74	69	66	(6.8)	(4.3)
Contract	206	188	172	(8.7)	(8.5)
Prepaid	49	47	46	(4.1)	(2.1)
Community services	2,327	1,151	883	(50.5)	(23.3)
Gross capex spend (Rand millions) 6	4,384	4,993	4,251	13.9	(14.9)
Capex as a % of revenue (%)	14.1	13.5	9.9	(0.6 pts)	(3.6 pts)
Cumulative capex (Rand millions) 6	24,095	27,310	30,742	13.3	12.6
Capex per customer (Rand)	1,257	1,187	1,239	(5.6)	4.4
Number of employees	4,148	4,388	4,504	5.8	2.6
Customers per employee	4,619	5,242	5,511	13.5	5.1
Estimated mobile penetration (%) 7	71	84	94	13 pts	10 pts
Estimated mobile market share (%) 7	58	58	55	-	(3.0 pts)

Notes

1. Customer totals are based on the total number of customers registered on Vodacom’s network, which have not been disconnected, including inactive customers, as at the end of the period indicated.

2. Churn is calculated by dividing the average monthly number of disconnections during the period by the average monthly total reported customer base during the period.

3. Traffic comprises total traffic registered on Vodacom’s network, including bundled minutes, outgoing international roaming calls and calls to free services, but excluding national roaming and incoming international roaming calls.

4. ARPU is calculated by dividing the average monthly revenue during the period by the average monthly total reported customer base during the period. ARPU excludes revenue from equipment sales, other sales and services and revenue from national and international users roaming on Vodacom’s networks.

5. Minutes of use per month is calculated by dividing the average monthly minutes during the period by the average monthly total reported customer base during the period. Minutes of use exclude calls to free services, bundled minutes and data minutes.

6. Cumulative capital expenditure (“capex”) includes software.

7. Estimated mobile penetration and market share is calculated based on Vodacom’s total reported customers and the estimated total reported customers of MTN and Cell C.

VODACOM TANZANIA

	Year ended March 31			% change
KEY INDICATORS	2006	2007	2008	06/07	07/08
Customers (thousands) 1	2,091	3,247	4,207	55.3	29.6
Contract	7	14	16	100.0	14.3
Prepaid	2,081	3,223	4,181	54.9	29.7
Community services	3	10	10	>200.0	-
Gross connections (thousands)	1,353	2,092	2,645	54.6	26.4
Churn (%)	28.5	35.6	45.5	7.1 pts	9.9 pts
ARPU (Rand) 2	67	52	49	(22.4)	(5.8)
Gross capex spend (Rand millions)	318	957	713	>200.0	(25.5)
Capex as a % of revenue (%)	24.3	55.3	30.3	31.0 pts	(25.0 pts)
Cumulative capex (Rand millions)	1,503	2,674	3,810	77.9	42.5
Number of employees 3	438	527	618	20.3	17.3
Customers per employee	4,774	6,161	6,807	29.1	10.5
Estimated mobile penetration (%) 4	9	16	20	7 pts	4 pts
Estimated mobile market share (%) 4	58	55	52	(3 pts)	(3 pts)

VODACOM CONGO

	Year ended March 31,			% change
KEY INDICATORS	2006	2007	2008	06/07	07/08
Customers (thousands) 1	1,571	2,632	3,289	67.5	25.0
Contract	14	17	21	21.4	23.5
Prepaid	1,538	2,587	3,209	68.2	24.0
Community services	19	28	59	47.4	110.7
Gross connections (thousands)	892	1,688	2,141	89.2	26.8
Churn (%)	28.1	30.4	48.0	2.3 pts	17.6 pts
ARPU (Rand) 2	86	77	59	(10.5)	(23.4)
Gross capex spend (Rand millions)	273	506	658	85.3	30.0
Capex as a % of revenue (%)	20.5	26.4	28.7	5.9 pts	2.3 pts
Cumulative capex (Rand millions)	2,000	2,852	3,928	42.6	37.7
Number of employees 3	479	627	691	30.9	10.2
Customers per employee	3,279	4,198	4,759	28.0	13.4
Estimated mobile penetration (%) 4	6	9	12	3 pts	3 pts
Estimated mobile market share (%) 4	48	47	41	(1 pt)	(6 pts)

Notes
1.	Customer totals are based on the total number of customers registered on Vodacom's network, which have not been disconnected, including inactive customers, as at the end of the period indicated.
2.	ARPU is calculated by dividing the average monthly revenue during the period by the average monthly total reported customer base during the period. ARPUexcludes revenue from equipment sales, other sales and services and revenue from national and international users roaming on Vodacom's networks.
3.	Headcount includes secondees.
4.	Estimated mobile penetration and market share is calculated based on Vodacom's estimates.

VODACOM LESOTHO

	Year ended March 31			% change
KEY INDICATORS	2006	2007	2008	06/07	07/08
Customers (thousands) 1	206	279	395	35.4	41.6
Contract	3	3	4	-	33.3
Prepaid	200	272	383	36.0	40.8
Community services	3	4	8	33.3	100.0
Gross connections (thousands)	98	119	176	21.4	47.9
Churn (%)	22.3	19.0	17.8	(3.3 pts)	(1.2 pts)
ARPU (Rand) 2	78	75	73	(3.8)	(2.7)
Gross capex spend (Rand millions)	26	25	36	(3.8)	44.0
Capex as a % of revenue (%)	15.2	11.0	11.6	(4.2 pts)	0.6 pts
Cumulative capex (Rand millions)	225	184	220	(18.2)	19.6
Number of employees 3	67	60	70	(10.4)	16.7
Customers per employee	3,071	4,644	5,642	51.2	21.5
Estimated mobile penetration (%) 4	13	17	26	4 pts	9 pts
Estimated mobile market share (%) 4	80	80	80	-	-

VODACOM MOZAMBIQUE

	Year ended March 31			% change
KEY INDICATORS	2006	2007	2008	06/07	07/08
Customers (thousands) 1	490	988	1,282	101.6	29.8
Contract	8	15	21	87.5	40
Prepaid	482	973	1,250	101.9	28.5
Community services	-	-	11	n/a	n/a
Gross connections (thousands)	342	797	951	133.0	19.3
Churn (%)	32.2	41.7	58.7	9.5 pts	17.0 pts
ARPU (Rand) 2	36	28	29	(22.2)	3.6
Gross capex spend (Rand millions)	121	85	111	(29.8)	30.6
Capex as a % of revenue (%)	76.8	31.7	25.7	(45.1 pts)	(6.0 pts)
Cumulative capex (Rand millions)	605	816	1,123	34.9	37.6
Number of employees 3	170	129	157	(24.1)	21.7
Customers per employee	2,885	7,659	8,168	165.5	6.6
Estimated mobile penetration (%) 4	8	14	16	6 pts	2 pts
Estimated mobile market share (%) 4	30	35	40	5 pts	5 pts

Notes
1.	Customer totals are based on the total number of customers registered on Vodacom's network, which have not been disconnected, including inactive customers, as at the end of the period indicated.
2.	ARPU is calculated by dividing the average monthly revenue during the period by the average monthly total reported customer base during the period. ARPUexcludes revenue from equipment sales, other sales and services and revenue from national and international users roaming on Vodacom's networks.
3.	Headcount includes secondees.
4.	Estimated mobile penetration and market share is calculated based on Vodacom's estimates.

	2006	2007	2008
	Rm	Rm	Rm
Revenue	34,042.5	41,146.4	48,177.8
Other operating income	125.1	119.8	155.6
Direct network operating cost	(18,297.2)	(22,439.8)	(26,299.5)
Depreciation	(2,651.6)	(2,901.8)	(3,366.0)
Staff expenses	(2,042.1)	(2,372.5)	(2,975.4)
Marketing and advertising expenses	(976.9)	(1,146.4)	(1,264.3)
Other operating expenses	(1,042.7)	(1,063.6)	(1,362.4)
Amortisation of intangible assets	(344.2)	(459.4)	(545.2)
Impairment of assets	52.8	(22.9)	(29.9)
Profit from operations	8,865.7	10,859.8	12,490.7
Finance income	129.9	74.5	72.3
Finance costs	(246.0)	(369.3)	(681.3)
Gains/(Losses) on remeasurement and disposal of
financial instruments	(523.1)	(169.0)	185.1
Profit before taxation	8,226.5	10,396.0	12,066.8
Taxation	(3,083.7)	(3,836.0)	(4,109.2)
Net profit	5,142.8	6,560.0	7,957.6
Attributable to:
Equity shareholders	5,026.1	6,342.4	7,811.4
Minority interests	116.7	217.6	146.2
	2006	2007	2008
	R	R	R
Basic and diluted earnings per share	502,610	634,240	781,140
Dividend per share	450,000	540,000	594,000

	2006	2007	2008
	Rm	Rm	Rm
ASSETS
Non-current assets	16,079.2	20,844.3	24,468.3
Property, plant and equipment	13,386.6	17,073.2	19,119.6
Intangible assets	1,954.9	2,700.3	4,224.1
Financial assets	92.1	209.5	244.2
Deferred taxation	297.6	386.1	455.1
Deferred cost	311.2	396.4	333.3
Lease assets	36.8	78.8	92.0
Current assets	8,688.6	7,625.9	9,706.9
Deferred cost	451.8	574.8	705.9
Financial assets	149.3	207.5	444.9
Inventory	454.3	364.3	636.9
Trade and other receivables	4,474.0	5,675.0	6,801.1
Lease assets	13.1	32.9	140.5
Cash and cash equivalents	3,146.1	771.4	977.6
Total assets	24,767.8	28,470.2	34,175.2
EQUITY AND LIABILITIES
Ordinary share capital	*	*	*
Retained earnings	8,583.0	9,523.2	11,392.9
Non-distributable reserves	(194.0)	(97.4)	8.8
Equity attributable to equity holders of the parent	8,389.0	9,425.8	11,401.7
Minority interests	283.3	221.2	403.6
Total equity	8,672.3	9,647.0	11,805.3
Non-current liabilities	2,236.6	3,812.1	4,788.2
Interest bearing debt	819.2	2,051.4	3,025.8
Non-interest bearing debt	-	3.0	6.0
Deferred taxation	602.3	757.3	776.5
Deferred revenue	320.3	412.3	358.8
Provisions	372.3	377.5	373.7
Other non-current liabilities	122.5	210.6	247.4
Current liabilities	13,858.9	15,011.1	17,581.7
Trade and other payables	5,104.7	6,874.4	7,561.3
Deferred revenue	1,604.5	1,904.8	2,229.9
Taxation payable	630.2	1,112.7	580.5
Non-interest bearing debt	4.3	-	-
Interest bearing debt	1,645.5	501.0	502.9
Provisions	623.0	741.8	909.5
Dividends payable	2,800.0	2,990.0	3,190.0
Derivative financial liabilities	60.9	7.2	10.8
Bank borrowings	1,385.8	879.2	2,596.8
Total equity and liabilities	24,767.8	28,470.2	34,175.2
* Share capital R100

	Attributable to equity shareholders
	Share capital	Retained earnings	Non-      Distribut- able reserves	Total	Minority interests	Total equity
	Rm	Rm	Rm	Rm	Rm	Rm
Balance at March 31, 2005	*	8,059.1	(299.9)	7,759.2	128.7	7,887.9
Net profit for the period	-	5,026.1	-	5,026.1	116.7	5,142.8
Dividends declared	-	(4,500.0)	-	(4,500.0)	(0.9)	(4,500.9)
Business combinations and
other acquisitions	-	-	-	-	46.5	46.5
Minority shares of VM, S.A.R.L.	-	-	-	-	8.0	8.0
Contingency reserve	-	(2.2)	2.2	-	-	-
Net gains and losses not
recognised in the income statement
Foreign currency translation reserve	-	-	103.9	103.9	(15.6)	88.3
Revaluation of available-for-sale
investments	-	-	(0.2)	(0.2)	(0.1)	(0.3)
Balance at March 31, 2006	*	8,583.0	(194.0)	8,389.0	283.3	8,672.3
Net profit for the period	-	6,342.4	-	6,342.4	217.6	6,560.0
Dividends declared	-	(5,400.0)	-	(5,400.0)	(170.8)	(5,570.8)
Business combinations and
other acquisitions		-	-	-	(136.4)	(136.4)
Contingency reserve	-	(2.2)	2.2	-	-	-
Net gains and losses not
recognised in the income statement
Foreign currency translation reserve	-	-	94.4	94.4	27.5	121.9
Balance at March 31, 2007	*	9,523.2	(97.4)	9,425.8	221.2	9,647.0
Net profit for the period	-	7,811.4	-	7,811.4	146.2	7,957.6
Dividends declared	-	(5,940.0)	-	(5,940.0)	(0.6)	(5,940.6)
Business combinations and
other acquisitions	-	-	-	-	(6.1)	(6.1)
Disposal of subsidiaries	-	-	-	-	(0.3)	(0.3)
Minority shares of VM, S.A.R.L.	-	-	-	-	0.8	0.8
Contingency reserve	-	(1.7)	1.7	-	-	-
Net gains and losses not
recognised in the income statement
Foreign currency translation reserve	-	-	87.7	87.7	42.4	130.1
Revaluation of available-for-sale
investments	-	-	16.8	16.8	-	16.8
Balance at March 31, 2008	*	11,392.9	8.8	11,401.7	403.6	11,805.3
* Share capital R100

	2006	2007	2008
	Rm	Rm	Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers	33,132.7	40,380.0	47,409.6
Cash paid to suppliers and employees	(22,042.4)	(26,513.9)	(31,076.1)
Cash generated from operations	11,090.3	13,866.1	16,333.5
Finance costs paid	(214.3)	(326.6)	(669.6)
Finance income received	124.1	41.7	74.3
Realised net losses on remeasurement and
disposal of financial instruments	(17.6)	(38.8)	(151.0)
Taxation paid	(2,980.3)	(3,303.3)	(4,721.5)
Dividends paid – equity shareholders	(3,500.0)	(5,300.0)	(5,650.0)
Dividends paid – minority shareholders	(0.9)	(80.8)	(90.6)
Net cash flows from operating activities	4,501.3	4,858.3	5,125.1
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment and intangible assets	(4,788.4)	(5,955.3)	(6,540.6)
Proceeds on disposal of property, plant and
equipment and intangible assets	31.2	98.3	10.2
Business combinations and other acquisitions	(0.1)	(591.2)	(956.5)
Disposal of subsidiaries			15.7
Other investing activities	(33.5)	(135.7)	(31.0)
Net cash flows utilised in investing activities	(4,790.8)	(6,583.9)	(7,502.2)
CASH FLOW FROM FINANCING ACTIVITIES
Non-interest bearing debt incurred	-	3.0	-
Non-interest bearing debt repaid	-	-	(3.0)
Interest bearing debt incurred	32.3	6.0	1,000.0
Interest bearing debt repaid	(89.7)	(141.3)	(117.5)
Finance lease capital repaid	(50.2)	(67.7)	(108.9)
Bank borrowings	-	-	2,456.0
Share capital and premium movement of minority
shareholders	-	-	7.2
Net cash flows from/(utilised) in financing activities	(107.6)	(200.0)	3,233.8
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	(397.1)	(1,925.6)	856.7
(Bank borrowings)/cash and cash equivalents at the beginning of the year	2,173.0	1,760.3	(107.8)
Effect of foreign exchange rate changes	(15.6)	57.5	87.9
CASH AND CASH EQUIVALENTS/
(BANK BORROWINGS) AT THE END OF THE YEAR	1,760.3	(107.8)	836.8

This presentation has been prepared and published by Vodacom Group (Proprietary) Limited.

Vodacom Group (Proprietary) Limited is a private company and as such is not required by the Companies Act 61 of 1973, as amended, to publish its results.

Vodacom Group (Proprietary) Limited makes no guarantee, assurance, representation and/or warranty as to the accuracy of the information contained in this presentation and will not be held liable for any reliance placed on the information contained in this presentation.

The information contained in this presentation is subject to change without notice and may be incomplete or condensed. In addition, this presentation may not contain all material information pertaining to Vodacom Group (Proprietary) Limited and its subsidiaries.

Without in any way derogating from the generality of the foregoing, it should be noted that:

• Many of the statements included in this presentation are forward-looking statements that involve risks and/or uncertainties and caution must be exercised in placing any reliance on these statements. Moreover, Vodacom Group (Proprietary) Limited will not necessarily update any of these statements after the date of this presentation either to conform them to actual results or to changes in its expectations.

• Insofar as the shareholders of Vodacom Group (Proprietary) Limited are listed and offer their shares publicly for sale on recognised stock exchanges locally and/or internationally, potential investors in the shares of Vodacom Group (Proprietary) Limited’s shareholders are cautioned not to place undue reliance on this presentation.