Telkom buys Africa Online

Johannesburg, 26 Feb 2007

Telkom South Africa, Africa's largest integrated communications company, will expand its footprint into nine African states following its acquisition of Africa Online.

A provider of Internet services on the African continent and a subsidiary of the African Lakes Corporation Limited, Africa Online's geographic coverage extends to: Kenya, Tanzania, Uganda, Ghana, Cote d'Ivoire, Namibia, Swaziland and Zimbabwe. Additionally, Africa Online has a 40% equity stake in a joint venture with Verizon, which has a presence in Kenya and Zambia.

"This acquisition is aligned to Telkom's goal of expanding outside South Africa, specifically sub-Saharan Africa, where there is growth potential, healthy returns and value creation for our shareholders," said Telkom CEO, Papi Molotsane.

Added Molotsane: "To ensure sustainable future growth, Telkom continues to explore investment opportunities on the African continent. This is based on our vision of becoming the preferred telecommunications services provider and partner in Africa, providing the full spectrum of ICT solutions on the continent including voice, data, video and Internet services."

In addition, Molotsane explained that by widening Telkom's reach to East, West and Southern Africa, the company endeavours to gain a strong presence in key African regional nodes.

"Telkom will also gain an existing ISP infrastructure as well as the opportunity to expand our offerings to a larger customer base on the continent and diversify our revenues."

Molotsane stated that Telkom looked forward to collaboration with local partners in the nine African countries that the company would now gain a footprint in.

"Collaboration is key to ensuring that we acquire a deep understanding of local market trends and conditions and to customise products and services that satisfy local needs," explained Molotsane.

He emphasised that with the Africa Online acquisition, Telkom's objective is to add significant service offerings to customers across all segments in the nine African states. These include value-added network suppliers (VANS), Internet caf'es and Internet service providers. Internet services in the public, parastatal, private and residential sectors will also be enhanced.

The Africa Online acquisition cost Telkom a total of £10.32 million but, stated Molotsane, this investment "forms part of Telkom's drive towards investing in and enhancing our longer-term future, while creating more value for our customers and shareholders alike".

At a broader level, added Molotsane, Telkom's skills base, infrastructure and long-standing ties with African operators will enable the company to contribute to the development and upgrade of Africa's telecommunications capacity.

Kindly attribute comment to: Papi Molotsane, Telkom's CEO.

Telkom

Telkom SA Limited is Africa's largest integrated communications company. Telkom provides public switched communication services in South Africa and offers fixed-line voice and data services. Telkom participates in the South African mobile communications market through its 50% shareholding in Vodacom, the largest mobile communications network operator in South Africa based on total estimated customers. Telkom's infrastructure is composed of terrestrial, undersea and satellite communications and pathways, broadband circuits and connections that enable voice, data and video communication services.

Telkom has approximately 4.7 million telephone access lines in service as of March 2006. Telkom had consolidated operating revenue of R47.6 billion for the year ended 31 March 2006. Telkom's subsidiaries include Telkom Directory Services (Pty) Ltd which provides complete yellow and white pages directory services as well as electronic services, and Swiftnet (Pty) Ltd. Swifnet trades under the name of FastNet Wireless Service and provides synchronous wireless access on Telkom's X25 network, Saponet-P, to its customers.

Telkom strongly believes in corporate social investment and has a dedicated wing, the Telkom Foundation, which focuses in investing and developing previously disadvantaged South African communities. The foundation spend R50.2 million in the year ended 31 March 2006 on projects relating to ICT planning and infrastructure roll-out; education and training; and empowerment of women, children and people with disabilities.

Telkom has always viewed South Africa's effective transformation as imperative for its sustainable long-term growth. Empowerment and the transformation of the economy are central to Telkom's BEE strategy. During the year ended 31 March 2006, 67% of Telkom's procurement spend was on BEE companies. In addition, Telkom trained 18 black SMMEs and a total of 1 181 suppliers at an estimated cost of R7.1 million.

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