Competition Commission recommendation

Issued by Telkom Business
Pretoria, 18 Aug 2015

The Competition Commission today informed Telkom and MTN South Africa that it has not recommended the approval of the proposed transaction between the two companies to the Competition Tribunal.

Telkom and MTN South Africa signed a heads of agreement in 2014 to extend their existing roaming agreement to include bilateral roaming and outsourcing of the operation of Telkom's radio access network.

"While the Commission's decision is disappointing, Telkom and MTN have agreed not to proceed with the transaction, as we wish to avoid a protracted Tribunal hearing," Telkom Group CEO, Sipho Maseko said.

"Over the past 18 months, our focused efforts to de-risk our mobile business have delivered a mobile division that is viable and sustainable. The mobile business will break even in this financial year and we are most encouraged by the stability that has been brought into our mobile environment. As previously communicated we will continue to explore all avenues to further strengthen our mobile business," Maseko said.

Telkom

Telkom is a leading communications services provider in South Africa. It had consolidated operating revenue from continuing operations of R31.7 billion and profit after tax from continuing operations of R2,889 million for the year ended 31 March 2015. Total assets amounted to R42 billion and equity attributable to the owners of Telkom to R25.7 billion as of 31 March 2015. The group generated free cash flow of R3.9 billion for the year ended 31 March 2015.

As of 31 March 2015, it had approximately 3.4 million telephone access lines in service and 964 196 ports connected via MSAN access. It offers business, residential and payphone customers a wide range of services and products, including:

* fixed-line retail voice services using PSTN (Public Switched Telephone Network) lines, including ISDN (Integrated Services Digital Network) lines, and the sale of subscription-based value-added voice services and calling plans;
* fixed-line customer premises equipment rental and sales services both voice and data needs and these include PABX, computers, routers, modems, telephone handsets and other ancillary equipment;
* 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 (Asymmetrical Digital Subscriber Line) services, packet-based services, managed data networking services and internet access and related information technology services;
* Data Centre Operations include e-commerce, application service provider, hosting, data storage, e-mail and security services;
* W-CDMA (Wideband Code Division Multiple Access), a 3G next generation network, including fixed voice services, data services and nomadic voice services;
* mobile communication services, including voice services, data services and handset sales through its mobile brand called Telkom Mobile; and
* other services including directory services, through Trudon, wireless data services, through Swiftnet.

Convergence is one of its key strategic initiatives in building a sustainable future for Telkom. It will lead the provision of converged services in South Africa in support of its mission statement: Seamlessly connecting people to a better life.

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