#1Telkom SA SOC Ltd Annual Results Presentation For the year ended 31 March 2022 Telkom Telkom#2Tough trading environment Economic volatility Competitive landscape Social instability • Weak GDP growth . . Rising interest rates ⚫ Rising energy and fuel costs • Ongoing loadshedding • Increased intensity in the mobile sector Pricing adjustments in the postpaid market • Market consolidation • Looting in certain parts of the country Russia/Ukraine War High unemployment rate Telkom Annual Results Presentation FY22 2#3Stabilising regulatory environment Auction outcome ICASA Settlement Telkom Competition Tribunal Withdrawal Existing Auction Effective 3500Mhz 28Mhz 22Mhz 50Mhz • Licensing unassigned spectrum by 30 June 2022 2300Mhz 60Mhz 60Mhz 2100Mhz 30Mhz 30Mhz 1800Mhz 24Mhz 24Mhz 800Mhz 20Mhz 20Mhz • New Information Memorandum to promote competition • New Auction to be concluded within the next financial year • ICASA agreement Study secondary spectrum market Develop of an adequate regulatory framework 700Mhz Total 142Mhz 42Mhz 184Mhz Annual Results Presentation FY22 3#42 Ill Business Overview Telkom Annual Results Presentation FY22 4#5Openserve stabilised as the business evolves to NGN EX, ↑ ↑52.7% ↑38.4% 16.6% 0.4% 0.3% ↑ 18.0% Homes passed with fibre Homes connected with fibre Revenue Fixed broadband traffic growth/ Revenue EBITDA growth/ EBITDA Capex growth/ Capex 840k 389k 1665 petabytes R13.4bn R4.2bn R3.5bn Annual Results Presentation FY22 5 open serve#6Swiftnet continues to commercialise its portfolio if + B के swiftnet ↑ 31.0% ↑>100% ↑ 5.9% 14.4% 8.6%* ↑ 96.8% New towers (Build program) New IBS's (Build program) Productive portfolio sites Revenue growth/ Revenue EBITDA growth/ Capex growth/ EBITDA Capex 152 17 3 916 R1.3bn R909m R366m *The decline was driven by the refinement in the property operating cost allocation methodology during the second half of the financial year, across the different Telkom business areas. On a normalised basis, excluding the impact of the refinement in property operating costs, the EBITDA increased by 2.7% from the prior year to R1 021m, at a 79% EBITDA Margin Annual Results Presentation FY22 6#7Mobile Revenue Growth in line with industry Telkom Consumer ij + ↑13.7% ↑ 6.3% 13.7% 38.8% ↑ 10.5% ↑3.8% Active mobile subscribers Mobile broadband subscribers Mobile base stations Mobile revenue EBITDA growth/ Capex growth/ EBITDA Capex 16.9m 10.7m 7313 R21.4 bn R5.8bn R 2.8bn Annual Results Presentation FY22 7#8BCX performance under pressure, some clawback in H2 ↓1.1% ↑ 23.3% 74.0% Converged Communication revenue IT business customers Data Centre Co-location/ # of racks III ايل BCX ↓2.6% 7.1% ↑ 9.2% Revenue growth/ Revenue Capex EBITDA growth/ growth/ EBITDA Capex R7.3bn 1 345 2 914 R15.3bn R2.3bn R567m racks Annual Results Presentation FY22 8#93 سل Financial overview Telkom Annual Results Presentation FY22 9#10Group financial performance ||| 1.1% EBITDA flat R11.9bn 0.5%* EBITDA margin 0.2ppts* 27.9% Revenue R42.8bn HEPS || |||||||||||| growth 575.3 cps Net debt 2.5%* 0.3x to EBITDA including spectrum 1.2x Excluding spectrum funding 1.1x Negative Free Cash Flow including spectrum R2.1bn Excluding spectrum funding R negative FCF of R938 million *Excludes the impact of VSP, VERP and S189 costs of R270 million and the related tax impact of R76 million in the comparative year Telkom Annual Results Presentation FY22 10#1143.2 42.8 Revenue headwinds Revenue by stream Rbn 1.1% 16.9 17.5 3.3% 6.0 5.6 Group revenue Mobile service revenue Information technology 6.4% 2.2 3.9 2.0 3.0 0.4 0.3 FY21 FY22 Fixed voice and interconnection FY21 FY22 17.9% 4.6 4.0 Traditional fixed data products 12.6% 3.9 4.2 7.3% FY21 FY22 220 New fixed data products Mast & towers Annual Results Presentation FY22 11 Interconnection Subscriptions Usage 0.8% Telkom#12Revenue headwinds offset by strong cost control EBITDA analysis Rm 10 720 EBITDA 11 973 11 908 0.5%* * Excludes the impact of VSP, VERP and S189 costs of R270 million in the comparative year **Total cost includes direct and operating expenses | ||- \|| - 0.2ppts* 0.1ppts* EBITDA margin Total cost to revenue ratio* ** Annual Results Presentation FY22 12 FY20 FY21 FY22 Telkom#13FY21 11 084 Rm Direct expenses Cost of handset, Payments to Sales, incentives equipment and other operators and logistical directories costs *Payments to other Operators (PtoO) and sales commission and incentives 867 485 Focused effort remains to contain mobile direct expenses FY22 11 557 91 4.3% (R473m) FY20 7.3 15.2 ❤ 33.7% 48.2% Mobile cost efficiency ratios Rbn Direct expenses Mobile revenue Costs to serve* / mobile service revenue ratio FY21 7.7 19.6 39.1% 30.0% FY22 8.3 20.8 27.7% Annual Results Presentation FY22 13 40.0% Telkom#14FY20 279.0 BEPS Cents FY21 529.1 BEPS and HEPS movement FY22 536.6 Strong cost control and finance charges drive earnings growth Telkom 1.4% FY20 366.0 HEPS FY21 561.5 FY22 575.3 2.5% H1 FY20 H1 FY21 H1 FY22 Earnings improvement driven by: Lower finance charges mainly due to lower and stable interest rates as well as the settlement of the SARS liability in the prior year. Favourable foreign exchange hedging position. Annual Results Presentation FY22 14#15Continued acceleration of Fibre rollout and monetisation Capex spend and intensity Rm 19.5 Capex spend Capex intensity 75 7 755 18.0 8 448 17.5 7 484 Capex investments allocation % di 11% 2%5% FY20 35% 11% 2% 5% 4% 7% 8% 29% 00 47% 55% FY21 Fibre homes passed and connected 37% FY22 FY21 FY20 Fibre to the home 839 691 549 957 455 553 Homes connected 389 109 281 065 219 583 Active fibre connectivity rate % 46.3 51.1 48.2 *Fibre services include FTTH, Core network and Service on demand 42% FY22 Fibre services* Mobile Information technology Network sustainment Subsidiaries and other Annual Results Presentation FY22 15 Telkom#16Spectrum and capex negatively impact cash flow performance Telkom Free cash flow (FCF) movement Rm Cash generated from operations Repayment of lease liability FY22 FY21 % 9 886 14 383 (31.3) (1076) (856) (25.7) Interest received 235 332 (29.2) Finance charges paid (1 188) (1 291) 8.0 Taxation paid (764) (2 194) 65.2 Cash generated from operations before dividend paid and received 7 093 10 374 Spectrum acquisition (1 142) (31.6) (100.0) Cash paid for capital expenditure (8 031) (8 311) 3.4 Decline in Free Cash Flow driven by: • Lower revenues • Increase in handset sales despite R1 billion in handset financing • Increase in handset purchases Settlement of Q4 FY21 capex in H1. Free cash flow (2 080) 2 063 (200.8) • Spectrum payment Free cash flow excluding spectrum* (938) 2 063 (145.5) * Post settlement of FY2021 capex in current year and R1 billion handset financing Annual Results Presentation FY22 16#17Healthy balance sheet post spectrum funding Rm Cash balances FY22 FY21 % Debt maturity profile 3 239 5 002 (35.2) 3.000 Interest bearing debt 11 932 10 866 Opening balance 10 866 12 005 (9.8) 9.5 Net funding raised/(repaid) 2 500 (193) (1 132) (83.0) Spectrum funding 1 150 (100.0) Other 109 7 (1 457.1) 2 000 Lease liabilities 5 374 4 972 (8.1) Opening balance 4 972 4 775 (4.1) 1 500 IFRS16 lease liability raised 402 197 (104.1) Net debt* 14 067 10 836 (29.6) 1000 Net debt/EBITDA times 1.2 0.9 (0.3) Net debt/EBITDA times excluding 1.1 0.9 (0.2) spectrum funding 500 Average cost of debt (%) 6.5 6.2 (0.3) Fixed 46% FY20 54% 50% FY21 50% 53% FY22 47% Floating * Net debt increase is mainly attributable to the decrease in cash balances and refinancing of R1 150 million relating to spectrum FY22 FY23 FY26 FY27 FY28 Annual Results Presentation FY22 17 FY29 FY30 Call borrowings Bonds Term loans Foreign loans Telkom#18Capital allocation prioritises growth • Operational cashflow Sources of Capital • Debt issuance - adequate debt capacity • Value unlock proceeds • Opportunistic property disposal h Uses of Capital • Prioritise growth to ensure sustainability of the business. Optimal Performance • Hurdle for organic growth: WACC + 2-3% Total Shareholder Returns • Remains a key component 71 Shareholder returns • Dividend policy at the end of FY23 Spectrum took priority in line with capital allocation framework Telkom Annual Results Presentation FY22 18#19Financial framework to drive sustainable growth Inputs Annual Strategic Review • Includes spectrum but excludes corporate action • Base year FY2022 Drivers New revenue streams (Mobile, Fibre, Masts & Tower businesses) Medium tern guidance FY2023 - FY2025 (CAGR) Outputs Mid single digit Revenue growth Sustainable cost management program (roaming and legacy costs) Mid single digit EBITDA growth Sustainable organic growth Capex to fund growth excluding once-off spectrum acquisition Strong balance sheet capacity to fund growth (incl. spectrum) 16-18% Net debt to EBITDA of less or equal to 1.2x Telkom Annual Results Presentation FY22 19#204 Strategic Review E טויו Telkom Annual Results Presentation FY22 20#21Group PIVOT strategy P I V O T Telkom Portfolio diversification Expand and invest in e-commerce, big data, gaming and fintech Integrated solutions Offer end to end converged propositions from connectivity to IT solutions Victory in broadband Become the leading broadband provider in South Africa Evolving Operating Model Operational efficiency Develop operational superiority which provides a competitive advantage People and organisational capabilities Partnership model Sustainable financial framework Technical innovation Modernise and build a state of the art network Annual Results Presentation FY22 21 24#22Strategic imperatives to enhance value Growth Scale • Scale drives economics and underpins competitiveness Capability Critical skills to access adjacent opportunities Scale Capability • Enables market relevance in our core business • Adjacent businesses allow us to access new sources of growth Telkom open serve BCX swiftnet Consumer Gyro Telkom Annual Results Presentation FY22 22#23Partnerships are critical to enable the Telkom Group strategy Partnership objectives Role of partnerships in driving Strategic themes Access to capabilities Expanding & strengthening value proposition Driving digitisation/ modernizing tech stack Growth Enabling advanced capabilities I Scale Efficiencies · . . . • Access to new product & service offerings: - Cloud and cybersecurity services - 5G and loT use cases - New offerings in Content, FinTech, EdTech, MedTech... Partnerships provide insights and access to different technologies and digital platforms Access to new network capabilities e.g., private networks, Hyperscaler powered networks Access to new cloud / IT capabilities Opportunities to augment & drive network & infrastructure efficiencies Procurement efficiencies Market expansion . Go to market capabilities e.g., channels, salesforce, bundling Telkom Annual Results Presentation FY22 23#24Our ESG strategy ESG Vision We deliver the Future of Converged ICT solutions to create E Environ- ment Key Focus Areas Operational Efficiencies Digital Planet sustainable economic, environmental and social value for all Become Carbon Neutral by 2035 • Achieve Net Zero by 2040 . ESG Commitments Enable responsible water consumption and energy usage by deploying utilities monitoring IoT devices for our business and government customers Telkom • Impact 30 000 lives through digital literacy by 2023 Grow our female talent pool for senior management positions and demonstrate intent-to-action • Investing with Purpose Impact 100,000 lives through SMME spend by 2025 • S Social Digital Services Empowered Communities • • Bridge the digital divide through our educational, entertainment and financial services platforms Grow SA's business segment by providing our digital solutions to businesses and government Improve digital inclusion for South Africans by providing internet access over Telkom's wide-spread mobile and fixed wireless broadband network G Governance Business Promote fair and ethical practices towards our customers and within the organisation Stewardship • Enhance contract simplification and billing transparency BALTY MON WORK AND (CONNIC GROWTH 12APING SUSTAINABLE DEVELOPMENT 1 10 Impact со GOALS Influence Annual Results Presentation FY22 24 24#25Demonstrating our ESG commitment Key Focus Areas E Environ- ment Operational Efficiencies Digital Planet What we've been focused on Telkom SBTi E-waste Water Buildings . Set science based targets ~2000 tonnes recycled Consumption down 5% y.o.y. • and pathway to Net Zero Optimised HVAC roll-out underway S Social G Investing with Purpose Digital Services Empowered Communities ICT solutions New products: - eMarketPlace for SMBS insurance policies payment solutions 60% y.o.y. in fixed broadband connections Homes passed up 52.7% Data security Governance Business Stewardship Retained ISO/IEC 27001:2013 certification Skills ~2000 participants in FTTX and FTTH prog. 103 graduates in Advanced Management Leadership prog. Awarded ~200 bursaries in digital and data science fields Health & Safety LTIFR improved by 50% to 0.07 Employees Dedicated learning platform >3000 modules 10% participants in FLDP were promoted Largest y.o.y. improvement in Net Sentiment** Covid-19 Vaccination drive in partnership with DisChem • CSI Futuremakers: supported 2 500 enterprises, creating 27 000* jobs since 2015 Township Innovation: ~50 local businesses Telkom Foundation: psychosocial support for ~650 000 people Hybrid model Telkom grant for employees who are telecommuters *Indirect and direct jobs **Reputational and Operational Net Sentiment relative to other local wireless network providers Annual Results Presentation FY22 25#26BU strategic focus areas Telkom Consumer BCX open serve swiftnet Gyro Telkom Accelerate mobile growth Drive high-speed fibre broadband adoption • Expand the network Drive E-commerce and Fintech Converged Communication • Cloud platform services • Digital platform services • Modernise the network • Commercialise the network • Transform service delivery • Increase tenancy on existing portfolio • Acquire strategic sites and build new towers in line with MNO demand • Expand range of products and services offering • Optimise utilization on existing Data Centre Real Estate Portfolio segmentation and development of viable projects with prospective investment prospective Annual Results Presentation FY22 26#275 Value unlock Telkom Annual Results Presentation FY22 27#28InfraCo, present significant value unlock opportunities A'swiftnet open serve Gyro Tower assets 5 960 Full portfolio of towers ~2.5mill Premises covered by Fibre ready Nodes 10 3 916 Productive Portfolio 839 691 Fibre to the home 3 out of 4 2 675 Growth Towers: 1 or less tenants 46.3% Connectivity Rate Size Mature Towers: 1 241 2 or more tenants World Class Managed NOC 78% Services Operation Centre Undersea landing stations Anchor tenancy Top 3 42% in South Africa (Mobile and Openserve) Data Centres Carrier Neutral Certified Tier 4 data centres in SA ~11 MW IT ~6500m² ~ Occupancy rate Annual Results Presentation FY22 28 Telkom#29Rationale for strategic options Value unlock ((9)) Scale & capabilities Growth prospects ((•)) swiftnet • Affirm valuation of Swiftnet and Group • Potential sale proceeds to reinvest in the business • Enhance EV/EBITDA and/or PE ratio • Be part of a bigger M&T portfolio Opportunity to access markets outside South Africa • Opportunity to tap into operational synergies and more advanced expertise/capabilities • Increase in tenancy and sustainable revenue Spectrum and 5G present new growth opportunities • Increased financial contribution to Group Annual Results Presentation FY22 29#30BCX Strategic Equity Partner (SEP) Attributes of the SEP ⚫ similar aspirations to and alignment to BCX future growth strategy a comprehensive and complementary product portfolio and solutions • a presence in industries in which BCX has ambitions to grow • a significant geographical presence or ambitions to enter new markets where BCX has a solid footing Focused Capabilities System integrator with capabilities mainly in digital solutions • IOT, data analytics and automation . ⚫ Cloud Consulting BCX Annual Results Presentation FY22 30#31Key strategic priorities Strengthen our Core businesses Strategic themes Focus and capitalise on our strength Strategic initiatives Core Businesses to drive growth а • Invest in our infrastructure business to drive 5G • Broadband leadership - fixed and mobile • Accelerate migration from legacy to next generation • Drive converged IT solutions and fixed mobile convergence Robust partnership model to address scale and capabilities to drive value in the businesses Adjacencies to support growth Value unlock strategy to create value for shareholders • E-commerce and Fintech • Partnership for capabilities • Innovation Affirm valuation of the underlying businesses and Telkom Group • Reviewing shareholder rewards Telkom Annual Results Presentation FY22 31#32Q&A Thank you Telkom Annual Results Presentation FY22 32#33Telkom SA SOC Ltd Annexure Detailed BU performance Telkom#34Telkom Consumer 10.5% growth in mobile subscribers 42.4% increase in 4.5G integrated sites EX Annual Results Presentation FY22 34#35000, 2 580 15 326 FY20 9 432 2 563 11 995 FY21 12 746 FY22 FY20 14 269 10.5% 99 99 FY21 77 FY22 188 99 growth Subscriber 2 667 16 936 91 Solid performance against strong prior year ARPU revenue Mobile service Post-paid Post-paid Rm Rm Pre-paid Pre-paid 211 104 212 13.9% 90 06 FY20 8 659 3 934 12 593 17 505 FY21 12 211 4 727 16 938 FY22 12 563 4 942 3.3% Voice Rm Data 5 624 27.9% FY20 2 863 18.6% FY21 FY22 5 832 27.2% Annual Results Presentation FY22 35 0.7 ppt Mobile EBITDA/ margin Margin Mobile EBITDA Consumer Telkom#36Monetisation of broadband traffic Mobile data revenue Rm 12 211 12 563 Total mobile broadband subscribers Post-paid '000 Pre-paid Mobile broadband traffic Peta- bytes 2.9% 3.8% 3.3% Annual Results Presentation FY22 36 Telkom Consumer#37FY20 5 862 FY21 6 430 integrated Mobile sites FY22 7 313 Ongoing network investment 13.7% FY20 3 759 FY21 4 342 sites FY22 6 451 4.5G integrated 42.4% Fibre Ratio Site backhaul FY20 65% FY21 FY22 68% יון 73% Annual Results Presentation FY22 37 Telkom Consumer#38BCX 2.6% decline in Revenue to R15.3 bn 1.9% decline in Operating expenses to R 13.1 bn Exception growth in Cybersecurity, IoT Solutions, Innovation and Technology Annual Results Presentation FY22 38#39Financial performance under pressure Revenue Rm EBITDA & margin Rm Total Expenses Rm 15 271 BCX Sales commission, incentive, logistical costs, payment to other operators Selling general and administration FY20 17 485 οτε τ ||- | | |- 15 742 FY21 FY22 15 329 2.6% FY20 FY21 FY22 4 203 FY20 2 253 13 354 13 105 Employee expenses 818 Service fees, 2 025 673 2 274 operating leases 592 Cost of handsets, equipment and directories 4 159 4 024 1.9% 7 428 5 995 5 723 569 502 492 FY21 FY22 Annual Results Presentation FY22 39#40Revenue Rm Converged comms nearing stabilisation FY20 3 853 3 277 1 257 8 387 FY21 3 180 σετ ε 1 032 7 351 FY22 2 980 3 023 1 271 7 274 1.1% Voice FY20 Data CPE and Data access Sundry revenue 29% 71% FY21 50% FY22 Next-generation revenue 50% %99 34% FY20 generation Legacy Rm Next- 1 208 -18.2% FY21 3 853 Slow down of UC decline 3 180 -17.5% 988 2 980 -6.3% +24.7 1 232 FY22 Annual Results Presentation FY22 40 1.1% CPE Voice BCX#412 963 1 475 9 113 FY21 4056 2 437 1 896 FY20 4 675 8 389 8 055 Hardware and Software Application Solution IT services IT remains under pressure Revenue Rm Annuity revenue ratio Exceptional growth Rm FY22 3 621 2 274 2 160 4.0% FY22 78% Existing [65%: FY21| 63%: FY20] 22% New [35%: FY21| 37%: FY20] 30.7% 20 29 56 73 83 120 162 CPS Cybersecurity DPS Innovation & DPS SS loT Solutions Technology Annual Results Presentation FY22 41 134 133 159 34.5% 19.3% FY20 FY21 FY22 BCX#42open) serve 46.3% FTTH connectivity rate 16.6% growth Fixed line broadband data consumption 00 Annual Results Presentation FY22 42#43FY20 15 134 1 Segment lead approach FY21 13 485 FY22 13 428 0.4% Rm Revenue FY20 4 544 Stable financial performance ❤30.0% 31.0% Rm FY22 4 163 31.0% FY21 4 175 0.3% EBITDA/EBITDA margin 39 443 FY20 40 791 FY21 FY22 H22 41 368 4.9% FY20 120 Circuits Business Enterprise¹ 15 582 FY21 17 888 FY22 Annual Results Presentation FY22 43 19 210 7.4% Circuits Carrier¹ open serve#44Fixed broadband evolution Fixed line broadband data consumption Petabytes 16.6% Fixed line broadband services Below 10Mbps Subscribers open serve Fixed line broadband connections Access Connections 10Mbps and higher Legacy Access Fibre Access Annual Results Presentation FY22 44#45FY20 455 553 FY21 1 Since FY2021 Homes Connected measure as per the FCGA Definition of Terms 549 957 Accelerated investment in fibre Homes passed with fibre FY22 839 691 52.7% FY20 219 583 FY21 281 065 Fibre homes connected¹ FY22 389 109 Annual Results Presentation FY22 45 38.4% open serve#46((•)) Aswiftnet 4.4% Revenue growth (at 70.4% EBITDA margin) 5.9% Increase in productive portfolio ((p)) Annual Results Presentation FY22 46#476 225 Commercialised productive portfolio Tower portfolio (all site types) (# of sites) -508 +243 FY2021 Net decommissioned¹ New Towers² FY2022 5 960 3 699 Productive portfolio growth (# of sites) -26 Notes: 1: Net decommissioned comprising of: -591 sites Decommissioned; +83 additional sites through additional database clean-up/adjustments 2: 243 New Towers includes 74 towers completed in FY21 and 169 towers started and completed in FY22. FY21 previously not included as they were awaiting power. Notes: 3: Net decommissioned comprising of: -53 sites Decommissioned; +27 additional sites through additional database clean-up/adjustments FY2021 Net Decommisioned³ 243 +243 Towers decommissioned in productive portfolio were supporting legacy Openserve legacy equipment (and are not capable of supporting MNOS) New Towers FY2022 Annual Results Presentation FY22 47 3 916 ((•)) swiftnet#48Strong earnings performance Revenue Rm EBITDA* & margin* EBIT*^ Rm Rm PAT*^ Rm ((•)) swiftnet |- |- |- ||- 4.4% 8.6% 070 11.0% 11.9% *The decline in FY22 was driven by the refinement in the property operating cost allocation methodology during the second half of the financial year, across the different Telkom business areas. On a normalised basis, excluding the impact of the refinement in property operating costs, the EBITDA increased by 2.7% from the prior year to R1 021m, at a 79% EBITDA Margin. ^ EBIT = Earnings Before Interest; PAT = Profit After Tax Annual Results Presentation FY22 48#49Rm 1 119 ill- FY20 FY21 1 140 FY22 1.8% Rm Highly cash generative and lowly geared balance sheet Cash generated from operations Capex FCF FY20 135 FY21 FY22 186 366 96.8% FY20 422 FY21 687 FY22 516 24.9% FY20 0 FY21 0 Rm FY22 Annual Results Presentation FY22 49 239 100% Rm J Net debt ((•)) swiftnet