TELKOM SA SOC LIMITED - Trading Statement for the six months ended 30 September 2022

Trading Statement for the six months ended 30 September 2022

Telkom SA SOC Limited
Registration number 1991/005476/30
(Incorporated in the Republic of South Africa)
JSE share code: TKG
JSE bond code: BITEL
ISIN: ZAE000044897
("Telkom" or “the Group”)

Trading Statement for the six months ended 30 September 2022

Shareholders are advised that Telkom is currently finalising its interim results for the six
months ended 30 September 2022 (“H1 2023” or “the half year” or “the period”), which will be
released on the Stock Exchange News Service (“SENS”) of the JSE Limited (“JSE”) on or
about 23 November 2022.

In accordance with paragraph 3.4(b) of the Listings Requirements of the JSE, shareholders
are advised that reported headline earnings per share (HEPS) and reported basic earnings
per share (BEPS) are expected to decrease by between 45% and 55% compared to the prior
interim period ended 30 September 2021 (“the prior period”).

This was mainly due to Telkom’s mobile postpaid vs prepaid mix changing which had the
impact of deferring revenue over 24 – 36 months, as well as the cost base increasing. The
resultant reduction in earnings is a combination of the following:

   •   The impact of revenue deferral resulting from the continued growth of our post-paid
       mobile sales reduced revenue recognised by R299 million;
   •   A shift in mobile product mix coupled with the upfront spend on handsets recorded
       immediately (while associated revenue is recognised over 24 – 36 months) increased
       the cost of handsets, equipment, software and directories by more than 30% from
       R2 453 million in the prior period;
   •   Maintenance costs and service costs also increased materially reflecting an increased
       mobile network for the period. Maintenance costs increased by more than 10% from
       R1 924 million, while service fees increased by more than 20% from R1 611 million,
       also impacted by higher backup energy costs due to accelerated loadshedding during
       the period;
   •   These costs were partially offset by savings in other areas as payments to other
       operators, employee costs, marketing, and other expenses were well managed;
   •   Net finance charges and fair value movements also partially offset the impact of
       increased costs and declined by more than 15% from R659 million due to a favourable
       foreign exchange hedging position during the period; and
   •   Reduced taxation for the period also contributed in offsetting the impact of higher costs.

Notwithstanding the weaker performance in earnings and challenging trading environment,
Telkom expects to sustain its topline revenue compared to the prior period.
 
                 30 September                           30 September 2022
                      2021
                Reported Earnings      Expected              Movement             Expected Earnings
                     (cents)            ranges                (cents)                  (cents)
 BEPS
  Reported            276.8c         45%-55% lower     152.2 to 124.6 cps lower   124.6 to 152.2 cps
 HEPS
  Reported            285.5c         45%-55% lower     157.0 to 128.5 cps lower   128.5 to 157.0 cps

The difference between BEPS and HEPS recorded in H1 2023 is due to the net impact of
impairment of assets and profit/loss on sale of assets.

The above information has not been reviewed or reported on by Telkom’s independent
external auditors.

The Group's interim results for the six months ended 30 September 2022 will be released on
SENS on 23 November 2022 with a presentation in Sandton on the same day. The
presentation will be available for all stakeholders on the Group's website. A live presentation
will be webcast (a link will be available on Group’s website) and a live broadcast on BDTV
(Channel 412 on DSTV) at 10 am.

Centurion
14 November 2022

Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited

Date: 14-11-2022 07:10:00
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