TELKOM SA SOC LIMITED - TKG - Unaudited Pro Forma Financial Effects of the Proposed Business Connexion Group Limited Acquisition

TKG - Unaudited Pro Forma Financial Effects of the Proposed Business Connexion Group Limited Acquisition

TELKOM SA SOC LIMITED
(Incorporated in the Republic South Africa)
(Registration number 1991/005476/30)
JSE code: TKG
ISIN: ZAE000044897
("Telkom")

ANNOUNCEMENT OF THE UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE
PROPOSED BUSINESS CONNEXION GROUP LIMITED ACQUISITION

Telkom shareholders are referred to the joint announcement by Business Connexion Group Limited
(“BCX”) and Telkom relating to a firm intention by Telkom to make a cash offer to acquire the entire
issued share capital of BCX (the “Proposed Transaction”) released on the Stock Exchange News
Service of the JSE Limited (“JSE”) on 22 May 2014. The Proposed Transaction constitutes a
Category 2 transaction for Telkom.

The unaudited pro forma financial effects set out below have been prepared for illustrative purposes
only to assist Telkom shareholders to assess the impact of the Proposed Transaction on the earnings
per share (“EPS”), headline earnings per share (“HEPS”), net asset value (“NAV”) per share and net
tangible asset value (“NTAV”) per share of Telkom.

The unaudited pro forma financial effects have been prepared in accordance with the JSE Listings
Requirements (“the Listings Requirements”) and because of their nature may not fairly represent
Telkom’s financial position, changes in equity, results of operations or cash flows, nor the effect and
impact of the Proposed Transaction going forward. The unaudited pro-forma financial effects are the
responsibility of the directors of Telkom.

The impact on Telkom is outlined below:

                                               Before the         After the
                                                Proposed         Proposed
                                              Transaction      Transaction            %
                                                  (cents)          (cents)        change
 EPS                                                 566                588          3.8%
 HEPS                                                650                643         -1.0%
 NAV per share                                      4,207             4,164         -1.0%
 TNAV per share                                     3,685             3,394         -7.9%
         Weighted average number of           510,593,816
         shares in issue
         Diluted weighted average             510,593,816
         number of shares in issue

Notes:

1)   The financial information in the "Before the Proposed Transaction" column has been based
     on Telkom's results for the six month period ended 30 September 2013.
2)   The financial information in the "After the Proposed Transaction" column assumes that the
     Proposed Transaction was effective on 1 April 2013 for statement of comprehensive income
     purposes and 30 September 2013 for statement of financial position purposes, which has
     been based on Telkom's results for the six month period ended 30 September 2013.
3)   The acquisition is funded by debt at a funding rate of 7.5% per annum.
4)   Transaction costs have been assumed to be R30 million.
5)   All adjustments have an on-going effect except for the transaction costs.
6)   In calculating the unaudited pro forma financial effects, Telkom has not considered potential
     fair value adjustments. Such adjustments will be considered upon successful closing of the
     Proposed Transaction in accordance with the Listings Requirements, IFRS and The Guide on
     Pro Forma Financial Information issued by SAICA.

Telkom shareholders will be informed of the key developments relating to the Proposed Transaction
in due course as more information becomes available; including the outcome of the BCX shareholder
meeting to consider the Proposed Transaction and the requisite regulatory approvals.

Pretoria
10 June 2014

Investment bank and corporate advisor to Telkom:
Absa Bank Limited (acting through its Corporate and Investment Banking Division)

Transaction sponsor to Telkom:
Absa Bank Limited (acting through its Corporate and Investment Banking Division)

Date: 10/06/2014 02:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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