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TKG - Telkom SA Limited - Announcement regarding the potential strategic venture with KT Corporation ("KT") and further cautionary announcement Telkom SA Limited (Registration number 1991/005476/06) JSE share code: TKG ISIN: ZAE000044897 ("Telkom" or the "Company") ANNOUNCEMENT REGARDING THE POTENTIAL STRATEGIC VENTURE WITH KT CORPORATION ("KT") AND FURTHER CAUTIONARY ANNOUNCEMENT Shareholders are referred to the cautionary announcements dated 14 October 2011, 21 November 2011, 12 December 2011, 27 January 2012, 9 March 2012 and 25 April 2012 regarding a potential strategic venture ("Potential Strategic Venture") between Telkom and KT (collectively "the Companies"), that would, if implemented, result in: i. KT acquiring a strategic equity shareholding of 20% in the post-issue ordinary share capital of Telkom by way of a specific issue of shares for cash ("Potential Equity Investment"); and ii. the Companies entering into a 5-year co-source management services agreement to formalise the relationship and identified areas of mutual strategic and business cooperation. Following an extensive investigation period into the merits of the Proposed Strategic Venture, Telkom is pleased to advise shareholders that the Companies have reached in principle agreement regarding the terms of the Potential Strategic Venture, including a revised cash issue price for the new Telkom ordinary shares to be issued to KT (described in more detail below). The Proposed Strategic Venture remains subject to the fulfilment of the following pre-conditions before the final terms can be finalised: i. finalisation of the transaction agreements. The transaction agreements comprise a subscription and relationship agreement and a co-source management services agreement; ii. final resolution of the current investigation by the Competition Authorities into the competition complaints against Telkom to the satisfaction of KT; iii. receipt of in principle support for the Proposed Strategic Venture by the Government of South Africa; and iv. receipt of in principle support for the Proposed Strategic Venture by Allan Gray and the Public Investment Corporation. On fulfilment of the pre-conditions set out above the boards of directors of Telkom and KT will consider the final terms of the Proposed Strategic Venture and, following approval by the Companies, sign the transaction agreements. Telkom will subsequently present the Proposed Strategic Venture to Telkom shareholders for approval. Potential Equity Investment Since the first cautionary announcement on 14 October 2011, there have been a number of developments concerning Telkom that have materially impacted the Telkom share price. As a consequence, Telkom and KT have agreed to revisit the terms of the Potential Equity Investment. Shareholders are advised that Telkom and KT have agreed to a revised cash issue price for the new Telkom ordinary shares to be issued to KT under the Potential Equity Investment of ZAR25.60 per new Telkom ordinary share ("Proposed Issue Price"). The Proposed Issue Price represents a 9.9% premium to the closing price of Telkom ordinary shares of ZAR23.30 on the securities exchange operated by JSE Limited on 4 May 2012 and a 7.1% premium to the volume weighted average price of Telkom ordinary shares for the 30 trading days up to and including 4 May 2012. In the event that Telkom declares and/or pays any distribution to Telkom shareholders prior to the implementation of the Proposed Strategic Venture, the aggregate subscription price payable by KT will be reduced by 20% of the total gross distribution declared and/or paid by Telkom. Further cautionary announcement Shareholders are advised that discussions regarding the Potential Strategic Venture are ongoing. Accordingly, shareholders are advised to continue exercising caution when trading in the Company`s securities until a further announcement is made. For enquiries: Telkom Robin Coode (Investor Relations) Tel: +27 (0)12 311 6081 Pynee Chetty (Media) Tel: +27 (0)12 311 5247 Pretoria 08 May 2012 Lead financial advisor and transaction sponsor to Telkom Deutsche Bank Sponsor to Telkom UBS South Africa (Pty) Ltd Date: 08/05/2012 07:05:06 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
