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'). 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.