1 IPO PRESENTATION PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES 14 SEPTEMBER 2005

2 Telkom IPO key statistics R 4.3. Billion raised for the NRF ordinary shares offered Issue date 4 March 2005 Good aftermarket share performance (listed at R 28 – now trading at R 125) 220 educational roadshows ( ) individuals and 283 stokvesl registered individuals and 445 stokvels applied Successful ESOP and Retail offer

3 BACKGROUND Restructuring of the SA economy Restructuring of economic sectors Restructuring of SOEs SEPs, outright sales, IPO, concessions Telkom IPO

4 Planning Pre planning Identifications of roles Regulatory issues Timing ( approximately 1 year) Listing considerations

5 Government sale of share to SEP and BEE prior to the IPO Amendments to the Telecommunication Act Regulatory issues Market conditions Government objectives Telkom IPO

6 REPORTING LINES IMC CABINET CABINET COMMITTEE STEERING COMMITTEE MANCO IPO PROJECT TEAM WORKING GROUPS

7 LISTING CONSIDERATIONS AdvantagesDisadvantages Additional source of optional for the IPO Raises the international profile of the SOE Raises the profile of South African capital markets Assists in future fund raising Additional cost, especially to comply with international accounting and disclosure standards Requires appointment of international advisers, in particular lawyers and investment bankers International advisers are more expensive and are likely to require payment in foreign currency More extensive international roadshow required

8 APPOINTMENT OF SERVICE PROVIDERS Global coordinators Syndicates Legal specialists Communication specialists Advertising agencies Event coordinators

9 PROJECT TEAM National Treasury Policy department Department of trade and industry Government Communications and Information System The industry regulator (the regulator) JSE and NYSE Organised labour

10 LESSONS LEARNT Planning phase  Clear government IPO objectives  Defined and complete regulatory regime and industry structure  More flexible time-table  Clear communication strategy

11 BEE PARTICIPANTS IN THE IPO TRANSACTIONS Reasonable work allocation and remuneration Meaningful representation and participation in IPO structures Participation in discussions of key issues Maximising skills transfer opportunities

12 What next? IPOs are one of the options in the Govertment strategy, but only in the next 3 years Priority is on improving the balance sheet of key SOEs and obtain certainty in sectoral policies and regulatory environement Explore partneships with private sector Accelereate the disposal of non-core assets and promote Broad-based BEE