PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT 2016-08-31 PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT Briefing by Ericsson South Africa on its economic transformation policies 31 August 2016 © Ericsson AB 2016

Agenda Introduction to Ericsson Economic Transformation 2016-08-31 Agenda Introduction to Ericsson Economic Transformation Specific Questions posed to Ericsson in letter dated July 25th from Small Business Development Portfolio Committee The total number of outlets and shops serviced by Ericsson; the number of black owned or previously disadvantaged people companies contracted by Ericsson as opposed to white companies to be sub-contracted on the work given by telecommunications companies; The criteria that is used for awarding contracts and sub-contracts to those outlets; Total amount of budget allocated to black companies or companies belonging to previously disadvantaged people; The availability and implementation of Capacity Building Policy in relation to enhancing black empowerment; and The policy on the 30 days payment to SMME’s and Cooperatives. © Ericsson AB 2016

Our Organisation Presence in South Africa since 1896 10 Regions 2016-08-31 Our Organisation 10 Regions Sub-Saharan Africa North America Western & Central Europe Mediterranean Latin America Sub-Saharan Africa Middle East India North East Asia South East Asia & Oceanica Presence in South Africa since 1896 © Ericsson AB 2016

Ericsson South Africa SA Head Office Co-location at client offices 2016-08-31 Ericsson South Africa SA Head Office 148 Kelvin Drive Woodmead Johannesburg Co-location at client offices Cape Town Port Elizabeth Umhlanga Bloemfontein Polokwane Nelspruit Pretoria Midrand © Ericsson AB 2016

Ericsson South Africa Core Business 2016-08-31 Ericsson South Africa Core Business Network roll out Managed services Network modernization Equipment supply Systems integration TV and Media management Operations and business support systems Charging systems Play a role in broadband roll out to support SA Connect and National Development Plan Driving industry transformation in other sectors; Energy Transport Safety and security Media Finance Education Water Create innovation networks © Ericsson AB 2016

SUSTAINABILITY & CORPORATE RESPONSIBILITY 2016-08-31 SUSTAINABILITY & CORPORATE RESPONSIBILITY © Ericsson AB 2016

ICT Empowerment in Africa 2016-08-31 ICT Empowerment in Africa UNIVERSITY OF CAPE TOWN MEng (Telecoms Programme) Designed in partnership with Ericsson Academy South Africa UNIVERSITY OF STOCKHOLM Capacity Development of Policy Makers Ericsson support with market insights COMMUNICATIONS REGULATORY ASSOCIATION OF SOUTHERN AFRICA (CRASA) AND WEST AFRICAN TELECOMMUNICATIONS REGULATORY ASSEMBLY (WATRA) Support with development of national broadband plan framework Supporting the World Radio-Communications Conference (WRC) 19 process SMART AFRICA ALLIANCE Driving Smart Cities Frameworks Driving National Broadband Plans AFRICA TELECOMMUNICATION UNION (ATU) Support with technology insights Inputs to the WRC 19 process Capacity workshops EAST AFRICA COMMUNICATION ORGANIZATION (EACO) Technology and market trends seminar for EAC member states regulators © Ericsson AB 2016

Supplier Selection Criteria 2016-08-31 Supplier Selection Criteria © Ericsson AB 2016

Supplier Criteria - Scorecard 2016-08-31 Supplier Criteria - Scorecard © Ericsson AB 2016

2016-08-31 Supplier summary © Ericsson AB 2016

Ericsson South Africa -BBBEE 2016-08-31 Ericsson South Africa -BBBEE Ericsson South Africa (ESA) Total Procured Spend 2015 Total Procured Spend with Black Owned Companies (>51% BO & >30 % BWO) Nr. of Suppliers – 56/171 R324m 37% Total Procured Spend with Companies with black ownership Nr. of Suppliers – 83/171 R620m 71% Total Procured Spend with Black Owned Companies >50% (# supplier - 38/122) Nr. of Suppliers – 38/171 R187m 21% Total Procured Spend BEE Compliant Companies Nr. of Suppliers – 147/171 R854m 97% Ericsson South Africa (ESA) Total Procured Spend with Black Woman Owned Companies >30% Nr. of Suppliers – 18/171 R137m 16% Total Procured Spend Local Suppliers Nr. of Suppliers – 159/171 R858m 98% Total Procured Spend from EME's Nr. of Suppliers 37/171 R57m 31% Total Procured Spend - 2015 Nr. of Suppliers - 171 R873m Total Procured Spend BEE Non-Compliant Companies Nr. of Suppliers – 12/171 R3m .4% Total Procured Spend from SMME's Nr. of Suppliers – 82/171 R327m 37% Total Procured Spend Foreign Suppliers Nr. of Suppliers – 12/171 R14m 2% Total Procured Spend from QSE's Nr. of Suppliers 45/171 R270m 7% © Ericsson AB 2016

Ericsson South Africa -BBBEE 2016-08-31 Ericsson South Africa -BBBEE Ericsson South Africa (ESA) Total Procured Spend 2016 (YTD) Total Procured Spend with Black Owned Companies (>51% BO & >30 % BWO) Nr. of Suppliers - 70/203 R326m 48% Total Procured Spend with Companies with black ownership Nr. of Suppliers - 92/203 R478m 70% Total Procured Spend with Black Owned Companies >50% (# supplier - 38/122) Nr. of Suppliers – 46/203 R152m 22% Total Procured Spend BEE Compliant Companies Nr. of Suppliers – 147/171 R648m 95% Ericsson South Africa (ESA) Total Procured Spend with Black Woman Owned Companies >30% Nr. of Suppliers - 24/203 R175m 26% Total Procured Spend Local Suppliers Nr. of Suppliers - 182/203 R655m 96% Total Procured Spend from EME's Nr. of Suppliers - 46/203 R57 28% Total Procured Spend - 2016 Nr. of Suppliers - 203 R682m Total Procured Spend BEE Non-Compliant Companies Nr. of Suppliers – 12/203 R4m 1% Total Procured Spend from SMME's Nr. of Suppliers – 95/203 R245m 36% Total Procured Spend Foreign Suppliers Nr. of Suppliers – 20/203 R26m 4% Total Procured Spend from QSE's Nr. of Suppliers – 49/203 R189m 8% © Ericsson AB 2016

2016-08-31 Supplier Spend – Total © Ericsson AB 2016

In 2016: Spend with SMME’s = 36% of total 2016-08-31 Supplier Spend – SMME In 2016: 95/198 (48%) are SMME’s In 2016: Spend with SMME’s = 36% of total © Ericsson AB 2016

Supplier Spend – Black Owned 2016-08-31 Supplier Spend – Black Owned In 2016: 46/198 (23%) are Black owned In 2016: Spend with Black owned = 22% of total © Ericsson AB 2016

Supplier Spend – Black Women 2016-08-31 Supplier Spend – Black Women In 2016: 24/198 (12%) are Black Women owned In 2016: Spend with Black Women owned = 26% of total © Ericsson AB 2016

Supplier Development - Policy 2016-08-31 Supplier Development - Policy Ericsson South Africa Supplier Development Policy Supplier Opportunity Identification Beneficiary Sourcing Beneficiary Selection Beneficiary Communication Beneficiary Contracting Supplier Development Beneficiary Assessment Beneficiary Support Service Providers Beneficiary Monitoring Measurement Reporting Preferential Payment © Ericsson AB 2016

Enterprise and Supplier Development 2016-08-31 Enterprise and Supplier Development Activity Date Transformation unit established June 2016 BEE Consultants on board for added support Collaboration with contract managers to direct ESD investment towards core SMMEs Continuous Technical Support and OHS training provided to 8 ASPs 2014, ongoing Early payments and overheads costs made to 4 Supplier Development SMMEs Investment towards commercialization of an innovative enterprise majority-owned youth Coaching & Mentoring SMMEs on HR, Finance, Marketing skills, etc. by ESA managers October 2016, ongoing Training on ICT tools, processes and Ways of Working Ongoing 5% NPAT budgeted for 2016 Enterprise and Supplier Development © Ericsson AB 2016

Supplier Development Example 2016-08-31 Supplier Development Example Health and Safety Zero Tolerance campaign ASP Management © Ericsson AB 2016

Preferential Payment Payment policy 2016-08-31 Preferential Payment Payment policy For Beneficiaries, preferred payment terms will be offered. Preferred payment terms will align with requirements to maximise scoring on the ESA B-BBEE scorecard. Typically, this will be less than 10-days after receipt of invoice. SMME with < 30 day payment terms © Ericsson AB 2016

BBBEE Transformation BBBEE Transformation Project BEE spend in 2016 2016-08-31 BBBEE Transformation BBBEE Transformation Project Reviewing all elements BBEE Transformation unit BBBEE Consulting & Training BBBEE Systems BEE spend in 2016 Ownership Skills Development Enterprise and Supplier Development Socio-Economic Development Steering Group Project Management Ownership Management Control Skills Development Enterprise & Supplier Development Socio-Economic Development © Ericsson AB 2016

2016-08-31 SLIDE STORY: Summarize, connecting to the start of the presentation, and to end positively looking with confidence and ambition on what lies ahead Through the years, as an industry, telecommunication has had an un-matched impact and spread globally. Naturally take some pride in that. We have transformed immensely as a company and it has taken us to where we are today, on the brink of transforming industries and societies across the world with the power of ICT. Something that we are all right in the middle of, as a generation, as an industry and as a company. Finally, let’s look at what’s next for us at Ericsson, and explore how technologies and transformation can create positive change in society. For example to:  Provide smarter & more accessible healthcare Empower more efficient & sustainable transport Revolutionize creation, delivery and experience of media Enable more personal and interactive education Make cities cleaner, safer and more dynamic Make cars, houses or anything intelligent And of course, much more. (click) END OF PRESENTATION © Ericsson AB 2016