Slide 1 PORTFOLIO COMMITTTEE: Briefing by Broadband Infraco on Progress made on issues emanating from the Annual Report 2011/2012

R 1.8 Billion Shareholder Funds WACS connectivity R504.2 M R36.7 M Integrating SADC R317.2 M Broadband expansion Operations Enabling Government through SITA R89.9 M R444.5 M 151 PoP KM

Slide 3. Expanding Access Project NameProject DescriptionTowns/Distr ict Completion Date Western Cape YzerfonteinConnectivity of the West African Cable System (WACS) to Broadband Infraco national backhaul network YzerfonteinMar 2013 Northern Cape SALT/KATDelivering on Project of National interestSutherland Laingsburg Aug 2012 SITA UpingtonCreating a diverse fibre route into the Upington area UpingtonReviewing the Design Limpopo Zimbabwe Connectivity Fulfilling licence obligation for regional integration. Development of an access point at the Beitbridge border BeitbridgeMar 2013 KZN MtunziniConnectivity of the Broadband Infraco national backhaul network to the East Africa cable system MtunziniSep 2013

Slide 4. Project NameProject DescriptionTowns/Distr ict Completion Date WC – KZN - GP New Infrastructure Project Open Access PoP to enable connectivity of other operators to connect to Broadband Infraco fibre network. Bellville JHB PTA Newland East Apr 2013 National Network 10G overlay Installation of additional Network CapacityTshwane Buffalo City Nelson Mandela Metro JHB Aug 2012 WC – KZN - GP IP CoreEvolution of the network to Internet Protocol technology enabling low capacities to be packaged City of Cape Town Isando uMhlanga Aug 2012 Expanding Access

Slide 5 Appointment of Key Personnel. Update on Key Performance Indicators 2011/2012 Completed All Executives positions filled KPI STATUS COMMENT Development of Product Portfolio Debt Fund Business Operations Strategy Project put into commercial use Carrier Ethernet Layer 2 developed No debt funding sourced Re-engineered and optimised Capital Project Management processes This forms part of 2013/2014 programme Completed Work in Progress Continuous monitoring Work in Progress Continuous monitoring Project Time Variance Instituted Capital Projects governance structures

Slide 6 FINANCIAL SUSTAINABILITY  Funding is required to address the fundamental issues of the Broadband Infraco these include:  Expand the network to the broader market other than Neotel.  Enhance the integrity of the network.  Expand the network in rural area and other areas to address market inefficiencies.  MTEF application of R4.0b was made for increase access in all nine provinces over 5 years was made and for improving the integrity of the national backhaul.  Over R530m is expected from DST on project of national interest including SKA  A capital investment plan and funding plan have been developed. CUSTOMERS  Critical to sustainability of the business  Network performance improvement  Increase capacity utilisation  Continuous engagement with customers:  Neotel MSA contract  Extension of Vodacom contract  MTC capacity expansion  MTN Trial  International Sales strategy developed Priorities

Slide 7 MARKET POSITION  Expand footprint in district by connecting municipalities and extending to rural areas  Two Proof of Concepts (PoC) completed with MetroFibre Network and BXC for Carrier Ethernet services  WACS is connected to National Backhaul  Provision of International telecommunication services. CAPITAL EXPEDITURE  Optimised Network Master Plan addressing the integrity of the Network  Connecting with other operators  Addressing Network vulnerabilities  Capacity upgrade  Capital Build programme over 10 years  Programme for compliance with SHEQ regulations in place  Technology evolution and technology life cycle on existing old network equipment  Yzerfontein primary route to the WACS has been completed. Priorities

Slide 8 SUPPLY CHAIN MAGEMENT  Supplier Development and Localisation : based on CSDP guideline issued by Executive Authority Suppliers are evaluated on the following:  BBBEE  Black People Living with Disabilities (BPLD)  Black Youth Owned (BYO)  Black Women Owned and Black Owned  Skills Development  Electricians  Engineers  Project Management  Local content  Items such as fibre and related accessories  Target 100%. INTERNAL CONTROL ENVIRONMENT  This is a continuous process of ensuring adherence to policies, procedures and legislations.  Culture of compliance is being enhanced.  Where there are policy gaps, these are being addressed and new or revised policies are being developed. Priorities

Slide 9 SHAREHOLDERS  Performance management  As provider of capital, report on financial performance and overall sustainability of the company  Support on future plans and expansions  Regular sessions with both shareholders DPE and IDC at different levels.  Support from the Shareholder i.e. DPE on funding request and aligning the business to make government a key customer of Broadband Infraco. REGULATORS  Licence condition and compliance thereof  Continuous engagement on regulatory framework  Spectrum and access potentials  Submitted inputs to the amendments to the ECA  Submitted status on the roll out for obligations  Continuous engagement with the Regulator Priorities

Improvements on the HR Slide 10 HR POLICIES Performance Management Policy Human Resource Development Policy Talent Acquisition Policy Rewards & Remuneration Policy STAFF TURNOVER RATE 2012 Change Management Programme Other interventions  Fostering organisational culture change  Improve employee competencies  Improve overall organisation performance Continuous Staff Engagement  Senior management forum has been established for constructive and robust discussions with staff.  Significant improvement on staff morale and confidence

Security around PoP Slide 11 Eskom Servitude Wire Mesh 54 (Part of SNO) Palisade 15 Transnet Servitude Wire Mesh 0 Palisade 45  Concerns Wire Mesh is an old security technology and prone to cutting and break-ins.  Status A programme is being developed to address security of the PoP’s.

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