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| Title of Each Class                                                                                                                                                                                                                                                                                |   | Name of Each Exchange on Which Registered |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|
| American Depositary Shares*                                                                                                                                                                                                                                                                        |   | New York Stock Exchange                   |
| Equity Shares, par value Rs. 10 per share**                                                                                                                                                                                                                                                        |   |                                      |
|                                                                                                                                                                                                                                                                                               |   |                                      |
| *American Depositary Shares evidenced by American Depositary Receipts.  Each American Depositary Share represents two Shares. **Not for trading, but only in connection with the listing of American Depositary Shares pursuant to the requirements of the New York Stock Exchange. |

----

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| US GAAP  ý | International Financial Reporting Standards as issued by the International Accounting Standards Board   ̈ | Other   ̈ |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------|-------------------------|

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| INDEX                                          | PAGE   |
|------------------------------------------------|--------|
|                                           |   |
| Directors’ responsibilities and approval | 1      |
|                                           |   |
| Independent auditors’ report             | 2      |
|                                           |   |
| Group statement of comprehensive income        | 3      |
|                                           |   |
| Group statement of financial position          | 4 - 5  |
|                                           |   |
| Group statement of changes in equity           | 6      |
|                                           |   |
| Group statement of cash flow                   | 7      |
|                                           |   |
| Notes to the Group annual financial statements | 8 - 55 |

----

| /s/ Memani XK   |
|-----------------|
|  DIRECTOR  |
|            |
|            |
|            |
| /s/ Ajay Pandey |
| DIRECTOR        |
|            |

----

----

|                                  |   | Notes  |   |   |   | 2010R’000 |       |   |   | 2009R’000 |       |   |   | 2008R’000 |     |
|---------------------------------------|--------|--------|--------|--------|--------|-----------------|------------|--------|--------|-----------------|------------|--------|--------|-----------------|----------|
| Revenue                               |   |   | 4      |   |   |            | 1 831 065  |   |   |            | 1 125 215  |   |   |            | 218 524  |   |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
| Interest received                     |   |   | 5      |   |   |            | 27 358     |   |   |            | 35 850     |   |   |            | 11 081   |   |
| Other income                          |   |   |   |   |   |            | 12 747     |   |   |            | 18 793     |   |   |            | 96       |   |
| Negative goodwill recognised          |   |   |   |   |   |            | –    |   |   |            | 144 996    |   |   |            | –  |   |
| Payments to other operators           |   |   |   |   |   |            | (908 803   | )      |   |            | (554 277   | )      |   |            | (136 974 | ) |
| Cost of phone devices                 |   |   |   |   |   |            | (37 491    | )      |   |            | (21 192    | )      |   |            | –  |   |
| Employee expenses                     |   |   |   |   |   |            | (545 920   | )      |   |            | (422 140   | )      |   |            | (145 395 | ) |
| Other expenses                        |   |   |   |   |   |            | (841 475   | )      |   |            | (544 347   | )      |   |            | (131 968 | ) |
| Consulting expenses                   |   |   |   |   |   |            | (51 068    | )      |   |            | (101 399   | )      |   |            | (60 258  | ) |
| Depreciation                          |   |   |   |   |   |            | (318 748   | )      |   |            | (271 516   | )      |   |            | (75 590  | ) |
| Amortisation                          |   |   |   |   |   |            | (72 370    | )      |   |            | (72 891    | )      |   |            | (19 676  | ) |
| Fair value of interest rate swap      |   |   |   |   |   |            | (127 848   | )      |   |            | –    |   |   |            | –  |   |
| Finance charges                       |   |   | 6      |   |   |            | (550 166   | )      |   |            | (369 583   | )      |   |            | (92 152  | ) |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
| Loss before taxation                  |   |   | 7      |   |   |            | (1 582 719 | )      |   |            | (1 032 491 | )      |   |            | (432 312 | ) |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
| Taxation                              |   |   | 8      |   |   |            | 432 714    |   |   |            | 293 026    |   |   |            | 111 542  |   |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
| Loss for the year                     |   |   |   |   |   |            | (1 150 005 | )      |   |            | (739 465   | )      |   |            | (320 770 | ) |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
| Other comprehensive income            |   |   |   |   |   |            | –    |   |   |            | –    |   |   |            | –  |   |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |
| Total comprehensive loss for the year |   |   |   |   |   |            | (1 150 005 | )      |   |            | (739 465   | )      |   |            | (320 770 | ) |
|                                  |   |   |   |   |   |            |       |   |   |            |       |   |   |            |     |   |

----

|                          |   | Notes  |   |   |   | 2010 R’000 |      |   |   | 2009 R’000 |      |
|-------------------------------|--------|--------|--------|--------|--------|------------------|-----------|--------|--------|------------------|-----------|
| Assets                        |   |   |   |   |   |             |      |   |   |             |      |
|                          |   |   |   |   |   |             |      |   |   |             |      |
| Non current assets            |   |   |   |   |   |             |      |   |   |             |      |
| Property, plant and equipment |   |   | 9      |   |   |             | 2 683 926 |   |   |             | 1 956 999 |   |
| Intangible assets             |   |   | 10     |   |   |             | 152 259   |   |   |             | 222 379   |   |
| Deferred taxation asset       |   |   | 11     |   |   |             | 803 211   |   |   |             | 388 855   |   |
| Other investments             |   |   | 12     |   |   |             | 30 363    |   |   |             | –   |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
| Total non current assets      |   |   |   |   |   |             | 3 669 759 |   |   |             | 2 568 233 |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
| Current assets                |   |   |   |   |   |             |      |   |   |             |      |   |
| Inventories                   |   |   | 13     |   |   |             | 116 173   |   |   |             | 66 979    |   |
| Trade and other receivables   |   |   | 14     |   |   |             | 904 235   |   |   |             | 500 575   |   |
| Assets held for sale          |   |   | 9      |   |   |             | 15 724    |   |   |             | –   |   |
| Other financial assets        |   |   |   |   |   |             | –   |   |   |             | 2 133     |   |
| Other investments             |   |   | 12     |   |   |             | 30 095    |   |   |             | –   |   |
| Cash and cash equivalents     |   |   | 15     |   |   |             | 64 744    |   |   |             | 433 616   |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
| Total current assets          |   |   |   |   |   |             | 1 130 971 |   |   |             | 1 003 303 |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |
| Total assets                  |   |   |   |   |   |             | 4 800 730 |   |   |             | 3 571 536 |   |
|                          |   |   |   |   |   |             |      |   |   |             |      |   |

----

|                              |   | Notes  |   |   |   | 2010R’000 |       |   |   | 2009R’000 |       |
|-----------------------------------|--------|--------|--------|--------|--------|-----------------|------------|--------|--------|-----------------|------------|
| Equity and liabilities            |   |   |   |   |   |            |       |   |   |            |       |
|                              |   |   |   |   |   |            |       |   |   |            |       |
| Capital and reserves              |   |   |   |   |   |            |       |   |   |            |       |
| Share capital                     |   |   | 16     |   |   |            | 5 751      |   |   |            | 3 501      |   |
| Share premium                     |   |   | 17     |   |   |            | 569 250    |   |   |            | 346 500    |   |
| Other reserves                    |   |   |   |   |   |            | 3 008      |   |   |            | 3 008      |   |
| Accumulated deficit               |   |   |   |   |   |            | (2 285 102 | )      |   |            | (1 135 097 | ) |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
| Shareholders’ deficit       |   |   |   |   |   |            | (1 707 093 | )      |   |            | (782 088   | ) |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
| Non-current liabilities           |   |   |   |   |   |            |       |   |   |            |       |   |
| Loan from shareholders            |   |   | 18     |   |   |            | 2 036 238  |   |   |            | 1 200 031  |   |
| Deferred tax liability            |   |   | 11     |   |   |            | –    |   |   |            | 18 358     |   |
| Licence fee payable               |   |   | 19     |   |   |            | –    |   |   |            | 121 328    |   |
| Loans from financial institutions |   |   | 20     |   |   |            | 3 245 675  |   |   |            | 2 064 865  |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
| Total non current liabilities     |   |   |   |   |   |            | 5 281 913  |   |   |            | 3 404 582  |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
| Current liabilities               |   |   |   |   |   |            |       |   |   |            |       |   |
| Loan from related parties         |   |   | 21     |   |   |            | 47 365     |   |   |            | 172 878    |   |
| Trade and other payables          |   |   | 22     |   |   |            | 809 976    |   |   |            | 704 217    |   |
| Licence fee payable               |   |   | 19     |   |   |            | 78 330     |   |   |            | 17 311     |   |
| Provisions                        |   |   | 23     |   |   |            | 64 467     |   |   |            | 54 636     |   |
| Unearned revenue                  |   |   |   |   |   |            | 95 061     |   |   |            | –    |   |
| Other financial liabilities       |   |   |   |   |   |            | 130 711    |   |   |            | –    |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
| Total current liabilities         |   |   |   |   |   |            | 1 225 910  |   |   |            | 949 042    |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
| Total liabilities                 |   |   |   |   |   |            | 6 507 823  |   |   |            | 4 353 624  |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |
| Total equity and liabilities      |   |   |   |   |   |            | 4 800 730  |   |   |            | 3 571 536  |   |
|                              |   |   |   |   |   |            |       |   |   |            |       |   |

----

|                                 |   | OrdinarysharecapitalR’000 |    |   | PreferencesharecapitalR’000 |   |    | PreferencesharepremiumR’000 |   |   | OtherreservesR’000 |   |   | Accu-mulateddeficitR’000 |    |   | TotalR’000 |   |
|--------------------------------------|--------|---------------------------------|---------|--------|-----------------------------------|--------|---------|-----------------------------------|--------|--------|--------------------------|--------|--------|--------------------------------|---------|--------|------------------|--------|
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
| Balance at 1 April 2007              |   |                            | 1       |   |                              |   | 375     |                              |   |   | 37 125                   |   |   |                           | 3 008   |   |             |   | (74 862 | ) |   |   | (34 353 | ) |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
| Issue of shares                      |   |                            | – |   |                              |   | 750     |                              |   |   | 74 250                   |   |   |                           | – |   |             |   | – |   |   |   | 75 000 |   |
| Total comprehensiveloss for the year |   |                            | – |   |                              |   | – |                              |   |   | –                  |   |   |                           | – |   |             |   | (320 770 | ) |   |   | (320 770 | ) |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
| Balance at 31 March 2008             |   |                            | 1       |   |                              |   | 1 125   |                              |   |   | 111 375                  |   |   |                           | 3 008   |   |             |   | (395 632 | ) |   |   | (280 123 | ) |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
| Issue of shares                      |   |                            | – |   |                              |   | 2 375   |                              |   |   | 235 125                  |   |   |                           | – |   |             |   | – |   |   |   | 237 500 |   |
| Total comprehensive lossfor the year |   |                            | – |   |                              |   | – |                              |   |   | –                  |   |   |                           | – |   |             |   | (739 465 | ) |   |   | (739 465 | ) |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
| Balance at 31 March 2009             |   |                            | 1       |   |                              |   | 3 500   |                              |   |   | 346 500                  |   |   |                           | 3 008   |   |             |   | (1 135 097 | ) |   |   | (782 088 | ) |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
| Issue of shares                      |   |                            | – |   |                              |   | 2 250   |                              |   |   | 222 750                  |   |   |                           | – |   |             |   | – |   |   |   | 225 000 |   |
| Total comprehensive lossfor the year |   |                            | – |   |                              |   | – |                              |   |   | –                  |   |   |                           | – |   |             |   | (1 150 005 | ) |   |   | (1 150 005 | ) |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |
| Balance at 31 March 2010             |   |                            | 1       |   |                              |   | 5 750   |                              |   |   | 569 250                  |   |   |                           | 3 008   |   |             |   | (2 285 102 | ) |   |   | (1 707 093 | ) |
|                                 |   |                            |    |   |                              |   |    |                              |   |   |                     |   |   |                           |    |   |             |   |   |   |   |   |   |   |

----

|                                                            |   | Notes  |   |   |   | 2010R’000 |       |   |   | 2009R’000 |       |   |   | 2008R’000 |      |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|-----------------|------------|--------|--------|-----------------|------------|--------|--------|-----------------|-----------|
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |
| Cash flows from operating activitiesCash utilised in operations |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |
| Receipts from customers                                         |   |   |   |   |   | 1 770 825       |       |   |   | 1 195 993       |       |   |   | 117 021         |      |
| Payments to suppliers and employees                             |   |   |   |   |   | (2 474 492      | )          |   |   | (1 658 296      | )          |   |   | (237 157        | )         |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |
| Cash flows utilised in operations                               |   |   | 24.1   |   |   |            | (703 667   | )      |   |            | (462 303   | )      |   |            | (120 136  | ) |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Interest received                                               |   |   |   |   |   |            | 27 358     |   |   |            | 35 850     |   |   |            | 11 081    |   |
| Foreign exchange (losses) gains                                 |   |   |   |   |   |            | (75 270    | )      |   |            | 2 357      |   |   |            | 96        |   |
| Finance charges                                                 |   |   |   |   |   |            | (360 800   | )      |   |            | (229 088   | )      |   |            | (50 194   | ) |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Net cash outflow from operating activities                      |   |   |   |   |   |            | (1 112 379 | )      |   | (653 184)       |       |   |   | (159 153        | )         |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Cash flows from investing activities                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Additions to property, plant and equipment                      |   |   |   |   |   |            | (1 088 181 | )      |   |            | (928 168   | )      |   |            | (694 651  | ) |
| Additions to intangible assets                                  |   |   |   |   |   |            | (35 206    | )      |   |            | (21 891    | )      |   |            | (74 192   | ) |
| Acquisition of business                                         |   |   | 24.3   |   |   |            | –    |   |   |            | (258 023   | )      |   |            | –   |   |
| Proceeds from disposal of property, plantand equipment          |   |   |   |   |   |            | 217        |   |   |            | 3          |   |   |            | 99        |   |
| Increase in other investments                                   |   |   |   |   |   |            | (60 458    | )      |   |            | –    |   |   |            | –   |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Net cash outflow from investing activities                      |   |   |   |   |   |            | (1 183 628 | )      |   |            | (1 208 079 | )      |   |            | (768 744  | ) |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Cash flows from financing activities                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Proceeds from preference share issue                            |   |   |   |   |   |            | 191 250    |   |   |            | 217 214    |   |   |            | 56 500    |   |
| Proceeds from long term borrowings                              |   |   |   |   |   |            | 1 162 135  |   |   |            | 1 279 107  |   |   |            | 785 758   |   |
| Increase in shareholders’ loans                           |   |   |   |   |   |            | 573 750    |   |   |            | 637 390    |   |   |            | 183 750   |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Net cash inflow from financing activities                       |   |   |   |   |   |            | 1 927 135  |   |   |            | 2 133 711  |   |   |            | 1 026 008 |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Net (decrease) increase in cash and cash equivalents            |   |   |   |   |   |            | (368 872   | )      |   |            | 272 448    |   |   |            | 98 111    |   |
| Cash and cash equivalents at thebeginning of the year           |   |   |   |   |   |            | 433 616    |   |   |            | 161 168    |   |   |            | 63 057    |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |
| Cash and cash equivalents at end ofthe year                     |   |   |   |   |   |            | 64 744     |   |   |            | 433 616    |   |   |            | 161 168   |   |
|                                                            |   |   |   |   |   |            |       |   |   |            |       |   |   |            |      |   |

----

| 1.   | GENERAL INFORMATION & BASIS OF PREPARATION |
|----------------|------------------------------------------------|

| 2.   | SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES |
|----------------|-------------------------------------------------|

| 2.1   | Interconnect income and payments to other telecommunications operators |
|-----------------|------------------------------------------------------------------------|

----

| 2.   | SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued) |
|----------------|-------------------------------------------------------------|

| 2.2   | Provisions and contingent liabilities |
|-----------------|---------------------------------------|

| 2.3   | Property, plant and equipment and intangible assets |
|-----------------|-----------------------------------------------------|

----

| 2.   | SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued) |
|----------------|-------------------------------------------------------------|

| 2.4   | Financial assets |
|-----------------|------------------|

| 2.5   | Taxation |
|-----------------|----------|

| 2.6   | Capitalisation of labour costs |
|-----------------|--------------------------------|

----

| 3.   | ACCOUNTING POLICIES |
|----------------|---------------------|

| 3.1   | Subsidiaries, associates and joint ventures |
|-----------------|---------------------------------------------|

| 3.2   | Consolidated financial statements |
|-----------------|-----------------------------------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.3   | Property, plant and equipment |
|-----------------|-------------------------------|

|   | ASSET CLASS                                                                                                                | ESTIMATED USEFUL LIFE (YEARS) |
|--------|----------------------------------------------------------------------------------------------------------------------------|-------------------------------|
|   |                                                                                                                       |                          |   |
|   | Leasehold improvements                                                                                                     | Lease period                  |   |
|   | Plant and equipment                                                                                                        |                          |   |
|   |     ●           Cable (fibre and duct)    | 0 to 12                       |   |
|   |     ●           Network equipment         | 2 to 12                       |   |
|   |     ●           Other plant and equipment | 5 to 20                       |   |
|   | Furniture and fittings                                                                                                     | 5 to 10                       |   |
|   | Motor vehicles                                                                                                             | 5                             |   |
|   | Computer equipment                                                                                                         | 3 to 10                       |   |
|   | Assets under construction                                                                                                  | Nil                           |   |

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.3   | Property, plant and equipment (continued) |
|-----------------|-------------------------------------------|

| 3.4   | Intangible assets |
|-----------------|-------------------|

|   | ASSET CLASS                                | ESTIMATED USEFUL LIFE (YEARS) |
|--------|--------------------------------------------|-------------------------------|
|   |                                       |                          |
|   | Public Switch Telecommunication Services   |                          |
|   | (“PSTS”) licence               | 25 years                      |
|   | Computer Software                          | 3 - 5 years                   |
|   | Contractually based customer relationships | period of contract            |
|   | Favourable lease                           | period of lease               |

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.4   | Intangible assets (continued) |
|-----------------|-------------------------------|

| 3.5   | Impairment of non-current assets |
|-----------------|----------------------------------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.6   | Taxation |
|-----------------|----------|

| 3.7   | Inventory |
|-----------------|-----------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.8   | Financial instruments |
|-----------------|-----------------------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.8   | Financial instruments (continued) |
|-----------------|-----------------------------------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.9   | Provisions |
|-----------------|------------|

| 3.10   | Employee benefits |
|------------------|-------------------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.10   | Employee benefits (continued) |
|------------------|-------------------------------|

| 3.11   | Borrowing costs |
|------------------|-----------------|

| 3.12   | Revenue |
|------------------|---------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.12   | Revenue (continued) |
|------------------|---------------------|

| 3.13   | Investment income |
|------------------|-------------------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.14   | Leases |
|------------------|--------|

| 3.15  | Foreign currencies |
|------------|--------------------|

| 3.16  | Comparative figures |
|------------|---------------------|

----

| 3.   | ACCOUNTING POLICIES (continued) |
|----------------|---------------------------------|

| 3.17  | Adoption of new and revised International Financial Reporting Standards |
|------------|-------------------------------------------------------------------------|

|   | IFRS 1   | First time Adoption of International Financial Reporting Standards                                |
|--------|----------|---------------------------------------------------------------------------------------------------|
|   | IFRS 2   | Share-based Payments                                                                              |
|   | IFRS 3   | Business Combinations                                                                             |
|   | IFRS 5   | Non-current Assets Held for Sale and Discounted Operations                                        |
|   | IFRS 8   | Operating Segments                                                                                |
|   | IFRS 9   | Financial Instruments                                                                             |
|   | IAS 1    | Presentation of Financial Statements                                                              |
|   | IAS 7    | Statement of Cash Flows                                                                           |
|   | IAS 24   | Related Party Disclosures                                                                         |
|   | IAS 27   | Consolidated and Separate Financial Statements                                                    |
|   | IAS 28   | Investments in Associates                                                                         |
|   | IAS 31   | Interest in Joint Ventures                                                                        |
|   | IAS 32   | Financial Instruments: Presentation                                                               |
|   | IAS 36   | Impairment of Assets                                                                              |
|   | IAS 38   | Intangible Assets                                                                                 |
|   | IAS 39   | Financial Instruments: Recognition and Measurement                                                |
|   | IFRIC 14 | IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction |
|   | IFRIC 17 | Distributions of Non-cash Assets to Owners                                                        |
|   | IFRIC 18 | Transfers of Assets from Customers                                                                |
|   | IFRIC 19 | Extinguishing Financial liabilities with Equity Instruments                                       |

----

|   |                                                       |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|--------|------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|   |                                                       |   |   | R’000 |   |   |   | R’000 |   |   |   | R’000 |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| 4.     | REVENUE                                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Enterprise services and Wholesale services                 |   |   | 1 313 457   |   |   |   | 960 424     |   |   |   | 176 301 |   |
|   | Network services                                           |   |   | 280 231     |   |   |   | 138 675     |   |   |   | 42 198 |   |
|   | Consumer services                                          |   |   | 169 315     |   |   |   | 26 116      |   |   |   | 25 |   |
|   | Managed services                                           |   |   | 68 062      |   |   |   | –     |   |   |   | – |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   | 1 831 065   |   |   |   | 1 125 215   |   |   |   | 218 524 |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| 5.     | INTEREST RECEIVED                                          |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Interest received from banks                               |   |   | 27 358      |   |   |   | 35 850      |   |   |   | 11 081 |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| 6.     | FINANCE CHARGES                                            |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Interest on licence fee payable                            |   |   | 12 337      |   |   |   | 15 661      |   |   |   | 14 658 |   |
|   | Interest on loan from related party                        |   |   | 9 534       |   |   |   | 25,344      |   |   |   | 29 139 |   |
|   | Interest on shareholders’ loans                      |   |   | 161 206     |   |   |   | 116 411     |   |   |   | 31 898 |   |
|   | Interest on bank and other loans                           |   |   | 353 199     |   |   |   | 226 567     |   |   |   | 50 194 |   |
|   | Other                                                      |   |   | 26 276      |   |   |   | 2 521       |   |   |   | – |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   | 562 552     |   |   |   | 386 504     |   |   |   | 125 889 |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Less: capitalised interest - property, plant and equipment |   |   | (12 386     | )      |   |   | (16 921     | )      |   |   | (33 737 | ) |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   | 550 166     |   |   |   | 369 583     |   |   |   | 92 152 |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| 7.     | LOSS BEFORE TAXATION                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Loss before taxation has been arrived at after charging:   |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Audit fees                                                 |   |   | 5 671       |   |   |   | 5 072       |   |   |   | 1 145 |   |
|   | Director’s emoluments                                |   |   | 4 457       |   |   |   | 3 129       |   |   |   | 2 681 |   |
|   | Consulting fees                                            |   |   | 27 119      |   |   |   | 80 253      |   |   |   | 24 136 |   |
|   | (Profit) / loss on sale of assets                          |   |   | (93         | )      |   |   | 97          |   |   |   | 8 |   |
|   | Provision for doubtful debts                               |   |   | 95 127      |   |   |   | 11 791      |   |   |   | 1 679 |   |

----

|   |                                                               |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|--------|--------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|   |                                                               |   |   | R’000 |   |   |   | R’000 |   |   |   | R’000 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
| 7.     | LOSS BEFORE TAXATION (continued)                                   |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Operations, maintenance and network costs*                         |   |   | 337 536     |   |   |   | 165 259     |   |   |   | 11 995 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Operating leases                                                   |   |   |        |   |   |   |        |   |   |   |   |   |
|   | - Buildings and sites                                              |   |   | 81 094      |   |   |   | 59 684      |   |   |   | 9 491 |   |
|   | - Houses                                                           |   |   | 2 143       |   |   |   | 68          |   |   |   | 3 102 |   |
|   | - Vehicles                                                         |   |   | 808         |   |   |   | –     |   |   |   | 1 058 |   |
|   | - Infrastructure                                                   |   |   | 139 356     |   |   |   | 227 000     |   |   |   | 38 000 |   |
|   | - Office equipment                                                 |   |   | –     |   |   |   | –     |   |   |   | 84 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                               |   |   | 223 401     |   |   |   | 286 752     |   |   |   | 51 735 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Net foreign exchange gains and losses                              |   |   |        |   |   |   |        |   |   |   |   |   |
|   | - unrealised losses                                                |   |   | 9 782       |   |   |   | 5 220       |   |   |   | 1 493 |   |
|   | - realised losses                                                  |   |   | 73 972      |   |   |   | 13 285      |   |   |   | 5 283 |   |
|   | - unrealised gains                                                 |   |   | (2 511      | )      |   |   | (5 367      | )      |   |   | (5 174 | ) |
|   | - realised gains                                                   |   |   | (5 973      | )      |   |   | (15 495     | )      |   |   | (96 | ) |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                               |   |   | 75 270      |   |   |   | (2 357      | )      |   |   | 1 506 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Depreciation and amortisation                                      |   |   |        |   |   |   |        |   |   |   |   |   |
|   | - Depreciation of property, plant and equipment                    |   |   | 318 748     |   |   |   | 271 516     |   |   |   | 75 590 |   |
|   | - Amortisation of intangible assets                                |   |   | 72 370      |   |   |   | 72 891      |   |   |   | 19 676 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                               |   |   | 391 118     |   |   |   | 344 407     |   |   |   | 95 266 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Management and technical fees                                      |   |   |        |   |   |   |        |   |   |   |   |   |
|   | - Business Services Agreement                                      |   |   | 23 369      |   |   |   | 21 146      |   |   |   | 20 289 |   |
|   | - Operations and business support services (“OSS/BSS”) |   |   | 52 121      |   |   |   | 80 568      |   |   |   | 15 833 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                               |   |   | 75 490      |   |   |   | 101 714     |   |   |   | 36 122 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Employee benefits expense                                          |   |   |        |   |   |   |        |   |   |   |   |   |
|   | - Defined contribution plan                                        |   |   | 43 606      |   |   |   | 36 128      |   |   |   | 6 859 |   |
|   | - Medical aid contribution                                         |   |   | 15 419      |   |   |   | 20 074      |   |   |   | 3 565 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                               |   |   | 59 025      |   |   |   | 56 202      |   |   |   | 10 424 |   |
|   |                                                               |   |   |        |   |   |   |        |   |   |   |   |   |

----

|   |                                                        |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|--------|-------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|   |                                                        |   |   | R’000 |   |   |   | R’000 |   |   |   | R’000 |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| 8.     | TAXATION                                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Deferred tax  - current year                      |   |   | 427 307     |   |   |   | 299 590     |   |   |   | 111 701 |   |
|   | - prior year                                                |   |   | 5 407       |   |   |   | (6 564      | )      |   |   | (159 | ) |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Taxation credit per income statement                        |   |   | 432 714     |   |   |   | 293 026     |   |   |   | 111 542 |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Reconciliation between accounting profit and tax expense    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Accounting loss                                             |   |   | (1 582 719  | )      |   |   | (1 032 491  | )      |   |   | (432 312 | ) |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Tax at the applicable rate of 28% (2009:28%)                |   |   | (443 161    | )      |   |   | (289 097    | )      |   |   | (125 371 | ) |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Tax effect of adjustments on taxable income                 |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Deferred tax asset not recognised                           |   |   | 1 960       |   |   |   | –     |   |   |   | 3 378 |   |
|   | Depreciation/amortisation of non-qualifying assets          |   |   | 10 439      |   |   |   | 11 398      |   |   |   | – |   |
|   | Non-taxable income                                          |   |   | –     |   |   |   | (40 598     | )      |   |   | 5 391 |   |
|   | Non-deductible expenses                                     |   |   | 5 175       |   |   |   | 16 488      |   |   |   | – |   |
|   | Non-taxable portion of capital gain                         |   |   | (1 573      | )      |   |   | –     |   |   |   | – |   |
|   | Permanent differences on acquisition                        |   |   | –     |   |   |   | 2 562       |   |   |   | – |   |
|   | Learnerships allowances                                     |   |   | (147        | )      |   |   | (343        | )      |   |   | – |   |
|   | Change in rate relating to deferred tax                     |   |   | –     |   |   |   | –     |   |   |   | 4 901 |   |
|   | Deferred tax adjustment relating to prior year              |   |   | (5 407      | )      |   |   | 6 564       |   |   |   | 159 |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Tax effect of assessed loss                                 |   |   | (432 714    | )      |   |   | (293 026    | )      |   |   | (111 542 | ) |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Reconciliation of tax rate                                  |   | %      |        |   | %      |   |        | %      |   |
|   | Normal rate of taxation                                     |   |   | (28.0       | )      |   |   | (28.0       | )      |   |   | (29.0 | ) |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Adjusted for:                                               |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Permanent differences                                       |   |   | 0.9         |   |   |   | 2.7         |   |   |   | 2.0 |   |
|   | -  Permanent differences on acquisition           |   |   | –     |   |   |   | 0.2         |   |   |   | – |   |
|   | -  Non taxable income                             |   |   | –     |   |   |   | (3.9        | )      |   |   | – |   |
|   | -  Deferred tax adjustment relating to prior year |   |   | (0.3        | )      |   |   | 0.6         |   |   |   | – |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Effective tax rate                                          |   |   | (27.4       | )      |   |   | (28.4       | )      |   |   | (26.0 | ) |
|   |                                                        |   |   |        |   |   |   |        |   |   |   |   |   |

----

| 8.   | TAXATION (continued) |
|----------------|----------------------|

| 9.     | PROPERTY, PLANT AND EQUIPMENT |   |            |      |   |                                 |   |     |                      |   |
|--------|-------------------------------|--------|-----------------|-----------|--------|--------------------------------------|--------|----------|---------------------------|--------|
|   |                          |   |            |      |   |                                 |   |     |                      |   |
|   |                          |   | CostR’000 |      |   | Accumulated depreciation R’000 |   |     | Carrying valueR’000 |   |
|   | 2010                          |   |            |      |   |                                 |   |     |                      |   |
|   | Leasehold improvements        |   |            | 129 331   |   |                                 |   | (24 544  | )                         |   |   | 104 787 |   |
|   | Plant and equipment           |   |            | 2 575 556 |   |                                 |   | (556 975 | )                         |   |   | 2 018 581 |   |
|   | Furniture and fittings        |   |            | 23 480    |   |                                 |   | (7 499   | )                         |   |   | 15 981 |   |
|   | Computer equipment            |   |            | 164 044   |   |                                 |   | (76 651  | )                         |   |   | 87 393 |   |
|   | Motor vehicles                |   |            | 388       |   |                                 |   | (201     | )                         |   |   | 187 |   |
|   | Assets under construction     |   |            | 472 721   |   |                                 |   | –  |                      |   |   | 472 721 |   |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   |                          |   |            | 3 365 520 |   |                                 |   | (665 870 | )                         |   |   | 2 699 650 |   |
|   | Less assets held for sale     |   |            | (18 710   | )      |                                 |   | 2 986    |                      |   |   | (15 724 | ) |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   |                          |   |            | 3 346 810 |   |                                 |   | (662 884 | )                         |   |   | 2 683 926 |   |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   | 2009                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   | Leasehold improvements        |   |            | 36 386    |   |                                 |   | (18 923  | )                         |   |   | 17 463 |   |
|   | Plant and equipment           |   |            | 1 431 723 |   |                                 |   | (284 717 | )                         |   |   | 1 147 006 |   |
|   | Furniture and fittings        |   |            | 13 620    |   |                                 |   | (3 676   | )                         |   |   | 9 944 |   |
|   | Computer equipment            |   |            | 131 171   |   |                                 |   | (43 741  | )                         |   |   | 87 430 |   |
|   | Motor vehicles                |   |            | 407       |   |                                 |   | (129     | )                         |   |   | 278 |   |
|   | Assets under construction     |   |            | 694 878   |   |                                 |   | –  |                      |   |   | 694 878 |   |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |
|   |                          |   |            | 2 308 185 |   |                                 |   | (351 186 | )                         |   |   | 1 956 999 |   |
|   |                          |   |            |      |   |                                 |   |     |                      |   |   |   |   |

----

| 9.   | PROPERTY, PLANT AND EQUIPMENT (continued) |
|----------------|-------------------------------------------|

| 2010                      |   | Carrying value at beginning of year R’000 |      |   | AdditionsR’000 |   |      | Reclassi-fication R’000 |   |   | TransfersR’000 |   |   | Disposals R’000 |     |   | DepreciationR’000 |    |       | Carrying value at endof year R’000 |   |
|---------------------------|--------|-------------------------------------------------|-----------|--------|----------------------|--------|-----------|-------------------------------|--------|--------|----------------------|--------|--------|-----------------------|----------|--------|-------------------------|---------|------------|------------------------------------------|--------|
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |
| Leasehold improvements    |   |                                            | 17 463    |   |                 |   | 94 464    |                          |   |   | 3 166                |   |   |                  | (516     | )      |                    |    |  (112 | )                                   |   |   | (9 678 | ) |   |   | 104 787 |   |
| Plant and equipment       |   |                                            | 1 147 006 |   |                 |   | 705 075   |                          |   |   | 20 496               |   |   |                  | 408 318  |   |                    |    | –    |                                     |   |   | (262 314 | ) |   |   | 2 018 581 |   |
| Furniture and fittings    |   |                                            | 9 944     |   |                 |   | 9 998     |                          |   |   | 41                   |   |   |                  | (909     | )      |                    |    | –    |                                     |   |   | (3 093 | ) |   |   | 15 981 |   |
| Computer equipment        |   |                                            | 87 430    |   |                 |   | 66 090    |                          |   |   | (23 685              | )      |   |                  | 1 160    |   |                    |    | (12        | )                                        |   |   | (43 590 | ) |   |   | 87 393 |   |
| Motor vehicles            |   |                                            | 278       |   |                 |   | –   |                          |   |   | (18                  | )      |   |                  | –  |   |                    |    | –    |                                     |   |   | (73 | ) |   |   | 187 |   |
| Assets under construction |   |                                            | 694 878   |   |                 |   | 224 940   |                          |   |   | –              |   |   |                  | (447 097 | )      |                    |    | –    |                                     |   |   | – |   |   |   | 472 721 |   |
| Assets held for sale      |   |                                            | –   |   |                 |   | –   |                          |   |   | (15 724              | )      |   | –               |     |   |                    | – |       |                                     |   | – |   |   |   | (15 724 | ) |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
|                      |   |                                            | 1 956 999 |   |                 |   | 1 100 567 |                          |   |   | (15 724              | )      |   |                  | (39 044  | )      |                    |    | (124       | )                                        |   |   | (318 748 | ) |   |   | 2 683 926 |   |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
| 2009                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
| Leasehold improvements    |   |                                            | 17 078    |   |                 |   | 391       |                          |   |   | 9 520                |   |   |                  | 824      |   |                    |    | –    |                                     |   |   | (10 350 | ) |   |   | 17 463 |   |
| Plant and equipment       |   |                                            | 543 560   |   |                 |   | 425 650   |                          |   |   | 157 169              |   |   |                  | 248 574  |   |                    |    | –    |                                     |   |   | (227 947 | ) |   |   | 1 147 006 |   |
| Furniture and fittings    |   |                                            | 1 260     |   |                 |   | 10 563    |                          |   |   | 256                  |   |   |                  | 111      |   |                    |    | –    |                                     |   |   | (2 246 | ) |   |   | 9 944 |   |
| Computer equipment        |   |                                            | 61 112    |   |                 |   | 8 742     |                          |   |   | 41 818               |   |   |                  | 6 751    |   |                    |    | (100       | )                                        |   |   | (30 893 | ) |   |   | 87 430 |   |
| Motor vehicles            |   |                                            | 271       |   |                 |   | 28        |                          |   |   | 59                   |   |   |                  | –  |   |                    |    | –    |                                     |   |   | (80 | ) |   |   | 278 |   |
| Assets under construction |   |                                            | 347 380   |   |                 |   | 499 715   |                          |   |   | 104 043              |   |   |                  | (256 260 | )      |                    |    | –    |                                     |   |   | – |   |   |   | 694 878 |   |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |
|                      |   |                                            | 970 661   |   |                 |   | 945 089   |                          |   |   | 312 865              |   |   |                  | –  |   |                    |    | (100       | )                                        |   |   | (271 516 | ) |   |   | 1 956 999 |   |
|                      |   |                                            |      |   |                 |   |      |                          |   |   |                 |   |   |                  |     |   |                    |    |       |                                     |   |   |   |   |   |   |   |   |

----

| 10.   | INTANGIBLE ASSETS |
|-----------------|-------------------|

|   |                                       |   | FavourableleasecontractR’000              |    |   | LicenceR’000   |   |    | ComputersoftwareR’000       |   |   | ContractuallybasedcustomerrelationshipsR’000 |   |   | TotalR’000                          |    |
|--------|--------------------------------------------|--------|-------------------------------------------------|---------|--------|----------------------|--------|---------|-----------------------------------|--------|--------|----------------------------------------------------|--------|--------|-------------------------------------------|---------|
|   | 2010                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |
|   | Cost                                       |   |                                            | 917     |   |                 |   | 28 000  |                              |   |   | 182 950                                            |   |   |                                      | 112 558 |   |   |   | 324 425 |   |
|   | Accumulated amortisation                   |   |                                            | (367    | )      |                 |   | (14 344 | )                                 |   |   | (112 432                                           | )      |   |                                      | (45 023 | ) |   |   | (172 166 | ) |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   | Carrying value                             |   |                                            | 550     |   |                 |   | 13 656  |                              |   |   | 70 518                                             |   |   |                                      | 67 535  |   |   |   | 152 259 |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   | 2009                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   | Cost                                       |   |                                            | 917     |   |                 |   | 100 000 |                              |   |   | 104 113                                            |   |   |                                      | 112 558 |   |   |   | 317 588 |   |
|   | Accumulated amortisation                   |   |                                            | (183    | )      |                 |   | (10 344 | )                                 |   |   | (62 170                                            | )      |   | (22 512)                                  |    |   |   | (95 209 | ) |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   | Carrying value                             |   |                                            | 734     |   |                 |   | 89 656  |                              |   |   | 41 943                                             |   |   |                                      | 90 046  |   |   |   | 222 379 |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   | Carryingvalue at thebeginningof yearR’000 |    |   | AdditionsR’000 |   |    | (Reductions)/transfersR’000 |   |   | Amorti-sationR’000                           |   |   | Carryingvalue atthe endof yearR’000 |    |
|   | 2010                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   | Favourable lease contract                  |   |                                            | 734     |   |                 |   | – |                              |   |   | –                                            |   |   |                                      | (184    | ) |   |   | 550 |   |
|   | Licence                                    |   |                                            | 89 656  |   |                 |   | – |                              |   |   | (72 000                                            | )*     |   |                                      | (4 000  | ) |   |   | 13 656 |   |
|   | Computer software                          |   |                                            | 41 943  |   |                 |   | 35 206  |                              |   |   | 39 044                                             |   |   |                                      | (45 675 | ) |   |   | 70 518 |   |
|   | Contractually based customer relationships |   |                                            | 90 046  |   |                 |   | – |                              |   |   | –                                            |   |   |                                      | (22 511 | ) |   |   | 67 535 |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            | 222 379 |   |                 |   | 35 206  |                              |   |   | (32 956                                            | )      |   |                                      | (72 370 | ) |   |   | 152 259 |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   | 2009                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   | Favourable lease contract                  |   |                                            | – |   |                 |   | 917     |                              |   |   | –                                            |   |   |                                      | (183    | ) |   |   | 734 |   |
|   | Licence                                    |   |                                            | 93 656  |   |                 |   | – |                              |   |   | –                                            |   |   |                                      | (4 000  | ) |   |   | 89 656 |   |
|   | Computer software                          |   |                                            | 66 248  |   |                 |   | 21 891  |                              |   |   | –                                            |   |   |                                      | (46 196 | ) |   |   | 41 943 |   |
|   | Contractually based customer relationships |   |                                            | – |   |                 |   | 112 558 |                              |   |   | –                                            |   |   |                                      | (22 512 | ) |   |   | 90 046 |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |
|   |                                       |   |                                            | 159 904 |   |                 |   | 135 366 |                              |   |   | –                                            |   |   |                                      | (72 891 | ) |   |   | 222 379 |   |
|   |                                       |   |                                            |    |   |                 |   |    |                              |   |   |                                               |   |   |                                      |    |   |   |   |   |   |

----

| 10.   | INTANGIBLE ASSETS (continued) |
|-----------------|-------------------------------|

|   |                                             |   | 2010   |        |   | 2009   |   |
|--------|--------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|   |                                             |   |   | R’000 |   |   |   | R’000 |   |
|   |                                             |   |   |        |   |   |   |   |   |
| 11.    | DEFERRED TAXATION                                |   |   |        |   |   |   |   |   |
|   |                                             |   |   |        |   |   |   |   |   |
|   | Deferred tax consists of:                        |   |   |        |   |   |   |   |   |
|   |                                             |   |   |        |   |   |   |   |   |
|   | Tax losses available for future set off          |   |   | 700 748     |   |   |   | 381 195 |   |
|   | Originating temporary differences on:            |   |   |        |   |   |   |   |   |
|   | -  Property, plant and equipment       |   |   | (18 848     | )      |   |   | (17 117 | ) |
|   | -  Prepayments                         |   |   | 2 294       |   |   |   | – |   |
|   | -  Provisions                          |   |   | 54 685      |   |   |   | 25 564 |   |
|   | -  Unrealised exchange differences     |   |   | 2 377       |   |   |   | – |   |
|   | -  Fair value on financial instruments |   |   | 35 798      |   |   |   | – |   |
|   | -  Unearned revenue                    |   |   | 48 142      |   |   |   | 6 273 |   |
|   | -  Intangible assets                   |   |   | (21 985     | )      |   |   | (25 418 | ) |
|   |                                             |   |   |        |   |   |   |   |   |
|   |                                             |   |   |        |   |   |   |   |   |
|   |                                             |   |   | 803 211     |   |   |   | 370 497 |   |
|   |                                             |   |   |        |   |   |   |   |   |
|   |                                             |   |   |        |   |   |   |   |   |
|   | Disclosed as:                                    |   |   |        |   |   |   |   |   |
|   | -  Deferred tax asset                  |   |   | 803 211     |   |   |   | 388 855 |   |
|   | -  Deferred tax liability              |   |   | –     |   |   |   | (18 358 | ) |
|   |                                             |   |   |        |   |   |   |   |   |
|   |                                             |   |   |        |   |   |   |   |   |
|   |                                             |   |   | 803 211     |   |   |   | 370 497 |   |
|   |                                             |   |   |        |   |   |   |   |   |
|   |                                             |   |   |        |   |   |   |   |   |

----

|   |                                                                                                                                                                                                                                                                                                                                                   |   | 2010   |        |    | 2009   |   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|---------|--------|--------|
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   | R’000 |    |   |   | R’000 |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
| 11.    | DEFERRED TAXATION (continued)                                                                                                                                                                                                                                                                                                                          |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   | The movement in deferred tax is as follows:                                                                                                                                                                                                                                                                                                            |   |   |        |    |   |   |   |   |
|   | Opening balance                                                                                                                                                                                                                                                                                                                                        |   |   | 370 497     |    |   |   | 137 189 |   |
|   | Acquisition of business                                                                                                                                                                                                                                                                                                                                |   |   | –     |    |   |   | (59 718 | ) |
|   | Income statement charge                                                                                                                                                                                                                                                                                                                                |   |   |        |    |   |   |   |   |
|   | -  Adjustment to prior year                                                                                                                                                                                                                                                                                                                  |   |   | 5 407       |    |   |   | (6 564 |  ) |
|   | -  Unused tax losses                                                                                                                                                                                                                                                                                                                         |   |   | 314 146     |    |   |   | 248 453 |   |
|   | -  Property, plant and equipment                                                                                                                                                                                                                                                                                                             |   |   | (1 363      |  ) |   |   | 22 984 |   |
|   | -  Prepayments                                                                                                                                                                                                                                                                                                                               |   |   | 2 294       |    |   |   | – |   |
|   | -  Provisions                                                                                                                                                                                                                                                                                                                                |   |   | 29 121      |    |   |   | 21 798 |   |
|   | -  Unrealised exchange differences                                                                                                                                                                                                                                                                                                           |   |   | 2 377       |    |   |   | – |   |
|   | -  Fair value on financial instruments                                                                                                                                                                                                                                                                                                       |   |   | 35 798      |    |   |   | – |   |
|   | -  Unearned revenue                                                                                                                                                                                                                                                                                                                          |   |   | 41 869      |    |   |   | – |   |
|   | -  Intangible assets                                                                                                                                                                                                                                                                                                                         |   |   | 3 065       |    |   |   | 6 355 |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   | Closing balance                                                                                                                                                                                                                                                                                                                                        |   |   | 803 211     |    |   |   | 370 497 |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   | Based on the Group’s approved business plans and financial projections, the Group is confident of utilising the estimated tax losses within a four year period (2009: five year period). The losses excluded from deferred tax asset recognition relate specifically to the wholly owned subsidiary, Neotel Business Support Services (Pty) Ltd. |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
| 12.    | OTHER INVESTMENTS                                                                                                                                                                                                                                                                                                                                      |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   | The Group have placed cash of R57.6 million and R60.4 million respectively, for guarantees issued - made up as follows:                                                                                                                                                                                                                                |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   | Greater than twelve months                                                                                                                                                                                                                                                                                                                             |   |   | 30 363      |    |   |   | – |   |
|   | Three to twelve months                                                                                                                                                                                                                                                                                                                                 |   |   | 30 095      |    |   |   | – |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   | 60 458      |    |   |   | – |   |
|   |                                                                                                                                                                                                                                                                                                                                                   |   |   |        |    |   |   |   |   |

----

|   |                                                                                                                                                                                                                                                                                                     |   | 2010   |        |   | 2009   |   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|   |                                                                                                                                                                                                                                                                                                     |   |   | R’000 |   |   |   | R’000 |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| 13.    | INVENTORIES                                                                                                                                                                                                                                                                                              |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   | Finished goods                                                                                                                                                                                                                                                                                           |   |   | 116 173     |   |   |   | 66 979 |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   | The cost of inventories recognised as an expense during the year was R44.0 million (2009:  R21.6  million).  The cost of inventories recognised as an expense includes R1.0 million (2009: R 7.5 million) in respect of write down of inventories to net realisable value. |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| 14.    | TRADE AND OTHER RECEIVABLES                                                                                                                                                                                                                                                                              |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   | Trade receivables - gross                                                                                                                                                                                                                                                                                |   |   | 630 339     |   |   |   | 315 751 |   |
|   | Less allowances for doubtful debts                                                                                                                                                                                                                                                                       |   |   | (121 093    | )      |   |   | (34 022 | ) |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   | 509 246     |   |   |   | 281 729 |   |
|   | Trade receivables - net                                                                                                                                                                                                                                                                                  |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   | Other receivables                                                                                                                                                                                                                                                                                        |   |   |        |   |   |   |   |   |
|   | -  Purchase price adjustment receivable from Transnet Ltd                                                                                                                                                                                                                                 |   |   | –     |   |   |   | 11 224 |   |
|   | -  VAT                                                                                                                                                                                                                                                                                         |   |   | 16 899      |   |   |   | 62 877 |   |
|   | -  Prepaid loan arrangement fees                                                                                                                                                                                                                                                               |   |   | 81 666      |   |   |   | 83 959 |   |
|   | -  Prepayments                                                                                                                                                                                                                                                                                 |   |   | 18 130      |   |   |   | 25 432 |   |
|   | -  Indefeasible right of use                                                                                                                                                                                                                                                                   |   |   | 163 370     |   |   |   | – |   |
|   | -  Other receivables                                                                                                                                                                                                                                                                           |   |   | 114 924     |   |   |   | 35 354 |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   | 904 235     |   |   |   | 500 575 |   |
|   |                                                                                                                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |

----

| 14.   | TRADE AND OTHER RECEIVABLES (continued) |
|-----------------|-----------------------------------------|

|   |                                         |   | 2010   |        |   | 2009   |   |
|--------|----------------------------------------------|--------|--------|-------------|--------|--------|--------|
|   |                                         |   |   | R’000 |   |   |   | R’000 |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Ageing of past due but not impaired          |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | 30 – 60 days                           |   |   | 119 913     |   |   |   | – |   |
|   | 60 - 90 days                                 |   |   | 25 767      |   |   |   | 11 663 |   |
|   | 90 - 120 days                                |   |   | 24 298      |   |   |   | 17 875 |   |
|   | 120 – 180 days                         |   |   | 41 229      |   |   |   | 41 963 |   |
|   | > 180 days                                |   |   | 82 412      |   |   |   | 37 274 |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Total                                        |   |   | 293 619     |   |   |   | 108 775 |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Movement in the allowance for doubtful debts |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Balance at beginning of the year             |   |   | 34 022      |   |   |   | 2 370 |   |
|   | On acquisition of business                   |   |   | –     |   |   |   | 19 861 |   |
|   | Reversal of impairment losses                |   |   | (8 056      | )      |   |   | – |   |
|   | Impairment losses recognised on receivables  |   |   | 95 127      |   |   |   | 11 791 |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Balance at end of the year                   |   |   | 121 093     |   |   |   | 34 022 |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Ageing of impaired trade receivables         |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Current                                      |   |   | 149         |   |   |   | – |   |
|   | 30 – 60 days                      |   |   | 848         |   |   |   | – |   |
|   | 60 – 90 days                           |   |   | 43 791      |   |   |   | – |   |
|   | 90 – 120 days                     |   |   | 2 007       |   |   |   | – |   |
|   | 120 – 180 days                    |   |   | 6 557       |   |   |   | 13 520 |   |
|   | > 180 days                                |   |   | 67 741      |   |   |   | 20 502 |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   |                                         |   |   |        |   |   |   |   |   |
|   | Total                                        |   |   | 121 093     |   |   |   | 34 022 |   |
|   |                                         |   |   |        |   |   |   |   |   |

----

|   |                                                                                                                                                                                                         |   | 2010   |        |   | 2009   |   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|   |                                                                                                                                                                                                         |   |   | R’000 |   |   |   | R’000 |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
| 15.    | CASH AND CASH EQUIVALENTS                                                                                                                                                                                    |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   | Cash and bank balances                                                                                                                                                                                       |   |   | 64 744      |   |   |   | 338 821 |   |
|   | Short term deposits                                                                                                                                                                                          |   |   | –     |   |   |   | 94 795 |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   | 64 744      |   |   |   | 433 616 |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   | Cash and cash equivalents comprise cash held by the Group and short term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value. |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
| 16.    | SHARE CAPITAL                                                                                                                                                                                                |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   | Authorised                                                                                                                                                                                                   |   |   |        |   |   |   |   |   |
|   | Ordinary                                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
|   | 1 000 Ordinary shares of par value R1 each                                                                                                                                                                   |   |   | 1           |   |   |   | 1 |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   | Preference                                                                                                                                                                                                   |   |   |        |   |   |   |   |   |
|   | 758 257 250 (2009: 531 000 000)                                                                                                                                                                              |   |   |        |   |   |   |   |   |
|   | Cumulative redeemable preference shares of par value R0.01 each                                                                                                                                              |   |   | 7 583  |   |   |   | 5 310  |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   | Issued and fully paid                                                                                                                                                                                        |   |   |        |   |   |   |   |   |
|   | 1 000 Ordinary shares of R1 each                                                                                                                                                                             |   |   | 1           |   |   |   | 1 |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   | 575 000 000 (2009: 350 000 000)                                                                                                                                                                              |   |   |        |   |   |   |   |   |
|   | Cumulative redeemable preference shares of R0.01                                                                                                                                                             |   |   | 5 750  |   |   |   | 3 500  |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |
|   |                                                                                                                                                                                                         |   |   | 5 751       |   |   |   | 3 501 |   |
|   |                                                                                                                                                                                                         |   |   |        |   |   |   |   |   |

----

| 16.   | SHARE CAPITAL (continued) |
|-----------------|---------------------------|

|   |                                                                                           |   | 2010              |          |   | 2009              |   |
|--------|------------------------------------------------------------------------------------------------|--------|-------------------|---------------|--------|-------------------|--------|
|   |                                                                                           |   |  R’000 |          |   |  R’000 |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |
| 17.    | SHARE PREMIUM                                                                                  |   |              |          |   |              |   |   |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |
|   | 575 000 000 (2009: 350 000 000) cumulative preference shares issued at a premium of R0.99 each |   |              | 569 250  |   |              |   | 346 500  |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |
| 18.    | LOANS FROM SHAREHOLDERS                                                                        |   |              |          |   |              |   |   |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |
|   | Unsecured                                                                                      |   |              |          |   |              |   |   |   |
|   | Sepco Communications (Pty) Ltd                                                                 |   |              | 1 038 573     |   |              |   | 612 112 |   |
|   | VSNL SNOSPV Pte Ltd                                                                            |   |              | 549 510       |   |              |   | 359 705 |   |
|   | Nexus Connexion (Pty) Ltd                                                                      |   |              | 387 098       |   |              |   | 228 214 |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd                                                            |   |              | 61 057        |   |              |   | – |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |
|   |                                                                                           |   |              | 2 036 238     |   |              |   | 1 200 031 |   |
|   |                                                                                           |   |              |          |   |              |   |   |   |

|   |                                |   | SanctionedR’000 |      |   | DrawnR’000 |   |      | Available facilityR’000 |   |
|--------|-------------------------------------|--------|-----------------------|-----------|--------|------------------|--------|-----------|-------------------------------|--------|
|   |                                |   |                  |      |   |             |   |      |                          |   |
|   | Sepco Communications (Pty) Ltd      |   |                  | 1 496 000 |   |             |   | 1 173 000 |                          |   |   | 323 000 |   |
|   | VSNL SNOSPV Pte Ltd                 |   |                  | 792 000   |   |             |   | 621 000   |                          |   |   | 171 000 |   |
|   | Nexus Connexion (Pty) Ltd           |   |                  | 557 333   |   |             |   | 437 000   |                          |   |   | 120 333 |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd |   |                  | 88 000    |   |             |   | 69 000    |                          |   |   | 19 000 |   |
|   |                                |   |                  |      |   |             |   |      |                          |   |   |   |   |
|   |                                |   |                  |      |   |             |   |      |                          |   |   |   |   |
|   |                                |   |                  | 2 933 333 |   |             |   | 2 300 000 |                          |   |   | 633 333 |   |
|   |                                |   |                  |      |   |             |   |      |                          |   |   |   |   |

----

|   |                                           |   | 2010              |    |   | 2009              |   |
|--------|------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|   |                                           |   |  R’000 |    |   |  R’000 |   |
|   |                                           |   |              |    |   |              |   |   |   |
| 19.    | LICENCE FEE PAYABLE                            |   |              |    |   |              |   |   |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   | Opening balance                                |   |              | 138 639 |   |              |   | 122 848 |   |
|   | Variable licence fees raised during the year   |   |              | – |   |              |   | 645 |   |
|   | Variable licence fees paid during the year     |   |              | (645    | )      |              |   | (515 | ) |
|   | Interest payable                               |   |              | 12 336  |   |              |   | 15 661 |   |
|   | Reduction of licence fee payable               |   |              | (72 000 | )      |              |   | – |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   | Closing balance                                |   |              | 78 330  |   |              |   | 138 639 |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   | Licence fees consists of the following:        |   |              |    |   |              |   |   |   |
|   | - Fixed licence fees due – long term     |   |              | – |   |              |   | 121 328 |   |
|   | - Fixed licence fees due – short term    |   |              | 78 330  |   |              |   | 16 666 |   |
|   | - Variable licence fees due – short term |   |              | – |   |              |   | 645 |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   |                                           |   |              |    |   |              |   |   |   |
|   |                                           |   |              | 78 330  |   |              |   | 138 639 |   |
|   |                                           |   |              |    |   |              |   |   |   |

| 20.   | LOANS FROM FINANCIAL INSTITUTIONS |
|-----------------|-----------------------------------|

|   |              |   | 2010              |      |   | 2009              |   |
|--------|-------------------|--------|-------------------|-----------|--------|-------------------|--------|
|   |              |   |  R’000 |      |   |  R’000 |   |
|   |              |   |              |      |   |              |   |   |   |
|   | Long term loans   |   |              | 3 227 000 |   |              |   | 2 064 685 |   |
|   | Interest accrued* |   |              | 18 675    |   |              |   | 180 |   |
|   |              |   |              |      |   |              |   |   |   |
|   |              |   |              |      |   |              |   |   |   |
|   |              |   |              | 3 245 675 |   |              |   | 2 064 865 |   |
|   |              |   |              |      |   |              |   |   |   |

----

| 20.   | LOANS FROM FINANCIAL INSTITUTIONS (continued) |
|-----------------|-----------------------------------------------|

|   | Type of facility                    | Interest rate    | Tenure of loan |
|--------|-------------------------------------|------------------|----------------|
|   | Senior term loan facility           | JIBAR plus 4.75% | 7.5 years      |
|   | Subordinated term loan facility     | JIBAR plus 6.75% | 9.5 years      |
|   | IDC subordinated term loan facility | JIBAR plus 6%    | 9.5 years      |
|   | IDC Mezzanine facility              | JIBAR Plus 2.5%  | 10 years       |

|   | Type of facility                    |   | SanctionedR’000 |      |   | DrawnR’000 |   |      | AvailablefacilityR’000 |   |
|--------|-------------------------------------|--------|-----------------------|-----------|--------|------------------|--------|-----------|------------------------------|--------|
|   |                                |   |                  |      |   |             |   |      |                         |   |   |   |   |
|   | Senior term loan facility           |   |                  | 3 100 000 |   |             |   | 2 273 568 |                         |   |   | 826 432 |   |
|   | Subordinated term loan facility     |   |                  | 200 000   |   |             |   | 146 682   |                         |   |   | 53 318 |   |
|   | IDC subordinated term loan facility |   |                  | 800 000   |   |             |   | 586 727   |                         |   |   | 213 273 |   |
|   | IDC Mezzanine facility              |   |                  | 300 000   |   |             |   | 220 023   |                         |   |   | 79 977 |   |
|   |                                |   |                  |      |   |             |   |      |                         |   |   |   |   |
|   |                                |   |                  |      |   |             |   |      |                         |   |   |   |   |
|   | Total                               |   |                  | 4 400 000 |   |             |   | 3 227 000 |                         |   |   | 1 173 000 |   |
|   |                                |   |                  |      |   |             |   |      |                         |   |   |   |   |

----

|   |                        |   | 2010              |     |   | 2009              |   |
|--------|-----------------------------|--------|-------------------|----------|--------|-------------------|--------|
|   |                        |   |  R’000 |     |   |  R’000 |   |
|   |                        |   |              |     |   |              |   |   |   |
| 21.    | LOANS FROM RELATED PARTIES  |   |              |     |   |              |   |   |   |
|   |                        |   |              |     |   |              |   |   |   |
|   | Secured                     |   |              |     |   |              |   |   |   |
|   | VSNL SNOSPV Pte Ltd         |   |              | 47 365   |   |              |   | 171 813 |   |
|   | Eskom Enterprises (Pty) Ltd |   |              | –  |   |              |   | 1 065 |   |
|   |                        |   |              |     |   |              |   |   |   |
|   |                        |   |              |     |   |              |   |   |   |
|   |                        |   |              | 47 365   |   |              |   | 172 878 |   |
|   |                        |   |              |     |   |              |   |   |   |
|   |                        |   |              |     |   |              |   |   |   |
|   |                        |   |              |     |   |              |   |   |   |
|   | Loans details:              |   |              |     |   |              |   |   |   |
|   |                        |   |              |     |   |              |   |   |   |
|   | VSNL SNO SPV Pte Ltd        |   |              |     |   |              |   |   |   |
|   | - Original loan             |   |              | 250 109  |   |              |   | 250 109 |   |
|   | - Less capital called up    |   |              | (276 000 | )      |              |   | (141 000 | ) |
|   | - Add interest accrued      |   |              | 73 256   |   |              |   | 62 704 |   |
|   |                        |   |              |     |   |              |   |   |   |
|   |                        |   |              |     |   |              |   |   |   |
|   |                        |   |              | 47 365   |   |              |   | 171 813 |   |
|   |                        |   |              |     |   |              |   |   |   |

|   |                         |   | 2010              |    |   | 2009              |   |
|--------|------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|   |                         |   |  R’000 |    |   |  R’000 |   |
|   |                         |   |              |    |   |              |   |   |   |
| 22.    | TRADE AND OTHER PAYABLES     |   |              |    |   |              |   |   |   |
|   |                         |   |              |    |   |              |   |   |   |
|   | Trade payable                |   |              | 137 791 |   |              |   | 96 224 |   |
|   | Capital expenditure payables |   |              | 167 566 |   |              |   | 98 330 |   |
|   | Accruals                     |   |              | 299 883 |   |              |   | 316 848 |   |
|   | Related party accruals       |   |              | 146 394 |   |              |   | 76 911 |   |
|   | Other payables               |   |              | 58 342  |   |              |   | 115 904 |   |
|   |                         |   |              |    |   |              |   |   |   |
|   |                         |   |              |    |   |              |   |   |   |
|   |                         |   |              | 809 976 |   |              |   | 704 217 |   |
|   |                         |   |              |    |   |              |   |   |   |
|   |                         |   |              |    |   |              |   |   |   |

----

|   |       |   |   | Opening |        |   | Business    |   |        |   |   |   |        |   |   | Closing |        |
|--------|------------|--------|--------|---------|-------------|--------|-------------|--------|-------------|--------|--------|--------|-------------|--------|--------|---------|-------------|
|   |       |   |   | balance |        |   | acquisition |   |        | Raised |   |   | Utilised    |   |   | balance |        |
|   |       |   |   |    | R’000 |   |        |   | R’000 |   |   |   | R’000 |   |   |    | R’000 |   |   |   | R’000 |   |
|   |       |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   |       |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
| 23.    | PROVISIONS |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   |       |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   |  2010 |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   | Bonus      |   |   |    | 54 636      |   |        |   | –     |   |   |   | 64 467      |   |   |    | (54 636     | ) |   |   | 64 467 |   |
|   |       |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   |       |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   |  2009 |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   | Bonus      |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |
|   |       |   |   |    | 20 000      |   |        |   | –     |   |   |   | 34 636      |   |   |    | –     |   |   |   | 54 636 |   |
|   |       |   |   |    |        |   |        |   |        |   |   |   |        |   |   |    |        |   |   |   |   |   |

----

|   |                                                                  |   | 2010   |        |    | 2009   |   |        | 2008   |   |
|--------|-----------------------------------------------------------------------|--------|--------|-------------|---------|--------|--------|-------------|--------|--------|
|   |                                                                  |   |   | R’000 |    |   |   | R’000 |   |   |   | R’000 |   |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |
| 24.    | NOTES TO THE CASH FLOW STATEMENTS                                     |   |   |        |    |   |   |        |   |   |   |   |   |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |
| 24.1   | Reconciliation of loss for the year to cash generated from operations |   |   |        |    |   |   |        |   |   |   |   |   |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |
|   | Loss before taxation                                                  |   |   | (1 582 719  | )       |   |   | (1 032 491  | )      |   |   | (432 312 | ) |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |
|   | Adjustments for:                                                      |   |   |        |    |   |   |        |   |   |   |   |   |
|   | Negative goodwill written off                                         |   |   | –     |    |   |   | (144 996    | )      |   |   | – |   |
|   | Depreciation and amortisation                                         |   |   | 391 118     |    |   |   | 344 407     |   |   |   | 95 266 |   |
|   | Investment income                                                     |   |   | (27 358     | )       |   |   | (35 850     | )      |   |   | (11 081 | ) |
|   | Finance costs                                                         |   |   | 550 166     |    |   |   | 369 583     |   |   | 92 152 |   |
|   | Net foreign exchange loss                                             |   |   | 75 270      |    |   |   | (2 357      | )      |   |   | (96 | ) |
|   | (Profit) loss on disposal of property, plant and equipment            |   |   | (93         | )  |   |   | 97          |   |   |   | 8 |   |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |
|   | Changes in working capital                                            |   |   |        |    |   |   |        |   |   |   |   |   |
|   | Increase in trade and other receivables                               |   |   | (403 660    | )       |   |   | (232 527    | )      |   |   | (135 419 | ) |
|   | Increase in inventories                                               |   |   | (49 194     | )       |   |   | (51 658     | )      |   |   | (4 332 | ) |
|   | Decrease in other financial assets                                    |   |   | 2 133       |    |   |   | 2 946       |   |   |   | (5 079 | ) |
|   | Increase in trade and other payables                                  |   |   | 105 759     |    |   |   | 271 314     |   |   |   | 263 946 |   |
|   | Increase in provisions                                                |   |   | 9 831       |    |   |   | 49 099      |   |   |   | 16 296 |   |
|   | Increase in other financial liabilities                               |   |   | 130 711     |    |   |   | –     |   |   |   | – |   |
|   | Increase in unearned revenue                                          |   |   | 95 061      |    |   |   | –     |   |   |   | – |   |
|   | Decrease in licence fee payable                                       |   |   | (645        | )       |   |   | 130         |   |   |   | 515 |   |
|   | Decrease in loan to related parties                                   |   |   | (47         | )       |   |   | –     |   |   |   | – |   |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |
|   | Cash utilised in operations                                           |   |   | (703 667    | )       |   |   | (462 303    | )      |   |   | (120 136 | ) |
|   |                                                                  |   |   |        |    |   |   |        |   |   |   |   |   |

| 24.2 | Non-cash transactions |
|------|-----------------------|

----

| 24.   | NOTES TO THE CASH FLOW STATEMENTS (continued) |
|-----------------|-----------------------------------------------|

| 24.3 | Neotel acquired the Transtel Telecoms, the commercial telecommunications division of Transnet Limited. The details of the acquisition are reflected below: |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                    |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|--------|-----------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|   |                                    |   |   | R’000 |   |   |   | R’000 |   |   |   | R’000 |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Property, plant and equipment           |   |   | –     |   |   |   | 312 865     |   |   |   |   |   |
|   | Intangibles                             |   |   | –     |   |   |   | 113 475     |   |   |   | – |   |
|   | Deferred taxation                       |   |   | –     |   |   |   | (59 718     | )      |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Fair value of non-current assets        |   |   | –     |   |   |   | 366 622     |   |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Working capital                         |   |   | –     |   |   |   |        |   |   |   | – |   |
|   | Inventories                             |   |   | –     |   |   |   | 10 989      |   |   |   | – |   |
|   | Trade and other receivables             |   |   | –     |   |   |   | 117 400     |   |   |   | – |   |
|   | Trade and other payables                |   |   | –     |   |   |   | (86 221     | )      |   |   | – |   |
|   | Payroll provisions                      |   |   | –     |   |   |   | (5 771      | )      |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Purchase price for working capital      |   |   | –     |   |   |   | 36 397      |   |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Fair value of total net assets acquired |   |   | –     |   |   |   | 403 019     |   |   |   | – |   |
|   | Goodwill (negative)                     |   |   | –     |   |   |   | (144 996    | )      |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Net Cash flow on acquisition            |   |   | –     |   |   |   | 258 023     |   |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Consists of:                            |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Purchase price agreement                |   |   | –     |   |   |   | 230 000     |   |   |   | – |   |
|   | Working capital adjustment              |   |   | –     |   |   |   | 21 789      |   |   |   | – |   |
|   | Acquisition related transaction costs   |   |   | –     |   |   |   | 17 458      |   |   |   | – |   |
|   | Settlement of amounts                   |   |   | –     |   |   |   | (11 224     | )      |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   | –     |   |   |   | 258 023     |   |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Settled as follows:                     |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   | Payment to vendor                       |   |   | –     |   |   |   | 258 023     |   |   |   | – |   |
|   | Loan account                            |   |   | –     |   |   |   | –     |   |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |
|   |                                    |   |   | –     |   |   |   | 258 023     |   |   |   | – |   |
|   |                                    |   |   |        |   |   |   |        |   |   |   |   |   |

----

| 25.    | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                            |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                             |
| (a)    | Capital risk management                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                             |
|   | The Group manage their capital to ensure they will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.                                                                                   |
|   |                                                                                                                                                                                                                                                                             |
|   | The capital structure of the Group consists of debt which includes the shareholder loans disclosed in Note 18 and equity attributable to shareholders of the Group, comprising issued capital (disclosed in Notes 16 and 17 respectively), reserves and the accumulated deficit. |
|   |                                                                                                                                                                                                                                                                             |
|   | The Group monitors capital on a basis of debt to equity.  Debt comprises interest bearing debt, shareholder loans and any other long term loan. Equity comprises share capital and reserves.                                                                           |

|   |                                              |   |   | 2010R’000 |   |   |   | 2009R’000 |   |
|--------|---------------------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|   |                                              |   |   |            |   |   |   |            |   |
|   | The gearing ratio at the year end was as follows: |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   | Debt                                              |   |   | 5 329 278       |   |   |   | 3 576 413  |   |
|   | Cash and cash equivalents                         |   |   | (64 744         | )      |   |   | (433 616        | )      |
|   |                                              |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   | Net debt                                          |   |   | 5 264 534       |   |   |   | 3 142 797       |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   | Shareholders’ deficit                       |   |   | 1 707 094       |   |   |   | 782 088         |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
| (b)    | Interest rate risk management                     |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   | Interest rate swaps                               |   |   |            |   |   |   |            |   |
|   | Nominal value                                     |   |   | 2 070 000       |   |   |   | –         |   |
|   | Fair value *                                      |   |   | 127 848         |   |   |   | –         |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   | Fixed rate                                        |   |   | 8.295           | %      |   |   | –         |   |
|   | Average floating rate                             |   |   | 7.123           | %      |   |   | –         |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   |                                              |   |   |            |   |   |   |            |   |
|   | (* Included in other financial liabilities)       |   |   |            |   |   |   |            |   |

----

| 25.    | FINANCIAL INSTRUMENTS  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (b)    | Interest rate risk management (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The Group is exposed to interest rate risk as it borrows funds at floating interest rates. The risk is managed by the Group under interest rate swap contracts where the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on notional principal amounts. The fair value of interest rate swaps at the end of the reporting period is determined by discounting the future cash flows using curves at the end of the reporting period and the credit risk inherent in the contract. |

|   |                |   | 1 yearR’000 |    |   | 2-5 yearsR’000 |   |      | 5 yearsR’000 |   |   | TotalR’000 |   |
|--------|---------------------|--------|-------------------|---------|--------|----------------------|--------|-----------|--------------------|--------|--------|------------------|--------|
|   |                |   |              |    |   |                 |   |      |               |   |   |             |   |
|   | Interest rate swaps |   |              | – |   |                 |   | 2 070 000 |               |   |   | –          |   |   |   | 2 070 000 |   |
|   |                |   |              |    |   |                 |   |      |               |   |   |             |   |   |   |   |   |
|   |                |   |              |    |   |                 |   |      |               |   |   |             |   |   |   |   |   |
|   |                |   |              |    |   |                 |   |      |               |   |   |             |   |   |   |   |   |

|   | The Interest Rate Swaps are against a floating rate at 3 month JIBAR. The interest is reset every quarter ending 31 March, 30 June, 30 September and 31 December. The resulting gain or loss is recognised in profit and loss immediately. In addition to the above swaps, the Group has entered into swaps to the value of R1.615 billion with a start date of 31 December 2010.                                                                                                                                      |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Interest rate sensitivity analysis                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The sensitivity analysis below has been determined based on the exposure to interest rates at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the balance sheet date was outstanding for the whole year. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | If interest rates had been 100 basis points higher / lower and all other variables were held constant, the Group’s:                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | For 100 basis points higher                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Loss for the year would increase by R32.4 million (2009: R28.8 million).                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | For 100 basis points lower                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Loss for the year would decrease by R32.4 million (2009: R28.8 million).                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The Group’s sensitivity to interest rates has increased during the current period mainly due to the increase in variable rate borrowings from shareholders and lenders.                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (c)    | Credit risk management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Credit risk refers to the risk of a counterparty defaulting on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate as a means of mitigating the risk of financial loss from defaults.                                                                                                                                                                               |

----

| 25.   | FINANCIAL INSTRUMENTS (continued) |
|-----------------|-----------------------------------|

| (c)       | Credit risk management (continued)                                                                                                                                                                                                                                                                                                                                    |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                  |
|      | Trade receivables consist of customers in various sectors of the telecommunications industry. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.                    |
|      |                                                                                                                                                                                                                                                                                                                                                                  |
| (c)  | Foreign currency risk management                                                                                                                                                                                                                                                                                                                                      |
|      |                                                                                                                                                                                                                                                                                                                                                                  |
|      | The Group undertake certain transactions denominated in foreign currencies, namely the currency of the United States of America (US Dollars) and the currency of the European Union (Euro). Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts. |
|      |                                                                                                                                                                                                                                                                                                                                                                  |
|      | The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:                                                                                                                                                                                                                  |

|   |                  |   | 2010   |    |   | Assets2009 |   |    |   |   |   | 2010   |   |   | Liabilities2009 |   |
|--------|-----------------------|--------|--------|---------|--------|------------|--------|---------|--------|--------|--------|--------|--------|--------|-----------------|--------|
|   |                  |   |   |    |   |       |   |    |   |   |   |   |   |   |            |   |
|   | United States Dollars |   |   | 3 029   |   |       |   | 725     |   |   |   |   |   |   |            | 9 542  |   |   |   | 51 026 |   |
|   | Euro                  |   |   | – |   |       |   | – |   |   |   |   |   |   |            | 44     |   |   |   |   – |   |
|   | Botswana              |   |   | – |   |       |   | – |   |   |   |   |   |   |            | 55     |   |   |   |  – |   |
|   |                  |   |   |    |   |       |   |    |   |   |   |   |   |   |            |   |   |   |   |   |   |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Foreign currency sensitivity analysis                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The following disclosure details the Group’s sensitivity for a 25% (2009: 25%) increase and decrease in the rand against the relevant foreign currencies. 25% (2009: 25%) is the sensitivity rate used when reporting foreign currency risk internally to key management’s assessment of the reasonable possible change in foreign exchange rates.                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The sensitivity includes only outstanding foreign currency denominated items and adjusts their translation at the year end. For a 25% strengthening of the rand against the relevant currency, the impact is an increase in the profit and other equity of R12.1 million (2009: R57.7 million). For a 25% weakening of the rand against the relevant currency, the impact is a decrease in profit and other equity for R12.1 million (2009: R57.7 million). |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Forward foreign exchange contracts                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments. Exposure to exchange rate fluctuations is constantly monitored and, when the need arises, contracts are entered into.                                                                                                                                                                                                           |

----

| 25.    | FINANCIAL INSTRUMENTS (continued)            |
|--------|----------------------------------------------|
|   |                                         |
| (d)    | Foreign currency risk management (continued) |

|   |                                                                                                       |   | Averagerate |    |   | Foreigncurrency$’000 |   |    | ContractvalueR’000 |   |   | Market tomarket value R’000 |   |
|--------|------------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------|----------------------------|--------|---------|--------------------------|--------|--------|-----------------------------------|--------|
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |
|   | The following table details the forward foreign currency (FC) outstanding contracts at the reporting date: |   |        |    |   |                       |   |    |                     |   |   |                              |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |
|   | 2010 - Buy EUR                                                                                             |   |        |    |   |                       |   |    |                     |   |   |                              |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |
|   | Less than three months                                                                                     |   |        | 12.401  |   |                       |   | 68      |                     |   |   | 845                               |   |   |   | 673 |   |
|   | Three to six months                                                                                        |   |        | – |   |                       |   | – |                     |   |   | –                           |   |   |   | – |   |
|   | Greater than six monts                                                                                     |   |        | – |   |                       |   | – |                     |   |   | –                           |   |   |   | – |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   | 2010 - Buy USD                                                                                             |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   | Less than three months                                                                                     |   |        | 7.478   |   |                       |   | 1 498   |                     |   |   | 11 203                            |   |   |   | 10 999 |   |
|   | Three to six months                                                                                        |   |        | 7.567   |   |                       |   | 9 858   |                     |   |   | 74 600                            |   |   |   | 73 431 |   |
|   | Greater than six monts                                                                                     |   |        | 8.070   |   |                       |   | 8 250   |                     |   |   | 66 573                            |   |   |   | 65 255 |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   | 2009 - Buy USD                                                                                             |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |
|   | Less than three months                                                                                     |   |        | 9.56    |   |                       |   | 12 158  |                     |   |   | 116 222                           |   |   |   | 116 993 |   |
|   | Three to six months                                                                                        |   |        | 9.65    |   |                       |   | 2 092   |                     |   |   | 20 187                            |   |   |   | 20 322 |   |
|   | Greater than six monts                                                                                     |   |        | 9.95    |   |                       |   | 14 866  |                     |   |   | 147 935                           |   |   |   | 149 162 |   |
|   |                                                                                                       |   |        |    |   |                       |   |    |                     |   |   |                              |   |   |   |   |   |

|   |                                               |   |   | 2010R’000 |   |   |   | 2009R’000 |   |
|--------|----------------------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|   |                                               |   |   |            |   |   |   |            |   |
|   | Foreign currency forward contracts (USD)           |   |   | (2 692          | )      |   |   | 2 133           |   |
|   | Foreign currency forward contracts (EURO)          |   |   | (171            | )      |   |   | –         |   |
|   |                                               |   |   |            |   |   |   |            |   |
|   |                                               |   |   |            |   |   |   |            |   |
|   | Included in other financial (liabilities) / assets |   |   | (2 863          | )      |   |   | 2 133           |   |
|   |                                               |   |   |            |   |   |   |            |   |

----

| 25.    | FINANCIAL INSTRUMENTS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (e)    | Liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Ultimate responsibility for liquidity risk management rests with the board of directors, which has implemented an appropriate investment policy for the Group’s short, medium and long-term funding and liquidity management requirements. The Group manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in Note 29 is a listing of additional undrawn facilities that the Group has at its disposal to further reduce liquidity risk. |

|   |                              |   |   | <1 yearR’000 |     |   | 2 - 5 yearsR’000 |    |       | >5 yearsR’000 |   |    | TotalR’000 |   |
|--------|-----------------------------------|--------|--------|-----------------------|----------|--------|------------------------|---------|------------|------------------------|--------|---------|------------------|--------|
|   |                              |   |   |                  |     |   |                   |    |       |                   |   |    |             |   |
|   | 2010                              |   |   |                  |     |   |                   |    |       |                   |   |    |             |   |
|   | Trade and other payables          |   |   |                  | (751 634 | )      |                   | – |       |                   |   | – |             |   |   | (751 634 | ) |
|   | Loans from related parties        |   |   |                  | (47 365  | )      |                   |    | –    |                   |   |    | –          |   |   |   | (47 365 | ) |
|   | Licence fee payable               |   |   |                  | (78 330  | )      |                   |    | –    |                   |   |    | –          |   |   |   | (78 330 | ) |
|   | Loans from shareholders           |   |   |                  | –  |   |                   |    | –    |                   |   |    | (2 036 238       | )      |   |   | (2 036 238 | ) |
|   | Loans from financial institutions |   |   |                  | –  |   |                   |    | (2 875 675 | )                      |   |    | (370 000         | )      |   |   | (3 245 675 | ) |
|   |                              |   |   |                  |     |   |                   |    |       |                   |   |    |             |   |   |   |   |   |
|   |                              |   |   |                  |     |   |                   |    |       |                   |   |    |             |   |   |   |   |   |
|   | 2009                              |   |   |                  |     |   |                   |    |       |                   |   |    |             |   |   |   |   |   |
|   | Trade and other payables          |   |   |                  | 704 217  |   |                   |    | –    |                   |   |    | –          |   |   |   | 704 217 |   |
|   | Loans from related parties        |   |   |                  | (1 065   | )      |                   |    | (171 813   | )                      |   |    | –          |   |   |   | (172 878 | ) |
|   | Licence fee payable               |   |   |                  | (17 311  | )      |                   |    | (121 328   | )                      |   |    | –          |   |   |   | (138 639 | ) |
|   | Loans from shareholders           |   |   |                  | –  |   |                   |    | –    |                   |   |    | (1 200 031       | )      |   |   | (1 200 031 | ) |
|   | Loans from financial institutions |   |   |                  | –  |   |                   |    | (2 064 865 | )                      |   |    | –          |   |   |   | (2 064 865 | ) |
|   |                              |   |   |                  |     |   |                   |    |       |                   |   |    |             |   |   |   |   |   |   |

|   |                        |   |   | <1 yearR’000 |    |   | 2 - 5 yearsR’000 |   |    | >5 yearsR’000 |   |   | TotalR’000 |   |
|--------|-----------------------------|--------|--------|-----------------------|---------|--------|------------------------|--------|---------|------------------------|--------|--------|------------------|--------|
|   |                        |   |   |                  |    |   |                   |   |    |                   |   |   |             |   |
|   |  2010                  |   |   |                  |    |   |                   |   |    |                   |   |   |             |   |
|   | Trade and other receivables |   |   |                  | 509 246 |   |                   |   | – |                   |   |   | –          |   |   |   | 509 246 |   |
|   | Other investments           |   |   |                  | 30 095  |   |                   |   | 30 363  |                   |   |   | –          |   |   |   | 60 458 |   |
|   | Cash and bank balances      |   |   |                  | 64 744  |   |                   |   | – |                   |   |   | –          |   |   |   | 64 744 |   |
|   |                        |   |   |                  |    |   |                   |   |    |                   |   |   |             |   |   |   |   |   |
|   |                        |   |   |                  |    |   |                   |   |    |                   |   |   |             |   |   |   |   |   |
|   |  2009                  |   |   |                  |    |   |                   |   |    |                   |   |   |             |   |   |   |   |   |
|   | Trade and other receivables |   |   |                  | 500 575 |   |                   |   | – |                   |   |   | –          |   |   |   | 500 575 |   |
|   | Cash and bank balances      |   |   |                  | 433 616 |   |                   |   | – |                   |   |   | –          |   |   |   | 433 616 |   |
|   |                        |   |   |                  |    |   |                   |   |    |                   |   |   |             |   |   |   |   |   |

----

| 25.    | FINANCIAL INSTRUMENTS (continued)   |
|--------|-------------------------------------|
|   |                                |
| (f)    | Categories of financial instruments |
|   |                                |

|   |                              |   |   | Loans andreceivablesR’000 |    |   | At fair valuethrough profitand lossR’000 |   |    | Financialliabilities atamortised costR’000 |   |   | Fair valueof financialinstrumentsR’000 |   |
|--------|-----------------------------------|--------|--------|---------------------------------|---------|--------|------------------------------------------------|--------|---------|--------------------------------------------------|--------|--------|----------------------------------------------|--------|
|   |                              |   |   |                            |    |   |                                           |   |    |                                             |   |   |                                         |   |
|   |  2010                        |   |   |                            |    |   |                                           |   |    |                                             |   |   |                                         |   |
|   | Trade and other receivables       |   |   |                            | 509 246 |   |                                           |   | – |                                             |   |   | –                                      |   |   |   | 509 246 |   |
|   | Other investments                 |   |   |                            | 60 458  |   |                                           |   | – |                                             |   |   | –                                      |   |   |   | 60 458 |   |
|   | Cash and cash equivalents         |   |   |                            | 64 744  |   |                                           |   | – |                                             |   |   | –                                      |   |   |   | 64 744 |   |
|   | Loans from shareholders           |   |   |                            | – |   |                                           |   | – |                                             |   |   | 2 036 238                                    |   |   |   | 2 036 238 |   |
|   | Loans from financial institutions |   |   |                            | – |   |                                           |   | – |                                             |   |   | 3 245 675                                    |   |   |   | 3 245 675 |   |
|   | Loan from related parties         |   |   |                            | – |   |                                           |   | – |                                             |   |   | 47 365                                       |   |   |   | 47 365 |   |
|   | Trade and other payables          |   |   |                            | – |   |                                           |   | – |                                             |   |   | 751 634                                      |   |   |   | 751 634 |   |
|   | Licence fee payable               |   |   |                            | – |   |                                           |   | – |                                             |   |   | 78 330                                       |   |   |   | 78 330 |   |
|   | Other financial liabilities       |   |   |                            | – |   |                                           |   | – |                                             |   |   | 130 711                                      |   |   |   | 130 711 |   |
|   |                              |   |   |                            |    |   |                                           |   |    |                                             |   |   |                                         |   |   |   |   |   |
|   |                              |   |   |                            |    |   |                                           |   |    |                                             |   |   |                                         |   |   |   |   |   |
|   |  2009                        |   |   |                            |    |   |                                           |   |    |                                             |   |   |                                         |   |   |   |   |   |
|   | Trade and other receivables       |   |   |                            | 500 575 |   |                                           |   | – |                                             |   |   | –                                      |   |   |   | 500 575 |   |
|   | Other financial assets            |   |   |                            | – |   |                                           |   | 2 133   |                                             |   |   | –                                      |   |   |   | 2 133 |   |
|   | Cash and cash equivalents         |   |   |                            | 433 616 |   |                                           |   | – |                                             |   |   | –                                      |   |   |   | 433 616 |   |
|   | Loans from shareholders           |   |   |                            | – |   |                                           |   | – |                                             |   |   | 1 200 031                                    |   |   |   | 1 200 031 |   |
|   | Licence fee payable               |   |   |                            | – |   |                                           |   | – |                                             |   |   | 121 328                                      |   |   |   | 121 328 |   |
|   | Loans from financial institutions |   |   |                            | – |   |                                           |   | – |                                             |   |   | 2 064 865                                    |   |   |   | 2 064 865 |   |
|   | Loan from related parties         |   |   |                            | – |   |                                           |   | – |                                             |   |   | 172 878                                      |   |   |   | 172 878 |   |
|   | Trade and other payables          |   |   |                            | – |   |                                           |   | – |                                             |   |   | 704 217                                      |   |   |   | 704 217 |   |
|   | Licence fee payable               |   |   |                            | – |   |                                           |   | – |                                             |   |   | 17 311                                       |   |   |   | 17 311 |   |
|   |                              |   |   |                            |    |   |                                           |   |    |                                             |   |   |                                         |   |   |   |   |   |

|   | Effective interest rate on cash deposits ranges from 6.10% to 6.40% (2009: 8.55% to 8.95%).                                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                |
|   | Cash deposits have maturities ranging from 1 to 34 days.                                                                                                                                            |
|   |                                                                                                                                                                                                |
| 26.    | EMPLOYEE BENEFITS                                                                                                                                                                                   |
|   |                                                                                                                                                                                                |
|   | The Group operates a defined contribution retirement benefit plan for all qualifying employees.  The assets are managed separately from the Group by Momentum Group Ltd.                  |
|   |                                                                                                                                                                                                |
|   | The total expense recognised in the income statement of R43.6 million (2009: R36.1 million) represents contributions payable to this plan by the Group at rates specified in the rules of the plan. |

----

| 27.    | CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | ECS & ECNS Licence                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The Group was granted a Public Switched Telecommunication Service (PSTS) licence valid for a period of 25 years from 9 December 2005. This licence was converted on 16 January 2010 into an Electronic Communication Services (“ECS”) and Electronic Communication Network Services (“ECNS”) licence, in terms of the ICASA repudiation. These licences are subject to the fulfilment of certain obligations relating to service levels, roll out targets and annual licence fees. The Directors believe the obligations are achievable. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Preference dividend                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Cumulative preference dividends amounting to R74 million (2009: R37 million) will be declared and paid when the Group has distributable cash available, in terms of the Shareholders’ Agreement.                                                                                                                                                                                                                                                                                                                                                           |

|   |                                                      |   |   | 2010R’000 |   |   |   | 2009R’000 |   |
|--------|-----------------------------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|   |                                                      |   |   |            |   |   |   |            |   |
| 28.    | COMMITMENTS                                               |   |   |            |   |   |   |            |   |
|   |                                                      |   |   |            |   |   |   |            |   |
|   | Capital commitments                                       |   |   |            |   |   |   |            |   |
|   | Capital expenditure authorised and contracted for         |   |   | 412 440         |   |   |   | 751 855         |   |
|   | Capital expenditure authorised but not yet contracted for |   |   | 1 352 083       |   |   |   | 1 892 000       |   |
|   |                                                      |   |   |            |   |   |   |            |   |
|   |                                                      |   |   |            |   |   |   |            |   |
|   |                                                      |   |   | 1 764 523       |   |   |   | 2 643 855       |   |
|   |                                                      |   |   |            |   |   |   |            |   |

|   | Capital commitments comprise of commitments for property, plant and equipment. Management expects these commitments to be financed from borrowings and capital contributions from the Group’s shareholders. The Group has committed to participation in the East African Submarine System (EASSy) to the extent of US $9 million as well as the Seacom Submarine Cable initiative to the extent of US$ 16 million. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Operating lease commitments:                                                                                                                                                                                                                                                                                                                                                                                             |

|   | 2010                   |   | TotalR’000 |    |   | < 1 yearR’000 |   |    | 2 - 5 yearsR’000 |   |   | > 5 yearsR’000 |   |
|--------|------------------------|--------|------------------|---------|--------|------------------------|--------|---------|------------------------|--------|--------|-------------------------|--------|
|   | Buildings              |   |             | 369 741 |   |                   |   | 19 029  |                   |   |   | 62 971                  |   |   |   | 287 741 |   |
|   | Houses                 |   |             | 1 538   |   |                   |   | 1 393   |                   |   |   | 146                     |   |   |   | – |   |
|   | Vehicles               |   |             | 8 876   |   |                   |   | 3 216   |                   |   |   | 5 660                   |   |   |   | – |   |
|   | Sites                  |   |             | 208 853 |   |                   |   | 31 519  |                   |   |   | 116 544                 |   |   |   | 60 790 |   |
|   | Infrastructure network |   |             | 370 000 |   |                   |   | 370 000 |                   |   |   | –                 |   |   |   | – |   |
|   |                   |   |             |    |   |                   |   |    |                   |   |   |                    |   |   |   |   |   |
|   |                   |   |             |    |   |                   |   |    |                   |   |   |                    |   |   |   |   |   |
|   |                   |   |             | 959 008 |   |                   |   | 425 157 |                   |   |   | 185 321                 |   |   |   | 348 531 |   |
|   |                   |   |             |    |   |                   |   |    |                   |   |   |                    |   |   |   |   |   |

----

| 28.   | COMMITMENTS (continued) |
|-----------------|-------------------------|

|   |                   |   |   | TotalR’000 |      |   | < 1 yearR’000 |   |    | 1 - 5 yearsR’000 |   |   | > 5 yearsR’000 |   |
|--------|------------------------|--------|--------|------------------|-----------|--------|------------------------|--------|---------|------------------------|--------|--------|-------------------------|--------|
|   |  2009             |   |   |             |      |   |                   |   |    |                   |   |   |                    |   |
|   | Buildings              |   |   |             | 408 955   |   |                   |   | 36 974  |                   |   |   | 113 765                 |   |   |   | 258 216 |   |
|   | Houses                 |   |   |             | 1 537     |   |                   |   | 1 384   |                   |   |   | 153                     |   |   |   | – |   |
|   | Vehicles               |   |   |             | 17 887    |   |                   |   | 9 711   |                   |   |   | 5 275                   |   |   |   | 2 901 |   |
|   | Sites                  |   |   |             | 125 459   |   |                   |   | 22 286  |                   |   |   | 65 216                  |   |   |   | 37 957 |   |
|   | Infrastructure network |   |   |             | 658 000   |   |                   |   | 288 000 |                   |   |   | 370 000                 |   |   |   | – |   |
|   |                   |   |   |             |      |   |                   |   |    |                   |   |   |                    |   |   |   |   |   |
|   |                   |   |   |             |      |   |                   |   |    |                   |   |   |                    |   |   |   |   |   |
|   |                   |   |   |             | 1 211 838 |   |                   |   | 358 355 |                   |   |   | 554 409                 |   |   |   | 299 074 |   |
|   |                   |   |   |             |      |   |                   |   |    |                   |   |   |                    |   |   |   |   |   |

|   | The Group lease buildings, sites, houses and vehicles. The contracts for houses are for periods of up to two years, the vehicle leases are for up to five years and the buildings up to 20 years. The minimum lease payments under the building lease agreements are subject to average escalations of 9%. The minimum lease payments on the vehicles are subject to interest rate fluctuations and are adjusted as and when such changes in rates are announced. The monthly lease payments on the office equipment are fixed for the duration of the contracts. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 29.    | UNDRAWN BORROWING FACILITIES AND GUARANTEES                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The Group has undrawn borrowing facilities amounting to R1.17 billion (2009: R2.3 billion) with a consortium of banks comprising Nedbank Limited, Investec Bank Limited, Development Bank of Southern Africa Limited, Industrial Development Corporation of South Africa Limited, State Bank of India and Deutsche Investitions - und Entwicklungsgesellschaft mbH. The facilities have a remaining duration of two financial years, ending on 30 September 2012.                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Part of the conditions for the facilities drawdown is that each shareholder shall have subscribed for, and paid up in full, in accordance with the Equity Subscription Agreement, such Equity Contributions so as to ensure that, in respect of the drawdown on the facilities requested in the Drawdown Request, the aggregate of all advances requested shall be no greater than 1.5 times the aggregate of all Equity Contributions subscribed for and paid up in full by all the Shareholders. |

|   |               |   | MezzanineFacilityR’000 |     |   | Seniorterm loanR’000 |   |       | Subordinatedterm loanR’000 |   |   | TotalR’000 |   |
|--------|--------------------|--------|------------------------------|----------|--------|----------------------------|--------|------------|----------------------------------|--------|--------|------------------|--------|
|   |               |   |                         |     |   |                       |   |       |                             |   |   |             |   |
|   | Facility available |   |                         | 300 000  |   |                       |   | 3 100 000  |                             |   |   | 1 000 000        |   |   |   | 4 400 000 |   |
|   | Amount drawn       |   |                         | (220 023 | )      |                       |   | (2 273 568 | )                                |   |   | (733 409         | )      |   |   | (3 227 000 | ) |
|   |               |   |                         |     |   |                       |   |       |                             |   |   |             |   |   |   |   |   |
|   |               |   |                         |     |   |                       |   |       |                             |   |   |             |   |   |   |   |   |
|   | Facility available |   |                         | 79 977   |   |                       |   | 826 432    |                             |   |   | 266 591          |   |   |   | 1 173 000 |   |
|   |               |   |                         |     |   |                       |   |       |                             |   |   |             |   |   |   |   |   |
|   |               |   |                         |     |   |                       |   |       |                             |   |   |             |   |   |   |   |   |
|   | Interest on loan   |   |                         | 18 495   |   |                       |   | 228 282    |                             |   |   | 81 292           |   |   |   | 328 069 |   |
|   |               |   |                         |     |   |                       |   |       |                             |   |   |             |   |   |   |   |   |

|   | Borrowings                                                                                                                                                                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                    |
|   | The Directors do not have any borrowing powers except for temporary overdrafts. The shareholders, through the Board, issue specific approvals for the Directors to borrow funds on behalf of the Group. |
|   |                                                                                                                                                                                                    |
|   | The draw downs on the shareholders funding as at 31 March 2010 are as follows:                                                                                                                          |

|   |                                |   | SanctionedR’000 |      |   | DrawnR’000 |   |      | AvailablefacilityR’000 |   |
|--------|-------------------------------------|--------|-----------------------|-----------|--------|------------------|--------|-----------|------------------------------|--------|
|   |                                |   |                  |      |   |             |   |      |                         |   |
|   | Sepco Communication (Pty) Ltd       |   |                  | 1 496 000 |   |             |   | 1 173 000 |                         |   |   | 323 000 |   |
|   | VSNL SNOSPV Pte Ltd                 |   |                  | 792 000   |   |             |   | 690 000   |                         |   |   | 102 000 |   |
|   | Nexus Connexion (Pty) Ltd           |   |                  | 557 333   |   |             |   | 437 000   |                         |   |   | 120 333 |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd |   |                  | 88 000    |   |             |   | -         |                         |   |   | 88 000 |   |
|   |                                |   |                  |      |   |             |   |      |                         |   |   |   |   |
|   |                                |   |                  |      |   |             |   |      |                         |   |   |   |   |
|   | Total                               |   |                  | 2 933 333 |   |             |   | 2 300 000 |                         |   |   | 633 333 |   |
|   |                                |   |                  |      |   |             |   |      |                         |   |   |   |   |

----

|   |                                  |   |   | 2010R’000 |   |   |   | 2009R’000 |   |   |   | 2008R’000 |   |
|--------|---------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|   |                                  |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                  |   |   |            |   |   |   |            |   |   |   |            |   |
| 30.    | DIRECTORS’ EMOLUMENTS           |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                  |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Executive director’s emoluments |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Mr Ajay Pandey                        |   |   | 4 457           |   |   |   | 3 129           |   |   |   | 2 681           |   |

| 31.    | RELATED PARTY DISCLOSURES                                                           |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |
|   | Details of material transactions and balances with related parties were as follows: |
|   |                                                                                |
|   | Related party balances                                                              |
|   |                                                                                |
|   | Amounts included in share                                                           |
|   | capital and share premium                                                           |

|   | Sepco Communications (Pty) Ltd                                  |   |   | 293 250   |   |   |   | 176 715 |   |
|--------|-----------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|
|   | - VSNL SNOSPV Pte Ltd                                      |   |   | 126 567   |   |   |   | 76 271  |   |
|   | - Tata Africa Holdings (SA) (Pty) Ltd                           |   |   | 22 991    |   |   |   | 13 854  |   |
|   | - Communitel Telecommunications (Pty) Ltd                  |   |   | 71 846    |   |   |   | 43 295  |   |
|   | - Two Telecom Consortium (Pty) Ltd                         |   |   | 71 846    |   |   |   | 43 295  |   |
|   |                                                            |   |   |      |   |   |   |    |   |
|   | Transpoint Properties (Pty) Ltd*                                |   |   | –   |   |   |   | 103 950 |   |
|   | VSNL SNOSPV Pte Ltd *                                           |   |   | 155 250   |   |   |   | – |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd *                           |   |   | 17 250    |   |   |   | – |   |
|   | Nexus Connexion (Pty) Ltd                                       |   |   | 109 250   |   |   |   | 65 835  |   |
|   |                                                            |   |   |      |   |   |   |    |   |
|   |                                                            |   |   |      |   |   |   |    |   |
|   | (* - The shareholding was sold between these related parties)   |   |   |      |   |   |   |    |   |
|   |                                                            |   |   |      |   |   |   |    |   |
|   | Amounts included in loans from shareholders and related parties |   |   |      |   |   |   |    |   |
|   |                                                            |   |   |      |   |   |   |    |   |
|   | Sepco Communications (Pty) Ltd                                  |   |   | 1 038 573 |   |   |   | 612 112 |   |
|   | - VSNL SNOSPV Pte Ltd                                      |   |   | 448 326   |   |   |   | 264 188 |   |
|   | - Tata Africa Holdings (SA) (Pty) Ltd                      |   |   | 81 443    |   |   |   | 47 990  |   |
|   | - Communitel Telecommunications (Pty) Ltd                  |   |   | 254 527   |   |   |   | 149 967 |   |
|   | - Two Telecom Consortium (Pty) Ltd                         |   |   | 254 277   |   |   |   | 149 967 |   |
|   |                                                            |   |   |      |   |   |   |    |   |
|   | VSNL SNOSPV Pte Ltd                                             |   |   | 549 510   |   |   |   | 531 474 |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd                             |   |   | 61 057    |   |   |   | – |   |
|   | Nexus Connexion (Pty) Ltd                                       |   |   | 387 098   |   |   |   | 228 214 |   |
|   | Eskom Enterprises (Pty) Ltd                                     |   |   | –   |   |   |   | 1 065   |   |
|   |                                                            |   |   |      |   |   |   |    |   |

----

|   |                                                                                 |   |   | 2010R’000 |   |   |   | 2009R’000 |   |
|--------|--------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|   |                                                                                 |   |   |            |   |   |   |            |   |
| 31.    | RELATED PARTY DISCLOSURES (continued)                                                |   |   |            |   |   |   |            |   |
|   |                                                                                 |   |   |            |   |   |   |            |   |
|   | Amounts included in ‘Trade andother Payables’ and ‘Accruals’ |   |   |            |   |   |   |            |   |
|   |                                                                                 |   |   |            |   |   |   |            |   |
|   | Tata Communications Ltd                                                              |   |   | 34 148          |   |   |   | –         |   |
|   | Tata Communications (UK) Ltd                                                         |   |   | 141 663         |   |   |   | 38 145          |   |
|   | Tata Consultancy Services (Pty) Ltd                                                  |   |   | 15 220          |   |   |   | –         |   |
|   | Tata Bermuda (Pte) Ltd                                                               |   |   | 58 125          |   |   |   | –         |   |
|   | Telecom Namibia Ltd                                                                  |   |   | 138             |   |   |   | 9               |   |
|   | Neotel Business Support Services (Pty) Ltd                                           |   |   | –         |   |   |   | –         |   |
|   | Nexus/Nextube JVs                                                                    |   |   | 319             |   |   |   | –         |   |
|   | Stallion Security (Pty) Ltd                                                          |   |   | 237             |   |   |   | –         |   |
|   | EMG Consultants (Pty) Ltd                                                            |   |   | 908             |   |   |   | –         |   |
|   | arivia.Kom Ltd                                                                       |   |   | 137             |   |   |   | –         |   |
|   | Sonke Computer Services Africa (Pty) Ltd                                             |   |   | 1 539           |   |   |   | –         |   |
|   | Burlington Strategy Advisors (Pty) Ltd                                               |   |   | 125             |   |   |   | –         |   |
|   |                                                                                 |   |   |            |   |   |   |            |   |
|   |                                                                                 |   |   |            |   |   |   |            |   |
|   | Amounts included in ‘Trade and other receivables’                        |   |   |            |   |   |   |            |   |
|   |                                                                                 |   |   |            |   |   |   |            |   |
|   | Tata Communications (UK) Ltd                                                         |   |   | 125 927         |   |   |   | 48 647          |   |
|   | Eskom Enterprises (Pty) Ltd                                                          |   |   | –         |   |   |   | 1 540           |   |
|   | Transnet Ltd                                                                         |   |   | –         |   |   |   | 33 151          |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd                                                  |   |   | (48             | )      |   |   | 16              |   |
|   | Neotel Business Support Services (Pty) Ltd                                           |   |   | –         |   |   |   | –         |   |
|   | Tata Communications Ltd                                                              |   |   | 4 755           |   |   |   | 23 400          |   |
|   | Tata Steel (KZN) (Pty) Ltd                                                           |   |   | 50              |   |   |   | –         |   |
|   | Telecom Namibia Ltd                                                                  |   |   | 7 279           |   |   |   | –         |   |
|   | Sonke Computer Services Africa (Pty) Ltd                                             |   |   | 143             |   |   |   | –         |   |
|   | Tata Communications (US) Inc.                                                        |   |   | 531             |   |   |   | –         |   |
|   | Tata Communications (Americas) Inc                                                   |   |   | 831             |   |   |   | –         |   |
|   | Tata Communications (Canada) LLC                                                     |   |   | 11 978          |   |   |   | –         |   |
|   | Tata Communications Transformation                                                   |   |   | 1 604           |   |   |   | –         |   |
|   | arivia.Kom Ltd                                                                       |   |   | –         |   |   |   | 748             |   |
|   |                                                                                 |   |   |            |   |   |   |            |   |

----

|   |                                             |   |   | 2010R’000 |   |   |    | 2009R’000 |   |   |    | 2008R’000 |   |
|--------|--------------------------------------------------|--------|--------|-----------------|--------|--------|---------|-----------------|--------|--------|---------|-----------------|--------|
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
| 31.    | RELATED PARTY DISCLOSURES (continued)            |   |   |            |   |   |    |            |   |   |    |            |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Related party transactions                       |   |   |            |   |   |    |            |   |   |    |            |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Revenue                                          |   |   |            |   |   |    |            |   |   |    |            |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Tata Communications (UK) Ltd                     |   |   | 90 577          |   |   |    | 20 257          |   |   |    | 10 517          |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |    | 256 734         |   |   |    | 20 658          |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd              |   |   | 69              |   |   |    | 46              |   |   |    | 182             |   |
|   | Tata Consultancy Services (Pty) Ltd              |   |   | 740             |   |   |    | 597             |   |   |    | 103             |   |
|   | Tata Communications Ltd                          |   |   | 4 689           |   |   |    | 44 274          |   |   |    | –         |   |
|   | Tata Steel (KZN) (Pty) Ltd                       |   |   | 277             |   |   |    | –         |   |   |    | –         |   |
|   | Eskom Ltd                                        |   |   | –         |   |   |    | 1 461           |   |   |    | –         |   |
|   | Telecom Namibia Ltd                              |   |   | 1 277           |   |   |    | –         |   |   |    | –         |   |
|   | Sonke Computer Services Africa (Pty) Ltd         |   |   | 155             |   |   |    | –         |   |   |    | –         |   |
|   | Tata Communications (US) Inc.                    |   |   | 531             |   |   |    | –         |   |   |    | –         |   |
|   | Tata Communications (Americas) Inc               |   |   | 831             |   |   |    | –         |   |   |    | –         |   |
|   | Tata Communications (Canada) LLC                 |   | 2 756  |            |   |   | – |            |   |   | – |            |
|   | Good Hope Palace Hotels (Pty) Ltd                |   |   | 237             |   |   |    | –         |   |   |    | –         |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Costs charged by related parties are as follows: |   |   |            |   |   |    |            |   |   |    |            |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Outsourced and consulting services               |   |   |            |   |   |    |            |   |   |    |            |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Tata Consultancy Services (Pty) Ltd              |   |   |            |   |   |    |            |   |   |    |            |   |
|   | - OSS/BSS costs                             |   |   | 74 406          |   |   |    | 22 791          |   |   |    | 10 605          |   |
|   | Tata Communications Ltd                          |   |   |            |   |   |    |            |   |   |    |            |   |
|   | - OSS/BSS costs                             |   |   | –         |   |   |    | 50 525          |   |   |    | 4 928           |   |
|   | - Technical Services Agreement costs        |   |   | 24 499          |   |   |    | 17 621          |   |   |    | 19 778          |   |
|   | - Reimbursement of out of pocket costs      |   |   | –         |   |   |    | –         |   |   |    | 511             |   |
|   | Nexus/Nextube JVs                                |   |   |            |   |   |    |            |   |   |    |            |   |
|   | - Technical Services Agreement costs        |   |   | 4 437           |   |   |    | –         |   |   |    | –         |   |
|   | Burlington Strategy Advisors (Pty) Ltd           |   |   |            |   |   |    |            |   |   |    |            |   |
|   | - Consulting fee                            |   |   | 2 308           |   |   |    | –         |   |   |    | –         |   |
|   | Sonke Computer Services Africa (Pty) Ltd         |   |   |            |   |   |    |            |   |   |    |            |   |
|   | - Consulting fee                            |   |   | 24 435          |   |   |    | –         |   |   |    | –         |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |    | –         |   |   |    | 148             |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Payments to other operators                      |   |   |            |   |   |    |            |   |   |    |            |   |
|   | Tata Communication (UK) Ltd                      |   |   | 96 820          |   |   |    | 44 803          |   |   |    | 40 823          |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |    | 5 059           |   |   |    | –         |   |
|   | Telecom Namibia                                  |   |   | 970             |   |   |    | 628             |   |   |    | –         |   |
|   |                                             |   |   |            |   |   |    |            |   |   |    |            |   |

----

|   |                                             |   |   | 2010R’000 |   |   |   | 2009R’000 |   |   |   | 2008R’000 |   |
|--------|--------------------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
| 31.    | RELATED PARTY DISCLOSURES (continued)            |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Costs charged by related parties are as follows: |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Security costs                                   |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Stallion Security Services (Pty) Ltd             |   |   | 1 399           |   |   |   | –         |   |   |   | –         |   |
|   | Eskom Enterprises (Pty) Ltd                      |   |   | –         |   |   |   | –         |   |   |   | 129             |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Rentals                                          |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |   | 1 309           |   |   |   | 2 827           |   |
|   | Eskom Enterprises (Pty) Ltd                      |   |   | –         |   |   |   | 1 141           |   |   |   | 563             |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Vehicle hire                                     |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Tata Communications Ltd                          |   |   | 8               |   |   |   | –         |   |   |   | –         |   |
|   | Tata Africa Holdings (SA) (Pty) Ltd              |   |   | –         |   |   |   | –         |   |   |   | 394             |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |   | –         |   |   |   | 33              |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Telephone costs                                  |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |   | 2 388           |   |   |   | 279             |   |
|   | Eskom Enterprises (Pty) Ltd                      |   |   | –         |   |   |   | –         |   |   |   | 880             |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Maintenance Charges                              |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |   | 2 484           |   |   |   | 2 480           |   |
|   | Nexus/Nextube JVs                                |   |   | 19 380          |   |   |   | –         |   |   |   | –         |   |
|   | Sonke Computer Services Africa (Pty) Ltd         |   |   | 50 598          |   |   |   | –         |   |   |   | –         |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Electronic data costs                            |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Eskom Enterprises (Pty) Ltd                      |   |   | –         |   |   |   | 534             |   |   |   | –         |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Energy costs                                     |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Eskom Enterprises (Pty) Ltd                      |   |   | –         |   |   |   | 1               |   |   |   | –         |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |   | 1               |   |   |   | –         |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Parking costs                                    |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Transnet Ltd                                     |   |   | –         |   |   |   | 48              |   |   |   | –         |   |
|   |                                             |   |   |            |   |   |   |            |   |   |   |            |   |

----

|   |                                           |   |   | 2010R’000 |   |   |   | 2009R’000 |   |   |   | 2008R’000 |   |
|--------|------------------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
| 31.    | RELATED PARTY DISCLOSURES (continued)          |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Operating leases                               |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Transnet Ltd                                   |   |   | –         |   |   |   | 6 609           |   |   |   | –         |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Personnel costs                                |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Transnet Ltd                                   |   |   | –         |   |   |   | 6               |   |   |   | –         |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Interest charges                               |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Sepco Communications (Pty) Ltd                 |   |   | 82 211          |   |   |   | 59 417          |   |   |   | 16 262          |   |
|   | - VSNL SNOSPV Pte Ltd                     |   |   | 35 501          |   |   |   | 25 645          |   |   |   | 7 024           |   |
|   | - Tata Africa Holdings (SA) (Pty) Ltd     |   |   | 6 448           |   |   |   | 4 658           |   |   |   | 1 276           |   |
|   | - Communitel Telecommunications (Pty) Ltd |   |   | 20 157          |   |   |   | 14 557          |   |   |   | 3 981           |   |
|   | - Two Telecom Consortium (Pty) Ltd        |   |   | 20 105          |   |   |   | 14 557          |   |   |   | 3 981           |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Transpoint Properties (Pty) Ltd                |   |   | –         |   |   |   | 34 602          |   |   |   | 9 554           |   |
|   | VSNL SNOSPV Pte Ltd                            |   |   | 48 362          |   |   |   | –         |   |   |   | –         |   |
|   | Nexus Connexion (Pty) Ltd                      |   |   | 30 634          |   |   |   | 22 391          |   |   |   | 6 083           |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
| 32.    | COMPENSATION OF KEY MANAGEMENT PERSONNEL       |   |   |            |   |   |   |            |   |   |   |            |   |
|   |                                           |   |   |            |   |   |   |            |   |   |   |            |   |
|   | Short term benefits                            |   |   | 93 088          |   |   |   | 57 659          |   |   |   | 12 086          |   |

| 33.  | GOING CONCERN |
|-----------|---------------|

|   | The Directors have reviewed the Company’s cash flow statement for the forthcoming year to 31 March 2011 and, in light of this review and the current financial position, they are satisfied that the Company has access to adequate resources to continue in operational existence for the foreseeable future. The going concern assumption is supported by |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Undrawn committed funding facilities of R1 806 billion |
|--------|---------|--------------------------------------------------------|

|   | ● | Shareholder profile and specifically Tata Communications Limited & Tata Africa Holdings SA (Pty) Limited together owns 56% of the company |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | The ability to manage the cash outflows on the capital intensive infrastructure project |
|--------|---------|-----------------------------------------------------------------------------------------|

|   | ● | Agreement by all shareholders to fulfill their obligations in respect of the injection of the new equity equivalent to the shortfall of the targeted EBITDA as defined in the lenders agreement stipulated in the financing arrangement to effect the required “cure” to the initial EBITDA breach (Refer to Note 34). |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 34. | STATUS OF FUNDING |
|-----|-------------------|

| 34.1 | Under the LFCTA, Neotel is obliged to meet financial covenants quarterly. The EBITDA breach of 31 March 2010 quarter has been cured by way of induction of new equity and the shareholders have committed to meeting the expected cure for the 30 June 2010 EBITDA breach. To this end the call for new equity has been made. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.2 | Lenders in response to Neotel’s request have agreed to consider waiving the 31 March 2010 breach provided that they are satisfied with the outcome of the review of the business plan, strategy, and overall performance, currently underway. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.3 | Neotel and the lenders have agreed to revisit the LFCTA and the process is currently underway and expected to be completed by 31 December 2010. Furthermore, the shareholders and lenders are discussing ways to meet the funding shortfall as envisaged in the revised business plan and to remedy the September 2010 breach. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 34.4 | The review is currently underway and is expected to be completed by 31 December 2010. |
|------|---------------------------------------------------------------------------------------|

| 35.  | POST BALANCE SHEET EVENTS |
|-----------|---------------------------|

|   | The Directors are not aware of any material events not otherwise dealt with in the annual financial statements that would affect the operations of the Group significantly, other than: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | The acquisition of a 20% investment in Number Portability Company (Proprietary) Limited for an amount of R9 million; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | ● | The intention to purchase the Midrand property subject to successful raising of funding and requisite approvals; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | ● | The intention to dispose of the satellite business, subject to conclusion of several conditions precedent in the agreement. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------|

----

| TATA COMMUNICATIONS LIMITED,     |                        |
|----------------------------------|-----------------------------|
|                             |                        |   |
| By:                              | /s/ Narasimhan Srinath |   |
| Name: Narasimhan Srinath         |                        |
| Title: Managing Director and CEO |                        |

| By:                            | /s/ Sanjay Baweja |   |
|--------------------------------|------------------------|--------|
| Name: Sanjay Baweja            |                   |
| Title: Chief Financial Officer |                   |
|                           |                   |   |

----

| ExhibitNumber |   | Description                                                                                                            |
|---------------|--------|------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                   |
| 12.1          |   | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                |
|          |   |                                                                                                                   |
| 12.2          |   | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                |
|          |   |                                                                                                                   |
| 13.1          |   | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

----