Digital business transformation

Digital business transformation enables the Group to reimagine customer value propositions, modernise operating models and create sustainable growth through digital platforms and ecosystems.

In FY2026, the Group refined and integrated its digital business strategy with broader strategic planning processes. This establishes the foundation for a fit‑for‑purpose technology operating model and enabling enterprise architecture that are aligned with Telkom's long-term objectives.

We optimised our enterprise architecture capabilities by assessing and benchmarking our corporate application and technology landscape. Capital funding was approved for FY2027, balancing short-term rationalisation and modernisation with longer‑term strategic platform investments. Priority areas for investment include:

• Infrastructure and enterprise resource planning (ERP) modernisation
• Enhanced cybersecurity
• Selective use of alternative platforms to large original equipment manufacturer (OEM) solutions
• The establishment of a private AI model

At Telkom Consumer, we reimagined digital customer journeys through the launch of the Telkom SuperApp, an evolution of the MyTelkom App. The SuperApp consolidates our digital services into a unified platform spanning acquisitions, order management, billing and account management. It supports increased digital sales, reduced call centre volumes and faster time‑to‑market.

Telkom Consumer also introduced conversational AI through the AI Anchor platform.

This enables real-time customer interaction for FAQs, troubleshooting and product queries, and improves continuity between self‑service and assisted support.

Openserve advanced wholesale digital enablement by expanding and maturing its unified partner platform (UPP) as the primary self-service channel for ISPs and partners. End-to-end digital journeys now support onboarding, quoting, ordering, service management, fault resolution and reporting, complemented by the Openserve website, Connect App and WhatsApp channel.

Investment in cloud‑based, API‑enabled platforms improved scalability, resilience and speed‑to‑market, reinforcing Openserve's position as a digitally led open‑access network provider.

At Group level, customer and colleague journeys were enhanced through human‑centric AI solutions such as Bafo and PoliPal. Bafo combines an African large language model with AI virtual agents and speech analytics. The platform helped to reduce queries requiring human intervention by up to 62%. This improved query deflection by 47% month on month and saved R23 million in costs over 18 months in the BCX contact centres. PoliPal provides AI-enabled access to policies and procedures, reducing reliance on manual HR support and improving productivity.

IT modernisation

We advanced IT modernisation through a more co-ordinated, enterprise‑led OneTelkom approach. Initiatives were consolidated into a structured, multi‑year programme that will transition critical platforms to scalable, standardised and supportable infrastructure.

Group‑wide initiatives included the refresh of core network platforms and the migration of service management, content and selected customer‑facing platforms to cloud‑aligned solutions. We re‑platformed multiple applications onto standardised environments, reducing duplication, simplifying operations and improving consistency. Upgrades to foundational platforms and core infrastructure improved performance, reliability and alignment with vendor‑supported roadmaps, and reduced reliance on extended support arrangements for legacy systems.

Telkom Consumer focused on improving efficiency, stability and integration. Upgrades to core systems strengthened data integration and reduced technical debt. Enhancements to the Enterprise portal improved accessibility and responsiveness across internal and customer-facing interactions, providing a stable and scalable foundation for digital transformation and customer‑centric service delivery.

These modernisation initiatives form part of a phased capital investment approach. We aim to realise value progressively through estate simplification, reduced maintenance costs and more efficient use of shared platforms, while enabling future digital and cloud‑based capabilities.

Core platform transformation

The transformation of Telkom's core operational support system (OSS) and business support system (BSS) platforms is central to improving operational performance, resilience and customer experience, while enabling future digital business models.

The core Telkom Consumer BSS transformation entered phase 3, shifting from technical enablement to business‑led transformation. The aim is to embed the platform within business operations, strengthen adoption and realise value beyond system deployment.

A BSS platform upgrade was completed, focusing on revenue protection across billing and order management. This resulted in service-level agreement (SLA) performance of 95.02% across BSS and core systems. Availability exceeded 99.975% across the core BSS environment, and high-priority incidents were reduced. The stabilised platform supports average monthly pinless recharge revenue of approximately R1.03 billion, while ongoing transformation efforts focus on improving agility, time‑to‑market and end‑to‑end integration.

Openserve focused on phase 2 of its OSS transformation programme, implementing technologies to modernise network operations and assurance. We modernised the logical network inventory management system for optical transport network (OTN) services, creating an online digital network twin. This enhanced planning, feasibility assessment and network assurance processes, enabling near real‑time visibility of active inventory. In parallel, we enhanced fault correlation capabilities for internet protocol (IP) and OTN services, improving recovery and restoration times and enabling proactive service management as a value‑added offering.

Automation of planning processes reduced order processing times for OTN services, while online inventory capabilities represent a differentiator in the South African market.

IT cost optimisation

Telkom initiated a Group-wide, structurally driven IT cost optimisation programme in FY2026. The programme addresses complexity, duplication and inefficiencies arising from a historically federated model. The aim is to re-baseline IT operating expenditure via a phased approach to 5% of Group revenue by FY2028, aligning Telkom with industry norms.

Over the three-year period, approximately R1.7 billion in IT capex has been allocated to strategic investments in infrastructure modernisation, enhanced cybersecurity, ERP modernisation, alternative platforms and the establishment of a private AI model. Together, these investments will shift the cost base towards Group-owned digital assets, thereby reducing long-term run costs and dependency on third parties.

IT governance, IT security and enterprise resilience

Telkom further strengthened IT governance, risk and compliance frameworks, controls and oversight by:

• Reviewing and aligning the cybersecurity governance framework and strategy for evolving threats, regulatory requirements and globally recognised standards such as National Institute of Standards (NIST) and ISO-based principles
• Enhancing third-party cybersecurity risk management and introducing data governance guardrails to better anage data-sharing risks and protect sensitive information and intellectual property
• Updating and improving IT resilience and continuity frameworks, policies, standards and procedures covering access governance, authentication, data classification, security logging and monitoring, IoT security and information security awareness. Telkom maintained its externally audited ISO 27001 certification

The Group's systems showed strong resilience to outages, disruptions and cyber events. The cybersecurity incident response team effectively contained and mitigated a targeted email‑based security incident in June 2025, with no data leakage or disruption to operations.

We enhanced Board‑level technology governance and oversight through more structured reporting on IT risk, cybersecurity posture and compliance, and revisions to Committee terms of reference aligned with King IV principles.

Artificial intelligence

AI is a foundational Group capability to augment products, processes and decision-making and enhance efficiency, customer experience and resilience. The Group's approach is pragmatic and value-led, focusing on demonstrable business outcomes rather than isolated experimentation.

The Group AI framework was published and socialised to establish a common reference. We also published our Code of AI Ethics, initiated AI security standards and drew up terms of reference for a Group AI Council. These elements provide guardrails for responsible innovation and enable learning and experimentation to flourish in a controlled way.

In Telkom Consumer, initial AI use cases deployed conversational AI to support real-time customer interactions across digital channels. These use cases improved response times, service consistency and operational efficiency. They provide a scalable foundation for future expansion into predictive analytics and intelligent automation.

Openserve applied AI and advanced analytics to support data‑led growth, particularly within the pre‑paid portfolio. Predictive analytics supported recharge forecasting, customer segmentation and targeted marketing. Churn prediction models enabled early identification of at‑risk customers and more effective retention interventions.

Openserve also introduced generative AI‑powered virtual agents to support digital customer care across social media, email and web channels. This improved response accuracy and reduced resolution times through retrieval‑augmented generation techniques.

BCX continued to embed AI at scale, shifting from reactive support models to intelligent self‑learning systems, improving service performance, responsiveness and decision-making. These capabilities underpin BCX's evolution towards platform‑led, AI‑enabled solutions that deliver measurable client value.

Innovation and R&D

Telkom's R&D and innovation programmes delivered commercial and societal value in FY2026 through a dual‑track model combining industry‑focused R&D and nationally co‑funded academic research. The industry R&D lab at Wits University, for example, produced a Voice of the Customer platform, an AI‑powered solution for customer experience management at scale.

The Telkom‑NRF FutureTech Programme, a three‑year R18 million co‑investment, completed its first full operational year, advancing multi-institutional research across AI, 5G and IoT. The SATNAC 2025 Industry Solutions Challenge engaged 235 students from 84 institutions, generating innovations in areas such as AI fraud detection, autonomous network design and customer experience transformation.

We also supported innovation and ecosystem development through Telkom FutureMakers, which launched the AI Growth Catalyst Programme in partnership with the UK‑South Africa Tech Hub and Disraptor. The programme supported 10 ICT start‑ups.

Telkom brand equity

Telkom leverages several tools, services and policies to ensure the purposeful impact of our brand and reputation, including:

• Policies and evaluation metrics to align brand activity with our purpose and vision
• Tools to stay "on the pulse" to deliver brand impact, shared value and reputational resonance
• Tools and services that ensure an "outside-in" approach guided by the voice of our customers, driving continuous improvement in customer satisfaction

Our awards and recognition in FY2026:

• Telkom and BCX were both certified as a Top Employer in South Africa
• Telkom was ranked as the leader in high-scoring value plans by independent global pricing and research firm Tarifica
• Telkom Consumer retained a top two spot in the Ask Africa Orange Index^TM, which highlights customer trust and engagement
• Telkom was rated "Excellent" for the ninth consecutive year at the EY Integrated Reporting Awards, reflecting high-quality, transparent and integrated reporting
• Telkom was the winner in the Fledgling/ AltX category at the 2025 CGISA‑JSE Integrated Reporting Awards, recognising the quality and progress of our integrated reporting and commitment to transparent value creation

Looking ahead

Telkom will continue to apply cost discipline while preparing to shift towards a unified, shared‑service‑enabled enterprise architecture. The evolution of the Group IT operating model will support greater collaboration, scalability and alignment.

Telkom Consumer's priorities include scaling the business‑led transformation programme, embedding agile ways of working, accelerating adoption of modernised platforms and expanding AI capabilities.

Openserve will focus on OSS transformation and digitalisation, reducing dependence on ageing systems, and pragmatically applying mature AI capabilities where they deliver value.

Across the Group, managing the complexity of large‑scale transformation and evolving cybersecurity threats remain key considerations, balanced by opportunities to leverage digital, data and AI capabilities to drive efficiency, resilience and growth.