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Dirk Fourie

Differentiation is the key

It has been a tough year for the local telecommunications market, with exchange rate fluctuations and
ongoing regulatory uncertainty for network operators.

The exchange rate, in particular, placed significant pressure on our margins as the Rand depreciated by
31% against our major import partner countries during the financial year. Market demand for data and
associated services nevertheless means that operators have to continue investing in their network
infrastructures or risk falling behind. For companies like ours, which supplies services and FTTx
equipment to the telcos, this is good news.

MTN announced in early May that it is investing R12 billion in its network to improve and expand
coverage, while Vodacom is continuing to invest in fibre network infrastructure. Vodacom, MTN and Cell
C are all testing LTE-U, a technology that uses the licensed and unlicensed frequency spectrum to deliver
high-speed mobile broadband. The rollout of fibre infrastructure around the country - both as backhaul
and for last-mile delivery - continues apace. Telkom, MTN, Vodacom and others are all rolling out fibre
as demand for high-speed internet connectivity in the business and consumer sectors continues to grow.

Tedaka is responding to these market conditions in several ways. We have recently merged with Redline
SA, a telecommunications solutions provider. Combining Redline’s services with Tedaka’s expertise in
acquiring and distributing telecommunications equipment means the merged entity - Tedaka Network
Solutions - will be able to provide comprehensive solutions to our clients.

For the five years we have been operating, Tedaka has been mostly an equipment distributor, and this
still comprises 90% of the business.

The distribution business in the ICT sector is, however, subject to very tight margins, and success in this
arena depends on being able to run a very streamlined operation. Having already significantly expanded
our warehousing and logistics capacity, we are looking to further improve efficiencies and reduce costs
in the supply chain. Having also doubled our business year-on-year for the past three years, we have
outgrown our current planning and ERP solutions. We therefore intend to invest in this area during the
current financial year.

Tedaka is differentiating itself in the market through developing equipment to fulfil uniquely South
African requirements. It is here that our position as part of the Ansys group will yield tangible benefits;
through giving access to Ansys’ engineering capacity and capability. Development of our first product –
an ultra-small fibre splicing enclosure - is at the advanced stage.
Further along the line, we are looking to expand beyond our current home base in Johannesburg,
probably by setting up additional operations in Cape Town.

Tedaka sees itself as a trusted partner to its clients, and we ensure that the relationships we have
between our suppliers, ourselves and our customers are transparent and mutually beneficial. Keeping
close to our customers and working with them to find the best solutions to meet their specific needs is
how Tedaka addresses both current market conditions and the competitive landscape. We are confident
this approach will continue to drive the company’s success.

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