2010 was another significant year in the evolution of Vox Telecom. In an environment of regulatory change and increased competition in all market segments, Vox continued to differentiate itself as the leading alternative independent telecommunications company across the South African telecommunications market.

PERFORMANCE

Although our revenues remained flat at R2.07 billion we increased headline earnings to R72 million (2009: R68 million).

We generated an operating profit of R108 million for the period, but significantly increased cash generated from operations by 35% to R251 million and increased our cash-on-hand by 78% to R164 million. In addition, we further reduced our short- and long-term debt by R84 million and invested R36 million into our network.

Despite a highly competitive trading environment, deflationary pricing in the voice and data market and the regulatory impact of lower interconnect rates, we have maintained our market share and continue to experience low churn in our corporate customer base, which is evidence of our success in offering a competitively priced voice and data solution that meets market needs.

We do however, recognise that we need to do better and we intend to improve our financial performance as we execute the transition of the majority of our corporate voice customers onto our own network over the next 18 – 24 months. Infrastructure

INVESTMENT

This year we have further invested in our infrastructure with an additional upgrade of our data centres and core network infrastructure with the final roll out of Juniper routers to replace our Cisco equipment. This not only enhanced the quality of our core network infrastructure, but also provided us with increased capacity for our voice and data traffic. We have increased the capacity of our physical network interconnects with the major mobile operators and continue to experience significant growth in our interconnect traffic, which we expect to continue.

During the year we also upgraded our software platforms and ensured that our customer care, billing, provisioning and network management systems can support the growth of our business. This is an ongoing process and we will continue to invest in our network and software infrastructure to ensure that we can offer carrier class voice and data services to our customers.

REGULATIONS

This year has been marked by a number of changes to the regulation of the telecommunications sector. The previous Minister of Communications, General Siphiwe Nyanda, brought an increased focus on key issues affecting pricing and competition - in particular the reduction in wholesale fixed and mobile termination rates.

ICASA initially reduced wholesale mobile termination rates by 36%, effective March 2010. On October 29, 2010 ICASA made a further proclamation that will result in the further reduction of fixed and mobile termination rates via a glide path over a three year period from March 2011 through March 2013.

Of further significance is that Local Number Portability (LNP) became legal in April 2010 and has now been implemented. This is a major breakthrough for alternative carriers and for the first time Vox Telecom can port numbers from Telkom customers onto our network. Although the process to effect porting has been complex and time consuming to execute, we expect to see the benefit in our voice business over the coming years.

Vox has been a leader in driving the deregulation and liberalisation of the South African telecommunications market and we will continue to lobby parliament, the Department of Communications (DOC), the Minister and ICASA for the benefit of all market participants and customers.

As we go to print with this Annual Report we note that a new Minister of Communications, Roy Padayachie has been appointed to succeed General Siphiwe Nyanda. We are hopeful that this change will not impede the pace of positive regulatory change, but will in fact accelerate deregulation to the benefit of all customers in the South African market.

THE FUTURE

Vox Telecom continues to have a major impact on the telecommunications landscape in southern Africa through offering innovative, reliable products, novel pricing and by providing outstanding customer service.

We have made further progress as a business over the past year in an environment where we faced constant deflationary pricing and fierce competition in all the market segments in which we compete. We appreciate the support of all our customers who trust us with their telecommunications needs. As we start to roll out a full telco solution to our large corporate customer base, we are aware of the need to maintain quality and reliability and to ensure we deliver exceptional service.

I would like to recognise all our employees and the executive team for their outstanding contribution in 2010. I would also like to thank our customers, partners, distributors, resellers and professional advisors for their dedication and commitment to Vox Telecom.

In closing I would like to thank the Board and shareholders for their support and guidance. I look forward to reviewing our performance with you next year.