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Vodacom Group Limited Integrated report for the year ended 31 March ’13

Environment report

In an attempt to minimise our environmental impact, we have to look for opportunities to work smarter to make our operations more efficient and to reduce costs. We are a leader in operationalising new technology and we work closely with our partners to achieve this, whether in renewable energy or working to make existing technology more efficient.

Our products and services have the potential to reduce carbon emissions associated with traditional forms of business, providing a unique opportunity to support the transition to a low carbon economy. We are also well placed to enable transformative technologies. One example is machine-to-machine technology, through which electronic devices can communicate between themselves or with central data centres. This holds great potential for more efficiently managing carbon emissions, for example intelligently managing fleet logistics to realise the best possible fuel efficiency.

Through our membership of the National Business Initiative (‘NBI’), a regional partner of the World Business Council for Sustainable Development (‘WBCSD’) we have committed to playing our part in shaping and influencing a sustainable future through responsible business leadership and action.

Managing our environmental impact

To remain competitive we constantly look for opportunities to innovate and work smarter. The same applies to how we manage our impact on the environment, in that we are always looking for ways of doing things that – while addressing environmental concerns – drive value for our business through lower cost and greater efficiency and resilience.

Our environmental management systems (‘EMS’) across all our operations are aligned to ISO 14001. This year, our South African operations retained their ISO 14001

certification, and we are looking to extend the scope of this certification to our International operations. Group Internal Audit conducted an audit of the alignment between ISO 14001 and EMS in the DRC, Tanzania and Mozambique, the results of which were positive. To ensure that we have the necessary skills to implement and maintain ISO 14001 certification, we have trained our health, safety and environment (‘HSE’) specialists on the implementation of ISO 14001 as well as how to apply our environmental policy and standards.

Measuring our environmental performance

To effectively manage our impact on the environment we need to understand the extent of our impact and the effectiveness of our mitigating actions. While Vodacom South Africa has reported against the following indicators for the past three years, this is the first year that our International operations have reported against them. The following indicators are measured and reported every six months:

• handsets reused and recycled;

• network waste;

• office paper utilised;

• compliance with environmental laws;

• electricity and diesel consumption;

• vehicle fleet fuel consumption;

• business air travel;

• renewable energy sites;

• water consumption; and

• fire suppressants and refrigeration gas refills.

1 Managing our environmental impact1 Measuring our environmental performance2 Carbon disclosure4 Smarter, more efficient operations4 Powering our network through renewable energy4 Green network coverage for farming communities4 Making our buildings greener6 Working with our suppliers7 Compliance with environmental laws7 Glossary

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Environment report continued

Oversight of our environmental performance is primarily provided by the Group Audit, Risk and Compliance Committee and the Group Social and Ethics Committee.

The following table illustrates our environmental performance over the past three years:

Key environmental performance indicators

Year ended 31 March % change

2013 2012 2011 12/13

Group indicators

Reduction in carbon emissions per site1 (%) 6.2 11.5 – –

CO2 emissions2 (tonnes) 544 381 526 837 410 471 3.3

Number of base station sites 12 835 11 595 10 705 10.7

South Africa indicators

Number of base station sites 9 405 8 946 8 394 5.2

Number of shared sites 4 081 3 646 n/m 11.9

M2M connections (thousand) 983 793 694 24.0

Access network electricity (GWh) 206.6 189.4 195.8 9.1

Core network electricity (GWh) 77.4 65.7 n/m 17.8

Data centres electricity (GWh) 51.5 43.7 n/m 17.8

Building electricity (GWh) 60.2 81.2 101.8 (25.9)

Diesel generator fuel (million litres) 2.9 2.7 n/m 7.4

Vehicle fuel (diesel and petrol) (million litres) 1.9 1.9 2.1 –

Network equipment and handsets reused or recycled3 (tonnes) 396 254 611 55.9

Water per employee (kl) 47.3 36.7 47.2 28.9

Water consumption (kl) 243 509 192 521 250 903 26.5

Paper utilised4 (kg) 129 444 102 956 138 260 25.7

Paper per employee (kg) 25.1 16.8 26.0 49.4

Notes:1. Based on comparative emissions figures for each year.2. Total scope 1, 2 and 3 emissions (GHG protocol).3. In FY 2011 we replaced a large portion of our network with new equipment which substantially increased the waste disposed of for recycling.4. Paper utilised has been restated from 88 110kg to 102 956kg in 2012 due to more accurate data.

Carbon disclosure

In November 2012, the Carbon Disclosure Project (‘CDP’) released the CDP South Africa 100 Climate Change Report which evaluates the carbon performance and disclosure of the top 100 companies in South Africa. Vodacom Group was once again included in the top 100 JSE listed companies in South Africa and achieved a score of 88%, up from 81% in the prior year. We retained our position as the leader in the local telecommunications sector and will continue to participate in the CDP this year, the results of which will be available in June 2013.

New research released by the Environmental Investment Organisation (‘EIO’), a climate change and finance think tank, has revealed that Vodacom leads the way for South African firms who disclose their greenhouse gas emissions.

The ET BRICS 300 Report, which examined the greenhouse gas emissions and transparency of the 300 largest companies in Brazil, Russia, India, China and South Africa (‘BRICS’), found that large quantities of emissions in the BRICS countries are not being accounted for. Vodacom ranked second for the effort that we have taken in disclosing and verifying our emissions. In first place was Brazilian alternative energy company Cemig, and Lenovo Group in third place. We are the only South African company in the top 10.

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Overview of Vodacom Group’s carbon dioxide equivalent (‘CO2e’) emissions for the year ended 31 March:

CO2e (tonnes) 2013 2012 2011

Scope 1

South Africa fuel 12 334† 12 953 12 807

South Africa other 593 1 356 24

International 54 964 53 902 44 140

Group 67 891 68 211 56 971

Scope 2

South Africa 391 857† 376 254 306 544

International 50 667 47 098 30 354

Group 442 524 423 352 336 898

Scope 3

South Africa business travel 3 895† 3 606 2 135

South Africa other 16 961 10 241 8 035

International 4 221 3 378 2 439

Group 25 077 17 225 12 609

Non-Kyoto Protocol

Group 8 889 18 049 3 993

Total Group 544 381 526 837 410 471

† These items were included as part of our assurance process in the current year.

Scope 1emissions

Emissions resulting from company owned equipment and vehicles, eg. diesel generators and vehicles.

Scope 2emissions

Indirect emissions resulting from consumption of electricity.

Scope 3emissions

Indirect emissions resulting from other activities such as business travel and paper consumption.

Comparative Group carbon footprint (mtCO2e)

2009

429 2432011

410 4712012

526 8362013

544 3812010

0

Note: 1. FY 2010 was not measured.

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Smarter, more efficient operations

In FY 2012, we committed to reducing our carbon footprint by 5% a year. Our Group carbon footprint for the year was 3% higher at 544 381 million tonnes CO2e. Given that the total number of base stations increased by 11%, we effectively achieved a CO2 emissions reduction of 6% per base station. This is further evidence that our substantial investments in our network, office and IT facilities to make these more energy efficient by using hybrid technologies and renewable energy where possible, is paying off.

As 80% of our CO2 emissions come from electricity consumed and around 11% from diesel generators, we focus most of our carbon reduction initiatives on these two areas. For the year under review, we also cut budgets for office paper and business travel by almost 30% across the Group, as part of our drive to reduce costs and increase operational efficiency.

FY 2013 Group carbon footprint

% contribution

l Purchased electricity 80.4%

l Rental cars 0.0%

l Business flights 0.8%

l Hotel accommodation 0.1%

l Third party vehicle fleet 0.1%

l Consumption of office paper 0.0%

l Employee commuting 2.3%

l Non-Kyoto Protocol GHG emissions 3.4%

l Equipment owned and controlled 11.0%

l Vehicle fleet 1.5%

l Air conditioning and refrigeration gasses 0.4%

Our biggest energy consumer is our network. During the year we continued to invest in our radio access network (‘RAN’) renewal programme to replace our older, more energy-intensive network equipment with new, more efficient technology. In the

year, we replaced equipment at 1 479 sites, which translates into a saving of 10 181 699.12kWh.

Other ways in which we increase the energy efficiency of our base stations is through using diesel/battery hybrid systems, installing batteries that remain efficient at higher operating temperatures and free cooling technologies that use low ambient air temperatures to cool equipment. A total of 1 000 sites have implemented free cooling technologies this year leading to savings of approximately 1 231 621kWh. Energy efficiency initiatives at our data centres include optimising our cooling requirements and automatically turning off systems that aren’t immediately necessary to maintain network resilience.

Powering our network through renewable energy

Renewable energy presents a great opportunity for reducing our dependence on grid electricity and diesel generators, and for providing coverage in areas where grid power is not available or difficult to access for maintenance purposes. We are constantly testing different technologies, particularly wind and solar, to find solutions that work for different markets.

A notable example of using renewable energy to power our network is Lesotho, where 25% (40 out of 165 base stations) is powered using wind and solar power. These base stations do not use diesel generators or power from the national grid, and are among the first of their kind in the world. They also require less maintenance and monitoring which greatly reduces ongoing

operational costs. Vodacom Lesotho plans to build a further 80 of these base stations over the next four years.

Geographically Lesotho lends itself to solar and wind power. Our pioneering work in this area aims to bring mobile communications and the internet to previously unconnected communities in the most remote areas. This has the potential for delivering substantial social and economic benefits.

Green network coverage for farming communities

An example of how renewable energy technology can help us extend our network coverage to areas that were previously impossible to provision is our work in the Vleiland Valley in the Western Cape. Due to its geography there was generally no network coverage in the area. After working with the community to find a suitable solution, we installed hybrid-type base stations that operate on solar tracking and wind power – the first time this technology is being used on the continent.

The solar tracking system adjusts the panels to the most optimal position in relation to the sun. In addition to higher power production, solar tracking panels are faster to install and require less surface area to achieve maximum power. Wind generation brings an additional power production component, and helps offset against weather conditions unfavourable to solar. We are actively looking at deploying this technology to places that require off-grid, low-cost base stations.

We are testing various green technologies at our Canelands site in KwaZulu-Natal. We have fitted specific thin-film solar panels which although costly are less prone to theft. The wind turbines are being trialled to test their resilience and efficiency during different types of weather conditions. Our plan is to run the entire base station – which services a radius of about 20km – using renewable energy sources.

Making our buildings greener

Although our network is our biggest energy consumer, we are always looking for new ways to make our buildings greener. It is also an opportunity for us to test new technologies, keeping us at the forefront of environmental innovation through technology.

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Smart energy for our Century City offices

In February 2013, we unveiled the solar panel array at our offices in Century City, Cape Town. At a cost of approximately R10 million, it is the largest array on a single building in Africa and is expected, at its peak, to provide up to 90% of the building’s power. A display panel installed in the reception area of the building will display information such as power currently being produced and carbon emission savings. The total installed capacity of this array is around 500kWp, with a predicted annual energy yield of around 830.1MWh.

Through this project we want to demonstrate that business can successfully take the lead in promoting renewable energy solutions, to help stimulate the green economy. As part of our commitment to socioeconomic development, we contracted local small, medium and micro-enterprises (‘SMMEs’) to install the solar panels and do the construction work required. The scale of the project resulted in these SMMEs training new technicians, and we made it a pre-requisite for local and international product suppliers to provide training on the technical elements of the installation. All the roof tiles removed from the building were reused at a community project in the Delft area.

Vodacom was honoured as the winner in the category ‘African Solar Project of the Year’ in the African Energy Awards, in recognition of its investment in innovative and sustainable energy reduction solutions. In addition, the Vodafone Site Solution Innovation Centre in Midrand won the Mail and Guardian’s prestigious Greening the Future Awards for Innovations in Renewables.

Rainwater harvesting

We invested almost R5 million in a unique rainwater harvesting system at our head office in Midrand. The system captures about one megalitre of water that would

A mobile phone charging station at a local shop is also saving the community time and money, as they no longer need to travel outside the area to charge their phones. This free service has not only driven foot traffic to the shop, but the sale of Vodacom airtime vouchers is also contributing to its revenue.

Before this project, our local base station relied on a hybrid system, with a diesel generator

connected to a battery bank. Since the installation of the solar panels at the school at Emfihlweni, diesel expenditure has reduced by 90% and maintenance costs including labour have reduced by 24% a month, realising an overall operational

saving of 61.4%. We believe that Community Power holds great potential. It has a direct business benefit to Vodacom, in that people are able to charge their phones and use our services in rural communities. But it is the positive impact on people’s lives – through better education and healthcare, enabling commerce or simply providing street lighting – that will be felt for a long time. We continue to look for opportunities to partner with other organisations, governments and non-governmental organisations to bring this technology to communities in the countries in which we operate.

Last year we launched our Community Power project in the Emfihlweni community in Northern KwaZulu-Natal. One year on, the benefits of this project are being felt throughout the community.

One of the key goals of the project was to bring power to the Mhlupheki High School. According to the school’s principal, the project has fundamentally changed how the teachers teach and learners learn. Having reliable power has enabled the school to train its staff on using the computers that were donated and accessing the internet; knowledge which they share with learners and community members, and that has enriched their own teaching through having access to global information and knowledge. At night, the community’s adult learners no longer have to use candles as they have access to the school facilities.

Being able to run their own office equipment has also saved the school and community time and money, as people no longer need to travel some 40km to the nearest town for simple tasks such as making photocopies. Sanitation has also improved due to the uninterrupted water supply and improved water pressure to toilets and wash basins, and the availability of clean water from storage tanks which are accessible to the community.

Community Power: one year on

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usually be diverted to the storm water system to cool air-conditioning equipment. Our rain water harvesting project is integrated with a central automation system that monitors water quality and quantity, enabling us to measure the water we have captured and reused within our buildings.

Earth Hour 2013

On 23 March 2013, between 20:30 and 21:30, Vodacom again participated in the global Earth Hour initiative. Together with millions of individuals and institutions around the world, we turned off all non-essential utilities at 29 office sites and turned off the lights for 22 major advertising billboards and signage in South Africa. Although Earth Hour is only for one hour a year, the awareness that it creates of the importance of sustainable practices around the world is invaluable. This is why we are committed to showing our support for this initiative.

Working with our suppliers

We believe that as a responsible company, we can engender good management practices among our suppliers. We ensure that our suppliers comply with our environmental requirements through a pre-qualification vetting system where the level of compliance is evaluated before work commences. Suppliers need to report on their EMS incidents as part of the vetting process and for the duration of the contract with Vodacom. Where significant incidents occur a detailed investigation is conducted.

During the year, we started working with our suppliers to see how we can reduce carbon emissions along our value chain. As courier services are a large part of our distribution channel, we are working with our courier company to measure the carbon emitted as a result of the services they provide to us. We anticipate many more collaborations with our suppliers to drive emissions reductions, which has the potential to reduce risk, lower costs, create new revenue opportunities and better position our brand.

E-waste

Electronic waste (‘e-waste’) from electronic products contains toxic materials that may present health hazards and cause environmental damage through land contamination as well as water and air pollution. Electronic products also require the extraction and processing of valuable raw materials. We collect, reuse or recycle all of our e-waste, which includes equipment replaced under our RAN renewal programme, to minimise these impacts. We also encourage our customers to recycle their mobile phones and accessories through supporting and promoting our recycling programme. During the year, we recycled a total of 396 tonnes of network waste and handsets.

The top environment risks and risk management plans are set forth in the following table.

Risk

Waste generationDiesel storage at

Vodacom premises

Issue • To reduce Vodacom’s carbon footprint, reduce waste quantities through recycling of waste and to adopt energy efficient technologies.

• Provincial level legislation requires obtaining environmental authorisation to store diesel.

Activities to mitigate the risk

• A waste reduction and waste recycling programme is run on the Midrand Campus and in the Western Region. Vodacom is replacing old technology with energy efficient alternatives.

• Obtain authorisation from local authorities.

Improvements/achievements

• This year 115 tonnes of generated waste was recycled and 413 tonnes CO2 saved.

• Waste reduction initiatives are to be implemented concurrently with the new way of working (floor plan layout design). The project is planned for the 2014 financial year.

• An application was submitted to the local authority regarding the fuel storage installations for the Midrand campus.

• Environmental legal compliance audit conducted.

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Compliance with environmental laws

We are committed to managing, designing, locating and constructing operational facilities in such a way that their impact on the social, biophysical, cultural and historic environment is minimised. We promote the sustainable use of natural resources at all buildings and installations to achieve the lowest possible level of usage.

We follow stringent guidelines when identifying and decommissioning sites that are no longer operational and adhere to specific conditions in terms of the initial Environmental Authorisation Record of Decision. We aim to restore and rehabilitate these sites to their original state.

There were no instances of non-compliance with relevant environmental laws during the year.

Glossary

Fuel emissions (Scope 1)‡

Tonnes of CO2 arising from diesel usage at the office buildings, generators and company owned vehicles (including petrol usage for company owned vehicles) (scope 1 fuel emissions), for the 12 months ended 31 March 2013. Scope 1 emissions are from sources owned or controlled by the reporting company in relation to diesel consumption relating to generators used and company owned vehicles (including petrol usage).

Electricity emissions (Scope 2)‡

Tonnes of CO2 arising from electricity consumption of access and core network, data centres and buildings nationwide (scope 2 electricity emissions) for the 12 months ended 31 March 2013. Scope 2 emissions are associated with the consumption of purchased electricity from a source that is not owned or controlled by the reporting company. Under the GHG Protocol, ‘Indirect’ sources are those emissions related to the company’s activities that are emitted from sources owned or controlled by another company.

Business travel emissions (Scope 3)‡

Tonnes of CO2 arising from business travel which includes air travel, hotel accommodation and car rental (scope 3 business travel emissions) for the 12 months ended 31 March 2013. Scope 3 emissions are indirect emissions, other than purchased electricity, which can be described as relevant to the activities of the reporting company such as air travel, hotel accommodation and car rental. The measurement basis is based on the actual number of:1. kilometres travelled for car hire;2. air miles travelled (air travel); and3. hotel nights.

‡ Measurement criteria for assured KPIs.

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