(as defined below) or (2) persons other th

IMPORTANT NOTICE

THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1) QIBS (ASDEFINED BELOW) OR (2) PERSONS OTHER THAN US PERSONS (AS DEFINED IN AND INACCORDANCE WITH REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED(THE “SECURITIES ACT”)) IN AN OFFSHORE TRANSACTION

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer appliesto the attached offering circular (the “Offering Circular”) following this page and you are therefore advised toread this disclaimer carefully before reading, accessing or making any other use of the Offering Circular. Inaccessing the Offering Circular, you agree to be bound by the following terms and conditions, including anymodifications to them from time to time, each time you receive any information from (or on behalf of) MTN(MAURITIUS) INVESTMENTS LIMITED (the “Issuer”), MTN Group Limited, Mobile Telephone NetworksHoldings Limited, MTN International (Mauritius) Limited, MTN International Proprietary Limited or MobileTelephone Networks Proprietary Limited (together the “Guarantors”), Barclays Bank PLC, Citigroup GlobalMarkets Limited, Merrill Lynch International or The Standard Bank of South Africa Limited (together the “JointBookrunners”) or J.P. Morgan Securities plc, Mizuho Securities USA Inc., MUFG Securities EMEA plc, SMBCNikko Capital Markets Limited or Standard Chartered Bank (the “Co-Managers” and, together with the JointBookrunners, the “Managers”) as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FORSALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.THE SECURITIES DESCRIBED IN THE OFFERING CIRCULAR HAVE NOT BEEN, AND WILL NOT BE,REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THEUNITED STATES OR OTHER UNITED STATES JURISDICTION, AND SUCH SECURITIES MAY NOTBE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES OR TO, OR FORTHE ACCOUNT OR BENEFIT OF, US PERSONS (AS DEFINED IN REGULATION S UNDER THESECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOTSUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLESTATE OR LOCAL SECURITIES LAWS.

THE OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED IN WHOLE OR IN PARTTO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND,IN PARTICULAR, MAY NOT BE FORWARDED TO ANY US ADDRESS. ANY FORWARDING,DISTRIBUTION OR REPRODUCTION OF THE OFFERING CIRCULAR IN WHOLE OR IN PART ISUNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OFTHE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVEGAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOINGRESTRICTIONS, YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OFTHE SECURITIES.

Confirmation of your representation: In order to be eligible to view the Offering Circular or make aninvestment decision with respect to the securities described therein, prospective investors must be either (1)Qualified Institutional Buyers (“QIBs”) (within the meaning of Rule 144A (“Rule 144A”) under the SecuritiesAct), or (2) a person other than a US person (as defined in and in accordance with Regulation S under theSecurities Act) purchasing in an offshore transaction. The Offering Circular is being sent to you at your request,and by accepting the email and accessing the Offering Circular you shall be deemed to have represented to theIssuer, the Guarantors and the Managers that (1) either (a) you and any customers you represent are QIBs, or (b)you are a person other than a US person (as defined in Regulation S under the Securities Act) and you arepurchasing the securities being offered in an offshore transaction (within the meaning of Regulation S under theSecurities Act) and the electronic mail address that you gave us and to which this email has been delivered is notlocated in the United States, and (2) you consent to delivery of the Offering Circular by electronic transmission.

You are reminded that the Offering Circular has been delivered to you on the basis that you are a person intowhose possession the Offering Circular may be lawfully delivered in accordance with the laws of the jurisdictionin which you are located and you may not, nor are you authorised to, deliver or disclose the contents of theOffering Circular to any other person.

The materials relating to this offering of securities do not constitute, and may not be used in connection with, anoffer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requiresthat this issuance of securities be made by a licensed broker or dealer, and a Manager or any affiliate of any

Manager is a licensed broker or dealer in the relevant jurisdiction, this offering shall be deemed to be made bysuch Manager or affiliates on behalf of the Issuer and the Guarantors in such jurisdiction.

The Offering Circular may only be distributed to, and is only directed at (a) persons who have professionalexperience in matters relating to investments falling within Article 19(5) of the Financial Services and MarketsAct 2000 (Financial Promotion) Order 2005 (the “Order”), (b) high net worth bodies corporate falling withinArticle 49(2) of the Order, and (c) any other persons to whom it may otherwise lawfully be communicated (allsuch persons together being referred to as “relevant persons”). Any person who is not a relevant person shouldnot act or rely on the Offering Circular or any of its contents.

The Offering Circular has been sent to you in an electronic form. You are reminded that documents transmittedvia this medium may be altered or changed during the process of electronic transmission and consequently noneof the Issuer, the Guarantors or the Managers, any person who controls them or any director, officer, employee oragent of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of anydifference between the Offering Circular distributed to you in electronic format and the hard copy versionavailable to you on request from the Managers. Please ensure that your copy of the Offering Circular is complete.You are responsible for protecting against viruses and other destructive items.

MTN (MAURITIUS) INVESTMENTS LIMITED(incorporated with limited liability in Mauritius)

US$500,000,000 5.373% Guaranteed Notes due 2022US$500,000,000 6.500% Guaranteed Notes due 2026

each guaranteed on a joint and several basis by

MTN Group Limited(incorporated with limited liability in the Republic of South Africa)

Mobile Telephone Networks Holdings Limited(incorporated with limited liability in the Republic of South Africa)

MTN International (Mauritius) Limited(incorporated with limited liability in Mauritius)

MTN International Proprietary Limited(incorporated with limited liability in the Republic of South Africa)

and

Mobile Telephone Networks Proprietary Limited(incorporated with limited liability in the Republic of South Africa)

MTN (MAURITIUS) INVESTMENTS LIMITED (the “Issuer”) is issuing US$500,000,000 5.373% Guaranteed Notes due 2022 (the “2022 Notes”) and theUS$500,000,000 6.500% Guaranteed Notes due 2026 (the “2026 Notes” and, together with the 2022 Notes, the “Notes” and each a “Series”). The Notes willbe guaranteed on a joint and several basis by MTN Group Limited (“MTN Group”), Mobile Telephone Networks Holdings Limited, MTN International(Mauritius) Limited, MTN International Proprietary Limited and Mobile Telephone Networks Proprietary Limited (together the “Guarantors”) pursuant to adeed of guarantee in respect of each Series (each a “Guarantee” and together, the “Guarantees”) to be dated the Issue Date (as defined below).

Interest on the 2022 Notes will be paid in arrear on the thirteenth day of each February and August, provided that if any such date is not a Business Day (asdefined below), then such payment will be made on the next Business Day. Principal of the 2022 Notes is scheduled to be paid on 13 February 2022, but maybe paid earlier under certain circumstances as further described herein. The 2022 Notes initially will be sold to investors at a price equal to 100% of theprincipal amount thereof. For a more detailed description of the 2022 Notes, see “Conditions of the 2022 Notes”.

Interest on the 2026 Notes will be paid in arrear on the thirteenth day of each April and October, provided that if any such date is not a Business Day (asdefined below), then such payment will be made on the next Business Day. Principal of the 2026 Notes is scheduled to be paid on 13 October 2026, but maybe paid earlier under certain circumstances as further described herein. The 2026 Notes initially will be sold to investors at a price equal to 100% of theprincipal amount thereof. For a more detailed description of the 2026 Notes, see “Conditions of the 2026 Notes”.

INVESTING IN THE NOTES INVOLVES RISKS. PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SETFORTH UNDER “RISK FACTORS” BEGINNING ON PAGE 1 OF THIS OFFERING CIRCULAR.

This offering circular (the “Offering Circular”) has been approved by the Central Bank of Ireland, as competent authority under Directive 2003/71/EC asamended (including by Directive 2010/73/EU) (the “Prospectus Directive”). The Central Bank of Ireland only approves this Offering Circular as meeting therequirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange plc (the “IrishStock Exchange”) for the Notes to be admitted to the official list of the Irish Stock Exchange (the “Official List”) and to trading on its regulated market (the“Main Securities Market”). Such approval will only relate to Notes which are to be admitted to trading on a regulated market for the purposes of Directive2004/39/EC and/or which are to be offered to the public in any Member State of the European Economic Area. References in this Offering Circular to theNotes being listed (and all related references) will mean that the Notes have been admitted to the Official List and have been admitted to trading on the MainSecurities Market. The Main Securities Market is a regulated market for the purposes of Directive 2004/39/EC.

The Notes are expected to be rated Baa3 by Moody’s Investors Service Limited (“Moody’s”) and BB+ by Standard & Poor’s Credit Market Services EuropeLimited (“S&P” and, together with Moody’s, the “Rating Agencies”). A rating is not a recommendation to buy, sell or hold securities and may be subject torevision, suspension or withdrawal at any time by the assigning rating organisation. As at the date of this Offering Circular, each of the Rating Agencies isestablished in the European Union and is registered under Regulation (EU) No 1060/2009, as amended (the “CRA Regulation”).

The Notes and the Guarantees have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), orthe securities laws of any state of the United States, and are being offered: (a) for sale in the United States to qualified institutional buyers only (each a“QIB”) as defined in, and in reliance upon, Rule 144A under the Securities Act (“Rule 144A”), and (b) for sale to non-US persons (as defined in Regulation Sunder the Securities Act (“Regulation S”)) in offshore transactions in reliance upon Regulation S (together, the “Offering”). Prospective purchasers that areQIBs are hereby notified that the seller of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act pursuant toRule 144A. Investors in the Notes will be deemed to have made or be required to make certain representations and warranties in connection with purchasingthe Notes. For the purpose of the Securities Act 2005 of Mauritius, Notes will only be issued to sophisticated investors (which term means that they subscribefor a minimum amount of US$200,000 and they are either (i) QIBs in the United States or (ii) qualified investors (as defined in Directive 2003/71/EC, asamended)). In addition, no Notes will be issued to the public in Mauritius. For a description of certain restrictions on sale and transfer of investments in theNotes, see “Subscription and Sale”, “Selling Restrictions” and “Transfer Restrictions” herein.

The Notes and the Guarantees are being offered under Rule 144A and Regulation S by each of Barclays Bank PLC, Citigroup Global Markets Limited, MerrillLynch International and The Standard Bank of South Africa Limited (each, a “Joint Bookrunner” and, collectively, the “Joint Bookrunners”), J.P. MorganSecurities plc, Mizuho Securities USA Inc., MUFG Securities EMEA plc, SMBC Nikko Capital Markets Limited and Standard Chartered Bank (the “Co-Managers” and, together with the Joint Bookrunners, the “Managers”), subject to their acceptance of, and right to reject, orders in whole or in part.

The Notes will be issued in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof. The Notes in respect of each Serieswill initially be represented by two global certificates in registered form (the “Global Certificates”), one of which will be issued in respect of theNotes of such Series (the “Rule 144A Notes”) offered and sold in reliance on Rule 144A (the “Restricted Global Certificate”) and will be registered inthe name of Cede & Co., as nominee for the Depository Trust Company (“DTC”), and the other of which will be issued in respect of the Notes ofsuch Series (the “Regulation S Notes”) offered and sold in reliance on Regulation S (the “Unrestricted Global Certificate”) and will be registered inthe name of a nominee of a common depositary for Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream,Luxembourg”). It is expected that delivery of the Global Certificates will be made in immediately available funds on 13 October 2016 (i.e., the fifthBusiness Day following the date of pricing of the Notes (such date being referred to herein as the “Issue Date” and such settlement cycle being hereinreferred to as T+5)).

Joint Bookrunners

BARCLAYS BOFA MERRILL LYNCH CITIGROUP STANDARD BANKCo-Managers

J.P. MORGAN MIZUHO SECURITIES MUFG SMBC NIKKO STANDARD CHARTERED BANK

The date of this Offering Circular is 11 October 2016

This Offering Circular constitutes a prospectus for the purpose of Article 5 of the Prospectus Directive. ThisOffering Circular is to be read in conjunction with our reviewed condensed consolidated interim financialstatements for the six months ended 30 June 2016 and our audited consolidated financial statements for the yearsended 31 December 2015 and 2014, which form part of this Offering Circular and are included herein.

The Issuer and MTN Group, whose respective addresses are set out herein, accept responsibility for theinformation contained in this Offering Circular and each of the Guarantors accepts responsibility for theinformation contained in each part of this Offering Circular relating to itself and the Guarantees. To the best ofthe knowledge and belief of the Issuer and MTN Group, with regard to the information contained in this OfferingCircular, and each Guarantor, with regard to the information contained in this Offering Circular relating to itselfand the Guarantees (each having taken all reasonable care to ensure that such is the case), the informationcontained in this Offering Circular is in accordance with the facts and there are no other facts the omission ofwhich would be likely to affect the import of such information.

This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Issuer, theGuarantors or the Managers to subscribe for or purchase, any Notes (or beneficial interests therein). ThisOffering Circular is intended only to provide information to assist potential investors in deciding whether or notto subscribe for or purchase Notes (or beneficial interests therein) in accordance with the terms and conditionsspecified by the Managers. The Notes (and beneficial interests therein) may not be offered or sold, directly orindirectly, and this Offering Circular may not be circulated, in any jurisdiction except in accordance with legalrequirements applicable to such jurisdiction.

The distribution or delivery of this Offering Circular and the offer or sale of the Notes (or beneficial intereststherein) in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circularmay come are required by the Issuer, the Guarantors and the Managers to inform themselves about and toobserve any such restrictions. For a description of certain restrictions on offers, sales and deliveries of the Notes(or beneficial interests therein) and on the distribution or delivery of this Offering Circular and other offeringmaterial relating to the Notes, see “Selling Restrictions” and “Transfer Restrictions”.

No person has been authorised in connection with the offering of the Notes (or beneficial interests therein) togive any information or make any representation regarding the Issuer, the Guarantors, the Managers, the Notes orthe Guarantees other than as contained in this Offering Circular. Any such representation or information must notbe relied upon as having been authorised by the Issuer, the Guarantors or the Managers. The delivery of thisOffering Circular at any time does not imply that there has been no change in the affairs of the Issuer or anyGuarantor or that the information contained in it is correct as at any time subsequent to its date or that any otherinformation supplied in connection with the Offering is correct as at any time subsequent to the date indicated inthe document containing the same. This Offering Circular may only be used for the purpose for which it has beenpublished. The Managers expressly do not undertake to review the financial condition or affairs of the Issuer orany Guarantor during the life of the Notes or to advise any investor in the Notes of any information coming totheir attention. None of the Managers have independently verified the information contained herein. Accordingly,no representation or warranty, express or implied, is made by the Managers as to the accuracy or completeness ofthe information set forth in this Offering Circular, and nothing contained in this Offering Circular is, or should berelied upon as, a promise or representation, whether as to the past or the future, by any of the Managers. None ofthe Managers assumes any responsibility or liability for the accuracy or completeness of the information set forthin this Offering Circular. No Manager accepts any liability in relation to the information contained in thisOffering Circular or any other information provided by the Issuer or any Guarantor in connection with the offeror sale of the Notes or their distribution.

Neither this Offering Circular nor any other information supplied in connection with the offering of the Notes

(a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as arecommendation by the Issuer, any of the Guarantors or any of the Managers that any recipient of this OfferingCircular or any other information supplied in connection with the offer or sale of the Notes should purchase theNotes. Each person contemplating making an investment in the Notes must make its own investigation and analysisof the creditworthiness of the Issuer and the Guarantors and its own determination of the suitability of any suchinvestment, with particular reference to its own investment objectives and experience, and any other factors thatmay be relevant to it in connection with such investment. In particular, each potential investor should:

• have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits andrisks of investing in the Notes and the information contained in this Offering Circular or any applicablesupplement;

i

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particularfinancial situation, an investment in the Notes and the impact such investment will have on its overallinvestment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,including where the currency for principal and interest payments is different from the potential investor’scurrency;

• understand thoroughly the terms and conditions of the Notes and be familiar with the behaviour of financialmarkets in which they participate; and

• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic,interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

None of the Issuer, the Guarantors, the Managers or any of their respective representatives is making anyrepresentation to any offeree or purchaser of the Notes (or beneficial interests therein) regarding the legality ofany investment by such offeree or purchaser under applicable legal investment or similar laws. Each investorshould consult with its own advisers as to the legal, tax, business, financial and related aspects of aninvestment in the Notes.

ii

INFORMATION

The Notes and the Guarantees have not been and will not be registered under the Securities Act or under thesecurities or “blue sky” laws of any state of the United States or any other US jurisdiction. Each investor, bypurchasing a Note (or a beneficial interest therein), agrees that the Notes and the Guarantees (or beneficialinterests therein) may only be reoffered, resold, pledged or otherwise transferred only upon registration under theSecurities Act or pursuant to the exemptions therefrom described under “Transfer Restrictions”. Each investorwill also be deemed to have made certain representations and agreements as described therein. Any resale orother transfer, or attempted resale or other attempted transfer, that is not made in accordance with the transferrestrictions may subject the transferor and transferee to certain liabilities under applicable securities laws.

This Offering Circular is being provided on a confidential basis in the United States to a limited number of QIBsfor informational use solely in connection with the consideration of the purchase of the Notes and theGuarantees. It may not be copied or reproduced in whole or in part nor may it be distributed or any of its contentsdisclosed to anyone other than the prospective investors to whom it is originally submitted.

Notes offered and sold to QIBs in reliance upon Rule 144A will be represented by beneficial interests in one ormore permanent global certificates in fully registered form without interest coupons. Notes offered and sold tonon-US persons in offshore transactions pursuant to Regulation S will be represented by beneficial interests in aglobal certificate in fully registered form without interest coupons. Except as described in this Offering Circular,beneficial interests in the Global Certificates will be represented through accounts of financial institutions actingon behalf of beneficial owners as direct and indirect participants in DTC, Euroclear and Clearstream,Luxembourg. Except as described in this Offering Circular, owners of beneficial interests in the GlobalCertificates will not be entitled to have the Notes registered in their names, will not receive or be entitled toreceive physical delivery of the Notes in definitive form and will not be considered holders of the Notes(“Noteholders”) under the Notes and the Agency Agreement in respect of each Series.

An application has been made to admit the Notes to listing on the Official List and to have the Notes admitted totrading on the Main Securities Market.

The Notes have not been approved or disapproved by the US Securities and Exchange Commission (the “SEC”),any state securities commission or any other US, South African, Mauritian, Irish, United Kingdom or otherregulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of thisOffering or the accuracy or adequacy of this Offering Circular. Any representation to the contrary may be acriminal offence.

The distribution of this Offering Circular and the offering of the Notes (and beneficial interests therein) in certainjurisdictions may be restricted by law. Persons that come into possession of this Offering Circular are required bythe Issuer, the Guarantors and the Managers to inform themselves about and to observe any such restrictions.

This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy the Notes (or anybeneficial interest therein) in any jurisdiction to the extent that such offer or solicitation is unlawful. In particular,there are restrictions on the distribution of this Offering Circular and the offer and sale of the Notes (andbeneficial interests therein) in the United States, South Africa, Mauritius and the United Kingdom.

iii

STABILISATION

In connection with the issue of each Series, Citigroup Global Markets Limited (the “Stabilisation Manager”) (orpersons acting on behalf of the Stabilisation Manager) may over-allot Notes of a Series or effect transactionswith a view to supporting the market price of the Notes of a Series at a level higher than that which mightotherwise prevail. However, stabilisation may not necessarily occur. Any stabilisation action may begin on orafter the date on which adequate public disclosure of the terms of the offer of the Notes of the relevant Series ismade and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the Issue Dateand 60 days after the date of the allotment of the Notes of a Series. Any stabilisation action or over-allotmentmust be conducted by the Stabilisation Manager (or persons acting on behalf of the Stabilisation Manager) inaccordance with all applicable laws and rules.

iv

AVAILABLE INFORMATION

The Issuer has agreed that, for so long as any Notes are “restricted securities” within the meaning of Rule144(a)(3) under the Securities Act, it will, during any period in which it is neither subject to and in compliancewith Section 13 or 15(d) of the United States Securities Exchange Act of 1934, as amended (the “ExchangeAct”), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, furnish upon request to any holder orbeneficial owner of Notes, or any prospective purchaser designated by any such holder or beneficial owner, theinformation specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

v

FORWARD-LOOKING STATEMENTS

This Offering Circular contains statements that may be considered to be “forward-looking statements” as thatterm is defined in the US Private Securities Litigation Act of 1995. Forward-looking statements appear in anumber of places throughout this Offering Circular, including, without limitation, under “Risk Factors”,“Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “BusinessDescription”, and include, but are not limited to, statements regarding the objectives, goals, strategies, futureevents, future revenues or performance, capital expenditures, financing needs or plans of the MTN Group and itssubsidiaries (the “Group”) or the Group’s intentions relating to acquisitions, competitive strengths andweaknesses, business strategy and the trends management anticipates in the telecommunications industry and thepolitical and legal environment in which the Group operates and other information that is not historicalinformation.

In some cases, forward-looking statements may be identified by words such as “believes”, “expects”,“anticipates”, “projects”, “intends”, “plans”, “should”, “could”, “would”, “may”, “will”, “seeks”, “estimates”,“probability”, “risk”, “target”, “goal”, “objective”, “future” or similar expressions or variations on suchexpressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materiallyfrom those expressed in these forward-looking statements.

The Issuer and the Guarantors have identified some of the risks inherent in forward-looking statements under“Risk Factors” in this Offering Circular. Other important factors that could cause the Group’s actual results,performance, achievements or financial condition to differ materially from those in forward-looking statementsinclude, among others:

• changes in government policies or political, social, economic, legal, regulatory or accounting conditions inSouth Africa, Nigeria or other jurisdictions where any such changes could affect the Group’s financialcondition, results or prospects;

• the Group’s ability to obtain and retain the licences necessary for doing business and to comply withregulatory requirements;

• the Group’s ability to fund future operations and capital needs through borrowing or otherwise;

• the Group’s ability to implement successfully any business strategies;

• legal or regulatory claims in connection with our operations;

• the Group’s ability to integrate businesses, including recently acquired businesses, and to realise operationalbenefits from such integration;

• the Group’s ability to retain or increase market share and retain customers;

• the Group’s ability to attract and retain qualified personnel;

• the results of the Group’s investments and capital expenditures;

• the loss of suppliers or disruption of supply chains;

• a decrease in demand for the Group’s products and services;

• the effects of increased competition in the telecommunications market;

• the effects of inflation, interest rate and exchange rate fluctuations;

• reliance on software and hardware systems that are susceptible to failure; and

• the Group’s success in identifying other risks to businesses and managing the risks of the aforementionedfactors.

This list of important factors is not exhaustive. There may be other risks, including risks of which the Issuer andthe Guarantors are unaware, that could adversely affect the Group’s results or the accuracy of forward-lookingstatements in this Offering Circular. When relying on forward-looking statements, investors should carefullyconsider the foregoing factors and other uncertainties and events, especially in light of the political, economic,social and legal environment in which the Issuer and the Guarantors operate. Such forward-looking statementsspeak only as at the date on which they are made. Accordingly, neither the Issuer nor any Guarantor undertakes

vi

any obligation to update or revise any of them, whether as a result of new information, future events orotherwise. Neither the Issuer nor any Guarantor makes any representation, warranty or prediction that the resultsanticipated by such forward-looking statements will be achieved. Such forward-looking statements represent, ineach case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario.

The forward-looking statements contained in this Offering Circular are based on the beliefs of the Group’smanagement, as well as the assumptions made by and information currently available to the Group’smanagement. Although the Group’s management believes that the expectations reflected in such forward-lookingstatements are reasonable, no assurances can be given that such expectations will prove to be correct. Given theseuncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. Importantfactors that could cause actual results to differ materially from the Group’s management’s expectations arecontained in cautionary statements in this Offering Circular, including, without limitation, in conjunction withthe forward-looking statements included in this Offering Circular and specifically under “Risk Factors” andabove. In addition, under no circumstances should the inclusion of such forward-looking statements in thisOffering Circular be regarded as a representation or warranty by the Issuer, the Guarantors, the Managers or anyother person with respect to the achievement of the results set out in such statements or that the underlyingassumptions used will in fact be the case. If any of these risks and uncertainties materialise, or if any of theseunderlying assumptions prove to be incorrect, the Group’s actual results of operations or financial conditioncould differ materially from that described herein as anticipated, believed, estimated or expected.

All subsequent written and oral forward-looking statements attributable to the Issuer or any Guarantor areexpressly qualified in their entirety by reference to these cautionary statements.

vii

INDUSTRY AND MARKET DATA

This Offering Circular contains historical and forward-looking market and industry data which have beenobtained from Group data and from industry publications, market research and publicly available information. Inparticular, market data, statistics and information relating to the demographics and economy in Africa and theMiddle East and in particular the countries in which the Group operates and the telecommunications markets inthose areas have been derived from available Group data, as well as data published by the UN World PopulationProspects, the CIA World Factbook, World Bank, DataMarket, the Nigerian Communications Commission, theAfrican Development Bank Group, IMF, Analysys Mason and Marketline.

The information provided from the sources referred to above has been accurately reproduced and, as far as theIssuer and the Guarantors are aware and have been able to ascertain from information published by such sources,no facts have been omitted which would render the reproduced information inaccurate or misleading. Wherethird-party information has been used in this Offering Circular, the source of such information has beenidentified.

Neither the Issuer nor any Guarantor has independently verified the information in industry publications ormarket research, although management believes the information contained therein to be reliable. None of theIssuer, any of the Guarantors nor any of the Managers represents that this information is accurate.

viii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Financial Information

This Offering Circular contains (i) consolidated financial information for the Group as at and for the six monthsended 30 June 2016 and 2015, derived from our reviewed condensed consolidated interim financial statementsfor the six months ended 30 June 2016, contained elsewhere in this Offering Circular, (ii) consolidated financialinformation for the Group as at and for the years ended 31 December 2015 and 2014, derived from our auditedconsolidated financial statements for the year ended 31 December 2015, and (iii) consolidated financialinformation for the Group as at and for the year ended 31 December 2013, derived from our audited consolidatedfinancial statements for the year ended 31 December 2014, which have been prepared in accordance withInternational Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board,the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the AccountingPractices Committee, financial pronouncements as issued by the Financial Reporting Standards Council, theJohannesburg Stock Exchange listing requirements and the requirements of the Companies Act, 2008 (the “SouthAfrican Companies Act”).

The financial information included in this Offering Circular is not intended to comply with the United StatesSecurities and Exchange Commission requirements. Compliance with such requirements would require, amongother things, compliance with the requirements of Regulation S-X and the exclusion of certain non-IFRSmeasures.

Restatement of financial information

The consolidated financial information for the six months ended 30 June 2015 has been restated in our reviewedcondensed consolidated interim financial statements for the six months ended 30 June 2016. Following thechange in respect of the income statement line items as disclosed in the income statement for the year ended31 December 2015, the expense categories “Government and regulatory costs” and “Value-added services (VAS)costs” have been disclosed separately or reclassified between expense categories for the six months ended30 June 2015 to present the expenses in more appropriate categories in accordance with the classification for sixmonths ended 30 June 2016. In line with the presentation for the six months ended 30 June 2016, cash used inacquiring intangible assets in the six months ended 30 June 2015 has been disclosed as a significant itemseparately from cash used in other investing activities in the condensed consolidated statement of cash flows.Please see note 16 to our reviewed condensed consolidated interim financial statements for the six months ended30 June 2016 included elsewhere in this Offering Circular.

The consolidated financial information for the year ended 31 December 2014 has been restated in our auditedconsolidated financial statements for the years ended 31 December 2015. Following a review of expensesdisclosed in the Group income statement for the year ended 31 December 2015, the expense categories“Government and regulatory costs” and “Value-added services (VAS) costs” have been disclosed separately orreclassified between expense categories for the year ended 31 December 2014 to present the expenses inaccordance with the classification for the year ended 31 December 2015. In addition, an amount of R1,293million in respect of the year ended 31 December 2014 was reclassified from data revenue to airtime andsubscription revenue in our audited consolidated financial statements for the year ended 31 December 2015. TheGroup manages its risk to foreign exchange exposure on a net basis and consequently the foreign exchange gainsand losses previously disclosed on a gross basis for the year ended 31 December 2014 and included in therelevant finance income or finance cost line are disclosed on a net basis in the audited consolidated financialstatements for the year ended 31 December 2015. See note 1.6 to our audited consolidated financial statementsfor the year ended 31 December 2015 included elsewhere in this Offering Circular.

Prior to 1 January 2014, we applied the residual value method of revenue recognition (“Residual Method”) inrespect of multiple element revenue arrangements. Under the Residual Method, fair value is ascribed to each ofthe undelivered elements in the transaction (typically the service contract) and any consideration remaining isallocated to the delivered item(s) (typically the handset). From 1 January 2014, we applied the relative fair valuemethod of revenue recognition (the “Relative Fair Value Method”) in respect of multiple element revenuearrangements. The Relative Fair Value Method allocates the consideration received or receivable to each of theelements of a transaction (delivered and undelivered) according to their stand-alone selling prices. This change inaccounting treatment affects our results and financial position information in our operation in South Africa and,as a result, our consolidated results and financial position information. Accordingly, in this Offering Circular,unless otherwise indicated, to aid comparability all comments and amounts in respect of our results and financialposition information are presented under the Relative Fair Value Method of revenue recognition in respect of

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multiple element revenue arrangements which differs from the corresponding financial information contained inthe 2013 accounts. Please see “Management’s Discussion and Analysis of Financial Condition and Results ofOperations—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenuearrangements” and note 48 to our audited consolidated financial statements for the year ended 31 December2014 for more information.

Presentation of certain information on a constant currency basis

Furthermore, as a result of the impact of exchange rate fluctuations on our results, in our results of operationsdiscussion in the section “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” we have presented revenue changes between periods on a constant currency or “organic” basis toidentify the underlying operational drivers impacting the change in revenue. In determining the change inconstant currency terms, the latest year’s results have been adjusted to the prior year’s average exchange rates,which are based on a weighted average calculation of monthly exchange rates performed at a disaggregated levelfor each of the Group’s components and key revenue lines. This detailed basis of measurement isolates theimpact of currency volatility in each territory during the year. The organic growth percentage has then beencalculated by utilising the constant currency results compared to the prior year’s results. In addition, in respect ofIrancell, MTN Sudan and MTN Syria, the constant currency information has been prepared excluding the impactof hyperinflation. In 2015, the Iranian economy was assessed to no longer be a hyperinflationary environment.We therefore discontinued hyperinflation accounting in that operation effective 1 July 2015. The organicinformation may not fairly present our results of operations. Please see “Management’s Discussion and Analysisof Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations andComparability of Financial Statements—Effect of exchange rate fluctuations” for more information.

Adjustments for the impact of currencies of hyperinflationary economies

The financial statements (including comparative amounts) of the Group entities whose functional currencies arethe currencies of hyperinflationary economies are adjusted in terms of the measuring unit current at the end of thereporting period. All items recognised in the income statement are restated by applying the change in the generalprice index from the dates when the items of income and expenses were initially earned or incurred. Therefore,on our consolidated income statement, revenue is presented after adjusting for the impact of the currencies ofhyperinflationary economies. Revenue from products and services—revenue from outgoing voice, revenue fromincoming voice, revenue from data, revenue from SMS, revenue from mobile telephones and accessories andrevenue from other sources as well as revenue by geographical breakdown—presented in this Offering Circular ispresented without adjustments being effected for the impact of currencies of hyperinflationary economies.Consequently, total revenue comprises revenue from products and services or revenue on a geographical basistogether with an adjustment for the impact of hyperinflation. As a result, in this Offering Circular, theproportionate contribution of revenue from a category of products and services or from a specifichyperinflationary economy is expressed as revenue from that category of products and services or that specifichyperinflationary economy, prior to any adjustments for hyper-inflation, as a percentage of total revenue,including any adjustments for hyperinflation.

Presentation of alternative performance measures (“APMs”)

This Offering Circular contains certain non-IFRS measures or alternative performance measures (“APMs”),including “EBITDA”, “EBITDA margin”, “net debt” and “net debt/EBITDA ratio”.

We have presented EBITDA and the associated margin as we believe that they enhance an investor’sunderstanding of our financial performance and because we use these measures in our business operations toevaluate the performance of our operations. These measures are not a measure of a company’s financialperformance or earnings under IFRS and as such should not be viewed as an alternative to profit, operating profitor other measures of earnings under IFRS. Nor should these measures be viewed as an alternative to cash flowfrom operating activities or as a measure of liquidity. We use these measures as supplemental measures ofoperating performance because they are measures that are regularly used by security analysts, rating agencies,investors and other parties to evaluate a company’s operating performance. We also believe that these measuresserve as a useful indicator of our ability to incur and service our indebtedness. EBITDA and similar measures areused by different companies for differing purposes and are often calculated in ways that reflect the circumstancesof those companies. One should exercise caution in comparing EBITDA as reported by the Group to EBITDA ofother companies.

We define EBITDA as profit before depreciation of property, plant and equipment, amortisation of intangibleassets, impairment of goodwill, finance income, finance costs, share of results of associates and joint ventures

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after tax, net monetary gains/losses and income tax expense. We define EBITDA margin as EBITDA expressedas a percentage of total revenue. For further information on the reconciliation of these measures to measuresdisclosed in the consolidated financial statements, see “Selected Historical Consolidated Financial andOperating Information—Other Financial and Operating Information”. EBITDA should not be considered anindication of our performance or as an alternative to cash flows as a measure of our liquidity as determined inaccordance with IFRS and should not be considered in isolation, because its ability to convey meaningfulinformation is limited in various respects. For example, EBITDA, among other things:

• does not reflect any cash capital expenditure requirements for the assets being depreciated and amortisedthat may have to be replaced in the future;

• does not reflect changes in, or cash requirements for, our working capital needs; and

• does not reflect the significant financial cost of, or the cash requirements necessary to service interestpayments on, our debts.

We have presented net debt and net debt/EBITDA ratio as we believe that they enhance investors’ understandingof our financial position and because we use these measures to evaluate our liquidity and financial profile. Wedefine net debt as the sum of the current and non-current portion of interest-bearing liabilities less cash and cashequivalents, restricted cash and current investments (excluding investments in cell captives). See notes 7.1.3,7.1.7 and 7.4 to our audited consolidated financial statements for the year ended 31 December 2015 and notes 20,43.3 and 43.7 to our audited consolidated financial statements for the year ended 31 December 2014 and“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity andCapital Resources”. We define the net debt/EBITDA ratio as the ratio of net debt to EBITDA. See “SelectedHistorical Consolidated Financial and Operating Information—Net Debt” for a reconciliation of net debt tomeasures disclosed in the consolidated financial statements.

Rounding

Certain amounts which appear in this Offering Circular have been subject to rounding adjustments; accordingly,figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

Currency Presentation

References in this document to “US dollars”, “US$” or “$” refer to United States dollars; references to “ZAR”,“R” or “Rand” are to South African Rand, the lawful currency of South Africa; references to “Euro” or “EUR”are to the currency introduced at the start of the third stage of European economic and monetary union pursuantto the Treaty establishing the European Community, as amended; references to “Naira”, “N” or “NGN” are to theNigerian Naira, the lawful currency of Nigeria; references to “GNF” are to the Guinean Franc, the lawfulcurrency of Guinea-Conakry; references to “GBP” are to the pound sterling, the lawful currency of the UK;references to “Cedi” are to the Ghanaian Cedi, the lawful currency of Ghana; references to “Syrian pound” or“SYP” are to the Syrian Pound, the lawful currency of Syria; references to “SDG” are to the Sudanese Pound, thelawful currency of Sudan; references to “SSP” are to the South Sudanese Pound, the lawful currency of SouthSudan; references to “ZMW” are to the Zambian Kwacha, the lawful currency of Zambia and references to“Iranian rial” or “IRR” are to the Iranian rial, the lawful currency of Iran.

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EXCHANGE RATES

The table below sets forth, for the periods indicated, the period-end, average and high and low rates determinedby the Bloomberg Composite Rate, in each case for the purchase of ZAR, all expressed in ZAR per US dollar.The ZAR/US$ exchange rate determined by the Bloomberg Composite Rate on 5 October 2016 wasZAR 13.7028 to US$1. The rates may differ from the actual rates used in the preparation of MTN Group’sfinancial statements and other financial information appearing in this Offering Circular.

High Low Average(1)PeriodEnd(2)

ZAR per US$1.00

Year2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5412 6.5791 7.2609 8.07512012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9608 7.4531 8.2098 8.47782013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5404 8.4575 9.6504 10.52062014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7600 10.3008 10.8493 11.55102015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7558 11.2815 12.7773 15.4868

MonthSix months ended 30 June 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5794 11.2815 11.9177 12.1514March 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.9532 14.6915 15.3809 14.6915April 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2295 14.2185 14.6062 14.2506May 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.9223 14.2506 15.3028 15.6809June 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6330 14.4683 15.0462 14.6895Six months ended 30 June 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9238 14.2185 15.4106 14.6895July 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7584 13.8984 14.4063 13.8984August 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7313 13.2814 13.7988 14.7313September 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6623 13.4570 14.0515 13.7324

(1) For each of the years 2011 to 2015, represents the yearly averages of the ZAR/US dollar exchange ratesdetermined by the Bloomberg Composite Rate for the relevant period. For the months of 2016, thisrepresents the monthly averages of the ZAR/US dollar exchange rates determined by the BloombergComposite Rate for such month, which averages were computed by calculating the average of the dailyZAR/US dollar exchange rates on the business days of each month during the relevant period.

(2) Represents the ZAR/US dollar exchange rates for the purchase of US dollars determined by the BloombergComposite Rate on the last working day of the relevant period.

Fluctuations in the exchange rates between the Rand and the US dollar in the past are not necessarily indicativeof fluctuations that may occur in the future. No representation is made that Rand amounts referred to in thisOffering Circular could have been or could be converted into US dollars at the above exchange rates or at anyother rate.

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ENFORCEABILITY OF CIVIL JUDGMENTS

The Issuer is a limited liability company incorporated under the laws of Mauritius, and the Guarantors, excludingMTN Mauritius (which is a limited liability company organised under the laws of Mauritius), are limited liabilitycompanies incorporated under the laws of South Africa. A majority of the directors and officers of the Issuer andthe Guarantors named herein reside inside South Africa or Mauritius and all or a significant portion of the assetsof such persons may be, and the majority of the assets of the Issuer and the Guarantors are, located inSouth Africa, Nigeria, Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius. As a result, itmay not be possible for investors to effect service of process upon such persons outside South Africa, Nigeria,Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius, as applicable, or to enforce anyjudgments against them obtained in the courts of jurisdictions other than South Africa, Nigeria, Cameroon,Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius, as applicable, predicated upon the laws of suchother jurisdictions. In order to enforce such judgments in South Africa, investors should initiate enforcementlawsuits before the competent South African courts.

Recognition of Non-Mauritian Judgments in Mauritius

A judgment obtained in a foreign court may be enforced in Mauritius pursuant to a procedure known asexequatur. The Supreme Court of Mauritius (the “Supreme Court”) may register and enforce, by way ofexequatur under article 546 of the Code de procédure civile, an in personam judgment of a foreign court obtainedagainst the Issuer or any Guarantor without reconsideration of the merits, if the judgment remains valid andcapable of execution in the country where it was delivered, the Issuer or such Guarantor has been regularlysummoned to the proceedings leading to the judgment and the foreign court had jurisdiction over the Issuer orsuch Guarantor and the matter submitted to it. The Supreme Court can refuse to recognise and enforce ajudgment obtained in a foreign court if the judgment is contrary to any principle affecting public order, as suchterm is interpreted under Mauritian law, the judgment was obtained by fraud or in a manner contrary to theprinciples of natural justice, including in respect of procedure, or the judgment is for a claim that under Mauritianlaw would be characterised as based on a tax or as being expropriatory, penal or contrary to any other public law.Further, the Supreme Court has discretion to stay or decline to hear an action on the foreign judgment if theforeign judgment is under appeal or there is another subsisting judgment in any jurisdiction relating to the samecause of action as the foreign judgment.

There exists also an alternative procedure for enforcement of judgments rendered by superior courts in theUnited Kingdom and the enforcement of such UK judgments will be made in accordance with the ReciprocalEnforcement of Judgments Act 1923.

A foreign arbitral award may be recognised and enforced in Mauritius pursuant to the Convention on theRecognition and Enforcement of Foreign Arbitral Awards Act 2001. The recognition and enforcement of theforeign arbitral award may be refused by the Supreme Court at the request of the party against whom it isinvoked on certain limited grounds. Further, the recognition and enforcement can also be refused if the SupremeCourt finds that the subject-matter of the dispute is not capable of settlement by arbitration under the law ofMauritius or the recognition or enforcement of the award would be contrary to the public policy of Mauritius.

Recognition of Non-South African Judgments in South Africa

An authenticated judgment obtained outside of South Africa will be recognised and enforced in accordance withprocedures ordinarily applicable under South African law for the enforcement of foreign judgments, namely aprovisional sentence summons or application or action claiming enforcement of the foreign judgment; providedthat the judgment was pronounced by a proper court of law, was final and conclusive (in the case of a judgmentfor money, on the face of it), has not become stale, and has not been obtained by fraud or in any manner opposedto natural justice or contrary to the international principles of due process and procedural fairness, theenforcement thereof is not contrary to South African public policy, the foreign court in question had jurisdictionand international competence according to the applicable South African rules on international competence andenforcement is not precluded in terms of the Protection of Businesses Act, 1978 (the “SA PB Act”). A foreignjudgment will probably not be recognised in South Africa if the foreign court exercised jurisdiction over thedefendant solely by virtue of an attachment to found jurisdiction or on the basis of domicile alone. South Africancourts will not enforce foreign revenue or penal laws (e.g. fines or governmental levy (distinct from privatejudgments)) and South African courts have, as a matter of public policy, generally not enforced awards formultiple or punitive damages. In terms of the Conventional Penalties Act, 1962, a creditor may not, in respect ofan act or omission which is the subject of a penalty stipulation, recover both the penalty and damages or except

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where expressly provided for, damages in lieu of the penalty. Certain defined judgments obtained in a court otherthan South Africa may not be enforced in South Africa without the permission of the South African Minister ofTrade and Industry under the SA PB Act. Permission from the South African Minister of Trade and Industry willsimilarly not be granted if it would result in the recovery of punitive damages.

Where obligations are to be performed in a jurisdiction outside South Africa they may not be enforceable underthe laws of South Africa to the extent that such performance would be illegal or contrary to public policy underthe laws of South Africa or the foreign jurisdiction, or to the extent that the law precludes South African courtsfrom granting extra-territorial orders. South African courts have the discretion of refusing the granting of orderswith extra-territorial effect if the granting of such order would be ineffectual.

Under the South African Recognition and Enforcement of Foreign Arbitral Awards Act, 1977 (the“SA Enforcement Act”), any foreign arbitral award may, subject to the provisions of sections 3 and 4 thereof, bemade an order of court. Any such award which has been made an order of court pursuant to the provisions of theSA Enforcement Act may be enforced in the same manner as any judgment or order to the same effect (subject tothe provisions of the SA PB Act, which apply mutatis mutandis to foreign arbitral awards). A South Africancourt may refuse to enforce a foreign arbitral award if it finds that the reference to arbitration would not havebeen permissible in South Africa in respect of the dispute, or enforcement of the award would be contrary topublic policy in South Africa.

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TABLE OF CONTENTS

Page

INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

STABILISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi

INDUSTRY AND MARKET DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii

ENFORCEABILITY OF CIVIL JUDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

OVERVIEW OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

CAPITALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION . . . . . 36

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

BUSINESS DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

DESCRIPTION OF OTHER INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

CONDITIONS OF THE 2022 NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

CONDITIONS OF THE 2026 NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

THE GLOBAL CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

BOOK-ENTRY CLEARANCE SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

EXCHANGE CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

SELLING RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162

COMMERCIAL PAPER REGULATIONS UNDER THE SOUTH AFRICAN BANKS ACT . . . . . . . . . . . 165

LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

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RISK FACTORS

An investment in the Notes involves certain risks. Prior to making an investment decision, prospective purchasersof the Notes should carefully read the entire Offering Circular. In addition to the other information in thisOffering Circular, prospective investors should carefully consider, in light of their own financial circumstancesand investment objectives, the following risks before making an investment in the Notes. If any of the followingrisks actually occurs, the market value of the Notes may be adversely affected. In addition, factors that arematerial for the purpose of assessing the market risks associated with the Notes are also described below. Eachof the Issuer and the Guarantors believes that the factors described below represent the principal risks inherentin investing in the Notes, but makes no representation that the statements below regarding the risks of holdingany Notes are exhaustive.

RISKS RELATING TO OUR BUSINESS

If we do not continue to provide telecommunications or related services that are useful and attractive tocustomers, we may not remain competitive, and our business, financial condition, results of operations andprospects may be adversely affected.

Our commercial success depends on providing services such as mobile voice, data access and digital services thatprovide our customers with attractive products and services at a competitive cost. Many of the services we offerare technology-intensive and the development or acceptance of new technologies may render such services non-competitive, replace such services or reduce prices for such services. The telecommunications industry ischaracterised by an increasing pace of technological change in existing mobile systems and industry standardscombined with ongoing improvements in the capacity and quality of technology to cater to changing customerneeds. As new technologies develop, our equipment may need to be replaced or upgraded, we may need toacquire additional licences and bandwidth or our networks may need to be rebuilt in whole or in part in order tosustain our competitive position as a market leader. While we endeavour to upgrade our existing infrastructure(such as by upgrading our second-generation wireless networks (“2G”) to third and fourth generation wirelessnetworks (“3G” and “LTE”, respectively) and fibre, to respond successfully to technological advances, we mayrequire substantial capital expenditures and access to related or enabling technologies in order to integrate thenew technology with our existing technology. If we are unable to anticipate customer preferences or industrychanges, or if we are unable to modify our service offerings on a timely and cost-effective basis, we may losecustomers.

As convergence of services accelerates, we have made and will have to continue to make substantial additionalinvestments in new technologies to remain competitive and changes in technology and services may also lead usto competing with new competitors including both emerging players as well as established technology companiesentering new sectors. Our operating results will also suffer if our new products and services are not responsive tothe needs of our customers, are not appropriately timed with market opportunities, are not effectively brought tomarket or are not priced competitively. The new technologies we choose may not prove to be commerciallysuccessful or profitable.

We cannot be certain that existing, proposed or as yet undeveloped technologies will not become dominant in thefuture and render the technologies we use less commercially viable or profitable or that we will be successful inresponding in a timely and cost-effective way to keep up with new developments. As telecommunicationstechnology continues to develop, our competitors may be able to offer telecommunications products and servicesthat are, or that are perceived to be, substantially similar or better than those offered by us. This could have amaterial adverse effect on our business, financial condition, results of operations and prospects. If we are notsuccessful in anticipating and responding to technological change and resulting consumer preferences in a timelyand cost-effective manner, our quality of services, business, financial condition, results of operations andprospects could be materially adversely affected.

A failure in the operations of our networks, gateways to our networks or the networks of other operators couldadversely affect our business, financial condition, results of operations and prospects.

We depend to a significant degree on the uninterrupted operation of our networks to provide our services. Fromtime to time, customers of certain operating companies within our Group have experienced blocked or droppedcalls or slow data speeds because of network capacity constraints. For example, we recently had a 48-hournetwork outage in some areas in South Africa. We may not be able to improve or maintain these relevantnetworks at current levels, particularly if our traffic volume grows significantly beyond our headroom capacity.

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For example, growth in data services and consequently data revenue has at times been constrained in Nigeria as aresult of slow data speeds. In particular, since the majority of our markets (other than South Africa) are prepaidmarkets with no fixed-term contracts, network outages or other issues can have a particularly significant impactas customers may choose an alternative service provider, and we may need to engage in costly marketingactivities to retain or attract customers.

We also rely to a certain extent on interconnection with the networks of other telecommunications operators tocarry calls from our customers to the customers of fixed-line operators and other mobile operators, both within agiven country and internationally. While we have interconnection and international roaming agreements in placewith many other telecommunications operators, we have no direct control over the quality of these networks andthe interconnections and international roaming services they provide. Any difficulties or delays ininterconnecting with other networks and services, or the failure of any operator to provide reliableinterconnections or roaming services to us on a consistent basis, could result in a loss of subscribers or a decreasein traffic, which could adversely affect our business, financial condition, results of operations and prospects.

In addition, our network, including our information systems, information technology and infrastructure, and thenetworks of other operators with whom our customers interconnect, are vulnerable to damage or interruptions inoperation from a variety of sources including earthquakes, fires, floods, power loss, equipment failure, networksoftware flaws, transmission cable disruption or similar events. Any interruption of our operations or theprovision of any service, including for a short period of time, whether from operational disruption, naturaldisaster or otherwise, could damage our ability to attract and retain customers, cause significant customerdissatisfaction and have a material adverse effect on our brand, business, financial condition, results of operationsand prospects.

We are subject to intense competition in many of the markets in which we operate.

We operate in an increasingly competitive environment, particularly around pricing, across our markets whichadversely affects our revenue and margins. Our competitors generally fall into three broad categories:(i) international diversified telecommunications companies; (ii) state-owned and partly state-ownedtelecommunications companies; and (iii) local and regional telecommunications companies. Some of our globalcompetitors have substantially greater financial, personnel, technical, marketing and other resources. In a numberof countries, our competitors are also government-owned entities or major local business participants, and mayhave the advantage of being an incumbent service provider. Local and regional operators may be able to leveragetheir knowledge of the local markets more efficiently than us.

Increasing competition has also led, in certain markets, to declines in the prices we are able to charge for ourservices. For example, in 2015, voice tariffs declined by 25% across the Group’s operations in the year’s averageprice per minute in US dollar terms and the Group’s effective data tariff in US dollar terms declined by 45% andmay lead to further price declines in the future, which could adversely affect our overall profitability. Some ofour competitors may further reduce pricing and offer unsustainable price reductions or discounts in an effort tostrengthen their market position, and we may not be able to match their price reductions while maintaining ourprofitability.

The continuing trend toward business combinations, consolidation in the media industry and strategic alliances inthe telecommunications industry may create increased competition, including from non-conventional and OTTplayers (internet-based alternatives to traditional telephony services) such as social networking sites, messagingapplications and video on demand services. Although new laws and regulatory initiatives may provide us withincreased business opportunities by removing or substantially reducing certain barriers to competition, in sodoing they also create a more competitive business environment and may encourage new entrants, which couldadversely affect our key performance indicators, such as our total voice minutes on network and data usage onnetwork.

Increased competition may also lead to increased churn, a reduction in the rate at which we are able to add newcustomers or to a decline in customer numbers and a decrease in our market share as customers purchasetelecommunications services, or other competing services, from other providers and/or increasingly switchbetween providers based on pricing and the products and services that are offered.

There can be no assurance we will not experience increases in churn rates, reflecting increased numbers ofcustomer deactivations, particularly as competition for existing customers intensifies. An increase in churn ratesmay result in lower revenue and higher costs resulting from the need to replace customers, and may consequentlyhave a material adverse effect on our business, financial condition, results of operations and prospects.

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Our revenue from voice services is declining and unlikely to improve and our future revenue will beincreasingly dependent on data services

Revenue from fixed-line and mobile telephony voice services is in decline across the industry globally, but at thesame time there is an upward trend in data revenue. Data revenue made up 25.1% of our total revenue in thesix months ended 30 June 2016 and 23.0% of our total revenue in the year ended 31 December 2015, ascompared to 17.7% and 14.9% of total revenue in the years ended 31 December 2014 and 31 December 2013,respectively. We expect that the demand for data services will continue to be driven by rising smartphone andtablet penetration and usage, usage of video and other multimedia services, as well as improvements in mobilenetwork capability. Although we have identified data revenue as one of the most important drivers for futureprofit growth and are investing in and upgrading our infrastructure and new consumer propositions in response tothis trend, there is no assurance that we will successfully monetise the increase in data traffic and any increase inthe revenue generated from data services may not be sufficient to offset the substantial capital expendituresrequired to upgrade our networks to handle increased data traffic as well as the decline in voice services revenue.This could have a material adverse effect on our business, financial condition, results of operations andprospects.

We have operations in sanctioned countries that could subject us to increased government scrutiny, makebusiness more difficult and expose us to allegations or investigations in respect of sanctions violations, withpossible damage to our reputation and financial position.

We have conducted or currently conduct business activities in a wide range of countries, including Iran, Sudanand Syria which have been, are or may become subject to sanctions regimes of the United States, theEuropean Union, United Kingdom, and United Nations (“UN”). In connection with such business, we haveengaged or currently engage in business with certain persons or entities that are the target of sanctions.

The United States, through sanctions overseen primarily by the US Treasury Department’s Office of ForeignAssets Control and the US State Department, and the European Union and its Member States have laws thatregulate, restrict or prohibit certain business activities in sanctioned countries or dealing with certain individualsor entities within such countries or with significant ties to such countries. Any failure to comply with these lawsand regulations may expose us to risk of adverse and material financial, operational, or other impacts.

Neither we nor any of our affiliates is subject to US sanctions as a US person or as an entity located in theUnited States; however, certain US secondary (extraterritorial) sanctions are applicable to all US and non-US persons regardless of whether they have any ties or contacts to the United States. We are not generallysubject to EU sanctions as an EU person or as an entity located in the EU. However, some of our affiliates areorganised in EU Member States or affiliated jurisdictions (Cyprus, Belgium, Germany, Luxembourg and theBritish Virgin Islands, respectively and some of our tower investments are held in Dutch entities), and are subjectto EU sanctions.

Our activities in sanctioned countries are:

• In Iran, our joint venture, Irancell Telecommunication Company Services (PJSC) (“Irancell”), in which wehold a 49% interest, provides a range of telecommunications services to 47.3 million subscribers or 46.4%of the Iranian market, as at 30 June 2016, representing 20% of our total subscriber base.

• In Sudan, our affiliate, MTN Sudan Company Limited, in which we hold a majority interest, providesprepaid and postpaid telecommunications services to 8.8 million subscribers or 33.8% of the market. Ourbusiness in Sudan generated 3% of our total revenue, 4.4% of our total EBITDA and 4% of our totalsubscribers for the six months ended 30 June 2016. In 2015, our business in Sudan represented 2.4% of ourtotal revenue, 2.1% of our total EBITDA and 4% of our total subscribers.

• In Syria, our affiliate, MTN Syria (JSC), in which we hold a majority interest, provides telecommunicationsservices to 5.8 million subscribers, representing 40.9% of the market, as at 30 June 2016. Our business inSyria generated 1.3% of our total revenue, 1.6% of our total EBITDA and 2% of our total subscribers for thesix months ended 30 June 2016. In 2015, our business in Syria represented 1.8% of our total revenue, 0.8%of our total EBITDA and 3% of our total subscribers.

Our business interests and activities have been disclosed to the South African government and the US StateDepartment and Treasury Department. The US government applies extensive sanctions against Iran, some ofwhich may also apply to non-US persons, under numerous laws and executive orders. The US State Departmenthas historically given guidance on sanctions compliance which may be applicable to our business operations.

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Sanctions regimes and related laws and regulations are complex and constantly changing. Sanctions regimes andrelated laws and regulations may be enacted, amended, enforced or interpreted in a manner that materiallyimpacts our operations. We work closely with US, South African, and other legal authorities to remain compliantwith all applicable sanctions. Neither we nor our affiliates, to the best of our knowledge, are the subject of acurrent government investigation or enforcement action in respect of any sanctions matter.

If we or our affiliates are found to be in violation of sanctions laws, we or our affiliates could be subject tofinancial or other penalties, and investors may decide, or be required, to divest their interest, or not to invest, inus. The enforcement of sanctions laws may interfere with our operations. For example we have been unable for anumber of years to repatriate significant funds (R15.4 billion as at 30 June 2016) owed to us by our Iranian jointventure, Irancell; however, following the relaxation in January 2016 of nuclear-related sanctions imposed on Iranby the US and the EU it may become possible to repatriate these funds as international financial institutionsbecome more accustomed to and comfortable with doing business in Iran. Even where there is no violation ofsanctions laws, government investigations or other actions by pressure groups related to the conduct of businessin countries subject to international sanctions may result in reputational or other harm to us. Any of the foregoingcould result in a material adverse effect on our business, financial condition and results of operations.

Because we operate in highly regulated business environments, changes in law, regulations or governmentalpolicy affecting our business activities could adversely affect our business, financial condition, results ofoperations and prospects.

We have ventures in a large number of jurisdictions, and therefore we must comply with an extensive range oflaws and regulations pertaining to the licensing, construction and operation, as well as monitoring (including callinterceptions), of telecommunications networks and services, as implemented by relevant agencies or otherregulatory bodies. Among the most significant of these laws and regulations are those governing tariffs, customerregistration and identification, the ability to offer and/or bundle products and services, the allocation of frequencyspectrum, interconnection and access, and those governing the regulatory agencies that monitor and enforceregulation and competition laws that apply to the telecommunications industry. In addition, we are required tocomply with anti-money laundering, anti-bribery and corruption and sanctions laws and regulations. Decisions byregulators regarding the grant, amendment or renewal of licences, to us or to third parties, or regarding laws,rules, and regulations, could materially and adversely affect our operations in these geographic areas. We cannotprovide any assurance that governments or regulatory bodies in the countries in which we operate will not issuetelecommunications licences to new operators whose services will compete with those services provided by us.

As we operate in a number of emerging markets, the interpretation and application of laws and regulationsaffecting telecommunications services may be subject to increased uncertainties due to developing or incompleteregulatory regimes and ensuring compliance may be more difficult compared to more developed markets. Inmany of the countries in which we operate, local regulators have significant latitude in the administration andinterpretation of telecommunications licences and laws, rules and regulations. In addition, the actions taken bythese regulators in the administration and interpretation of these licences and laws, rules and regulations may beinfluenced by local political and economic pressures. Terrorist-related activities have caused an increased focusby regulators in many of the jurisdictions in which we operate on subscriber registration requirements and theneed to disconnect improperly registered customers. Obtaining required identity documentation can bechallenging in a number of the markets in which we operate due to a lack of, or incomplete, national identityscheme. For example, in Nigeria and Uganda stricter customer SIM card registration requirements have resultedin MTN Nigeria disconnecting 6.7 million subscribers in 2015 and a further 4.5 million at the end of February2016 and MTN Uganda disconnecting 3.7 million subscribers in 2015 who did not fully comply with thesubscriber registration requirements and subscriber net additions for the year were impacted negatively, erodingthe market share of MTN Nigeria and MTN Uganda.

Enforcement of regulations may also be subject to increased uncertainties, including limited regulatory history,inconsistent application of regulations and unclear penalties, which may be sizeable. For example, in Nigeria inOctober 2015, the Nigerian Communications Commission (“NCC”) imposed a N1.040 trillion fine (which was atthe time equivalent to US$5.2 billion) on MTN Nigeria for failure to disconnect improperly registered customerson a timely basis. The fine was subsequently reduced to a total cash amount of N330 billion over three years (asat 10 June 2016, the equivalent of US$1.671 billion at the official exchange rate prevailing at the time), amongstother conditions, in a settlement reached on 10 June 2016 to the Federal Government of Nigeria in full and finalsettlement of the matter. For a further discussion, see “Business Description—Litigation, Arbitration andDisputes—Nigerian Regulatory Fine.” Accordingly, although we seek to comply with prevailing regulations ineach of our markets, we cannot provide any assurance that we will not be subject to future regulatoryenforcement actions.

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Increases in, or changes to, regulation could result in higher operational costs and decrease our ability to presentattractive offers to our subscribers and potential subscribers, which could adversely affect our business, financialcondition and results of operations. In addition, other changes in the regulatory environment concerning the useof mobile phones may lead to a reduction in the usage of mobile phones or otherwise adversely affect us.Decisions by regulators and new legislation, including in relation to retail, wholesale and interconnect priceregulation, could adversely affect the pricing of, or adversely affect the revenue from, the services we offer.Decisions by regulators may include limiting our pricing flexibility, raising our costs, reducing our retail orwholesale revenues or conferring greater pricing flexibility on our competitors.

The industry in which we operate is constantly advancing and, as a result, the laws applicable to this industry areevolving. In addition, enforcement priorities are subject to change and we are subject to additional laws andregulations, including, but not limited to, those governing anti-money laundering requirements, anti-bribery andanti-corruption requirements, sanctions and licensing regimes, as we introduce new products and services. Therecan be no assurance that we will be able to comply with the evolving legal and regulatory landscape.

Our ability to grow profitably depends in part on our ability to continue to grow internationally throughorganic expansion and/or further acquisitions.

Our ability to grow profitably will depend in part on our ability to continue to grow our international operationsthrough organic expansion and/or further acquisitions. Such acquisitions may vary in size, and could besignificant enough that they would have a material impact on the Group and require an increase in our overalllevel of indebtedness and leverage. The success of our acquisition and investment strategy depends on the abilityof management to identify and compete for suitable acquisition and investment targets, to assess the value,strengths, weaknesses, contingent or other liabilities and potential profitability of such acquisitions andinvestments, to negotiate acceptable purchase, financing and other terms and, in some cases, the selection ofappropriate international and local partners, and the continued contributions by certain of our key managementand technical personnel. Our acquisition and investment strategy also depends on our ability to obtain theappropriate regulatory and governmental approvals, licences, spectrum allocation and registrations, and may belimited by regulatory constraints in the countries in which we operate due to antitrust laws, asset control laws orpolitical conflicts. See “—Current and future antitrust and competition laws in the countries in which we operatemay limit our growth and subject us to antitrust and other investigations or legal proceedings”. In addition, thesuccess of our acquisitions and investments will depend on, and may be limited by, our ability to financeacquisitions and investments, which may be limited by our overall level of indebtedness and liquidity profile,restrictions contained in our debt instruments and our other existing and future financing arrangements, ourability to upstream dividends from certain jurisdictions and one-off events such as the payment of the NigerianRegulatory Fine. See “Business—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine”.

Once targets are acquired, the success of our acquisitions and investments is dependent on the ability of ourmanagement and employees to integrate the acquired businesses, to implement an effective managementstructure given the terms of the investment (particularly in cases where we have only a minority interest or have ajoint venture partner), to realise the benefits of expected planned synergies (such as branding, marketing andequipment sourcing) and to successfully operate and manage new and acquired businesses, particularly in newjurisdictions (such as rolling out a new network, managing vendors, establishing billing systems and addressingsecurity concerns). These risks can be particularly significant in emerging markets, where it is difficult to assessthe regulatory, business and operating environment given limited history and precedent and other economicoperating and political factors. See “—Risks Relating to the Countries in Which We Operate—We are subject tothe risks of political, social and economic instability associated with emerging market countries and regions inwhich we operate or may seek to operate”. Additionally, we regularly evaluate and analyse our businesses from astrategic point of view.

There can be no assurance that we will be able to identify and complete future acquisitions or investments onappropriate terms and at an acceptable cost or that we will successfully execute our acquisition, investment orroll-out plans or that we will realise the benefit of such plans when completed. The use of cash to fundacquisitions may limit the availability of our working capital. In addition, we may exit certain markets in whichwe operate should there be a compelling business or regulatory reason to do so. We cannot give any assurancethat our recent rate of growth will be maintained in the future or that demand for our services will enable us toachieve a satisfactory return on any acquisitions or investments that we make or support the leverage taken on forsuch acquisitions or investments. Our inability to expand our existing business internationally, or to find,complete, operate and integrate suitable acquisitions or investments and to operate with increased leverage, couldhave a material adverse effect on our business, financial condition, results of operations and prospects.

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Our investment plans are based on models reflecting management’s predictions of market conditions in themarkets in which we seek to operate. There can be no assurance that such models will correctly anticipateactual investment results.

Our investment plans, including in particular our acquisitions and greenfield roll-out plans, are influenced by ourmodelling of anticipated investment returns. We use the results of our modelling to identify and execute potentialinvestment strategies, such as acquisitions or greenfield network development. These models rely on certainassumptions of market fundamentals, such as macroeconomic assumptions, economic growth forecasts, pricingand competition in the relevant markets, in determining a given investment’s timing, cost and expectedprofitability for us. If actual market conditions deviate from the assumptions underlying these models, we couldbe required to modify, scale back or delay our acquisition and expansion plans. If we are not able to modify ourplans, our financial returns could be materially adversely affected. Changing market fundamentals could likewiseaffect our ability to adhere to our acquisition and expansion plans in ways that could have a material adverseeffect on our business, financial condition, results of operations and prospects.

We maintain and regularly review our internal controls over financial reporting, risk elevation and corporatecompliance, but these controls cannot eliminate the risk of errors or omissions in such reporting orcompliance with laws.

We maintain and regularly review internal controls over our financial reporting, risk elevation and corporatecompliance. However, internal control over financial reporting, risk elevation and corporate compliance haveinherent limitations. They are processes that involve human diligence and compliance and is subject to lapses injudgment and breakdowns resulting from human failures. In addition, it can be circumvented by collusion orimproper management override. We have in the past had issues with risk elevation and corporate compliance inour operating companies, including Nigeria, and have recently engaged external consultants to advise on, amongother things, risk elevation and corporate compliance with respect to our operating companies. Following theseconsultations, we have undertaken remedial actions to strengthen our risk elevation and corporate compliancefunctions, including anti-money laundering, anti-bribery and corruption and sanctions compliance. A failure todetect or correct deficiencies and weaknesses in a timely manner could have an adverse effect on the accuracy offinancial reporting. A failure to adequately monitor compliance with laws and regulations could have a materialadverse effect on our business, financial condition, results of operations and prospects. Although we haveundertaken organisational changes to strengthen the compliance of our operating companies with laws andregulations and the reporting by the operating companies in to the Group, there can be no assurance that suchchanges will eliminate the risk of a failure in risk elevation and corporate compliance or prevent enforcementactions by regulators, impositions of fines or reputational damage, among others.

Many of our operations are in countries with volatile exchange rates and negative fluctuations in currencyexchange rates could materially and adversely affect our business, financial condition and results ofoperations.

Our results of operations are directly affected by the exchange rates for currencies of countries in which weoperate and which fluctuate in relation to the Rand, such as the US dollar, the Euro, the Naira, the Cedi, theSyrian pound and the Iranian rial, amongst others. In particular, our operations are located in emerging marketswhich are subject to a higher degree of currency volatility compared to more developed markets, and subject ouroperations to a higher degree of currency risk. Because the Rand is our reporting currency, we must translate theassets, liabilities, turnover and expenses of all of our operations with a functional currency other than the Randinto Rand at the applicable exchange rates, being the period-end rate for assets and liabilities, the average periodrate for revenue and expenses, and the transaction date rate for specific transactions in equity.

Consequently, increases or decreases in the value of the Rand in relation to these other currencies may affect thevalue of these items with respect to our non-Rand businesses in our consolidated financial statements, even iftheir value has not changed in their original currency. Since 2015, the value of the Rand has fallen against othercurrencies, which leads to an increase in the reported results of operations of the non-Rand businesses. On theother hand, a stronger Rand against the US dollar will reduce the reported results of operations of the non-Randbusinesses. These translations could affect the comparability of our results between financial periods or result inchanges to the carrying value of our assets, liabilities and equity. For example, the recent devaluation of theNaira has reduced the value of revenue received by the Group from our operations in Nigeria.

In 2015, 27.2% of our total revenue and 27.7% of our costs were denominated in Rand. In 2015, we had netexchange losses of R1,471 million, of which R712 million, R434 million, R303 million and R75 million were

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related to net exchange losses in Nigeria, South Sudan, Zambia and Ghana, respectively. We generally do nothedge our foreign currency earnings. There can be no assurance that future exchange rate fluctuations betweenthe Rand and the currencies of countries in which we operate will not have a material adverse effect on ourbusiness, financial condition and results of operations.

Fluctuations in rates could increase our finance costs and/or make it difficult to meet our obligations underfinance facilities.

Our finance costs are highly sensitive to many factors beyond our control, including the interest rate, exchangerate and other monetary policies of governments and central banks in the jurisdictions in which we operate. Asignificant proportion of our debt is denominated in US dollars which has become more expensive to service as aresult of the fall in value of the Rand in relation to the US dollar. As of 30 June 2016, R25,701 million of MTNGroup debt and R5,588 million of MTN Nigeria debt is denominated in US dollars. The floating rate portion ofour loans and borrowings is subject to interest rate risk resulting from fluctuations in the relevant reference ratesunderlying such debt. Consequently, because a significant portion of our debt is subject to floating interest rates,any increase in such reference rates will result in an increase in our interest rate expense and may have a materialeffect on our financial condition, results of operations and prospects. Any future unhedged interest rate risk mayresult in an increase in our interest expense and may have a material adverse effect on our business, our financialcondition and results of operations.

In addition, the imposition of exchange controls and limits on convertibility due to hard currency liquidityshortages may make it difficult for us to repay foreign-denominated debt and/or upstream dividends to the parentcompany, as has been the case in Nigeria in the last 12 months.

If our risk management and loss limitation methods fail to adequately manage our exposure to losses, thelosses we incur could be materially higher than our expectations and our financial condition and results ofoperations could be materially adversely affected.

We historically have sought and will in the future seek to manage our exposure to losses through a number ofloss limitation methods, including internal risk management procedures.

Our methods of managing risk include setting a Group framework for general risk management and internal auditwhich are then implemented by our operating companies. These methods may not predict future exposures,which could be significantly greater than anticipated. Our risk management methods depend on the evaluation ofinformation regarding markets or other matters that are publicly available or otherwise accessible to us and thesuccessful implementation of Group risk policies by our operating companies. This information may not alwaysbe accurate, complete, up-to-date or properly evaluated. Any upgrades or changes to our risk managementmethods might not be successful. Further, insufficient resources and cost-cutting initiatives by our operatingcompanies could impact on their ability to implement the Group risk framework and manage their risks; forexample, reducing staff tasked with monitoring fraud could result in our Group being impacted by increasedfraud-related costs. Accordingly, if the estimates and assumptions that we enter into our risk models areincorrect, if such models prove to be an inaccurate forecasting tool, or if our operating companies fail tosuccessfully implement our risk framework and policies, the losses we might incur could be materially higherthan our expectation of losses, and our financial condition and results of operations could be adversely affected.

We have implemented a series of organisational and management changes in an effort to strengthen our riskelevation and corporate compliance functions. However, there can be no assurance that this will adequatelymanage our exposure to losses, which could have a material adverse effect on our business, financial conditionand results of operations.

Continued cooperation between us and our key equipment and service providers is important to maintain ourtelecommunications operations.

Once a manufacturer of telecommunications equipment has designed and installed its equipment within oursystem, we will often be reliant on the manufacturer for continued service and supply. We outsource themanagement and operation of much of our infrastructure to the original equipment manufacturer or technologyprovider. Our ability to maintain and grow our subscriber base depends in part on our ability to source adequatesupplies of network equipment and on the effective management and operation of our network equipment bythird parties. For example, we have made substantial equipment purchases from, and have entered into vendorfinancing arrangements with certain of our vendors in certain jurisdictions. Continued cooperation with theseequipment and service providers is essential in order for us to maintain our operations.

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We do not have direct operational or financial control over our key equipment and service providers, includingtower operators, such as American Tower Corp (“ATC”) and IHS Holdings Limited (“IHS”), with whom wehave entered into sale and lease back transactions in respect of our tower infrastructure in some of the markets inwhich we operate, and have limited influence with respect to the manner in which our key equipment and serviceproviders conduct their businesses. Our reliance on these equipment and service providers subjects us to risksresulting from any delays in the delivery of services. We cannot assure investors that our key equipment andservice providers will continue to provide equipment and services to us at attractive prices or that we will be ableto obtain such equipment and services in the future from these or other providers on that scale, in the geographieswhere we operate and within the time frames required, if at all. The inability or unwillingness of key equipmentand service providers to provide our operations with adequate equipment and supplies on a timely basis and tomanage our infrastructure in accordance with best practices, including at attractive prices, could materially andadversely impact the ability of these operations to retain and attract subscribers or provide attractive productofferings, either of which could materially and negatively impact our business, financial condition, results ofoperations and prospects.

A downgrade in our credit ratings could adversely affect our ability to access the debt capital markets and mayincrease our borrowing costs.

Our credit ratings, which are intended to measure our ability to meet our debt obligations as they mature, are animportant factor in determining our cost of borrowing. The interest rates of our borrowings are partly dependenton our credit ratings. Furthermore, our credit rating is partially correlated to the sovereign credit ratings in ourkey operations, particularly South Africa and Nigeria. On 16 September 2016, S&P lowered its long-term foreignand local currency sovereign credit ratings on the Federal Republic of Nigeria to “B” from “B+” as a result of amarked contraction in oil production, a restrictive foreign exchange regime and delayed fiscal stimulus. As aresult of the increased country risk in Nigeria and our ability to be rated above the sovereign credit rating, ourlong-term corporate credit rating was lowered by S&P from “BBB- (negative)” to “BB+ (stable)”, while ourcorporate rating continued to be assessed as Baa3 (negative) by Moody’s. Per the terms of the up to US$1 billioncredit facility entered into on 25 August 2016, the margin on our US$656,250,000 Term Facility andUS$218,750,000 Revolving Facility thereunder increased from 1.80% per annum to 2.15% per annum and 1.40%per annum to 1.75% per annum, respectively, as a consequence of the downgrade to our corporate rating. Per theterms of the ZAR1.5 billion credit facility entered into on 18 August 2016, the margin increased from 2.25% perannum to 2.55% per annum also as a result of the downgrade to our corporate rating. There can be no assurancethat any of our ratings will remain the same in the future and that there would not be additional or furtherdowngrades as result of ongoing deterioration in the Nigerian economy and/or the South African economy orotherwise.

A downgrade of our credit ratings (or announcement of a negative ratings watch) may increase our cost ofborrowing and may also limit our ability to raise capital. Moreover, actual or anticipated changes in our creditratings or the credit ratings of the Notes (if applicable) generally may affect the market value of the Notes. Inaddition, ratings assigned to the Notes (if applicable) may not reflect the potential impact of all risks related tothe transaction, the market or any additional factors discussed in this Offering Circular and other factors that mayaffect the value of the Notes. A securities rating is not a recommendation to buy, sell or hold securities. Ratingsmay be subject to revision or withdrawal at any time by the assigning rating organisation and each rating shouldbe evaluated independently of any other rating.

Current and future antitrust and competition laws in the countries in which we operate may limit our growthand subject us to antitrust and other investigations or legal proceedings.

The antitrust and competition laws and related regulatory policies in many of the countries in which we operategenerally favour increased competition in the telecommunications industry and may prohibit us from makingfurther acquisitions or continuing to engage in particular practices to the extent that we hold a significant marketshare in such countries. For example, in 2013 the Nigerian Communications Commission (the “NCC”) declaredthat we were a dominant operator in the mobile voice segment of the Nigerian market. The NCC placed certainobligations on us, including the requirement that we refrain from offering differential pricing on our on-net andoff-net mobile voice service. From October 2015 to May 2016 the regulator suspended regulatory services toMTN Nigeria. This entailed the NCC withdrawing its approval of new tariff plans and promotions until certaintariff plans and promotions were removed from the market. This resulted in our Nigerian operations beinguncompetitive during that period which negatively impacted our revenues and margins. In addition, violations ofantitrust and competition laws and policies could expose us to administrative proceedings, civil lawsuits orcriminal prosecution, including fines and imprisonment, and to the payment of punitive damages.

Regulators are particularly focused on establishing rules and a regulatory framework for interconnection betweenfixed and mobile networks, including mobile termination (i.e., the ability of a telecommunications provider to

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terminate a call on another operator’s network (i.e., calling between networks)) and the related pricingmechanisms (i.e., mobile termination rates). In fixed-line networks, although the incumbent provider hasgenerally been obliged by the regulator to offer access to its network for the purposes of interconnection or calltermination at prices which have usually been set by the regulator to equal cost, such pricing could also be setwell below cost. Decisions by any of our regulators requiring us to provide mobile termination andinterconnection services well below current rates or to pay rates to our competitors that are higher than the rateswhich our competitors pay us, which is more likely to be required in countries in which we are viewed ordesignated by the local regulator as having significant market power, could prevent us from realising asignificant amount of revenue and have a material adverse effect on our business, financial condition, results ofoperations and prospects. For instance, in South Africa the Independent Communications Authority of SouthAfrica (“ICASA”) requires us to pay a higher termination rate to our competitor Cell-C (currently R0.24 perminute), than Cell-C is required to pay us (currently R0.16 per minute). In October 2016 ICASA is expected todecrease rates further. Please see “Business Description—Litigation, Arbitration and Disputes—ICASATermination Rates.” Such asymmetrical regulatory intervention negatively impacts our competitive position andour profit.

In addition, antitrust and competition laws are subject to change and existing or future laws may be implementedor enforced in a manner that is materially detrimental to us. We cannot predict the effect that current or anyfuture lawsuits, appeals or investigations by regulatory bodies or by any third party in any of the countries inwhich we operate will have on our business, financial condition, results of operations or prospects. Although todate we have not been subject to any material antitrust or competition-related lawsuits, there can be no assurancethat these lawsuits will not occur and as a result cause us material losses and expenses. In addition, any fines, orother penalties imposed by an antitrust or competition authority as a result of any such investigation, or anyprohibition on us engaging in certain types of business in one or more of the regions in which we operate, couldhave a material adverse effect on our business, financial condition, results of operations and prospects.

We are, and may in the future be, involved in disputes and litigation, the ultimate outcome of which isuncertain.

We are subject to numerous risks relating to legal and regulatory proceedings to which we, our associates andjoint ventures are currently a party or which could develop in the future. We operate in a highly regulatedindustry in a number of jurisdictions where the law may be unclear or subject to changing interpretations. We arecurrently engaged in litigation in South Africa with Turkcell Iletisim Hizmetleri AS (“Turkcell”). Theproceedings relate to the unsuccessful effort of a Turkcell subsidiary to obtain the second Global System forMobile Communications (“GSM”) licence tendered in Iran in 2005. Should there be an adverse finding in theseproceedings, the damages for the alleged breach carries an exposure of up to US$4.2 billion. While we believethat the claim is unfounded and that the proceedings will be resolved in a satisfactory manner, there can be noassurance in this respect.

Our involvement in litigation and regulatory proceedings may adversely affect our reputation. Furthermore,litigation and regulatory proceedings are unpredictable and legal or regulatory proceedings in which we are orbecome involved (or settlements thereof) may have a material adverse effect on our business, financial condition,results of operations and prospects. For a description of current litigation and disputes, see “BusinessDescription—Litigation, Arbitration and Disputes.”

Telecommunications businesses require substantial capital investment and we may not be able to obtainsufficient financing on favourable terms, or at all.

We operate in a capital-intensive industry that requires substantial amounts of capital and other long termexpenditures, including those relating to the development and acquisition of new networks and the expansion orimprovement of existing networks. Our capital expenditures have been R29,611 million, R25,406 million andR30,164 million in each of 2015, 2014 and 2013, respectively. We have authorised R35,114 million for capitalexpenditures in 2016, with South Africa and Nigeria making up 32.1% and 31.7%, respectively, of the allocatedcapital expenditures. In the past, we have financed these expenditures through a variety of means, primarilythrough syndicated banking facilities, particularly at the operating company level, and debt capital markets insome instances, and to a lesser extent, through equity capital markets. This is likely to remain unchanged in thefuture. Our ability to arrange external financing, and the cost of such financing, depends on numerous factors,including our future financial condition and results of operations, as well as that of our individual operatingcompanies, general economic and capital markets conditions, interest rates, credit availability from banks orother lenders, investor confidence in us, applicable provisions of tax and securities laws and political andeconomic conditions in any relevant jurisdiction.

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We are exposed to certain risks in respect of the development, expansion and maintenance of ourtelecommunications networks.

Our ability to increase our subscriber base depends in part upon the success of the expansion and management ofour telecommunications networks. The build-out of our networks is subject to risks and uncertainties which coulddelay the introduction of services in some areas and increase the cost of network construction. Networkexpansion and infrastructure projects, including those in our development pipeline, typically require substantialcapital expenditure throughout the planning and construction phases and it may take months or years before wecan obtain the necessary permits and approvals and the new sites become operational. During the planning andexpansion process, we are subject to a number of construction, financing, operating, regulatory and other risksbeyond our control, including, but not limited to:

• shortages or unavailability of materials, equipment and skilled and unskilled labour;

• access to US dollars;

• increases in capital and/or operating costs, including as a result of foreign exchange rate movements;

• changes in demand for our services;

• labour disputes and disputes with contractors and sub-contractors;

• inadequate engineering, project management, capacity or infrastructure, including as a result of failure bythird parties to fulfil their obligations relating to the provision of utilities and transportation links that arenecessary or desirable for the successful operation of a project;

• electricity and power interruptions due to electricity load-shedding and/or blackouts, and energy shortages;

• regulatory regimes impacting our business;

• failure to complete projects according to specifications;

• failure to meet licence obligations;

• adverse weather conditions and natural disasters;

• environmental regulations, including the need to perform feasibility studies and conduct remedial activities;

• political, social and economic conditions;

• fraud;

• accidents;

• theft and malfeasance;

• terrorist action;

• changes in law, rules, regulations, governmental priorities and regulatory regimes; and

• an inability to obtain and maintain project development permission or requisite governmental licences,permits or approvals.

The occurrence of one or more of these events may have a material adverse effect on our ability to complete ourcurrent or future network expansion projects on schedule or within budget, if at all, and may prevent us fromachieving the projected revenues, internal rates of return or capacity associated with such projects. There can beno assurance that we will be able to generate revenues or profits from our expansion projects that meet ourplanned targets and objectives, or that such revenues will be sufficient to cover the associated construction anddevelopment costs, either of which could have a material adverse effect on our business, financial condition,results of operations and prospects.

If we fail to attract and retain qualified and experienced employees, our business may be harmed.

If we are unable to attract and retain experienced, capable and reliable personnel, especially senior and middlemanagement with appropriate professional qualifications, or if we fail to recruit skilled professional and technicalstaff at a pace consistent with our growth, our business, financial condition, results of operations and prospectsmay be materially adversely affected. Experienced and capable personnel in the telecommunications industryremain in high demand and there is continuous competition for their talents. We may not be able to successfullyrecruit, train or retain the necessary qualified personnel in the future. The loss of some members of our seniormanagement team or any significant number of our mid-level managers and skilled professionals may,particularly with regards to digital content and advertising, result in a loss of organisational focus, poor executionof operations and corporate strategy or an inability to identify and execute potential strategic initiatives such asexpansion of capacity or acquisitions and investments. These adverse consequences could, individually or in theaggregate, have a material adverse effect on our business, financial condition, results of operations and prospects.

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Our ability to exercise control over our subsidiaries and joint ventures is, in some cases, dependent upon theconsent and cooperation of other participants who are not under our control. Disagreements or terms in theagreements governing our subsidiaries and joint ventures could adversely affect our business, financialcondition, results of operations and prospects.

We currently operate through subsidiaries and joint ventures. While we have a majority interest in most of theseentities which allows us to maintain management control, our level of ownership of each of our subsidiaries andjoint ventures varies from market to market, and we do not always have a majority interest. Although the termsof our investments vary, our business, financial condition, results of operations and prospects may be materiallyand adversely affected if disagreements develop with our partners.

Our ability to withdraw funds, including dividends, from our participation in, and to exercise managementcontrol or joint management control over our subsidiaries and joint ventures, respectively, depends, in somecases, on the consent of our other partners in these entities and/or the consent of regulatory authorities. Further,failure to resolve any disputes with our partners in certain of our operating subsidiaries and joint ventures couldrestrict payments made by these operating entities to our Group and have a material adverse effect on ourbusiness, financial condition, results of operations and prospects.

RISKS RELATING TO THE TELECOMMUNICATIONS INDUSTRY

We could experience breaches in privacy laws and other information security requirements, which maymaterially adversely affect our reputation, lead to subscriber lawsuits, loss of subscribers or hinder our abilityto gain new subscribers and thereby materially adversely affect our business.

We may be exposed to breaches in privacy laws and other information security requirements which could resultin the unauthorised dissemination of information about our subscribers, including their names, addresses, homephone numbers, passport details, financial information and individual tax numbers. The breach of security of ourdatabase and illegal sale of our subscribers’ personal information could materially adversely impact ourreputation, prompt lawsuits against us by individual and corporate subscribers, lead to adverse actions by thetelecommunications and other regulators, lead to a loss in customers and hinder our ability to attract newcustomers. If severe customer data security breaches are detected, the regulatory authority can sanction us, andsuch sanction can include suspension of operations for some time period. These factors, individually or in theaggregate, could have a material adverse effect on our business, financial condition, results of operations andprospects.

In addition, our information security requirements have increased, and will continue increase, over time as weexpand the scope of our digital services and process an increasing amount of sensitive personal information,including financial transactions. We are currently in the process of reviewing and upgrading our informationsecurity procedures in a number of markets, but we cannot assure you that such changes will be or effective orsufficient to protect customer information in an evolving cybersecurity threat environment.

Our telecommunications licences, permits and frequency allocations are subject to finite terms, ongoingreview and/or periodic renewal, any of which may result in modification or early termination. In addition, ourinability to obtain new licences and permits could adversely affect our business.

The terms of our licences, permits and frequency allocations are subject to finite terms, ongoing review and/orperiodic renewal and, in some cases, are subject to modification or early termination or may require renewal withthe applicable government authorities. While we do not expect that we or any of our subsidiaries, associates orjoint ventures will be required to cease operations at the end of the term of their business arrangements orlicences, and while many of these licences provide for terms on which they may be renewed, there can be noassurance that these business arrangements or licences will in all cases be renewed on equivalent or satisfactoryterms, or at all. Upon termination, the licences and assets of these companies may revert to the local governmentsor local telecommunications operators, in some cases without any or adequate compensation being paid.

We have in the past paid significant amounts for certain of our telecommunications licences and the competitionfor these licences has historically been high. We anticipate that we may have to continue to pay substantiallicence fees in certain markets, particularly those with anticipated high growth rates and incur substantial costs tomeet specified network build-out requirements that we commit to in acquiring such licences. There can be noassurance that we will be successful in obtaining or funding these licences, or, if licences are awarded, that theycan be obtained on terms acceptable to us. If we obtain or renew further licences, we may need to seek futurefunding through additional borrowings or equity offerings and there can be no assurance that such funding will

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be obtained on satisfactory terms, or at all. Failure to obtain financing on satisfactory terms or at all may have amaterial adverse effect on our business, financial condition, results of operations and prospects.

Our operations could be adversely affected by natural disasters or other catastrophic events beyond ourcontrol.

Our business operations, technical infrastructure (including our network infrastructure) and development projectscould be adversely affected or disrupted by natural disasters (such as earthquakes, floods, tsunamis, hurricanes,fires or typhoons) or other catastrophic or otherwise disruptive events, including, but not limited to:

• changes to predominant natural weather, hydrologic and climatic patterns;

• major accidents, including chemical or other material environmental contamination;

• acts of terrorism;

• cyber security incidents;

• power loss;

• strikes or lock-outs or other industrial action by workers or employers; and

• medical pandemics.

The occurrence of any of these events, or a similar such event, in the regions in which we operate or affectingany part of our telecommunications network may cause disruptions to our operations in part or in whole, mayincrease the costs associated with providing services as a result of, among other things, costs associated withremedial work, may subject us to liability or impact our brands and reputation and may otherwise hinder thenormal operation of our business, which could materially adversely affect our business, financial condition,results of operations and prospects.

In addition, our technical infrastructure is vulnerable to damage or interruption from information andtelecommunications technology failures, acts of war, terrorism, intentional wrongdoing, human error and similarevents. Unanticipated problems affecting any part of our telecommunications network, such as system failures,hardware or software failures, computer viruses or hacker attacks could affect the quality of our services andcause service interruptions. Any of these occurrences could result in reduced user traffic and reduced revenuesand could harm our operations.

Further, any security breaches, such as misappropriation, misuse, penetration by viruses, worms or otherdestructive or disruptive software, leakage, falsification or accidental release or loss of information (includingcustomer, personnel and vendor data) maintained in our information technology systems and networks or thoseof our business partners could damage our reputation, result in legal and/or regulatory action against us, andrequire us to expend significant capital and other resources to remedy any such security breach.

The effect of any of these events on our business, financial condition, results of operations and prospects may beworsened to the extent that any such event involves risks for which we are uninsured or not fully insured, orwhich are not currently insurable, such as acts of war and terrorism. See “Business Description—Insurance”.

Failure in our information and technology systems could result in interruptions of our business operations.

Our information and technology systems are designed to enable us to use our infrastructure resources aseffectively as possible and to monitor and control all aspects of our operations. Although our critical systems aredesigned with high availability to avoid any downtime, any failure or breakdown in these systems could interruptthe normal business operations and result in a significant slowdown in operational and management efficiencyfor the duration of such failure or breakdown. Any prolonged failure or breakdown could dramatically impact ourability to offer services to our customers, which could have a material adverse effect on our business, financialcondition, results of operations and prospects. For example, we depend on certain technologically sophisticatedmanagement information systems and other systems, such as our customer billing system, to enable us to conductour operations. For example, in South Africa, we experienced significant disruptions while upgrading our SouthAfrican network. Any significant delays or interruptions in providing services, such as the disruptions whichoccurred while upgrading our South African network, could negatively impact our reputation as an efficient andreliable telecommunications provider.

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In addition, we rely on third-party vendors to supply and maintain much of our information technology. In theevent that one or more of the third-party vendors that we engage to provide support and upgrades with respect tocomponents of our information technology ceased operations or became otherwise unable or unwilling to meetour needs, we cannot assure investors that we would be able to replace any such vendor promptly or oncommercially reasonable terms, if at all. Delay or failure in finding a suitable replacement could materiallyadversely affect our business, financial condition, results of operations and prospects.

Actual or perceived health risks or other problems relating to mobile handsets or transmission and/or networkinfrastructure could lead to litigation or decreased mobile communications usage.

The effects of any damage caused by exposure to an electromagnetic field have been and continue to be thesubject of careful evaluations by the international scientific community, but to date there is no conclusivescientific evidence of harmful effects on health. However, we cannot rule out that exposure to electromagneticfields or other emissions originating from wireless handsets or transmission infrastructure is not, or will not befound to be, a health risk.

Our mobile communications business may be harmed as a result of these alleged or actual health risks. Forexample, the perception alone of these health risks could result in a lower number of customers, reduced usageper customer or potential customer liability. In addition, these concerns may cause regulators to impose greaterrestrictions on the construction of base station towers or other infrastructure, which may hinder the completion ofnetwork build-outs and the commercial availability of new services and may require additional investments.

Industrial action or adverse labour relations could disrupt our business operations and have an adverse effecton operating results.

While only a limited number of our operations, involving in aggregate approximately 1,200 employees, orapproximately 6%, are currently subject to collective bargaining, union or similar labour agreements, more of ouroperations may in the future be subject to collective bargaining, union or similar labour agreements. In addition,our employees also benefit from local laws regarding employee rights and benefits. If we are unable to negotiateacceptable labour agreements or maintain satisfactory employee relations, the results could include workstoppages, strikes or other industrial action or labour difficulties (including higher labour costs), whichindividually or in the aggregate, could have a material adverse effect on our business, financial condition, resultsof operations and prospects. For example, in 2015 the functioning of MTN South Africa’s call centres wasdisrupted by a seven week strike, affecting customer service. One of the results of the resolution of this strikewas the recognition of the Communications Workers Union.

RISKS RELATING TO THE COUNTRIES IN WHICH WE OPERATE

We are subject to the risks of political, social and economic instability associated with emerging marketcountries and regions in which we operate or may seek to operate.

Overview

We conduct our business in a number of emerging market countries and regions with developing economies,many of which have uncertain legal and regulatory systems and some of which from time to time haveexperienced economic, social or political instability. In addition, some of the countries in which we operate, suchas Ghana and Rwanda, are in the process of transitioning to a market economy and, as a result, are experiencingchanges in their economies and their government policies that can affect our investments in these countries.

There is also a risk that our operations in certain of the countries in which we operate could be expropriated bythe relevant government or regulatory authorities, either by formal change in ownership, revocation of anoperating licence or by changes in regulatory or financial policies that have an equivalent effect. Governments inthese jurisdictions and countries, as well as in more developed jurisdictions and countries, may be influenced bypolitical or commercial considerations outside of our control, and may act arbitrarily, selectively or unlawfully,including in a manner that benefits our competitors. In addition, we may from time to time enter into businessrelationships with entities subject to European, United States, UN or other international sanctions. By doing so,we could experience adverse publicity, which may in turn result in reputational harm in certain jurisdictions.

Specific country risks that may have a material adverse effect on our business, financial condition, results ofoperations and prospects include, among other things:

• political instability, riots or other forms of civil disturbance or violence;

• war, terrorism, invasion, rebellion or revolution, or disease outbreaks;

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• government interventions, including expropriation or nationalisation of assets;

• increased protectionism and the introduction of tariffs or subsidies;

• changing fiscal, regulatory and tax regimes;

• arbitrary or inconsistent government action, including capricious application of tax laws and selective taxaudits;

• inflation in local economies;

• difficulties and delays in obtaining requisite governmental licences, permits or approvals;

• restricted access to cash;

• cancellation, nullification or unenforceability of contractual rights; and

• underdeveloped industrial and economic infrastructure.

Changes in investment policies or shifts in the prevailing political climate in any of the countries in which weoperate, or seek to operate, could result in the introduction of increased government regulations with respect to,among other things:

• price controls;

• export and import controls;

• income and other taxes;

• environmental legislation;

• customs and immigration;

• foreign ownership restrictions;

• foreign exchange and currency controls; and

• labour and welfare benefit policies.

Political climate

Various countries in Africa and the Middle East, such as Syria, Sudan, South Sudan and Yemen, haveexperienced varying degrees of political instability and armed conflict in recent years. Ongoing and future armedconflicts or political instability in those regions could impact our operations, including our ability to purchaseadequate political risk and political violence insurance. For example, in Afghanistan, Syria, South Sudan andNigeria, terrorist and other armed groups have engaged in campaigns against their respective governments andallies, and have struck both military and civilian targets resulting in continued risk to our operations, includingthe threat of damage to our infrastructure. There can be no assurance that terrorist groups will not escalate violentactivities or that the relevant governments will be successful in maintaining the prevailing levels of domesticorder and stability.

Investing in countries that are politically and economically undeveloped or developing, as we have done andexpect to continue to do, is risky and uncertain. Any changes in the political, social, economic or other conditionsin such countries, or in countries that neighbour such countries, could have a material adverse effect on theinvestments that we have made or may make in the future, which in turn could have a material adverse effect onour business, financial condition, results of operations and prospects. Additionally, political and economicchallenges in one emerging market economy may have contagion effects in other economies, which in turn couldhave a material effect on our business, financial condition, results of operations and prospects.

We are subject to political and economic conditions in the key markets in which we operate.

Our key operations are located in South Africa and Nigeria. Our results of operations are, and will continue to be,significantly affected by financial, economic and political developments in or affecting those markets and, inparticular, by the level of economic activity in those markets. For example, the continued weak economicsituation in South Africa has depressed consumer business confidence and negatively impacted consumerdemand in the country. In Nigeria, low oil prices and a devalued local currency have negatively affectedconsumer demand. It is not possible to predict the occurrence of events or circumstances, such as war orhostilities, or the impact of such occurrences, and no assurance can be given that we would be able to sustain the

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operation of our business if adverse financial, economic, political or other events or circumstances were to occur.Any future economic downturn, either regionally or domestically in any of the key markets in which we operate,could have a material adverse effect on our business, financial condition, results of operations and prospects.Investors should also note that our business and financial performance could be adversely affected by political,financial, economic or related developments both within and outside the key markets in which we operatebecause of inter-relationships within the global financial markets. In addition, the implementation by a nationalor local government in any of the key markets in which we operate of regulations adverse to our interests,including changes with respect to royalty payments, taxation or telecommunications regulations, or changes togrants and licences of properties used by us in those markets, could have a material adverse effect on ourbusiness, financial condition, results of operations and prospects and thereby adversely affect our ability toperform our obligations in respect of the Notes.

In recent years, there has been significant political and social unrest, including violent protests in a number ofcountries in which we operate. Certain countries in which we operate, such as Syria, Sudan, South Sudan andAfghanistan are currently in a state of civil war or armed conflict and do not have stable political environments.Instability in any of these countries may result from a number of factors, including government or militaryregime change, foreign intervention, civil unrest or terrorism. To a varying extent in each of these countries,extremists have engaged in a campaign, sometimes violent, against various governments in the region andterrorists have struck both military and civilian targets. For example, in Syria the ongoing conflict continuallymakes the refuelling of our base stations challenging due to the security risks faced by our employees, which hasnegatively impacted our financial results in the country as a result of network downtime. There can be noassurance that extremists or terrorist groups will not escalate violent activities in the countries in which weoperate or that the governments of those countries will be successful in maintaining the prevailing levels ofdomestic order and stability. There can be no assurance that such significant political and social unrest will notescalate or that the governments of countries in which we operate will be successful in maintaining domesticorder and stability.

Any of the foregoing circumstances could have a material adverse effect on the political and economic stabilityof the countries in which we operate and, in particular, could impact the level of economic activity in thosecountries and, consequently, could have a material adverse effect on our business, financial condition, results ofoperations and prospects, and thereby adversely affect our ability to perform our obligations in respect of theNotes.

We may pursue investment opportunities in countries in which we have no previous investment experience orin jurisdictions that are subject to greater social, economic and political risks.

We may not be able to adequately assess the risks of investing in new jurisdictions irrespective of advice fromour advisers. Investments made by us in emerging markets may involve a greater degree of risk than investmentsin developed countries. For example, emerging market investments may carry the risk of more volatile equitymarkets, less favourable and less sophisticated fiscal and commercial regulation and a less favourable businessand operating environment, a greater likelihood of severe inflation, unstable currency, exchange controls,restrictions on repatriation of profits and capital, corruption, political, social and economic instability (includingwarfare and civil unrest) and government actions or interventions, including tariffs, royalties, protectionism,subsidies, expropriation of assets and cancellation of contractual rights, than investments in companies based indeveloped countries. An occurrence of any of the foregoing risks or failure by us to correctly identify the risksassociated with an investment could have a material adverse effect on our business, financial condition andresults of operations.

A downturn in the domestic, regional or global economy may adversely affect our business.

We are exposed to risks associated with any future downturn in the domestic, regional or global economy. Globalfinancial markets have remained volatile since the global financial crisis that started in 2008 and remainsusceptible to renewed shocks. There can be no assurance that economic performance, whether globally or in theregions in which we operate, can or will be sustained in the future. To the extent that economic growth orperformance, either globally or in the regions in which we operate, slows down or begins to decline, this couldhave an adverse effect on our operations. Many of our strategic partners and suppliers, who are based overseas,may, in the event of a global downturn or a downturn in any specific region, experience financial difficulties thatcould affect their ability to service us in a timely and efficient manner. Any future global downturn, such as thatexperienced from 2008 to 2011, could have a material and adverse effect on our revenues, financial position,results of operations and prospects.

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Economic conditions can have a material adverse effect on telecommunications businesses, including a materialadverse effect on the quality and growth of their customer base and service offerings. For example, customersmay decide that they can no longer afford mobile services, or that they can no longer afford the data services andvalue-added services that are instrumental in maintaining or increasing total revenue generated per subscriber,and, in turn, increasing our revenues. Subject to differing levels of price elasticity of demand in each market inwhich we operate, any future economic downturn in those markets could have a material adverse effect on ourbusiness, financial condition, results of operations and prospects. High rates of inflation in some of the countriesin which we operate may also cause consumer purchasing power to decrease, which may reduce consumerdemand for our Group’s services.

A loss of investor confidence in the financial systems of emerging as well as mature markets may causeincreased volatility in the financial markets in the countries and regions in which we operate and a slowdown ineconomic growth or economic contraction in those countries and regions. Any such increased volatility orslowdown could have a material adverse effect on our business, financial condition, results of operations andprospects.

In some markets, requirements for foreign companies to broaden local ownership of their subsidiariesthrough listing on local stock exchanges could lead to a dilution of earnings for the Group and limitations onforeign investment or ownership could hinder the Group’s ability to operate.

In some markets there are requirements for foreign companies to broaden local ownership of their subsidiariesthrough listing on local stock exchanges. For example it is a requirement of the award of a 4G/LTE licence inGhana that MTN Ghana must have a minimum of 35% Ghanaian ownership by the first quarter of 2017, and it isa requirement of the settlement of the Nigerian Regulatory Fine that MTN Nigeria be listed on the NigerianStock Exchange (please see Business Description—Nigeria—Industry for further details). Additionally, 21% ofIrancell may be required to be offered to members of the Iranian public. Any listing of a large MTN operationcould lead to a dilution of MTN earnings, which could have a material adverse effect on our business, financialcondition, and prospects. In some markets, limitations on foreign investment or ownership could hinder theGroup’s ability to operate effectively which could have a material adverse effect on our business, financialconditions, and prospects.

Some of the countries in which we operate lack infrastructure or have infrastructure in very poor conditionand, particularly in Africa, have an insufficient supply of electricity.

Some of the countries in which we operate often lack modern infrastructure or have infrastructure in poor or verypoor condition, including, in particular, roads and power networks. In general, the rural areas in each of thecountries in which we operate often lack even the most basic infrastructure, as any development tends to beconcentrated in urban areas. We must often build our cell sites without the benefit of roads and otherinfrastructure, which increases our network development and maintenance costs. A number of countries in whichwe operate have limited spectrum availability. For example, in South Africa, we face challenges with regard tothe availability of spectrum. Spectrum shortages limit our ability to provide more customers with broadbandservices and faster data speeds, and so limit profitability.

The electricity supply is insufficient in certain of the African countries in which we operate due tounderdevelopment of electricity sectors compared to the pace of economic growth in such countries. In certaincountries, including South Africa and Nigeria, we must rely on diesel-powered generators or solar panels topower our radio sites and some of our towers have solar back-up power or hybrid deep cycle backup batteries.These measures increase our costs and impact the profitability of our African operations, although the impact ismitigated, to some extent, by the sale of our towers in Nigeria, Ghana, Uganda, Rwanda, Ivory Coast, Zambiaand Cameroon, though in some instances we retain interests in tower entities.

We operate in locations where there are high security risks, which could result in harm to our employees andcontractors or substantial costs.

Some of our subsidiaries, joint ventures and associates operate in high-risk locations, such as Afghanistan,Sudan, South Sudan, Syria and Yemen, where the country or location has suffered, or is suffering from political,social or economic instability, or war or civil unrest. In those locations where we have employees, assets oroperations, those subsidiaries, associates and joint ventures may incur substantial costs to maintain the safety oftheir personnel and to protect their assets. Despite these precautions, the safety of our personnel in these locationsmay continue to be at risk, and we may not be able to obtain insurance to effectively mitigate these risks. In

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addition, network maintenance and expansion projects in these areas could be delayed or cancelled due to theneed for heightened security for employees and contractors operating in these areas. The security situation inAfghanistan, Sudan, South Sudan, Syria and Yemen and other regions in which we operate remains unstable andcould have a material adverse effect on our business, financial condition, results of operations and prospects.

A decrease in commodity prices may adversely affect our business.

Commodity prices have historically been highly volatile, and such high levels of volatility are expected tocontinue in the future. Declines in commodity prices may have adverse economic effects globally or in theregions in which we operate. For example, the global decline in crude oil prices since 2014 to sub $100 per barrellevels has had a significant impact on the GDP and consequently the exchange rate in Nigeria, which has affectedour revenue from our operations in Nigeria. Efforts by the government to protect the currency and limit thedevaluation thereof has resulted in a rapid depletion of foreign currency reserves and a significant slowdown ofcapital inflows. Additionally, foreign exchange reserves in Nigeria have been prioritised for certain uses andindustries and consequently has resulted in challenges in repatriating funds out of the country. The recentdownturn in commodities prices and the global oil surplus have also been damaging to the currencies, andconsequently the consumer spending, of South Africa, Nigeria, Iran, Sudan and Ghana. The decline in disposableincomes and consumer expenditure has adversely affected our revenue and margins. Any further decrease incommodity prices could have a material and adverse effect on our revenues, financial position, results ofoperation and prospects.

RISKS RELATING TO THE NOTES

The Notes will constitute unsecured obligations of the Issuer and the Guarantees will constitute unsecuredobligations of each Guarantor.

The Notes will constitute unsecured and unsubordinated obligations of the Issuer and the Guarantees willconstitute unsecured and unsubordinated obligations of each Guarantor. The Notes and the Guarantees will rankequally with all of the other unsecured and unsubordinated indebtedness of the Issuer and each Guarantor,respectively. However, the Notes and the Guarantees will be effectively subordinated to the secured indebtednessand securitisations, if any, of the Issuer and each Guarantor, respectively, to the extent of the value of the assetssecuring such transactions, and will be subject to certain preferential obligations under South African and/orMauritian law, as applicable, such as wages of employees.

Generally, lenders and trade and other creditors of the subsidiaries of the Issuer and the Guarantors are entitled topayment of their claims from the assets of such subsidiaries before these assets are made available fordistribution to the Issuer or the relevant Guarantor, as the case may be, as a direct or indirect shareholder. Anydebt that the subsidiaries of the Issuer or any Guarantor may incur in the future will also rank structurally seniorto the Notes and the Guarantees, respectively.

The Issuer and the Guarantors are dependent on cash flows received from other members of the Group tomeet their respective payment obligations on their debt obligations, including under the Notes and under theGuarantees, and their ability to distribute funds is often dependent upon the consent of third parties, includingregulators, who are not under our control.

The Issuer is a special purpose vehicle with no business operations other than the issue of the Notes, the issue ofUS$750,000,000 Guaranteed Notes due 11 November 2024 issued by it on 10 November 2014 and thetransactions ancillary thereto, and will, accordingly, depend upon the receipt of sufficient funds from othermembers of the Group to meet its obligations. The Group intends to provide funds to the Issuer or theGuarantors, as applicable, in order to meet their respective obligations on the Notes and under the Guaranteesthrough payments or advances under intra-Group loans or other funding payments from the Group. To date, theIssuer has principally funded its obligations with cash flows from interest income from loans and advances toMTN Mauritius which are derived from dividend and management fee payments from our operating companies.However, the payment of the Nigerian Regulatory Fine is expected to be funded through our operating cashflows from Nigeria. Accordingly, we expect the amount of retained earnings available for dividends from MTNNigeria to be reduced. For a further discussion, see “Business Description—Litigation, Arbitration andDisputes—Nigerian Regulatory Fine.”

The amount of such payments under intra-Group loans or other funding payments from the Group that can bemade available to the Issuer and/or the Guarantors will depend on the profitability and cash flow of the variousmembers of the Group and the ability of such companies to make such payments to the Issuer and/or theGuarantors.

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In addition, the Guarantors conduct their business through their respective operating subsidiaries and jointventures, and will, accordingly, depend upon the receipt of sufficient funds from other members of the Group andsuch joint ventures in the form of management fees and dividends to meet their respective obligations Theoperating subsidiaries are separate legal entities and are under no contractual or other obligations to paydividends. The amount of such dividends and management fees that will be received by each Guarantor dependon the profitability and cash flows of their respective subsidiaries and joint ventures. The Group’s subsidiariesand such joint ventures may not, however, be able to, or may not be permitted under the terms of their existing orfuture indebtedness or applicable law to make dividend or management fee payments to their shareholders (whomay include the Guarantors) so that payments can be made to the Issuer and/or the Guarantors on loans extendedby the Issuer and/or the Guarantors. Additionally, the ability of the operating subsidiaries to pay dividends maybe subject to the availability of foreign currency, exchange rate controls, central bank permission and compliancewith sanctions laws.

In the event that the Issuer and the Guarantors do not receive payments under intra-Group loans, dividends,management fees or other funding payments from other members of the Group or its joint ventures, the Issuermay be unable to make required principal and interest payments on the Notes of either or each Series and theGuarantors may be unable to meet their respective payment obligations under the relevant Guarantee of either oreach Series.

In addition, other than the Issuer in relation to the Notes and the Guarantors in relation to the Guarantees, theother members of the Group are separate and distinct legal entities and have no obligation, contingent orotherwise, to pay any amounts due pursuant to the Notes or the Guarantees or to make funds available for thesepurposes, whether by loans, dividends, distributions, management fees or other payments, and do not guaranteethe payment of interest on, or principal of, the Notes.

The operating subsidiaries and joint ventures have obligations to creditors under their respective supplytransactions or borrowings. Any right that the Issuer or the Guarantors may have to receive assets of any of theirrespective subsidiaries or joint ventures upon any such subsidiary’s or joint venture’s liquidation, and theconsequent right of Noteholders to benefit from the distribution of proceeds from those assets to the Issuer or anyGuarantor, will be effectively subordinated to the claims of creditors of such subsidiaries and joint ventures(including tax authorities, employees, trade creditors and lenders to such subsidiaries).

Decisions of the holders of the required majority of the Notes of each Series bind all Noteholders of suchSeries.

The terms and conditions of the Notes of each Series will contain provisions for calling meetings of Noteholdersto consider matters affecting their interests generally. These provisions will permit Noteholders holding definedpercentages of Notes of each Series to bind all Noteholders of the relevant Series, including Noteholders of suchSeries who did not attend and vote at the relevant meeting and Noteholders of such Series who voted in a mannercontrary to the majority.

The Notes are subject to redemption at the option of the Issuer.

The optional redemption feature of the Notes may limit their market value. During any period where the Issuermay elect to redeem the Notes of the relevant Series, the market value of those Notes generally will not risesubstantially above the price at which they can be redeemed. This also may be true prior to any redemptionperiod.

The Issuer may be expected to redeem Notes of a particular Series when its cost of borrowing is lower than theinterest rate on the Notes of that Series. At those times, an investor generally would not be able to reinvest theredemption proceeds at an effective interest rate as high as the interest on the Notes of the relevant Series beingredeemed and may only be able to do so at a significantly lower rate. Potential investors should considerreinvestment risk in light of other investments available at that time.

The Issuer may create and issue further Notes.

The Issuer may from time to time without the consent of the Noteholders create and issue further Notes of eachSeries, having terms and conditions that are the same as those of the Notes of such Series, or the same except forthe amount of the first payment of interest, which new Notes may be consolidated and form a single series withthe outstanding Notes of the relevant Series even if doing so may adversely affect the value of the original Notesof such Series.

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It may not be possible for investors to enforce foreign judgments against the Issuer, any Guarantor or theirrespective management.

The Issuer is a limited liability company incorporated under the laws of Mauritius and the Guarantors, excludingMTN Mauritius (which is a limited liability company organised under the laws of Mauritius), are limited liabilitycompanies incorporated under the laws of South Africa. A majority of the directors and officers of the Issuer andthe Guarantors named herein reside inside South Africa or Mauritius and all or a substantial portion of the assetsof such persons may be, and the majority of the assets of the Issuer and the Guarantors are, located in SouthAfrica, Nigeria, Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius. As a result, it may notbe possible for investors to effect service of process upon such persons outside South Africa, Nigeria, Cameroon,Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius, as applicable, or to enforce any judgments againstthem obtained in the courts of jurisdictions other than South Africa, Mauritius, Nigeria or Ghana, as applicable,predicated upon the laws of such other jurisdictions. For further information, see “Enforceability of CivilJudgments”.

There is no public trading market for the Notes and an active trading market may not develop or be sustainedin the future.

There is no active trading market for investments in the Notes. If investments in the Notes are traded after theirinitial issuance, then they might trade at a discount to their initial offering price, depending upon prevailinginterest rates, the market for similar securities, general economic conditions and the financial condition of theIssuer and each Guarantor. Although application has been made for the Notes to be listed on the Official Listmaintained by the Irish Stock Exchange and to be admitted to trading on the Main Securities Market, there can beno assurance that an active trading market will develop or, if developed, that it can be sustained. If an activetrading market for investments in the Notes is not developed or maintained, then the market or trading price andliquidity of investments in the Notes may be adversely affected.

The market price of the Notes is subject to a high degree of volatility.

The market price of investments in the Notes could be subject to significant fluctuations in response to actual oranticipated variations in our operating results, adverse business developments, changes to the regulatoryenvironment in which the Group operates, changes in financial estimates by securities analysts and the actual orexpected sale by any of the Issuer and the Guarantors of other debt securities, as well as other factors. Inaddition, in recent years global financial markets have experienced significant price and volume fluctuations that,if repeated in the future, could adversely affect the market price of investments in the Notes without regard to ourfinancial condition or results of operations.

The market price of investments in the Notes is also influenced by economic and market conditions in thosemarkets in which the Group operates and, to varying degrees, economic and market conditions in emergingmarkets generally. Although economic conditions differ in each country, the reaction of investors todevelopments in one country may cause capital markets in other countries to fluctuate. Developments oreconomic conditions in other emerging market countries have at times significantly affected the availability ofcredit to the South African, Nigerian and Mauritian economies and resulted in considerable outflows of funds anddeclines in the amount of foreign investments in South Africa, Nigeria and Mauritius. Crises in other emergingmarket countries may diminish investor interest in securities issued by South African and Mauritian entities,including the Notes, which could adversely affect the market price of investments in the Notes.

Interest rate risks.

Investment in the Notes involves the risk that if market interest rates subsequently increase above the rate paid onthe Notes of the relevant Series, this will adversely affect the value of the Notes of such Series.

Credit ratings may not reflect all risks.

In addition to the ratings on the Notes expected to be provided by Moody’s and S&P, one or more otherindependent credit rating agencies may assign credit ratings to the Notes. The ratings might not reflect thepotential impact of all risks related to structure, market and other factors that may affect the value of the Notes.Credit ratings assigned to the Notes do not necessarily mean that they are a suitable investment. A rating is not arecommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at anytime by the assigning rating organisation. Similar ratings on different types of notes do not necessarily mean thesame thing. The initial ratings by Moody’s and S&P will not address the likelihood that the principal on the

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Notes will be prepaid or paid on the scheduled maturity date. Such ratings also will not address the marketabilityof investments in the Notes or any market price. Any change in the credit ratings of the Notes or the Issuer couldadversely affect the price that a subsequent purchaser will be willing to pay for investments in the Notes. Thesignificance of each rating should be analysed independently from any other rating.

In general, European-regulated investors are restricted under the CRA Regulation from using credit ratings forregulatory purposes, unless such ratings are issued by a credit rating agency established in the EU and registeredunder the CRA Regulation (and such registration has not been withdrawn or suspended), subject to transitionalprovisions that apply in certain circumstances whilst the registration application is pending. Such generalrestriction will also apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevantcredit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency iscertified in accordance with the CRA Regulation (and such endorsement action or certification, as the case maybe, has not been withdrawn or suspended). The list of registered and certified rating agencies published by theEuropean Securities and Markets Authority (“ESMA”) on its website in accordance with the CRA Regulation isnot conclusive evidence of the status of the relevant rating agency included in such list, as there may be delaysbetween certain supervisory measures being taken against a relevant rating agency and the publication of theupdated ESMA list. Certain information with respect to the credit rating agencies and ratings is set out on thecover of this Offering Circular.

Transfer of investments in the Notes will be subject to certain restrictions.

The Notes have not been and will not be registered under the Securities Act or any US state securities laws.Prospective investors may not offer or sell the Notes, except pursuant to an exemption from, or in a transactionnot subject to, the registration requirements of the Securities Act and applicable state securities laws. Similarrestrictions will apply in other jurisdictions. Prospective investors should read the discussion under “TransferRestrictions” for further information about these transfer restrictions. It is their obligation to ensure that theiroffers and sales of the Notes within the United States and other countries comply with any applicable securitieslaws.

Investors in the Notes must rely on DTC, Euroclear and Clearstream procedures.

The Regulation S Notes of each Series will be represented on issue by an Unrestricted Global Certificate that willbe delivered to a common depositary for, and registered in the name of a common nominee of, Euroclear andClearstream, Luxembourg. Except in the circumstances described in the relevant Unrestricted Global Certificate,investors will not be entitled to receive Notes in definitive form. Euroclear and Clearstream, Luxembourg andtheir respective participants will maintain records of the beneficial interests in the relevant Unrestricted GlobalCertificate. While the Notes of a Series are represented by the Unrestricted Global Certificate in respect of thatSeries, investors will be able to trade their beneficial interests only through Euroclear and Clearstream,Luxembourg and their respective participants.

The Rule 144A Notes of each Series will be represented on issue by a Restricted Global Certificate that will bedeposited with a nominee for DTC. Except in the circumstances described in the relevant Restricted GlobalCertificate, investors will not be entitled to receive Notes in definitive form. DTC and its direct and indirectparticipants will maintain records of the beneficial interests in the relevant Restricted Global Certificate. Whilethe Notes of a Series are represented by the Restricted Global Certificate, investors will be able to trade theirbeneficial interests only through DTC. While the Notes of a Series are represented by the Restricted GlobalCertificate in respect of that Series, the Issuer will discharge its payment obligation under the Notes of that Seriesby making payments through one of DTC, Euroclear or Clearstream, Luxembourg (together, the “ClearingSystems”). A holder of a beneficial interest in a Global Certificate must rely on the procedures of the relevantclearing system and its participants to receive payments under the Notes. None of the Issuer and the Guarantorshas any responsibility or liability for the records relating to, or payments made in respect of, beneficial interestsin any Global Certificate. Holders of beneficial interests in a Global Certificate will not have a direct right to votein respect of the Notes of the relevant Series. Instead, such holders will be permitted to act only to the extent thatthey are enabled by the relevant clearing system and its participants to appoint appropriate proxies.

Return on an investment in the Notes will be affected by charges incurred by investors.

An investor’s total return on an investment in the Notes will be affected by the level of fees charged by an agent,nominee service provider and/or clearing system used by such investor. Such a person or institution may chargefees for the opening and operation of an investment account, transfers of Notes, custody services and onpayments of interest and principal. Potential investors are, therefore, advised to investigate the basis on whichany such fees will be charged on the Notes.

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Legal investment considerations may restrict certain investments.

The investment activities of certain investors are subject to legal investment laws and regulations, or review orregulation by certain authorities. Each potential investor should consult its legal advisers to determine whetherand to what extent (i) the Notes are legal investments for it, (ii) the Notes can be used as collateral for varioustypes of borrowing, and (iii) other restrictions apply to its purchase or pledge of any Notes. Financial institutionsshould consult their legal advisers or the appropriate regulators to determine the appropriate treatment of theNotes under any applicable risk-based capital or similar rules.

The Offering Circular does not contain separate single company accounts for each of the Guarantors

Although item 3.5.2 of the Prospectus Handbook of the Central Bank of Ireland requires that the OfferingCircular include separate single company accounts for each of the Guarantors, the Issuer has submitted a requestto the Central Bank of Ireland for the omission of such single company accounts from the Offering Circular, andthe Central Bank of Ireland has granted such omission request. The Guarantors are holding companies of theGroup, with the exception of MTN South Africa, which is an operating company. The Offering Circular containsthe Group’s (i) reviewed condensed consolidated interim financial statements as at and for the six months ended30 June 2016, contained elsewhere in this Offering Circular; and, (ii) audited consolidated financial statements asat and for the years ended 31 December 2015 and 31 December 2014 contained elsewhere in this OfferingCircular, which consolidate the financial information of each Guarantor.

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OVERVIEW OF THE GROUP

This overview contains information about our Group, the Issuer and the Guarantors. It does not contain all theinformation that may be important to prospective investors. Before making an investment decision, prospectiveinvestors should read this entire Offering Circular carefully, including the financial statements and the notesthereto and the other financial information contained in this Offering Circular, as well as the risks describedunder “Risk Factors”. Certain defined terms used herein are defined elsewhere in this Offering Circular.

Overview

We are a leading emerging market mobile operator by subscribers headquartered in Johannesburg, South Africa.Through our extensive investment in advanced communication infrastructure, the talent of our people and thestrength of our brand, as at 30 June 2016 we connected approximately 232.6 million customers in 22 countriesacross Africa and the Middle East. We offer an integrated suite of communications products and services to ourcustomers, including mobile voice, data, digital services and information and communications technology(“ICT”) enterprise products and services to our small and medium enterprise (“SME”) customers and corporateclients. We operate a predominantly prepaid business with over 97% of our customers on prepaid plans as at30 June 2016. We offer postpaid services mainly in South Africa, where approximately 17% of our customers areon postpaid plans as at 30 June 2016, as well as in Cyprus. We are the market leader by number of subscribers in15 of the 22 countries in which we offer voice, data and digital services (source: Group data). As at 30 June2016, we employed 20,376 people. We are listed on the Johannesburg Stock Exchange and had a marketcapitalisation of R263,757 million as at 30 June 2016.

MTN Group was founded in 1994, when M-Cell (later renamed MTN Group Limited in 2002) was incorporatedin South Africa, our home market. Employing the experience we gained from establishing ourselves in our homemarket and from serving our South African customers, we commenced our expansion into the rest of Africa. In2001, we acquired GSM 900 megahertz (“MHz”) and GSM 1800 MHz licences in Nigeria. At the time, this wasour single largest investment and in 2015 our Nigerian operation contributed 35.3% of our total revenue andapproximately 26% of our subscriber base, which represented the largest contributions to our subscriber base andrevenue among our operations. Our operations have since 2001 expanded to other emerging markets in bothAfrica and the Middle East and, as at 30 June 2016, we had approximately 232.6 million customers across thesecontinents. In the last few years we have started to focus on investments that would help us to expand ourofferings in digital and financial value-added services. In 2007, MTN Nigeria was awarded a 3G licence andacquired a 4G spectrum licence in 2015. In 2006, we commenced operations in Iran through our joint venture,MTN Irancell. In 2010, we launched MTN Mobile Money in several of the markets in which we operate. Todaywe serve over 36 million MTN Mobile Money customers in 14 markets. In 2015, MTN Ghana was declared awinner in the auction process for a 15 year 4G/LTE licence.

The following diagram illustrates our development and growth during the strategically significant years from1993 to 2016:

1993-1997 1998-2005 2006-2016

Operations

Population

Market cap.

41 million

1

R2.7 billion(31 December 1997)

Operations

Population

Market cap.

11

274 million

R103 billion(31 December 2005)

Operations

Population

Market cap.

22

585 million

R264 billion(30 June 2016)

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Our two most significant markets are South Africa and Nigeria. Our operations in South Africa contributed25.1% and 27.2% of our total revenue for the six months ended 30 June 2016 and the year ended 31 December2015, respectively. As at 30 June 2016, we had approximately 29.8 million subscribers in South Africa. Ouroperations in Nigeria contributed 36.6% and 35.3% of our total revenue for the six months ended 30 June 2016and the year ended 31 December 2015, respectively. As at 30 June 2016 we had approximately 59.0 millionsubscribers in Nigeria. Together, operations in these two countries accounted for 61.7% of Group revenue for thesix months ended 30 June 2016 and 62.5% of Group revenue for the year ended 31 December 2015.

Strengths

We believe that we benefit from the following competitive strengths that position us to achieve our strategicobjectives:

• Leading market position in 15 markets and brand recognition;

• Economies of scale and synergies across our operations;

• Diversified and balanced international portfolio, and a proven track record of establishing newtelecommunications operations in emerging markets with significant growth potential;

• Extensive telecommunications network and strong network quality;

• Strong distribution network;

• Experienced and diversified employees;

• Strong long-term financial profile; and

• Detailed information on the behaviour of 233 million customers to leverage for expansion into new revenuestreams.

Strategies

Our vision to lead the delivery of a bold new digital world to our customers is built on five strategic pillars:

• Driving sustainable growth;

• Creating and managing stakeholder value;

• Creating a distinct customer experience;

• Transforming our operating model; and

• Innovation and best practice.

Interim results and Other Recent Developments

Trading Update

Trading conditions remained largely unchanged from the trends noted in the six months ended 30 June 2016.Costs, excluding the Nigerian regulatory fine and associated professional fees, remained largely in line innominal currency terms with the preceding period. However, we expect reduced margins in Nigeria in the currentperiod as a result of the recent devaluation of the Nigerian Naira.

Other Recent Developments

Credit Ratings

On 16 September 2016, S&P lowered its long-term foreign and local currency sovereign credit ratings on theFederal Republic of Nigeria to “B” from “B+” as a result of continued low oil prices and shortages of foreignexchange affecting the country. S&P caps our credit rating at two notches above the blended sovereign creditrating of South Africa and Nigeria, which was previously lowered from “BB” to “BB-.” S&P consequentlylowered our long-term corporate credit rating to “BB+ (stable)” from “BBB- (negative)” on 30 September 2016to reflect the increased country risk in Nigeria and the lowered blended sovereign credit rating of South Africaand Nigeria.

Recent Media Reports

In recent weeks, various media reports have contained allegations of improper repatriation of money out ofNigeria by MTN Nigeria. The reports refer to allegations made on the floor of the Senate that MTN Nigeria hadillegally repatriated $13.92 billion out of Nigeria over a period of 10 years in collusion with a number of

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commercial banks. MTN Nigeria is cooperating fully with the Nigerian authorities investigating the matter toresolve it promptly. We believe the allegations are completely unfounded and without any merit. See also “RiskFactors – Risks Relating to our Business – Because we operate in highly regulated business environments,changes in law, regulations or governmental policy affecting our business activities could adversely affect ourbusiness, financial condition, results of operations and prospects.”

Resolution of the Nigerian Regulatory Fine

In October 2015 the Nigerian Communication Commission (“NCC”) imposed a N1.040 trillion fine on MTNNigeria (equivalent to approximately US$5.2 billion using the exchange rate prevailing at the time). This relatedto the late disconnection of 5.1 million subscribers whose registration documents were considered incompletefollowing the Nigerian regulator’s introduction of a SIM registration process.

On 10 June 2016, the Group announced that the Nigerian regulatory fine matter was resolved with the FederalGovernment of Nigeria on the following terms: MTN Nigeria has agreed to pay a total cash amount ofN330 billion over three years (the equivalent of US$1.671 billion at the official exchange rate prevailing at thetime) to the Federal Government of Nigeria in full and final settlement of the matter payable as set out hereunder.The payment of the Nigerian Regulatory Fine is expected to be funded through the operating cash flows of MTNNigeria.

The monetary component of the settlement will be paid as follows:

• Naira 50 billion (paid on 24 February 2016)

• Naira 30 billion (paid on 24 June 2016)

• Naira 30 billion on 31 March 2017


• Naira 55 billion on 31 December 2018


• Naira 55 billion on 31 May 2019

As at 31 December 2015, we recorded a provision of N119.6 billion (the equivalent of R9.3 billion translated atthe closing rate at 31 December 2015 of R1 = N12.88) in connection with the Nigerian Regulatory Fine. Therecorded provision for the fine as at 31 December 2015 was less than the settlement amount subsequently agreed.On 10 June 2016, as a result of the settlement, the nature of the fine was changed from a provision under IAS 37Provisions, Contingent Liabilities and Contingent Assets to a financial liability under IAS 39 FinancialInstruments: Recognition and Measurement as from this date onwards MTN Nigeria was contractually obliged tosettle the fine in cash.

In addition to the monetary settlement set out above:

• MTN Nigeria has agreed to subscribe to the voluntary observance of the Code of Corporate Governance forthe Telecommunications Industry and will ensure compulsory compliance therewith;

• MTN Nigeria has undertaken to take immediate steps to ensure the listing of its shares on the NigerianStock Exchange as soon as commercially and legally possible; and

• MTN Nigeria shall always ensure full compliance with its licence terms and conditions as issued by theNCC.

Following a review of our operating structure subsequent to the imposition of the Nigerian Regulatory Fine, wehave undertaken a series of organisational and management changes as described below in an effort to strengthenour risk elevation procedures and corporate compliance functions.

Senior Management Changes

Appointment of group president and CEO

Following the resignation of the Group President and CEO in November 2015 the Executive chairman,Phuthuma Nhleko, conducted an extensive global search for a candidate suited to the demands of the group’sfuture strategy. The Board has resolved in June 2016 to appoint Rob Shuter as the new Group President and

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CEO. Mr. Shuter may commence his role as soon as it is practically possible in 2017 but not later than 1 July2017 after the completion of his current contractual obligations. Given the appointment of Mr. Shuter as GroupPresident and CEO, Mr. Nhleko will return to his role as non-executive Chairman as soon as practicably possiblefollowing Mr. Shuter’s assumption of his position as Group President and CEO.

Resignation of the Group CFO

Brett Goschen, the Group CFO, left MTN effective 30 September 2016 and resigned from the Board as anexecutive director. Gunter Engling has assumed the position of Acting Group CFO following Mr Goschen’sdeparture until a permanent CFO is appointed. Mr. Engling is a chartered accountant who was previously theGroup finance executive and CEO of MTN Rwanda.

Appointment of MTN Nigeria CEO

In December 2015, Ferdi Moolman was appointed as CEO of MTN Nigeria replacing Michael Ikpoki. Prior toassuming the role of CEO of MTN Nigeria, Mr Moolman was CFO of MTN Nigeria.

Appointment of MTN Nigeria Regulatory and Corporate Affairs Executive

In December 2015, Amina Oyagbola was appointed Head of Regulatory and Corporate Affairs for MTN Nigeriafollowing the resignation of Akinwale Goodluck.

Organisational Changes

We have reintroduced the role of Group Chief Operating Officer and have established the role of Vice Presidentsfor each of our three regions, namely West and Central Africa, South and East Africa and Middle East and NorthAfrica, and have introduced segment reporting on the basis of these three regions. Additionally, we are in theprocess of establishing regulation compliance officers to work with the Vice Presidents and in country regulatoryexecutives in order to strengthen our compliance and governance structure.

The Issuer

The Issuer was incorporated as a private company limited by shares under the laws of Mauritius on 3 October2014 under the name MTN (Mauritius) Investments Limited (with registered number 125821 C1/GBL) andoperates under the Companies Act 2001 of Mauritius. The Issuer holds a Category 1 Global Business Licence(“GBL 1”) issued by the Financial Services Commission (the “FSC”) under the Financial Services Act 2007 ofMauritius. The registered office of the Issuer is at c/o Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius. The issued share capital of the Issuer is composed of100 ordinary shares of US$ 10.00 each. The Issuer is a wholly owned subsidiary of MTN International(Mauritius) Limited (“MTN Mauritius”) and therefore an indirect wholly owned subsidiary of MTN Group.MTN Mauritius holds all of the fully paid-up ordinary shares issued by the Issuer, so that the stated capital of theIssuer is US$1,000. The constitution of the Issuer specifies that the Issuer may engage in any activity which isnot prohibited under the terms of its GBL 1; the provisions of the constitution are customary provisions ofconstitutions adopted by a wholly owned private company with a GBL 1. The Issuer is not subject to anyborrowing limits in its constitution. The Issuer has issued US$750,000,000 Guaranteed Notes due 11 November2024 (the “2024 Notes”) on 10 November 2014 and has not otherwise issued any listed or unlisted securities.

The Issuer is organised as a special purpose entity. The Issuer was established to raise capital by the issue of the2024 Notes and the Notes offered hereby. The Issuer does not have any particular dividend policy, has not paidany dividends since incorporation and is not expected to pay dividends over the next year.

The Issuer has not engaged, since its incorporation, in any activities other than those incidental to: (i) itsregistration as a global business company; (ii) the issuance of the 2024 Notes; (iii) the authorisation of thisOffering Circular and the issue of Notes hereunder; (iv) the ownership of such interests and other assets referredto herein; (v) the other matters contemplated in this Offering Circular; (vi) the authorisation and execution of theother documents referred to in this Offering Circular to which the Issuer is or will be a party; and (vii) othermatters which are incidental or ancillary to those activities.

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The Issuer’s ongoing activities will principally comprise: (i) the issue of the Notes under this Offering Circularand the 2024 Notes; (ii) the entering into of any documents relating to this Offering Circular and the issue ofNotes hereunder; (iii) the exercise of related rights and powers and other activities referred to in this OfferingCircular or reasonably incidental to those activities; and (iv) the exercise of related rights and powers and otheractivities related to the 2024 Notes.

No financial statements for the Issuer are included in this Offering Circular, and the Issuer will not publishfinancial statements on an interim basis or otherwise.

The Issuer has no subsidiaries, employees or executive directors.

The directors of the Issuer and their respective business addresses and principal activities are:

Name Business Address Principal Activities

Paul Deon Norman 216 14th Ave Fairland, Group Chief Human ResourcesRoodepoort 2195 South Africa and Corporate Affairs Officer

Roshan Nathoo 1st Floor, Anglo-Mauritius Managing Director – GlobefinHouse, Intendance Street, Management Services

Port-Louis, Mauritius (Fiduciary and CorporateServices)

Sivakumaren Mardemootoo 1st Floor, Anglo-Mauritius Attorney at Law – ManagingHouse, Intendance Street, Partner of Mardemootoo

Port-Louis, Mauritius Solicitors

Mr. Paul Deon Norman is a non-executive director of the Issuer and serves as Group Chief Human Resourcesand Corporate Affairs Officer at MTN Group. He has received several awards for his achievements, includingHR Practitioner of the Year from the Institute of People Management South Africa in 2003 and a LifetimeAchievement Award from the South African Board for People Practices in 2012. He holds a B.A. and M.A. inPsychology from Rhodes University in Grahamstown, South Africa, as well as an Executive MBA from theInstitute for Development Management in Switzerland. He is a registered psychologist, and he has alsoparticipated in the Executive Development Program at the Wits Business School in Johannesburg, South Africa.

Mr. Roshan Nathoo is a non-executive director of the Issuer. He is also the Managing Director of GlobefinManagement Services Ltd and the Company Secretary of the Issuer. Previously, Mr. Nathoo was the ChiefOperating Officer of the Standard Bank Group in Mauritius, the Managing Director of Standard Bank Trust(Mauritius) and a Senior Manager at the representative of Arthur Andersen in Mauritius. Mr. Nathoo is a Fellowof the Association of Chartered Certified Accountants (UK), a member of the Chartered Institute of ManagementAccountants (UK) and a member of the Society of Trust and Estate Practitioners (UK).

Mr. Sivakumaren Mardemootoo is a non-executive director of the Issuer. He is also the Managing Partner andhead of the Banking & Corporate Finance Practice at Mardemootoo Solicitors. He is also a founding partner ofLEGIS & Partners, a Corporate and Property Advisory Firm. Mr. Mardemootoo holds a “Licence en Droit” and a“Maitrise en Droit” from the University of Aix-Marseille, France. He also holds a Master of Laws (LL.M) fromthe University of Texas at Austin School of Law. He was admitted to practice as an attorney in Mauritius in1997.

The Corporate Administrator and Company Secretary of the Issuer is Globefin Management Services Ltd, acompany incorporated in Mauritius and licensed by the Mauritius FSC.

The Guarantors

MTN Group

MTN Group was incorporated on 23 November 1994, under the Companies Act, 2008 of the Republic of SouthAfrica. The registration number of MTN Group is 1994/009584/06 and its registered address is 216 14th Avenue,Fairland, Roodepoort, 2195, South Africa. Its telephone number is +27 11 9123000.

MTN Group is listed on the Johannesburg Stock Exchange.

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Mobile Telephone Networks Holdings Limited

Mobile Telephone Networks Holdings Limited (“MTN Holdings”) was incorporated on 17 March 1993, underthe Companies Act, 2008 of the Republic of South Africa. The registration number of MTN Holdings is1993/001411/06 and its registered address is 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa. Itstelephone number is +27 11 912 3000.

MTN Holdings is a wholly owned subsidiary of MTN Group and is directly controlled by MTN Group.

MTN International Proprietary Limited

MTN International Proprietary Limited (“MTN International”) was incorporated on 10 February 1998, under theCompanies Act, 2008 of the Republic of South Africa. The registration number of MTN International is1998/002351/07 and its registered address is 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa. Itstelephone number is +27 11 912 3000.

MTN International is a wholly owned subsidiary of MTN Holdings and is indirectly controlled by MTN Group.

MTN International (Mauritius) Limited

MTN International (Mauritius) Limited (“MTN Mauritius”) was incorporated on 27 March 1998, under theCompanies Act 2001 of Mauritius. The registration number of MTN Mauritius is 19434/3597 and its registeredaddress is c/o Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, PortLouis, Mauritius. Its telephone number is +230 213 1913.

MTN Mauritius is a wholly owned subsidiary of MTN International and is indirectly controlled by MTN Group.

Mobile Telephone Networks Proprietary Limited

Mobile Telephone Networks Proprietary Limited (“MTN South Africa”) was incorporated on 17 March 1993,under the Companies Act, 2008 of the Republic of South Africa. The registration number of MTN South Africais 1993/001436/07 and its registered address is 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa. Itstelephone number is +27 11 912 3000.

MTN South Africa is a wholly owned subsidiary of MTN Holdings and is indirectly controlled by MTN Group.

27

The diagram below illustrates our simplified organisational structure:

100%MTN Treasury

30%MTN Swaziland

100%MTN Holdings

86%Zambia

70%Cameroon

75%Syria

60%Liberia

53.1%Botswana

80%Rwanda

97.7%Ghana

100%Guinea Bissau

100%Congo

Brazzaville

49%Iran

20%Belgacom

Interna�onal CarrierServices

Issuer

Guarantor

Non-guarantor ofThe Notes

MTN Group

100%MTN South Africa

100%MTN Interna�onal

100%MTN Mauri�us

100%MTN (Mauri�us)

Investments Limited

100%MTN Dubai

58.8%MTN Cote d’Ivoire

78.83%Nigeria

75%Guinea Conakry

65%Benin

96%Uganda

82.3%Yemen

100%Cyprus

100%Afghanistan

85%Sudan

100%South Sudan

(1) Each of MTN Group, MTN Holdings, MTN International and MTN Mauritius is a Guarantor and a holdingcompany for the Group. None of them is an operating company. MTN South Africa is a Guarantor and anoperating company.

MTN Group, as the holding company for the Group, accounted for 100% of the Group EBITDA and 100%of Group net assets on a consolidated basis as at and for the years ended 31 December 2014 and 2015 and asat and for the six months ended 30 June 2016.

MTN Holdings (through intermediate holding companies) holds the operating companies of the Group andaccounted for the following percentages of Group EBITDA and net assets on a consolidated basis for theperiods indicated:

28

As at and for the year endedAs at and for the six

months ended

31 December 2014 31 December 2015 30 June 2016

EBITDA (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100Net assets (%)* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 101 101

*The net asset value for MTN Holdings and its subsidiaries includes shares held by MTN Holdings in itsshareholder, MTN Group Limited.

MTN South Africa accounted for the following percentages of Group EBITDA and net assets for the periodsindicated:


months ended


EBITDA (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 22 31Net assets (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5 4

MTN International holds, in its own name and through its subsidiary MTN Mauritius, the operating companies ofthe Group that accounted for the following percentages of Group EBITDA and net assets on a consolidated basisfor the periods indicated:


months ended



Together, MTN South Africa and MTN International, through the operating subsidiaries held by MTNInternational on a consolidated basis, accounted for the following percentages of Group EBITDA and net assetsfor the periods indicated:


months ended



MTN Treasury, which is not a Guarantor, did not account for any Group EBITDA or net assets as at and for theyear ended 31 December 2014 or 2015 or as at and for the six month period ended 30 June 2016.

MTN Group holds through MTN International a 30% joint venture interest in MTN Swaziland, which is not aGuarantor. MTN Swaziland accounted for the following percentages of Group EBITDA and net assets for theperiods indicated:


months ended



MTN Group’s share of net income from MTN Swaziland, which is accounted for under “Share of results ofassociates and joint ventures after tax”, amounted to R97 million, R95 million and R50 million for the yearsended 31 December 2014 and 2015 and for the six month period ended 30 June 2016, respectively.

Note that all percentages of net assets and EBITDA given in this note have been rounded to the nearest wholenumber.

29

THE OFFERING

This overview of the Offering must be read as an introduction to this Offering Circular and any decision to investin the Notes should be based on a consideration of this Offering Circular as a whole. This overview is indicativeonly, does not purport to be complete and is qualified in its entirety by the more detailed information appearingelsewhere in this Offering Circular. See in particular “Conditions of the 2022 Notes” and “Conditions of the2026 Notes”.

Words and expressions defined in “Conditions of the 2022 Notes” and “Conditions of the 2026 Notes” shallhave the same meanings in this section “The Offering”.

Issue: US$500,000,000 principal amount of 5.373% Guaranteed Notes due2022 and US$500,000,000 principal amount of 6.500% GuaranteedNotes due 2026.

Issuer: MTN (MAURITIUS) INVESTMENTS LIMITED.

Guarantors: MTN Group Limited

Mobile Telephone Networks Holdings Limited

MTN International (Mauritius) Limited

MTN International Proprietary Limited

Mobile Telephone Networks Proprietary Limited.

Interest and Interest Payment Dates: The 2022 Notes will bear interest from and including 13 October2016 at the rate of 5.373% per annum payable semi-annually in arrearon each of 13 February and 13 August in each year (each an “InterestPayment Date” in respect of the 2022 Notes).

The first payment in respect of the 2022 Notes (representing a shortfirst coupon) for the period from and including 13 October 2016 tobut excluding 13 February 2017 shall be made on 13 February 2017.

The second payment in respect of the 2022 Notes (representing a fullsix months’ interest) shall be made on 13 August 2017.

The 2026 Notes will bear interest from and including 13 October2016 at the rate of 6.500% per annum, payable semi-annually inarrear on each of 13 April and 13 October in each year (each an“Interest Payment Date” in respect of the 2026 Notes).

The first payment in respect of the 2026 Notes (representing a full sixmonths’ interest) shall be made on 13 April 2017.

Issue Prices: 100% of the principal amount in respect of the 2022 Notes and 100%of the principal amount in respect of the 2026 Notes.

Issue Date: 13 October 2016.

Maturity Dates: 13 February 2022 in respect of the 2022 Notes and 13 October 2026in respect of the 2026 Notes.

Status: The Notes of each Series will be direct, unconditional,unsubordinated and (subject to the provisions of Condition 5)unsecured obligations of the Issuer and (subject as provided above)will rank pari passu, without any preference among the Notes of such

30

Series, with all other outstanding unsecured and unsubordinatedobligations of the Issuer, present and future, but, in the event ofinsolvency, only to the extent permitted by applicable laws relating tocreditors’ rights.

The obligations of each Guarantor under the relevant Guarantee foreach Series will be direct, unconditional, unsubordinated and (subjectto the provisions of Condition 5) unsecured obligations of the relevantGuarantor and (subject as provided above) will rank pari passu, withall other outstanding unsecured and unsubordinated obligations of therelevant Guarantor, present and future, but, in the event of insolvency,only to the extent permitted by applicable laws relating to creditors’rights.

Redemption at the option of theIssuer: In respect of each Series, the Issuer may at any time redeem all of the

Notes of such Series, but not some only, at the greater of (a) 100 percent. of the principal amount of the Notes of such Series and (b) thesum of the present values of the Remaining Scheduled Payments ofsuch Series (as defined in Condition 8) discounted to the date ofredemption on a semi-annual basis at the U.S. Treasury Rate plus aspread of 50 basis points, together with accrued interest on theprincipal amount of the Notes of such Series to the date ofredemption. See “Conditions of the 2022 Notes” and “Conditions ofthe 2026 Notes”.

Negative Pledge: The terms of the Notes of each Series contain a negative pledgeprovision binding on the Issuer and the Guarantors as furtherdescribed in Condition 5.

Taxation; Payment of AdditionalAmounts: All payments in respect of the Notes by or on behalf of the Issuer or

any Guarantor shall be made free and clear of, and withoutwithholding or deduction for, or on account of, any present or futuretaxes, duties, levies, assessments or governmental charges (includingrelated interest and penalties) of whatever nature (“Taxes”) imposed,assessed or levied by or on behalf of any of the Relevant Jurisdictions(as defined in Condition 9), unless such withholding or deduction ofthe Taxes is required by law. In that event, the Issuer or, as the casemay be, the Guarantors will (subject to certain exceptions) pay suchadditional amounts as may be necessary in order that the net amountsreceived by the Noteholders after the withholding or deduction shallequal the respective amounts which would have been receivable inrespect of the Notes in the absence of the withholding or deduction,all as further described in Condition 9. See “Taxation—Certain SouthAfrican Tax Considerations”, “Taxation—Certain Mauritian TaxConsiderations” and “Conditions of the 2022 Notes” and“Conditions of the 2026 Notes”.

Redemption for Taxation Reasons: The Notes of each Series may be redeemed at the option of the Issuerin whole, but not in part, at any time (subject to certain conditions), attheir principal amount (together with interest (if any) accrued to (butexcluding) the date fixed for redemption) if:

• as a result of any change in, or amendment to, the laws orregulations of a Relevant Jurisdiction, or any change in theapplication or official interpretation of the laws or regulations of aRelevant Jurisdiction, which change or amendment becomeseffective after 11 October 2016, on the next Interest Payment Dateeither (i) the Issuer would be required to pay additional amounts asprovided or referred to in Condition 9 or (ii) the Guarantors would

31

be unable for reasons outside their control to procure payment bythe Issuer and in making payment themselves would each berequired to pay such additional amounts; and

• the requirement cannot be avoided by the Issuer or, as the case maybe, the Guarantors taking reasonable measures available to it orthem.

Events of Default: The Notes will be subject to certain Events of Default including(among others) non-payment of principal for five days, non-paymentof interest for seven days, failure to perform or observe any of theother obligations in respect of the Notes of a Series, cross-default andcertain events related to disposals, bankruptcy and insolvency, all asfurther described in Condition 11. See “Conditions of the 2022 Notes”and “Conditions of the 2026 Notes”.

Substitution: The terms of the Notes contain provisions allowing for thesubstitution of the Issuer as principal debtor, as more fully describedin Condition 15.

Use of Proceeds: The Issuer and the Guarantors will incur various fees and expenses inconnection with the issue of the Notes, including, amongst otherthings, underwriting fees, distributor commissions, legal counsel fees,rating agencies expenses and listing expenses. The net proceeds of theissue of the Notes will be used for capital expenditures, to pay downworking capital facilities and general corporate purposes.

Form and Denominations: Notes will be issued in denominations of US$200,000 and integralmultiples of US$1,000 in excess thereof, as further described inCondition 1. See “Conditions of the 2022 Notes” and “Conditions ofthe 2026 Notes”.

Notes in respect of each Series offered and sold in reliance uponRegulation S will be represented by beneficial interests in theUnrestricted Global Certificate in registered form, without interestcoupons attached, which will be delivered to a common depositaryfor, and registered in the name of a common nominee of, Euroclearand Clearstream, Luxembourg. Notes in respect of each Series offeredand sold in reliance upon Rule 144A will be represented by beneficialinterests in the Restricted Global Certificate, in registered form,without interest coupons attached, which will be deposited with acustodian for, and registered in the name of, Cede & Co. as nomineefor DTC. Except in limited circumstances, individual certificates forthe Notes will not be issued in exchange for beneficial interests in theGlobal Certificates. See “The Global Certificates—Registration ofTitle”.

Governing Law: In respect of each Series, the Notes, the Agency Agreement, the Deedof Covenant, the deed poll dated 13 October 2016 entered into by theIssuer, under which it has agreed to comply with the informationdelivery requirements of Rule 144A(d)(4) under the Securities Act(the “Deed Poll”), the Guarantee and any non-contractual obligationsarising out of or in connection with the Notes, the AgencyAgreement, the Deed of Covenant, the Deed Poll and the Guaranteein respect of each Series, as the case may be, will be governed by, andconstrued in accordance with, English law.

Selling and Transfer Restrictions: The Notes and the Guarantees have not been and will not beregistered under the Securities Act or any state securities laws andbeneficial interests therein may not be offered or sold within theUnited States or to, or for the account or benefit of, any US person (asdefined in Regulation S under the Securities Act) except to QIBs inreliance

32

upon the exemption from the registration requirements of theSecurities Act provided by Rule 144A or otherwise pursuant to anexemption from, or in a transaction not subject to, the registrationrequirements of the Securities Act. The offer and sale of Notes (orbeneficial interests therein) is also subject to restrictions in SouthAfrica, Mauritius and the United Kingdom. See “SellingRestrictions”.

Interests in the Rule 144A Notes will be subject to certain restrictionson transfer. See “Transfer Restrictions”. Interests in the GlobalCertificates will be shown on, and transfers thereof will be effectedonly through, records maintained by Euroclear and Clearstream,Luxembourg, in the case of the Regulation S Notes, and by DTC andits direct and indirect participants, in the case of Rule 144A Notes.

Listing: Application has been made to the Irish Stock Exchange for the Notesto be admitted to listing on the Official List and to trading on theMain Securities Market.

Regulation S Security Codes for the2022 Notes: ISIN: XS1503116912

Common Code: 150311691

Rule 144A Security Codes for the 2022Notes: ISIN: US55377XAC02

CUSIP: 55377XAC0


Regulation S Security Codes for the2026 Notes: ISIN: XS1493823725


Rule 144A Security Codes for the 2026Notes: ISIN: US55377XAB29

CUSIP: 55377XAB2


Expected Rating(s): Baa3 by Moody’s Investors Services Limited and BB+ by Standard &Poor’s Credit Market Services Europe Limited.

Fiscal Agent, Principal Paying Agentand Transfer Agent: Citibank, N.A., London Branch.

Registrar: Citigroup Global Markets Deutschland AG.

Listing Agent: A&L Listing Limited.

Risk Factors: For a discussion of certain risk factors relating to the Issuer, theGuarantors, the Notes and the Guarantees that prospective investorsshould carefully consider prior to making an investment in the Notes,see “Risk Factors”.

33

USE OF PROCEEDS

The Issuer and the Guarantors will incur various fees and expenses in connection with the issue of the Notes,including, amongst other things, underwriting fees, distributor commissions, legal counsel fees, rating agenciesexpenses and listing expenses. The net proceeds of the issue of the Notes will be used by the Issuer for capitalexpenditures, to pay down working capital facilities and general corporate purposes.

34

CAPITALISATION

The following table sets out the consolidated debt and capitalisation of the Group as at 30 June 2016. Theinformation has been extracted without adjustment from our reviewed condensed consolidated interim financialstatements for the six months ended 30 June 2016 and should be read in conjunction with “Selected HistoricalConsolidated Financial and Operating Information”, “Management’s Discussion and Analysis of FinancialCondition and Results of Operations”, “Description of Other Indebtedness” and our consolidated financialstatements for the years ended 31 December 2015 and 2014 included elsewhere in this Offering Circular.

As at 30 June 2016

(unaudited)(Rm)

Debt:Borrowings – interest-bearing liabilities . . . . . . . . . . . 81,947

Total debt(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,947

Equity:Ordinary share capital and share premium . . . . . . . . . 43,068Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,740Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,988

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,796

Attributable to equity holders . . . . . . . . . . . . . . . . . . . 116,669Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . 3,127

Total capitalisation(3) . . . . . . . . . . . . . . . . . . . . . . . . . 201,743

(1) “Total debt” is defined as the sum of the current and non-current portion of interest-bearing liabilities.(2) We have incurred additional indebtedness subsequent to 30 June 2016 in the amounts of US$300 million

and R4,300 million as at 31 August 2016.(3) “Total capitalisation” is defined as the sum of our total debt and total equity.

Save as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”and “Description of Other Indebtedness”, there have been no significant changes in the consolidated debt orcapitalisation of the Group since 30 June 2016.

35

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

The selected consolidated income statement information, consolidated statement of financial position informationand consolidated statement of cash flows information as at and for the six months ended 30 June 2016 and 2015have been derived from our reviewed condensed consolidated interim financial statements for the six monthsended 30 June 2016, which are included elsewhere in this Offering Circular. The selected consolidated incomestatement information, consolidated statement of financial position information and consolidated statement ofcash flows information as at and for the years ended 31 December 2015, 2014, and 2013 of the Group have beenderived from our audited consolidated financial statements for the years ended 31 December 2015 and 2014,which are included elsewhere in this Offering Circular.

The selected consolidated financial information has been derived from, and should be read in conjunction with,the reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016 and theaudited consolidated financial statements for the years ended 31 December 2015 and 2014, and the related notesthereto, included elsewhere in this Offering Circular, as well as the sections entitled “Presentation of Financialand Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations”.

Selected Consolidated Income Statement Information

The following table summarises our consolidated income statement information for the periods indicated:

Year ended 31 December Six months ended 30 June

Restated(1)

2013Restated(2)(3)

2014 2015Restated(2)(3)

2015 2016

(audited) (unaudited)(Rm)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,270 146,930 147,063 69,304 79,115Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,327 7,928 8,409 411 367Direct network operating costs . . . . . . . . . . . . . . . . . . (18,299) (16,354) (18,809) (8,327) (12,291)Costs of handsets and other accessories(2) . . . . . . . . . . (10,744) (10,314) (10,829) (4,449) (6,065)Interconnect and roaming costs . . . . . . . . . . . . . . . . . . (13,816) (13,653) (13,102) (6,330) (7,358)Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,670) (8,838) (8,587) (4,155) (4,777)Selling, distribution and marketing expenses(2) . . . . . (16,362) (17,174) (18,412) (8,439) (9,624)Government and regulatory costs(3) . . . . . . . . . . . . . . — (5,734) (5,888) (2,835) (2,982)Other operating expenses . . . . . . . . . . . . . . . . . . . . . . (10,276) (9,600) (11,433) (4,505) (7,004)Nigeria regulatory fine . . . . . . . . . . . . . . . . . . . . . . . . — — (9,287) — (10,499)Depreciation of property, plant and equipment . . . . . (16,458) (18,262) (19,557) (8,905) (10,913)Amortisation of intangible assets . . . . . . . . . . . . . . . . (2,820) (3,251) (3,736) (1,845) (2,174)Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . — (2,033) (504) — (604)

Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,152 49,645 35,328 19,925 5,191Net finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,234) (3,668) (3,010) (2,319) (5,945)Net monetary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 878 1,348 496 919Share of results of joint ventures and associates after

tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,431 4,208 1,226 2,027 (1,692)

Profit/(loss) before tax . . . . . . . . . . . . . . . . . . . . . . . 43,349 51,063 34,892 20,129 (1,527)Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,487) (13,361) (11,322) (6,249) (4,726)

Profit/(loss) after tax . . . . . . . . . . . . . . . . . . . . . . . . . . 30,862 37,702 23,570 13,880 (6,253)

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenuearrangements. The accounts from 2013 were restated in the financial statements for the year ended31 December 2014 to aid comparability with the 2014 financial results. Please see “Management’sDiscussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting OurResults of Operations and Comparability of Financial Statements—Accounting Changes—Change inrevenue recognition accounting policy for multiple element revenue arrangements” and “Presentation ofFinancial and Other Information” for more information.

(2) Following a review of expenses disclosed in the Group income statement for the year ended 31 December2015, value-added services costs that were previously included in the costs of handsets and other accessorieswere reclassified based on the underlying nature of these costs and included in selling, distribution andmarketing expenses for the years ended 31 December 2014 and 2015 and the six months ended 30 June2015 and 2016. Please see “Presentation of Financial and Other Information” for more information.

36

(3) Following a review of expenses disclosed in the Group income statement for the year ended 31 December2015, government and regulatory costs that had previously been included in direct networking operatingcosts and other operating expenses which comprise government revenue share, regulatory fees and leviesand spectrum fees, have been disclosed as a separate category of expense in the income statement called“government and regulatory costs” for the years ended 31 December 2014 and 2015 and the six monthsended 30 June 2015 and 2016. Please see “Presentation of Financial and Other Information” for moreinformation.

Selected Consolidated Financial Position Information

The following table summarises our consolidated statement of financial position information for the periodsindicated:

As at 31 December As at 30 June

Restated(1)

2013 2014 2015 2015 2016


Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,083 163,218 218,435 161,219 200,447Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . 92,903 87,546 106,702 85,501 93,462Intangible assets and goodwill . . . . . . . . . . . . . . . . . . . . . . . 37,751 36,618 55,887 37,484 52,172Investment in joint ventures and associates . . . . . . . . . . . . . 12,643 25,514 35,552 24,978 32,169Deferred tax and other non-current assets . . . . . . . . . . . . . . 9,786 13,540 20,294 13,256 22,644Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,573 90,467 95,432 85,269 82,468Non-current assets held for sale . . . . . . . . . . . . . . . . . . . . . . 1,281 3,848 10 3,959 466Other current assets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,470 42,628 59,510 49,295 54,410Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,222 893 1,735 1,001 637Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 39,600 43,098 34,177 31,014 26,955Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,656 253,685 313,867 246,488 282,915Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,812 133,442 151,838 127,420 119,796Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,479 128,517 146,369 122,702 116,669Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,333 4,925 5,469 4,718 3,127Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,860 52,613 72,510 51,495 84,000Interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,664 39,470 52,661 39,511 64,190Deferred tax and other non-current liabilities . . . . . . . . . . . . 15,196 13,143 19,849 11,984 19,810Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,984 67,630 89,519 67,573 79,119Non-current liabilities held for sale . . . . . . . . . . . . . . . . . . . — — — 15 208Interest bearing liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,361 13,809 22,510 16,548 17,757Other current liabilities(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,623 53,821 67,009 51,010 61,154

Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 229,656 253,685 313,867 246,488 282,915


(2) Includes trade and other receivables.(3) Includes trade and other payables.

37

Selected Consolidated Cash Flows Information

The following table summarises our consolidated statement of cash flows information for the periods indicated:


2013 2014 2015 2015 2016


Net cash generated from/(used in) operatingactivities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,025 27,132 13,122 1,432 (436)

Net cash used in investing activities . . . . . . . . . . . . . . . . (19,835) (25,991) (34,290) (14,471) (14,209)Net cash from financing activities . . . . . . . . . . . . . . . . . . 6,264 2,639 8,101 1,558 13,608Net increase/(decrease) in cash and cash equivalents . . . . 13,454 3,780 (13,067) (11,481) (1,037)Net cash and cash equivalents at beginning of

year/period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,539 39,577 43,072 43,072 34,139Exchange gains/(losses) on cash and cash equivalents . . . 3,584 (182) 3,860 (787) (6,272)Net monetary gains/(losses) on cash and cash

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (103) 274 134 107Net cash and cash equivalents at end of year/period . . 39,577 43,072 34,139 30,938 26,937

Net Debt

The following table summarises the calculation of our net debt for the periods indicated:


Restated(1)

2013 2014 2015 2015 2016

Non-current interest-bearing liabilities . . . . . . . . . . . . . . . . . . 34,664 39,470 52,661 39,511 64,190Current interest-bearing liabilities . . . . . . . . . . . . . . . . . . . . . . 11,361 13,809 22,510 16,548 17,757Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . (39,600) (43,098) (34,177) (31,014) (26,955)Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,222) (893) (1,735) (1,001) (637)Current investments (excluding investments in cell

captives)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,851) (4,745) (7,624) (6,883) (5,098)

Net debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 4,543 31,635 17,161 49,257Net debt/EBITDA(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.01x 0.06x 0.46x 0.28x 0.84x


(2) Current investments (excluding investments in cell captives) is calculated as current investments lessinvestments in cell captives. Investments in cell captives are financial assets held at fair value through profitor loss. The fair value of the investments in cell captives is determined based on the net asset value of thecell captive at the reporting date.

(3) Net debt/EBITDA is calculated as net debt divided by EBITDA. Net debt/EBITDA for the year ended 31December 2015 and the six months ended 30 June 2016 is presented before giving effect to the Nigeriaregulatory fine. For the six months ended 30 June 2015 and 2016, the net debt/EBITDA ratio is presented onan annualised basis and is calculated as net debt as at each of 30 June 2015 and 2016, divided by annualisedEBITDA for the respective six month period.

Other Financial and Operating Information

The following table summarises our other financial and operating information for the periods indicated:


Restated(1)

2013 2014 2015 2015 2016

GroupEBITDA (Rm)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,430 73,191 59,125 30,675 18,882EBITDA margin (%)(2) . . . . . . . . . . . . . . . . . . . . . . 44.0 49.8 40.2 44.3 23.9Total voice minutes on network (millions) . . . . . . . 203,682 212,962 243 879 110,617 119,394Total data usage on network (terabytes) . . . . . . . . . 54,548 106,927 222,976 87,914 208,137

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Restated(1)

2013 2014 2015 2015 2016

South AfricaEBITDA (Rm)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,067 12,509 13,370 6,724 5,979EBITDA margin (%)(2) . . . . . . . . . . . . . . . . . . . . . . 34.7 32.1 33.4 35.6 30.1Total voice minutes on network (millions) . . . . . . . 21,366 27,997 34,403 17,629 17,001Total data usage on network (terabytes) . . . . . . . . . 24,188 38,019 61,330 26,388 42,413

NigeriaEBITDA (Rm)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,235 31,620 27,504 14,132 14,421EBITDA margin (%)(2) . . . . . . . . . . . . . . . . . . . . . . 60.7 58.6 53.0 57.3 49.8Total voice minutes on network (millions) . . . . . . . 65,001 60,504 68,910 31,047 33,107Total data usage on network (terabytes) . . . . . . . . . 13,785 19,378 39,778 18,316 23,537


(2) We define EBITDA as profit before depreciation of property, plant and equipment, amortisation ofintangible assets, impairment of goodwill, finance income, finance costs, share of results of associates andjoint venture after tax, net monetary gains/losses and income tax expense. We define EBITDA margin asEBITDA expressed as a percentage of total revenue.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS

The following is a discussion and analysis of the results of operations and financial condition of the Group as atand for the six months ended 30 June 2016 and 2015 and as at and for the years ended 31 December 2015, 2014and 2013.

You should read the following discussion in conjunction with the section “Presentation of Financial and OtherInformation” and our reviewed condensed consolidated interim financial statements for the six months ended30 June 2016 and our audited consolidated financial statements for the years ended 31 December 2015 and 2014,as well as the related notes thereto, beginning on page F-2 of this Offering Circular. The statements in thisdiscussion regarding industry outlook, our expectations regarding our future performance, liquidity and capitalresources and other non-historical statements are forward-looking statements. These forward-looking statementsare subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties describedin the “Risk Factors” section of this Offering Circular. Our actual results may differ materially from thosecontained in, or implied by, any forward-looking statements.

OVERVIEW

We are a leading emerging market mobile operator by subscribers headquartered in Johannesburg, South Africa.Through our extensive investment in advanced communication infrastructure, the talent of our people and thestrength of our brand, as at 30 June 2016 we connected approximately 232.6 million customers in 22 countriesacross Africa and the Middle East. We offer an integrated suite of communications products and services to ourcustomers, including mobile voice, data, digital services and ICT enterprise products and services to our SMEand corporate clients. We operate a predominantly prepaid business with over 97% of our customers on prepaidplans. We offer postpaid services mainly in South Africa, where approximately 17% of our customers are onpostpaid plans as at 30 June 2016, as well as in Cyprus. We are the market leader by number of subscribers in15 of the 22 countries in which we offer voice, data and digital services (source: Group data). As at 30 June2016, we employed 20,376 people. We are listed on the Johannesburg Stock Exchange and had a marketcapitalisation of R263,757 million as at 30 June 2016.

MTN Group was founded in 1994, when M-Cell (later renamed MTN Group Limited in 2002) was incorporatedin South Africa, our home market. Employing the experience we gained from establishing ourselves in our homemarket and from serving our South African customers, we commenced our expansion into the rest of Africa. In2001, we acquired GSM 900 MHz and GSM 1800MHz licences in Nigeria. At the time, this was our singlelargest investment and in 2015 our Nigerian operation contributed 35.3% of our total revenue and approximately26% of our subscriber base, which represented the largest contributions to our subscriber base and revenueamong our operations. Our operations have since 2001 expanded to other emerging markets in both Africa andthe Middle East and, as at 30 June 2016, we had approximately 232.6 million customers across these continents.In the last few years we have started to focus on investments that would help us expand our offerings in digitaland financial value-added services. In 2007, MTN Nigeria was awarded a 3G licence and acquired a 4G spectrumlicence in 2015. In 2006, we commenced operations in Iran through our joint venture, MTN Irancell. In 2010, welaunched MTN Mobile Money in several of the markets in which we operate. Today we serve over 36 millionMTN Mobile Money customers in 14 markets. In 2015, MTN Ghana was declared a winner in the auctionprocess for a 15 year 4G/LTE licence.

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The following table shows our consolidated revenue information by service and product and our EBITDAmargins for the periods indicated:

Year ended 31 DecemberSix months ended

30 June

Restated(1)

2013Restated2014(2) 2015

Restated2015 2016

(unaudited)(Rm, except for percentages)

Revenuefrom outgoing voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,757 90,671 85,027 41,392 44,690from incoming voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,367 14,919 14,690 6,889 7,777from data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,504 26,024 33,874 15,013 19,849from short message service (“SMS”) . . . . . . . . . . . . . . . 5,364 4,518 4,097 2,042 1,735from mobile telephones and accessories . . . . . . . . . . . . 7,541 7,890 6,985 2,905 3,885from other sources(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,737 2,132 1,680 969 942

Revenue prior to IFRS hyperinflation adjustment . . . . . . . . . 137,270 146,154 146,353 69,210 78,878IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . . . — 776 710 94 237

Total revenue (audited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,270 146,930 147,063 69,304 79,115EBITDA margins (%)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.0 49.8 40.2 44.3 23.9

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenuearrangements. The accounts from 2013 were restated in the financial statements for the year ended31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors AffectingOur Results of Operations and Comparability of Financial Statements—Accounting Changes—Change inrevenue recognition accounting policy for multiple element revenue arrangements” and “Presentation ofFinancial and Other Information” for more information.

(2) During the year ended 31 December 2015, an amount of R1,293 million in respect of the year ended31 December 2014 was reclassified from data revenue to airtime and subscription revenue to accuratelyreflect the respective categories on a comparative basis. See “Presentation of Financial and OtherInformation” for more information.

(3) Other revenue is principally composed of connections, SIM card, itemised billing and calling-lineidentification service revenue.

(4) We define EBITDA as profit before depreciation of property, plant and equipment, amortisation ofintangible assets, impairment of goodwill, finance income, finance costs, share of results of associates andjoint venture after tax, net monetary gains/losses and income tax expense. We define EBITDA margin asEBITDA expressed as a percentage of total revenue.

Our annual capital expenditure has increased rapidly since we were established. Our cumulative capitalexpenditure amounted to R99,031 million in the period from 1 January 2013 to 30 June 2016. We have largelyfunded our capital expenditure through our strong operating cash flows from our local businesses as well asfinancing at the subsidiary level. Our capital expenditure decreased by 15.8% to R25,406 million in 2014 fromR30,164 million in 2013. This was slightly lower than budget due to improved procurement processes. Ourcapital expenditure in 2015 was R29,611 million, 16.6% higher than the previous year, which was used to roll-out 966 2G, 1,593 co-located 3G sites and 3,148 co-located LTE sites, supporting increased minutes of use(“MOU”) and faster data speeds on our 3G and LTE networks. We expect our annual capital expenditure in themedium term to increase in the coming years as we increase our capital expenditures in Nigeria and South Africaas we upgrade and expand wireless and fixed-line networks and deploy fibre network infrastructure. We haveauthorised R35,114 million for capital expenditures in 2016, with South Africa and Nigeria making up 32.1%and 31.7%, respectively, of the allocated capital expenditures. Please see “—Liquidity and Capital Resources—Capital Expenditures” for more information.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND COMPARABILITY OFFINANCIAL STATEMENTS

Our performance and results of operations have been and will continue to be affected by a number of factors,including external factors. Certain of these key factors that have had, or may have, an effect on the results of ouroperations are set forth below.

Growth in minutes and data traffic

Our revenue is principally derived from the purchase of voice minutes and, to a lesser (but growing) extent, dataand digital services. Revenue is no longer driven just by number of subscribers but also by consumer spending ondata and digital services. Data usage has become an increasingly important measure of demand and component of

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revenue, reflecting evolving customer trends across a range of customer segments, as revenue from voiceservices has been affected by decreases in the price per voice minute in recent years as a result of competitivepressure. These metrics are particularly relevant for the majority of our businesses (other than South Africa) asthey operate principally on a prepaid basis whereby we sell customers packages of minutes of voice and/or datatraffic. These metrics are used to develop and customise products and services for different customer segmentsand to ensure that the network has the appropriate capacity to carry traffic.

The table below shows our growth in total minutes on network and total data usage on network (i) for the Group,(ii) in South Africa, (iii) in Nigeria, and (iv) in Ghana, for the periods indicated:

Year ended 31 DecemberSix months ended

30 June

2013 2014 2015 2015 2016

GroupTotal voice minutes on network (millions) . . . . . . . . . . . . . . 203,682 212,962 243,879 110,617 119,394Total data usage on network (terabytes) . . . . . . . . . . . . . . . . 54,548 106,927 222,976 87,914 208,137South AfricaTotal voice minutes on network (millions) . . . . . . . . . . . . . . 21,366 27,997 34,403 17,629 17,001Total data usage on network (terabytes) . . . . . . . . . . . . . . . . 24,188 38,019 61,330 26,388 42,413NigeriaTotal voice minutes on network (millions) . . . . . . . . . . . . . . 65,001 60,504 68,910 31,047 33,107Total data usage on network (terabytes) . . . . . . . . . . . . . . . . 13,785 19,378 39,778 18,316 23,537GhanaTotal voice minutes on network (millions) . . . . . . . . . . . . . . 18,160 17,956 23,874 11,033 14,153Total data usage on network (terabytes) . . . . . . . . . . . . . . . . 3,046 7,388 12,266 4,833 10,569

As we penetrate deeper into lower income countries and as both subscriber and machine-to-machine data trafficcontinues to grow as a percentage of our total revenue, we believe these metrics will be significant in assessingthe performance of our business.

Number of mobile subscribers

Our total mobile subscriber base increased by 0.69% to 232.6 million as at 30 June 2016 from 231 million as at30 June 2015. Over the last several years, the increase in the mobile subscriber base has been a significant driverof our revenue growth, particularly in South Africa and Nigeria, where we added an aggregate total of 4 millionsubscribers and 5.4 million subscribers in 2014 and 2015, respectively. From 31 December 2015 to 30 June 2016,we experienced a decrease in subscriber numbers in South Africa and Nigeria, in an amount of 0.78 millionsubscribers in South Africa and 2.27 million subscribers in Nigeria. In South Africa, subscriber numbers werenegatively impacted by network outages in some areas, competition and economic pressure affecting customerspending. In Nigeria, our ability to attract and retain subscribers was affected by the mandatory disconnection ofsubscribers and the suspension of regulatory services until May 2016, when we attained the necessary approvalsto introduce market-related pricing plans and promotions. On a Group level, our subscriber growth was offset bythe 11.2 million subscribers we disconnected in Nigeria in 2015 and 2016 as well as an additional 6.8 millionsubscribers disconnected in Uganda and Cameroon as a result of subscriber registration requirements. For a moredetailed discussion see “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

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Our mobile subscriber numbers as at the periods indicated were as follows:


2013%

change 2014%

change 2015%

change 2016

(million)

South Africa . . . . . . . . . . . . . . . . . . . . . . . . 25.7 8.95 28.0 9.29 30.6 (2.61) 29.8Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56.8 5.46 59.9 2.34 61.3 (3.75) 59.0Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.4 6.04 43.9 5.01 46.1 2.60 47.3Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9 7.75 13.9 17.27 16.3 7.98 17.6Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 11.49 9.7 (5.15) 9.2 4.35 9.6Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 18.18 10.4 (14.42) 8.9 11.24 9.9Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 12.68 8.0 3.75 8.3 (1.20) 8.2Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 1.72 5.9 1.69 6.0 (3.33) 5.8Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 3.45 9.0 (5.56) 8.5 3.53 8.8

Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . 31.9 7.52 34.3 9.0 37.4 (2.14) 36.6Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207.8 7.31 223.0 4.30 232.6 0.00 232.6

(1) Includes customers in Benin, Guinea Conakry, Guinea Bissau, Liberia, Congo-Brazzaville, Rwanda,Zambia, Botswana, Swaziland, South Sudan, Cyprus, Yemen and Afghanistan.

Our revenue is driven by overall market demand for communications services in the markets served by ourGroup, which is in turn directly affected by a number of macroeconomic and other trends. In particular, demandfor our services depends primarily on a number of demographic and economic factors, all of which are outside ofour control, such as population growth and gross domestic product (“GDP”). According to the United Nations,the population of Africa is expected to grow by approximately 2.55% per year over the coming years (Source:UN World Population Prospects, 2015 Revision). We expect our subscriber base to continue to grow along withthese demand and population trends. Many of the countries in which we operate are among the fastest growingsocieties in the world in terms of population and GDP during the periods under review. For instance, the realGDP growth rates in 2015 for the Ivory Coast, Ghana and Uganda were 8.4%, 3.5% and 5.9%, respectively,(source: CIA World Factbook) which, given the recent slump in commodities and oil prices which has damaged anumber of economies in the area, are notably high. These factors vary substantially across the markets in whichwe operate and have historically impacted our results of operations. Population growth and rising GDP generallycorrespond to increased demand for our services. We believe that the countries in which we operate, which areprimarily located in Africa and the Middle East, have favourable demographic profiles for a communicationsoperator.

Additionally, many of the countries in which we operate are emerging market economies with limited landlineinfrastructure. In 2000, there were fewer than 10 million fixed-line phones across Africa, with a penetration rateof 1%. The provision of mobile telephony and data services has transformed Africa and its various economies.Between 31 December 2013 and 30 June 2016 alone, our total mobile subscribers increased by 24.8 millionsubscribers, or 12%. Mobile phones and mobile data are used not only for voice communication, but as aplatform to provide access to the internet and various services, including financial and government services, aswell as business solutions, by-passing the requirement for traditional infrastructure. In conjunction with thedemand for mobile technology to provide such services, many of the countries in which we operate areexperiencing an increasing use of the internet for leisure and entertainment, including the consumption andcreation of online content and media. We believe such demand and cultural trends will likely continue in thefuture and have a positive impact on our subscriber base.

Furthermore, the number of customers we have at any time is dependent on the number of new customers and thenumber of our customers whose services are terminated over a given period, which is measured by churn.Voluntary terminations are motivated by a number of factors, including pricing (particularly for our mass marketsubscribers who are highly price elastic and where we experience the highest amount of churn amongst ourcustomer segments), the breadth of our service offerings, subscriber regulations, and the quality of our service.Customer disconnections can also occur on an involuntary basis. We routinely disconnect customers who haveshown no activity over the last 90 days. As a result, in addition to attracting new customers, we also seek toretain existing customers, which in turn reduces our rate of churn. We seek to attract new customers and retainexisting customers through offering attractive services and pricing, as well as maintaining our brand value andhigh quality customer service.

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As our subscriber base grows, we are also able to further leverage our scale to (i) secure more competitivepricing from vendors, (ii) reduce infrastructure duplication and (iii) promote and raise the visibility of our brandwithout incurring additional marketing costs.

Competition, pricing levels and retail tariffs

The markets in which we operate are competitive in nature and, while we believe a certain amount ofconsolidation in the industry as a result of regulatory pressure and the need for scale (particularly in markets withfive or more operators) should alleviate competitive pressure in the medium term, we expect that competitionwill continue to remain high. Emerging markets mobile telecommunications operators compete for customersprincipally on the basis of price, services offered, advertising and brand image, quality and reliability of serviceand coverage area. Price competition is significant on voice and data services, which still represent the vastmajority of our revenue (together as a percentage of total revenue they were 89.3%, 89.6%, 90.8% and 91.4% in2013, 2014, 2015 and the six months ended 30 June 2016, respectively), and these services are largelycommoditised, as the ability to differentiate these services among operators is limited and penetration is high.This has resulted in increased pricing pressure especially in competitive markets such as South Africa andNigeria where competitors have pushed down pricing. Pricing pressure, high penetration into lower incomesegments, the increasing use of multiple SIMs and higher volumes of machine-to-machine SIMs have alsoresulted in a decline in our average revenue per customer/unit (“ARPU”) in some of our markets, which in turnhas reduced profitability. Blended ARPU for each of South Africa and Nigeria was R165.05 and N2,164,respectively, for the six months ended 30 June 2016. Additionally, there has been a significant increase in thenumber of non-conventional and OTT players (internet based alternatives to traditional telephony services) in themarket such as free messaging platforms including social networking sites and mobile messaging applications,and this has impacted traditional telecommunications revenue streams.

The number of services the average customer uses in a given market, and thus the level of fees that the averagecustomer pays, drives the revenue that we are able to generate from our customer base. We therefore aim toincrease the amount of data and digital services that our customers use in order to increase revenue. Sellingadditional services to our existing customers thus increases the revenue generated by that customer base. In aneffort to counter the impact of competition and declining voice revenue and ARPU, we have expanded ouroffering to include data, digital, financial and information and communications technology enterprise services.We also employ dynamic tariffing, bundled packages and targeted promotions to subscribers (such as free airtimeand top-up incentives) to enhance the competitiveness of our voice business. Each of our potential products orservice offerings is vetted through a structured internal process which assesses the product’s potential cost,performance and features, value and time-to-market, with the ultimate aim of minimising operating and capitalexpenditures and increasing market share. This business model has enabled us to expand our customer base inhighly competitive markets, particularly in Africa, and thereby increase our sales volume and, in turn, ourrevenue.

Furthermore, a change in our pricing structure as a result of regulatory tariff policies could reduce the fees we areable to charge for our services, which in turn would reduce ARPU. Mobile rates are determined by eachrespective regulator in the countries in which we operate. In recent years these rates have generally decreased asregulators have promoted the interests of subscribers. Additionally, we are occasionally subject to asymmetricalregulatory intervention, particularly given our leading market positions, which can give our competitors anadvantage. Such asymmetrical regulatory intervention negatively impacts our competitive position and our profit.Please see “Business Description—Litigation, Arbitration and Disputes—ICASA Termination Rates”.

Expanding our service offering through the introduction of new services

Revenue growth, particularly in maturing markets where penetration is increasingly high, is driven by thedevelopment of additional products and services which can be offered to both new and existing customers.Adding additional service options to our offering, such as Mobile Money, a way of transferring money, makingpayments and doing other transactions using a mobile phone, mobile content on MTN Play, which providesnews, games and ringtones amongst other content, Games Club, a premium mobile gaming proposition, or MTNMagic Voice, a service that allows our users to change their voice when making a call, allows us to increaseARPU, which in turn leads to greater revenue. We have been offering new digital services such as MTN Go, avoice, data and SMS bundle and MTN Hello World, a global roaming platform. We continue to be one of themajor distributors of digital music in Africa. As at 30 June 2016 we had 36.5 million Mobile Money customersacross 15 countries, who contributed R1,289 million to our total revenue.

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The availability of new services also helps to attract new customers, which also leads to an increase in revenue.Uganda, Ghana, Rwanda, Benin and Iran have seen strong subscriber growth as a result of digital serviceofferings. We believe leveraging technology and delivering more services via the internet represents a significantopportunity, particularly as internet penetration across our footprint is low and we aim to increase our presence inthe digital space and take advantage of growth in data traffic and ICT enterprise solutions. Expanding our thirdgeneration wireless telephone coverage (“3G”) and fourth generation (“LTE”), as well as access to affordabledata-enabled devices, will continue to drive data usage. During the six months ended 30 June 2016, revenue fromdata as a percentage of our total revenue increased to 25.1%, compared to 21.7% during the six months ended30 June 2015. During 2015, revenue from data as a percentage of our total revenue increased to 23.0% as of31 December 2015, compared to 17.7% as of 31 December 2014.

We expect innovation to be a key driver of growth in the years ahead, mainly with 3G and LTE in the short tomedium term. In particular, MTN Mobile Money and financial services are becoming an increasingly importantpart of our service offering. We are not only focused on acquiring subscribers for these services but also onincreasing the volume of transactions and expanding our product range to include short-term insurance, ATMwithdrawals and remote payments for airline tickets. As we expand and adapt MTN Mobile Money and otherfinancial services to the local markets in which we operate, we expect these services to make a substantialcontribution to our revenue growth as a result of their potential to address the lack of traditional financial servicesin many of the countries in which we operate. Further, we plan to deliver innovative ICT enterprise solutions tocorporate and SME customers though our enterprise business unit, such as fibre connectivity. We have alsobegun offering digital local content services such as music, gaming and media offerings and digital lifestyleservices through our service delivery platforms and MTN Play. Our investment in, Africa Internet Holdings,Middle East Internet Holdings and Iran Internet Group, enable us to participate in the e-commerce opportunitiesin Africa and the Middle East.

Impact of regulation and regulatory fines

Registration requirements in Nigeria and Uganda led to MTN Nigeria disconnecting 6.7 million subscribers in2015 and a further 4.5 million at the end of February 2016 and MTN Uganda disconnecting 3.7 millionsubscribers who did not fully comply with the subscriber registration requirements. This meant that subscribernet additions for the year were impacted negatively, eroding the market share of MTN Nigeria and MTN Uganda.We offered free minutes in Nigeria and Uganda following the disconnections, in order to rebuild our customerbase in those countries, which also negatively impacted our revenue.

Nigerian Regulatory Fine

The late disconnection by MTN Nigeria of 5.1 million subscribers whose registration documents were consideredincomplete led to the NCC initially imposing a N1.040 trillion fine on MTN Nigeria. We subsequently reached asettlement whereby the fine was agreed to be reduced to a total cash amount of N330 billion over three years,amongst certain other conditions (the “Nigerian Regulatory Fine”). For a further discussion, see “BusinessDescription—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

Payment of the Nigerian Regulatory Fine

MTN Nigeria has made payments to the NCC of N80 billion in respect of the Nigerian Regulatory Fine through30 June 2016 as follows:

• Naira 50 billion on 24 February 2016; and

• Naira 30 billion on 24 June 2016;

The outstanding cash amount of the Nigerian Regulatory Fine as at 30 June 2016 was Naira 250 billion (theequivalent of R12.9 billion, translated at the 30 June 2016 closing rate of R1 = N19.33) which will be paid asfollows:

• Naira 30 billion on 31 March 2017;


• Naira 55 billion on 31 December 2018;

• Naira 55 billion on 31 March 2019; and

• Naira 55 billion on 31 May 2019

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The payment of the Nigerian Regulatory Fine is expected to be funded through operating cash flows from MTNNigeria. Accordingly, we expect the amount of retained earnings available for dividends from MTN Nigeria to bereduced. We have also undertaken a series of organisational and management changes as further described in“Overview of the Group—Interim results and Other Recent Developments—Other Recent Developments—Organisational Changes”.

Accounting treatment of the Nigerian Regulatory Fine

As at 31 December 2015, we recorded a provision of N119.6 billion (the equivalent of R9.3 billion translated atthe closing rate at 31 December 2015 of R1 = N12.88) in connection with the Nigerian Regulatory Fine. Therecorded provision for the fine as at 31 December 2015 was less than the settlement amount subsequently agreedupon. On 10 June 2016, as a result of the settlement, the nature of the fine was changed from a provision underIAS 37 Provisions, Contingent Liabilities and Contingent Assets to a financial liability under IAS 39 FinancialInstruments: Recognition and Measurement as from this date onwards MTN Nigeria was contractually obliged tosettle the fine in cash. See Note 17 to our reviewed condensed consolidated interim financial statements for thesix months ended 30 June 2016 included elsewhere in this Offering Circular.

Capital expenditure requirements necessary to build out the network in new markets and expand thenetwork in existing markets to support customer growth

In order to support our rapidly growing customer base and demand for higher-bandwidth data services, we havehad to expand our mobile network coverage and capacity to accommodate the increases in usage, which requiresthe purchase of additional spectrum, the expansion of existing infrastructure and other capital expenditures.

Increases in our capital expenditures affect our investing cash flows, property, plant and equipment andintangible asset balances, interest expense (to the extent they are funded by debt) and depreciation andamortisation expense. In addition, as new mobile subscribers are added to our network and their usage of ourservices increases, we incur higher operating expenses, including access charges, network operations costs,employee costs and selling, general and administrative expenses. This partly offsets the increased revenuegenerated by growing our customer base and reduces our operating profit.

Our capital expenditure decreased by 15.8% to R25,406 million in 2014 from R30,164 million in 2013. This wasslightly lower than budget due to improved procurement processes. Our capital expenditure in 2015 wasR29,611 million, 16.6% higher than the previous year, which was used to roll-out 966 2G, 1,593 co-located 3Gsites and 3,148 co-located LTE sites, supporting increased minutes of use (“MOU”) and faster data speeds on our3G and LTE networks. We expect our annual capital expenditure in the medium term to increase in the comingyears as we increase our capital expenditures in Nigeria and South Africa as we upgrade and expand networks,deploy fibre network infrastructure and increase the capacity and quality of data networks. We have authorisedR35,114 million for capital expenditures in 2016, with South Africa and Nigeria making up 32.1% and 31.7%,respectively, of the allocated capital expenditures. For the six months ended 30 June 2016, capital expenditurewas R13,850 million, an increase of 27.4% compared with the same period in 2015.

Acquisitions and Disposals

Traditionally our acquisition strategy has involved identifying and acquiring assets, either in the form ofcompanies with existing networks or licences to operate a network, in target markets and then investing toincrease their efficiency and improve both coverage and capacity. Although acquisitions of companies withexisting networks generally allow for the rapid expansion of capacity and immediate generation of cash flow,they often require a greater capital investment than would typically be necessary to achieve organic growth. Inaddition, acquisitions involve risks inherent in identifying and assessing the value, strengths and weaknesses ofacquisition targets, as well as the potential for significant integration and efficiency improvement costs.Significant capital expenditures and risks are also involved when we acquire a licence to operate and are requiredto build our own network. While we will continue to consider and review potential acquisition targets, if andwhen they present themselves, value accretive opportunities are scarce and when available may requiresubstantial investment by the Group and have a significant impact on our financial results and leverage. We haveevolved our acquisition strategy to include opportunities that will grow non-voice revenue streams andmonetisation of assets as well as our access to new and developing markets.

Additionally, as part of our asset optimisation plan we seek to identify and dispose of passive infrastructure toallow management to focus on products and services and to enhance our operational efficiency by reducing

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capital expenditure and depreciation going forward. Sale and leaseback transactions relating to towers haveresulted in an effective swap of depreciation for operating expenditure, thereby negatively impacting ourEBITDA. Our material acquisitions and disposals from 2013 to 30 June 2016 were as follows:

• In March 2013, we acquired an additional 50% stake in our subsidiary MTN Cyprus Limited forR690 million, making it a wholly-owned subsidiary.

• In 2013 and 2014, we entered into tower sale and leaseback transactions in Nigeria, Ghana, Uganda,Cameroon and Ivory Coast, Rwanda and Zambia amounting to gross sale proceeds of R9,001 million.

• In 2014, we became a 33.3% partner in Africa Internet Holding, along with Rocket Internet and MillicomInternational Cellular, to develop internet businesses in Africa. We invested EUR168 million in 2014 and afurther EUR135 million in March 2016. We expect our total investment in the joint venture to beapproximately EUR405 million, EUR303 million of which has been invested as of 30 June 2016.

• In 2014, we and Rocket Internet started a 50/50 joint venture, Middle East Internet Holding (“MEIH”), todevelop internet businesses in the Middle East. We invested EUR120 million consisting of a EUR40 millioncash payment and EUR80 million contingent consideration.

• In November 2014, we acquired our Nashua Mobile subscriber base from Nashua Mobile ProprietaryLimited for R1,246 million. The acquisition of this subscriber base enabled us to consolidate a major portionof our postpaid subscriber base into one entity.

• In 2015 we completed the transfer of the tower portfolio of MTN Nigeria (approximately 9,000 towers) to anew company jointly owned by us and IHS over which IHS has full operational control. IHS is the biggestsingle country tower company in Africa.

• On 22 January 2016, we made an investment in TravelLab Global AB (Travelstart) in an amount ofUS$27 million. Travelstart is an online travel agency focused on emerging markets. We jointly controlTravelstart indirectly through funds managed by Amadeus Capital Partners.

• In March 2016, we concluded the acquisition of the Altech Autopage subscriber base from Altron TMTProprietary Limited for R678 million. The acquisition will enable us to service and interact directly withthese customers and will reduce future commission expenditure.

Optimisation of Cost and Group Structure

As the telecommunication environment continues to evolve towards data and as competition intensifies, weexpect revenue and margins will come under further pressure. As a result, we have initiated cost optimisation andefficiencies into the business to ensure that we have an effective cost base for future growth and profitability. Anumber of initiatives have already resulted in cost benefits. These include centralising procurement, reducingcosts in our distribution network through the renegotiation of contracts in South Africa, which has resulted inlower distribution costs and the realignment of our commission structure in Nigeria, which has resulted in lowercommission costs. Other steps which we have implemented and will continue to implement include optimisingemployee numbers in all operations as well as moving more base stations onto national grids and continuing ourfocus on introducing hybrid power to our base stations.

In 2013, we launched “Project Next!”, a back-office transformation initiative for supply chain, human resourcesand finance functions which aims to centralise transactional activities, implement standardised processes withclear roles and responsibilities and optimise and consolidate the technology landscape of the Group.

We regularly review our operational and organisational structure as part of our commitment to cost optimisationand enhancing operational efficiencies and we may in future implement internal reorganisations and/or otheroperational and organisational changes to achieve these goals.

Accounting Changes

Reclassification of expenses

Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2015,the expenses detailed below have been disclosed separately or reclassified between expense categories for theyear ended 31 December 2014 to present the expenses in accordance with the classification for the year ended31 December 2015.

47

Government and regulatory costs

Government and regulatory costs that had previously been included in direct networking operating costs andother operating expenses which comprise government revenue share, regulatory fees and levies and spectrumfees, have been disclosed as a separate category of expense in the income statement called “government andregulatory costs.”

Value-added services (VAS) costs

VAS costs were previously included in the costs of handsets and other accessories. Based on the underlyingnature of these costs, they were reclassified and included in selling, distribution and marketing expenses.

Change in revenue recognition accounting policy for multiple element revenue arrangements

Prior to 2014, we accounted for arrangements with a multiple of deliverables (i.e. multiple element revenuearrangements) by dividing these arrangements into separate units of accounting and recognising revenue throughthe application of the Residual Method.

From 1 January 2014, we changed our accounting policy for recognising revenue relating to multiple elementrevenue arrangements from applying the Residual Method to the Relative Fair Value Method on a voluntarybasis.

Previously under the Residual Method, fair value was ascribed to each of the undelivered elements (typically theservice contract) and any consideration remaining (after reducing the total consideration of the arrangement withthe fair value of the undelivered elements) was allocated to the delivered item(s) in the transaction (typically thehandset). This resulted in limited amounts of revenue being allocated to the elements delivered upfront (i.e. thehandset). Under the Relative Fair Value Method, the consideration received or receivable is allocated to each ofthe elements (delivered and undelivered) according to the relative fair value of the elements included in thearrangement. This results in more revenue being recognised at inception of a post-paid phone contract becausepreviously only a small portion of the total value of the post-paid contract revenue was allocated to the handsetwhile the full cost of the handset was recognised at inception. This application of the Relative Fair Value Methodresults in revenue being allocated proportionately to the handset and the service contract.

This change in accounting treatment mainly affects our income and financial position information in ouroperation in South Africa and, as a result, our consolidated income and financial position information.

This change results in more relevant and reliable information being presented in respect of revenue recognised inrelation to multiple element revenue arrangements as revenue is now being recognised in relation to each of theelements delivered and to be delivered based on the relative fair value of the relating elements in relation to thetotal consideration received. The current accounting policy results in an improved correlation between therecognition of revenue and associated costs and also aligns us more closely with the requirements of IFRS 15:Revenue from Contracts with Customers. The change in accounting policy was applied retrospectively from thebeginning of January 2013.

The impact of the change in the accounting policy for revenue recognition in multiple element revenuearrangements is disclosed in note 48 to our audited consolidated financial statements for the year ended31 December 2014, contained elsewhere in this Offering Circular.

As a result, our results of operations for the year ended 31 December 2013 and going forward will not be directlycomparable to our historical results of operations. To aid comparability, the financial information presented inthis Offering Circular is presented in accordance with the Relative Fair Value Method, unless otherwiseindicated.

Effect of exchange rate fluctuations

Our results of operations are directly affected by the exchange rates for currencies of countries in which ourcompanies operate and which fluctuate in relation to the Rand, such as the US dollar, the Euro, the Naira, Cediand the Iranian rial. Some of the countries in which we operate are considered hyperinflationary, including Syriaand Sudan. As the Rand is our presentation currency, we must translate the assets, liabilities, turnover andexpenses of all of our operations with a functional currency other than the Rand into Rand at the applicableexchange rates, being the period-end rate for assets and liabilities, the weighted average period rate for revenue

48

and expenses and the transaction date rate for specific transactions in equity. Consequently, increases ordecreases in the value of the Rand in relation to these other currencies may affect the value of these items withrespect to our non-Rand businesses in our consolidated financial statements, even if their value has not changedin their functional currency. For example, a stronger Rand against the US dollar will reduce the reported resultsof operations of the non-Rand businesses, and conversely a weaker Rand will increase the reported results ofoperations of the non-Rand businesses. These translations could affect the comparability of our results betweenfinancial periods or result in changes to the carrying value of our assets, liabilities and equity. In particular, anumber of the markets in which we operate have had volatile currency fluctuations, including the South AfricanRand and Nigerian Naira, and this has had a significant impact on our reported results of operations. See “RiskFactors—Risks Relating to Our Business—Many of our operations are in countries with volatile exchange ratesand negative fluctuations in currency exchange rates could materially and adversely affect our business,financial condition and results of operations.”

In addition, foreign currency transactions are translated into the functional currency using the exchange rates atthe dates of the transactions. Foreign exchange gains or losses resulting from the settlement of such transactionsand from the translation at reporting date exchange rates of monetary assets and liabilities denominated in foreigncurrencies are recognised in profit or loss. For example, in 2014 and 2015 we had net exchange losses ofR1,101 million and R1,471 million respectively, due to depreciation of the Naira against the US dollar and theIranian rial against the Rand, and net exchange losses of R3,606 million for the six months ended 30 June 2016due to the depreciation of our local currencies against the US dollar.

As a result of the impact of exchange rate fluctuations on our results, in our results of operations discussionbelow we have presented revenue changes between periods on a constant currency or “organic” basis to identifythe underlying operational drivers impacting the change in revenue. In determining the change in constantcurrency terms, the latest year’s/period’s results have been adjusted to the prior year’s/period’s average exchangerates, which are based on a weighted average calculation of monthly exchange rates performed at a disaggregatedlevel for each of the Group’s territories and key revenue lines. This detailed basis of measurement isolates theimpact of both currency volatility and business mix in each territory during the year. The organic growthpercentage has then been calculated by utilising the constant currency results compared to the prioryear’s/period’s results. In addition, in respect of Irancell, MTN Sudan and MTN Syria, the constant currencyinformation has been prepared excluding the impact of hyperinflation. In 2015, the Iranian economy wasassessed to no longer be a hyperinflationary environment. We therefore discontinued hyperinflation accountingin that operation effective 1 July 2015. The organic information may not fairly present our results of operations.

Seasonality

Although our business is not subject to significant seasonal effects, mobile revenue tends to increase duringholiday periods (caused by increased usage of roaming services by subscribers travelling abroad), especiallyduring the December holiday period (resulting from intensified usage of messaging services). On the other hand,mobile revenue tends to decrease in the first quarter of each year due to lower usage after the December holidayperiod and as a result of the fewer number of calendar and business days in February.

DESCRIPTION OF SELECTED INCOME STATEMENT LINE ITEMS

Revenue

Revenue comprises the fair value of the consideration received or receivable from the sale of goods and servicesin the ordinary course of our activities, namely outgoing voice services, incoming voice services, data services,SMS services, sales of mobile telephones and accessories and other revenue. Revenue is shown net of indirecttaxes, estimated returns and trade discounts and after eliminating sales within the Group.

Other income

Other income primarily consists of income on tower sales and the realisation of the deferred gain on the assetswap for the investment in Belgacom International Carrier Services (“BICS”) over a five year period, whicharose when we contributed various assets in the Group in exchange for an equity share in BICS.

Direct network operating costs

Direct network operating costs consist primarily of rent, utility and transmission costs.

Costs of handsets and other accessories

Costs of handsets and other accessories consist of the cost of acquiring handsets and accessories.

49

Interconnect and roaming costs

Interconnect and roaming costs consist of interconnect and roaming costs.

Staff costs

Staff costs primarily consist of salaries and wages, post-employment benefits, share options granted to directorsand employees, training and other costs.

Selling, distribution and marketing expenses

Selling, distribution and marketing expenses primarily consist of dealer commission, as well as advertising andpublic relations related costs.


Government and regulatory costs consist of government revenue sharing, regulatory fees and levies and spectrumfees.

Other operating expenses

Other operating expenses mainly consist of professional and consulting fees, as well as other non-network relatedrent and utility costs.

Nigeria regulatory fine

Nigeria regulatory fine consists of the expenses relating to settling the late disconnection of subscribers inNigeria in connection with the Nigerian Regulatory Fine.

Depreciation of property, plant and equipment

Depreciation of property, plant and equipment consists of depreciation charges on our property, plant andequipment.

Amortisation of intangible assets

Amortisation of intangible assets consists of amortisation expenses incurred on our intangible assets.

Impairment of goodwill

Impairment of goodwill consists of goodwill impairment losses.

Net finance costs

Net finance costs mainly consist of interest income and foreign exchange transaction gains less interest expensesrelating to borrowings and finance leases, finance costs relating to put options, foreign exchange transactionlosses and other finance costs.

Net monetary gain

The financial statements (including comparative amounts) of the Group entities whose functional currencies arethe currencies of hyperinflationary economies are adjusted in terms of the measuring unit current at the end of thereporting period.

As the presentation currency of the Group is that of a non-hyperinflationary economy, comparative amounts arenot adjusted for changes in the price level or exchange rates in the current year. In the first period of application,the adjustments determined at the beginning of the period are recognised directly in equity as an adjustment toopening retained earnings. In subsequent periods, the prior period adjustments related to components of owners’equity and differences arising on translation of comparative amounts are accounted for in other comprehensiveincome.

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Items in the statement of financial position not already expressed in terms of the measuring unit current at thereporting period, such as non-monetary items carried at cost or cost less depreciation, are restated by applying ageneral price index. The restated cost, or cost less depreciation, of each item is determined by applying to itshistorical cost and accumulated depreciation the change in a general price index from the date of acquisition tothe end of the reporting period.

All items recognised in the income statement are restated by applying the change in the general price index fromthe dates when the items of income and expenses were initially earned or incurred.

Gains or losses on the net monetary position are recognised in profit or loss and included in this line item.

Share of results of joint ventures and associates after tax

Share of results of joint ventures and associates after tax consists of our portion of the profit/loss in our jointventures and associates less our portion of the tax expense/benefit on that profit/loss.

Income tax expense

Income tax expense comprises current and deferred tax applicable to the income of the Group.

SEGMENTS

Subsequent to 31 December 2015, we changed the composition and presentation of our segment analysis. Wenow operate our business in three segments: South and East Africa (“SEA”), West and Central Africa (“WECA”)and Middle East and North Africa (“MENA”). Comparative results for the segments have been presentedaccordingly for the year ended 31 December 2015 and six months ended 30 June 2015. Operating results includeitems directly attributable to a segment as well as those that are attributable on a reasonable basis, whether fromexternal transactions or from transactions with other group segments.

Year ended31 December

Six months ended30 June

2015 2015 2016

(unaudited)(Rm)

RevenueSEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,419 24,456 25,156South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,038 18,882 19,841Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,148 2,540 2,804Other SEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,233 3,034 2,511WECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,443 38,296 46,347Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,942 24,649 28,941Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,903 3,496 5,165Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,806 2,742 3,202Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,424 3,081 3,751Other WECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,368 4,328 5,288MENA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,766 6,569 7,402Syria(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,605 1,329 1,068Sudan(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,472 1,610 2,345Other MENA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,689 3,630 3,989Major joint venture - Iran(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,660 6,435 8,324Head office companies and eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (275) (111) (27)Hyperinflation impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710 94 237Iran revenue exclusion(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,660) (6,435) (8,324)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147,063 69,304 79,115

(1) Excludes the increase in revenue resulting from hyperinflation accounting of Syria (R103 million for thesix months ended 30 June 2016, R28 million for the six months ended 30 June 2015 and R391 million forthe year ended 31 December 2015) and Sudan (R134 million for the six months ended 30 June 2016,R66 million for the six months ended 30 June 2015 and R319 million for the year ended 31 December2015).

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(2) Irancell Telecommunication Company Services (PJSC) proportionate revenue forms part of the MENAregion but is reported separately in the segment analysis as reviewed by the Group executive committee(chief operating decision maker (“CODM”)) and is excluded from IFRS reported revenue due to equityaccounting for joint ventures and excludes the increase in revenue resulting from hyperinflation accounting(June 2015: R271 million and December 2015: R287 million). In 2015, the Iranian economy was assessed tono longer be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015.

Year ended31 December Six months ended 30 June

2015 2015 2016

(unaudited)(Rm)

EBITDASEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,903 8,555 7,213South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,370 6,724 5,979Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,775 915 842Other SEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,758 916 392WECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,116 19,303 20,574Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,504 14,132 14,421Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,197 1,387 2,004Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,101 1,036 1,218Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,195 1,126 1,349Other WECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,119 1,622 1,582MENA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,324 2,051 2,359Syria(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460 215 305Sudan(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,216 539 829Other MENA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,648 1,297 1,225Major joint venture - Iran(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,665 2,582 3,139Head office companies and eliminations . . . . . . . . . . . . . . . . . . . . . . . . 575 365 (873)Hyperinflation impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 49 90Nigeria Regulatory Fine(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,287) — (10,499)Tower sale profits(3)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,263 352 18Iran EBITDA exclusion(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,665) (2,582) (3,139)

EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,125 30,675 18,882

Depreciation, amortisation and impairment of goodwill . . . . . . . . . . . (23,797) (10,750) (13,691)Net finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,010) (2,319) (5,945)Net monetary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,348 496 919Share of results of joint ventures and associates after tax . . . . . . . . . . 1,226 2,027 (1,692)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,892 20,129 (1,527)

(1) Excludes the increase in EBITDA resulting from hyperinflation accounting of Syria (R41 million for the sixmonths ended 30 June 2016, R25 million for the six months ended 30 June 2015 and R106 million for theyear ended 31 December 2015) and Sudan (R49 million for the six months ended 30 June 2016, R24 millionfor the six months ended 30 June 2015 and R125 million for the year ended 31 December 2015).

(2) Irancell Telecommunication Company Services (PJSC) proportionate EBITDA forms part of the MENAregion but is reported separately in the segment analysis as reviewed by the CODM and is excluded fromIFRS reported EBITDA due to equity accounting for joint ventures and excludes the increase in EBITDAresulting from hyperinflation accounting (June 2015: R141 million and December 2015: R215 million).During 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflationaccounting was discontinued effective 1 July 2015. The Group’s share of results from IrancellTelecommunication Company Services (PJSC) includes expenses resulting from discontinuation ofhyperinflation accounting amounting to R1, 039 million mainly relating to the subsequent depreciation andamortisation of previously hyper-inflated assets that were historically written up under hyperinflationreporting.

(3) Tower sale profit and the expense relating to the regulatory fine imposed by the Nigerian CommunicationsCommission (NCC) are excluded from segment results.

(4) Tower sale profits are calculated as the sum of (a) the profit on tower sales in Nigeria, comprising the salesproceeds less contingent consideration plus the fair value of the retained interest in Nigeria Tower InterCoB.V. and the equity derivative, less the carrying amount of assets and related liabilities disposed of, and (b)

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the realisation of the deferred gain on the Ghana tower sale. In 2011, Scancom Limited (MTN Ghana)concluded a transaction with American Tower Company (ATC), which involved the sale of MTN Ghana’sbase transceiver station (BTS) sites to Ghana Tower InterCo B.V. which is an associate of the Group. Profitwas eliminated to the extent of the Group’s interest in the associate. Such unrealised profit is realised by theGroup as the underlying assets are depreciated by the associate.

RESULTS OF OPERATIONS

The following table summarises our consolidated income statement information for the periods indicated:


Restated(1)

2013Restated(2)(3)

2014 2015Restated(2)(3)

2015 2016


Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,270 146,930 147,063 69,304 79,115Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,327 7,928 8,409 411 367Direct network operating costs . . . . . . . . . . . . . . . . . . (18,299) (16,354) (18,809) (8,327) (12,291)Costs of handsets and other accessories(2) . . . . . . . . . . (10,744) (10,314) (10,829) (4,449) (6,065)Interconnect and roaming costs . . . . . . . . . . . . . . . . . . (13,816) (13,653) (13,102) (6,330) (7,358)Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,670) (8,838) (8,587) (4,155) (4,777)Selling, distribution and marketing expenses(2) . . . . . (16,362) (17,174) (18,412) (8,439) (9,624)Government and regulatory costs(3) . . . . . . . . . . . . . . — (5,734) (5,888) (2,835) (2,982)Other operating expenses . . . . . . . . . . . . . . . . . . . . . . (10,276) (9,600) (11,433) (4,505) (7,004)Nigerian regulatory fine . . . . . . . . . . . . . . . . . . . . . . . — — (9,287) — (10,499)Depreciation of property, plant and equipment . . . . . (16,458) (18,262) (19,557) (8,905) (10,913)Amortisation of intangible assets . . . . . . . . . . . . . . . . (2,820) (3,251) (3,736) (1,845) (2,174)Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . — (2,033) (504) — (604)

Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,152 49,645 35,328 19,925 5,191Net finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,234) (3,668) (3,010) (2,319) (5,945)Net monetary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 878 1,348 496 919Share of results of joint ventures and associates after

tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,431 4,208 1,226 2,027 (1,692)

Profit/(loss) before tax . . . . . . . . . . . . . . . . . . . . . . . 43,349 51,063 34,892 20,129 (1,527)Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,487) (13,361) (11,322) (6,249) (4,726)

Profit/(loss) after tax . . . . . . . . . . . . . . . . . . . . . . . . . . 30,862 37,702 23,570 13,880 (6,253)


(2) Following a review of expenses disclosed in the Group income statement for the year ended 31 December2015, value-added services costs that were previously included in the costs of handsets and other accessorieswere reclassified based on the underlying nature of these costs and included in selling, distribution andmarketing expenses for the years ended 31 December 2014 and 2015 and the six months ended 30 June2015 and 2016. See “Presentation of Financial and Other Information” for more information.

(3) Following a review of expenses disclosed in the Group income statement for the year ended 31 December2015, government and regulatory costs that had previously been included in direct networking operatingcosts and other operating expenses which comprise government revenue share, regulatory fees and leviesand spectrum fees, have been disclosed as a separate category of expense in the income statement called“government and regulatory costs” for the years ended 31 December 2014 and 2015 and the six monthsended 30 June 2015 and 2016. See “Presentation of Financial and Other Information” for moreinformation.

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Results of operations for the six months ended 30 June 2016 and 2015

Revenue

Overview

Revenue increased by 14.2% to R79,115 million in the six months ended 30 June 2016 from R69,304 million inthe six months ended 30 June 2015. This was primarily due to the weakness in the Rand exchange rate in thesix months ended 30 June 2016, which led to higher contributions to revenue from our operations outside ofSouth Africa. On an organic basis, revenue increased by 1.7%. Our revenue growth was negatively impacted by adecline in revenue growth in Nigeria, Cameroon, Ivory Coast and Uganda, mainly due to regulatory challengesand aggressive competition in these markets. Revenue in South Africa increased primarily due to higher handsetsales and data revenue growth, while the revenue growth in Ghana was attributable to competitive voice and dataofferings.

Revenue by products and services

The following table shows our revenue for the six months ended 30 June 2015 and 2016 by product and service:

Six months ended 30 June

2015 2016 % change

(unaudited)(Rm) (%)

Revenuefrom outgoing voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,392 44,690 8.0from incoming voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,889 7,777 12.9from data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,013 19,849 32.2from SMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,042 1,735 (15.0)from mobile telephones and accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,905 3,885 33.7from other sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 969 942 (2.8)

Revenue prior to IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,210 78,878 14.0IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 237 152.1

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,304 79,115 14.2

Revenue from our outgoing voice services increased by 8.0% to R44,690 million in the six months ended 30 June2016 from R41,392 million in the six months ended 30 June 2015. On an organic basis revenue from outgoingvoice services decreased 5.4%. This was primarily due to a decrease in revenue from our outgoing voice servicesin Nigeria and South Africa. In Nigeria, outgoing voice revenue was negatively impacted by subscriberdisconnections and the withdrawal of regulatory services until the beginning of May 2016. In South Africa,revenues from outgoing voice services were negatively impacted by a 48 hour network outage in February 2016and increased churn in the post-paid segment due to competition. Although the duration of the network outagewas limited, this had a negative impact on our ability to attract and retain subscribers. We are continuing toinvest in our South African infrastructure. Despite an increase in average voice traffic by 7.9% as compared withthe six month ending 30 June 2015, our effective voice tariff on an organic basis declined by 12.2%, mainly dueto free minutes offered in an effort to win back disconnected subscribers in Nigeria and Uganda and pricecompetition in most key markets.

Revenue from our incoming voice services increased 12.9% to R7,777 million in the six months ended 30 June2016 from R6,889 million in the six months ended 30 June 2015. On an organic basis revenue for incoming voiceservices decreased 2.7%. This was primarily due to a decline in our mobile termination rates (the chargescompetitors pay us for terminating calls on our network).

Revenue from our data services increased 32.2% to R19,849 million in the six months ended 30 June 2016 fromR15,013 million in the six months ended 30 June 2015. On an organic basis revenue from data services increased19.7%. This was primarily due to an increase in data traffic of 135.3%, the number of data users on our3G networks, enhanced product offerings and increased adoption of data-enabled devices and smartphones in thesix months ended 30 June 2016 as compared to the six months ended 30 June 2015. In South Africa, data revenueincreased to R6,766 million in the six months ended 30 June 2016 from R5,677 million in the six months ended30 June 2015. In Nigeria, data revenue increased to R5,587 million in the six months ended 30 June 2016 fromR4,661 million in the six months ended 30 June 2015. The increase was partially offset by declining effectivetariffs for data services.

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Revenue from our SMS services decreased 15.0% to R1,735 million in the six months ended 30 June 2016 fromR2,042 million in the six months ended 30 June 2015. On an organic basis revenue from SMS services decreased22%. This was primarily due to increased use of data services in place of SMS in the six months ended 30 June2016 as compared to the six months ended 30 June 2015 and declining SIM traffic.

Revenue from our mobile telephones and accessories increased 33.7% to R3,885 million in the six months ended30 June 2016 from R2,905 million in the six months ended 30 June 2015. On an organic basis revenue from ourmobile telephones and accessories increased 36.5%. The increase in revenue from mobile telephones andaccessories was mainly attributable to an increase in the number of prepaid handsets sold in South Africa in thesix months ended 30 June 2016 as compared to the six months ended 30 June 2015 as a result of our increasedfocus on the prepaid market, as well as increased sales of handsets in the post-paid market and because sales ofhandsets in the six months ended 30 June 2015 were impacted by an industrial strike and supply chainchallenges.

Other revenue decreased 2.8% to R942 million in the six months ended 30 June 2016 from R969 million in thesix months ended 30 June 2015. On an organic basis other revenue decreased 12.1%.

Revenue by Country

The following table shows our revenue for the six month period ended 2015 and 2016 from our significantgeographic markets:

Six months ended 30 June

2015 2016 % change

(unaudited)(Rm) (%)

Key marketsSouth Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,882 19,841 5.1Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,649 28,941 17.4

Large opcosGhana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,496 5,165 47.7Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,742 3,202 16.8Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,081 3,751 21.7Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,540 2,804 10.4Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,329 1,068 (19.6)Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,610 2,345 45.7

Key markets

Revenue from South Africa increased 5.1% to R19,841 million in the six months ended 30 June 2016 fromR18,882 million in the six months ended 30 June 2015. This was primarily due to strong data revenue growth,attributed to increased smartphone sales, improved 3G and LTE network quality and additional service offerings,including international content. The increase was partially offset by the decrease in our subscriber base of2.6% in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015 due tocompetition in the South African market, network outages in some areas and negative economic conditions inSouth Africa affecting customer spending.

Revenue from Nigeria increased 17.4% to R28,941 million in the six months ended 30 June 2016 fromR24,649 million in the six months ended 30 June 2015. On an organic basis revenue decreased 4.8%. This wasprimarily due to a decrease in both voice and data revenue as the subscriber base decreased by 3.7%, due to themandatory disconnection of subscribers and the suspension of regulatory services until May 2016, when weattained the necessary approvals to introduce market-related pricing plans. Other key contributors to the decreasein revenue (on an organic basis) were the lower outgoing voice and data revenue, impacted by regulatoryrestrictions on “out-of-bundle” data tariffs.

Large opcos

Revenue from Ghana increased 47.7% to R5,165 million in the six months ended 30 June 2016 fromR3,496 million in the six months ended 30 June 2015, mainly due to continued weakness in the Rand against theCedi. On an organic basis revenue increased 18.9%. This was primarily due to increases in data revenue, anincrease in outgoing voice revenue and the further growth of MTN Mobile Money, with an increase in the MTN

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Mobile Money subscriber base by 23.3%, in the six months ended 30 June 2016 as compared to the six monthsended 30 June 2015.

Revenue from Cameroon increased 16.8% to R3,202 million in the six months ended 30 June 2016 fromR2,742 million in the six months ended 30 June 2015. On an organic basis revenue decreased 8.7%. This wasmainly due to a decline in outgoing voice revenue impacted by price competition and free minutes used inrelation to the subscriber registration process. However, data revenue increased by 49.5% (on an organic basis),supported by increased 3G device penetration and the rollout of 3G and LTE networks.

Revenue from Ivory Coast increased 21.7% to R3,751 million in the six months ended 30 June 2016 fromR3,081 million in the six months ended 30 June 2015. On an organic basis revenue decreased 3.9%. Thisdecrease was mainly due to lower outgoing voice revenue impacted by a decrease in minutes from a lowersubscriber base. This was partially offset by a 13.4% increase (on an organic basis) in data revenue in the sixmonths ended 30 June 2016, as compared to the six months ended 30 June 2015 supported by increased 3G andLTE coverage.

Revenue from Uganda increased 10.4% to R2,804 million in the six months ended 30 June 2016 fromR2,540 million in the six months ended 30 June 2015. On an organic basis revenue decreased 2.3%. This wasprimarily a result of a decline in both outgoing and incoming voice revenue, impacted by the decline in mobiletermination rates and the subscriber disconnections. Data revenue increased by 22.7% (on an organic basis) in thesix months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Revenue from Syria decreased 19.6% to R1,068 million in the six months ended 30 June 2016 fromR1,329 million in the six months ended 30 June 2015. On an organic basis revenue increased 10.5%. This wasprimarily due to an increase in outgoing voice and data revenue. Data revenue increased by 16.9% (on an organicbasis) in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Revenue from Sudan increased 45.7% to R2,345 million in the six months ended 30 June 2016 fromR1,610 million in the six months ended 30 June 2015. On an organic basis revenue increased 15.7%. This wasprimarily due to a 78.3% (on an organic basis) increase in data revenue in the six months ended 30 June 2016 ascompared to the six months ended 30 June 2015.

Other income

Other income decreased 10.7% to R367 million in the six months ended 30 June 2016 from R411 million in thesix months ended 30 June 2015. This was primarily due to reduced profit from the sale of towers in Nigeria.


Direct network operating costs increased 47.6% to R12,291 million in the six months ended 30 June 2016 fromR8,327 million in the six months ended 30 June 2015. This was primarily due to aggressive 3G and LTE networkexpansion in key markets, higher rent and utilities costs and higher foreign-denominated expenses mainly inNigeria in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.


Costs of handsets and other accessories increased 36.3% to R6,065 million in the six months ended 30 June 2016from R4,449 million in the six months ended 30 June 2015. This was primarily due to an increase in the numberof handsets sold as well as an increase in the average cost of smartphones purchased combined with foreigncurrency impacts (with higher US dollar and Euro denominated costs, when translated into South African Rand)in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.


Interconnect and roaming costs increased 16.2% to R7,358 million in the six months ended 30 June 2016 fromR6,330 million in the six months ended 30 June 2015. This was primarily due to higher off-network billabletraffic driven by SIM registration incentives.

Staff costs

Staff costs increased 15.0% to R4,777 million in the six months ended 30 June 2016 from R4,155 million in thesix months ended 30 June 2015. This was primarily due to delayed outsourcing of call centre and warehousestaff.

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Selling, distribution and marketing expenses increased 14.0% to R9,624 million in the six months ended 30 June2016 from R8,439 million in the six months ended 30 June 2015. This was primarily due to an increase inmarketing and commission expenditures related to the re-connecting of subscribers disconnected following theimposition of stricter registration requirements in Nigeria.


Government and regulatory costs increased 5.2% to R2,982 million in the six months ended 30 June 2016 fromR2,835 million in the six months ended 30 June 2015. This includes government and regulatory costs that hadpreviously been included in direct network operating costs and other operating expenses. It does not include thepayments to the Nigerian government in settlement of the Nigerian Regulatory Fine. The increase was primarilydue to foreign currency rate movements.

Nigeria regulatory fine

Nigeria regulatory fine of R10,499 million in the six months ended 30 June 2016 represents the income statementimpact of the remeasurement of the provision for the Nigerian Regulatory Fine, which was changed on 10 June2016 from a provision to a financial liability (with the amount being increased to reflect the outstandingsettlement amount) following the settlement with the Nigerian regulatory authorities.


Other operating expenses increased 55.5% to R7,004 million in the six months ended 30 June 2016 fromR4,505 million in the six months ended 30 June 2015. This increase primarily relates to costs incurred forprofessional services relating to the negotiations that led to a reduction in the Nigerian Regulatory Fine,impairment of property, plant and equipment in South Sudan and costs associated with subscriber registrations.


Depreciation of property, plant and equipment increased 22.5% to R10,913 million in the six months ended30 June 2016 from R8,905 million in the six months ended 30 June 2015. This was primarily due to higherdepreciation charges because of higher capital expenditures in South Africa in 2015.


Amortisation of intangible assets increased 17.8% to R2,174 million in the six months ended 30 June 2016 fromR1,845 million in the six months ended 30 June 2015. This was primarily due to amortisation costs associatedwith higher spending on software in previous years as well as goodwill impairments.

Net finance costs

Net finance costs increased 156.4% to R5,945 million in the six months ended 30 June 2016 from R2,319 millionin the six months ended 30 June 2015. This was primarily due to an increase in net foreign exchange losses toR3,606 million in the six months ended 30 June 2016, as compared to R1,481 million in the six months ended30 June 2015, impacted by unfavourable exchange rates, in particular the depreciation of the Nigerian Nairaagainst the US dollar and the Iranian rial against the rand. An increase in the net interest expense to R1,855million in the six months ended 30 June 2016 from R839 million in the six months ended 30 June 2015 due to anincrease in debt also contributed to the increase in net finance costs.


Share of results of joint ventures and associates after tax decreased 183% to a loss of R1,692 million in thesix months ended 30 June 2016 from R2,027 million in the six months ended 30 June 2015. This was primarilydue to foreign exchange losses as well as a charge of R1,039 million incurred in Iran mainly relating to thesubsequent depreciation and amortisation of previously hyper-inflated assets that were historically written upunder hyperinflation reporting. Iran hyperinflation accounting was discontinued effective 1 July 2015.

Income tax expense

Income tax expense decreased 24.4% to R4,726 million in the six months ended 30 June 2016 fromR6,249 million in the six months ended 30 June 2015. This was primarily due to lower profit before tax and a

57

higher deferred tax credit due to increased unrealised foreign exchange losses on US dollar-denominatedintercompany loans and third party payables in Nigeria in the six months ended 30 June 2016 as compared to thesix months ended 30 June 2015. The effective tax rate was 49.2% (on a normalised basis) in the six monthsended 30 June 2016 as compared to 32.9% (on a normalised basis) in the six months ended 30 June 2015.

Results of operations for the years ended 31 December 2015 and 2014

Revenue

Overview

Revenue remained largely flat at R147,063 million in 2015 and R146,930 million in 2014. This was primarilydue to a decline in voice revenue in Nigeria and a reduction in handset revenue in South Africa following theindustrial action experienced in the first half of the year which led to lower distribution of handsets. This was,however, largely offset by an increase in data revenue across the business.


The following table shows our revenue for 2014 and 2015 by product and service:

Year ended 31 December

Restated 2014(1) 2015 % change

(unaudited)(Rm) (%)

Revenuefrom outgoing voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,671 85,027 (6.2)from incoming voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,919 14,690 (1.5)from data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,024 33,874 30.2from SMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,518 4,097 (9.3)from mobile telephones and accessories . . . . . . . . . . . . . . . . . . . . . . . . 7,890 6,985 (11.5)from other sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,132 1,680 (21.2)

Revenue prior to IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . 146,154 146,353 0.1IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 776 710 (8.5)

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,930 147,063 0.1

(1) During the year ended 31 December 2015, an amount of R1,293 million in respect of the year ended31 December 2014 was reclassified from data revenue to airtime and subscription revenue to accuratelyreflect the respective categories on a comparative basis. See “Presentation of Financial and OtherInformation” for more information

Revenue from our outgoing voice services decreased 6.2% to R85,027 million in 2015 from R90,671 million in2014. On an organic basis, revenue from outgoing voice services decreased 5.0%. This was primarily due to adecrease in voice tariffs in 2015 as compared to 2014 driven by price competition in South Africa and Nigeriaand a loss of high value subscribers in Nigeria.

Revenue from our incoming voice services decreased 1.5% to R14,690 million in 2015 from R14,919 million in2014. On an organic basis, revenue from incoming services decreased 1.2%. This was primarily due to a fall invoice tariffs as well as consumers increasingly using multiple SIM cards from various operators.

Revenue from our data services increased 30.2% to R33,874 million in 2015 from R26,024 million in 2014. Onan organic basis, revenue from data services increased 32.6%. This was primarily due to strong growth in thenumber of data users in 2015 as compared to 2014, supported by our expanded 3G and LTE network rollout andincreased smartphone adoption as well as new products and services. In particular, in our key markets, datarevenue increased to R12,709 million in 2015 from R9,264 million in 2014 in South Africa and toR10,113 million in 2015 from R8,754 million in 2014 in Nigeria.

Revenue from our SMS services decreased 9.3% to R4,097 million in 2015 from R4,518 million in 2014. On anorganic basis, revenue from SMS services decreased 7.6%. This was primarily due to decreased SMS volumesowing to increase use of OTT applications.

Revenue from our mobile telephones and accessories decreased 11.5% to R6,985 million in 2015 fromR7,890 million in 2014. On an organic basis, revenue from mobile telephones and accessories decreased 11.3%.This was primarily due to lower handset sales in South Africa following the industrial action experienced in thefirst half of the year which led to lower distribution of handsets.

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Other revenue decreased 21.2% to R1,680 million in 2015 from R2,132 million in 2014. On an organic basis,other revenue decreased 21.3%. This was primarily due to declines in revenue from VAS services as a result ofincreased competition.

Revenue by Country

The following table shows our revenue for 2014 and 2015 from our significant geographic markets:


2014 2015

(audited)(Rm)

Key marketsSouth Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,922 40,038Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,995 51,942Large opcosGhana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,149 7,903Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,194 5,806Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,418 6,424Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,289 5,148Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,449 2,605Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,701 3,472

Key markets

Revenue from South Africa increased 2.9% to R40,038 million in 2015 from R38,922 million in 2014. This wasdriven mainly driven by healthy growth in data revenue. This was, however, offset by an 18.0% reduction inhandset revenue and a 2.4% decrease in outgoing voice revenue. Service revenue, which excludes mobiletelephones and accessories revenue and other revenue, increased 7.6%. Data revenue increased by 37.2% andcontributed 31.7% to total revenue. This was supported by strong 3G and LTE network rollout as well asincreased 3G and LTE device penetration. The number of smartphones on the network increased by 10.6% to7.6 million despite decreased handset sales in 2015 as compared to 2014.

Revenue from Nigeria decreased 3.8% to R51,942 million in 2015 from R53,995 million in 2014. On an organicbasis, revenue decreased 2.1%. This reflected the absence of new competitive offerings and multiple SIM cardusage resulting in a decline in outgoing voice revenue. Data revenue increased by 18.8% (on an organic basis)and contributed 19.5% to total revenue. While data revenue growth was supported by a 60.7% increase in thenumber of smartphones and higher digital services uptake, it was negatively impacted by regulatoryrequirements, which obliged the operation to seek permission from the customer before charging out-of-bundlerates which resulted in a decline in data revenue. Slow data speeds and lower effective data tariffs also had anegative impact.

Large opcos

Revenue from Ghana increased 10.5% to R7,903 million in 2015 from R7,149 million in 2014. On an organicbasis, revenue increased 15.9%. This was primarily due to the 79.9% (85.1% on an organic basis) growth in datarevenue from R1,344 million to R2,418 million.

Revenue from Cameroon decreased 6.3% to R5,806 million in 2015 from R6,194 million in 2014. On an organicbasis, revenue decreased by 4.6%. This was primarily due to a 12.5% (on an organic basis) decrease in outgoingvoice revenue as a result of lower effective tariffs and network challenges in the first half of the year but wasoffset by an increase in data revenue of 65.7%.

Revenue from Ivory Coast increased 0.1% to R6,424 million in 2015 from R6,418 million in 2014. On anorganic basis, revenue increased by 2.2%. This was primarily due to an increase in data revenue and an increasein MTN Mobile Money subscribers.

Revenue from Uganda decreased 2.7% to R5,148 million in 2015 from R5,289 million in 2014. On an organicbasis, revenue increased 2.8%. This was primarily due to an increase in data revenue of 17.3% (on an organicbasis). This was attributable to the launch of LTE services in the year, an increase in 3G and LTE devices and thecontinued success of MTN Mobile Money. However this was offset by a decrease in outgoing voice revenue of2.1% (on an organic basis) mainly due to lower effective voice tariffs.

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Revenue from Syria decreased 24.5% to R2,605 million in 2015 from R3,449 million in 2014. On an organicbasis, revenue increased 4.7%. This was primarily due to an increase in data revenue of 22.9% (on an organicbasis) and an increase in the subscriber base despite deteriorating conditions in the country.

Revenue from Sudan increased 28.5% to R3,472 million in 2015 from R2,701 million in 2014. On an organicbasis, revenue increased 14.8%. This was primarily due to an increase in data revenue of 59.8% (on an organicbasis) but was offset by a 5.5% decline in subscribers to 8.5 million due to subscriber registration requirements.

Other income

Other income increased 6.1% to R8,409 million in 2015 from R7,928 million in 2014. This was primarily due tothe profit on the tower sales in Nigeria.


Direct network operating costs increased 15.0% to R18,809 million in 2015 from R16,354 million in 2014. Theincrease in the direct network operating costs was primarily due to network expansion, higher rent and utilitiescosts, increased tower leasing costs on the back of the tower sales transaction entered into in Nigeria andcommissions associated with new revenue streams, together with operational currency weakness impactingUS dollar linked expenses.


Costs of handsets and other accessories increased 5.0% to R10,829 million in 2015 from R10,314 million in2014. This was primarily due to an increase in the average cost of handsets purchased in MTN South Africa andforeign currency impacts in 2015 as compared to 2014.


Interconnect and roaming costs decreased 4.0% to R13,102 million in 2015 from R13,653 million in 2014. Thiswas primarily due to lower MTR’s and the impact of foreign exchange rates.

Staff costs

Staff costs decreased 2.8% to R8,587 million in 2015 from R8,838 million in 2014. This was primarily due toorganisational restructuring and staff attrition in South Africa.


Selling, distribution and marketing expenses increased 7.2% to R18,412 million in 2015 from R17,174 million in2014. This was primarily due to an increase in costs related to the Nigerian SIM registration process and stronggrowth in VAS/Digital revenue share.


Other operating expenses increased 19.1% to R11,433 million in 2015 from R9,600 million in 2014. This wasprimarily due to a provision of R503 million for interconnect debt in 2015, a provision for inventoryobsolescence related to handsets in South Africa due to fewer handset sales as a result of labour strikes and anEbola awareness donation of US$10 million in Nigeria.


Depreciation of property, plant and equipment increased 7.1% to R19,557 million in 2015 from R18,262 millionin 2014. This was primarily due to an increase in depreciable assets due to a higher capital base in South Africaand Syria in 2015 as compared to 2014 following continued network investment.


Amortisation of intangible assets increased 14.9% to R3,736 million in 2015 from R3,251 million in 2014. Thiswas primarily due to increased spend on software in 2015 as compared to 2014.

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Net finance costs

Net finance costs decreased 17.9% to R3,010 million in 2015 from R3,668 million in 2014. This was primarilydue to a 37.1% decrease in the net interest expense to R1,618 million in 2015 from R2,572 million in 2014 as aresult of higher interest income on cash and investments, offset by unfavourable exchange rate movements thatresulted in net foreign exchange losses of R1,391 million in 2015 compared to net foreign exchange losses ofR1,096 million in 2014.


Share of results of joint ventures and associates after tax decreased 70.9% to R1,226 million in 2015 fromR4,208 million in 2014. This was primarily due to adjusting for hyperinflation in respect of our operation in Iran.Our operation in Iran had increased revenue by 17.4% over the period, with data revenue increasing by 90.2%(on an organic basis) despite the 4% (on an organic basis) decline in outgoing voice revenue.

Income tax expense

Income tax expense decreased 15.3% to R11,322 million in 2015 from R13,361 million in 2014. This wasprimarily due to lower profit before tax resulting from a decrease in equity income from joint ventures/associatesand a higher provision for current tax liability in 2014 compared to 2015 due to the change in handset revenuetreatment within South Africa. The effective tax rate for the Group in 2015 was 32.5% compared to an effectivetax rate of 26.17% in 2014.

Results of operations for the years ended 31 December 2014 and 2013

Revenue

Overview

Revenue increased 7.0% to R146,930 million in 2014 from R137,270 million in 2013. This was primarily due toan increase of 12.1% in MTN Nigeria’s revenue (partially offset by a 3.9% decline in MTN South Africa’srevenue), an increase in data revenue of 33.2% and growth in other markets.


The following table shows our revenue for 2013 and 2014 by product and service:


Restated(1)

2013 2014(2) % change

(unaudited)(Rm) (%)

Revenuefrom outgoing voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,757 90,671 4.5from incoming voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,367 14,919 (2.9)from data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,504 26,024 26.9from SMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,364 4,518 (15.8)from mobile telephones and accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,541 7,890 4.6from other sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,737 2,132 22.7

Revenue prior to IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . 137,270 146,154 6.5IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 776 —

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,270 146,930 7.0


(2) During the year ended 31 December 2015, an amount of R1,293 million in respect of the year ended31 December 2014 was reclassified from data revenue to airtime and subscription revenue to accuratelyreflect the respective categories on a comparative basis. See “Presentation of Financial and OtherInformation” for more information.

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Revenue from our outgoing voice services increased 4.5% to R90,671 million in 2014 from R86,757 million in2013. On an organic basis, revenue from outgoing voice services decreased 0.9%. This was primarily due to pricecompetition in key markets resulting in lower voice tariffs, particularly in South Africa.

Revenue from our incoming voice services decreased 2.9% to R14,919 million in 2014 from R15,367 million in2013. On an organic basis, revenue from incoming voice services decreased 5.9%. This was primarily due to afall in our mobile termination rates (the charges which our competitors pay us for terminating calls on ournetwork) in 2014 as compared to 2013 depressing revenue growth.

Revenue from our data services increased 26.9% to R26,024 million in 2014 from R20,504 million in 2013. Onan organic basis, revenue from data services increased 30.9%. This was primarily due to an expanded3G network, strong growth in data usage in 2014 and an increase in the number of smartphones and 3G-enableddevices in our markets. In particular, in our key markets, data revenue increased to R9,264 million in 2014 fromR8,656 million in 2013 in South Africa and to R8,754 million in 2014 from R7,285 million in 2013 in Nigeria.

Revenue from our SMS services decreased 15.8% to R4,518 million in 2014 from R5,364 million in 2013. On anorganic basis, revenue from SMS services decreased 17.5%. This was primarily due to decreased SMS volumesowing to increased use of OTT applications.

Revenue from mobile telephones and accessories increased 4.6% to R7,890 million in 2014 from R7,541 millionin 2013. On an organic basis, revenue from mobile telephones and accessories increased 4.5%. This wasprimarily due to high demand for handsets and an increase in more expensive handsets in MTN South Africabeing sold in 2014 as compared to 2013.

Other revenue increased 22.7% to R2,132 million in 2014 from R1,737 million in 2013. On an organic basis,other revenue increased 19.6%. This was primarily due to an increase in revenue from our provision of internetservices and increased VAS offerings in 2014 as compared to 2013.

Revenue by Country

The following table shows our revenue for 2013 and 2014 from our significant geographic markets:


Restated(1)

2013 2014

(audited)(Rm)

Key marketsSouth Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,482 38,922Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,159 53,995Large opcosGhana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,269 7,149Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,204 6,194Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,480 6,418Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,467 5,289Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,229 3,449Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,496 2,701


Key markets

Revenue from South Africa decreased 3.9% to R38,922 million in 2014 from R40,482 million in 2013. This wasprimarily due to a 36.0% decline in interconnect revenue due to lower mobile termination rates (“MTRs”)although this was offset by an increase in data revenue of 7.0% as a result of higher volumes due to lowerpricing.

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Revenue from Nigeria increased 12.1% to R53,995 million in 2014 from R48,159 million in 2013. On an organicbasis, revenue increased 3.7%. This was primarily due to a 28.3% increase in data revenue mainly as a result ofthe 18.1% increase in data users, increased smartphone penetration and the introduction of products such as the4.5G smartphone data plan. This growth was offset by a decline in on-net traffic due to the dominance ruling andlower-than-anticipated subscriber numbers which resulted in a 1.7% (on an organic basis) decline in outgoingvoice revenue.

Large opcos

Revenue from Ghana decreased 13.5% to R7,149 million in 2014 from R8,269 million in 2013. On an organicbasis, revenue increased 13.8%. This was primarily due to an increase in data revenue of 122.9% (on an organicbasis) as a result of an increase in data users to approximately 8 million. The strong growth in data was a result ofimproved 3G coverage, reduced data prices and a significant uptake of digital services.

Revenue from Cameroon increased 19% to R6,194 million in 2014 from R5,204 million in 2013. On an organicbasis, revenue increased 6.9% This was primarily due to an increase in data revenues of 35.1% (on an organicbasis).

Revenue from Ivory Coast increased 17.1% to R6,418 million in 2014 from R5,480 million in 2013. On anorganic basis, revenue increased 5.0%. This was primarily due to an increase in data revenues of 33.7% (on anorganic basis) supported by an increase in data users which was significantly boosted by the first 3G sites comingon air in the country.

Revenue from Uganda increased 18.4% to R5,289 million in 2014 from R4,467 million in 2013. On an organicbasis, revenue increased 6.8%. This was primarily due to an increase in data revenue of 36.6% (on an organicbasis) supported by increased use of MTN Mobile Money from 2013 to 2014.

Revenue from Syria increased 6.8% to R3,449 million in 2014 from R3,229 million in 2013. On an organic basis,revenue increased 25.9%. This was primarily due to growth in data revenue of 108% (on an organic basis) from2013 to 2014, partially offset by the increased impact of the ongoing conflict and political crisis in the country.

Revenue from Sudan increased 8.2% to R2,701 million in 2014 from R2,496 million in 2013. On an organicbasis, revenue increased 16.5%. This was primarily due to an increase in our data revenue of 136.5% (on anorganic basis) which was mainly attributable to attractive data bundles.

Other income

Other income increased 497.4% to R7,928 million in 2014 from R1,327 million in 2013. This was primarily dueto increased income from tower sales in 2014 as compared to 2013.


Direct network operating costs decreased 10.6% to R16,354 million in 2014 from R18,299 million in 2013. Thiswas primarily due to decreased distribution costs.


Costs of handsets and other accessories decreased 4% to R10,314 million in 2014 from R10,744 million in 2013.This was primarily due to the reclassification of value added service costs into selling, distribution and marketingexpenses. Excluding the effects of the reclassification, costs of handsets and other accessories increased by 11%to R11,926 million due to the adoption of high end smartphones, higher average costs per handset and foreignexchange impacts.


Interconnect and roaming costs decreased 1.2% to R13,653 million in 2014 from R13,816 million in 2013. Thiswas primarily due to decreased interconnect and roaming costs owing to increased Nigeria interconnect costsoffset by foreign exchange impacts and a decrease in South Africa interconnect costs.

Staff costs

Staff costs increased 1.9% to R8,838 million in 2014 from R8,670 million in 2013. This was primarily due to anincrease in aggregate remuneration in 2014 as compared to 2013 offset by headcount reduction in South Africa,Nigeria and Uganda.

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Selling, distribution and marketing expenses increased 5% to R17,174 million in 2014 from R16,362 million in2013. This was primarily due to the reclassification of value added service costs from costs of handsets and otheraccessories into selling, distribution and marketing expenses which was offset by a decrease in costs due todecreased commissions.


Other operating expenses decreased 6.6% to R9,600 million in 2014 from R10,276 million in 2013. This wasprimarily due to cost containment initiatives.


Depreciation of property, plant and equipment increased 11% to R18,262 million in 2014 from R16,458 millionin 2013. This was primarily due to higher capital expenditures in 2013 as compared to 2014.


Amortisation of intangible assets increased 15.3% to R3,251 million in 2014 from R2,820 million in 2013. Thiswas primarily due to increased spending on software in Nigeria, Uganda and Cameroon.

Net finance costs

Net finance costs increased 197.2% to R3,668 million in 2014 from R1,234 million in 2013. This was primarilydue to the effects of net foreign exchange and functional currency losses in 2014 as compared to 2013, with netforeign exchange losses of R1,096 million in 2014 as compared to net foreign exchange gains of R1,065 millionin 2013, as well as due to an increase in the net interest expense to R2,572 million in 2014 from R2,299 millionin 2013.


Share of results of joint ventures and associates after tax increased 22.6% to R4,208 million in 2014 fromR3,431 million in 2013. This was primarily due to the increase in profits from Irancell.

Income tax expense

Income tax expense increased 7% to R13,361 million in 2014 from R12,487 million in 2013. This was primarilydue to withholding tax payable as a result of increased dividend upstreaming, the lower investment allowancedeductions resulting from lower capex additions in Nigeria as well as handset adjustments due to the voluntarychange in accounting policy relating to revenue recognition in South Africa. The effective tax rate in 2014 was26.17% as compared to an effective tax rate of 28.8% in 2013.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary sources of liquidity are cash flows from operations, bank borrowings and the issuance of securities.Our principal uses of cash flows from operations include capital expenditures, interest, dividend and taxpayments and principal loan repayments.

Our ability to fund planned capital expenditures and working capital, and to make scheduled payments ofprincipal, or to pay the interest on, or to refinance, our indebtedness, will depend on our future performance andour ability to generate cash, which, to a certain extent, is subject to general economic, financial, competitive,legislative, legal, regulatory and other factors that are beyond our control, as well as the factors discussed under“Risk Factors” and “—Key Factors Affecting Our Results of Operations and Comparability of FinancialStatements”.

We believe that our cash flows from operating activities, bank borrowings and issuance of securities will besufficient to fund our anticipated capital expenditure, working capital requirements and debt service requirementsas they become due. We aim to ensure we have sufficient liquidity to meet our obligations over a rolling 18 to

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24 month period, based on a conservative review of probable cash available to meet our obligations (i.e.excluding restricted cash, for more information please see “—Critical Accounting Judgements, Estimates andAssumptions—Restricted cash”), exclusive of one-off transactions in our pipeline with the expectation of a netcash inflow and inclusive of one-off transactions in our pipeline with the expectation of a net cash outflow. Wecannot, however, assure you that our business will generate sufficient cash flows from operating activities or thatfuture borrowings or access to capital markets will be available in an amount sufficient to enable us to serviceour indebtedness or to fund our other liquidity needs.

Consolidated Cash Flow

The following table summarises our consolidated statement of cash flows information for 2013, 2014 and 2015:


Restated(1)

2013 2014 2015

(audited)(Rm)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,708 64,628 57,598Finance income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,752 2,584 2,591Finance costs paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,947) (3,993) (4,855)Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,184) (11,779) (13,506)Dividends paid to equity holders of the company . . . . . . . . . . . . . . . . . . . . . . . . . . (16,187) (20,527) (23,506)Dividends paid to non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,571) (4,289) (5,777)Dividends received from associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 233 230Dividends received from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234 275 347

Net cash generated from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,025 27,132 13,122

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,568) (19,562) (21,612)Acquisition of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,586) (3,282) (10,412)Proceeds from sale of property, plant and equipment and intangible assets . . . . . . 106 541 772Proceeds on sale of towers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,378 6,465 6,515Acquisition of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — —Increase in non-current investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (128) (5,657) (3,319)Acquisition of business, net of cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47) (1,634) (3,040)Loans granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64) (1,007) (1,007)Increase in investment in associates or joint ventures . . . . . . . . . . . . . . . . . . . . . . . (69) (1,524) —Increase in investment in insurance cell captives . . . . . . . . . . . . . . . . . . . . . . . . . . (628) (173) (952)Proceeds from/(purchase of) bonds, treasury bills and foreign deposits . . . . . . . . . 3,423 (1,057) (542)Decrease/(increase) in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,348 899 (693)

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,835) (25,991) (34,290)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from the issuance of ordinary shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 —Net cash outflows from changes in shareholding . . . . . . . . . . . . . . . . . . . . . . . . . . (881) — —Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,279 30,603 23,384Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,951) (25,620) (14,802)Share buyback purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (2,249) (173)Settlement of vested equity rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (209) (288)Other financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (188) 111 (20)

Net cash from/(used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,264 2,639 8,101

Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 13,454 3,780 (13,067)Net cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . 22,539 39,577 43,072Exchange gains/(losses) on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . 3,584 (182) 3,860Net monetary gains/(losses) on cash and cash equivalents . . . . . . . . . . . . . . . . . . . — (103) 274

Net cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,577 43,072 34,139

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenuearrangements. The accounts from 2013 were restated in the financial statements for the year ended31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting

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Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change inrevenue recognition accounting policy for multiple element revenue arrangements” and “Presentation ofFinancial and Other Information” for more information.

The following table summarises our condensed consolidated statement of cash flows for the six months ended30 June 2015 and 2016:

Six months ended30 June

2015 2016

(unaudited)(Rm)

Net cash inflow/(outflow) from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,432 (436)Net cash outflow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,471) (14,209)Net cash inflow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,558 13,608

Decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,481) (1,037)Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,072 34,139Exchange losses on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (787) (6,272)Net monetary gain on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 107

Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,938 26,937

The six months ended 30 June 2016 and 2015

Net cash inflow from operating activities decreased 130.4% to a net cash outflow of R436 million in the sixmonths ended 30 June 2016 from a net cash inflow of R1,432 million in the six months ended 30 June 2015. Thiswas primarily due to a reduction in cash generated from operations because of the payment of a portion of theNigerian Regulatory Fine in the amount of R5.9 billion. In this regard, a N50 billion good faith payment was paidwithout prejudice by MTN Nigeria on 24 February 2016. This payment formed part of the monetary componentof the settlement. A further payment of N30 billion was made on 24 June 2016 resulting in a remaining cashbalance of Naira 250 billion (the equivalent of R12.9 billion, translated at the 30 June 2016 closing rate ofR1 = N19.33) outstanding as at 30 June 2016.

Net cash outflow from investing activities decreased 1.8% to R14,209 million in the six months ended 30 June2016 from R14,471 million in the six months ended 30 June 2015. This was primarily due to increasedacquisitions of property, plant and equipment, offset by changes in investments in the six months ended 30 June2016 as compared to the six months ended 30 June 2015.

Net cash inflow from financing activities increased 773.4% to R13,608 million in the six months ended 30 June2016 from R1,558 million in the six months ended 30 June 2015. This was primarily due to relatively higherproceeds from borrowings in the six months ended 30 June 2016 as compared to the six months ended 30 June2015, primarily as a result of borrowings made under our new facilities entered into in the six months ended30 June 2016. See “Description of Other Indebtedness.”

The years ended 31 December 2015 and 2014

Net cash generated from operating activities decreased 51.6% to R13,122 million in 2015 from R27,132 millionin 2014. This was primarily due to a decrease in revenue from MTN Nigeria as a result of the factors discussedabove, higher leasing costs and increased foreign currency expenses and an increase in working capital as a resultof inventories, receivables and prepayments and trade payables.

Net cash used in investing activities increased 31.9% to R34,290 million in 2015 from R25,991 million in 2014.This was primarily due to an increase in cash outflows on the acquisition of property, plant and equipment andintangible assets.

Net cash from financing activities increased 207% to R8,101 million in 2015 from R2,639 million in 2014. Thischange was primarily due to reduced repayments of borrowings and decreased share buybacks in 2015 ascompared to 2014, partially offset by a decrease in proceeds from borrowings.

The years ended 31 December 2014 and 2013

Net cash generated from operating activities increased 0.4% to R27,132 million in 2014 from R27,025 million in2013. This was primarily due to a 8.2% increase in cash generated from operations offset by higher dividendsand tax paid in 2014 as compared to 2013.

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Net cash used in investing activities increased 31% to R25,991 million in 2014 from R19,835 million in 2013.This was primarily due to the acquisition in November 2014 of the Nashua Mobile subscriber base from NashuaMobile Proprietary Limited which resulted in an increase in non-current investments.

Net cash from financing activities decreased 57.9% to R2,639 million in 2014 from R6,264 million in 2013. Thiswas primarily due to share buybacks and the settlement of vested equity rights.

Capital Expenditures

Our capital expenditures mainly consist of expenditures on network infrastructure, capital work in progress,software, information systems, furniture and office equipment, as well as other expenditures. Networkinfrastructure improvements are principally focused on building out fibre networks and focusing on high valuecity centres.

Our capital expenditure increased by 16.6% to R29,611 million in 2015 from R25,406 million in 2014representing 20.1% and 17.3% of total revenue for each period, respectively, mainly as a result of significantcapital expenditure of R10,948 million in South Africa in order to bolster our network capacity and quality in thecountry by adding 966 2G, 1,593 co-located 3G and 3,148 co-located LTE sites. During 2015, in Nigeria weadded 597 new 2G sites and 1,856 co-located 3G sites. Capital expenditure in Nigeria was R4,993 million in2015 and improving quality and data speeds of the network in some parts of the country remains a priority. InIran, capital expenditure in 2015 was R8,531 million with a focus on network modernisation and the continuedexpansion of the 3G and LTE networks where we added 432 2G sites, 2,443 co-located 3G sites and 1,266 co-located LTE sites. Capital expenditure in 2014 was 15.8% lower than in 2013 (at R30,164 million) of whichR517 million related to foreign currency movements.

The following table shows a breakdown of our capital expenditures by type of expenditure for the periodsindicated:


Six monthsended

30 June

2013 2014 2015 2016


Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,804 22,154 25,751 11,683

Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581 380 465 94Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 196 177 95Network infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,332 7,539 8,802 5,623Information systems, furniture and office equipment . . . . . . . . . . . . . 1,496 1,287 1,484 599Capital work in progress/other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,966 12,604 14,700 5,235Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 148 123 37

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,360 3,252 3,860 2,167

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,991 2,144 2,860 871Capital work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,369 1,108 1,000 1,296

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,164 25,406 29,611 13,850

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The following table shows a geographic breakdown of our capital expenditures for the periods indicated:


Six monthsended

30 June

2013 2014 2015 2016


South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,835 5,676 10,948 4,773Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,298 8,375 4,993 2,534Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,690 1,400 1,831 1,646Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 892 357 974 191Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 768 862 1,911 1,121Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830 1,185 833 842Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 667 951 364Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,072 1,392 819 549Small opco cluster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,809 3,888 4,368 1,645Head office companies and eliminations(1) . . . . . . . . . . . . . . . . . . . . . . . . . 417 1,440 1,571 107IFRS hyperinflation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 164 412 78

Consolidated total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,164 25,406 29,611 13,850

Iran(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,758 3,112 4,180 2,313

(1) Consists mainly of capital expenditure incurred by our head office companies and intersegmenteliminations.

(2) Irancell Telecommunication Company Services (PJSC) proportionate results are included in the segmentanalysis as reviewed by the CODM and excluded from IFRS reported results due to equity accounting forjoint ventures.

We expect our annual capital expenditure to increase in the medium term as we increase our capital expendituresin Nigeria and South Africa as we upgrade and expand wireless and fixed-line networks and deploy fibre networkinfrastructure. For the six months ended 30 June 2016, capital expenditure was R13,850 million, an increase of27.4% compared with the same period in 2015. We rolled out a further 873 2G, 3,660 3G and 2,691 LTE sitesand 1,132 km of long-distance fibre in the six months ended 30 June 2016. We have authorised R35,114 millionfor capital expenditures in 2016, with South Africa and Nigeria making up 25.9% and 36.1%, respectively, of theallocated capital expenditures.

Funding Strategy

Capital Structure Considerations

Gearing

While we do not have a stated gearing policy, we are committed to a conservative gearing profile andmaintaining an investment grade rating.

Our net debt/EBITDA ratio was 0.46x (excluding the impact of the Nigerian regulatory fine), 0.06x and 0.01x forthe years ended 31 December 2015, 2014 and 2013, respectively, and 0.84x (excluding the impact of theNigerian regulatory fine) and 0.28x for the six months ended 30 June 2016 and 2015, respectively. For the sixmonths ended 30 June 2015 and 2016, the net debt/EBITDA ratio is presented on an annualised basis and iscalculated as net debt as at each of 30 June 2015 and 2016, divided by annualised EBITDA for the respective sixmonth period.

We define net debt as the sum of the current and non-current portion of interest-bearing liabilities less cash andcash equivalents, restricted cash and current investments (excluding investments in cell captives).

Dividends and Management Fees from Subsidiaries

Dividends and management fees are paid to either of MTN Mauritius or MTN Dubai by our operatingsubsidiaries (with the exception of our subsidiary in South Africa which pays its dividends to MTN Holdings andmanagement fees to MTN Group Management Services). Cash held in MTN Dubai and MTN Mauritius isfurther paid to MTN Holdings as dividends. Maximising the upstreaming of cash from operating subsidiaries andmanaging the lack of foreign currency in certain of our subsidiaries continue to be a key focus in liquiditymanagement.

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Shareholder return

For the period ending 30 June 2016, we have declared an interim dividend of R2.50 per share. We plan to pay aminimum of R7 per share to investors in 2016. The payment of this minimum dividend remains at the fulldiscretion of the Board and will be considered by taking account of the needs of our business and the associatedfree cash generation along with the availability of upstreamed cash at the holding company level. Our sharebuyback policy is opportunistic in nature and is used to support our commitment to shareholder returns.

Payment of Regulatory Fines

The payment of the Nigerian Regulatory Fine is expected to be funded through our operating cash flows inNigeria and will be settled in Naira. Accordingly, we expect the amount of retained earnings available fordividends from MTN Nigeria to be reduced.

Holding Company Funding

At the holding company level, we utilise a mix of Rand and US dollar denominated facilities. These are primarilyused to fund our operations in South Africa, meet our working capital requirements and potential futureacquisitions. Additionally, we rely on cash flows from our operations in South Africa and other operatingcompanies abroad in the form of dividends and management fees. MTN Holdings acts as the direct financingvehicle for the South African business and our international holding companies provide limited bridge funding toour international operating companies.

At the holding company level, our debt comprises 49% revolving credit facilities, 28% capital markets debt, 16%term loan facilities and 7% general banking facilities. See “Description of Other Indebtedness”.

Currently our operations in South Africa, Guinea-Conakry, South Sudan, Zambia and Sudan have debt providedby our holding companies.

The holding companies (MTN Holdings, MTN International (Mauritius) Limited and the Issuer) have incurredR52,065 million of gross debt out of a total of R81,947 million consolidated gross debt as of 30 June 2016. Theholding companies hold R7,000 million of cash and cash equivalents, compared to a total of R32,960 millionconsolidated cash and cash equivalents as of 30 June 2016. The next largest business, MTN Nigeria, as of30 June 2016 had R16,922 million of non-recourse debt and R14,785 million of cash and cash equivalents.

Operating Company Funding

At the operating company level, we generally fund our operations through non-recourse debt in local currency. Ifthis is not possible, depending on the circumstances prevailing at the time, we may provide guarantees orintercompany loans to those operating companies. Our preference is for our operating companies to incur, onaverage across the Group, approximately 80% of their debt in local currency denominated facilities for thepurposes of (i) matching our local revenue streams, (ii) unlocking local debt capacity and delivering value tolocal financial markets, (iii) improving the efficiency of our operating companies’ balance sheets for localpartners, and (iv) to reduce the impact of foreign currency volatility. The proportion of local currency borrowingsby operational companies varies by jurisdiction and depends upon a number of factors.

Currently, our operations in Nigeria, Liberia, Ivory Coast, Uganda, Zambia, Cyprus, Benin, Cameroon, Congo-Brazzaville, Ghana, Sudan, and our joint ventures in Botswana and Swaziland (accounted for under the equitymethod), have non-recourse debt. Our operations in Syria, Rwanda, Afghanistan, Yemen and Guinea-Bissaucurrently have no long term debt. Our operations in Zambia and Cyprus have recourse debt.

69

The following table shows a geographic breakdown of our net debt for the periods indicated:


Sixmonthsended30 June

2013 2014 2015 2016

(unaudited)(Rm)

South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,562 (1,828) (1,507) (3,457)Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,121 6,820 1,695 2,138Large Opco cluster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,061) (4,842) 2,810 5,959

Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (705) (230) 15 918Cameroon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,478) (2,877) 118 739Ivory Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 308 2,399 2,032Uganda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (444) (576) (86) 1,198Syria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,492) (3,149) (1,525) (736)Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,610 1,682 1,889 1,808

Small opco cluster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (673) (1,962) (1,279) (447)Head office companies and eliminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,473) 6,355 29,916 45,064

Total reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352 4,543 31,635 49,257

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

Provisions and Contingent Liabilities

As at 30 June 2016, we had R1,308 million in contingent liabilities, as compared to R875 million as at31 December 2015, principally related to uncertain tax and regulatory exposures in various tax jurisdictionswhere the Group operates. We do not have any defined benefit pension schemes and do not contribute to post-retirement health benefit schemes. As at 30 June 2016, we had R325 million in provisions primarily relating toongoing litigation and arbitration proceedings.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT CREDIT RISK, LIQUIDITY RISK,FOREIGN EXCHANGE AND INTEREST RATE RISK

Our overall risk management programme focuses on the unpredictability of financial markets and seeks tominimise potential adverse effects on our financial performance. We use derivative financial instruments, such asforward exchange contracts and interest rate swaps, to hedge certain exposures, but as a matter of principle, wedo not enter into derivative contracts for speculative purposes.

Risk management is carried out under policies approved by our board of directors (the “Board”) and boards ofrelevant subsidiaries. The MTN Group executive committee identifies, evaluates and hedges financial risks in co-operation with our operating units. The Board provides written principles for overall risk management, as well asfor specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financialinstruments and investing excess liquidity.

Credit Risk

Credit risk, or the risk of financial loss to our Group due to customers or counterparties not meeting theircontractual obligations, is managed through the application of credit approvals, limits and monitoring procedures.See note 7.1.4 to our audited consolidated financial statements for the year ended 31 December 2015 and note43.4 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewherein this Offering Circular.

Cash and cash equivalents and current investments

Our exposure and the credit ratings of our counterparties are continuously monitored and the aggregate values oftransactions concluded are spread amongst approved financial institutions. We actively seek to limit the amountof credit exposure to any one financial institution and credit exposure is controlled by counterparty limits that arereviewed and approved by the credit risk department.

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The operations in Nigeria, Dubai and South Africa (including head office entities) hold their cash balances infinancial institutions with a rating range from B- to AAA.

Given these credit ratings, management does not expect any counterparty to fail to meet its obligations.

Trade receivables

We have no significant concentrations of credit risk, due to our wide spread of customers across variousoperations and dispersion across geographical locations. We have policies in place to ensure that retail sales ofproducts and services are made to customers with an appropriate credit history.

The recoverability of interconnect receivables in certain international operations is uncertain; however, this isactively managed within acceptable limits and has been incorporated in the assessment of an appropriate revenuerecognition policy and the impairment of trade receivables, where applicable. In addition, in certain countriesthere exists a right of set-off with interconnect parties to assist in settling outstanding amounts.

Liquidity Risk

Liquidity risk is the risk that an entity in our Group will be unable to meet its obligations as they become due.Our approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet our liabilitieswhen due under both normal and stressed conditions, without incurring unacceptable losses or risking damage toour reputation. We ensure that we have sufficient cash on demand (currently, we are maintaining a positive cashposition) or access to facilities to meet expected operational expenses, including the servicing of financialobligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted,such as natural disasters. See note 7.1.5 to our audited consolidated financial statements for the year ended31 December 2015 and note 43.5 to our audited consolidated financial statements for the year ended31 December 2014 contained elsewhere in this Offering Circular.

Interest rate risk

Interest rate risk is the risk borne by an interest-bearing asset or liability, due to variability of interest rates.Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents, restricted cash,current investments, trade and other receivables/payables, loans receivable/payable and bank overdrafts. Theinterest rates applicable to these financial instruments are a combination of floating and fixed rates in line withthose currently available in the market. Our interest rate risk arises from the repricing of our forward cover andfloating rate debt, incremental funding or new borrowings, the refinancing of existing borrowings and themagnitude of the significant cash balances which exist.

Debt in the South African entities and all holding companies (including MTN (Dubai) Limited andMTN International (Mauritius) Limited) is managed on a fixed versus floating interest rate basis, in line with theapproved Group Treasury Policy. Significant cash balances are also considered in the fixed versus floatinginterest rate exposure mix. Debt in the majority of our non-South African operations, including our local facilitiesin Nigeria, is at floating interest rates. This is due to the limited availability and expensive nature of derivativeproducts in these financial markets, if they are available at all. We continue to monitor developments which maycreate opportunities as these markets evolve in order that each underlying operation can be aligned with theGroup Treasury Policy. We make use of various products, including interest rate derivatives and otherappropriate hedging tools as a way to manage these risks; however, derivative instruments may only be used tohedge existing exposures.

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At the dates indicated below, the interest rate profile of our interest-bearing financial instruments was as follows:As at 31 December

2013(1) 2014 2015

Fixedrate

instruments

Variablerate

instruments

Fixedrate

instruments

Variablerate

instruments

Fixedrate

instruments

Variablerate

instruments

(unaudited)(Rm)

Non-current financial assetsLoans and other non-current receivables . . . . . . . . . . 1,736 856 3,071 905 6,040 1,253Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 — 223 — 262 —Current financial assetsTrade and other receivables . . . . . . . . . . . . . . . . . . . . 123 5,255 74 5,988 136 16,235Current investments . . . . . . . . . . . . . . . . . . . . . . . . . . 3,851 — 4,745 — 7,624 —Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 1,663 155 366 498 276Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . 25,729 7,252 20,788 7,395 18,731 5,874

31,739 15,026 29,056 14,654 33,291 23,638

Non-current financial liabilitiesBorrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,850 29,772 11,947 27,523 15,785 36,938Other non-current liabilities . . . . . . . . . . . . . . . . . . . . 723 347 693 298 1,202 279Current financial liabilitiesTrade and other payables . . . . . . . . . . . . . . . . . . . . . . 128 69 107 54 1,536 945Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,623 3,715 4,220 9,563 3,852 18,295Bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 11 — 26 — 38

13,336 33,914 16,967 37,464 22,375 56,495

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. Theaccounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparabilitywith the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability ofFinancial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple elementrevenue arrangements” and “Presentation of Financial and Other Information” for more information.

See note 7.1.6.1 to our audited consolidated financial statements for the year ended 31 December 2015 andnote 43.6.1 to our audited consolidated financial statements for the year ended 31 December 2014 containedelsewhere in this Offering Circular.

Sensitivity analysis

We have used a sensitivity analysis technique that measures the estimated change to profit or loss of aninstantaneous increase or decrease of 1% (100 basis points) in market interest rates, from the rate applicable at31 December of each year, for each class of financial instrument held as of that balance sheet date, with all othervariables remaining constant. This analysis is for illustrative purposes only, as in practice market rates rarelychange in isolation. The analysis has been performed on the basis of the change occurring at the start of thereporting period and assumes that all other variables, in particular foreign currency rates, remain constant.

As at 31 December

2013(1) 2014 2015

Changein

interestrate

Upwardchange

ininterest

rate

Downwardchange

ininterest

rate

Changein

interestrate

Upwardchange ininterest

rate

Downwardchange

ininterest

rate

Changein

interestrate

Upwardchange

ininterest

rate

Downwardchange

ininterest

rate

(%) (Rm) (Rm) (%)(unaudited)

(Rm) (Rm) (%) (Rm) (Rm)JIBAR . . . . . . . . . . . . . . . . . . . . 1 (62.5) 62.5 1 (102.7) 102.7 1 (118.3) 118.3LIBOR . . . . . . . . . . . . . . . . . . . . 1 (187.3) 187.3 1 1.4 (1.4) 1 28.9 (28.9)Three-month LIBOR . . . . . . . . . 1 (3.6) 3.6 1 (0.8) 0.8 1 (0.0) 0.0NIBOR . . . . . . . . . . . . . . . . . . . . 1 — — 1 (174.9) 174.9 1 (194.7) 194.7EURIBOR . . . . . . . . . . . . . . . . . 1 (10.2) 10.2 1 (14.3) 14.3 1 (25.8) 25.8Money market . . . . . . . . . . . . . . 1 31.1 (31.1) 1 22.8 (22.8) 1 14.5 (14.5)Prime . . . . . . . . . . . . . . . . . . . . . 1 (1.3) 1.3 1 — — 1 25.5 (25.5)Other . . . . . . . . . . . . . . . . . . . . . 1 44.9 (44.9) 1 40.4 (40.4) 1 (20.4) 20.4

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Pleasesee “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change inrevenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and OtherInformation” for more information.

72


Currency Risk

Currency risk is the exposure to exchange rate fluctuations that have an impact on cash flows and financingactivities. We operate internationally and are exposed to foreign currency risk arising from various foreigncurrency exposures. Foreign currency risk arises when future commercial transactions or recognised assets andliabilities are denominated in a currency that is not the entity’s functional currency. We are also exposed totranslation risk as holding companies do not report in the same currencies as operating entities.

Where possible, entities in our Group use forward contracts to hedge their actual exposure to foreign currency.Our Nigerian subsidiary manages foreign currency risk on major foreign purchases by placing foreign currencyon deposit as security against Letters of Credit when each order is placed. We have foreign subsidiaries whoseassets are exposed to foreign currency translation risk, which is managed primarily through borrowingsdenominated in the relevant foreign currencies to the extent that such funding is available on reasonable terms inthe local capital markets.


Foreign currency exposure

Included in our statement of financial position are the following amounts denominated in currencies other thanthe functional currency of the reporting entities:


2013(1) 2014 2015

(unaudited)(Rm)

AssetsNon-current assetsUS$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 318 419

Current assetsUS$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,935 9,169 6,424Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,406 2,477 1,435Iranian rial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,110 5,640 9,592ZAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 29 16GBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 3

11,464 17,315 17,470

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,667 17,633 17,889

LiabilitiesNon-current liabilitiesUS$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,832 14,651 20,777Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 1,155 1,059

6,372 15,806 21,836Current liabilitiesUS$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,624 8,375 8,853Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,332 1,043 2,304ZAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 57 7Ugandan Shilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 75GBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6 9Botswana pula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2 —

7,995 9,483 11,248

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,367 25,289 33,084

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenuearrangements. The accounts from 2013 were restated in the financial statements for the year ended

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31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors AffectingOur Results of Operations and Comparability of Financial Statements—Accounting Changes—Change inrevenue recognition accounting policy for multiple element revenue arrangements” and “Presentation ofFinancial and Other Information” for more information.


We have used a sensitivity analysis technique that measures the estimated change to profit or loss and equity ofan instantaneous 10% strengthening or weakening in the Rand against all other currencies, from the rateapplicable at 31 December of each year, for each class of financial instrument held as of that balance sheet date,with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice, marketrates rarely change in isolation. We are mainly exposed to fluctuations in foreign exchange rates in respect of theUS dollar, Euro, Naira, Syrian pound and Iranian rial. This analysis considers the impact of changes in foreignexchange rates on profit, excluding foreign exchange translation differences resulting from the translation ofGroup entities that have functional currencies different from the presentation currency, into the Group’spresentation currency. The analysis has been performed on the basis of the change occurring at the start of thereporting period and assumes that all other variables, in particular interest rates, remain constant.

Increase/(decrease) in profit before tax

Denominated: functional currencyChange in

exchange rate

Weakening infunctionalcurrency

Strengtheningin functional

currency

(%) (Rm) (Rm)

2015US$:ZAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (1,256.4) (1,256.4)US$:SYP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (105.8) 105.8US$:SDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (136.9) 136.9US$:SSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (73.9) 73.9US$:NGN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (861.7) 861.7EUR:SDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (222.1) 222.1EUR:US$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 9.8 (9.8)US$:GNF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (63.2) 63.2US$:ZMW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (37.1) 37.1IRR:ZAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1,208.6 (1,082.6)

2014US$:ZAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (144.8) 144.8US$:SDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (42.8) 42.8US$:SSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (109.2) 109.2US$:NGN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (265.5) 265.5EUR:SDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (492.0) 492.0EUR:US$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (160.5) 160.5US$:GNF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (28.1) 28.1SYP:US$ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (155.3) (155.3)US$:ZMW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 (63.4) 63.4IRR:ZAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 564.0 (564.0)

Price risk

We are not directly exposed to commodity price risk or material equity securities price risk.

Capital Risk Management

Our policy is to maximise borrowings at an operating company level, on a non-recourse basis, within anacceptable level of debt for the maturity of the local company. The average maturity of borrowings at anoperating company level is 5 years from the date of incurrence. See note 7.1.7 to our audited consolidatedfinancial statements for the year ended 31 December 2015 and note 43.7 to our audited consolidated financialstatements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

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CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

In the opinion of our management, the following accounting policies and topics are critical for the consolidatedfinancial statements in the present economic environment. The influences and judgements, as well as theuncertainties which affect them, are important factors to be considered when looking at our present and futureoperating earnings.

The preparation of the consolidated financial statements in conformity with IFRS requires assumptions,judgements and estimates to be made which can impact the reported amounts of assets, liabilities, income andexpenses. Estimates and the underlying assumptions are based on historical experience and numerous otherfactors within the scope of the particular circumstances. Actual amounts may deviate from estimated amounts.All estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimates are revised and in any future periods affected.

We have summarised below our accounting policies that require judgements, estimates and assumptions thathave a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities. For moreinformation see the notes to our audited consolidated financial statements included in the financial statementsincluded elsewhere in this Offering Circular.

Provisions

We exercise judgement in determining the expected cash outflows related to our provisions. Judgement isnecessary in determining the timing of outflow as well as quantifying the possible range of the financialsettlements that may occur.

The present value of our provisions is based on management’s best estimate of the future cash outflows expectedto be required to settle the obligations, discounted using appropriate pre-tax discount rates that reflect currentmarket assessment of the time value of money and the risks specific to each provision. Additional information onprovisions is disclosed in note 6.3 to the audited consolidated financial statements for the year ended31 December 2015 and note 28 to our audited consolidated financial statements for the year ended 31 December2014 contained elsewhere in this Offering Circular.

In 2015 the NCC imposed a fine on MTN Nigeria that is related to the late disconnection by MTN Nigeria of5.1 million subscribers whose registration documents were considered incomplete. We provided R9.3 billion inour financial statements for the year ended 31 December 2015 based on management’s judgement. The ultimateresolution of the fine resulted in, among other requirements, a cash amount of N330 billion (as at 10 June 2016,the equivalent of US$1.671 billion at the official exchange rate prevailing at the time) to be paid over three years.On 10 June 2016 the nature of the fine changed from a provision under IAS 37 Provisions, Contingent Liabilitiesand Contingent Assets to a financial liability under IAS 39 Financial Instruments: Recognition andMeasurement, as from this date onwards MTN Nigeria was contractually obliged to settle the fine in cash. For afurther discussion, see “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

Impairment of goodwill

We test goodwill for impairment on an annual basis, in accordance with the accounting policy disclosed in note5.2 to our audited consolidated financial statements for the year ended 31 December 2015 and note 12 to ouraudited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in thisOffering Circular. The recoverable amounts of cash-generating units have been determined based on value-in-usecalculations. These calculations are performed internally by us and require the use of estimates and assumptions.

The input factors most sensitive to change are management estimates of future cash flows based on budgets andforecasts, growth rates and discount rates. Further detail on these assumptions has been disclosed in note 5.2 tothe audited consolidated financial statements for the year ended 31 December 2015 and note 12 to our auditedconsolidated financial statements for the year ended 31 December 2014 contained elsewhere in this OfferingCircular. We have performed a sensitivity analysis by varying these input factors by a reasonably possiblemargin and assessing whether the changes in input factors result in any of the goodwill allocated to appropriatecash generating units being impaired. Goodwill impairment losses of R504 million, R2,033 million and Rnilwere recognised in 2015, 2014 and 2013, respectively. See note 5.2 to the audited consolidated financialstatements for the years ended 31 December 2015 and note 12 to our audited consolidated financial statementsfor the year ended 31 December 2014 contained elsewhere in this Offering Circular.

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Sale of tower assets

We apply judgement and follow the guidance in IFRS 3 Business Combinations to determine whether the sale oftower assets constitutes the sale of a business or an asset.

We determined that the tower assets in Nigeria which were sold in two tranches during the years ended31 December 2014 and 2015, were an integrated set of activities capable of being conducted and managed for thepurpose of providing a return and therefore constituted the sale of a business. In exercising our judgement weconsidered the following:

• the transfer of assets resulted in the transfer of employees that are key to the inputs and processes beingtransferred;

• the sale agreements provide for the transfer of all substantial assets required to operate the towers includingrelated tower rights, site maintenance agreements, tenant leases and inventory;

• the processes involved in the tower businesses such as the site management systems and site maintenanceprogrammes, were transferred along with the assets; and

• the tower assets are able to produce outputs through the management and leasing of sites to other parties.

Income taxes

We are subject to income taxes in numerous jurisdictions. As a result, significant judgement is required indetermining our provision for income taxes. There are numerous calculations and transactions for which theultimate tax position is uncertain during the ordinary course of business. We recognise tax liabilities foranticipated tax issues based on estimates of whether additional taxes will be payable. Where payment is possiblebut not probable the tax exposure is disclosed as a contingent liability (see note 6.8 to the audited consolidatedfinancial statements for the year ended 31 December 2015 contained elsewhere in this Offering Circular). Wherethe final outcome of these matters is different from the amounts that were initially recorded, such differences willimpact the current and deferred tax in the period in which such determination is made.

Deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available againstwhich the deferred tax assets can be utilised. When recognising deferred tax assets, we exercise judgement indetermining whether sufficient taxable profits will be available. This is done by assessing the future financialperformance of the underlying Group entities to which the deferred tax assets relate. Our deferred tax assets as at31 December 2015 amounted to R542 million (2014: R1,109 million). See note 3.2 to our audited consolidatedfinancial statements for the year ended 31 December 2015 and note 16 to our audited consolidated financialstatements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

Determining whether an arrangement contains a lease

We apply the principles of IFRIC 4 Determining whether an Arrangement contains a Lease in order to assesswhether our arrangements constitutes or contain leases. The requirements to be met in order to conclude that anarrangement constitutes or contains a lease are as follows:

• the provision of a service in terms of the arrangement should be dependent on the use of one or morespecific assets; and

• the arrangement must convey a right to use these assets.

All other arrangements that do not constitute or contain leases are treated as service level agreements; the costsare expenses as incurred.

For the purpose of applying IFRIC 4 on tower space lease arrangements, we consider the tower asset as a wholein assessing whether the arrangement contains a lease. This is consistent with the guidance on determining acomponent of an asset in IAS 16 Property, Plant and Equipment. We have resolved that an arrangement containsa lease as defined in IAS 17 Leases where the arrangement provides an exclusive right to use specific towerspace which is more than an insignificant part of the tower asset.

Determining whether an arrangement qualifies as an operating lease or a financial lease

We apply our principal accounting policies for leases to account for arrangements which constitute or containleases and follow the guidance of IAS 17 to determine the classification of leases as either operating or financeleases.

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During the years ended 31 December 2014 and 2015, we entered into sale and leaseback transactions with IHSthat resulted in the sale of our mobile network towers in Nigeria. See note 2.3 to our audited consolidatedfinancial statements for the year ended 31 December 2015 and note 5 to our audited consolidated financialstatements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

The critical elements that we considered with respect to the classification of the lease transaction were:

• whether the lease terms are for the major part of the economic life of tower assets; and

• whether at inception of the leases, the present value of the minimum lease payments amounts to at leastsubstantially all of the fair value of tower assets.

We have estimated that the lease term of the tower assets is not for a major part of the economic life of the towerassets, taking into account the non-cancellable period for which we have contracted, and any options to renewsuch period where it is reasonably certain that we will exercise the option.

The minimum lease payments were determined by separating the payments required by the lease arrangementsinto those pertaining to the lease and those pertaining to other elements such as services and cost of inputs on thebasis of their relative fair values. Management exercised judgement in estimating the fair value of the otherelements by reference to comparable internal cost structures and other independent tower operators. The discountrate used in calculating the present value of the minimum lease payments reflects the rate of interest MTNNigeria would incur in borrowing the funds necessary to purchase similar assets.

The fair value of the tower assets was determined by reference to the amounts at which the tower assets weresold which represents the prices at which the assets could be sold in an orderly transaction between marketparticipants under current market conditions. We determined that the present value of the minimum leasepayments did not equal substantially all of the fair value of the underlying tower assets.

Following our assessment, the leaseback transactions were classified as operating leases.

Hyperinflation

We exercise significant judgement in determining the onset of hyperinflation in countries in which we operateand whether the functional currency of our subsidiaries, associates or joint ventures is the currency of ahyperinflationary economy.

Various characteristics of the economic environment of each country are taken into account. Thesecharacteristics include, but are not limited, to whether:

• the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreigncurrency;

• prices are quoted in a relatively stable foreign currency;

• sales or purchase prices take expected losses of purchasing power during a short credit period into account;

• interest rates, wages and prices are linked to a price index; and

• the cumulative inflation rate over three years is approaching, or exceeds, 100%.

Management exercises judgement as to when a restatement of the financial statements of a Group entity becomesnecessary. Following management’s assessment, MTN Irancell, MTN Sudan and MTN Syria have beenaccounted for as entities operating in hyperinflationary economies. During 2015 the Iranian economy ceased tobe hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015. See note 1.3.3 to theaudited consolidated financial statements for the years ended 31 December 2015 and 2014 contained elsewherein this Offering Circular.

Restatements

Reclassification of expenses

Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2014,the expenses in relation to government and regulatory costs and value-added services costs have been disclosedseparately or reclassified between expense categories to present the expenses in accordance with theclassification in the year ended 31 December 2015. See note 1.6.1 to the audited consolidated financialstatements for the year ended 31 December 2015 contained elsewhere in this Offering Circular.

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Reclassification of revenue

During the year ended 31 December 2015, an amount of R1,293 million in respect of 2014 was reclassified fromdata revenue to airtime and subscription revenue to accurately reflect the respective categories year-on-year. Seenote 2.2 to the audited consolidated financial statements for the year ended 31 December 2015 containedelsewhere in this Offering Circular.

Reclassification of foreign exchange gains and losses

We manage our risk to foreign exchange exposure on a net basis and consequently in year ended 31 December2015 the foreign exchange gains and losses previously disclosed on a gross basis and included in the relevantfinance income or finance cost line is now disclosed on a net basis. See note 2.5 to the audited consolidatedfinancial statements for the year ended 31 December 2015 contained elsewhere in this Offering Circular.

Restatement of goodwill disclosed per operation

We restated our previously disclosed allocation of goodwill for a number of our operations. The restatementrelates to a gain realised on a foreign currency hedge on initial acquisition of these operations. The gain waspreviously disclosed within the “other” category of goodwill. In addition, goodwill relating to the South Africanbusinesses acquired have been moved from the “other” category to be included within Mobile TelephoneNetworks Proprietary Limited (South Africa). See note 1.6.4 to the audited consolidated financial statements forthe year ended 31 December 2015 contained elsewhere in this Offering Circular.

Impairment of trade receivables

An impairment of trade receivables is established when there is objective evidence that we will not be able tocollect all amounts due according to the original terms of the receivables. Significant financial difficulties ofdebtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency inpayments are considered indicators that the trade receivable is impaired.

The carrying amount of the trade receivable is reduced through the use of an allowance and the amount of theloss is recognised in profit or loss. When a trade receivable is uncollectible it is written off against the allowanceaccount for trade receivables. Subsequent recoveries of amounts previously written off are credited to profit orloss.

Gains or losses arising from the modification of the terms of a debt instrument are recognised immediately inprofit or loss where the modification does not result in the derecognition of the existing instrument.

Connection incentives and subscriber acquisition costs

Connection incentives paid to service providers are currently expensed by us in the period in which these costsare incurred. Service providers utilise the incentives received to fund a variety of administrative costs and/or toprovide incentives to maintain or sign up customers on our behalf, at their own discretion. The portion of theincentive used by the respective service providers as an incentive to retain/obtain existing/new subscribers on ourbehalf, is to be capitalised only to the extent that it is reliably measurable (prepaid discount). In accordance withthe framework under IFRS, we do not capitalise these fees due to the portion of incentives utilised to acquire/retain subscribers on behalf of the Group by the respective independent service providers, not being reliablymeasurable.

In accordance with the recognition criteria in terms of International Accounting Standard 38: Intangible Assets,we have also resolved not to capitalise commissions paid to dealers, utilised to acquire new subscribers, asintangible assets (subscriber acquisition cost), due to the portion utilised to acquire subscribers on our behalf notbeing reliably measurable.

Interconnect revenue recognition

Due to the receipt of interconnect revenue in certain operations not being certain at transaction date, we haveresolved only to recognise interconnect revenue relating to these operations as the cash is received or where aright of set-off exists with interconnect parties in settling outstanding amounts.

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Property, plant and equipment

Property, plant and equipment represent a significant proportion of our asset base. Therefore, the judgementsmade in determining their estimated useful lives and residual values are critical to our Group’s financial positionand performance. Useful lives and residual values are reviewed on an annual basis with the effects of anychanges in estimates accounted for on a prospective basis.

In determining residual values, we use historical sales and management’s best estimate based on market prices ofsimilar items.

Useful lives of property, plant and equipment are based on management estimates and take into accounthistorical experience with similar assets, the expected usage of the asset, physical wear and tear, technical orcommercial obsolescence and legal restrictions on the use of the assets.

The estimated useful lives of property, plant and equipment for 2015 were as follows:

Buildings owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 50Buildings leased(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 – 20Network infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 – 20Information systems equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 – 10Furniture and fittings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 15Leasehold improvements(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 – 15Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 – 12Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 10

(1) Shorter of lease term and useful life.

Intangible assets with finite useful lives

The relative size of our intangible assets with finite useful lives makes the judgements surrounding the estimateduseful lives and residual values critical to our financial position and performance. Useful lives are reviewed on anannual basis with the effects of any changes in estimate accounted for on a prospective basis. The residual valuesof intangible assets are assumed to be zero.

The basis for determining the useful lives for the various categories of intangible assets is as follows:

Licences

The useful lives of licences are determined primarily with reference to the unexpired licence period.

Customer relationships

The useful life principally reflects management’s view of the average economic life of the customer base and isassessed by reference to factors such as customer churn rates. An increase in churn rates may lead to a reductionin the estimated useful life.

Software

The useful life is determined with reference to the licence term of the computer software. For unique softwareproducts controlled by us, the useful life is based on historical experience with similar assets as well asanticipation of future events such as technological changes, which may impact the useful life.

Other intangible assets

Useful lives of other intangible assets are based on management’s estimates and take into account historicalexperience as well as future events which may impact the useful lives.

The estimated useful lives of intangible assets with finite useful lives for 2015 were as follows:

Licences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 20Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 10Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 6Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 10

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Classification of significant joint arrangements

Joint arrangements are all arrangements where two or more parties contractually agree to share control of thearrangement, which only exists when decisions about the relevant activities require unanimous consent of theparties sharing control. Joint ventures are joint arrangements whereby the parties that have joint control of thearrangement have rights to the net assets of the arrangement.

We exercise judgement in determining the classification of our joint arrangements.

Irancell Telecommunication Company Services (PJSC)

We hold an effective interest of 49% in the issued ordinary share capital of Irancell TelecommunicationCompany Services (PJSC). The joint arrangement provides us and the other parties to the agreement with rightsto the net assets of the entity. Under the contractual agreement unanimous consent is required for all keyactivities. The entity has therefore been classified as a joint venture of the Group.

Mascom Wireless Botswana Proprietary Limited

We hold an effective interest of 53.11% in the issued ordinary share capital of Mascom Wireless BotswanaProprietary Limited. The joint arrangement provides us and the other parties to the agreement with rights to thenet assets of the entity. We have joint control over this arrangement as under the contractual agreement, no partyhas the right to control the managing company unilaterally. The entity has therefore been classified as a jointventure of the Group.

Restricted cash

We exercise judgement in determining the appropriate treatment of restricted cash. The judgement exercisedtakes into account the severity of exchange control regulations, the availability of foreign currency in theoperations affected and the purpose for which the funds will be used. As at 30 June 2016 an amount ofR637 million (31 December 2015: R1,735 million) has been treated as restricted cash.

See also note 4.3 to the audited consolidated financial statements for the years ended 31 December 2015 and note22 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere inthis Offering Circular for restricted cash amounts as at these dates.

Change in revenue recognition accounting policy for multiple element revenue arrangements

Prior to 2014, we accounted for arrangements with a multiple of deliverables (i.e. multiple element revenuearrangements) by dividing these arrangements into separate units of accounting and recognising revenue throughthe application of the Residual Method.

From 1 January 2014, we changed our accounting policy for recognising revenue relating to multiple elementrevenue arrangements from applying the Residual Method to the Relative Fair Value Method on a voluntarybasis.

Previously under the Residual Method, fair value was ascribed to each of the undelivered elements (typically theservice contract) and any consideration remaining (after reducing the total consideration of the arrangement withthe fair value of the undelivered elements) was allocated to the delivered item(s) in the transaction (typically thehandset). This resulted in limited amounts of revenue being allocated to the elements delivered upfront (i.e. thehandset). Under the Relative Fair Value Method, the consideration received or receivable is allocated to each ofthe elements (delivered and undelivered) according to the relative fair value of the elements included in thearrangement.

This change in accounting treatment mainly affected our income and financial position information in ouroperation in South Africa and, as a result, our consolidated income and financial position information.

This change results in more relevant and reliable information being presented in respect of revenue recognised inrelation to multiple element revenue arrangements as revenue is now being recognised for each of the elementsdelivered and to be delivered based on the relative fair value of the relating elements in relation to the totalconsideration received. The current accounting policy results in an improved correlation between the recognition

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of revenue and associated costs and also aligns us more closely with the requirements of IFRS 15: Revenue fromContracts with Customers. The change in accounting policy was applied retrospectively from the beginning ofJanuary 2013.

The impact of the change in the accounting policy for revenue recognition in multiple element revenuearrangements is disclosed in note 48 to our audited consolidated financial statements for the year ended31 December 2014, contained elsewhere in this Offering Circular.

As a result, our results of operations for the year ended 31 December 2013 (as restated in our auditedconsolidated financial statements for the year ended 31 December 2014 included elsewhere in this OfferingCircular) and going forward will not be directly comparable to our historical results of operations. To aidcomparability, the financial information presented in this Offering Circular is presented in accordance with theRelative Fair Value Method, unless otherwise indicated.

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BUSINESS DESCRIPTION

Overview

We are a leading emerging market mobile operator by subscribers headquartered in Johannesburg, South Africa.Through our extensive investment in advanced communication infrastructure, the talent of our people and thestrength of our brand, as at 30 June 2016 we connected approximately 232.6 million customers in 22 countriesacross Africa and the Middle East. We offer an integrated suite of communications products and services to ourcustomers, including mobile voice, data, digital services and ICT enterprise products and services to our SMEand corporate clients. We operate a predominantly prepaid business with over 97% of our customers on prepaidplans. We offer postpaid services mainly in South Africa, where approximately 17% of our customers are onpostpaid plans as at 30 June 2016, as well as in Cyprus. We are the market leader by number of subscribers in15 of the 22 countries in which we offer voice, data and digital services (source: Group data). As at 30 June2016, we employed 20,376 people. We are listed on the Johannesburg Stock Exchange and had a marketcapitalisation of R263,757 million as at 30 June 2016.

MTN Group was founded in 1994, when M-Cell (later renamed MTN Group Limited in 2002) was incorporatedin South Africa, our home market. Employing the experience we gained from establishing ourselves in our homemarket and from serving our South African customers, we commenced our expansion into the rest of Africa. In2001, we acquired GSM 900 MHz and GSM 1800 MHz licences in Nigeria. At the time, this was our singlelargest investment and in 2015 our Nigerian operation contributed 35.3% of our total revenue and approximately26% of our subscriber base, which represented the largest contributions to our subscriber base and revenueamong our operations. Our operations have since 2001 expanded to other emerging markets in both Africa andthe Middle East and, as at 30 June 2016, we had approximately 232.6 million customers across these continents.In the last few years we have started to focus on investments that would help us expand our offerings in digitaland financial value added services. In 2007, MTN Nigeria was awarded a 3G licence and acquired a 4G spectrumlicence in 2015. In 2006, we commenced operations in Iran through our joint venture, MTN Irancell. In 2010, welaunched MTN Mobile Money in several of the markets in which we operate. Today we serve over 36 millionMTN Mobile Money customers in 14 markets. In 2015, MTN Ghana was declared a winner in the auctionprocess for a 15 year 4G/LTE licence.

The following diagram illustrates our development and growth from 1993 to 2016:

1993-1997 1998-2005 2006-2016

Operations

Population

Market cap.

41 million

1

R2.7 billion(31 December 1997)

Operations

Population

Market cap.

11

274 million

R103 billion(31 December 2005)

Operations

Population

Market cap.

22

585 million

R264 billion(30 June 2016)

Our two most significant markets are South Africa and Nigeria. Our operations in South Africa contributed25.1% and 27.2% of our total revenue for the six months ended 30 June 2016 and the year ended 31 December2015, respectively. As at 30 June 2016, we had approximately 29.8 million subscribers in South Africa. Ouroperations in Nigeria contributed 36.6% and 35.3% of our total revenue for the six months ended 30 June 2016and the year ended 31 December 2015, respectively. As at 30 June 2016 we had approximately 59.0 millionsubscribers in Nigeria. Together, operations in these two countries accounted for 61.7% of total revenue for thesix months ended 30 June 2016 and 62.5% of total revenue for the year ended 31 December 2015.

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The table below provides a geographic breakdown of our main markets, together with a summary of operationaldata, as at 30 June 2016 unless specified otherwise (source: Group data):

Country of operation Revenue

Percentageof total

Revenue Technology

Technologycoverage as at31 December

2015(1)

Number ofsubscribers in

millions Market shareMarketposition

Key Markets Rm (%) (%) (%)

South Africa 19,841 25.1 2G 98.7% 29.8 32.3 23G 93.3%

LTE 42.5%

Nigeria 28,941 36.6 2G 91.5% 59.0 46.2 13G 66.6%

Long termevolution(“LTE”)

Large OpcosCameroon 3,202 4 2G 92.0% 9.6 57.4 1

3G 50.0%LTE 24.4%

Ghana 5,165 6.5 2G 82.5% 17.6 53.8 13G 42.0%

Iran 8,324 10.5(2) 2G 85.7% 47.3 46.4 23G 38.9%

worldwideinteroperabilityfor microwave

access(“WiMax”) 96.0%

LTE 14.0%Ivory Coast 3,751 4.7 2G 94.5% 8.2 32.8 1

3G 71.1%WiMax 43.0%

Sudan 2,345 3.0 2G 54.5% 8.8 33.8 23G 29.1%

Syria 1,068 1.3 2G 75.0% 5.8 40.9 23G 60.0%

Uganda 2,804 3.5 2G 79.5% 9.9 52.7 13G 20.3%

WiMax 21.0%LTE 2.3%

(1) Technology coverage figures represent the percentage of the population that is covered by each technologyas at 31 December 2015.

(2) Equity accounted.

• For the six months ended 30 June 2016 and the years 2015, 2014 and 2013, we had consolidated revenues ofR79 billion, R147 billion, R147 billion, and R137 billion, respectively.

• The revenue breakdown for the six months ended 30 June 2016 for outgoing voice, incoming voice, data,SMS, mobile telephones and accessories and other sources was R44,690 million (56.5% of total revenue),R7,777 million (9.8% of total revenue), R19,849 million (25.1% of total revenue), R1,735 million (2.2% oftotal revenue), R3,885 million (4.9% of total revenue) and R942 million (1.2% of total revenue),respectively.

• The 2015 revenue breakdown for outgoing voice, incoming voice, data, SMS, mobile telephones andaccessories and other sources was R85,027 million (57.8% of total revenue), R14,690 million (10.0% oftotal revenue), R33,874 million (23.0% of total revenue), R4,097 million (2.8% of total revenue),R6,985 million (4.7% of total revenue) and R1,680 million (1.1% of total revenue), respectively.

• Further, we have a demonstrated track record of efficient cost management and sustainable growth, asexhibited by our EBITDA margins of 23.9% (including the effect of the Nigerian Regulatory Fine

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recognised in the six months ended 30 June 2016 or 37.1% excluding the Nigerian Regulatory Fine) and40.2% (including the effect of the provision for the Nigerian Regulatory Fine or 46.5% excluding theNigerian Regulatory Fine), 49.8% and 44.0% for the years ended 31 December 2015, 2014 and 2013,respectively.

We have been offering mobile services in emerging markets for over 20 years and have leveraged this experienceto roll-out best practices to our newer markets as we pursue a diversification strategy across our markets,products and services, and technology. Furthermore, we believe that the mobile communications servicesindustry in our markets will continue to grow due to a combination of factors. These include limited fixed-linecoverage and penetration, the relatively high cost of fixed-line infrastructure deployment and low and increasingmobile penetration.

We aim to expand beyond our core voice offerings by leading the delivery of data access and digital servicesacross the emerging markets in which we operate. To achieve this, we are investing and growing our 3G andfourth generation wireless telephone (“4G”) capacity and coverage to provide data solutions to our subscribersand support growing data traffic. Our digital strategy is focused on three key areas of opportunity namelye-commerce, digital entertainment and media and mobile financial services. Furthermore, we are evolving tooffer a range of digital and financial services to our customers by leveraging our technology and distributionfootprint to maximise the opportunity of low internet penetration in our markets. We offer a range of financialservices, country specific content, entertainment, lifestyle and general content and e-commerce. Financialservices, in particular MTN Mobile Money, a service which offers customers bill payment and money transferservices, is an increasingly important part of our service offerings. Today we serve over 36 million MTN MobileMoney customers in 14 markets. We have made good progress positioning our non-voice businesses, inparticular through our investments in the digital services business, Africa Internet Holdings, our e-commerceventure which has been highly successful creating the largest online mall in Africa, Jumia. MTN is now thelargest distributor of music in Africa. We also offer digital solutions for 2G feature phones that are not smartphones that allow the purchase of and receipt of content via SMS.

The telecommunications environment is rapidly changing. There has been a significant increase in the number ofnon-conventional and OTT players (internet based alternatives to traditional telephony services) in the marketsuch as social networking sites and messaging applications, and this has impacted traditional telecommunicationsrevenue streams. However, the advent of new technologies and services has also provided us with an opportunityfor long term sustainable growth through the provision of both digital and financial services, as well as thepotential for strategic partnerships with OTT players. In addition, we face heightened competition, changingcustomer expectations and increasing regulatory pressures. These dynamics require us to create sustainable andsaleable improvements to our (i) revenue streams, such as through our commitment to digital and financialservices and pro-active approach to maintaining amicable relationships with regulators as well as anticipatingregulatory developments; and (ii) cost structures. We have embarked on several cost saving initiatives whichhave already resulted in measurable benefits. These initiatives include the centralisation of procurement (whichgave rise to approximately R7,147 million in savings in 2015, a 25% improvement year on year), themonetisation of our tower assets, the standardisation of back office functions, the renegotiation of distributionarrangements, and the realignment of the commission structure in our key markets.

Recent Accolades

Over the years, we have received numerous accolades and awards that speak to the efficient and reliable servicethat we provide our customers. We were named the most admired and most valuable African brand in the 2015Brand Africa 100 listings, Brand Finance South Africa’s top brand for a second year in a row and also namedAfrica’s top brand by the Brand Finance South Africa’s Top 50 awards. We were named as the only SouthAfrican company on the World Champions list compiled by Citi Group, and we are the only African brand on theMillward-Brown BrandZ Top 100 Most Valuable Global Brands 2014 survey. Furthermore in 2014, we werenamed a top sustainable global business in Newsweek’s Top 500 Sustainable Global Business survey, wererecognised at the Nedbank Sustainable Business Awards, were included in Citi Group’s Global Champions Listand won corporate social responsibility awards in Cameroon, Ghana, Uganda and Rwanda.

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Strengths

We believe that we benefit from the following competitive strengths that position us to achieve our strategicobjectives:

Leading market position in 15 markets and brand recognition

We are the largest telecommunications service provider in Africa with approximately 232.6 million subscribersas at 30 June 2016 (source: Group data). Further, we hold the leading market position by number of subscribersin 15 of the 22 countries in which we operate. We have significant experience in all facets of building, operatingand financing successful mobile telecommunications businesses in high growth and emerging markets, havingdeveloped mobile networks or acquired existing operations in numerous markets. In particular, we havedeveloped substantial experience in planning, building and managing mobile networks, obtaining project financeand managing financial risk, developing strong local branding strategies and introducing effective, affordable andreliable product and service offerings tailored to local markets. By leading the development of the mobiletelecommunications industry in the markets in which we operate, we have (i) built a leading market share in twoof our largest markets (Nigeria and Ghana), (ii) increased our market share in other growing markets such asSudan and (iii) increased our brand visibility to become one of the most recognisable brands on the Africancontinent.

Further, we believe that the MTN brand, which we use across all our markets except in Liberia, is generallyassociated with high quality, availability, competitive pricing, customer service and innovation. We were namedthe most admired and most valuable African brand in the 2015 Brand Africa 100 listings, Brand Finance SouthAfrica’s top brand for a second year in a row and also named Africa’s top brand by the Brand Finance SouthAfrica’s Top 50 awards. We were named as the only South African company on the World Champions listcompiled by Citi Group, and we are the only African brand on the Millward-Brown BrandZ Top 100 MostValuable Global Brands 2014 survey. Furthermore in 2014, we were named a top sustainable global business inNewsweek’s Top 500 Sustainable Global Business survey, were recognised at the Nedbank Sustainable BusinessAwards, were included in Citi Group’s Global Champions List and won corporate social responsibility awards inCameroon, Ghana, Uganda and Rwanda.

Our leading market positions provide us with a competitive advantage, as it is more difficult for other providersto compete with our scale across the markets in which we operate and our high customer base in our mobilebusiness.

Economies of scale and synergies across our operations

We believe that our size and market share offer significant benefits in allowing us to leverage economies of scalethrough a number of means, including the centralisation of our procurement, the standardisation of ourtechnology and back-office functions, the development of best practice across our operations and the increase inthe awareness of our brand across Africa without increasing costs and therefore reducing margins. Thetelecommunications industry is subject to rapid advances in technology, and we believe that with our scale andmarket share we are well positioned to timely bring new products and services to the market and at lower coststhan our competitors.

We are able to continue pursuing economies of scale and synergies from operating multiple mobile networks innumerous markets. Our scale has enabled us to develop the flexibility and best practices required for operationalsuccess in the fast developing emerging markets in which we operate. To achieve further network synergies, wehave also standardised our networks to the greatest extent possible which will facilitate supply cost reductionsand ensure a simplified and efficient network operating model. In addition, our management structure facilitatesthe sharing of information and experience among our operating companies to ensure cohesion and to enhancebest practice across our operations.

Each operating company employs innovative, targeted marketing and promotion campaigns (such as discountsand bundle options) to individual subscribers (for example via SMS) and they continually review and refreshtheir promotional offers to engage subscribers and prompt them to purchase airtime, data or additional services.Best practices and strategies developed at individual operating companies or as a result of initiatives andcampaigns at MTN Group are rolled out across the network of operating companies.

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Diversified and balanced international portfolio; proven track record of establishing new telecommunicationsoperations in emerging markets with significant growth potential

We have established a diversified and balanced international portfolio of telecommunications services, withoperations in 22 countries. We have successful operations in some of the most populous countries in theseregions, namely SEA, WECA and MENA. Our subscriber base has grown from approximately 12.5 million as at31 December 2006 to 232.6 million as at 30 June 2016.

Moreover, we believe that most of our operations have benefited from the positive relationships and co-operationwe have built with local regulators, due to the shared vision of increasing teledensity in the countries in which weoperate. We believe we have acquired adequate spectrum across our markets to meet our current needs and caterfor future growth requirements. This in turn is expected to reduce our capital expenditure requirements allowingus to offer lower cost services and to grow our customer base across Africa.

Extensive telecommunications network and strong network quality

We continually enhance our market and competitive position through our on-going investment in infrastructurewith R29,611 million, R25,406 million, and R30,164 million capital expenditure for 2015, 2014 and 2013,respectively. In 2015, we rolled out 3,116 2G, 7,891 3G sites and 5,241 LTE sites, increasing coverage, usageand supporting faster data speeds on our 3G networks. We rolled out a further 873 2G, 3,660 3G, and 2,691 LTEsites and 1,132 km of long-distance fibre in the six months ended 30 June 2016. The efficient execution of ourcapital expenditure programme improves network quality, coverage and capacity, and facilitates higher voice anddata traffic helping to ensure that we remain competitive and are able to roll-out data solutions and digitalservices beyond traditional voice offerings. We also believe that our network quality is among the strongest inAfrica and the Middle East. Our network is supported by equipment suppliers that are at the forefront oftechnologies that are crucial to our business.

Strong distribution network

Accessibility through an extensive distribution network and a simple activation process is key to customerrelations and growth, particularly for pre-paid subscribers, who at 30 June 2016 comprise over 97% of oursubscriber base. Our products are sold in MTN retail outlets and through numerous wholesalers, many of whichhave long term relationships with us. For example, in South Africa we have over 400 retail stores, including 100directly-owned stores, and in Nigeria at 30 June 2016 we operated through 78 trade partners who distribute ourproducts and services through their distribution channels to approximately 505,000 registered retailers. Webelieve that our strong distribution network is a critical part of our business and a key reason for our largecustomer base. Additionally, we have introduced convenient services such as electronic recharge options as wellas augmented our distribution base to increase customer access to our services.

Experienced and diversified management team with enhanced structure

We have a strong management team with extensive telecommunications industry experience and a track recordof operational excellence that we believe is necessary to successfully lead the development of our business. Werecently reviewed our operating structure with a view to strengthening operational oversight, leadership,governance and regulatory compliance across the MTN Group bringing in a new CEO and organising thebusiness according to regional clusters: West and Central Africa, South and East Africa, and Middle East andNorth Africa – with a senior executive responsible for each regional cluster. We also re-instated the position ofGroup COO. Both the regional senior executives and the COO report directly to MTN’s CEO. We expect thatthese changes will improve our ability to coordinate our businesses, while ensuring we are also able to locallymanage our operations, which we believe has been key to our growth. We are also in the process of searching fora new MTN Group CFO and have appointed an acting CFO while the process is ongoing. We believe that thecomposition and organisation of our management team puts us in a strong position to successfully implement ourgrowth strategy, as well as to focus on improving our operating performance while retaining appropriate levels ofoversight of our operations.

Strong long-term financial profile

The combination of our competitive strengths has enabled us to deliver strong long-term financial performance.Our revenue was R79,115 million for the six months ended 30 June 2016 as compared to R69,304 million for thesix months ended 30 June 2015, R147,063 million in 2015 as against R146,930 million and R137,270 million in2014 and 2013, respectively. We have retained consistently high EBITDA margins through efficient cost

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management and sustainable growth, including in challenging environments. We achieved EBITDA margins of37.1% (excluding the effect of the Nigerian Regulatory Fine or 23.9% including the Nigerian Regulatory Fine)and 44.3% for the six months ended 30 June 2016 and 2015, respectively, and 46.5% (excluding the effect of theNigerian Regulatory Fine or 40.2% including the Nigerian Regulatory Fine), 49.8% and 44.0% for the yearsended 31 December 2015, 2014 and 2013, respectively.

Detailed information on the behaviour of 233 million customers to leverage for expansion into new revenuestreams

We collect detailed information and data on the usage behaviour of our 233 million customers. For example, weare able to collect financial data, travel patterns, application usage and website surfing statistics. Utilising thisinformation, we are able to roll out new data and digital service offerings to our customers as a way of increasingour sources of revenue.

Strategy

The following table sets forth our five main strategies in order to deliver a “bold new digital world”:

Creating andmanaging stakeholder value

Creating a distinct customerexperience

Driving sustainable growth

Transforming the operating model

Innovation and best practice

Strategic Themes Strategic priorities over three to five yearsSustainable shareholder returnsResponsible corporate citizenshipCreating a great place to workInstilling sound governance and values

Brand LeadershipCustomer experienceCustomer analyticsNetwork quality and coverage

MTN in digital spaceAdjacent sectorsEnterprise strategyVoice and data evolutionM&A and partnerships

Asset optimisationSupply chain managementProcess standardisation and optimisation

InnovationBest practice sharing

The key components of our business strategy are:

Driving sustainable growth

We intend to continue to exploit the benefits that our scale provides by ensuring that we are at least a number oneor number two player in each of the markets in which we operate. We aim to promote connectivity acrossdeveloping markets and seek to do this by expanding into new markets where we believe there is potential forprofitable growth and where such markets could add value to our operations. Through various auctions, we haveacquired spectrum across multiple frequency bands in order to capture more growth. We aim to continueexpanding our service offerings by growing our 3G and 4G coverage. Further, we continue to exploreopportunities to expand our product offering outside of traditional mobile voice by increasing our presence indata provision and the digital space by leveraging technology and maximising the opportunity of low internetpenetration in our markets as consumer spending on data and digital services becomes increasingly important.

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We intend to achieve this by delivering additional services through the internet. This will be supported by ourinvestments in Africa Internet Holdings, Middle East Internet Holdings and Iran Internet Group which will allowus to increase our internet offerings particularly in the realm of e-commerce, making shopping more intuitive,cost-effective and enjoyable across Africa and the Middle East. We have also continued to roll-out MTN MobileMoney, a service which offers customers traditional bill payment and money transfer services, and otherfinancial services products to our customers, many of whom have limited access to traditional banking, alsoremain key priorities. In 2015, we increased our MTN Mobile Money registered subscribers to over 34 millionfrom 18.4 million in 2013. We are not only focused on acquiring subscribers for these services but also onincreasing the volume of transactions and expanding our product range to include short-term insurance, ATMwithdrawals and remote payments for airline tickets. As we expand and adapt MTN Mobile Money and otherfinancial services to the local markets in which we operate, we expect these services to make a substantialcontribution to our revenue growth as a result of their potential to address the lack of traditional financial servicesin many of the countries in which we operate.

We plan to execute this by investing in network improvements in high-value, urban areas first as well as buildingout fibre-optic networks. Through our digital services offerings, we aim to increase the number of customersusing data services as well as increase the amount of data consumption.

Additionally, we are continually evaluating investment opportunities to grow our brand and our offerings in newand existing markets, which may involve significant M&A, joint venture or partnership transactions. In the past,we have looked at implementing strategically important transactions in various jurisdictions including Africa, theMiddle East and South-East Asia including the Indian Subcontinent, and we continue to evaluate opportunities inthese and other areas. Such potential transactions could have a significant impact on our business and the scale ofour operations. In evaluating investment opportunities, we do not focus solely on having a majority equity orvoting interest in international opportunities (although that is an important consideration), but also considerminority stakes. In doing so, we have regard to the experience of potential partners, control over management,strategy, operations and the board of the investee, which can drive value creation, and give us the ability to takeadvantage of synergies.

Furthermore, as we operate in emerging markets with relatively low internet penetration, we are able to reviewand proactively respond to the challenges faced by telecommunications providers in more mature markets. Forexample, responding to the declines in voice and SMS revenue (due to free messaging applications, voice overinternet protocol and OTT players) by ensuring that we continually evolve our strategy and provide the digitaland financial services to ensure continued sustainable long term growth.

Creating and managing stakeholder value

We intend to maximise value for our stakeholders, including our investors and employees. By ensuring that ouroperations are managed cost-effectively and efficiently in terms of operating costs, financing costs and capitalexpenditures we aim to generate sustainable returns for our stakeholders. In 2015, we made solid progress on costoptimisation across our business. A number of initiatives have already resulted in cost benefits. These includecentralising procurement, reducing costs in our distribution network through the renegotiation of contracts inSouth Africa, which has resulted in lower distribution costs and the realignment of our commission structure inNigeria, which has resulted in lower commission costs.

We recognise the importance of properly skilled employees who are motivated by their work. We therefore striveto be an employer of choice to attract candidates and retain key staff. We aim to foster an inclusive and dynamicworking environment to enhance productivity in our workforce. We understand that the diversity of our people isa constant source of inspiration, creativity, learning and innovation. We believe that the health, knowledge, skills,experience, drive and inventiveness of our employees are key to our success. Our employees are offeredcompetitive pay and compensation benefits. In 2011, we launched “The MTN Deal”, our value proposition to ouremployees. It represents our pledge to our employees to develop their careers and improve their overall employeeexperience beyond reward and recognition. In addition, we launched the MTN Academy in 2008. The MTNAcademy provides a standardised approach to employee learning and development initiatives across the marketsin which we operate. Employees are actively encouraged to continuously look for opportunities to improve theircapabilities and skills through extensive training available digitally, face-to-face and from other sources suppliedby MTN Academy, or from external accredited and reputable organisations. On a regular basis, MTN Academycompiles internal reports for management on the nature of training undertaken by employees, amount of timespent on each module, and pass-rates. Certain elements of training are mandatory for all employees. Directorsalso receive regular and informative updates and training on legislative, regulatory, and any other

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business-related changes throughout their tenure. They are also encouraged to discuss their development needswith the chairman, and are provided with training where necessary. In 2015, we spent R223 million on thetraining of our employees and we intend to continue investing in our employees.

We aim to be a good corporate citizen and continue to invest in numerous community projects across thecountries in which we operate by partnering with both public and private organisations to implement sustainabledevelopment projects and make a positive and lasting impact. For example, we have established MTNFoundations in 15 of the countries in which we operate to invest in education, health, economic empowermentand areas of national priority.

Furthermore, we understand that governance and control are critical to maintain profitability and businesscontinuity. We strive to maintain and enhance sound governance practices that reflect prevailing internationalgovernance trends and the evolving legislative landscape. These practices are founded on values ofresponsibility, accountability, fairness and transparency. To this end in 2015 we reviewed our operating structurewith a view to strengthening operational oversight, leadership, governance and regulatory compliance across theMTN Group bringing in a new CEO and organising the business according to regional clusters: West and CentralAfrica, South and East Africa, and Middle East and North Africa—with a senior executive responsible for eachregional cluster. We also re-instated the position of Group COO. The regional senior executives and COOreporting directly to MTN’s CEO.

Creating a distinct customer experience

We intend to further strengthen our market positions while maintaining profitability by investing in andimproving our current offerings to increase customer satisfaction and experience. Our brand has won numerousaccolades in recent years demonstrating our success in this endeavour including being named the most admiredand most valuable African brand in the 2015 Brand Africa 100 listings. In this way, we aim to enhance our brandimage, retain existing subscribers and appeal to new customers. In 2012, we launched “Perfect 10”, a projectdesigned to enhance our service by identifying gaps in our customer experience and working to rectify them.Perfect 10 aims to provide customers with a seamless experience of our network, products and services. Suchcustomer focused initiatives are designed to ensure that we adequately service and grow this profitable segmentof our customer base. Evidencing the strength of our brand and our success in providing a high quality customerexperience, in 2015 we registered 9 million new subscribers to our network (this figure was affected by thedisconnection of subscribers in Nigeria related to registration requirements). In the six months ended 30 June2016, our subscriber growth was offset by the further subscriber disconnections in Nigeria, Uganda andCameroon, which led to the number of subscribers remaining flat at 30 June 2016 as compared to 31 December2015.

We aim to continue providing an intuitive and appealing customer experience through easy access to ourproducts via our numerous points of sale, increasing our direct sales forces as well as our range of affordableprepaid and postpaid offerings and retaining and continuously improving our simple activation processes.Accessibility through an extensive distribution network is key to customer retention, innovation and growth inthe prepaid mobile market. Further, we aim to continue providing service options directly tailored to the uniqueneeds of our customer base, such as per-second billing, low increment credit top-ups and alternate ways tocontinue talking when customers run out of balance via our “MTN XtraTime” offering, which increasesflexibility for our lower income customers. We have also launched products for customers who operate 2G,non-smartphones in an effort to migrate them to higher value data services.

In addition, we are committed to providing our customers with the most technologically advancedtelecommunication services appropriate to their market by investing in and upgrading our infrastructure in orderto improve the quality, coverage, as well as reliability, of our services and provide customers with reliable dataaccess, additional digital and financial services and complementary products and services based on marketmaturity and need. In 2015, our capital expenditure was R29,611 million and included expanding 3G and LTE tocater to the increasing demand for data services.

Transforming our operating model

We continue to transform our organisation through asset optimisation and increasing operational efficiencieswhich will help drive the delivery of sustainable returns. We have been rolling out “Project Next!”, a back-officetransformation initiative for supply chain, human resources and finance functions that aims to centralisetransactional activities, implement standardised processes, and optimise and consolidate our technology

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functions. This will help to ensure that our operations can focus on their core activities. In addition, centralisedprocurement continues to realise gains with the establishment of a procurement company in Dubai and thedevelopment of a blueprint for our supply chains. We realised meaningful cost reductions in our distributionnetwork through the renegotiation of distribution contracts in South Africa and the realignment of ourcommission structure in Nigeria leading to lower commission costs. In addition, the monetisation of our towerassets and other passive infrastructure is a key focus and we continue to explore tower transactions on an on-going basis. To date, we have completed tower transactions in Nigeria, Uganda, Ghana, Cameroon, Ivory Coast,Rwanda and Zambia. In 2015 we completed the transfer of the tower portfolio of MTN Nigeria (approximately9,000 towers) to IHS realising profits of R8,233 million in 2015 and R7,329 million in 2014. As thetelecommunications environment continues to evolve towards increased data communication and as competitionintensifies, our returns will come under pressure. We intend to continue to embed asset optimisation andefficiencies, including supply chain optimisation and operational standardisation into the business to ensure thatwe have the most effective base for future growth.

We will also continue to design and implement market-specific strategies in each of the individual markets inwhich we operate in order to maximise value from our market segments by continuing to undertake a systematicapproach involving dedicated analytics and research to develop an optimal pricing structure for our products andservices. These strategies are tailored to the particular conditions of each market, such as the stage ofdevelopment, the cultural and financial characteristics of the market, demand for particular products and servicesand our own competitive position in that market.

Innovation and best practice

We believe that our innovative digital services and our customer focused solutions underpin our strong marketposition. We aim to leverage our experience within the markets in which we operate to anticipate the needs ofour customers, and to develop innovative products and services tailored specifically to each of our markets. Forexample, our operating companies have recently introduced a number of innovative products and services to ourmarkets, including per-second billing, the ability for our customers to transfer airtime and SMS credits to oneanother and to borrow credit from us. In addition, we seek to partner with producers of VAS and OTT providersin order to ensure that we continue to remain innovative and relevant as technology and its use continues torapidly evolve.

Further, to the extent applicable, we seek to transfer best practices that we develop in our markets to all of ouroperations to ensure operational cohesion and best practices generally across our Group. Additionally, strategiesdeveloped at MTN Group are distributed to and implemented by our operating companies. We intend to roll-outtried and tested initiatives more broadly across our operations to enhance brand visibility, maintain customercontact and expand the services we provide to our customers.

Products and Services

Description of our voice and data technology

Our mobile network is designed using 2G, 3G and 4G LTE technologies (with speeds of up to 100 megabytes persecond (“Mbps”)). Our network is supplied by leading telecommunication equipment manufacturers. We have2G-enabled networks and 3G-enabled networks across most of our operations. 4G LTE technologies areavailable in some of the markets in which we operate, including South Africa, Nigeria, Cameroon, Iran, Ugandaand Zambia.

Our 2G technologies have enabled us to offer users voice services, SMS, multimedia services (“MMS”), VASand data services. We deploy general packet radio service (“GPRS”), enhanced data rates for GSM evolution(“EDGE”) and EDGE Evolution, with speeds of up to 1Mbps on our 2G network. We offer certain services, suchas MTN Mobile Money, to 2G customers without smartphones.

Our 3G technologies have enabled us to offer our users a wide range of advanced services, including dataservices, such as wireless broadband, while achieving greater network capacity through improved spectralefficiency. In those markets in which we use 3G technology, 3G enables us to offer new services to our users likevideo calls, mobile broadband data, and a full internet experience with richer mobile content. Our 3G networksalso give us more capacity to provide data and voice services than our 2G networks using our current spectrum.Our 3G networks are normally co-located with existing 2G infrastructure allowing faster and cost-effectivenetwork deployment. We have also expanded our 3G networks using high-speed uplink packet access(“HSUPA”), high-speed downlink packet access (“HSDPA”) and evolved high-speed packet access (“HSPA+”)technologies with speeds of up to 42Mbps.

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We have implemented a cost-efficient radio access network which aims to minimise the impact of networkinfrastructure on the environment by utilising extended cell features that require fewer base stations per cell, aswell as technologies that conserve energy by shutting down hardware during periods of low mobile traffic.Where possible, we intend to use the same 2G and 3G base stations for our WiMax network, which will add tothese cost and environmental benefits by requiring fewer towers and saving energy by using less power. Inaddition, we have embarked on a drive to reduce our dependency on diesel by introducing hybrid power solutionsto replace generators and connecting rural base stations to the national power grid.

Our 4G technologies are available in some of the markets in which we operate, such as South Africa, Nigeria,Cameroon, Iran, Uganda and Zambia. These technologies have allowed us to offer faster upload and downloadspeeds as compared with our 3G technologies. 4G enables us to offer our users fast access to high definitionvideo streaming, video conferencing, multiple chatting, instant uploading of photos and other data intensiveapplications. We believe that 4G will support a “data revolution” across the markets in which we operate, drivingfundamental changes in lifestyles, business and society and will also support economic growth in rural areas byenhancing the reach of e-governance, e-health and e-education services, and will be a significant source ofrevenue in the long term.

We continue to invest in various transmission and radio technologies, including international undersea cables.We have made multiple investments in cables from the east and west coasts of Africa terminating in Europe andthe Middle East.

In addition, we continue to explore new undersea projects where commercially beneficial. We have signed amemorandum of understanding to form a consortium, for constructing the new Africa-1 submarine cable system,as one of five international telecom companies (the others being Saudi Telecom Company, Telecom Egypt,Telkom SA and PCCW Global) with other carriers expected to join at a later stage. The project is expected tocomplement existing cable infrastructure and will ensure capacity requirements for Africa’s digital broadbandfuture in addition to providing better quality of service. Since 2008, we have invested approximately US$232million in broadband submarine and international backhaul terrestrial fibre-optic cables making us one of thelargest investors in information and communication capacity across the continent.

Voice Services

Overview

Our voice services include local, national and international calls. In addition, we provide VAS including thefollowing:

• dynamic tariffing services that offer discounted call rates based on available network capacity (“MTNZone”);

• services that allow several subscribers to share the same mobile phone with their own personal accounts andwithout having to swap subscriber identity module (“SIM”) cards each time (“MTN Virtual”);

• services that allow subscribers to borrow airtime which is then recouped when they next recharge (“MTNProlongation”);

• services that allows subscribers to send and receive airtime to or from each other, either directly from asubscriber’s mobile phone or through a message request (“Me2U”);

• MMS services;

• SMS services;

• auto top-up services (“MTN Auto Top-Up”);

• ring-back;

• voicemail;

• missed call notification; and

• Blackberry services.

Voice services has an average population penetration rate of around 50%-60% (with the lowest penetration ratebeing 25% in South Sudan and the highest being 164% in South Africa) in our markets and while we believe thatvoice communication services will remain a significant revenue generator for us in the medium term, we expect

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data to be an increasingly important revenue generator. We also expect data and financial VAS to play a role indifferentiating us from our competitors and increasing the loyalty of our mobile subscribers, notably among thosein the higher customer-value segments. We are continually looking at VAS opportunities in order to grow ourportfolio.

Plans

We operate a predominantly prepaid business with postpaid constituting a relatively small component of ourrevenues. As at 30 June 2016, approximately 97% of our subscribers were on prepaid plans and approximately3% of our subscribers (primarily in South Africa and, to a lesser extent, Cyprus) were on postpaid plans. In mostof our markets we do not subsidise handsets, but remain involved through partnerships with handset retailers.

• Prepaid Mobile Services

Prepaid services require the payment of a non-refundable subscription fee (that includes connection charges anda charge for a SIM card). Prepaid customers pay in advance for a fixed amount of airtime and services andrecharge their account when they run out of credit. There are various methods through which customers canpurchase airtime, including through the purchase of scratch cards or vouchers that provide a pin that the customerenters into their phone in order to download the airtime, or through their MTN Mobile Money account. We alsoregularly offer both SIM card and airtime promotions to our customers. The promotions are tailored to meet thespecific needs of our customers within each of the markets in which we operate.

• Postpaid Mobile Services

Postpaid services require the customer to pay an initial one-time non-refundable connection fee and followingwhich the customer is billed on a monthly basis (including a monthly subscription charge which is dependentupon the plan to which the customer subscribes). We offer a number of different plans, depending on theindividual needs of the customer, which include smartphone plans offering discounted smartphones. We alsooffer specially designed postpaid tariff plans to our business customers and different bundled offerings dependingon the size of the organisation. We also offer add-on services, including tariffs to cater to the data and callingneeds of the customers. The business packages can also be bundled with smartphones.

Data

Our data services include all data communications services, including 3G and 4G LTE data bundles, BlackBerryservice and other value-added services for mobile subscribers. We offer separate data plans to both our prepaidand postpaid voice subscribers.

Our mobile data service offerings focus on mobile broadband offerings over our 3G and 4G networks. Thecustomer can use mobile broadband either on a prepaid basis or under a mobile data postpaid subscriptionpackage. Data services are an increasingly important contributor to our mobile business, as digitisationaccelerates rapidly across our markets.

Digital Services

Overview

Traditional voice and data services once defined the telecommunications industry, but they are now just two of agrowing range of services. We aim to expand beyond our core offerings by leading the delivery of digital accessacross the emerging markets in which we operate, as consumer spending on data and digital services becomesincreasingly important. The need for a broader digital offering has led us to refresh our vision and mission andrefine our strategic objectives to ensure that we maintain our leading position in communications in emergingmarkets and sustain a business model that maximises value for all of our stakeholders.

The cornerstone of our digital services offerings is our mobile content solutions that we offer our subscribers.

Mobile Content

We provide our customers with a variety of mobile content solutions, including entertainment, lifestyle andmusic offerings. “MTN Play” is a content portal that provides a variety of entertainment and informative

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services; “MTN Opera Mini” is a service that allows customers in certain markets to access the web from theirmobile phones at lower costs and faster speeds; “MTN Afrinolly” allows subscribers to receive the latestNollywood movie trailers and music videos to their phone; “MTN Magic Voice” allows customers to change thesound of their voice during a call; “MTN Mobile News” provides customers with the most up to date local andinternational news, sports news, entertainment news, fashion news and finance news and “MTN Pulse” offerscustomers 10MB of free data for seven days after a top-up of a certain amount, as well as reduced call and SMSrates to other MTN Pulse subscribers. In addition, mobile messaging, including basic SMS and MMS enablecustomers to send various media including music, photographs and videos from their phones. We also offervarious services for easy and fast navigation or requests (such as balance enquiries or call-me-back requests).

Financial Services

The majority of the countries in which we operate are cash economies with most retail transactions beingconducted in cash and with limited access to traditional banking services. In view of these market dynamics, weoffer our customers, through “MTN Mobile Money”, the ability to use their mobile phone to pay utility bills, payfor goods and services from a range of businesses, play the national lottery and transfer funds to any other in-country customer on our network. We have rolled out MTN Mobile Money to 14 markets across our network,including Nigeria. There is significant potential for our MTN Mobile Money services, as there are approximately2 billion people across the world who do not have access to formal or semi-formal financial services (source:World Bank—April 2015). To send money to anyone within the MTN network using their mobile phone,subscribers deposit cash with an MTN agent at an MTN point of sale. Once the subscriber has received a textmessage confirming the deposit, the subscriber can access the MTN Menu on their phone to transfer money toanother customer. The recipient of the money transfer can withdraw cash from an MTN point of sale. To paybills, subscribers select the relevant utility company from the MTN Menu on their phone and enter their uniquereference number and the amount. The subscriber then enters a personal pin and confirms payment.

We are not only focused on acquiring subscribers for our financial services but also on increasing the volume oftransactions and expanding our product range to include micro lending, short-term insurance and ATM services.

Enterprise Services

We are a provider of ICT enterprise services to corporate and government customers. We deliver end-to-endtelecommunications solutions to our business customers by serving as the single point of contact for all theirtelecommunication needs. ICT enterprise services involve the combination of network, hardware, software andservice solutions together with support functions to achieve a customer’s business objectives or provide aparticular business solution. We provide a full suite of ICT enterprise services, including corporate datasolutions, satellite connectivity, infrastructure, networking, video-conferencing, system security and cloudcomputing. MTN Business Cloud, which is available across all of our operating companies, offers cloud-basedinfrastructure, platforms and databases as services. We own a state of the art national and international long-distance network infrastructure, including submarine cable, fibre connectivity and satellite connectivity, enablingus to provide connectivity service within the markets in which we operate. Our ICT enterprise services aredesigned to manage cost, improve efficiencies and deliver consistent quality to our business customers. Weprovide ICT enterprise services in South Africa, Nigeria, Botswana, Zambia, Namibia, Kenya, Uganda,Cameroon, Ghana and Ivory Coast.

We aim to become a business partner to our enterprise customers by developing solutions tailored to customers’specific needs rather than acting as a commodity services provider. We have a dedicated business solutions unitthat works closely with enterprise customers across our operations to act as a communications consultant for ourcorporate and SME clients.

Operations

Overview

As we are present in 22 diverse markets, with varying cultural norms and levels of economic development, weoperate a decentralised business model with significant operational discretion delegated to management at theoperational level. However, we retain supervisory oversight at the Group level over the operating companiesthrough our reporting structure which clusters operations according to region – West and Central Africa, Southand East Africa and Middle East and North Africa with a senior executive responsible for each cluster. The CEOsof MTN South Africa and MTN Nigeria have seats on the Group executive committee. This approach is designed

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to ensure that our business practices are appropriately tailored to the needs of each of our markets while retainingcentralised oversight of all of our operations. The Group’s central management (“Group Management”) overseesthe activities of our operating companies and is responsible for, amongst other things, the adoption of strategicplans, the monitoring of operational performance and management, and the development of appropriate andeffective risk management policies and processes. However, the implementation of Group policies andinitiatives, as well as the day-to-day operations are left to the individual operating companies and theirmanagement, which carry out their activities within a general operational framework implemented at the Grouplevel. Further, pursuant to certain guidelines, it is compulsory for operating companies to escalate material issuesto Group Management to ensure a cohesive and effective overall Group approach. The Group executivecommittee meets once a month to discuss any material issues.

Distribution

Each operating company is responsible for its distribution activities and manages the relevant relationships in thecountries and regions in which it operates. We generally sell airtime to regional wholesalers (which arecommercial providers of mobile services with distribution networks across Africa and the Middle East). Thesewholesalers subsequently sell the airtime on to smaller distributors who then sell to mass resellers (which areregistered agents that purchase our products such as SIM cards and payphone cards in bulk and distribute themacross a specified geographic area) who proceed to sell to small businesses, such as grocery and conveniencestores. It is from these end points that customers purchase airtime. For example, in Nigeria as at 30 June 2016 weoperate through 78 trade partners who distribute our products and services through their distribution channels toapproximately 505,000 registered retailers. In South Africa we have long-standing relationships with largeretailers to sell our products and services (including handsets) and we have over 400 retail outlets, including 100directly-owned stores.

Marketing

Each operating company is responsible for marketing its products and services in the countries and regions inwhich it operates, based on campaigns introduced by MTN Group, which are then rolled out to the operatingcompanies. As the number of products and services they offer continues to grow, we believe that increasingcustomer awareness of these new products is critical to our success. Each operating company seeks to increaseconsumer awareness of its new products and services, build customer loyalty, differentiate its services from thoseof competitors, enhance customer experience and improve ease of use.

Our operating companies track the spending habits of their subscribers and tailor their marketing approachaccordingly to each of the following customer and demographic segments: professionals, business (includingSME and corporate clients), youth and the mass market. They market their network primarily by emphasisingwhat we believe to be a superior network quality, coverage and capacity (relative to competitors) to all customersegments (though more affluent customers tend to respond more to network quality and coverage concerns) andtailor the advertising of certain services to specific demographics, such as music and video services to the youthsegment. They employ traditional advertising methods including television and radio advertising, sponsorship ofsports teams and the purchase of billboard space in prominent locations. Additionally, they employ more directedmarketing, particularly in respect of the mass market which entails a more considered approach. As mass marketcustomers (the vast majority being prepaid customers) are generally more sensitive to price, they employ targetedmarketing and promotion campaigns (such as discounts and bundle options) to individual subscribers (forexample via SMS) and they regularly refresh their promotional offers to ensure that they continually stimulateand engage their subscribers and prompt them to purchase airtime, data or additional services. In addition, ifcustomers are inactive for a period of time, they send them tailored promotions in which they offer them freeairtime if they reactivate their service by topping-up. Depending on the response of the customer, they graduallyprovide these customers with further incremental discounts and promotions.

Customers

We service the following four main customer segments: professionals, business (including SME and corporateclients), youth and the mass market. The professionals segment comprises our more affluent non-institutionalcustomer base. These customers tend to be less price sensitive and place an emphasis on the quality of the servicethat we provide them. The business segment constitutes SME and corporate clients, amongst others. Our businesscustomers place an emphasis on our ability to provide them with complete end-to-end communications solutions.The youth segment typically includes students. The mass-market captures all of our other customers. Mass-market customers tend to be more price sensitive than our other customer segments and are also more receptiveto promotional campaigns.

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Pricing

We generally price our services at a slight premium to our competitors as our operational philosophy is centredon providing our subscribers with higher network functionality as compared to our competitors, includingnetwork quality, coverage and capacity.

Our tariff structure differs between postpaid and prepaid plans, with prepaid customers subject to higher tariffs tooffset the absence of monthly subscription fees. In addition, our pricing is highly variable and depends on thecountry of operation, the type of plans on offer and our ongoing need to refresh our pricing to respond tocontinually changing market dynamics.

Postpaid Customer Service and Billing

Our billing operations are fully automated using telecommunications industry specific billing applications. Thebilling of postpaid voice services is performed using a single application while the billing of data services isperformed using multiple applications.

Back Office Services

We have been rolling out “Project Next!”, a back-office transformation initiative for supply chain, humanresources and finance functions that aims to centralise transactional activities, enhance operational efficiencies,implement standardised processes, and optimise and consolidate our technology functions.

Competition

We compete against both national and international players within the markets in which we operate. We haverecently experienced more aggressive pricing competition from our competitors in respect of voice and dataservices as they seek to win market share. In the coming years we expect to see some consolidation in theindustry as a result of both economic and regulatory factors.

Regulation

The operation of telecommunications networks and the provision of related services are regulated to varyingdegrees by national, state, regional or local governmental and/or regulatory authorities. In order to comply withapplicable law, telecommunications regulations and the licences we are granted under such laws, we may berequired to obtain consents or approvals from regulatory authorities for certain activities, such as operating orowning our wireless networks and establishing the rates we charge our customers. For example, we cannot raiseour rates beyond a specified regulatory ceiling, unless the relevant regulator raises such ceiling.

The regulatory regimes in the countries in which we operate vary from market to market and are influenced byfactors such as population, economic development, geographical landscape, available technologies, customerpenetration rates, political factors, government, social and economic policy and the number of existingcompetitors.

We work with local regulators in each of the countries where we operate with a view to ensuring fair andefficient regulation that is appropriate to the particular characteristics of the relevant market. In every country inwhich we operate, we have a dedicated manager who continually liaises with the respective regulator to ensurewe maintain effective communication and an amicable relationship with the regulator. Our approach is aimed atproactive engagement with regulators and monitoring our relationship with the government, regulators andvarious stakeholders in the markets in which we operate. In addition to certain other organisational changes, weare in the process of establishing regulation compliance officers to work with the Vice Presidents and in-countryregulatory executives in order to strengthen our compliance and governance structure. See “Overview of theGroup—Interim results and Other Recent Developments—Other Recent Developments—OrganisationalChanges.”

MTN Nigeria has recently been fined N330 billion (the equivalent of R25.1 billion, translated at the 10 June2016 closing rate of R1 = N13.15) by the NCC in connection with the late registration of subscribers in Nigeria.For a further discussion, see “—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

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Key Markets

South Africa

Overview

We commenced operations in South Africa in 1994 after being awarded a mobile licence in the country in 1993.

In 2015 South Africa had the third largest economy in Africa and boasts an abundance of natural resources,well-developed financial, legal, commercial and communications sectors, and modern infrastructure whichsupports the efficient distribution of goods and services throughout the country. In 2015, South Africa’s GDPwas an estimated US$329 billion. Real GDP growth for South Africa for the last three years averaged 1.7% peryear, with approximately 2.2% growth in 2013, 1.5% growth in 2014 and 1.3% growth in 2015. South Africa’sGDP per capita has remained relatively flat in the last three years at $13,200 (source: CIA World Factbook).South Africa has a population of approximately 55.0 million people. Telecommunications is one of the fastestgrowing sectors of the South African economy, driven by strong growth in mobile telephony and broadbandconnectivity. In 2015, the telecommunications industry contributed approximately 4.6% of South Africa’s GDP(source: DataMarket).

For the six months ended 30 June 2016 we generated 25.1% of our total revenue, or R19,841 million, andEBITDA of R5,979 million from our operations in South Africa. In 2015, we generated 27.2% of our totalrevenue, or R40,038 million, and EBITDA of R13,370 million from our operations in South Africa. As at30 June 2016, we had approximately 29.8 million subscribers in South Africa, an increase of 16% since31 December 2013.

Strategy

Given the high mobile penetration rate of 164% in the South African market, we aim to continue to provide moredata and digital services to our customers with competitive pricing and promotions for all our offerings. We willcontinue to grow our ICT enterprise services, with a particular emphasis on fibre connectivity. We also intend tocontinue to invest in our network, particularly focusing on high-value urban areas, and extend our fibreinfrastructure to deliver fibre-to-the-home to gated communities and business customers.

Offerings

We offer postpaid and prepaid voice, data and digital products and services to our customers in South Africathrough 2G, 3G and LTE technologies. Our principal postpaid subscriber base is in South Africa and accountedfor 17% of our total subscriber base in South Africa as at 30 June 2016. Postpaid offerings consist of a variety ofvoice and data packages that include a handset, while prepaid services include a variety of innovative offeringssuch as discounted pricing, per second billing and free minute promotions. South Africa is the only market inwhich we subsidise the cost of handsets.

Competition

The South African mobile industry has become more competitive in recent years driving down rates offered byoperators.

As at 30 June 2016, there were three other main mobile network operators in South Africa: Vodacom SouthAfrica, Cell C and Telkom Mobile. As at 30 June 2016, we were the second largest mobile operator bysubscribers in South Africa with 32.3% of the market, behind Vodacom South Africa. Cell C and Telkom SouthAfrica are third and fourth, respectively (source: Group data).

Industry

For the twelve months ended 30 June 2016, the South African mobile communications market was valued atapproximately $10 billion with a total subscriber base of 95 million. Of total service revenue in the three monthsended 30 June 2016, voice revenue had a market share of 62% while data revenue accounted for the remaining38%.

As at 31 March 2016, South Africa had a mobile penetration rate of 164% with approximately 82% of thesubscribers being prepaid customers.

Vodafone-controlled Vodacom is the largest mobile operator, followed by us, Cell-C and Telkom’s mobilebusiness (source: Group data). The mobile sector is characterised by strong competition between the operators in

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the prepaid space as well as for high-end contract customers. MVNOs including Virgin Mobile are active in themarket, enhancing retail competition and affecting margins, which tend to be lower than in markets with a moretraditional emerging market profile. Like our competitors, we have focused on the development of mobilebroadband to deliver fixed-line equivalent internet access services. 3G HSDPA networks are well-deployed andVodacom, MTN, and Telkom have launched 4G/LTE services.

The South African mobile operators currently operate mainly in the frequency bands of 900MHz, 1.8GHz, and2.1GHz. The 800MHz band is considered crucial to the roll-out of extensive coverage of 4G/LTE services,especially in rural areas. LTE services are currently deployed by Vodacom and MTN in the 1.8GHz band (havingre-farmed some spectrum), and Telkom has also rolled out LTE services in the 2.3GHz frequency band.

Fixed-line penetration in South Africa stands at approximately 26%, in comparison fixed-line penetration ratesare approximately 61% for Eastern Europe and 60% for Western Europe (equally weighted average for thecountries considered; fixed-line penetration rate is defined as main telephone lines per 100 inhabitants). As at31 March 2014, the fixed-line sector is still dominated by Telkom with approximately 3.6 million access lines(source: Group data) and as at 30 September 2013, approximately 85% of the fixed-line broadband subscriberbase (source: Analysys Mason). We have started to extend our fibre infrastructure to deliver fibre-to-the-home togated communities and business customers; however, the current scope of these operations is limited.

All of the large South African telecommunications operators are also active in the IT services and enterprisesolutions segment. They compete with a number of international IT services players like Dimension Data (ownedby Nippon Telegraph and Telephone) and Deutsche Telekom’s T-Systems unit as well as local specialisedIT services players.

Regulation

Key Statutes and Licences

The Electronic Communications Act, 2005 (the “ECA”) is the primary legislation regulating the electroniccommunications sector, including telecommunications and broadcasting services. The ECA encompasses anumber of areas including licensing, spectrum, interconnection, rights of way, numbering, broadcasting,competition, universal service and consumer issues.

In addition to the ECA, there are other key pieces of legislation that regulate certain aspects of the sectorincluding the:

• Electronic Communications and Transactions Act, 2002;

• Competition Act, 1998 (“CA”);

• Regulation of Interception of Communications and Provision of Communication-Related Information Act,2002 (“RICA”);

• Consumer Protection Act, 2008; and

• Independent Communications Authority of South Africa Act, 2000, which established the industryregulator, the Independent Communications Authority of South Africa (“ICASA”).

ICASA is the regulatory authority responsible for, amongst other things, licensing the providers oftelecommunications and broadcasting services, and the persons who operate the electronic communicationsnetworks over which such services are provided. There are a number of key regulations published by ICASA thatgovern or regulate a range of areas relevant to the electronic communications sector such as the:

• technical standards for electronic communications equipment;

• consumer issues and electronic communications network standards;

• licensing processes and procedures;

• standard terms and conditions for class and individual licences;

• compliance reporting to ICASA;

• licence fees and contributions to the Universal Service and Access Fund (“USAF”), which funds projectsand programmes that strive to achieve universal service and access to ICTs by all South African citizens;

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• radio frequency spectrum;

• call termination rates and interconnection;

• facilities leasing; and

• numbering.

Under the ECA, ICASA can issue two types of licences, namely class and individual licences for the provision ofelectronic communications network services (“ECNS”) and electronic communications services (“ECS”).In 2008, ICASA converted nearly 400 former value added network services licences to ECNS and ECS licences.Less than 200 of the 400 former value added network services licensees that were converted are active/significantplayers in the current market.

In the ordinary course of business, licence applications for individual licences may only be made in response toan invitation to apply issued by the Minister of Communications (although, since the splitting of the Ministry ofCommunications in 2014, this will now be the role of the Minister of Telecommunications and Postal Services).ICASA has issued MTN (Pty) Limited with two licences, namely an Individual ECNS licence (“I-ECNS”) and anIndividual ECS licence (“I-ECS”). Our I-ECNS was issued for 20 years and our I-ECS licence was issued for15 years. In addition, MTN is the holder of a number of radio frequency spectrum licences.

Regulatory Costs

Our licence fee is 0.35% of revenue generated from licensed services and our contribution to the USAF is 0.2%of annual turnover (derived from the licensee’s licenced activities). These calculation methodologies areprescribed in regulations published by ICASA.

These amounts are in addition to the fees paid to ICASA for the utilisation of radio frequency spectrum on thebasis of a radio frequency spectrum licence. A radio frequency spectrum licence is required in addition to anyservice licence. Radio frequency spectrum licences are renewable every year, the cost being based onadministrative incentive pricing as detailed in the radio frequency spectrum fees regulations. The numbersassigned by ICASA currently incur no fees.

Competition Regulation

ICASA regulates the electronic communications industry in terms of competition matters in tandem with theCompetition Commission (which primarily has investigative powers), established under the CA, which regulatescompetition matters across all industries, including the electronic communications industry. An agreement hasbeen reached between ICASA and the Competition Commission defining their respective areas of jurisdictionand regulating interaction between them. The CA also establishes the Competition Tribunal with adjudicativepowers, and the Competition Appeal Court.

Anticipated Developments

The Minister of Communications was responsible for making policy and issuing policy directions to ICASA andfor making key regulatory decisions regarding licensing and spectrum. However, this remit changed when theMinistry of Communications was split into two separate ministries in 2014, namely the Ministry ofCommunications and the Ministry of Telecommunications and Postal Services. Pursuant to a proclamation issuedby the President of South Africa on 16 July 2014, the administration, powers and functions entrusted by the ECAwere transferred from the Minister of Communications to the Minister of Telecommunications and PostalServices.

The Department of Communications developed a broadband policy in December 2013, with the intention toprovide broadband access to all citizens by 2030. It is anticipated that the Minister of Telecommunications andPostal Services will issue a policy directive to ensure that high demand broadband spectrum is assigned tooperators. On 23 May 2014, prior to the President of South Africa’s proclamation, the Department ofCommunications issued a statement on broadband radio spectrum policy directives in which it was indicated thatthese policy directives are anticipated to be published in October 2014. The assignment of spectrum must be on afair value and competitive basis and ensure the viability of possible new entrants, whilst encouraging competitionand taking into account broader interests of existing licence holders. The National Broadband Advisory Councilwas launched in March 2014, and comprises representatives and experts from government, business and civilsociety who will review broadband policy on an ongoing basis.

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Nigeria

Overview

We commenced operations in Nigeria in 2001 after we acquired GSM 900MHz and 1800MHz licences.

In 2015, Nigeria had the largest economy in Africa. In 2015, Nigeria’s GDP was an estimated US$490 billion.Real GDP growth for Nigeria for the last three years averaged 4.8% per year, with approximately 5.4% growth in2013, 6.3% growth in 2014 decreasing sharply to 2.9% growth in 2015 primarily as a result of the global slumpin oil prices. Nigeria has also experienced a significant fall in value of the Naira since its link to the US Dollarwas severed in June 2016 which is anticipated to lead to increased inflation in the short term and a more stablemacroeconomic environment in the medium to long term. Nigeria’s GDP per capita has increased in the last threeyears, from $5,900 in 2013 to $6,100 in 2015 (source: CIA World Factbook). Nigeria is also the most populouscountry in Africa, with its current population estimated to be around 180 million, and is now the largest mobiletelecommunications market in Africa, with mobile subscribers estimated at more than 140 million as at April2015 (source: Nigerian Communications Commission). In 2013, Nigeria overtook South Africa to become ourlargest contributor of revenue and in 2015 accounted for 35.3% of total revenue for the year. We see Nigeria as akey market and intend to continue to maintain or increase our market share there despite the recent disconnectionof 6.7 million subscribers during 2015 and a further 4.5 million subscribers in the six months ended 30 June 2016whose registration documents were considered to be incomplete. In 2013, the telecommunications industrycontributed approximately 2.9% of Nigeria’s GDP (source: DataMarket).

For the six months ended 30 June 2016, we generated 36.6% of our total revenue, or R28,941 million, andEBITDA of R14,421 million from our operations in Nigeria. In 2015, we generated 35.3% of our total revenue,or R51,942 million, and EBITDA of R27,504 million from our operations in Nigeria. As at 30 June 2016, we hadapproximately 59.0 million subscribers in Nigeria, an increase of 4% since 31 December 2013. Nigeria is ourlargest market in terms of number of subscribers, revenue and EBITDA contribution to the Group. We continueto benefit from our first-mover advantage and extensive investments we have made in our network in Nigeriaincluding improving data network speeds in key cities, which has recently led to better network quality. At theend of December 2015, we had 11,214 2G and 4,856 co-located 3G sites in Nigeria. We also had the largest fibrenetwork with more than 18,000 km of fibre across the country.

Strategy

At the end of December 2015, the mobile penetration rate in Nigeria was 83%. As mobile penetration increaseswe aim to grow our data and digital businesses. The implementation of these goals will further enable us to targetmore affluent customers with greater spending power with our wide range of data and digital service offerings.

Offerings

We mainly offer prepaid voice, data and digital services through 2G and 3G technologies. Our financial serviceoffering, “Diamond Yellow”, in partnership with Diamond Bank Plc, provides our customers with a relativelysafe and easy means of opening and operating a full bank account through the convenience of their MTN mobilephone. MTN Nigeria acquired Visafone Communications Limited, a provider whose 4G LTE licence and digitalTV spectrum will allow MTN Nigeria to roll out LTE services. In June 2016, we submitted a bid for the 2.6GHzband and were subsequently awarded the spectrum license as sole approved bidder. This spectrum will enhanceour LTE capacity in Nigeria.

Competition

We operate in a competitive environment in Nigeria and saw strong price competition in 2012, which lead to ratecuts on our network. This resulted in a significant increase in traffic volumes. As a result, our capital expenditurepeaked in 2013 to resolve network congestion. Since these price declines, the competitive environment has beenmore stable. However, competitors have recently been offering products at below-cost prices in order to gainmarket share.

As at 30 June 2016, we were first in terms of mobile market share by subscribers in Nigeria with 46.2% of themarket, ahead of Airtel, GloMobile and Etisalat, which ranked second, third and fourth, respectively (source:Group data).

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Industry

Nigeria has grown to become one of the largest telecom markets in Africa and within our footprint. There hasbeen rapid growth in the number of mobile users in Nigeria, partly in response to the shortcomings of thefixed-line network. In 2015, the total telecom sector contributed 8.5% to GDP. The mobile market accounts forapproximately 99.88% of the total subscriber base of 149 million; while fixed/fixed wireless subscribers accountfor 0.12% of the subscriber base. (source: NCC; CIA World Factbook).

As at 30 June 2016, Nigeria had a mobile penetration rate of 83%. We are the largest mobile operator withapproximately 59.0 million subscribers, followed by Bharti owned Airtel, Globacom and Etisalat controlledEMTS (source: Group data). The mobile sector sees strong competition between the four main mobile operators,focusing on promotional activity, service innovation and network differentiation. We have sustained our marketleadership for a number of years based on our market share which at the end of June 2016 was 46.2%.

Regulation

The telecommunications sector in Nigeria is under the general purview of the Federal Minister ofCommunications Technology (the “MoCT”), while the Nigerian Communications Commission (the “NCC”) isempowered by the Nigerian Communications Act of 2003 to regulate the industry. The MoCT is mandated tofacilitate universal, ubiquitous and cost-effective access to communications infrastructure, to promote theutilisation and development of ICT and to utilise ICT to drive transparency in governance. The NCC is mandatedto monitor all significant matters relating to the performance of all licensed telecoms service providers andpublish annual reports.

The powers of the NCC range from the issuance of various licences relating to the provision of communicationsservices, equipment and products to regulating competition, issuing spectrum and numbering resources to theindustry. Our Nigerian operation holds an 800 MHz licence (through our acquisition of Visafone), a 900MHzlicence, a 1800MHz licence, a 2600 MHz licence, a 3G spectrum licence, a unified access licence (includinginternational gateway), a WACS licence, a WiMax, 3.5GHz spectrum licence and a microwave spectrum licence.The NCC also has the power to enforce its mandate, with the aim of achieving fair competition, ethical marketconduct and optimal quality of service in the Nigerian telecommunications industry. Over the years the NCC hasdeveloped a body of subsidiary legislation and intervened to address issues such as competition regulation,mobile number portability, numbering and short codes, SIM registration, approval of infrastructure, technicalstandards of masts and towers as well as to resolve disputes between operators.

In 2013, under the stewardship of the MoCT, national telecommunications policy was revised to encompass thebroad spectrum of issues affecting the industry such as setting new targets and goals for the industry. The policyalso includes the National Broadband Plan designed to provide a roadmap for the implementation of broadbandin Nigeria.

In April 2013 the NCC declared MTN Nigeria dominant in the mobile voice market and it declared both MTNNigeria and Globacom ‘dominant’ in the wholesale leased lines and transmission capacity market. As aconsequence, both MTN Nigeria and Globacom are required to offer the same off-net tariff, as they offer on-net.The NCC also imposed a ban on promotions which was lifted in mid-September 2014. The NCC suspendedregulatory services to MTN Nigeria in October 2015 and withdrew its approval of new tariff plans andpromotions until tariff plans and promotions, that were linked to its determination of MTN Nigeria as a“dominant operator”, were removed from the market. This has been resolved and regulatory services haveresumed. We continue to engage with the NCC in respect of matters relating to the dominant operator ruling.Following the lifting of the ban and the revision of some targeted promotional offers to include off-network calls,there has been an improvement in subscriber growth in the Nigerian market.

MTN Nigeria’s performance has also been severely impacted by the disconnection of 6.7 million subscribersduring 2015 whose registration documents were considered to be incomplete. A further 4.5 million subscriberswere disconnected in the six months ended 30 June 2016. In addition in 2015 the NCC imposed a fine on MTNNigeria that is related to the late disconnection by MTN Nigeria of 5.1 million subscribers whose registrationdocuments were considered incomplete. The ultimate resolution of the fine includes a cash payment ofN330 billion (as at 10 June 2016, the equivalent of US$1.671 billion at the official exchange rate prevailing at thetime) to be paid over three years. For a further discussion, see “—Litigation, Arbitration and Disputes—NigerianRegulatory Fine.”

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We have agreed with the NCC to list MTN Nigeria on the Nigerian Stock Exchange and aim to do so during2017. The proposed listing is subject to suitable market prevailing circumstances and conditions as well asrelevant regulatory approvals.

Large Opcos

Our large opco cluster comprises Ghana, Cameroon, Ivory Coast, Uganda, Syria, Sudan and Iran.

Ghana

Overview

We commenced operations in Ghana in 1996 after our acquisition of Investcom LLC, which owned a mobileoperator in the country.

In 2015, Ghana had the 13th largest economy in Africa. In 2015, Ghana’s GDP was an estimated US$36 billion.Real GDP growth for Ghana for the last three years averaged 4.9% per year, with approximately 7.3% growth in2013, 4.0% growth in 2014 and 3.5% growth in 2015. Ghana’s GDP per capita has increased in the last threeyears, from $4,200 in 2013 to $4,300 in 2015 (source: CIA World Factbook). Ghana has a population ofapproximately 26.3 million people. Ghana entered the ranks of the continent’s middle income nations in 2010after nearly three decades of positive economic growth that helped to reduce poverty by successfully increasingaverage incomes (source: GlobalComms Database). This emerging middle class has a direct impact on thegrowing demand for consumer goods and services across the continent, including mobile phones andtelecommunication services. Mobile subscriptions totalled 35 million users (a subscription rate of 133 subscribersper 100 habitants). In 2013, the telecommunications industry contributed approximately 2.4% of Ghana’s GDP(source: StatsGhana; CIA World Factbook).

For the six months ended 30 June 2016, we generated 6.5% of our total revenue, or R5,165 million, from ouroperations in Ghana. In 2015, we generated 5.4% of our total revenue, or R7,903 million, from our operations inGhana. As at 30 June 2016, we had approximately 17.6 million subscribers in Ghana.

Competition

As at 30 June 2016, we were the largest operator in Ghana with 53.8% of the market share by subscribers.Vodafone Ghana ranked second, Millicom Ghana ranked third, Airtel Ghana ranked fourth, GloMobile Ghanaranked fifth and Kasapa ranked sixth (source: Group data).

Cameroon

Overview

We commenced operations in Cameroon in 2000 after our acquisition of state-run wireless operator CamTelMobile. The privatisation of the telecommunications industry and the introduction of competition in Cameroonprovided the catalyst for growth and development of Cameroon’s mobile market.

Cameroon has remained stable in a region marked by political and security crises. In 2015, Cameroon’s GDP wasan estimated US$28 billion. Real GDP growth for Cameroon for the last three years averaged 5.8% per year, withapproximately 5.6% growth in 2013, 5.9% growth in 2014 and 5.9% growth in 2015. Cameroon’s GDP percapita has increased in the last three years, from $2,900 in 2013 to $3,100 in 2015 (source: CIA WorldFactbook). Ghana has a population of approximately 23.7 million people.

For the six months ended 30 June 2016, we generated 4% of our total revenue, or R3,202 million, from ouroperations in Cameroon. In 2015, we generated 3.9% of our total revenue or R5,806 million, from our operationsin Cameroon. As at 30 June 2016, we had approximately 9.6 million subscribers in Cameroon.

Competition

As at 30 June 2016, we were the largest mobile operator in Cameroon, with 57.4% of the market share bysubscribers. Orange Cameroun was the second largest mobile operator by market share (source: Group data).

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Uganda

Overview

We commenced operations in Uganda in 1998 after we acquired a mobile licence in the country.

Uganda has a record of prudent macroeconomic management and structural reform. Real GDP growth forUganda for the last three years averaged 4.6% per year (source: CIA World Factbook).

For the six months ended 30 June 2016, we generated 3.5% of our total revenue, or R2,804 million, from ouroperations in Uganda. In 2015, we generated 3.5% of our total revenue, or R5,148 million from our operations inUganda. As at 30 June 2016, we had approximately 9.9 million subscribers in Uganda.

Competition

As at 30 June 2016, we were the leading mobile operator in terms of market share with 52.7% of the market bysubscribers. Airtel Uganda ranked second and Uganda Telecom Ltd. ranked third (source: Group data).

Ivory Coast

Overview

We commenced operations in Ivory Coast in 1996 after we acquired a 51% stake in Loteny Telecom, a mobileoperator in the country.

Following the end of more than a decade of civil conflict in 2011, Ivory Coast has experienced a boom in foreigninvestment and economic growth. Real GDP growth for Ivory Coast for the last three years averaged 8.4% peryear (source: CIA World Factbook).

For the six months ended 30 June 2016, we generated 4.7% of our total revenue, or R3,751 million, from ouroperations in Ivory Coast. In 2015, we generated 4.4% of our total revenue, or R6,424 million, from ouroperations in Ivory Coast. As at 30 June 2016, we had approximately 8.2 million subscribers in Ivory Coast.

Competition

As at 30 June 2016, we were the leading mobile operator in terms of market share with 32.8% of the market bysubscribers. Orange Cote d’Ivoire was second and Moov Cote d’Ivoire was third (source: Group data).

Syria

Overview

We commenced operations in Syria in 2002 after our acquisition of Investcom LLC, which owned a mobileoperator in the country. We previously operated under a Build, Operate and Transfer (“BOT”) contractual servicearrangement granted and controlled by the Syrian Telecommunications Establishment (“STE”) that provided forrevenue sharing between MTN Syria and the STE. Effective 1 January 2015 we converted the BOT to a twentyyear freehold concession valid until December 2034. The initial licence fee for 20 years was SYP25 billion(US$115 million equivalent as at 30 June 2016).

Syria’s economy continues to suffer as a consequence of over five years of political and civil unrest that hasresulted in more than 400,000 deaths across the country. The widespread disruptions and stringent sanctions haveresulted in shortages of basic commodities. This in turn is fuelling inflation, which reached a high of nearly 90%in 2013 reducing to 29% in 2014 and is estimated to have been 30% in 2015 and to be 25% in 2016 (source: TheWorld Bank).

Syria enjoyed a healthy rate of subscriber growth in the years to 2010, as high demand for telecommunicationsservices drove the subscriber growth rate to a high of 38.4% in end-2007. The country’s telecommunicationsinfrastructure has undergone significant improvement and digital upgrades, including fibre-optic technology andexpansion of networks to rural areas. However, the conflict in the country has since slowed annual subscribergrowth from 15% reported in 2011 (prior to the conflict) to 0.5% in 2015. Mobile cellular services have asubscription rate of 80 connections per 100 persons. (Source: CIA World Factbook).

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For the six months ended 30 June 2016, we generated 1.3%, or R1,068 million, from our operations in Syria. In2015, we generated 1.8% of our total revenue, or R2,605 million, from our operations in Syria. As at 30 June2016, we had approximately 5.8 million subscribers in Syria.

Competition

There are only two mobile operators in Syria. As at 30 June 2016, we were ranked second with 40.9% of themarket share by subscribers, and SyriaTel was ranked first (source: Group data).

Sudan

Overview

We commenced operations in Sudan in 2005 after our acquisition of Investcom LLC, which owned a mobileoperator in the country.

Years of civil war and social conflict have had a significant impact on the economy of Sudan, while the secessionof South Sudan in 2011 poses a significant challenge for the country’s economic development (source:GlobalComms Database).

Sudan’s mobile market is growing rapidly, due to the high level of competition, relatively low cost of servicesand limited availability of fixed-line telephony, but the country’s ongoing economic turmoil threatens toundermine the future development of the sector. Wireless penetration decreased from around 73% of thepopulation at 31 December 2013 to approximately 69% at 30 June 2016 (source: GlobalComms Database).Although Sudan lost around seven million people when the South gained independence—reducing its totalpopulation from just over 40 million at end-2010 to around 32.6 million a year later—the separation did not havea significant impact on its mobile subscriber base, as the vast majority of wireless customers were based in thenorth (source: GlobalComms Database).

For the six months ended 30 June 2016, we generated 3.0% of our total revenue, or R2,345 million, from ouroperations in Sudan. In 2015, we generated 2.4% of our total revenue, or R3,472 million, from our operations inSudan. As at 30 June 2016, we had approximately 8.8 million subscribers in Sudan.

Competition

The market leader is Zain Sudan, although its dominance has recently come under threat following increasedcompetition from us and Sudan Telecom. As at 30 June 2016 we had 33.8% of the mobile market by subscribers.Sudan Telecom ranked third in terms of market share (source: Group data).

Iran

Overview

We commenced commercial operations in Iran through our joint venture, Irancell, in 2006. MTN Irancell is ajoint venture between us and Iran Electronic Development Company (“IEDC”) which operates and providesMTN branded products and services in Iran. We own a 49% share of the joint venture under a joint controlarrangement. IEDC owns the remaining 51%. On 4 August 2014, we entered into an arrangement to upgrade ourlicence agreement with the Communications Regulatory Authority in Iran to include 3G mobile broadband aswell as higher standards (such as 4G) and to obtain access to additional spectrum frequency for an amount ofIRR3,000 billion (US$117.1 million equivalent as at 30 June 2014) which will be funded by the local operation.

Iran’s economy is dominated by oil and gas exports. Economic sanctions imposed by the US and EU have had asevere impact on Iran’s GDP, with the economy entering recession in early 2012 and experiencing a contractionof approximately 6% in the year to 20 March 2013 and Iran has not yet seen the expected economic improvementresulting from sanctions relief. Real GDP growth for Iran for 2015 was 0% (source: CIA World Factbook) butreal GDP growth is projected to reach 4.2% and 4.6% in 2016 and 2017, respectively (source: The World Bank).

As at 30 June 2016, we had approximately 47.3 million subscribers in Iran.

Competition

As at 30 June 2016, Irancell was the second largest mobile operator in Iran, with 46.4% of the market share bysubscribers. Mobile Communication Company of Iran was the largest and Taliya Mobile third-largest (source:Group data).

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Network Infrastructure

Mobile networks

Our mobile infrastructure is designed using 3rd Generation Partnership Project (a collaboration between groupsof telecommunications associations) standardised technologies, utilising architectures that are specificallydesigned to be future-proof and upgradable along the evolutionary path towards developing technologies such asLTE and LTE-Advanced. We implement various release levels of the latest high-performance mobile datatechnologies including HSDPA, HSUPA, HSPA+, and Dual Carrier HSPA+ on our 3G network, and GPRS andEDGE on our 2G network. We have also launched LTE in several operations in both the frequency divisionduplexing LTE as well as time division duplexing LTE configurations. These technologies allow our customersto enjoy mobile broadband connectivity across all 22 of our markets, at speeds up to 100Mbps in certainlocations. We also use local area wireless technology as an additional data technology to provide a broadbandexperience in locations where fast mobile packet data is not available or as an offloading technology in locationswhere excess data traffic is alleviated from the packet data network.

We have designed sustainable cost-efficient radio access networks, which aim to minimise the impact of networkinfrastructure on the environment by utilising extended cell features that require fewer base stations per cell, aswell as technologies that conserve energy by operating at ambient temperatures without the need for airconditioning. Further savings are achieved by automatic shutting down of hardware during periods of low mobiletraffic. We use common hardware technology platforms and have deployed over 45,000 radio base stations, ofwhich a high percentage are software definable in terms of their assortment of 2G, 3G and LTE capabilities,thereby minimising disruptions to subscribers during network upgrades. Co-locating radio base stations for 2G,3G and LTE capability, reduces capital expenditure and operating expenditure, as well as power consumptionand the physical impact on the environment.

Our radio resource control feature enables our 2G, 3G and LTE networks to operate as a common resource,allowing traffic to be switched between networks to provide greater network availability and higher datatransmission rates to our subscribers. In the event that users find themselves outside LTE coverage, the networkautomatically switches users to the 3G network and ultimately down to 2G if 3G coverage is insufficient.

Fixed-line and internet networks

In order to ensure fast connectivity between our base stations and the rest of the network, we have installedextensive optical fibre. There are multiple long distance fibre connections between cities in various operations.Through our ICT enterprise business, further fibre installations are built to connect corporations, businesscampuses and office parks. The latest initiatives see fibre being installed to the home in order to provide internetprotocol television, voice, data and several other value add-ons such as home automation.

We have also deployed a state-of-the-art next generation multiprotocol label switching (“MPLS”) network thatensures improved quality of service, high reliability, simplified operation and most importantly provides lowlatency scalable networks. Our MPLS network delivers dynamic, secured and future-ready services with bothcentralised and de-centralised network applications, both locally and internationally.

Satellite connectivity

Our satellite capacity is procured through our Global Carrier Services capability based in Dubai, which providesmainly C-band capacity. In order to augment satellite coverage, large operations within the Group may procurecapacity directly from satellite capacity providers. The satellite capacity is used for international voice and datatransport and also aims to provide backup in case of submarine or terrestrial transmission failures.

Towers Infrastructure

Towers comprise the non-active components of a wireless telecommunications infrastructure network, includingthe tower structure, shelters, industrial air conditioners, diesel generators, batteries, switch mode power suppliesand voltage stabilisers.

In our drive to transform the company’s operating model and outsource the management of non-core passiveinfrastructure to experienced independent companies, we have entered into several sale and lease backagreements in respect of our tower infrastructure. To date, we have entered into such agreements withindependent tower companies IHS, in respect of towers in Rwanda, Zambia, Ivory Coast and Cameroon, andAmerica Tower Corporation in respect of towers in Ghana and Uganda, the latter being associates in which wehave retained a minority interest.

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In 2015 we completed the transfer of the tower portfolio of MTN Nigeria (approximately 9,000 towers) to a newcompany jointly owned by us and IHS over which IHS has full operational control. The transaction is drivingnetwork efficiencies for MTN Nigeria and is expected to further expand service offerings and data capacity. IHSis the biggest single country tower company in Africa.

We continue to explore other similar opportunities across the Group on a country by country basis.

Network Partners

Overview

Our Group Chief Technology Officer is responsible for ensuring a standardised approach across our operations,from the type of technology we employ to the procurement of such technology.

We generally outsource the management and operation of our infrastructure to the original equipmentmanufacturer (“OEM”) or technology provider, who is contractually obligated to meet specified performancetargets as well as to scale their operations within defined parameters to meet our growth strategy. Themanagement service contracts with our OEMs and technology providers are typically for durations of three tofive years, and we have the ability to terminate based on their performance. Our partners are managed by ouroperating companies with ultimate review by Group Management.

Equipment and Technology Partners

We have forged long term strategic partnerships in all areas including equipment and technology with companiesat the forefront of technologies that are crucial to our business. We believe that our business models have enabledus to partner with global leaders who share our objective of co-creating innovative and tailor made solutions forthe markets in which we operate.

Telemedia Partners

For telemedia services in the markets in which we operate (e.g. fixed-line broadband and telephone), we havepartnered with prominent international technology companies.

IT Partners

We have maintained a strategic partnership with several organisations for our business and enterprise IT systems,including Oracle, Microsoft, Cisco, IBM and HP, amongst others.

Customer Care Partners

Our customer care partners help us to provide a strong customer experience. Our customer care partners includeTechnotree, Jamcracker and Comviva, amongst others. Technotree provides us with innovative convergentbilling, customer management and management dashboard solutions including the creation of a customermanagement platform that is able to fully service convergent products and services; Jamcracker provides us withsolutions that enable us to manage and deliver our own multi-cloud services and Comviva enables us to manage,optimise and monetise our data infrastructure.

Content and Value Added Partners

We work with globally recognised organisations such as Adaptive Mobile, OnMobile and IntegraT, providingeach of our customers with a unique experience in VAS such as caller ring back tone, music on demand, emailservices and other applications. We have revenue sharing agreements in place with most of these contentpartners.

We also have partnerships with independent developers and Rocket Internet (one of the world’s largeste-commerce focused venture capital firms). We believe these relationships will be valuable as we continue toincrease our presence in the digital space.

Towers Infrastructure Partners

Our tower partners, such as American Tower Corporation and IHS, provide and maintain site infrastructure suchas towers, shelters and other equipment needed to operate our mobile network. We have sold our towerinfrastructure in Ghana and Uganda to ATC and in Nigeria, Ivory Coast, Cameroon, Rwanda and Zambia to IHS.

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We have subsequently entered into lease back agreements in respect of these towers and have ownership interestsunder joint venture agreements with ATC and IHS. These sale and lease back agreements are in line with ourasset optimisation strategy.

Information Technology

Each of our operating companies maintains its own information technology (“IT”) systems. Our IT systems arecomparable to those typically used by other telecommunications service providers, and comprise operationalsupport systems (which support our telecommunications network and include processes such as maintainingnetwork inventory, provisioning services, configuring network components and managing faults) and businesssupport systems (which support processes related to our customers, such as taking orders, processing bills,collecting payments and customer relationship management). We believe that our existing IT systems areadequate for the purposes of our existing business.

Each of our operating companies maintains its own disaster recovery systems in order to ensure the recovery andcontinuation of its technology infrastructure following potential disruptive events, such as natural disaster orterrorism. Each operating company has procedures in place to either back up critical data on-site andautomatically copy this backed-up data to off-site storage, or to back-up and replicate critical data directly to off-site storage. Each of our operating companies reports to the Group on a quarterly basis. We have not had aserious disaster issue to date.

Insurance

Our operations are subject to a wide variety of operational and other risks, including accidents, fire and weatherrelated hazards. We maintain various types of insurance policies customary in the industry in which we operateto protect against the financial impact arising from unexpected events when the amount of the potential losswould be significant enough to prevent normal business operations. We also have insurance coverage in respectof 80% to 90% of the political violence and political risks to which our operations are exposed. However, incertain contexts we are unable to fully insure against political violence and political risk to the extent that suchcoverage is unavailable due to market factors. For example, we have been unable to fully secure insurancecoverage in respect of our exposure to political risk in Nigeria due to market capacity limitations and in respectof our exposure to political violence in Iran, Sudan, South Sudan and Syria where insurers have exited due tosanctions compliance requirements. In order to counter such lack of supply, we have established a captiveinsurance company with the specific objective of insuring risks which the insurance market will not readily coveror will not do so at a cost acceptable to us.

We cannot give any assurance that our insurance policies will be adequate to protect us from all expenses relatedto potential future claims for personal injury, property damage and consequential business interruption losses orthat these levels of insurance will be available in the future at commercially reasonable prices. However, webelieve that our existing insurance is sufficient in light of identified risks and is consistent with industrystandards based on the countries in which we operate and the scope of our operations. See “Risk Factors—RisksRelating to the Telecommunications Industry—Our operations could be adversely affected by natural disasters orother catastrophic events beyond our control”.

Material Property/Real Estate

The property, plant and equipment that we own includes administrative and commercial office buildings,business centres and technical properties, which consist of switching, international exchanges, transmissionequipment, mobile base stations, data centres, cabling and other technical ancillaries. Other properties includestores and warehouses and technical workshops.

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The table below sets forth details of property and real estate owned or leased by us as at 30 June 2016 that isconsidered to be material and/or integral to our business.

Property Owned or Leased Description

Golden Plaza Falomo, Lagos,Nigeria

Leased MTN Nigeria Head Office

6th Avenue, AmbassadorialEnclave, Ridge – Accra

Leased MTN Ghana Head Office

MTN Innovation Centre14th Ave Fairland, Roodepoort,2195 South Africa

Owned MTN Group and MTN South Africa HeadOffice

Intellectual Property

We do not own any material intellectual property rights apart from various trademarks and the licences requiredto operate our business (as discussed in more detail below).

Licences

Our operating licences specify the services we can offer and the frequency spectrum we can utilise for wirelessoperations. As of 30 June 2016, we held over 50 licences across various frequencies and across the countries weoperate in. These licences are subject to review, local law ownership requirements, interpretation, modification ortermination by the relevant authorities. The operating licences are generally renewable upon expiration. We aimto ensure that we have the appropriate amount of spectrum and the required licences to meet our strategicobjectives over the long term. However, there is no assurance that our licences will be renewed or that anyrenewal on new terms will be commercially acceptable. See “Risk Factors—Risks Relating to theTelecommunications Industry—Our telecommunications licences, permits and frequency allocations are subjectto finite terms, ongoing review and/or periodic renewal, any of which may result in modification or earlytermination. In addition, our inability to obtain new licences and permits could adversely affect our business”.

The table below sets forth details of material licences held by the Group as at 31 December 2015:

Licence agreements Type Granted/renewed Term

Key MarketsSouth Africa ECS licence 15/01/2009 15 years

ECNS licence 15/01/2009 20 years900MHz1 800MHz 1/01/2010 Renewable annually3G

Nigeria 1 800MHz 03/11/2015 5 years900MHz 03/11/2015 5 years3G spectrum licence 01/05/2007 15 yearsUnified access licence(including internationalgateway) 01/09/2006 15 yearsWACS 01/01/2010 20 yearsWiMax, 3.5GHz spectrum 2007 Renewable annuallyDigital Terrestrial TVBroadcasting licence 12/08/2015 10 years800MHz 01/01/2015 10 yearsMicrowave spectrum8GHz – 26GHz 2001 Renewable annually

Large OpcosGhana 900 MHz

1 800MHz 02/12/2004 15 years3GInternational Gateway(1) 23/01/2009 15 yearsFixed access service ofunified access

08/11/2014 5 years

06/07/2015 4 years

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Licence agreements Type Granted/renewed Term

Cameroon 2G3G 15/02/2015 15 years4G

Ivory Coast 900MHz 02/04/1996 20 years1 800MHz 02/04/1996 20 yearsWiMax 2.5 – 3.5GHz 31/07/2002 20 years3G/UMTS 1.9/2.1GHz 31/05/2012 10 yearsUniversal networks 04/01/2016 17 years

Uganda 900MHz 15/04/1998 20 years1 800MHz

Key marketsSyria 900MHz 29/06/2002 15 years

1 800 MHz 22/03/2007 10 years3G 29/04/2009 8 yearsISP 2009 Renewable annuallyFreehold licence 01/01/2015 20 years

Sudan 2G+3GTransmissionVSAT gateway 25/10/2003 20 yearsVSAT hubVSAT terminal

Small opcosBenin 900MHz 19/10/2007 25 years

1 800 MHz 19/10/2007 25 yearsUniversal licence 19/03/2012 20 years

Guinea-Conakry 900MHz 31/08/2005 18 years1 800MHz 31/08/2005 18 years3G 14/08/2013 10 yearsWiMax 04/08/2014 5 years

Congo-Brazzaville 900MHz 25/11/2011 15 years1 800MHz 25/11/2011 15 yearsInternational gateway 05/02/2002 15 yearsOptical fibre licence 02/04/2010 15 years3G 25/11/2011 17 years2G 25/11/2011 15 yearsInternational gateway byoptical fibre 03/06/2013 10 years

Liberia UniversalTelecommunication licence 04/08/2015 15 years

Guinea-Bissau 900MHz 23/05/2014 10 years1 800MHz 23/05/2014 10 years3G 17/07/2015 10 years4G 17/07/2015 10 years

Afghanistan 3G unified licence 01/07/2012 15 yearsYemen 900MHz 31/07/2000 15 years

1 800MHz 17/02/2008 15 yearsCyprus 900MHz

1 800MHz 01/12/2003 20 years4G (LTE) 2 100MHz

Rwanda GSM 01/07/2008 13 yearsSNO 30/06/2006 15 years

Zambia 900MHz1 800MHz 23/09/2010 15 years2 100 MHz

(1) Licence renewal confirmed in 2015.

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Employees

As at 30 June 2016, we had 20,376 employees.

The following table sets forth a breakdown of employees by country as at 30 June 2016, 31 December 2015,2014 and 2013:

As at31 December 2013



As at30 June 2016

South Africa . . . . . . . . . . . . . . . . . . . . 7,378 5,787 5,549 5,186Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . 3,286 2,402 2,215 2,073Ghana . . . . . . . . . . . . . . . . . . . . . . . . . 1,450 2,495 2,135 1,010Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,702 1,213 996 2,194Ivory Coast . . . . . . . . . . . . . . . . . . . . . 867 814 795 745Cameroon . . . . . . . . . . . . . . . . . . . . . . 903 1,248 1,135 800Uganda . . . . . . . . . . . . . . . . . . . . . . . . 1,305 817 838 1,074Syria . . . . . . . . . . . . . . . . . . . . . . . . . . 1,092 988 987 993Sudan . . . . . . . . . . . . . . . . . . . . . . . . . . 627 563 549 532Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . 5,814 5,877 5,885 5,769Total . . . . . . . . . . . . . . . . . . . . . . . . . . 25,424 22,204 21,084 20,376

(1) “Other” includes Afghanistan, Benin, Botswana, Congo-Brazzaville, Cyprus, Guinea-Bissau,Guinea-Conakry, Liberia, Rwanda, South Sudan, Swaziland, Yemen and Zambia.

Business Risk Management

We believe that business risk management is fundamental to effective corporate governance and the developmentof sustainable business. Our business risk management function encompasses:

• general risk management;

• business continuity and crisis risk management;

• information and technology governance;

• fraud risk management; and

• internal audit.

Risk management

MTN Group is listed on the Johannesburg Stock Exchange. As a listed company, we are required to comply withthe requisite listing, disclosure and corporate governance requirements. Our business risk management divisionfollows a combined assurance methodology in line with the requirements of the King III Code of CorporateGovernance (“King III”), the world’s first corporate governance code to explicitly address IT governance. Ourobjective is to instil greater risk awareness throughout the organisation, standardise the approach to riskmanagement and to embed the process into the day-to-day running of the business. We have adopted a robust riskmanagement framework that consists of proactively identifying and understanding the factors and events thatmay impact the achievement of our strategic and business priorities, then managing them through effectivemitigating plans, internal controls and monitoring and reporting processes.

Business continuity and crisis risk management

We are committed to ensuring that critical services are maintained without interruption or disruption, and in theevent of a catastrophic event, that critical services are resumed at the earliest opportunity. We consider disasterrecovery and business continuity management (“BCM”) to be vital components of risk management andcorporate governance. BCM establishes a strategic and operational framework that:

• proactively improves our resilience against disruption to our key objectives being achieved;

• provides a rehearsed method of restoring our ability to supply key products and deliver critical services toan agreed level within a specified time after a disruption occurs; and

• delivers a proven capability to manage disruptions and protect our reputation and brand.

Information and technology governance

We have established various positions, processes and supporting governance structures to help us meet our goalof implementing King III across our business. For example, a Group Information Security Officer has been

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appointed and charged with the responsibility of managing and monitoring our Group-wide information securityprogramme. This programme is based on global leading industry practices and standards such as ISO/IEC27001:2005.

Risk management practices at all levels within our business will continue to help us ensure that technologygovernance is fully integrated across all of our operations, and that current and emerging information securityrisks, such as cyber security and data privacy, are proactively addressed.

Fraud Risk Management

Our fraud risk management strategy is based on three core elements: prevention, detection and response.

The proactive management of fraud risk is embedded within our enterprise risk management processes and alsoinforms the residual rating and consideration of risk on a principal risk level. Our operating companies arerequired to identify, monitor, mitigate and report on significant fraud risks on a continual basis. All ourstakeholders have access to a third party website and email address through which they can report fraud andcorruption, and 20 of our operations have an established and dedicated whistleblowing line.

In 2015, we received 128 whistleblowing reports about fraud and other administrative matters. Our fraud riskmanagement framework ensures that every whistleblowing report is reviewed, investigated and reported to theaudit committee, where applicable and relevant. Current and emerging fraud risks such as mobile financialservices, cybercrime and procurement fraud continue to be assessed and monitored.

Internal audit teams

Our internal audit teams’ role is that of an objective and independent value-adding assurance provider to ourexecutive committee and Board. The independence of our internal audit teams is explicitly stated within thebusiness risk management charter. The internal audit teams embrace a risk-based auditing approach in line withKing III. The remit of our internal audit teams extends to all operations and all high-risk processes in line withour internal audit methodology. The internal audit teams consider the risks that may hamper the achievement ofstrategic priorities and further determines the effectiveness of our internal control and risk managementprocesses.

In 2015, more than 165,000 hours were spent on internal audit and for 2016 we expect that internal auditactivities will exceed 130,000 hours.

Litigation, Arbitration and Disputes

We are, from time to time, party to various legal actions arising in the ordinary course of our business. We do notbelieve that the resolution of these legal actions will, individually or in the aggregate, have a material adverseeffect on our financial condition or results of operations, except as noted below.

Turkcell

In early 2012, Turkcell Iletisim Hizmetleri AS and East Asian Consortium B.V (the “Plaintiffs”) filed a lawsuitagainst us and others in a US federal court. The lawsuit was based on claims related to Turkcell subsidiary EastAsian Consortium B.V’s unsuccessful effort to obtain the second GSM licence in Iran during 2005 which wewere awarded. Turkcell’s allegations were investigated by a special committee appointed by our Board(the Hoffmann Committee) and its findings reported by MTN to stakeholders in February 2013. After a thoroughexamination of Turkcell’s allegations and consideration of the available evidence, the Hoffmann Committeeconcluded that the allegations were unfounded. MTN will continue to vigorously defend any proceedingsinstituted by Turkcell in respect of such matters. Turkcell withdrew its claims in the US proceedings on 1 May2013.

In November 2013, the Plaintiffs filed a lawsuit against us and others in the South Gauteng High Court of SouthAfrica, seeking damages of approximately US$4.2 billion plus interest. The Plaintiffs’ claim arose fromsubstantially the same allegations on which it founded US proceedings against MTN in early 2012.

In 2015 MTN succeeded in its objection to their claim forcing Turkcell to amend their summons meaning thattheir case has had to be founded anew. In 2016, Turkcell refiled their case. MTN is considering their new statedcase.

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Nigerian Regulatory Fine

In October 2015, the NCC imposed a N1.040 trillion fine on MTN Nigeria (equivalent to approximatelyUS$5.2 billion using the exchange rate prevailing at the time the fine was initially imposed), which wassubsequently reduced to N780 billion. The fine related to the late disconnection of the 5.1 million subscriberswhose documents were considered incomplete following the Nigerian regulator’s introduction of a SIMregistration process.

On 10 June 2016, we announced that we have achieved a resolution with the Nigerian authorities and MTNNigeria has agreed to pay a total cash amount of N330 billion over three years (as at 10 June 2016, the equivalentof US$1.671 billion at the official exchange rate prevailing at the time) to the Federal Government of Nigeria infull and final settlement of the matter payable, as follows:

• Naira 50 billion (paid on 24 February 2016)

• Naira 30 billion (paid on 24 June 2016)



• Naira 55 billion on 31 December 2018;

• Naira 55 billion on 31 March 2019; and

• Naira 55 billion on 31 May 2019.

The payment of the Nigerian Regulatory Fine is expected to be funded through the operating cash flows of MTNNigeria. Accordingly, we expect the amount of retained earnings available for dividends from MTN Nigeria to bereduced.


• MTN Nigeria has agreed to subscribe to the voluntary observance of the Code of Corporate Governance forthe Telecommunications Industry and will ensure compulsory compliance therewith;

• MTN Nigeria has undertaken to take immediate steps to ensure the listing of its shares on the NigerianStock Exchange as soon as commercially and legally possible; and

• MTN Nigeria shall always ensure full compliance with its license terms and conditions as issued by theNCC.

In December 2015 we announced several changes to the Group’s operating structure, intended to strengthen theGroup’s oversight over its operations. The new operating structure reintroduces the role of Chief OperatingOfficer and clusters operations according to region with Vice Presidents of South and East Africa, Middle Eastand North Africa and West and Central Africa being appointed.

We have recently engaged external consultants to advise on, among other things, corporate compliance and riskmanagement with respect to our operating companies and have undertaken remedial actions to strengthen ourrisk elevation procedures and corporate compliance functions, including anti-money laundering, anti-bribery andcorruption and sanctions compliance. See “Risk Factors—Risk Factors Relating to Our Business—We maintainand regularly review our internal controls over financial reporting, risk elevation and corporate compliance, butthese controls cannot eliminate the risk of errors or omissions in such reporting or compliance with laws.”

We have been informed by the Johannesburg Stock Exchange of a probable investigation regarding ourdisclosure obligations under the listing rules in connection with the Nigerian Regulatory Fine. We have formallyresponded and the Johannesburg Stock Exchange is evaluating our response.

COSON Copyright Claim

The Copyright Society of Nigeria (“COSON”) has filed a claim for N16 billion (US$56.6 million at 30 June 2016exchange rate) for infringement of copyright by MTN Nigeria. It is also seeking injunctions against MTN Nigeriato prevent it from continuing to use the disputed copyrights. MTN Nigeria has since filed its notice to defend theaction.

ICASA Termination Rates

On 4 February 2014, the ICASA published the Call Termination Regulation (the “Regulation”) and mobiletermination rates. On 12 February 2014, we initiated legal action against the ICASA as we believed that theRegulation was arbitrary and unlawful. On 31 March 2014, the South Gauteng High Court of South Africa

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granted a final order in favour of ourselves and Vodacom (who also brought legal action against the ICASA).The order confirmed the unlawfulness of the Regulation. However, the judge ruled that the order be suspendedfor six months which resulted in the call termination rates from the Regulation being applied between 1 April2014 and 30 September 2014. This required us to pay a higher termination rate to our competitor Cell-C(R0.44 per minute), than Cell-C was required to pay us (R0.20 per minute).

ICASA subsequently engaged in a review process, in which MTN participated, which culminated in thepublished final Call Termination Regulations on 30 September 2014. The regulations gave a 3 year period duringwhich call termination rates must decline from R0.20 to R0.13 per minute starting in October 2014. Calltermination rates have declined in the subsequent period. However, we are still required to pay a highertermination rate to Cell-C (R0.24 per minute) than Cell-C is required to pay us (R0.16 per minute). The nextdecrease in call termination rates is expected in October 2016.

Environmental Matters

We have not been subject to any material fines or regulatory action involving non-compliance withenvironmental regulations in any of the jurisdictions in which we operate. We are not aware of anynon-compliance in any material respect with the relevant environmental regulations.

Corporate Social Responsibility (“CSR”)

Since our establishment in 1994, we have recognised and embraced society’s expectation that we provide apositive impact within the communities in which we operate. As we have grown, society’s expectations haveunderstandably grown as well. As a result, we have established MTN Foundations in 15 of the countries in whichwe operate. Our CSR strategy, which encompasses education, health, economic empowerment and nationalpriority areas, is implemented through our MTN Foundations. In 2015, we invested approximately R335 millionacross our CSR programmes.

Education

A lack of access to education is one of the challenges confronting the markets in which we do business. As aresult, we have chosen education as our primary CSR focus area in an effort to improve communities’ access tohigh-quality education and help young people to work towards becoming economically active citizens. In 2015alone we provided over 500 schools with learning materials and provided over 3,500 scholarships. We alsoestablished multi-media labs and distributed other educational technological material. Through various educationinitiatives, we believe we have impacted the lives of our 200,000 beneficiaries.

In 2015, we invested R155 million in our CSR education programmes. Our education programmes received themajority of our CSR investment spend.

Health

The well-being of the communities in which we operate is important to us. Through our health portfolioprogrammes, we aim to ensure that people have access to adequate medical and healthcare facilities.

Economic Empowerment

We aim to make a marked contribution to the development of entrepreneurs and small businesses in our marketsthrough entrepreneurial skills development and funding.

Black Economic Empowerment

In 2010, we entered into a broad-based black economic empowerment (“B-BBEE”) transaction pursuant to whichMTN Zakhele (RF) Limited (“MTN Zakhele”), an investment company, was formed. MTN Zakhele, which ownsapproximately 4% of the issued share capital of MTN Group Limited, reaches maturity on 24 November 2016and is required to settle all outstanding third party funding obligations at that time, with the residual amountbeing distributed to its shareholders. On 22 August 2016, we announced our intention to implement a new BEEtransaction, MTN Zakhele Futhi, which includes a reinvestment option for current MTN Zakhele shareholders.

National Priority Areas (“NPA”)

We operate in countries that cut across a broad developmental spectrum and comprise of different cultures,religions and socio-economic backgrounds. As a result, we aim to identify NPAs, or specific national needs inthe countries in which we operate, that we can help to address through development and support initiatives.

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MANAGEMENT

Board of Directors

The Board of MTN Group currently consists of 13 members. Eleven members of our Board are independent non-executive directors.

Our Board retains full and effective control over the Group and is responsible, among other things, for theadoption of strategic plans, the monitoring of operational performance and management and the development ofappropriate and effective risk management policies and processes. The full extent of the Board’s responsibilitiesis contained in an approved board charter which outlines the mandate of the directors.

The address of the Board is MTN Group Limited, Innovation Centre, 216 14th Avenue, Fairland, Roodepoort,2195, South Africa.

The table below sets forth certain information with respect to the current members of our Board as at the date ofthis Offering Circular.

Name Age Position Appointed

Mr. Phuthuma Nhleko(1) . . . . . . . . . . . . . . . . 55 Executive Chairman of the Board . . . . . . . . . . 2015Mr. Paul Hanratty . . . . . . . . . . . . . . . . . . . . . 55 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2016Mr. Alan Harper . . . . . . . . . . . . . . . . . . . . . . 59 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2010Ms. Koosum Kalyan . . . . . . . . . . . . . . . . . . . 61 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2006Mr. Shagyan Kheradpir . . . . . . . . . . . . . . . . . 55 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2015Mr. Peter Mageza . . . . . . . . . . . . . . . . . . . . . 61 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2010Ms. Dawn Marole . . . . . . . . . . . . . . . . . . . . . 56 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2010Mr. Azmi Mikati . . . . . . . . . . . . . . . . . . . . . . 43 Member of the Board; non-executive

director . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006Mr. Stan Miller . . . . . . . . . . . . . . . . . . . . . . . 58 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2016Ms. Christine Ramon . . . . . . . . . . . . . . . . . . 48 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2014Mr. Nkululeko Sowasi . . . . . . . . . . . . . . . . . 53 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2016Mr. Alan van Biljon . . . . . . . . . . . . . . . . . . . 68 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2002Mr. Jeff van Rooyen . . . . . . . . . . . . . . . . . . . 66 Member of the Board; independent non-

executive director . . . . . . . . . . . . . . . . . . . . 2006

(1) Mr. Nhleko will serve as Executive Chairman until Mr. Rob Shuter assumes the position in 2017.

Mr. Phuthuma Nhleko was appointed the Chairman of our Board and a non-executive director in 2013. Heagreed to take up the post of executive Chairman following the resignation of the Group CEO in late 2015 untilRob Shuter can take up the position in 2017. He is also the chairman of various holding companies in our Group,as well as the chairman of the Pembani Group and a director of Rapid African Energy, Afrisam (South Africa)(Pty) Limited and Opiconsivia Investments 230 (Pty) Limited. Mr. Nhleko previously served as Chairman of ourBoard and non-executive director from 2001 to 2002, and as Group president, Chief Executive Officer andexecutive director from 2002 until 2011. He previously served as a director of Johnic Holdings, Nedcor, Bidvest,Tsogo Sun KwaZulu-Natal, Alexander Forbes, BP plc and Anglo American plc. Mr. Nhleko holds a BSc in civilengineering from Ohio State University and an MBA in finance from Atlanta University.

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Mr. Paul Hanratty is an independent non-executive director on our Board. He is a Fellow of the Institute ofActuaries and served as CEO of Old Mutual South Africa prior to 2009 when he became CEO of Old MutualLong Term Savings in London and subsequently an Executive Director of Old Mutual plc. He has chaired theBoards of insurance, asset management and banking operations in the UK, Scandinavia, emerging markets andSouth Africa for the Old Mutual Group. Mr. Hanratty holds a B.Bus.Sc (Hons.), Fellow of Institute of Actuaries(FIA), Advanced Management Programme Harvard.

Mr. Alan Harper is an independent non-executive director on our Board. He is the chairman of the Board’sremuneration and human resources committee and a member of the Board’s nominations committee. He is also adirector of various holding companies in our Group, as well as a director of Azuri Technologies Limited andGigabit Fibre Limited. Mr. Harper holds a BA (Hons).

Ms. Koosum Kalyan is an independent non-executive director on our Board. She is also the chairman of theBoard’s social and ethics committee and a member of the Board’s risk management, compliance and corporategovernance committee. Ms. Kalyan is also a director of various holding companies in our Group, non-executivechairman of Edgo Merap, director of AOS Orwell Energy, Aker Solutions, director at Anglo American SouthAfrica and Petmin Mining and Member of the Thabo Mbeki Foundation Advisory Council. Ms. Kalyan holds aBCom (Law) (Hons) Economics, Senior Executive Management Programme (London Business School).

Mr. Shagyan Kheradpir is an independent non-executive director on our Board. He is a member of the Board’srisk management and compliance and corporate governance committees. He is currently the CEO and Chairmanof Coriant International Group, a global optical networking company. Mr Kheradpir joined Coriant after havingworked closely with the senior management team since earlier this year in the role of Operating Executiveto Marlin Equity Partners. He is the former CEO of Juniper Networks. Prior to joining Juniper in 2014, he spent3 years as the Group Chief Operating & Technology Officer at Barclays Bank PLC in the United Kingdom.Mr Kheradpir also spent in excess of 10 years at Verizon Communications until 2011 where he held the positionof EVP & Chief Information & Technology Officer. Mr Kheradpir holds a Bachelors, Masters & Doctorate inElectrical Engineering.

Mr. Peter Mageza is an independent non-executive director on our Board. He is the Chairman of the Board’s riskmanagement, compliance and corporate governance committee, a member of the audit committee; as well as thesocial and ethics committee. Mr. Mageza is also a director of various companies in our Group, as well as adirector of Remgro Limited, Sappi Limited, RCL Group, Eqstra Holdings Limited and Ethos Private EquityLimited. Mr. Mageza is a Fellow of the Association of Chartered Certified Accountants.

Ms. Dawn Marole is an independent non-executive director on our Board. She is a member of the Board’s riskmanagement, compliance and corporate governance committee, as well as the Board’s social and ethicscommittee. Ms. Marole is also a director of various holding companies in our Group, as well as a director of TheSouth African Post Office (SoC) Limited, Richards Bay Mining (Pty) Limited, Santam Limited and theDevelopment Bank of Southern Africa. Ms. Marole holds a BCom (Acc), Dip Tertiary Education, MBA,Executive Leadership Development Programme.

Mr. Azmi Mikati is a non-executive director on our Board. He is a member of the Board’s nominationscommittee, audit committee and remuneration and human resources committee. He is also a director of variousholding companies in our Group, as well as the CEO of the M1 Group Limited (an international investmentgroup with a strong focus on the telecommunications industry), director of various companies in M1 Group anddirector of Orascom Construction Ltd. He also serves on the boards of the Children Cancer Centre, theInternational College and Columbia University Board of Visitors. Mr. Mikati has a BSc.

Mr. Stan Miller is an independent non-executive director on our Board and a member of the risk management,compliance and corporate governance committee. He is currently working with Len Blavatnik in London andCapital Group in New York. Mr. Miller is also an executive Chairman for MTS, the telecommunicationsconglomerate which covers investments in multiple emerging countries. Mr. Miller has extensive commercialexperience, having spent nearly 20 years as a divisional Chief Executive with standalone responsibility, includingas Chief Executive Officer of International for KPN. Mr. Miller has successfully expanded the KPN through anumber of mobile virtual network operators. At KPN he was responsible for its mobile activities in Germany,Belgium and abroad. He also served as Chairman of E-Plus and BASE where he introduced a strategy thatchanged the business model, creating significant value for KPN’s shareholders. Before relocating from SouthAfrica, Mr. Miller was part of the M-Net founding management team and then subsequently joined Netholdwhere he served in various senior management roles before becoming Chief Executive Officer.

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Ms. Christine Ramon is an independent non-executive director on our Board and the chairman of the auditcommittee. She is a director of AngloGold Ashanti Limited, Lafarge and deputy chair of the Financial ReportingStandards Council of South Africa. Ms. Ramon holds a BCompt, BCompt (Hons), CA (SA).

Mr. Nkululeko Sowazi is an independent non-executive director on our Board and a member of the nominationscommittee and remuneration and human resources committee. He is also a director of various companies in theActom Group. He serves as a Chairman of Home Loan Guarantee Company NP and Housing for HIV, KagisoTiso Holdings (Pty) Ltd, Tiso Investments Holdings (Pty) Ltd (RF) and a non-executive director of IdwalaIndustrial Holdings (Pty) Ltd, Grindrod Ltd, Vanguard Group Ltd, TIH Africa Ltd, SAI Holdings Ltd, Tiso Blackstar Group (Pty) Ltd and Mobius Motors Ltd. He holds a Masters degree.

Mr. Alan van Biljon is an independent non-executive director on our Board and a member of the Board’snominations committee. He is also a director of various holding companies in our Group, a chairman and trusteeof Standard Bank Group Retirement Fund and Liberty Group Pension and Provident Funds (withdrawn fromLiberty Group on 31 March 2015). Mr. van Biljon holds a BCom, CA (SA), MBA.

Mr. Jeff van Rooyen is an independent non-executive director on our Board. He is a member of the Board’sremuneration and human resources committee; audit committee and social and ethics committee. Mr. vanRooyen is also a director of various holding companies in our Group, various companies in Uranus Group, Pick nPay Stores Limited, Pick n Pay Holdings Limited, Exxaro Resources Limited and former chairman of FinancialReporting Standards Council of South Africa. Mr. van Rooyen has a BCom, BCompt (Hons), CA (SA).

Group Secretary

The Group Secretary plays a key role in the continuing effectiveness of the Board. The Group Secretary ensuresthat all directors are provided with adequate guidance on governance and applicable laws. The Group Secretaryfurther ensures that directors have full and timely access to information training that equips them with the toolsrequired to effectively perform their duties and obligations. As at the date of this Offering Circular, the GroupSecretary is Ms. Bongi Mtshali. Ms. Mtshali holds a Higher Diploma in Company Law from the University ofthe Witwatersrand and a Fellowship of the Institute of Chartered Secretaries.

Corporate Governance

Our Board has six standing committees: the executive committee; the audit committee; the risk management,compliance and corporate governance committee; the nominations committee; the social and ethics committee;and the remuneration and human resources committee.

Executive Committee

The executive committee consists of ten members. The primary objective of the executive committee is tofacilitate the effective control of our operational activities. It is responsible for making recommendations to theBoard on our policies and strategies and for monitoring their implementation in line with the Board’s mandate.

The table below sets forth certain information with respect to the current members of our executive committee asat the date of this Offering Circular.

Name Age Position Appointed

Mr. Phuthuma Nhleko(1) . . . . . . . . . . . . . . . . 55 Executive Chairman of the Board . . . . . . . . . . . . 2015Ms. Jyoti Desai . . . . . . . . . . . . . . . . . . . . . . . 58 Group Chief Operating Officer . . . . . . . . . . . . . . 2009Mr. Gunter Engling . . . . . . . . . . . . . . . . . . . . 43 Acting Group Chief Financial Officer . . . . . . . . . 2016Mr. Michael Fleischer . . . . . . . . . . . . . . . . . . 55 Group Chief Legal Counsel . . . . . . . . . . . . . . . . . 2014Mr. Ismail Jaroudi . . . . . . . . . . . . . . . . . . . . . 45 Group Vice President for the Middle East and

North Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015Mr. Ferdi Moolman . . . . . . . . . . . . . . . . . . . . 52 Chief Executive Officer, MTN Nigeria . . . . . . . . 2015Mr. Paul Deon Norman . . . . . . . . . . . . . . . . . 50 Group Chief Human Resources and Corporate

Affairs Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . 1997Mr. Mteto Nyati . . . . . . . . . . . . . . . . . . . . . . 51 Chief Executive Officer, MTN South Africa . . . 2014Mr. Karl Toriola . . . . . . . . . . . . . . . . . . . . . . 44 Group Vice President for the West and Central

Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015Mr. Stephen van Coller . . . . . . . . . . . . . . . . . 50 Group Vice President for M&A and Strategy . . . 2016

(1) Mr. Nhleko will serve this role until Mr. Rob Shuter assumes the role of Group President and ChiefExecutive Officer in 2017.

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Ms. Jyoti Desai is the Group Chief Operating Officer. She is also a director of various companies in our Group.Ms. Desai previously worked at The Standard Bank of South Africa Limited and Telkom before joining MTNNigeria as Chief Information Officer. She also served as Chief Operations Officer of Irancell. Ms. Desai holds aBA (Honours) in Psychology and a BCom in Law from the University of South Africa.

Mr. Gunter Engling has assumed the position of Acting Group Chief Financial Officer until a permanent CFO isappointed. Mr. Engling is a chartered accountant and was previously the CEO of MTN Rwanda. Mr. Engling hasbeen at MTN for almost 13 years, having held many senior positions in MTN, including Group ExecutiveFinance reporting to the Group CFO, General Manager Finance of MTN Nigeria and CFO of MTN Ghana. Mr.Engling has extensive knowledge and understanding of MTN Group’s financial matters, workings andstewardship. Mr. Engling boasts substantial financial and audit management experience in the media andentertainment, telecommunications and technology industries. Before moving to MTN, he worked atPricewaterhouseCoopers (PwC), gaining experience in Amsterdam, Saudi Arabia and South Africa. He holds anHonours Degree in Accounting from the University of Stellenbosch and is a qualified Chartered Accountant.

Mr. Michael Fleischer is the Group Chief Legal Counsel. He was previously a partner at the law firm of WebberWentzel Bowens and then served as general counsel and executive vice president of Gold Fields Limited.Mr. Fleischer was admitted as an attorney of the High Court of South Africa in 1991. He has a BachelorProcurationis from the University of the Witwatersrand and an Advanced Taxation Certificate from theUniversity of South Africa.

Mr. Ismail Jaroudi is the Group Vice President for the Middle East and North Africa. He is also a director ofvarious companies in our Group. Mr. Jaroudi was CEO of MTN Syria from 2006 until his appointment as Groupvice president for MENA. Prior to this, he held senior operational roles for Investcom’s subsidiaries across theMiddle East and North Africa.

Mr. Ferdi Moolman is the Chief Executive Officer of MTN Nigeria. He is also a director of various companiesin our Group. Mr. Moolman joined MTN Nigeria in 2003 as a senior manager: financial operations. He waspreviously COO at Irancell and most recently CFO at MTN Nigeria.

Mr. Paul Deon Norman serves as Group Chief Human Resources and Corporate Affairs Officer at MTN Group.He has received several awards for his achievements, including HR Practitioner of the Year from the Institute ofPeople Management South Africa in 2003 and a Lifetime Achievement Award from the South African Board forPeople Practices in 2012. He holds a B.A. and M.A. in Psychology from Rhodes University in Grahamstown,South Africa, as well as an Executive MBA from the Institute for Development Management in Switzerland. Heis a registered psychologist, and he has also participated in the Executive Development Program at the WitsBusiness School in Johannesburg, South Africa.

Mr. Mteto Nyati is the Chief Executive Officer, MTN South Africa. He is a director of various companies in ourGroup and was previously the Group Enterprise Officer from October 2015 to June 2015. He is also a Director ofChristel House. Mr. Nyati has previously held various directorships including serving on the AdvTech Board aswell as on the Board of the University of Pretoria Centre for Responsible Leadership. Mr. Nyati joined MTNfrom Microsoft where he was general manager for the Middle East and Africa emerging regions. Prior to that hewas the managing director of Microsoft South Africa for six years. He also spent 12 years at IBM where he helda number of senior executive roles.

Mr. Karl Toriola is the Group Vice President for the West and Central Africa. Mr. Toriola has been at MTN for10 years, having held senior operational roles at MTN Group and MTN Iran and most recently was the GroupOperations Executive overseeing the 12 Tier 3 Operations. He was formerly also the Chief Technology Officer atMTN Nigeria and CEO at MTN Cameroon. He is also a director of various companies and a member of variousboard committees in our Group and a Non-executive Director of American Towers Uganda since 2013. Mr.Toriola holds a BSc in Electronics and Electrical Engineering from University of Ife and an MSc inCommunication Systems from University of Wales, Swansea, UK.

Mr. Stephen van Coller is the Group Vice President for M&A and Strategy. Mr. van Coller previously held theposition of CEO of the corporate and investment banking unit of Barclays Africa. Prior to joining BarclaysAfrica, he served as managing director at the Johannesburg-based investment banking unit of Deutsche Bank. Heis a chartered accountant and holds a B.Com (Hons) from the University of Stellenbosch and a Higher Diplomain Accounting from the University of KwaZulu-Natal.

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Audit committee

The audit committee consists of four members. The primary objective of the audit committee is to assist theBoard in discharging its duties relating to safeguarding the assets of the Group, and monitoring the operations,financial systems and control processes including internal financial controls, and the preparation of financialstatements and related financial reporting in compliance with all applicable legal requirements and accountingsafeguards.

The members of the audit committee are: KC Ramon (Chairman), NP Mageza, J van Rooyen and Azmi Mikati.

Risk management, compliance and corporate governance committee

The risk management, compliance and corporate governance committee consists of five members. The primaryobjective of the risk management, compliance and corporate governance committee is to improve the efficiencyof the Board and assist it in discharging its duties which include: (i) identifying, considering and monitoring risksimpacting our company; and (ii) responsibility for the sustainability framework and sustainability reporting forour Group.

The members of the risk management, compliance and corporate governance committee are: NP Mageza(Chairman), KP Kalyan, S Kheradpir, SP Miller and MLD Marole.

Remuneration committee

The remuneration committee consists of five members. The primary objective of the remuneration committee isto oversee the formulation of a remuneration policy to ensure that we attract, motivate and retain qualityemployees, directors and senior management committed to achieving the overall goals of the Group.

The members of the remuneration and human resources committee are: A Harper (Chairman), AT Mikati, PFNhleko, J van Rooyen and N Sowazi.

Social and ethics committee

The social and ethics committee consists of four members. The primary objective of the social and ethicscommittee is to oversee and monitor our role in partnership with other committees to ensure that our business isconducted in an ethical and properly-governed manner, and to develop or review policies, governance structuresand existing practices.

The members of the social and ethics committee are: KP Kalyan (Chairman), NP Mageza, MLD Marole andJ van Rooyen.

Nominations committee

The nominations committee consists of five members. The primary objective of the nominations committee is toimprove the efficiency of the Board in discharging its duties relating to the nomination of Board members andsenior management.

The members of the nominations committee are: PF Nhleko (Chairman), A Harper, AT Mikati, AF van Biljonand N Sowazi.

Compensation

The compensation paid or accrued to the directors and executive committee for the year ended 31 December2015 was R198.7 million.

Conflicts of Interest

There are no actual or potential conflicts of interest between the duties of the directors of the Board and seniorexecutive management listed above or the directors of the Issuer or any of the Guarantors, to the Group, theIssuer or any Guarantor and his or her private interests or other duties.

None of the directors of the Issuer or of any Guarantor perform any activities outside of the Group that aresignificant with respect to the Issuer or the relevant Guarantor, respectively.

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Independent Directors

The boards of each of the Issuer and each Guarantor contain independent directors.

The tables below set out the directors for the Issuer and each of the Guarantors (other than MTN Group) as at thedate of this Offering Circular.

Issuer

Name Business Address

Mr. Paul Norman . . . . . . . . . . . . . . . . . . . . . . . . Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius

Mr. Roshan Nathoo . . . . . . . . . . . . . . . . . . . . . . Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius

Mr. Sivakumaren Mardemootoo . . . . . . . . . . . . Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius

MTN Mauritius


Mr. Paul Norman . . . . . . . . . . . . . . . . . . . . . . . . Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius

Mr. Roshan Nathoo . . . . . . . . . . . . . . . . . . . . . . Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius

Mr. Sivakumaren Mardemootoo . . . . . . . . . . . . Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius

MTN Holdings


Mr. Phuthuma Nhleko . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Paul Hanratty . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Alan Harper . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Koosum Kalyan . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Shagyan Kheradpir . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Peter Mageza . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Dawn Marole . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Azmi Mikati . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Stan Miller . . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Christine Ramon . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Nkululeko Sowasi . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Alan van Biljon . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Jeff van Rooyen . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa

MTN International


Mr. Phuthuma Nhleko . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Paul Hanratty . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Alan Harper . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Koosum Kalyan . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Shagyan Kheradpir . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Peter Mageza . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Dawn Marole . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Azmi Mikati . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Stan Miller . . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Christine Ramon . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Nkululeko Sowasi . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Alan van Biljon . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Jeff van Rooyen . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa

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MTN South Africa


Mr. Phuthuma Nhleko . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Mike Bosman . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Jyoti Desai . . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Shauket Fakie . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Mike Harper . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Trudy Makhaya . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Nosipho Molope . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Paul Norman . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Mteto Nyati . . . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMr. Sandile Ntsele . . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South AfricaMs. Lerato Phalatse . . . . . . . . . . . . . . . . . . . . . . 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa

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RELATED PARTY TRANSACTIONS

In the ordinary course of our business, we enter into transactions, such as sales, asset purchases, rent and servicetransactions with our subsidiaries, joint ventures and associates and other entities in which we have a materialinterest. We believe that these transactions are entered into on an “arm’s-length” basis and their terms are no lessfavourable than those arranged with third parties.

Please see note 10 to our audited consolidated financial statements contained elsewhere in this Offering Circularfor the year ended 31 December 2015 for further information on related party transactions determined inaccordance with IFRS.

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DESCRIPTION OF OTHER INDEBTEDNESS

The following summary of certain provisions of our credit arrangements and other indebtedness does not purportto be complete and is subject to, and qualified in its entirety by reference to, the underlying credit arrangementsand other documentation. We utilise a variety of short-term and long term debt instruments.

Our principal sources of external financing include both secured and unsecured short-term as well as long termfacilities (in Rand and other currencies). As at 30 June 2016, we had total debt of R81,947 million. Due to theinternational nature of our operations and the multitude of currencies in which we generate revenues and cashflows, a significant portion of our debt is denominated in currencies other than the South African Rand(e.g. US dollars or Nigerian naira for our operations in Nigeria).

Our long term funding strategy is to maximise funding at the operating company level without recourse to theGroup and to upstream cash from the operating companies up to the Group.

The following table sets forth our material external indebtedness, excluding capital market indebtedness andshort-term general borrowing facilities at the Group-level, as at 30 June 2016:

Holding Company Debt Currency Facility sizeOutstanding

balance Tenor Facility type Maturity date

MTN HoldingsUS$1 billion

InternationalRevolving CreditFacility . . . . . . . . . . . . US$ 1,000,000,000 1,000,000,000 5 years

Unsecured, SyndicatedRevolving Credit

Facility March 2019Bilateral ZAR Term

Loan . . . . . . . . . . . . . . ZAR 2,000,000,000 2,000,000,000 3 yearsUnsecured, Bullet Term

Loan May 2017Bilateral ZAR Term

Loan and RevolvingCredit Facility . . . . . . ZAR 3,000,000,000 3,000,000,000 3 years

Unsecured Term Loanand Revolving Credit

Facility December 2017

Syndicated ZAR TermLoan and RevolvingCredit Facility . . . . . . ZAR 7,500,000,000 7,500,000,000 5 years

Unsecured, SyndicatedTerm Loan and

Revolving CreditFacility February 2021

Bilateral ZAR RevolvingCredit Facility . . . . . . ZAR 3,500,000,000 3,500,000,000 5 years

Unsecured, BilateralRevolving Credit

Facility February 2021

Bilateral ZAR RevolvingCredit Facility . . . . . . ZAR 3,000,000,000 3,000,000,000 5 years

Unsecured, BilateralRevolving Credit

Facility February 2021

Operating Company Debt

MTN NigeriaCommunicationsLimited

Local SyndicatedFacility . . . . . . . . . . . . NGN 329,000,000,000 219,054,096,459 6.5 years

Unsecured, SyndicatedTerm Loan November 2019

International SyndicatedFacility . . . . . . . . . . . . US$ 280,000,000 280,000,000 6 years

Unsecured, SyndicatedTerm Loan April 2019

KFW Bank SEK(Buyer’s CreditFacility) . . . . . . . . . . . US$ 300,000,000 182,000,000 6.2 years

Unsecured, BuyersCredit Facility July 2019

Chinese Banks Syndicate(Buyer’s CreditFacility) . . . . . . . . . . . US$ 300,000,000 85,050,000 6.6 years

Unsecured, BuyersCredit Facility December 2019

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Subsequent to 30 June 2016, we have entered into new facilities. The following table sets forth our materialexternal indebtedness that we have incurred as at 31 August 2016:

Holding Company Debt Currency Facility sizeOutstanding

balance Tenor Facility type Maturity date

MTN Holdings

Up to US$1 billion CreditFacilities . . . . . . . . . . . . . . . . . US$

Up to1,000,000,000 300,000,000

5 years (TermFacility);3 years

(RevolvingCredit Facility)

Unsecure,Term Loan and

RevolvingCredit

August 2021(TermFacility);August 2019(RevolvingCredit Facility)

ZAR Term Loan . . . . . . . . . . . . . ZAR 1,500,000,000 1,500,000,000 5 yearsUnsecured,Term Loan August 2021

ZAR Term Loan . . . . . . . . . . . . . ZAR 3,300,000,000 2,800,000,000 5 yearsUnsecuredTerm Loan August 2021

US$1 Billion International Revolving Credit Facility

On 28 March 2014, MTN Group and certain of its subsidiaries entered into a US$1 billion revolving creditfacility agreement with a syndicate of international banks to be used for the refinancing of existing debt and thegeneral corporate purposes of the Group. The members of the Group which are permitted to borrow loans underthe US$1 billion revolving credit facility agreement are MTN Group, Mobile Telephone Networks HoldingsProprietary Limited, MTN International (Mauritius) Limited and MTN Treasury Limited. Our obligations underthe US$1 billion revolving credit facility agreement are guaranteed by each such company and also by MTNInternational Proprietary Limited and MTN South Africa.

Loans drawn under the US$1 billion revolving credit facility bear interest at a rate equal to the aggregate ofapplicable LIBOR plus a margin of 1.10% per annum. The final maturity date under the US$1 billion revolvingcredit facility agreement is 28 March 2019, and the availability period for drawing loans under the US$1 billionrevolving credit facility agreement expires one month prior to the final maturity date.

Each lender under the US$1 billion revolving credit facility agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loans on 30 days’ notice following a changeof control of MTN Group.

The US$1 billion revolving credit facility agreement contains customary positive and negative covenants,including restrictions, subject to certain exceptions, on our ability to sell or otherwise dispose of assets beyond acertain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the US$1 billion revolving credit facility agreement requires MTN Group to maintain certainfinancial covenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last dayof each financial year and each half financial year, the consolidated total net borrowings of the Group do notexceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjustedconsolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, R14,689.5 million (the full US$1 billion), translated at the 30 June 2016 closing rate ofUS$1 =R14.6895 was outstanding under the US$1 billion international revolving credit facility agreement.

Up to US$1 Billion Credit Facilities

On 25 August 2016, MTN Group and certain of its subsidiaries entered into an up to US$1 billion credit facilitiesagreement with a syndicate of international banks to be used for the working capital and general corporatepurposes of the Group. The members of the Group which are permitted to borrow loans under the up toUS$1 billion credit facilities agreement are MTN Group, Mobile Telephone Networks Holdings Limited andMTN International (Mauritius) Limited. Our obligations under the up to US$1 billion credit facilities agreementare guaranteed by each such company and also by MTN International Proprietary Limited and MTNSouth Africa.

The up to US$1 billion credit facilities agreement allows for the provision of a term facility (the Term Facility(US$656,250,000)) and a revolving credit facility (the Revolving Facility (US$218,750,000)). Loans drawnunder the Term Facility bear interest at a rate equal to the aggregate of LIBOR plus a margin of 2.15% perannum. Loans drawn under the Revolving Facility bear interest at a rate equal to the aggregate of LIBOR plus a

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margin of 1.75% per annum. If at any time MTN Group is assigned a long term corporate credit rating/corporatefamily rating (as applicable) higher than BB+ / Ba1 by at least one of Standard & Poor’s Rating Service andMoody’s Investor Services Limited, then the margin applicable to each of the Term Facility and the RevolvingFacility will be reduced by 0.35%. The final maturity date of the Term Facility is 25 August 2021 and the finalmaturity date of the Revolving Facility is 25 August 2019. The availability period for drawing loans under theTerm Facility expires 90 days after the date of the up to US$1 billion credit facilities agreement. The availabilityperiod for drawing loans under the Revolving Facility expires one month prior to the final maturity date for theRevolving Facility.

The up to US$1 billion credit facilities agreement contains a provision which allows a borrower, on not less thanthree days’ notice, to increase the size of the total commitments by an aggregate amount not exceedingUS$125,000,000. Any such increase must be made on a pro rata basis between the Term Facility and theRevolving Facility. Such increase may either be provided by an existing lender under the up to US$1 billioncredit facilities agreement, or alternatively by a bank, financial institution, trust, fund or other entity which is notalready an existing lender, in which case such new lender will acquire rights and assume obligations as if it hadbeen an existing lender.

Each lender under the up to US$1 billion credit facilities agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loan on 30 days’ notice following a change ofcontrol of MTN Group.

The up to US$1 billion credit facilities agreement contains customary positive and negative covenants, includingrestrictions, subject to certain exceptions, on our ability to sell or otherwise dispose of assets beyond a certainlimit, create liens on assets, or effect a reconstruction or merger.

In addition, the up to US$1 billion credit facilities agreement requires MTN Group to maintain certain financialcovenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of eachfinancial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidatedEBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 31 August 2016, US$300,000,000 was outstanding under the Term Facility and no loans were outstandingunder the Revolving Facility.

R2 Billion Credit Facility

On 30 May 2014, MTN Group and certain of its subsidiaries entered into a R2 billion credit facility withSumitomo Mitsui Banking Corporation Europe Limited to be used for general corporate purposes of the Group,the financing of acquisitions and investments and the refinancing of existing debt. The members of the Groupwhich are permitted to borrow loans under the R2 billion credit facility agreement are MTN Group,MTN Telephone Networks Holdings Proprietary Limited and MTN Treasury Limited. Our obligations under theR2 billion revolving credit facility agreement are guaranteed by each such company and also byMTN International Proprietary Limited, MTN International (Mauritius) Limited and MTN South Africa.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 1.10%.The final maturity date for any loans drawn under this facility is 30 May 2017.

The lender under the R2 billion credit facility agreement has the right to demand cancellation of its commitmentsand repayment of its participation in any outstanding loans on 30 days’ notice following a change of control ofMTN Group.

The R2 billion facility contains customary positive and negative covenants, including restrictions subject tocertain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens onassets, or effect a reconstruction or merger.

In addition, the R2 billion facilities agreement requires MTN Group to maintain certain financial covenants if thefacility is terminated or cancelled at any time. MTN Group must ensure that, as at the end of each 12-monthperiod ending on the last day of each financial year and each half financial year, the consolidated total net

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borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, andthat the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same periodis not less than 5.00 to 1.00.

As at 30 June 2016, the full R2 billion was outstanding under this facility.

R3 Billion Credit Facilities

On 15 December 2014, MTN Group and certain of its subsidiaries entered into a R3 billion credit facilitiesagreement with The Standard Bank of South Africa Limited to be used for general corporate purposes of theGroup, the financing of acquisitions and investments and the refinancing of existing debt. The members of theGroup permitted to borrow loans under the R3 billion credit facilities agreement are MTN Group andMTN Treasury Limited. Our obligations under the R3 billion credit facilities agreement are guaranteed byMobile Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa,MTN International (Mauritius) Limited and MTN Treasury Limited.

The credit facilities agreement allows for the provision of a term facility (Facility A (R1 billion)) and a revolvingcredit facility (Facility B (R2 billion)). Loans drawn under Facility A and Facility B bear interest at a rate equalto the aggregate of JIBAR plus a margin of 1.1%. The final maturity date for Facility A and Facility B is15 December 2017. The availability period for drawing loans under Facility A expires 12 months after the date ofthe R3 billion credit facilities agreement. The availability period for drawing loans under Facility B expires30 days prior to the final maturity date.

The lender under the R3 billion credit facilities agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loans on 30 days’ notice following a changeof control of MTN Group.

The R3 billion facilities agreement contains customary positive and negative covenants, including restrictions,subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, createliens on assets, or effect a reconstruction or merger.

In addition, the R3 billion credit facilities agreement requires MTN Group to maintain certain financialcovenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of eachfinancial year and each half financial year, the consolidated total net borrowings of the Group do not exceed2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjustedconsolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, an aggregate principal amount of R1 billion was outstanding under Facility A and anaggregate principal amount of R2 billion was outstanding under Facility B.

R7.5 Billion Syndicated Credit Facilities

On 12 February 2016, MTN Group and certain of its subsidiaries entered into a R7.5 billion credit facilitiesagreement with Nedbank Limited, FirstRand Bank Limited (acting through its Rand Merchant Bank division)and The Standard Bank of South Africa Limited to be used for the settlement of amounts outstanding under theexisting facilities agreement dated 13 December 2012, general corporate purposes of the Group, the financing ofacquisitions and investments and the refinancing of existing debt. The members of the Group permitted toborrow loans under the R7.5 billion credit facilities agreement are MTN Group and MTN Telephone NetworksHoldings Limited (previously MTN Telephone Networks Holdings Proprietary Limited). Our obligations underthe R7.5 billion credit facilities agreement are guaranteed by Mobile Telephone Networks Holdings Limited,MTN International Proprietary Limited, MTN South Africa and MTN International (Mauritius) Limited.

The credit facilities agreement allows for the provision of a term facility (Facility A (R5.5 billion)) and arevolving credit facility (Facility B (R2 billion)). Loans drawn under Facility A and Facility B bear interest at arate equal to the aggregate of JIBAR plus a margin of 2.05%. The final maturity date for Facility A and FacilityB is 15 February 2021. The availability period for drawing loans under Facility A expires 12 months after thedate of the R7.5 billion credit facilities agreement. The availability period for drawing loans under Facility Bexpires 30 days prior to the final maturity date.

Each lender under the R7.5 billion credit facilities agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loans on 30 days’ notice following a changeof control of MTN Group.

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The R7.5 billion facilities agreement contains customary positive and negative covenants, including restrictions,subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, createliens on assets, or effect a reconstruction or merger.

In addition, the R7.5 billion credit facilities agreement requires MTN Group to maintain certain financialcovenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of eachfinancial year and each half financial year, the consolidated total net borrowings of the Group do not exceed2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjustedconsolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, an aggregate principal amount of R5.5 billion was outstanding under Facility A and anaggregate principal amount of R2 billion was outstanding under Facility B.

R3.5 Billion Revolving Credit Facility

On 3 February 2016, MTN Group and certain of its subsidiaries entered into a R3.5 billion revolving creditfacility with Absa Bank Limited to be used for general corporate purposes of the Group incorporated in SouthAfrica, the financing of acquisitions and investments by any member of the Group incorporated in South Africaand the refinancing of existing debt of any member of the Group incorporated in South Africa. The members ofthe Group which are permitted to borrow loans under the R3.5 billion revolving credit facility agreement areMTN Group and MTN Telephone Networks Holdings Limited (previously MTN Telephone Networks HoldingsProprietary Limited). Our obligations under the R3.5 billion revolving credit facility agreement are guaranteed byMTN Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa andMTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 1.95%.The final maturity date for any loans drawn under this facility is 12 February 2021.

The lender under the R3.5 billion revolving credit facility agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loans on 30 days’ notice following a changeof control of MTN Group.

The R3.5 billion revolving credit facility agreement contains customary positive and negative covenants,including restrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond acertain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R3.5 billion revolving credit facility agreement requires MTN Group to maintain certain financialcovenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end ofeach 12-month period ending on the last day of each financial year and each half financial year, the consolidatedtotal net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the sameperiod, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during thesame period is not less than 5.00 to 1.00.

As at 30 June 2016, R3.5 billion was outstanding under this facility.

R3 Billion Revolving Credit Facility

On 10 February 2016, MTN Group and certain of its subsidiaries entered into a R3 billion revolving creditfacility with Nedbank Limited to be used for general corporate purposes of the Group, the financing ofacquisitions and investments and the refinancing of existing debt. The members of the Group which arepermitted to borrow loans under the R3 billion revolving credit facility agreement are MTN Group andMTN Telephone Networks Holdings Limited (previously MTN Telephone Networks Holdings ProprietaryLimited). Our obligations under the R3 billion revolving credit facility agreement are guaranteed byMTN Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa andMTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 1.90%.The final maturity date for any loans drawn under this facility is 16 February 2021.

The lender under the R3 billion revolving credit facility agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loans on 30 days’ notice following a changeof control of MTN Group.

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The R3 billion revolving credit facility agreement contains customary positive and negative covenants, includingrestrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certainlimit, create liens on assets, or effect a reconstruction or merger.

In addition, the R3 billion revolving credit facility agreement requires MTN Group to maintain certain financialcovenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end ofeach 12-month period ending on the last day of each financial year and each half financial year, the consolidatedtotal net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the sameperiod, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during thesame period is not less than 5.00 to 1.00.

As at 30 June 2016, R3 billion was outstanding under this facility.

R3.3 Billion Term Loan Facility

On 24 August 2016, MTN Group and certain of its subsidiaries entered into a R3.3 billion term loan facility withICBC (Europe) S.A. and The Standard Bank of South Africa Limited consisting of: (i) a R1.65 billion term loanfacility to be used for general corporate purposes of the Group, the financing of acquisitions and investments andthe refinancing of existing debt; and (ii) a R1.65 billion term loan facility to be used for the reimbursement orfinancing of invoiced amounts owed to certain of our vendors. The members of the Group which are permitted toborrow loans under the R3.3 billion term loan facility agreement are MTN Group and MTN Telephone NetworksHoldings Limited. Our obligations under the R3.3 billion term loan facility agreement are guaranteed byMTN Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa andMTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 2.25%.The final maturity date for any loans drawn under this facility is 24 August 2021.

Any lender under the R3.3 billion term loan facility agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loans on 30 days’ notice following a changeof control of MTN Group.

The R3.3 billion term loan facility agreement contains customary positive and negative covenants, includingrestrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certainlimit, create liens on assets, or effect a reconstruction or merger.

In addition, the R3.3 billion term loan facility agreement requires MTN Group to maintain certain financialcovenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end ofeach 12-month period ending on the last day of each financial year and each half financial year, the consolidatedtotal net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the sameperiod, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during thesame period is not less than 5.00 to 1.00.

As at 31 August 2016, R2.8 billion was outstanding under this facility.

R1.5 Billion Term Loan Facility

On 18 August 2016, MTN Group and certain of its subsidiaries entered into a R1.5 billion term loan facility withStandard Chartered Bank consisting of: (i) a R1 billion term loan facility; and (2) a R0.5 billion term loanfacility; each to be used for the financing of capital expenditure, working capital and general corporate purposesof the Group. The members of the Group which are permitted to borrow loans under the R1.5 billion term loanfacility agreement are MTN Group and MTN Telephone Networks Holdings Limited. Our obligations under theR1.5 billion term loan facility agreement are guaranteed by MTN Telephone Networks Holdings Limited,MTN International Proprietary Limited, MTN South Africa and MTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 2.55% (asadjusted for changes in MTN Group’s credit rating). If at any time MTN Group is assigned a long term corporatecredit rating higher than BB+ by Standard & Poor’s, then the applicable margin shall be reduced by 0.30%. Thefinal maturity date for any loans drawn under this facility is 18 August 2021.

The lender under the R1.5 billion term loan facility agreement has the right to demand cancellation of itscommitments and repayment of its participation in any outstanding loans on 30 days’ notice following a changeof control of MTN Group.

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The R1.5 billion term loan facility agreement contains customary positive and negative covenants, includingrestrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certainlimit, create liens on assets, or effect a reconstruction or merger.

In addition, the R1.5 billion term loan facility agreement requires MTN Group to maintain certain financialcovenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end ofeach 12-month period ending on the last day of each financial year and each half financial year, the consolidatedtotal net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the sameperiod, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during thesame period is not less than 5.00 to 1.00.

As at 31 August 2016, R1.5 billion was outstanding under this facility.

Nigerian Credit Facilities

MTN Nigeria regularly enters into loan facilities with major international banks to finance capital expendituresand working capital requirements and to refinance existing debt, among other purposes. Borrowings under thesefacilities are usually due within five to seven years.

As at 30 June 2016, the aggregate amount outstanding under these credit facilities was R16,922 million.

Ivory Coast Credit Facilities

MTN Ivory Coast regularly enters into term loan facilities with major international banks to finance capitalexpenditures and working capital requirements and to refinance existing debt, among other purposes. Borrowingsunder these facilities are due within seven years.


Cameroon Credit Facilities

MTN Cameroon regularly enters into term loan facilities with major international banks to finance capitalexpenditures and working capital requirements and to refinance existing debt, among other purposes. Borrowingsunder these facilities are usually due within four years.


Uganda Credit Facilities

MTN Uganda regularly enters into term loan facilities with major international and regional banks to financecapital expenditures and working capital requirements and to refinance existing debt, among other purposes.Borrowings under these facilities are usually due within five years.


Ghana Credit Facilities

MTN Ghana regularly enters into term loan facilities with major international and regional banks to financecapital expenditures and working capital requirements and to refinance existing debt, among other purposes.Borrowings under these facilities are usually due within twelve months.


Credit Facilities Waivers

Following the initial imposition of the Nigerian regulatory fine and uncertainty regarding the terms andconditions of the fine, we sought and received waivers from lenders under certain of our material credit facilitieswith respect to any potential defaults that may arise as a result of the payment of the Nigerian regulatory fine.These waivers are valid until 1 July 2017. Following the settlement of the Nigerian regulatory fine, including theagreement of a payment schedule, with the Nigerian authorities, we do not believe any further waivers orextensions of existing waivers will be required. See “Business Description—Litigation, Arbitration andDisputes—Nigerian Regulatory Fine”.

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General Short-term Borrowing Facilities

We regularly enter into general short-term borrowing facilities at the Group level with international and SouthAfrican banks. Borrowings under these facilities are usually due within 30 days and the facilities typically maturewithin 12 months. Borrowings under these facilities generally bear interest at a floating rate. These general short-term borrowing facilities are used for general corporate purposes of the Group.

Capital Markets

In addition to bank borrowings, we have also raised debt funding through the domestic capital markets. In 2006and subsequently updated in 2010, MTN Holdings Proprietary Limited established a R10 billion DomesticMedium-Term Note Programme. As at 30 June 2016, there was R3,300 million outstanding under theProgramme.

In November 2014, MTN (Mauritius) Investments Limited issued US$750 million Guaranteed Notes due11 November 2024.

MTN Holdings Proprietary Limited is currently in the process of increasing its 2010 R10 billion DomesticMedium-Term Note Programme to R20 billion. Terms and conditions are expected to by and large remain thesame with the exception of updates for latest market standards.

Guarantees

In the normal course of business, we have issued guarantees to secure certain obligations of some of ouroperations under bank financing agreements. As at 30 June 2016, we had issued R62,683 million of guarantees,with a maximum exposure of R105,420 million.

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INDUSTRY

The telecommunication sector has had a transformational impact on the global economy over the last fewdecades. It has provided the technological backdrop for more efficient, instant communication betweenindividuals and the transfer of data and information in large quantities across the globe.

While more developed economies have experienced these developments as a rapid evolution and growth on thebasis of communication networks that were deployed from the late 19th century onwards, the impact onemerging market economies has been even more profound, effectively connecting people and businesses. Thetelecommunication sector has thus been a key factor in supporting the growth and development of emergingmarkets by facilitating the participation of individuals in their local economy.

Fixed-line-based telecommunication services have had a limited proliferation in emerging markets due to theirhistorically high cost of deployment and high usage costs. The arrival of mobile communication has profoundlychanged the industry dynamics and the rapid roll-out of mobile networks across emerging markets hassignificantly improved access to services similar to those in more developed markets.

Over the past several years, the cost of telecommunication services and mobile devices has continuouslydecreased, allowing access to these services for an ever increasing proportion of society. As industry standardscontinue to improve, the level of service and capacity to transport data has increased, enabling the delivery ofmore sophisticated services and solutions. Fixed-line networks are gradually upgraded to next-generationnetworks, which allow faster processing of larger quantities of data and more efficient network management thantraditional public switched telephone networks. Mobile networks have converged towards a few standards withGSM as the most widespread standard. GSM operators have organically moved on from the basic 2G networkstandard to 3G/Universal Mobile Telecommunications System (“UMTS”) networks and, increasingly, 4G/LTEnetworks which are capable of delivering high-speed broadband services to customers. The build out of LTEnetworks and the rapid expansion of 4G network coverage have continued and, given the growing number ofsmartphone and tablet users (which consume considerably more data than traditional cellular phone devices),there is a greater need for adequate spectrum.

In South Africa, the ICASA has recognised the need for additional spectrum and has invited interested companiesto apply for spectrum within the 700MHz, 800MHz and 2,600MHz bands. The issuance of spectrum licences willaccelerate the roll-out of the 4G network across the country enabling high-speed connections and fasterdownloads.

Regulators award permits and licences for the operation of telecommunication services, and grant spectrumrequired to deliver mobile services, normally for a finite period, such as 15 or 20 years. The telecommunicationsector in most of our markets of operation tends to be regulated by a combination of government ministries, suchas the ministry of communication, and national regulatory bodies. As a consequence, spectrum allocations mustbe renewed, normally for a fee or, if demand exceeds supply, the regulator may hold an auction for certainspectrum bands. In addition, regulatory bodies regulate certain fees and charges that telecommunicationoperators may charge, such as fixed or mobile termination fees that operators charge each other for terminating acall on their network that has originated on a different network and for which only the providing networkreceives a call charge fee from its customer (the “calling party pays principle”). Other areas of regulation includelimitations to roaming charges, i.e., fees charged to customers when using a network abroad, as well as terms andconditions for operators with a dominant infrastructure position to provide other operators with access to itsinfrastructure. Regulators are also responsible for monitoring the quality levels of services provided bytelecommunication operators, and they may impose fines or restrictions of service on operators if expected levelsof quality of service are not met.

Mobile Services

The proliferation of mobile services has experienced high growth globally, including in emerging markets. It istoday the predominant access technology for telecommunication services across most emerging economies, andspecifically within our regions of operation. Of the approximately 7.2 billion mobile subscribers globally,approximately 1.3 billion are in Africa and the Middle East, comprising approximately 19% of the global mobilesubscriber base. In contrast, there are approximately 0.8 billion fixed-line subscribers globally, withapproximately 0.08 billion in Africa and the Middle East, i.e., only approximately 11% of the global fixed-linesubscriber base.

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Mobile and fixed-line subscribers worldwide (m), (Mobile: March 2016, Fixed: 2015)

3,817

1,037700

370 398

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Total mobile subscribers (m)

362

169

9769 61

23

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Total fixed-line subscribers (m)

Across our markets of operation mobile coverage has continuously increased and generally achieves levels ofbetween 134% and 164% of the population in the more advanced markets like Ghana and South Africa, but mayonly be at levels of between 26% and 59% of the population in less advanced markets such as South Sudan andYemen. We and other mobile operators continue to invest considerably into our respective networks in order toincrease both coverage and capacity of the networks.

Mobile penetration rates, measured in number of mobile subscribers divided by the population, have increasedconsiderably over the last few years, but still have growth potential in most emerging markets when compared todeveloped economies. Demographic growth, growing levels of disposable income, increasing coverage andservice availability, as well as further expected declines in costs for consumers, are expected to contribute tofurther growth in the mobile telecommunication sector and generate new subscribers in the future. In addition,the adoption of new devices such as smartphones and tablets is expected to continue to drive additional usage, assubscribers may rely on more than one subscription for their multiple devices. Additional growth may also comefrom technological advances such as machine-to-machine traffic in the future.

Mobile penetration rates in selected countries in 2005 and March 2016

90%80%

110%

70%60%

20%10%

20%10%

132%144% 138%

123%

164%

134%

74%83%

47%

Germany

2005 2016

Switzerland UK Japan South Africa Ghana Sudan Nigeria Uganda

One of the key parameters in the rapid take-up of mobile services has been the offer of prepaid services, whichallows customers to avoid entering into a contract of a specified length with an operator, tailoring theirconsumption to the availability of funds and actual usage needs. While mobile network operators in mostdeveloped markets have embarked on a process of converting prepaid subscribers to contract subscribers, thisdevelopment has not significantly begun in emerging markets. The higher cost of more sophisticated handsetssuch as the iPhone or Android-based smartphones lends itself more to a contract-based subscription, as the costof the handset for the consumer can be recovered over the life of the contract, and the mobile network operatormay offer a subsidy on the handset cost to the consumer, knowing the customer will remain a subscriber at leastfor a specified contract period. In emerging markets, where the penetration of high-end devices is lower, theflexibility of prepaid subscriptions remains more attractive. Consumers may have several prepaid SIM cards andswitch them in their handset in order to take advantage of offers and lower on-net calling rates. In addition, manyemerging markets lack the wide-spread bank account system required for the operation of contract subscriptions.As at 31 December 2015, of our total subscriber base of approximately 232.5 million, a majority are prepaidsubscribers. Our South African operation has a significant postpaid subscriber base, with 17% of its totalsubscriber base being postpaid as at 30 June 2016.

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Mobile communication prices have generally decreased significantly since services began gaining wider adoptionabout a decade ago. This has been a direct consequence of technological advances, growing competition amongstmobile operators as well as regulatory changes, such as the reduction of roaming charges and mobile terminationrates. As a consequence, subscriber bases have grown, as more consumers have been able to afford the services.Usage, measured in minutes of use for voice services, has increased considerably, but has not compensated forthe effect of decreasing prices to sustain average revenue per user for mobile operators. In addition, consumerswith less spending power are being added as subscribers, diluting the ARPU. While the effect of one consumerusing multiple SIMs is to add to the subscriber count, it is ARPU dilutive. ARPUs across our markets ofoperation differ considerably depending on the level of affluence, mix of prepaid and postpaid subscribers andthe market penetration rate. Blended ARPU across all operators amounts to approximately $7.20 in South Africa,while it can be below $2.40 in markets such as Uganda.

Mobile operators have traditionally charged subscribers for usage based voice and text services, and this stillrepresents the bulk of our business across our markets of operation. Postpaid subscribers are offered servicebundles including voice minutes, SMS and data usage allowances. Operators with larger scale and a leadingmarket position, like us in most of our operations, tend to benefit from an on-net community effect. With notermination charge payable to another operator, on-net calls can be offered more cheaply, and thus prospectivenew subscribers have an incentive to subscribe to a network where most of their friends and family are alreadysubscribers. However, decreasing mobile termination rates and the wide-spread usage of multiple SIM cards havesomewhat eroded that benefit. Network operators also try to differentiate their services through features such ascalling circles with preferential rates, calling credits or promotions and loyalty programmes.

Increasingly, VAS have been rolled out which provide more than simple voice or data exchange. Apart fromoffering additional revenue opportunities, VAS are a tool to prevent churn among the subscriber base, ascustomers become accustomed to the use of specific tools and applications, thus lowering the appetite to switchproviders in case of a new promotion by a competing network operator. Emerging market mobile operators havebeen instrumental in developing data application over non-smartphone devices, in order to facilitate a fastadoption of their services. Mobile banking services have been a large success in emerging markets, where mostconsumers do not have regular bank accounts. Money can be sent over the mobile banking platform of operatorsand balances can be used to pay bills, friends and family or for mobile services. Mobile operators tend to chargea commission per transaction for the handling of a transaction on their network. They do not generally holdaccount balances, but underlying deposits are normally held by partnering financial institutions. We offer MTNMobile Money in 14 out of our 22 markets of operation. During 2015, the customer base for MTN MobileMoney grew by 56% to over 34.7 million customers, contributing 17% to Uganda’s total revenue and 6% each toGhana and Rwanda’s total revenue as of 31 December 2015. Similar areas of VAS, where the mobile networkoperator can offer a unique service intermediation, include airtime lending, micro-retail lending, handsetinsurance and other insurance products.

The arrival of smartphones has created new opportunities and challenges for mobile operators, and trendsobserved in developed markets are expected to affect emerging markets, albeit with a time delay. OTTapplications such as internet based chat services (e.g., WhatsApp, WeChat) as well as voice and video services(e.g., Skype) are a threat to traditional voice and SMS revenue streams for operators. At the same time, theincreasing demand for data services requires considerable network investments that need to be borne by themobile operators. However, new revenue streams can also be developed, as mobile operators can charge foronline content and digital services. In the effort of accelerating our expansion into the digital space, we enteredinto partnerships covering both Africa and the Middle East with Rocket Internet in 2014. Rocket is one of theworld’s leading internet incubators with a presence in Africa and the Middle East.

Competition at retail level does not only occur between the mobile network operators but resellers and mobilevirtual network operators (“MVNOs”) may also compete with the network operators for customers. MVNOspurchase network capacity from the network operators and offer this capacity on a resale basis to their owncustomers. MVNOs have had a profound impact in many developed markets, specialising in certain marketsegments such as ethnic minorities, but they have had a generally lower impact in emerging markets. Out of ourmarkets of operation, significant MVNOs only exist in South Africa.

Over the last few years, an independent tower sector has developed particularly across Africa, and to a lesserextent in the Middle East. Tower operators build tower sites that are then offered to mobile operators on which toinstall their equipment in exchange for a monthly rental fee. Independent tower operators manage the tower sitesin terms of access, security, electronics, air-conditioning and maintenance and are focused on renting space onone tower to several mobile operators, thus increasing the efficiency of the network of tower sites. Several

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mobile operators, including MTN, have sold sites or partial ownership in a tower network entity to specialisttower operators over the last few years. The mobile operators typically enter long term rental agreements ofapproximately 10-15 years at the time of a sale transaction. Higher up-front sale proceeds are generally balancedwith higher committed lease rates throughout the contractual rental period and vice versa. MTN most recentlysold 8,850 of its Nigerian mobile network towers in two tranches in 2014 and 2015 to INT Towers Ltd (of whichMTN holds a 51% stake, 49% held by IHS).

Fixed-line Services

Fixed-line services in emerging markets have achieved a far lower penetration than in developed markets, asmeaningful network deployment largely did not occur before the second half of the 20th century. Costs ofnetwork deployment are high, and in many markets the lack of wide-spread affluence has limited thecommercially viable reach of fixed-line networks to businesses and middle- and upper-class residentialneighbourhoods. With the arrival of mobile services in the 1990s and 2000s, growing communication needscould be met more quickly and more cost effectively by the new mobile technology.

The fixed-line incumbent operators were traditionally run as part of the state-owned post and telecommunicationservice. In most of our markets of operation, the incumbent operator remains controlled by the government.Typically, the incumbent infrastructure is obsolete and has not been developed further to deliver broadbandservices to a level akin to what can be found in Europe and other developed markets, although Telkom SouthAfrica has embarked on a fibre and next-generation network upgrade programme over the last few years. Mobileoperators tend to use incumbent or other alternative networks for channelling long-distance and internationalbackhaul traffic. In many emerging markets, the quality and reach of the incumbent networks are limited, and,therefore mobile operators are building their own fibre networks to direct and efficiently manage their owntraffic. For MTN, this self-provisioning is of particular relevance in South Africa and Nigeria, where we haveinvested significantly in our own fibre deployments. In 2015, 1,469km of long-distance fibre was rolled out,which served to connect a total of 1,164 sites to fibre, enabling better quality data network across operations.Improving quality and throughput in homes and fixed locations through the rollout of fibre-to-the-home in SouthAfrica, Nigeria, Ghana and Iran is a key focus in 2016.

Alternative independent network operators do exist to fill the void left by the emerging market incumbents. Theiroverall relevance, however, is small and focused on key markets. Business-focused telecommunication providersmay connect business parks and large corporate customers with their own fibre infrastructure. Coaxial cablenetworks, which are widely established across North America, Europe and parts of Asia, have generally not beendeployed in the emerging markets of Africa and the Middle East, as television distribution traditionally relied onfree-to-air and satellite services.

The following table sets forth certain market indicators in our largest markets for the year 2015:

SouthAfrica Nigeria Iran Ghana Syria

IvoryCoast Cameroon Uganda Sudan

Population (m) . . . . . . . . . . . . . . . . . 55.0 178.7 79.5 26.9 16.6 23.7 23.1 39.9 38.4Number of households (m) . . . . . . . 15.3 38.7 23.8 7.5 3.4 4.4 6.4 8.2 5.7MobileSubscribers (m) . . . . . . . . . . . . . . . . 90.4 151.1 113.0 35.0 13.3 25.4 19.5 18.1 27.9% 3G and 4G subscribers . . . . . . . . 46% 21% 20% 28% 5% 34% 8% 5% 15%Penetration rate (%) . . . . . . . . . . . . . 164% 85% 142% 130% 80% 107% 84% 45% 73%Blended ARPU (US$) . . . . . . . . . . . 7.2 4.9 3.9 3.3 3.3 4.8 3.6 2.4 2.6Fixed lineTelephony subscribers (m) . . . . . . . 3.9 0.2 24.8 0.3 3.4 0.3 0.2 0.4 0.1Telephony penetration of

households (%) . . . . . . . . . . . . . . 25.7% 0.5% 104.2% 3.4% 100.0% 6.3% 3.2% 4.3% 2.1%

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CONDITIONS OF THE 2022 NOTES

The following is the text of the terms and conditions of the 2022 Notes (the Conditions) which (subject tomodification and except for the paragraphs in italics) will be endorsed on the Certificates issued in respect of the2022 Notes:

The U.S.$500,000,000 5.373 per cent. Guaranteed Notes due 2022 (the “Notes”, which expression shall in theseConditions, unless the context otherwise requires, include any further notes issued pursuant to Condition 16 andforming a single series with the Notes) of MTN (Mauritius) Investments Limited (the “Issuer”) are issued subjectto and with the benefit of an Agency Agreement dated 13 October 2016 (such agreement as amended and/orsupplemented and/or restated from time to time, the “Agency Agreement”) made between the Issuer, MTNGroup Limited (“MTN Group”), Mobile Telephone Networks Holdings Limited, MTN International (Mauritius)Limited, MTN International Proprietary Limited and Mobile Telephone Networks Proprietary Limited asguarantors (together with MTN Group, the “Guarantors”), Citigroup Global Markets Deutschland AG as registrar(the “Registrar”) and Citibank, N.A., London Branch as fiscal agent and principal paying agent (the “FiscalAgent” and, together with any other paying agents appointed in respect of the Notes from time to time, the“Paying Agents” and the Fiscal Agent, the Registrar and the other Paying Agents together being referred to as the“Agents”). The holders of the Notes are entitled to the benefit of a Deed of Covenant (the “Deed of Covenant”)and a Deed Poll (the “Deed Poll”), each dated 13 October 2016 and made by the Issuer. The originals of the Deedof Covenant and the Deed Poll are held by the Fiscal Agent on behalf of the Noteholders (as defined below) at itsspecified office.

The statements in these Conditions include summaries of, and are subject to, the detailed provisions of anddefinitions in the Agency Agreement. Copies of the Agency Agreement are available for inspection duringnormal business hours by the Noteholders at the specified office of each of the Paying Agents. The Noteholdersare entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the AgencyAgreement, the Deed of Covenant and the Deed Poll applicable to them. References in these Conditions to theFiscal Agent, the Registrar, the Paying Agents and the Agents shall include any successor appointed under theAgency Agreement.

The owners shown in the records of Euroclear Bank SA/NV (“Euroclear”), Clearstream Banking S.A.(“Clearstream, Luxembourg”) and The Depository Trust Company (“DTC”) of book-entry interests in Notes areentitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the AgencyAgreement, the Deed of Covenant and the Deed Poll applicable to them.

1. FORM, DENOMINATION AND TITLE

1.1 Form and Denomination

The Notes are issued in registered form in amounts of U.S.$200,000 and integral multiples of U.S.$1,000 inexcess thereof (referred to as the “principal amount” of a Note). A note certificate (each a “Certificate”) willbe issued to each Noteholder in respect of its registered holding of Notes. Each Certificate will be numberedserially with an identifying number which will be recorded on the relevant Certificate and in the register ofNoteholders which the Issuer will procure to be kept by the Registrar and the exact copy of each suchregister which will be maintained by the Issuer at its registered office (together the “Register”).

The Notes are not issuable in bearer form.

1.2 Title

Title to the Notes passes only by registration in the Register. The holder of any Note will (except as orderedby a court of competent jurisdiction or as otherwise required by law) be treated as its absolute owner for allpurposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest or anywriting on, or the theft or loss of, the Certificate issued in respect of it) and no person will be liable for sotreating the holder. In these Conditions “Noteholder” and (in relation to a Note) “holder” means the personin whose name a Note is registered in the Register.

For a description of the procedures for transferring title to book-entry interests in the Notes, see “Book-Entry Clearance Systems”.

2. TRANSFERS OF NOTES AND ISSUE OF CERTIFICATES

2.1 Transfers

A Note may, subject to Condition 2.4, be transferred in whole or in part by depositing the Certificate issuedin respect of that Note, with the form of transfer on the back duly completed and signed, at the specifiedoffice of the Registrar or any of the other Agents.

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For a description of certain restrictions on transfers of interests in the Notes, see “Transfer Restrictions”.

2.2 Delivery of new Certificates

Each new Certificate to be issued upon transfer of Notes pursuant to Condition 2.1 will, within five businessdays of receipt by the Registrar or the relevant Agent of the duly completed form of transfer endorsed on therelevant Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Note to the addressspecified in the form of transfer. For the purposes of this Condition, “business day” shall mean a day onwhich banks are open for business in the city in which the specified office of the Agent with whom aCertificate is deposited in connection with a transfer is located.

Except in the limited circumstances described in “The Global Certificates—Registration of Title”, ownersof interests in the Notes will not be entitled to receive physical delivery of Certificates. Issues of Certificatesupon transfer of Notes are subject to compliance by the transferor and transferee with the certificationprocedures described above and in the Agency Agreement and compliance with the legends placed on theNotes as described in “Transfer Restrictions”.

Where some but not all of the Notes in respect of which a Certificate is issued are to be transferred a newCertificate in respect of the Notes not so transferred will, within five business days of receipt by theRegistrar or the relevant Agent of the original Certificate, be mailed by uninsured mail at the risk of theholder of the Notes not so transferred to the address of such holder appearing on the Register or as specifiedin the form of transfer.

2.3 Formalities free of charge

Registration of a transfer of Notes will be effected without charge by or on behalf of the Issuer or any Agentbut upon payment by the Noteholder (or the giving of such indemnity as the Issuer or any Agent mayreasonably require) in respect of any tax or other governmental charges which may be imposed in relation tosuch transfer.

2.4 Closed Periods

No Noteholder may require the transfer of a Note to be registered (a) during the period of 15 days ending on(and including) the due date for any payment of principal or interest on that Note, or (b) after any such Notehas been called for redemption.

2.5 Regulations

All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerningtransfer of Notes scheduled to the Agency Agreement. The regulations may be changed by the Issuer withthe prior written approval of the Registrar. A copy of the current regulations will be mailed (free of charge)by the Registrar to any Noteholder who requests one.

3. STATUS OF THE NOTES

The Notes are direct, unconditional, unsubordinated and (subject to the provisions of Condition 5)unsecured obligations of the Issuer and (subject as provided above) rank and will rank pari passu, withoutany preference among themselves, with all other outstanding unsecured and unsubordinated obligations ofthe Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable lawsrelating to creditors’ rights.

4. GUARANTEE

4.1 Guarantee

The payment of the principal and interest in respect of the Notes has been unconditionally and irrevocablyguaranteed by the Guarantors under a deed of guarantee (the “Guarantee”) dated 13 October 2016 andexecuted by the Guarantors.

4.2 Status of the Guarantee

The obligations of each Guarantor under the Guarantee constitute direct, unconditional, unsubordinated and(subject to the provisions of Condition 5) unsecured obligations of the relevant Guarantor and (subject as

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provided above) rank and will rank pari passu with all other outstanding unsecured and unsubordinatedobligations of the relevant Guarantor, present and future, but, in the event of insolvency, only to the extentpermitted by applicable laws relating to creditors’ rights.

The original of the Guarantee is held by the Fiscal Agent on behalf of, and copies are available forinspection by, the Noteholders at its specified office.

5. COVENANTS

5.1 Negative Pledges

So long as any of the Notes remains outstanding (as defined in the Agency Agreement):

(a) the Issuer will ensure that no Relevant Indebtedness (as defined below) or Sukuk Obligation (asdefined below) will be secured by any mortgage, charge, lien, pledge or other security interest (each a“Security Interest”) upon, or with respect to, any of the present or future business, undertaking, assetsor revenues (including any uncalled capital) of the Issuer or any of its Material Subsidiaries (as definedbelow) other than a Permitted Security Interest (as defined below), unless the Issuer, in the case of thecreation of a Security Interest, before or at the same time and, in any other case, promptly, takes anyand all action necessary to ensure that:

(i) all amounts payable by it under the Notes are secured by the Security Interest equally and rateablywith the Relevant Indebtedness or Sukuk Obligation, as applicable; or

(ii) such other Security Interest or other arrangement (whether or not it includes the giving of aSecurity Interest) is provided as is approved by an Extraordinary Resolution (which is defined inthe Agency Agreement as a resolution duly passed by a majority of not less than three-fourths ofthe votes cast) of the Noteholders; and

(b) each Guarantor will ensure that no Relevant Indebtedness or Sukuk Obligation will be secured by anySecurity Interest upon, or with respect to, any of the present or future business, undertaking, assets orrevenues (including any uncalled capital) of that Guarantor or any of its Material Subsidiaries otherthan a Permitted Security Interest, unless the relevant Guarantor, in the case of the creation of theSecurity Interest, before or at the same time and, in any other case, promptly, takes any and all actionnecessary to ensure that:

(i) all amounts payable by it under the Guarantee are secured by the Security Interest equally andrateably with the Relevant Indebtedness or Sukuk Obligation, as applicable; or

(ii) such other Security Interest or other arrangement (whether or not it includes the giving of aSecurity Interest) is provided as is approved by an Extraordinary Resolution of the Noteholders.

5.2 Interpretation

For the purposes of these Conditions:

(a) “Material Subsidiary” means at any time a Subsidiary of MTN Group:

(i) whose gross assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) orwhose pre-tax profits (consolidated in the case of a Subsidiary which itself has Subsidiaries) orwhose turnover (consolidated in the case of a Subsidiary which itself has Subsidiaries) representin each case (or, in the case of a Subsidiary acquired after the end of the financial period to whichthe then latest audited consolidated accounts of MTN Group relate, are equal to) not less than10 per cent. of the consolidated gross assets, consolidated pre-tax profits or consolidated turnover,as applicable, of MTN Group and its Subsidiaries, all as calculated respectively by reference to thethen latest audited accounts (consolidated or, as the case may be, unconsolidated) of suchSubsidiary and the then latest audited consolidated accounts of MTN Group, provided that in thecase of a Subsidiary of MTN Group acquired after the end of the financial period to which thethen latest audited consolidated accounts of MTN Group relate, the reference to the then latestaudited consolidated accounts of the MTN Group for the purposes of the calculation above shall,until consolidated accounts for the financial period in which the acquisition is made have beenprepared and audited as aforesaid, be deemed to be a reference to such first-mentioned accounts asif such Subsidiary had been shown in such accounts by reference to its then latest relevant auditedaccounts, adjusted as deemed appropriate by MTN Group;

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(ii) to which is transferred the whole or substantially the whole of the undertaking and assets of aSubsidiary of MTN Group which immediately prior to such transfer is a Material Subsidiary,provided that the transferor Subsidiary shall upon such transfer forthwith cease to be a MaterialSubsidiary and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to thissubparagraph (ii) on the date on which the consolidated accounts of MTN Group for the financialperiod current at the date of such transfer have been prepared and audited as aforesaid but so thatsuch transferor Subsidiary or such transferee Subsidiary may be a Material Subsidiary on or at anytime after the date on which such consolidated accounts have been prepared and audited asaforesaid by virtue of the provisions of subparagraph (i) above or, prior to or after such date, byvirtue of any other applicable provision of this definition; or

(iii) to which is transferred an undertaking or assets which, taken together with the undertaking orassets of the transferee Subsidiary, generated (or, in the case of the transferee Subsidiary beingacquired after the end of the financial period to which the then latest audited consolidatedaccounts of MTN Group relate, generate turnover or pre-tax profits equal to) not less than 10 percent. of the consolidated turnover or pre-tax profits, as applicable, or represent (or, in the caseaforesaid, are equal to) not less than 10 per cent. of the consolidated gross assets, of MTN Group,all as calculated as referred to in subparagraph (i) above, provided that the transferor Subsidiary(if a Material Subsidiary) shall upon such transfer forthwith cease to be a Material Subsidiaryunless immediately following such transfer its undertaking and assets generate (or, in the caseaforesaid, generate turnover or pre-tax profits equal to) not less than 10 per cent. of theconsolidated turnover or pre-tax profits, as applicable, or its assets represent (or, in the caseaforesaid, are equal to) not less than 10 per cent. of the consolidated gross assets, of MTN Group,all as calculated as referred to in subparagraph (i) above, and the transferee Subsidiary shall ceaseto be a Material Subsidiary pursuant to this subparagraph (iii) on the date on which theconsolidated accounts of MTN Group for the financial period current at the date of such transferhave been prepared and audited but so that such transferor Subsidiary or such transfereeSubsidiary may be a Material Subsidiary on or at any time after the date on which suchconsolidated accounts have been prepared and audited as aforesaid by virtue of the provisions ofsubparagraph (i) above or, prior to or after such date, by virtue of any other applicable provisionof this definition,

all as more particularly defined in the Agency Agreement.

A report by two Authorised Signatories (as defined in the Agency Agreement) of MTN Group that intheir opinion a Subsidiary is or is not or was or was not at any particular time or throughout anyspecified period a Material Subsidiary shall, in the absence of manifest error, be conclusive andbinding on all parties;

(b) “Permitted Security Interest” means (i) any Security Interest created or outstanding with the approvalof an Extraordinary Resolution of the Noteholders; (ii) any Security Interest securing RelevantIndebtedness or a Sukuk Obligation of a person existing at the time that such person is merged into, orconsolidated with, the Issuer, any Guarantor or any Subsidiary, provided that such Security Interest wasnot created in contemplation of, and the principal amount secured has not increased in contemplation ofor since, such merger or consolidation; (iii) any Security Interest existing on any property or assetsprior to the acquisition thereof by the Issuer or any Guarantor or any Subsidiary, provided that suchSecurity Interest was not created in contemplation of, and the principal amount secured has notincreased in contemplation of or since, such acquisition; or (iv) any renewal of or substitution for anySecurity Interest permitted by any of the subparagraphs (i) to (iii) (inclusive) of this definition,provided that with respect to any such Security Interest (A) the principal amount secured has notincreased and (B) the Security Interest has not been extended to any additional assets (other than theproceeds of such assets and, provided the aggregate book value of all assets the subject of the relevantSecurity Interest immediately following the relevant renewal or substitution does not exceed theaggregate book value of all assets the subject of the relevant Security Interest immediately prior to therelevant renewal or substitution, any replacement assets);

(c) “Relevant Indebtedness” means (i) any present or future indebtedness (whether being principal,premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock,loan stock or other securities which are for the time being quoted, listed or ordinarily dealt in on anystock exchange, over-the-counter or other securities market and (ii) any guarantee or indemnity of anysuch indebtedness;

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(d) “Subsidiary” means, in relation to the Issuer or any Guarantor, any company (i) in which the Issuer oras the case may be, the relevant Guarantor holds a majority of the voting rights or (ii) of which theIssuer or, as the case may be, the relevant Guarantor has the right to appoint or remove a majority ofthe board of directors or (iii) of which the Issuer or, as the case may be, the relevant Guarantor controlsa majority of the voting rights, and includes any company which is a Subsidiary of a Subsidiary of theIssuer or, as the case may be, the relevant Guarantor; and

(e) “Sukuk Obligation” means any undertaking or other obligation to pay any money given in connectionwith the issue of trust certificates or other securities issued in connection with any Islamic financingwhether or not in return for consideration of any kind, which trust certificates or other securities are forthe time being quoted, listed or ordinarily dealt in on any stock exchange, over-the-counter or othersecurities market.

5.3 Undertaking in respect of MTN Treasury Limited

MTN Group undertakes (i) to procure that MTN Treasury Limited will not (other than as a guarantor inrespect of (i) the US$750,000,000 4.755 per cent. Guaranteed Notes due 11 November 2024, (ii) theUS$1,000,000,000 revolving credit facility dated 28 March 2014, (iii) the ZAR2,000,000,000 credit facilitywith Sumitomo Mitsui Banking Corporation Europe Limited dated 30 May 2014, and (iv) theZAR3,000,000,000 credit facility with The Standard Bank of South Africa Limited dated 15 December 2014(but excluding, in each case, any refinancing or replacement of any such facility or notes)) be an obligor, asborrower or guarantor, in respect of any Indebtedness for Borrowed Money of MTN Group or any of itsSubsidiaries, and (ii) that it will not transfer, and will procure that no Subsidiary of MTN Group willtransfer, any undertaking or assets to MTN Treasury Limited.

6. INTEREST

6.1 Interest Rate and Interest Payment Dates

The Notes bear interest on their outstanding principal amount from and including 13 October 2016 at therate of 5.373 per cent. per annum, payable semi-annually in arrear on 13 February and 13 August in eachyear (each an “Interest Payment Date”). The first payment (representing a short first coupon) for the periodfrom and including 13 October 2016 to but excluding 13 February 2017 and amounting to U.S.$17.91 perU.S.$1,000 principal amount of Notes shall be made on 13 February 2017. The second payment(representing a full six months’ interest and amounting to U.S.$26.87 per U.S.$1,000 in principal amount ofNotes) shall be made on 13 August 2017.

6.2 Interest Accrual

Each Note will cease to bear interest from and including its due date for redemption unless, upon duesurrender of the Certificate representing such Note, payment of the principal in respect of the Note isimproperly withheld or refused or unless default is otherwise made in respect of payment. In such event,interest will continue to accrue at the rate referred to in Condition 6.1 until whichever is the earlier of:

(a) the date on which all amounts due in respect of such Note have been paid; and

(b) five days after the date on which the full amount of the moneys payable in respect of such Notes up tothat fifth day has been received by the Fiscal Agent or the Registrar, as the case may be, and notice tothat effect has been given to the Noteholders in accordance with Condition 13.

6.3 Calculation of Broken Interest

When interest is required to be calculated in respect of a period of less than a full six months, it shall becalculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of anincomplete month, the number of days elapsed on the basis of a month of 30 days.

7. PAYMENTS

7.1 Payments in respect of Notes

Payment of principal and interest will be made by transfer to the registered account of the Noteholder.Payments of principal and payments of interest due otherwise than on an Interest Payment Date will only bemade against surrender of the relevant Certificate at the specified office of any of the Agents. Interest onNotes due on an Interest Payment Date will be paid to the holder shown on the Register at the close ofbusiness on the date (the record date) being the fifteenth day before the due date for the payment ofinterest.

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For the purposes of this Condition, a Noteholder’s “registered account” means the U.S. dollar accountmaintained by or on behalf of it with a bank that processes payments in U.S. dollars, details of which appearon the Register at the close of business, in the case of principal and interest due otherwise than on anInterest Payment Date, on the second Business Day (as defined in Condition 7.4 below) before the due datefor payment and, in the case of interest due on an interest Payment Date, on the relevant record date.

7.2 Payments subject to Applicable Laws

Payments in respect of principal and interest on the Notes are subject in all cases to any fiscal or other lawsand regulations applicable in the place of payment, but without prejudice to the provisions of Condition 9.

7.3 No commissions

No commissions or expenses shall be charged to the Noteholders in respect of any payments made inaccordance with this Condition.

7.4 Payment on Business Days

Where payment is to be made by transfer to a registered account, payment instructions (for value the duedate or, if that is not a Business Day, for value the first following day which is a Business Day) will beinitiated on the Business Day preceding the due date for payment or, in the case of a payment of principal ora payment of interest due otherwise than on an Interest Payment Date, if later, on the Business Day onwhich the relevant Certificate is surrendered at the specified office of an Agent.

Noteholders will not be entitled to any interest or other payment for any delay after the due date in receivingthe amount due if the due date is not a Business Day, if the Noteholder is late in surrendering its Certificate(if required to do so).

In these Conditions, “Business Day” means a day (other than a Saturday or Sunday) on which commercialbanks are open for business in London and New York City and, in the case of presentation of a Certificate,in the place in which the Certificate is presented.

7.5 Partial Payments

If the amount of principal or interest which is due on the Notes is not paid in full, the Registrar will annotatethe Register with a record of the amount of principal or interest in fact paid.

7.6 Agents

The names of the initial Agents and their initial specified offices are set out at the end of these Conditions.The Issuer and the Guarantors reserve the right at any time to vary or terminate the appointment of anyAgent and to appoint additional or other Agents provided that:

(a) there will at all times be a Fiscal Agent;

(b) so long as the notes are listed on any stock exchange or admitted to listing by any other relevantauthority, there will at all times be a Paying Agent (which may be the Fiscal Agent) having a specifiedoffice in such place as may be required by the rules and regulations of the relevant stock exchange ofsuch other relevant authority; and

(C) there will at all times be a Registrar.

Notice of any termination or appointment and of any changes in specified offices shall be given to theNoteholders promptly by the Issuer in accordance with Condition 13.

8. REDEMPTION AND PURCHASE

8.1 Redemption at Maturity

Unless previously redeemed or purchased and cancelled as provided below, the Issuer will redeem the Notesat their principal amount on 13 February 2022.

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8.2 Redemption at the Option of the Issuer

(a) The Issuer may at its option at any time, having given not less than 30 nor more than 60 days’ notice tothe Noteholders in accordance with Condition 13 (which notice shall be irrevocable and shall specifythe date fixed for redemption), redeem all the Notes, but not some only, at the “Make-WholeRedemption Price”.

(b) For the purposes of these Conditions:

(i) “Make Whole Redemption Price” means in respect of each Note, the greater of (a) 100 per cent.of the principal amount of the Notes and (b) the sum of the present values of the RemainingScheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a360-day year consisting of 12 months of 30 days each) at the U.S. Treasury Rate plus a spread of50 basis points, together with accrued interest on the principal amount of the Notes to the date ofredemption, all as determined by the Determination Agent;

(ii) “U.S. Treasury Rate” means, with respect to any redemption date, the rate per annum equal tothe semi-annual equivalent yield to maturity (computed as of the third business day immediatelypreceding that redemption date) of the Comparable Treasury Issue, assuming a price for theComparable Treasury Issue (expressed as a percentage of its principal amount) equal to theComparable Treasury Price for that redemption date.

(iii) “Comparable Treasury Issue” means the United States Treasury security or securities selected bythe Determination Agent that would be utilised, at the time of selection and in accordance withcustomary financial practice, in pricing new issues of corporate debt securities of comparablematurity to the remaining term of the Notes;

(iv) “Comparable Treasury Price” means, with respect to any redemption date, the average of threeReference Treasury Dealer Quotations for the redemption date;

(v) “Reference Treasury Dealer” means each of the three nationally recognised firms selected by theDetermination Agent that are primary U.S. Government securities dealers;

(vi) “Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealerand any redemption date, the average, as determined by the Determination Agent, of the bid andasked prices for the Comparable Treasury Issue (expressed in each case as a percentage of itsprincipal amount) quoted in writing to the Determination Agent by such Reference TreasuryDealer at 5:00 p.m., New York City time on the third Business Day immediately preceding suchredemption date;

(vii) “Remaining Scheduled Payments” means, with respect to the Notes, the remaining scheduledpayments of the principal thereof and interest thereon that would be due after the relatedredemption date but for such redemption, provided, however, that if that redemption date is notan Interest Payment Date, the amount of the next succeeding scheduled interest payment thereonwill be reduced by the amount of interest accrued thereon to the redemption date; and

(viii) “Determination Agent” means an investment bank or financial institution of internationalstanding selected by the Issuer.

8.3 Redemption for Taxation Reasons

If:

(a) as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction (asdefined in Condition 9), or any change in the application or official interpretation of the laws orregulations of a Relevant Jurisdiction, which change or amendment becomes effective after 11 October2016, on the next Interest Payment Date either (i) the Issuer would be required to pay additionalamounts as provided or referred to in Condition 9 or (ii) the Guarantors would be unable for reasonsoutside their control to procure payment by the Issuer and in making payment themselves would eachbe required to pay such additional amounts; and

(b) the requirement cannot be avoided by the Issuer or, as the case may be, the Guarantors takingreasonable measures available to it or them,

the Issuer may at its option, having given not less than 30 nor more than 60 days’ notice to the Noteholdersin accordance with Condition 13 (which notice shall be irrevocable), redeem all the Notes, but not someonly, at any time at their principal amount together with interest (if any) accrued to (but excluding) the dateof redemption. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer

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shall deliver to the Fiscal Agent (i) a certificate signed by two Authorised Signatories of the Issuer or, as thecase may be, the Guarantors stating that the requirement referred to in (a) above will apply on the nextInterest Payment Date and cannot be avoided by the Issuer or, as the case may be, the Guarantors takingreasonable measures available to it or them and (ii) an opinion or opinions of independent legal advisers ofrecognised standing to the effect that the Issuer or, as the case may be, each Guarantor has or will becomeobliged to pay such additional amounts as a result of the change or amendment.

8.4 Purchases

The Issuer, each Guarantor or any of MTN Group’s other Subsidiaries may at any time purchase Notes inany manner and at any price. Such Notes may be held, reissued, resold or, at the option of the Issuer,surrendered to any Agent for cancellation.

8.5 Cancellations

All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer, a Guarantor or any of MTNGroup’s other Subsidiaries may be cancelled or held and resold.

8.6 Notices Final

Upon the expiry of any notice as is referred to in Condition 8.2 or Condition 8.3 above the Issuer shall bebound to redeem the Notes to which the notice refers in accordance with the terms of such Condition.

9. TAXATION

9.1 Payment without Withholding

All payments in respect of the Notes by or on behalf of the Issuer or any Guarantor shall be made free andclear of, and without withholding or deduction for, or on account of, any present or future taxes, duties,levies, assessments or governmental charges (including related interest and penalties) of whatever nature(“Taxes”) imposed, assessed or levied by or on behalf of any of the Relevant Jurisdictions, unless thewithholding or deduction of the Taxes is required by law. In that event, the Issuer or, as the case may be, theGuarantors will pay such additional amounts as may be necessary in order that the net amounts received bythe Noteholders after the withholding or deduction shall equal the respective amounts which would havebeen receivable in respect of the Notes in the absence of the withholding or deduction; except that noadditional amounts shall be payable in relation to any payment in respect of any Note:

(a) held by or on behalf of a holder who is liable to the Taxes in respect of the Note by reason of hishaving some connection with any Relevant Jurisdiction other than the mere holding of the Note; or

(b) in respect of which the certificate representing it is presented for payment more than 30 days after theRelevant Date (as defined below) except to the extent that the holder thereof would have been entitledto additional amounts on presenting the same for payment on the last day of the period of 30 daysassuming that day to have been a Business Day (as defined in Condition 7).

9.2 Interpretation

In these Conditions:

(a) “Relevant Date” means, with respect to any payment, the date on which such payment first becomesdue but, if the full amount of the money payable has not been received by the Fiscal Agent on or beforethe due date, it means the date on which, the full amount of the money having been so received, noticeto that effect has been duly given to the Noteholders by the Issuer in accordance with Condition 13;and

(b) “Relevant Jurisdiction” means (i) in the case of payments by the Issuer or MTN International(Mauritius) Limited in its capacity as a Guarantor, Mauritius or any political subdivision or anyauthority thereof or therein having power to tax, or (ii) in the case of payments by any Guarantor (otherthan MTN International (Mauritius) Limited), the Republic of South Africa or any political subdivisionor any authority thereof or therein having power to tax, or in either case any other jurisdiction or anypolitical subdivision or any authority thereof or therein having power to tax to which the Issuer or anyGuarantor, as the case may be, becomes subject in respect of payments made by it of principal andinterest on the Notes.

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9.3 Additional Amounts

Any reference in these Conditions to any amounts in respect of the Notes shall be deemed also to refer toany additional amounts which may be payable under this Condition.

10. PRESCRIPTION

Claims in respect of principal and interest will become prescribed and become void unless made within10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date, as definedin Condition 9.

11. EVENTS OF DEFAULT

11.1 Events of Default

The holder of any Note may give notice to the Issuer that the Note is, and it shall accordingly forthwithbecome, immediately due and repayable at its principal amount, together with interest accrued to the date ofrepayment, if any of the following events (“Events of Default”) shall have occurred and be continuing:

(a) if default is made in the payment of any principal or interest due in respect of the Notes or any of themand the default continues for a period of five days in the case of principal or ten days in the case ofinterest; or

(b) if the Issuer or any Guarantor fails to perform or observe any of its other obligations under theseConditions or the Guarantee and (except in any case where the failure is incapable of remedy, when nocontinuation or notice as is hereinafter mentioned will be required) the failure continues for the periodof 30 days following the service by any Noteholder on the Issuer or the relevant Guarantor (as the casemay be) of notice requiring the same to be remedied; or

(c) if (i) any Indebtedness for Borrowed Money (as defined below) of the Issuer, any Guarantor or anyMaterial Subsidiary becomes capable of being declared due and repayable prematurely by reason of anevent of default (however described); (ii) the Issuer, any Guarantor or any Material Subsidiary fails tomake any payment in respect of any Indebtedness for Borrowed Money on the due date for payment asextended by any originally applicable grace period; (iii) any security given by the Issuer, any Guarantoror any Material Subsidiary for any Indebtedness for Borrowed Money becomes enforceable; or(iv) default is made by the Issuer, any Guarantor or any Material Subsidiary in making any paymentdue under any guarantee and/or indemnity given by it in relation to any Indebtedness for BorrowedMoney of any other person; provided that no event described in this Condition 11.1(c) shall constitutean Event of Default unless the relevant amount of Indebtedness for Borrowed Money or other relativeliability due and unpaid, either alone or when aggregated (without duplication) with other amounts ofIndebtedness for Borrowed Money and/or other liabilities due and unpaid relative to all (if any) otherevents specified in (i) to (iv) above, amounts to at least U.S.$75,000,000 (or its equivalent in any othercurrency (on the basis of the middle spot rate for the relevant currency against the US dollar as quotedby any leading bank on the day on which this paragraph operates)); or

(d) if one or more judgments or orders or arbitration awards is rendered against any part of the property,assets or revenues of the Issuer, any Guarantor or any Material Subsidiary, and is not discharged orstayed within 30 days, and provided further that the aggregate value of all such judgments, orders andawards amounts to at least U.S.$75,000,000 (or its equivalent in any other currency (on the basis of themiddle spot rate for the relevant currency against the US dollar as quoted by any leading bank on theday on which this paragraph operates)); or

(e) if any order is made by any competent court or resolution is passed for the winding up or dissolution ofthe Issuer, any Guarantor or any Material Subsidiary, save in connection with a PermittedReorganisation; or

(f) if the Issuer or any Guarantor ceases or threatens to cease to carry on the whole or a substantial part ofits business or any Material Subsidiary ceases or threatens to cease to carry on the whole orsubstantially all of its business, save in connection with a Permitted Reorganisation, or the Issuer, anyGuarantor or any Material Subsidiary stops or threatens to stop payment of, or is unable to, or admitsinability to, pay, its debts (or any class of its debts) as they fall due or is deemed unable to pay its debtspursuant to or for the purposes of any applicable law, or is adjudicated or found bankrupt or insolvent;or

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(g) if (i) proceedings are initiated against the Issuer, any Guarantor or any Material Subsidiary under anyapplicable liquidation, insolvency, composition, reorganisation, business rescue or other similar laws oran application is made (or documents filed with a court) for the appointment of an administrative orother receiver, manager, administrator, business rescue practitioner or other similar official, or anadministrative or other receiver, manager, administrator, business rescue practitioner or other similarofficial is appointed, in relation to the Issuer, any Guarantor or any Material Subsidiary or, as the casemay be, in relation to the whole or any material part of the undertaking or assets of any of them or anencumbrancer takes possession of the whole or any material part of the undertaking or assets of any ofthem, or a distress, execution, attachment, sequestration, business rescue or other judicial or courtprocess is levied, enforced upon, sued out or put in force against the whole or any material part of theundertaking or assets of any of them, and (ii) in any such case (other than the appointment of anadministrator) unless initiated by the relevant company, is not discharged within 30 days; or

(h) if the Issuer, any Guarantor or any Material Subsidiary (or their respective directors or shareholders)initiates or consents to judicial proceedings relating to itself under any applicable liquidation,insolvency, composition, reorganisation, business rescue or other similar laws (including the obtainingof a moratorium) or makes a conveyance or assignment for the benefit of, or enters into anycomposition or other arrangement with, its creditors generally (or any class of its creditors) or anymeeting is convened to consider a proposal for an arrangement or composition with its creditorsgenerally (or any class of its creditors), save in connection with a Permitted Reorganisation; or

(i) if the Guarantee ceases to be, or is claimed by any Guarantor not to be, in full force and effect; or

(j) if the Issuer ceases to be a subsidiary wholly-owned and controlled, directly or indirectly, by MTNGroup; or

(k) if any event occurs which under the laws of a Relevant Jurisdiction (as defined in Condition 9.2) or anyother applicable jurisdiction has an analogous effect to any of the events referred to in paragraphs (e) to(h) of this Condition 11.1.

11.2 Interpretation

For the purposes of this Condition 11:

(a) “Indebtedness for Borrowed Money” means any indebtedness (whether being principal, premium,interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stockor other securities or any borrowed money or any liability under or in respect of any acceptance oracceptance credit; and

(b) “Permitted Reorganisation” means (i) any disposal by any Subsidiary of the Issuer or any Guarantor ofsubstantially all of its business, undertaking or assets to the Issuer or any Guarantor or any otherSubsidiary of the Issuer or any Guarantor; (ii) any amalgamation, consolidation or merger of aSubsidiary with (A) the Issuer or any Guarantor (provided that the Issuer (in the case of the former) orany Guarantor (in the case of the latter) is the surviving entity of such amalgamation, consolidation ormerger); or (B) any other Subsidiary of the Issuer or any Guarantor; or (iii) any amalgamation,consolidation, restructuring, merger or reorganisation on terms approved by an ExtraordinaryResolution of Noteholders.

12. REPLACEMENT OF CERTIFICATES

If any Certificate is lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office ofthe Registrar upon payment by the claimant of the expenses incurred in connection with the replacement andon such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defacedCertificates must be surrendered before replacements will be issued.

13. NOTICES

13.1 Notices to the Noteholders

All notices to the Noteholders will be valid if mailed to them at their respective addresses in the Register.The Issuer shall also ensure that notices are duly given or published in a manner which complies with therules and regulations of any stock exchange or other relevant authority on which the Notes are for the timebeing listed. Any notice shall be deemed to have been given on the day after being so mailed or on the dateof publication or, if so published more than once or on different dates, on the date of the first publication.

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13.2 Notices from the Noteholders

Notices to be given by any Noteholder shall be in writing and given by lodging the same, together with therelevant Certificate, with the Fiscal Agent or, if the Certificates are held in a clearing system, may be giventhrough the clearing system in accordance with its standard rules and procedures.

14. MEETINGS OF NOTEHOLDERS AND MODIFICATION

14.1 Meetings of Noteholders

The Agency Agreement contains provisions for convening meetings of the Noteholders to consider anymatter affecting their interests, including the modification by Extraordinary Resolution of any of theseConditions or the Guarantee or any of the provisions of the Agency Agreement. The quorum at any meetingfor passing an Extraordinary Resolution will be one or more persons present holding or representing morethan 50 per cent. in principal amount of the Notes for the time being outstanding, or at any adjournedmeeting one or more persons present whatever the principal amount of the Notes held or represented by himor them, except that at any meeting the business of which includes the modification of certain of theseConditions or certain provisions of the Guarantee the necessary quorum for passing an ExtraordinaryResolution will be one or more persons present holding or representing not less than two-thirds, or at anyadjourned meeting not less than one-third, of the principal amount of the Notes for the time beingoutstanding. An Extraordinary Resolution passed at any meeting of the Noteholders will be binding on allNoteholders, whether or not they are present at the meeting.

The Agency Agreement provides that (i) a resolution in writing signed by or on behalf of the holders of notless than 75 per cent. in principal amount of the Notes for the time being outstanding and (ii) consent givenby way of electronic consents (in a form satisfactory to the Fiscal Agent) through the relevant ClearingSystem(s) (as defined in the Agency Agreement) by or on behalf of the holders of not less than 75 per cent.in principal amount of the Notes for the time being outstanding shall in each case take effect as if it were anExtraordinary Resolution, and shall be binding on all of the Noteholders, whether or not signed by them (inthe case of any resolution in writing) or an electronic consent was submitted by them (in the case of anyconsent given by way of electronic consents). Any resolution in writing may be contained in one documentor several documents in the same form, each signed by or on behalf of one or more Noteholders.

14.2 Modification

The Fiscal Agent may agree, without the consent of the Noteholders, to any modification of any of theseConditions, the Guarantee or any of the provisions of the Agency Agreement for the purpose of curing anyambiguity or of curing, correcting or supplementing any manifest or proven error or any other defectiveprovision contained herein or therein. Any modification shall be binding on the Noteholders and, unless theFiscal Agent agrees otherwise, any modification shall be notified by the Issuer to the Noteholders as soon aspracticable thereafter in accordance with Condition 13.

15. SUBSTITUTION OF THE ISSUER

15.1 The Issuer may, without the consent of the Noteholders be replaced and substituted by any Guarantor or anyother company of which 100 per cent. of the shares or other equity interests (as the case may be) carryingthe right to vote are directly or indirectly owned by one or more of the Guarantors as principal debtor (insuch capacity, the “Substituted Debtor”) in respect of the Notes provided that:

(a) a deed poll and such other documents (if any) shall be executed by the Substituted Debtor, the Issuer,the Guarantors and the Agents as may be necessary to give full effect to the substitution (together the“Documents”) and (without limiting the generality of the foregoing) pursuant to which the SubstitutedDebtor shall undertake in favour of the Noteholders to be bound by these Conditions and the provisionsof the Agency Agreement, the Deed of Covenant and the Deed Poll as fully as if the Substituted Debtorhad been named in the Notes, the Agency Agreement, the Deed of Covenant and the Deed Poll as theprincipal debtor in respect of the Notes in place of the Issuer (or any previous substitute) and pursuantto which the Guarantors shall unconditionally and irrevocably guarantee (the “New Guarantee”) infavour of each Noteholder the payment of all sums payable by the Substituted Debtor as such principaldebtor on the same terms mutatis mutandis as the Guarantee;

(b) without prejudice to the generality of Condition 15.1(a), where the Substituted Debtor is incorporated,domiciled or resident for taxation purposes in a territory other than Mauritius, the Documents shall

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contain a covenant by the Substituted Debtor and/or such other provisions as may be necessary toensure that each Noteholder has the benefit of a covenant in terms corresponding to the provisions ofCondition 9 with the substitution in Condition 9.2(b) for the references to Mauritius in respect of theIssuer with references to the territory in which the Substituted Debtor is incorporated, domiciled and/orresident for taxation purposes;

(c) the Documents shall contain a warranty and representation by the Substituted Debtor and theGuarantors that the Substituted Debtor and the Guarantors have obtained all necessary governmentaland regulatory approvals and consents for such substitution and for the giving by the Guarantors of theNew Guarantee in respect of the obligations of the Substituted Debtor on the same terms mutatismutandis as the Guarantee, that each of the Substituted Debtor and the Guarantors has obtained allnecessary governmental and regulatory approvals and consents for the performance by each of theSubstituted Debtor and the Guarantors of its obligations under the Documents and that all suchapprovals and consents are in full force and effect;

(d) each stock exchange which has the Notes listed thereon shall have confirmed that following theproposed substitution of the Substituted Debtor the Notes would continue to be listed on such stockexchange;

(e) the Issuer shall have delivered or procured the delivery to the Fiscal Agent a copy of a legal opinionaddressed to the Issuer, the Substituted Debtor and the Guarantors from a leading firm of lawyers in thecountry of incorporation of the Substituted Debtor, to the effect that the Documents constitute legal,valid and binding obligations of the Substituted Debtor, such opinion(s) to be dated not more thanseven days prior to the date of substitution of the Substituted Debtor for the Issuer and to be availablefor inspection by Noteholders at the specified office of the Fiscal Agent;

(f) the Guarantors shall have delivered or procured the delivery to the Fiscal Agent a copy of a legalopinion addressed to the Issuer, the Substituted Debtor and the Guarantors from each of a leading firmof Mauritian lawyers acting for the Guarantors, a leading firm of South African lawyers acting for theGuarantors and a leading firm of English lawyers acting for the Guarantors in each case to the effectthat the Documents (including the New Guarantee given by the Guarantors in respect of the SubstitutedDebtor) constitute legal, valid and binding obligations of the Guarantors, such opinion to be dated notmore than seven days prior to the date of substitution of the Substituted Debtor for the Issuer and to beavailable for inspection by Noteholders at the specified office of the Fiscal Agent;

(g) the Substituted Debtor shall have appointed a process agent in England to receive service of process onits behalf in relation to any legal action or proceedings arising out of or in connection with the Notes orthe Documents;

(h) there is no outstanding Events of Default in respect of the Notes;

(i) any credit rating assigned to the Notes will remain the same or be improved when the SubstitutedDebtor replaces and substitutes the Issuer in respect of the Notes; and

(j) that all consents and approvals of any court, government department or other regulatory body inMauritius, South Africa and the country of incorporation of the Substituted Debtor required for thesubstitution have been obtained and are unconditional and in full force and effect.

15.2 Upon the execution of the Documents as referred to in Condition 15.1 above, the Substituted Debtor shall bedeemed to be named in the Notes as the principal debtor in place of the Issuer (or of any previous substituteunder these provisions) and the Notes shall thereupon be deemed to be amended to give effect to thesubstitution. The execution of the Documents shall operate to release the Issuer (or such previous substituteas aforesaid) from all of its obligations in respect of the Notes.

15.3 The Documents shall be deposited with and held by the Fiscal Agent for so long as any Notes remainoutstanding and for so long as any claim made against the Substituted Debtor or the Guarantors by anyNoteholder in relation to the Notes or the Documents shall not have been finally adjudicated, settled ordischarged. The Substituted Debtor and the Guarantors shall acknowledge in the Documents the right ofevery Noteholder to the production of the Documents for the enforcement of any of the Notes or theDocuments.

15.4 Not later than 15 Business Days after the execution of the Documents, the Substituted Debtor shall givenotice thereof to the Noteholders in accordance with Condition 13.

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16. FURTHER ISSUES

The Issuer may from time to time without the consent of the Noteholders create and issue further notes,having terms and conditions the same as those of the Notes, or the same except for the amount of the firstpayment of interest, which may be consolidated and form a single series with the outstanding Notes,provided, however, that such further notes will be fungible with the Notes for United States federal incometax purposes.

17. GOVERNING LAW AND SUBMISSION TO JURISDICTION

17.1 Governing Law

The Agency Agreement, the Guarantee, the Deed of Covenant, the Deed Poll and the Notes, and any non-contractual obligations arising out of or in connection with the Agency Agreement, the Guarantee, the Deedof Covenant, the Deed Poll and the Notes, are governed by, and will be construed in accordance with,English law.

17.2 Jurisdiction of English courts

The Issuer and the Guarantors have irrevocably agreed for the benefit of the Noteholders that the courts ofEngland are to have exclusive jurisdiction to settle any disputes which may arise out of or in connectionwith the Notes and any non-contractual obligations arising out of or in connection with the Notes, andaccordingly have submitted to the exclusive jurisdiction of the English courts. The Issuer and the Guarantorshave, to the extent permitted by law, waived any objection to the courts of England on the grounds that theyare an inconvenient or inappropriate forum.

To the extent permitted by law, the Noteholders may take any suit, action or proceeding arising out of or inconnection with the Notes (including any suit, action or proceeding relating to any non-contractualobligations arising out of or in connection with the Notes) (together referred to as “Proceedings”) against theIssuer or any Guarantor in any other court of competent jurisdiction and concurrent Proceedings in anynumber of jurisdictions.

17.3 Appointment of Process Agent

The Issuer hereby irrevocably and unconditionally appoints Law Debenture Corporate Services Limited atits registered office, for the time being at Fifth Floor, 100 Wood Street, London EC2V 7EX, as its agent forservice of process in England in respect of any Proceedings and undertakes that in the event of such agentceasing so to act it will appoint another person as its agent for that purpose.

17.4 Other Documents

Each of the Issuer and the Guarantors has in the Agency Agreement, the Deed of Covenant, the Deed Polland the Guarantee submitted to the jurisdiction of the English courts and appointed an agent in England forservice of process, in terms substantially similar to those set out above.

18. RIGHTS OF THIRD PARTIES

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce anyterm of this Note, but this does not affect any right or remedy of any person which exists or is availableapart from that Act.

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CONDITIONS OF THE 2026 NOTES

The terms and conditions of the 2026 Notes will be identical to those described under “Conditions of the 2022Notes” above, except as follows:

(a) the reference in the introductory paragraph to the “U.S.$500,000,000 5.373 per cent. Guaranteed Notes due2022” shall be replaced by a reference to the “U.S.$500,000,000 6.500 per cent. Guaranteed Notes due2026” and references to “Notes” shall be construed as references to the 2026 Notes;

(b) the reference in Condition 6.1 to “5.373 per cent.” shall be replaced by a reference to “6.500 per cent.”;

(c) the reference in Condition 6.1 to “on 13 February and 13 August in each year” shall be replaced by areference to “on 13 April and 13 October in each year”;

(d) the final two sentences in Condition 6.1 shall be replaced by the sentence “The first payment (representing afull six months’ interest and amounting to U.S.$32.50 per U.S.$1,000 in principal amount of Notes) shall bemade on 13 April 2017.”; and

(e) the reference in Condition 8.1 to “13 February 2022” shall be replaced by a reference to “13 October 2026”.

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THE GLOBAL CERTIFICATES

The Global Certificates of each Series contain the following provisions which apply to the Notes in respect ofwhich they are issued whilst they are represented by those Global Certificates, some of which modify the effect ofthe Conditions of such Notes. Terms defined in the Conditions of the relevant Series have the same meaning inparagraphs 1 to 6 below.

1. ACCOUNTHOLDERS

For so long as any of the Notes are represented by a Global Certificate, each person (other than another clearingsystem) who is for the time being shown in the records of DTC or Euroclear or Clearstream, Luxembourg (as thecase may be) as the holder of a particular aggregate principal amount of such Notes (each an “Accountholder”)(in which regard any certificate or other document issued by DTC or Euroclear or Clearstream, Luxembourg (asthe case may be) as to the aggregate principal amount of such Notes standing to the account of any person shallbe conclusive and binding for all purposes) shall be treated as the holder of such aggregate principal amount ofsuch Notes (and the expression “Noteholders” and references to “holding of Notes” and to “holder of Notes”shall be construed accordingly) for all purposes other than with respect to payments on such Notes, the right towhich shall be vested, as against the Issuer and the Guarantors, solely in the nominee for the relevant clearingsystem (the “Relevant Nominee”) in accordance with and subject to the terms of the relevant Global Certificate.Each Accountholder must look solely to DTC or Euroclear or Clearstream, Luxembourg, as the case may be, forits share of each payment made to the Relevant Nominee.

2. CANCELLATION

Cancellation of any Note following its redemption or purchase by the Issuer, any Guarantor or any of MTNGroup’s other Subsidiaries will be effected by reduction in the aggregate principal amount of the Notes in theRegister and by the annotation of the appropriate schedule to the relevant Global Certificate.

3. PAYMENTS

Payments of principal and interest in respect of Notes represented by a Global Certificate will be made uponpresentation or, if no further payment falls to be made in respect of the Notes, against presentation and surrenderof such Global Certificate to or to the order of the Fiscal Agent or such other Agent as shall have been notified tothe holders of the relevant Global Certificate for such purpose.

Distributions of amounts with respect to book-entry interests in the Regulation S Notes held through Euroclear orClearstream, Luxembourg will be credited, to the extent received by the Fiscal Agent, to the cash accounts ofEuroclear or Clearstream, Luxembourg participants in accordance with the relevant system’s rules andprocedures.

Holders of book-entry interests in the Rule 144A Notes held through DTC will receive, to the extent received bythe Fiscal Agent, all distribution of amounts with respect to book-entry interests in such Notes from the FiscalAgent through DTC. Distributions in the United States will be subject to relevant U.S. tax laws and regulations.

A record of each payment made will be endorsed on the appropriate schedule to the relevant Global Certificateby or on behalf of the Fiscal Agent and shall be prima facie evidence that payment has been made.

4. NOTICES

So long as the Notes of a Series are represented by a Global Certificate and such Global Certificate is held onbehalf of a clearing system, notices to Noteholders of that Series may be given by delivery of the relevant noticeto that clearing system for communication by it to entitled Accountholders in substitution for notification asrequired by Condition 13. Any such notice shall be deemed to have been given to such Noteholders on the dayafter the day on which such notice is delivered to such clearing system.

Whilst any of the Notes of a Series held by a Noteholder are represented by a Global Certificate in respect of thatSeries, notices to be given by such Noteholder may be given by such Noteholder (where applicable) through therelevant clearing system’s operational procedures and otherwise in such manner as the Fiscal Agent and theapplicable clearing system may approve for this purpose.

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5. REGISTRATION OF TITLE

Registration of title to Notes in a name other than that of the Relevant Nominee will not be permitted unlessEuroclear or Clearstream, Luxembourg or DTC, as appropriate, notifies the Issuer and the Guarantors that it isunwilling or unable to continue as a clearing system in connection with a Global Certificate of the relevant Seriesor, in the case of DTC only, DTC ceases to be a clearing agency registered under the Exchange Act, and in eachcase a successor clearing system is not appointed by the Issuer and the Guarantors within 90 days after receivingsuch notice from Euroclear, Clearstream, Luxembourg or DTC or becoming aware that DTC is no longer soregistered. In these circumstances title to a Note of such Series may be transferred into the names of holdersnotified by the Relevant Nominee in accordance with the Conditions of such Series, except that Certificates inrespect of Notes of that Series so transferred may not be available until 21 days after the request for transfer isduly made.

The Registrar will not register title to the Notes of a Series in a name other than that of the Relevant Nominee fora period of 15 calendar days preceding the due date for any payment of principal or interest in respect of theNotes of that Series.

If only one of the Global Certificates of a Series (the “Exchanged Global Certificate”) becomes exchangeable forCertificates in accordance with the above paragraphs, transfers of Notes of that Series may not take placebetween, on the one hand, persons holding Certificates issued in exchange for beneficial interests in theExchanged Global Certificate and, on the other hand, persons wishing to purchase beneficial interests in the otherGlobal Certificate.

6. TRANSFERS

Transfers of book-entry interests in the Notes will be effected through the records of Euroclear, Clearstream,Luxembourg and DTC and their respective participants in accordance with the rules and procedures of Euroclear,Clearstream, Luxembourg and DTC and their respective direct and indirect participants, as more fully describedunder “Book-Entry Clearance Systems”.

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BOOK-ENTRY CLEARANCE SYSTEMS

The information set out below is subject to any change in or reinterpretation of the rules, regulations andprocedures of each of DTC, Euroclear or Clearstream, Luxembourg currently in effect. The information in thissection concerning the Clearing Systems has been obtained from sources that the Issuer believes to be reliable,but none of the Managers takes any responsibility for the accuracy thereof. Investors wishing to use the facilitiesof the Clearing Systems are advised to confirm the continued applicability of the rules, regulations andprocedures of such facilities. None of the Issuer, the Guarantors nor any other party to the Agency Agreementwill have any responsibility or liability for any aspect of the records relating to, or payments made on account of,beneficial ownership interests in the Notes held through the facilities of the Clearing Systems or for maintaining,supervising or reviewing any records relating to such beneficial ownership interests.

Book-Entry Systems

Euroclear and Clearstream, Luxembourg

Euroclear and Clearstream, Luxembourg each hold securities for their customers and facilitate the clearance andsettlement of securities transactions by electronic book-entry transfer between their respective account holders.Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration,clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear andClearstream, Luxembourg also deal with domestic securities markets in several countries through establisheddepositary and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronicbridge between their two systems across which their respective participants may settle trades with each other.Euroclear and Clearstream, Luxembourg customers are worldwide financial institutions, including underwriters,securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear andClearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationshipwith an account holder of either system.

DTC

DTC has advised the Issuer that it is a limited purpose trust company organised under the New York BankingLaw, a “banking organisation” within the meaning of the New York Banking Law, a “clearing corporation”within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant toSection 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC. DTC alsofacilitates the settlement among its participants of securities transactions, such as transfers and pledges, indeposited securities through electronic computerised book-entry changes in participants’ accounts. Directparticipants include securities brokers and dealers, banks, trust companies, clearing corporations and certain otherorganisations. Access to the DTC system is also available to others such as securities brokers and dealers, banksand trust companies that clear through or maintain a custodial relationship with a direct participant, eitherdirectly or indirectly.

Registration and Form

Book-entry interests in the Notes of a Series held through Euroclear and Clearstream, Luxembourg will berepresented by the Unrestricted Global Certificate registered in the name of a nominee of, and held by, a commondepositary for Euroclear and Clearstream, Luxembourg. Book-entry interests in the Notes of a Series heldthrough DTC will be represented by the Restricted Global Certificate registered in the name of Cede & Co., asnominee for DTC, and held by a custodian for DTC. As necessary, the Registrar will adjust the amounts of Noteson the Register for the accounts of Euroclear, Clearstream, Luxembourg and DTC to reflect the amounts of Notesheld through Euroclear, Clearstream, Luxembourg and DTC, respectively. Beneficial ownership of book-entryinterests in Notes will be held through financial institutions as direct and indirect participants in Euroclear,Clearstream, Luxembourg and DTC.

The aggregate holdings of book-entry interests in the Notes in Euroclear, Clearstream, Luxembourg and DTCwill be reflected in the book-entry accounts of each such institution. Euroclear, Clearstream, Luxembourg orDTC, as the case may be, and every other intermediate holder in the chain to the beneficial owner of book-entryinterests in the Notes will be responsible for establishing and maintaining accounts for their participants andcustomers having interests in the book-entry interests in the Notes. The Registrar will be responsible formaintaining a record of the aggregate holdings of Notes registered in the name of a common nominee forEuroclear and Clearstream, Luxembourg, a nominee for DTC and/or, if individual Certificates are issued in the

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limited circumstances described under “The Global Certificates—Registration of Title”, holders of Notesrepresented by those individual Certificates. The Fiscal Agent will be responsible for ensuring that paymentsreceived by it from the Issuer for holders of book-entry interests in the Notes holding through Euroclear andClearstream, Luxembourg are credited to Euroclear or Clearstream, Luxembourg, as the case may be, and theFiscal Agent will also be responsible for ensuring that payments received by the Fiscal Agent from the Issuer forholders of book-entry interests in the Notes holding through DTC are credited to DTC.

The Issuer will not impose any fees in respect of holding the Notes; however, holders of book-entry interests inthe Notes may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear,Clearstream, Luxembourg or DTC.

Clearing and Settlement Procedures

Initial Settlement

Upon their original issue, the Notes of a Series will be in global form represented by the two Global Certificates.Interests in the Notes will be in uncertified book-entry form. Purchasers electing to hold book-entry interests inthe Notes through Euroclear and Clearstream, Luxembourg accounts will follow the settlement proceduresapplicable to conventional Eurobonds. Book-entry interests in the Notes will be credited to Euroclear andClearstream, Luxembourg participants’ securities clearance accounts on the business day following the date ofclosing of the Offering (the “Closing Date”) against payment (value the Closing Date). DTC participants actingon behalf of purchasers electing to hold book-entry interests in the Notes through DTC will follow the deliverypractices applicable to securities eligible for DTC’s Same Day Funds Settlement system. DTC participants’securities accounts will be credited with book-entry interests in the Notes following confirmation of receipt ofpayment to the Issuer on the Closing Date.

Secondary Market Trading

Secondary market trades in the Notes will be settled by transfer of title to book-entry interests in the ClearingSystems. Title to such book-entry interests will pass by registration of the transfer within the records ofEuroclear, Clearstream, Luxembourg or DTC, as the case may be, in accordance with their respective procedures.Book-entry interests in the Notes may be transferred within Euroclear and within Clearstream, Luxembourg andbetween Euroclear and Clearstream, Luxembourg in accordance with procedures established for these purposesby Euroclear and Clearstream, Luxembourg. Book-entry interests in the Notes may be transferred within DTC inaccordance with procedures established for this purpose by DTC. Transfer of book-entry interests in the Notesbetween Euroclear or Clearstream, Luxembourg and DTC may be effected in accordance with proceduresestablished for this purpose by Euroclear, Clearstream, Luxembourg and DTC.

General

None of Euroclear, Clearstream, Luxembourg or DTC is under any obligation to perform or continue to performthe procedures referred to above, and such procedures may be discontinued at any time. None of the Issuer, theGuarantors, the Fiscal Agent or any of their agents will have any responsibility for the performance by Euroclear,Clearstream, Luxembourg or DTC or their respective participants of their respective obligations under the rulesand procedures governing their operations or the arrangements referred to above and none of them will have anyliability for any aspect of the records relating to or payments made on account of beneficial interests in the Notesrepresented by Global Certificates or for maintaining, supervising or reviewing any records relating to suchbeneficial interests.

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TAXATION

This is a general overview of certain United States Federal, South African and Mauritian income taxconsiderations in connection with an investment in the Notes. This overview does not address all aspects ofUnited States Federal, South African and Mauritian income tax laws and does not discuss any state or local taxconsiderations. While this overview is considered to be a correct interpretation of existing laws in force on thedate of this Offering Circular, there can be no assurance that those laws or the interpretation of those laws willnot change. This overview does not discuss all of the income tax consequences that may be relevant to aninvestor in light of such investor’s particular circumstances or to investors subject to special rules, such asregulated investment companies, certain financial institutions or insurance companies. Prospective investors areadvised to consult their tax advisers with respect to the tax consequences of the purchase, ownership ordisposition of the Notes (or the purchase, ownership or disposition of beneficial interests therein) as well as anytax consequences that may arise under the laws of any state, municipality or other taxing jurisdiction. Referencesto “resident” herein refer to tax residents of the United States, South Africa or Mauritius, as applicable, andreferences to “non-resident” herein refer to persons who are not tax residents of the United States, South Africaor Mauritius, as applicable.

Certain US Federal Income Tax Consequences

The following discussion is a summary based on present law of certain US federal income tax considerationsrelevant to the purchase, ownership and disposition of Notes. This discussion addresses only US Holders (asdefined below) who purchase Notes in the Offering at their issue price, hold such Notes as capital assets and usethe US dollar as their functional currency. This discussion is not a complete description of all US federal taxconsiderations relating to the purchase, ownership and disposition of Notes. It does not address the tax treatmentof investors subject to special rules, such as financial institutions, dealers, traders that elect to mark-to-market,insurance companies, investors liable for the alternative minimum tax, US expatriates, tax-exempt entities orpersons holding Notes as part of a hedge, straddle, conversion or other integrated financial transaction. It doesnot address the tax treatment of prospective purchasers that hold Notes in connection with a permanentestablishment outside of the United States. It also does not consider US federal estate or gift taxes, US state orlocal tax matters or non-US tax considerations.

For purposes of this discussion, a “US Holder” is a beneficial owner of the Notes that is, for purposes of USfederal income taxation, (i) a citizen or individual resident of the United States, (ii) a corporation created ororganised under the laws of the United States, any state thereof or the District of Columbia, (iii) a trust subject tothe control of a US person and the primary supervision of a US court or (iv) an estate the income of which issubject to US federal income taxation regardless of its source.

The US federal income tax treatment of a partner in a partnership (or any entity treated as a partnership for USfederal income tax purposes) that acquires or holds Notes generally will depend upon the status of the partner andthe activities of the partnership. A prospective investor that is a partnership for US federal income tax purposesshould consult its own tax advisers about the tax consequences for its partners of its acquisition, ownership, ordisposition of Notes. This discussion assumes the Notes will be treated as debt for US federal income taxpurposes.

Interest

Stated interest on the Notes, including tax withheld, if any (and any additional amounts paid in respect of anysuch withholding taxes), generally will be includible in the gross income of a US Holder in accordance with itsregular method of tax accounting. The interest will be ordinary income from sources outside the United States.Subject to applicable limitations, a US Holder may claim a deduction or a foreign tax credit only for tax withheldat the appropriate rate.

If the Notes are issued with original issue discount (“OID”), a US Holder must accrue the OID into income on aconstant yield to maturity basis whether or not it receives cash payments and regardless of its method of taxaccounting. Generally, the Notes will be issued with OID to the extent that their “stated redemption price atmaturity” exceeds their “issue price” by more than a de minimis amount. However, the Notes generally will nothave OID if such excess is less than 1/4 of 1% of their stated redemption price at maturity multiplied by thenumber of complete years to maturity (“de minimis OID”). The issue price of the Notes is the initial offeringprice at which a substantial amount of the Notes is first sold to the public for cash (excluding sales tounderwriters, brokers or similar persons). The stated redemption price at maturity of a Note is the total of all

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payments due on the Note other than payments of “qualified stated interest”. In general, qualified stated interestis stated interest that is payable unconditionally in cash or in property at least annually at a single fixed rate.Stated interest on the Notes will be qualified stated interest. The OID, if any, will be treated as ordinary incomefrom sources outside of the United States. Prospective purchasers should consult their own tax advisersconcerning the application of the OID rules to the Notes.

Interest and any accrued OID will be included in net investment income for purposes of the Medicare taxapplicable to certain non-corporate US Holders.

Disposition of a Note

A US Holder generally will recognise gain or loss on the sale, redemption or other taxable disposition of a Notein an amount equal to the difference between the amount realised (less any accrued but unpaid interest, whichwill be taxable as ordinary interest income to the extent not previously included in income) and the US Holder’sadjusted tax basis in the Note. A US Holder’s adjusted tax basis in a Note generally will be the amount paid forthe Note, increased by any accrued OID and less any payments other than stated interest previously received bythe holder.

Gain or loss on a sale, exchange or other taxable disposition of a Note generally will be US source and willgenerally be capital gain or loss. Any capital gain or loss will be long term capital gain or loss if the US Holderhas held the Note for more than one year. The long term capital gains of non-corporate US Holders may be taxedat lower rates. Deductions for capital losses are subject to limitations.

Gains will be included in net investment income for purposes of the Medicare tax applicable to certain non-corporate US Holders.

Substitution of the Issuer

If a Substituted Debtor is substituted for the Issuer, the substitution may depending on the circumstances betreated as an exchange of the Notes for deemed new notes of the Substituted Debtor. In such an event, unless anon-recognition provision applies, a US Holder generally will recognise any gain or loss realised in the deemedexchange in an amount equal to the difference, if any, between (i) the issue price of the deemed new notes (whichwould be their fair market value assuming the Notes are trading on an established market) and (ii) the USHolder’s adjusted tax basis in the Notes. Any deemed new notes will be issued with OID if the stated principalamount of the new notes received in the deemed exchange exceeds their issue price by as much as 0.25%multiplied by the number of complete years to maturity, as described in the discussion relating to taxation ofinterest above. Thus, a substitution of the Issuer may cause US Holders to include OID or a greater amount ofOID on the Notes where either no OID or a lesser amount of OID was required to be included.

Information Reporting and Backup Withholding

Payments of interest, any OID and proceeds from the sale, redemption or other disposition of a Note may bereported to the Internal Revenue Service (“IRS”) unless the US Holder is a corporation or otherwise establishes abasis for exemption. Backup withholding tax may apply to amounts subject to reporting if the US Holder fails toprovide an accurate taxpayer identification number and make certain certifications or fails to report all interestand dividends required to be shown on its US federal income tax returns. A US Holder can claim a credit againstits US federal income tax liability for the amount of any backup withholding tax and a refund of any excessprovided the required information is furnished to the IRS in the time and manner required. Prospective investorsshould consult their tax advisers as to their qualification for exemption from backup withholding and theprocedure for establishing an exemption.

Certain non-corporate US Holders are required to report information with respect to their investment in Notes notheld through an account with certain financial institutions to the IRS. Investors who fail to report requiredinformation could become subject to substantial penalties. Potential investors are encouraged to consult withtheir own tax advisers regarding their reporting obligations in respect of their prospective investment in Notes.

Certain South African Tax Considerations

The following is a non-exhaustive summary of the South African tax consequences of the acquisition, ownershipand disposition of the Notes by South African tax residents and non-residents who are beneficial owners of theNotes. The Issuer is regarded as being tax resident in South Africa.

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Interest

Under current taxation law effective in South Africa a “resident” (as defined in section 1 of the South AfricanIncome Tax Act, 1962 (the “Income Tax Act”)) is subject to income tax on worldwide income. Accordingly, anyinterest received by or accruing to a South African tax resident will be subject to income tax (subject to availabledeductions, allowances and exemptions).

The taxation of interest is generally governed by section 24J of the Income Tax Act. The Income Tax Actrequires a South African tax resident to account for, inter alia, any interest arising from an “instrument” andpremium or discount on the issue and/or redemption of such “instrument” as interest. The taxation of suchinterest is spread over the term of the Notes using a yield-to-maturity or an acceptable alternative methodology,as set out in section 24J of the Income Tax Act, unless the holder is a financial institution registered in terms ofsection 1 of the South African Financial Markets Act, 2012, the South African Reserve Bank or a registeredbanking institution (including companies forming part of a banking group), but excluding long term and shortterm insurance institutions who determine their taxable income in respect of certain financial instruments byincluding in or deducting from their income, for tax purposes, any fair value adjustments of such instrumentsrequired in terms of the IFRS that are recognised in profits or loss.

As the Notes will be denominated in US dollars, the interest accruing to the holders of the Notes must beconverted to Rand on the date that the interest is received or accrues for tax purposes, using the exchange ratemethodology prescribed in the Income Tax Act.

Holders of Notes who are not tax resident in South Africa are subject to normal tax on interest received oraccrued from a source within South Africa. Any such interest is, however, exempt from South African normaltax, unless—

(i) that the tax non-resident person is a natural person who was physically present in South Africa for a periodexceeding 183 days in aggregate during the twelve-month period preceding the date on which the interest isreceived or accrues by or to that person; or

(ii) the debt from which the interest arises is effectively connected to a permanent establishment of that personin South Africa.

Issue, Sale and Redemption of the Notes

The issue, sale and redemption of the Notes are not subject to value-added tax (“VAT”) or any transfer taxes, asthey do not constitute “securities” for the purposes of the South African Securities Transfer Tax Act, 2007 andconstitute “debt securities” for purposes of the South African Value-Added Tax Act, 1991 (the “VAT Act”). Theissue, allotment, drawing, acceptance, endorsement or transfer of ownership of a debt security is exempt fromVAT in terms of section 12(a) of VAT Act. Commissions, fees or similar charges raised by a registered vendorfor VAT purposes for the facilitation, issue, allotment, drawing, acceptance, endorsement of transfer ofownership of Notes that constitute “debt securities” will, however, be subject to VAT at the standard rate (14 percent. at the date of initial issuance of the Notes), except where the recipient is a non-resident. The taxable supplyof services by a registered vendor rendered to non-residents who are not in South Africa when the services arerendered, are subject to VAT at a zero rate in terms of section 11(2) (l) of the VAT Act.

A sale of the Notes by a South Africa tax resident holder may result in a capital gain or loss if the Notes wereheld as capital assets or a revenue gain or loss if the Notes were held as trading stock. Any such capital gain orrevenue gain will be subject to capital gains tax or income tax, respectively, in the holder’s hands. The gain orloss is determined in accordance with the provisions of the Income Tax Act and any discount or premium onacquisition which has already been treated as interest for income tax purposes, under section 24J of the IncomeTax Act will not be taken into account when determining any capital gain or loss. If the Notes are disposed of orredeemed prior to or on maturity, an “adjusted gain on transfer or redemption of an instrument”, or an “adjustedloss on transfer or redemption of an instrument”, as contemplated in section 24J of the Income Tax Act, must becalculated. Any such adjusted gain or adjusted loss is deemed to have been incurred or to have accrued in theyear of assessment in which the transfer or redemption occurred. The calculation of the adjusted gain or adjustedloss will take into account, inter alia, all interest which has already been deemed to accrue to the Noteholder overthe term that the instrument. Under section 24J(4A) of the Income Tax Act, where an adjusted loss on transfer orredemption of an instrument realised by a holder of a Note includes any amount representing interest that haspreviously been included in the income of the holder, that amount will qualify as a deduction from the income ofthe holder during the year of assessment in which the transfer or redemption takes place and will not give rise to

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a capital loss. To the extent that a Noteholder constitutes a “covered person” (as defined in section 24JB of theIncome Tax Act) and section 24JB applies to the Notes, the Noteholder will be taxed in accordance with theprovisions of section 24JB of the Act and the capital gains tax provisions would not apply. A sale of Notes by anon-resident holder will only be subject to capital gains tax in South Africa if the Notes are attributable to apermanent establishment of the Noteholder in South Africa. This tax treatment will be subject to the provisionsof any applicable tax treaty.

Taxation of Foreign Exchange Gains and Losses

As the Notes will be denominated in US dollars, a South African tax resident holder who is (1) a company; (2) atrust carrying on a trade; or (3) a natural person who holds the Notes as trading stock will be required to accountfor foreign exchange gains and losses on translation and realisation of the Notes in accordance with theprovisions of section 24I of the Income Tax Act. Such persons will be required to include in their taxable incomeany translations and realisations exchange gains and losses on the Notes. No taxable foreign exchange gains orlosses will arise for such persons where the Notes are attributable to a permanent establishment outside of SouthAfrica and the functional currency of that permanent establishment is the same as the currency in which theapplicable Notes of such a person are denominated.

Persons holding the Notes as capital assets will be required to take currency fluctuations into account indetermining the capital gain or loss in respect of the disposal of the Notes in accordance with the provisions ofthe Eighth Schedule of the Income Tax Act. The manner in which the currency fluctuations have to be taken intoaccount will depend, inter alia, on the currency of the proceeds for the disposal of the Notes.

Withholding Tax

Under current taxation law in South Africa, all payments made under the Notes and the Guarantees to residentand non-resident holders of the Notes (other than payments of interest) will generally be made free ofwithholding or deduction for or on account of any taxes, duties, assessments or governmental charges in SouthAfrica.

Section 50A-50H of the Income Tax Act imposes a withholding tax on South African-sourced interest paid to orfor the benefit of a foreign person at a rate of 15% of the amount of interest. However, South African sourcedinterest that is paid to or for the benefit of a foreign person in respect of any listed debt is exempt from thewithholding tax on interest. A “listed debt” is a debt that is listed on a “recognized exchange” as defined in theIncome Tax Act. The Notes are listed on a “recognized exchange” and are therefore currently exempt fromwithholding tax on interest. In the event that the Notes cease to be listed on a “recognized exchange” the rate ofwithholding tax may be reduced by the application of any double taxation agreements between South Africa andthe country of tax residence of the relevant holder of the Notes. In order to benefit from the application of suchdouble taxation agreements non-resident holders of the Notes are required to submit a declaration andundertaking in the prescribed form to the Issuer.

In addition, a foreign person is exempt from the withholding tax on interest if:

(i) that foreign person is a natural person who was physical present in South Africa for a period exceeding 183days in aggregate during the twelve-month period preceding the date on which the interest is paid; or

(ii) the debt claim in respect of which that interest is paid is effectively connected with a permanentestablishment of that foreign person in South Africa if that foreign person is registered as a South Africantaxpayer in terms of the Chapter 3 of the South African Tax Administration Act, 2011.

Non-resident holders of the Notes are cautioned to seek independent tax advice in relation to withholding taximposed on interest payments.

Certain Mauritian Tax Considerations

Withholding Tax

With respect to any payment of principal made by the Issuer under the Notes or by any Guarantor under theGuarantees, there will be no withholding or deduction for or on account of any taxes in Mauritius nor any othertax implications in Mauritius.

Payments in respect of interest made by the Issuer under the Notes or MTN Mauritius under the Guarantee to aresident (other than a company resident in Mauritius) are subject to a withholding tax under the Income Tax Act

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1995 (“ITA 95”) at a rate of 15%, subject to such relief as may be available under the provisions of anyapplicable double taxation treaty or any other exemption which may apply. Any such payments when made tonon-residents not carrying on any business in Mauritius by a company holding a GBL 1 out of its foreign sourceincome (as defined below) are exempt from such withholding tax. Accordingly, it is expected that any paymentsof interest to non-residents not carrying on any business in Mauritius made under the Notes by the Issuer, being acompany holding a GBL 1, or under the Guarantees by MTN Mauritius, also being a company holding a GBL 1,will be exempt from any such withholding tax in Mauritius provided such payments are made out of foreignsource income. Any payments in respect of interest made under the Guarantees by any Guarantor (other thanMTN Mauritius) to a non-resident shall not be subject to any withholding or deduction for or on account of anytaxes in Mauritius.

Section 2 of the ITA 95 defines the term ‘foreign source income’ as income which is not derived from Mauritius;and as including, in the case of a corporation holding a GBL 1, income derived from transactions withnon-residents as defined in the ITA 95.

Capital gains tax

Any gains derived by a company resident in Mauritius from the sale of the Notes held for a period of at least six(6) months prior to the sale by such company will be considered as capital gains and will not be taxable inMauritius. However, the tax treatment of any gains derived by a company from the sale of Notes held for aperiod of less than six (6) months will depend on the nature of the business of the company. Accordingly, gainsderived by a company from the sale of Notes held for a period of less than six (6) months which are gains fromany trade or business carried on by that company, may be taxable in Mauritius at the applicable rate as such gainsare considered revenue in nature.

Gains made by any Noteholder who is a physical person or société resident in Mauritius are considered as capitalgains and are not subject to income tax or otherwise taxable in Mauritius.

Further, gains made by any Noteholder that is not a resident of Mauritius are considered as capital gains and arenot subject to income tax or otherwise taxable in Mauritius.

The proposed financial transactions tax (“FTT”)

On 14 February 2013, the European Commission has published a proposal (the “Commission’s Proposal”) for aDirective for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal,Slovenia and Slovakia (the “participating Member States”). However, Estonia has since stated that it will notparticipate.

The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes(including secondary market transactions) in certain circumstances.

Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within andoutside of the participating Member States. Generally, it would apply to certain dealings in the Notes where atleast one party is a financial institution, and at least one party is established in a participating Member State. Afinancial institution may be, or be deemed to be, “established” in a participating Member State in a broad rangeof circumstances, including (a) by transacting with a person established in a participating Member State or (b)where the financial instrument which is subject to the dealings is issued in a participating Member State.

However, the FTT proposal remains subject to negotiation between participating Member States. It may thereforebe altered prior to any implementation, the timing of which remains unclear. Additional EU Member States maydecide to participate.

Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

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EXCHANGE CONTROL

The information below is not intended as legal advice and it does not purport to describe all of theconsiderations that may be relevant to a prospective purchaser of the Notes. Prospective purchasers of the Notesthat are not South African residents or emigrants from the Common Monetary Area (as defined below) to SouthAfrica are urged to seek further professional advice in regard to the purchase of Notes.

Exchange controls restrict the export of capital from South Africa, Namibia and the Kingdom of Swaziland andLesotho (collectively the “Common Monetary Area”). These exchange controls are administered by the FinancialSurveillance Department of the South African Reserve Bank (the “SARB”) and regulate transactions involvingSouth African residents. The purpose of exchange controls is to mitigate the decline of foreign capital reserves inSouth Africa. The Issuer expects that South African exchange controls will continue to operate in the foreseeablefuture. The Government of South Africa has, however, committed itself to relaxing exchange controls graduallyand significant relaxation has occurred in recent years. It is the stated objective of the South African authoritiesto achieve equality of treatment between South African residents and non-South African residents in relation toinflows and outflows of capital. This gradual approach towards the abolition of exchange controls adopted by theGovernment of South Africa is designed to allow the economy to adjust more smoothly to the removal ofcontrols that have been in place for a considerable period of time. Furthermore, exchange control requirementsare in place under the Exchange Control Regulations, 1961 (the “Exchange Control Regulations”).

No South African residents or offshore subsidiary of a South African resident may subscribe for or purchase anyof the Notes or beneficially own or hold any of the Notes unless specific approval has been obtained from theSARB by such persons or such subscription, purchase or beneficial holding or ownership is otherwise permittedunder the South African exchange control regulations or the rulings promulgated thereunder (including, withoutlimitation, the rulings issued by the SARB providing for foreign investment allowances applicable to personswho are residents of South Africa under the applicable exchange control laws of South Africa).

The issuing of a guarantee by those Guarantors incorporated in South Africa requires the approval of the SARB.We have obtained the approval of the SARB for the issuance of the guarantee by the Guarantors incorporated inSouth Africa.

All exchange control restrictions applicable in Mauritius were suspended with effect from 29 July 1994. Thus allfunds paid to or by the Issuer, or by MTN Mauritius under the Guarantees, will be excluded from the exchangecontrol regulations.

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SUBSCRIPTION AND SALE

The Issuer intends to offer the Notes through the Managers and their broker-dealer affiliates, as applicable,named below. Subject to the terms and conditions stated in a subscription agreement (the “SubscriptionAgreement”) dated 11 October 2016 among the Managers, the Issuer and the Guarantors, each of the Managershas severally agreed to purchase, and the Issuer has agreed to sell to each of the Managers, the principal amountof the Notes of each Series set forth opposite each Manager’s name below.

Principalamount of2022 Notes

(US$)

ManagerBarclays Bank PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000Citigroup Global Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000Merrill Lynch International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000The Standard Bank of South Africa Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000J.P. Morgan Securities plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000Mizuho Securities USA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000MUFG Securities EMEA plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000SMBC Nikko Capital Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000Standard Chartered Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000Total 500,000,000

Principalamount of2026 Notes

(US$)

ManagerBarclays Bank PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000Citigroup Global Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000Merrill Lynch International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000The Standard Bank of South Africa Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000J.P. Morgan Securities plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000Mizuho Securities USA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000MUFG Securities EMEA plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000SMBC Nikko Capital Markets Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000Standard Chartered Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000,000Total 500,000,000

The Subscription Agreement provides that the obligations of the Managers to purchase the Notes are subject toapproval of legal matters by counsel and to other conditions. The offering of the Notes by the Managers issubject to the Managers’ right to reject any order in whole or in part.

The Issuer has been informed that the Managers propose to resell beneficial interests in the Notes of each Seriesat the offering price in respect of that Series set forth on the cover page of this Offering Circular within theUnited States to persons reasonably believed to be QIBs in reliance upon Rule 144A, and to persons other thanUS persons (as defined in Regulation S) in offshore transactions in reliance upon Regulation S. See “TransferRestrictions”. The prices at which beneficial interests in the Notes are offered may be changed at any timewithout notice.

Offers and sales of the Notes in the United States will be made by those Managers or their affiliates that areregistered broker-dealers under the Exchange Act, or in accordance with Rule 15a-6 thereunder.

The Notes and the Guarantees have not been registered under the Securities Act or any state securities laws andmay not be offered or sold within the United States or to, or for the account or benefit of, US persons (as definedin Regulation S) except in transactions exempt from, or not subject to, the registration requirements of theSecurities Act. See “Transfer Restrictions”.

Accordingly, until 40 days after the Closing Date of this Offering (the “Distribution Compliance Period”), anoffer or sale of Notes (or beneficial interests therein) within the United States by a dealer that is not participatingin this Offering may violate the registration requirements of the Securities Act if that offer or sale is madeotherwise than in accordance with Rule 144A.

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Each Series of Notes will constitute a new class of securities of the Issuer with no established trading market.The Issuer cannot provide any assurances to investors that the prices at which the Notes of that Series (orbeneficial interests therein) will sell in the market after this Offering will not be lower than the initial offeringprice in respect of that Series or that an active trading market for such Notes will develop and continue after thisOffering. The Managers have advised the Issuer that they currently intend to make a market in the Notes of eachSeries. However, they are not obligated to do so, and they may discontinue any market-making activities withrespect to the Notes of either or each Series at any time without notice. Applications have been made to admit theNotes to listing on the Official List and to have the Notes admitted to trading on the Main Securities Market.Accordingly, the Issuer cannot provide any assurances to investors as to the liquidity of or the trading market forthe Notes.

In connection with the Offering, one or more of the Managers may purchase and sell Notes of each Series (orbeneficial interests therein) in the open market. These transactions may include overallotment, syndicatecovering transactions and stabilising transactions. Overallotment involves the sale of Notes of a Series (orbeneficial interests therein) in excess of the principal amount of Notes of that Series to be purchased by theManagers in this Offering, which creates a short position for the Managers. Covering transactions involve thepurchase of the Notes of a Series (or beneficial interests therein) in the open market after the distribution hasbeen completed in order to cover short positions. Stabilising transactions consist of certain bids or purchases ofNotes of a Series (or beneficial interests therein) made for the purpose of preventing or retarding a decline in themarket price of the Notes of that Series (or beneficial interests therein) while the Offering is in progress. Any ofthese activities may have the effect of preventing or retarding a decline in the market price of the Notes of aSeries (or beneficial interests therein). They may also cause the price of the Notes of a Series (or beneficialinterests therein) to be higher than the price that otherwise would exist in the open market in the absence of thesetransactions. The Managers may conduct these transactions in the over-the-counter market or otherwise. If theManagers commence any of these transactions, they may discontinue them at any time.

The Issuer expects that delivery of interests in the Notes will be made against payment therefor on the Issue Datespecified on the cover page of this Offering Circular, which will be the fifth Business Day following the date ofpricing of the Notes (this settlement cycle being referred to as T+5). Under Rule 15c6-l of the Exchange Act,trades in the secondary market generally are required to settle in three New York business days, unless the partiesto any such trade expressly agree otherwise. Accordingly, investors who wish to trade interests in the Notes onthe date of pricing of the Notes or the next New York business day will be required, by virtue of the fact that theNotes initially will settle in T+5, to specify an alternate settlement cycle at the time of any such trade to prevent afailed settlement. Investors in the Notes who wish to trade interests in the Notes on the date of pricing of theNotes or the next New York business day should consult their own adviser.

The Managers and their respective affiliates are full service financial institutions engaged in various activities,which may include securities trading, commercial and investment banking, financial advisory, investmentmanagement, principal investment, hedging, financing and brokerage activities. The Managers or their respectiveaffiliates may have performed investment banking and advisory services for, and had other commercial dealingsin the ordinary course of business with, the Issuer, the Guarantors and their respective affiliates from time to timefor which they may have received fees, expenses, reimbursements and/or other compensation. The Managers ortheir respective affiliates may in the future, from time to time, engage in transactions with and perform advisoryand other services for the Issuer, the Guarantors and their respective affiliates in the ordinary course of theirbusiness for which they may receive customary fees and commissions. Certain of the Managers and/or theirrespective affiliates have acted and expect in the future to act as a lender to the Issuer, the Guarantors and/or theirrespective subsidiaries and/or otherwise participate in transactions with the Issuer, the Guarantors and/or theirrespective subsidiaries.

In the ordinary course of their various business activities, the Managers and their respective affiliates may makeor hold a broad array of investments and actively trade debt and equity securities (or related derivative securities)and financial instruments (including bank loans) for their own account and for the accounts of their customersand may at any time hold long and short positions in such securities and instruments. Such investment andsecurities activities may involve securities and/or instruments of the Issuer, the Guarantors or their respectiveaffiliates. In addition, certain of the Managers and/or their respective affiliates hedge their credit exposure to theIssuer and the Guarantors pursuant to their customary risk management policies. Typically, such Managers andtheir affiliates may hedge such exposure by entering into transactions which consist of either the purchase ofcredit default swaps or the creation of short positions in securities, including potentially the Notes. These hedgingactivities could have an adverse effect on the future trading prices of the Notes of either or each Series offered

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hereby. The Managers and their respective affiliates may also make investment recommendations and/or publishor express independent research views in respect of such securities or financial instruments and may hold, orrecommend to clients that they acquire, long and/or short positions in such securities and instruments.

Each of the Issuer and the Guarantors, on a joint and several basis, has agreed to indemnify each Manager againstcertain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Managersmay be required to make because of those liabilities.

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SELLING RESTRICTIONS

General

No action has been taken by the Issuer or any of the Managers that would, or is intended to, permit a public offerof the Notes, or possession or distribution of this Offering Circular or any other offering or publicity materialrelating to the Notes in any country or jurisdiction where any such action for that purpose is required.Accordingly, each Manager has undertaken that it will not, directly or indirectly, offer or sell any Notes or havein its possession, distribute or publish any offering circular, prospectus, form of application, advertisement orother document or information in any country or jurisdiction except under circumstances that will, to the best ofits knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales ofNotes by it will be made on the same terms.

For the purpose of the Securities Act 2005 of Mauritius the Issuer will only issue Notes to investors on thecondition that they subscribe for a minimum amount of US$200,000 and they are either (i) QIBs in theUnited States or (ii) qualified investors (as defined in Directive 2003/71/EC, as amended). Accordingly, theNotes will be issued in denominations of US$200,000 and each Manager has represented and agreed that it willnot sell any Notes other than to either (i) QIBs in the United States or (ii) qualified investors (as defined inDirective 2003/71/EC, as amended).

United States

The Notes and the Guarantees have not been and will not be registered under the Securities Act or the securitieslaws of any state or other jurisdiction of the United States and, subject to certain exceptions, may not be offeredor sold within the United States or to, or for the account or benefit of, a US person except pursuant to anexemption from, or in a transaction not subject to, the registration requirements of the Securities Act.Accordingly, the Notes and the Guarantees are being offered and sold only (a) to persons other than US personsas defined in Regulation S in offshore transactions in reliance on, and in compliance with, Regulation S and(b) in the United States to a limited number of QIBs as defined in the Securities Act in connection with resales bythe Manager, in reliance on, and in compliance with, Rule 144A.

Each Manager has represented and agreed that it has offered and sold, and will offer and sell, the Notes (a) aspart of its distribution at any time and (b) otherwise until 40 days after the later of the commencement of theOffering and the Closing Date, only in accordance with Rule 903 of Regulation S or to QIBs pursuant toRule 144A or any other available exemption from registration under the Securities Act. Accordingly, neither suchManager nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in anydirected selling efforts (as defined in Regulation S) with respect to the Notes, and such Manager, its affiliates andall persons acting on its or their behalf have complied and will comply with the offering restrictions requirementof Regulation S. Each Manager has agreed that, at or prior to confirmation of sale of the Notes (other than a salepursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, feeor other remuneration that purchases the Notes from it during the restricted period a confirmation or notice tosubstantially the following effect:

“The Notes covered hereby have not been registered under the US Securities Act of 1933, as amended (the“Securities Act”), and may not be offered and sold within the United States or to, or for the account or benefit of,US persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of thecommencement of the Offering and the Closing Date, except in either case in accordance with Regulation S (orRule 144A if available) under the Securities Act. Terms used above have the meaning given to them byRegulation S of the Securities Act.”

In addition, until 40 days after the commencement of the Offering, an offer or sale of Notes within theUnited States by any dealer (whether or not participating in the offering of the Notes) may violate the registrationrequirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A.

South Africa

Each Manager has represented, warranted and agreed that it will not offer or sell any Notes or solicit any offersfor subscription for or sale of any of the Notes constituting an offer to the public (as such expression is defined insection 95(1)(h) of the South African Companies Act (whether for subscription, purchase or sale) in SouthAfrica, or otherwise sell any Notes, to any person who, or which, is a resident (as defined in the South

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African Exchange Control Regulations) other than in strict compliance with the South African Exchange ControlRegulations in effect from time to time and, without prejudice to the foregoing, that it will take all reasonablemeasures available to it to ensure that no Note will be purchased by, or sold to, or beneficially held or owned by,any resident other than in strict compliance with the South African Exchange Control Regulations in effect fromtime to time.

Accordingly, no offer will be made or any Notes sold to any prospective investors in South Africa, other thanpursuant to section 96(1) of the South African Companies Act and in compliance with the South AfricanExchange Control Regulations and any other applicable laws and regulations of South Africa in force from timeto time.

This Offering Circular does not, nor is it intended to, constitute a “registered prospectus” (as that term is definedin the South African Companies Act) prepared and registered under the South African Companies Act.

Information made available in this Offering Circular should not be considered as “advice” as defined in the SouthAfrican Financial Advisory and Intermediary Services Act, 2002.

Mauritius

Each Manager has represented, warranted and agreed that it will not offer or sell any Notes in Mauritius.

Neither this Offering Circular, nor any other offering material or information contained herein relating to theoffer of the Notes, may be treated as a prospectus for the purpose of the Securities Act 2005 of Mauritius or bereleased or issued to the public in Mauritius or be used in connection with any such offer. Moreover this OfferingCircular does not constitute an offer made to sell the Notes to the public in Mauritius. For the purpose of theSecurities Act 2005 of Mauritius, the Notes will only be issued to sophisticated investors (which term means thatthey subscribe for a minimum amount of US$200,000 and they are either (i) QIBs in the United States or(ii) qualified investors (as defined in Directive 2003/71/EC, as amended)).

United Kingdom

Each Manager has represented, warranted and agreed that: (i) it has only communicated or caused to becommunicated and will only communicate or cause to be communicated any invitation or inducement to engagein investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the“FSMA”)) received by it in connection with the issue or sale of any Notes in circumstances in whichSection 21(1) of the FSMA does not apply to the Issuer or any Guarantor, and (ii) it has complied and willcomply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in,from or otherwise involving the United Kingdom.

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TRANSFER RESTRICTIONS

Because the following restrictions will apply with respect to the Notes, purchasers of the Notes are advised toconsult legal counsel prior to making an offer, resale, pledge or transfer of any of the Notes. References to Notesin this section should, as appropriate, be deemed to refer to the Notes themselves and/or beneficial intereststherein.

The Issuer has not registered the Notes or the Guarantees under the Securities Act or the laws of any statesecurities commission and, therefore, the Notes and the Guarantees may not be offered or sold within theUnited States or to, or for the account or benefit of, US persons (as defined in Regulation S under the SecuritiesAct) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of theSecurities Act. Accordingly, the Notes and the Guarantees are being offered and sold only (1) to QIBs, inreliance upon Rule 144A under the Securities Act and (2) to persons other than US persons in offshoretransactions in reliance upon Regulation S under the Securities Act.

By its purchase of Notes, each purchaser of Notes will be deemed to have acknowledged, represented and agreedwith the Managers, the Issuer and the Guarantors as follows:

1. that the Notes have not been and will not be registered under the Securities Act or any other applicablesecurities law and that the Notes and the Guarantees are being offered for resale in transactions not requiringregistration under the Securities Act or any other securities law, including sales pursuant to Rule 144Aunder the Securities Act, and, unless so registered, may not be offered, sold or otherwise transferred exceptin compliance with the registration requirements of the Securities Act or any other applicable securities law,or pursuant to an exemption therefrom or in a transaction not subject thereto, and in each case in compliancewith the conditions for transfer set forth in paragraph (4) below.

2. it is not an “affiliate” (as defined in Rule 144 under the Securities Act) of the Issuer and it is not acting onthe Issuer’s or any such affiliate’s behalf and it is either (i) a QIB and is aware that any sale of Notes to itwill be made in reliance on Rule 144A and such acquisition will be for its own account or for the account ofanother QIB or (ii) not a “US person” (as defined in Regulation S under the Securities Act) or purchasingfor the account or benefit of a US person (other than a distributor) and it is purchasing Notes in an offshoretransaction in accordance with Regulation S under the Securities Act.

3. that none of the Issuer, the Guarantors, the Managers or any person representing the Issuer, any Guarantoror any Manager has made any representation to it with respect to the Issuer, any Guarantor or the offer orsale of any of the Notes, other than the information contained in this Offering Circular, which has beendelivered to it and upon which it is relying in making its investment decision with respect to the Notes. Itacknowledges that the Managers make no representation or warranty as to the accuracy or completeness ofthis Offering Circular. It has had access to such financial and other information concerning the Issuer, theGuarantors and the Notes as it has deemed necessary in connection with its decision to purchase the Notes,including an opportunity to ask questions of and request information from the Issuer, the Guarantors and theManagers.

4. if it is a purchaser of the Rule 144A Notes, it is purchasing the Notes for its own account, or for one or moreinvestor accounts for which it is acting as a fiduciary or agent, in each case for investment, and not with aview to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act orany other law. It agrees (or will be deemed to agree) on its own behalf and on behalf of any investor accountfor which it is purchasing Notes, and each subsequent holder of the Notes by its acceptance thereof willagree, to offer, sell or otherwise transfer such Notes prior to (x), the date which is one year (or such shorterperiod of time as permitted by Rule 144 under the Securities Act or any successor provision thereunder)after the later of the date of the original issue of the Notes and the last date on which the Issuer or anyaffiliate of the Issuer was the owner of such Notes (or any predecessor thereto), or (y), such later date, ifany, as may be required by applicable law (the “Resale Restriction Termination Date”), only (a) to theIssuer, (b) pursuant to a registration statement which has been declared effective under the Securities Act,(c) for so long as the Notes are eligible for resale pursuant to Rule 144A, to a person it reasonably believesis a QIB that purchases for its own account or for the account of another QIB to whom it gives notice thatthe transfer is being made in reliance on Rule 144A, (d) in an offshore transaction in compliance withRule 903 or 904 of Regulation S under the Securities Act, or (e) pursuant to any other available exemptionfrom the registration requirements of the Securities Act, subject in each of the foregoing cases tocompliance with any applicable state securities laws. The foregoing restrictions on resale will not applysubsequent to the Resale Restriction Termination Date; however, any resale of the Notes thereafter willcontinue to need to comply with all applicable laws. It acknowledges that the Issuer reserves the right prior

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to any offer, sale or other transfer of the Notes pursuant to clause (d) or (e) above, to require the delivery ofan opinion of counsel, certifications and/or other information satisfactory to the Issuer.

Each Rule 144A Note will contain a legend substantially in the following form:

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATESSECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR OTHER SECURITIESLAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. NEITHER THISNOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OFSUCH REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

THE HOLDER OF THIS NOTE (OR OF A BENEFICIAL INTEREST HEREIN) BY ITS ACCEPTANCEHEREOF: (a) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINEDIN RULE 144A UNDER THE SECURITIES ACT), (b) AGREES ON ITS OWN BEHALF AND ONBEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED THIS NOTE (OR OF ABENEFICIAL INTEREST HEREIN) THAT IT WILL NOT PRIOR TO: (i), THE DATE THAT IS ONEYEAR (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THESECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THEORIGINAL ISSUE DATE OF THIS NOTE (OR OF ANY PREDECESSOR OF THIS NOTE) OR THELAST DAY ON WHICH THE ISSUER OR ANY “AFFILIATE” (AS DEFINED IN RULE 144) OF THEISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE), OR(ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALERESTRICTION TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE(OR A BENEFICIAL INTEREST HEREIN) EXCEPT: (A) TO THE ISSUER, (B) PURSUANT TO AREGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THESECURITIES ACT, (C) FOR SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TORULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIESACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHERQUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER ISBEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, (D) PURSUANT TOOFFERS AND SALES TO PERSONS OTHER THAN US PERSONS THAT OCCUR OUTSIDE THEUNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR(E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN COMPLIANCE WITH THERELEVANT SECURITIES LAWS OF ANY OTHER JURISDICTION, AND (c) AGREES THAT ITWILL GIVE TO EACH PERSON TO WHOM THIS NOTE (OR OF A BENEFICIAL INTERESTHEREIN) IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND;PROVIDED THAT THE ISSUER SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE ORTRANSFER PURSUANT TO CLAUSE (D) OR (E) ABOVE TO REQUIRE THE DELIVERY OF ANOPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLYSATISFACTORY TO THE ISSUER. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OFTHE HOLDER HEREOF AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USEDHEREIN, THE TERMS “OFFSHORE TRANSACTION”, “UNITED STATES” AND “US PERSON”HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

Each Regulation S Note will contain a legend substantially in the following form:

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATESSECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR OTHER SECURITIESLAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTERESTOR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATIONUNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT.

5. if it is a purchaser of Regulation S Notes in a sale that occurs outside the United States within the meaningof Regulation S, it acknowledges that until the expiration of the Distribution Compliance Period within themeaning of Rule 903 of Regulation S, any offer or sale of the Notes shall not be made by it to a US personor for the account or benefit of a US person within the meaning of Rule 902 of Regulation S.

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6. that the Registrar will not be required to accept for registration of transfer any Notes acquired by it, exceptupon presentation of evidence satisfactory to the Issuer and the Registrar that the restrictions set forth hereinhave been complied with.

7. that:

(a) the Issuer, the Guarantors, the Managers and others will rely upon the truth and accuracy of suchinvestor’s acknowledgements, representations and agreements set forth herein and such investor agrees(or will be deemed to agree) that if any of its acknowledgements, representations or agreements hereincease to be accurate and complete, it will notify the Issuer, the Guarantors and the Managers promptlyin writing; and

(b) if such investor is acquiring any Notes as fiduciary or agent for one or more investor accounts, suchinvestor represents with respect to each such account that:

(i) such investor has sole investment discretion; and

(ii) such investor has full power to make the foregoing acknowledgements, representations andagreements on behalf of each such account and that each such investment account is eligible topurchase the Notes.

8. that it will give to each person to whom it transfers the Notes notice of any restrictions on the transfer of theNotes.

9. that no action has been taken in any jurisdiction (including the United States) by the Issuer, the Guarantorsor the Managers that would permit a public offering of the Notes or the possession, circulation ordistribution of this Offering Circular or any other material relating to the Issuer, the Guarantors or the Notesin any jurisdiction where action for that purpose is required. Consequently, any transfer of the Notes will besubject to the selling restrictions set forth under this “Transfer Restrictions” section and “SellingRestrictions”.

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COMMERCIAL PAPER REGULATIONS UNDER THE SOUTH AFRICAN BANKS ACT

DISCLOSURE REQUIREMENTS IN TERMS OF PARAGRAPH 3(5) OF THE COMMERCIAL PAPERREGULATIONS PUBLISHED UNDER THE SOUTH AFRICAN BANKS ACT, 1990, AS AMENDED, INRELATION TO THIS ISSUE OF NOTES

The Issuer is required to make the disclosure set out below pursuant to paragraph 3(5) of the exemption noticepublished in terms of the South African Banks Act, 1990 (the “Banks Act”) under Government Notice 2172 inGovernment Gazette 16167 of 14 December 1994 (the “Commercial Paper Regulations”) exempting thedesignation of certain activities from falling within the meaning of “the business of a bank” (as that term isdefined in the Banks Act).

1. Paragraph 3(5)(a)

The “ultimate borrower” (as defined in the Commercial Paper Regulations) is the Issuer.

2. Paragraph 3(5)(b)

The Issuer is a going concern and can in all circumstances be reasonably expected to meet its commitmentsunder the Notes.

3. Paragraph 3(5)(c)

The auditors of the Issuer are PricewaterhouseCoopers Ltd.

4. Paragraph 3(5)(d)

As at the date of this issue:

(a) the Issuer has Commercial Paper (as defined in the Commercial Paper Regulations) in issue in a totalamount of US$750 million; and

(b) the Issuer estimates that it may issue US$1.5 billion of Commercial Paper during the current financialyear, ending 31 December 2016.

5. Paragraph 3(5)(e)

All information that may reasonably be necessary to enable an investor to ascertain the nature of thefinancial and commercial risk of its investment in the Notes is contained in this Offering Circular.

6. Paragraph 3(5)(f)

There has been no material adverse change in the Issuer’s financial position since the date of its last auditedfinancial statements.

7. Paragraph 3(5)(g)

The Notes issued will be listed.

8. Paragraph 3(5)(h)

The funds to be raised through the issue of the Notes are to be used by the Issuer for its general corporatepurposes.

9. Paragraph 3(5)(i)

The obligations of the Issuer in respect of the Notes are unsecured.

10. Paragraph 3(5)(j)

PricewaterhouseCoopers Ltd., the statutory auditors of the Issuer, have confirmed that their procedures didnot reveal anything which indicates that the issue of the Notes will not comply in all respects with therelevant provisions of the Commercial Paper Regulations.

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LEGAL MATTERS

Certain matters as to English and United States law will be passed upon for the Issuer and the Guarantors byFreshfields Bruckhaus Deringer LLP, certain matters as to South African law will be passed upon for the Issuerand the Guarantors by Webber Wentzel and certain matters as to Mauritian law will be passed upon for the Issuerand the Guarantors by TM&S Gujadhur Chambers. Certain matters as to English and United States law will bepassed upon for the Managers by Allen & Overy LLP, certain matters as to South African law will be passedupon for the Managers by Allen & Overy (South Africa) LLP, and certain matters as to Mauritian law will bepassed upon for the Managers by BLC Robert & Associates.

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GENERAL INFORMATION

Authorisation

The Issuer and the Guarantors have obtained all necessary consents, approvals and authorisations in connectionwith, as applicable, the issue and performance of the Notes and the Guarantees. The issue of the Notes was dulyauthorised by a resolution of the board of directors of the Issuer dated 5 August 2016 and shareholder resolutionsof the Issuer dated 5 August 2016. The giving of the Guarantees by the Guarantors was duly authorised by (A)resolutions of the board of directors of (i) MTN Group dated 4 August 2016, (ii) MTN Holdings dated 4 August2016, (iii) MTN International dated 4 August 2016, (iv) MTN Mauritius dated 5 August 2016, and (v) MTNSouth Africa dated 22 July 2016 and (B) resolutions of the shareholders of (i) MTN Group dated 25 May 2016,(ii) MTN Holdings dated 12 August 2016, (iii) MTN International dated 12 August 2016, (iv) MTN Mauritiusdated 5 August 2016 and (v) MTN South Africa dated 15 August 2016.

Listing

Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and totrading on the Main Securities Market. It is expected that admission of the Notes to the Official List and totrading on the Main Securities Market will be granted on or about 13 October 2016, subject only to the issue ofthe Notes.

The estimated total expenses related to the admission of the Notes to trading on the Main Securities Market areUS$4,600.

Listing Agent

A&L Listing Limited is acting solely in its capacity as listing agent for the Issuer in connection with the Notesand is not itself seeking admission of the Notes to the Official List of the Irish Stock Exchange or to trading onthe Main Securities Market for the purposes of the Prospectus Directive.

Clearing Systems

The Regulation S Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg.Application has been made for acceptance of the Rule 144A Notes into DTC’s book-entry settlement system.

In respect of the 2022 Notes: the ISIN for the Regulation S Notes is XS1503116912 and for the Rule 144A Notesis US55377XAC02. The Common Code for the Regulation S Notes is 150311691 and for the Rule 144A Notes is150315638. The CUSIP number for the Rule 144A Notes is 55377XAC0.

In respect of the 2026 Notes: the ISIN for the Regulation S Notes is XS1493823725 and for the Rule 144A Notesis US55377XAB29. The Common Code for the Regulation S Notes is 149382372 and for the Rule 144A Notes is149969136. The CUSIP number for the Rule 144A Notes is 55377XAB2.

No significant change

There has been no significant change in the financial or trading position of the Issuer, the Guarantors or theGroup taken as a whole since 30 June 2016 and there has been no material adverse change in the financialposition or prospects of the Issuer, the Guarantors or the Group taken as a whole since 31 December 2015, exceptwith respect to the Nigerian Regulatory Fine. See “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

Litigation

Except as disclosed on pages 110-112 of this Offering Circular, none of the Issuer, the Guarantors nor any oftheir respective subsidiaries is or has been involved in any governmental, legal or arbitration proceedings(including any such proceedings which are pending or threatened of which the Issuer is aware) in the 12 monthspreceding the date of this document which may have, or have had in the recent past, significant effects on thefinancial position or profitability of the Issuer, the Guarantors or the Group taken as a whole.

Auditors

The auditors of the Group for each of the three financial years ended 31 December 2015, 2014 and 2013 werePricewaterhouseCoopers Inc. (“PwC”) and SizweNtsalubaGobodo Inc. (“SNG”), who also both audited the MTNGroup’s annual consolidated financial statements included in this Offering Circular, without qualification. Theaddress of PwC is 2 Eglin Road, Sunninghill 2157, South Africa and the address of SNG is 20 Morris Street East,Woodmead 2191, South Africa. Neither PwC, PricewaterhouseCoopers Ltd., auditors of the Issuer and MTNMauritius, nor SNG have any material interest in the Issuer or any Guarantor. Each of PwC and SNG isauthorised by the Independent Regulatory Board for Auditors to conduct independent audits in South Africa.

167

Documents

Until the maturity date of the Notes, copies of the following documents will be available in physical form forinspection for free at the registered office of the Issuer and at the specified office of the Paying Agent for thetime being in London:

• the articles of association/constitution of each of the Issuer and the Guarantors along with any amendments;

• the consolidated, audited financial statements of the Group in respect of the financial years ended31 December 2015 and 2014, together with the audit reports in connection therewith. MTN Group currentlyprepares audited consolidated accounts on an annual basis;

• the reviewed condensed consolidated interim financial statements of the Group in respect of the six monthsended 30 June 2016, together with the review report in connection therewith;

• the Deed of Covenant in respect of each Series;

• the Deed Poll in respect of each Series;

• the Guarantee in respect of each Series;

• the Agency Agreement in respect of each Series; and

• this Offering Circular.

Documents incorporated by reference

No document or content of any website is incorporated by reference in this Offering Circular.

Material Contracts

Except as disclosed in this Offering Circular, none of the Issuer and the Guarantors has entered into any materialcontract outside the ordinary course of its business that could result in the Issuer or any Guarantor being under anobligation or entitlement that is material to its ability to meet its obligations in respect of the Notes or theGuarantee, as applicable.

Language

The language of this Offering Circular is English. Certain legislative references and technical terms have beencited in their original language in order that the correct technical meaning may be ascribed to them underapplicable law.

Post-issuance information

The Issuer does not intend to provide any post-issuance information in relation to this issue of Notes.

168

GLOSSARY

2022 Notes the US$500,000,000 5.373% Guaranteed Notes due 2022 issuedhereby

2026 Notes the US$500,000,000 6.500% Guaranteed Notes due 2026 issuedhereby

2G second generation wireless telephone technology

3G third generation wireless telephone technology

4G fourth generation wireless telephone technology

ARPU Average revenue per customer/unit

ATM Automated Teller Machine

BCM business continuity management

Board the Board of Directors of MTN Group

Borrower MTN South Africa

C-band a frequency band used in satellite communications

Clearing Systems DTC, Euroclear and Clearstream, Luxembourg

Closing Date the closing date of the Offering

Co-Managers J.P. Morgan Securities plc, Mizuho Securities USA Inc., MUFGSecurities EMEA plc, SMBC Nikko Capital Markets Limited andStandard Chartered Bank

Common Code a nine digit identification code in respect of the Notes

CRA Regulation Regulation (EU) No 1060/2009, as amended

Clearstream, Luxembourg Clearstream Banking S.A.

Commission’s Proposal the proposal of the European Commission published on 14 February2013 for a directive for a common FTT in the participating memberstates

CSR corporate social responsibility

CUSIP Committee on Uniform Securities Identification Procedures

Deed Poll the deed poll dated the Closing Date entered into by the Issuer inrespect of each Series, under which it has agreed to comply with theinformation delivery requirements of Rule 144A(d)(4) under theSecurities Act

Distribution Compliance Period the period lasting 40 days after the Offering

US dollars, US$ and $ United States dollars

DTC The Depository Trust Company

Dual Carrier HSPA+ an enhanced version of HSPA+

EBITDA profit before depreciation of property, plant and equipment,amortisation of intangible assets, impairment of goodwill, financeincome, finance costs, share of results of associates and joint venturesafter tax, net monetary gains/losses and income tax expense

ECA the Electronic Communications Act, 2005

ECNS electronic communications network services

ECS electronic communications services

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EDGE enhanced data rates for GSM evolution

EDGE Evolution an upgraded version of the EDGE technology

ESMA the European Securities and Markets Authority

EU European Union

EURIBOR Euro Interbank Offer Rate

Euroclear Euroclear Bank SA/NV

Exchange Act the United States Securities Exchange Act of 1934, as amended

Fiscal Agent Citibank N.A., London Branch

FSC the Financial Services Commission of Mauritius

FSMA the Financial Services and Markets Act 2000

FTT financial transactions tax

GBL 1 Category 1 Global Business Licence issued by the FSC

GDP gross domestic product

GHz gigahertz

Global Certificates the two global certificates in registered form representing the Notes

GPRS general packet radio service

Group, we, us, our MTN Group and its consolidated subsidiaries

Group Management the Group’s central management

GSM Global System for Mobile Communications

Guarantees the deeds of guarantee in respect of the 2022 Notes and the 2026Notes, each to be dated the Issue Date

Guarantors MTN Group Limited, Mobile Telephone Networks Holdings Limited,MTN International (Mauritius) Limited, MTN InternationalProprietary Limited and Mobile Telephone Networks ProprietaryLimited

HSUPA high-speed uplink packet access

HSDPA high-speed downlink packet access

HSPA+ evolved high-speed packet access

ICASA Independent Communications Authority of South Africa

ICT Information and communications technology

IEC International Electrotechnical Commission

I-ECNS an individual ECNS licence

I-ECS an individual ECS licence

IEDC Iran Electronic Development Company

170

IFRS International Financial Reporting Standards, as issued by theInternational Accounting Standards Board

IFRS 11 IFRS 11 Joint Arrangements

IHS IHS Holdings Limited

Interest Payment Dates in respect of the 2022 Notes: 13 February and 13 August of each year;andin respect of the 2026 Notes: 13 April and 13 October of each year

Irancell Irancell Telecommunication Company Services (PJSC)

Irish Stock Exchange Irish Stock Exchange plc

IRS Internal Revenue Service

ISIN International Securities Identification Number

ISO International Organization for Standardization

ISP internet service provider

Issue Date 13 October 2016

Issuer MTN (Mauritius) Investments Limited

IT information technology

JIBAR Johannesburg Interbank Agreed Rate

Joint Bookrunners Barclays Bank PLC, Citigroup Global Markets Limited, MerrillLynch International and The Standard Bank of South Africa Limited

King III the King III Code of Corporate Governance

Lender Mobile Telephone Networks Holdings Limited

LIBOR London Interbank Offered Rate

LTE long-term evolution

Main Securities Market the regulated market of the Irish Stock Exchange

Managers The Joint Bookrunners and the Co-Managers

MB megabyte

Mbps megabytes per second

Me2U services that allows subscribers to send and receive airtime to or fromeach other, either directly from a subscriber’s mobile phone orthrough a message request

MEIH Middle East Internet Holding

MHz megahertz

MMS multimedia services

MoCT Minister of Communications Technology

Moody’s Moody’s Investors Service Limited

MOU minutes of use

171

MPLS multiprotocol label switching

MTN MTN Group Limited and its subsidiaries

MTN Academy initiatives that provides a standardised approach to employee learningand development

MTN Afrinolly a service that allows subscribers to receive the latest Nollywoodmovie trailers and music videos to their phone

MTN Auto Top-Up auto top-up services

MTN Group MTN Group Limited

MTN Holdings Mobile Telephone Networks Holdings Limited

MTN International MTN International Proprietary Limited

MTN Magic Voice a service that allows customers to change their voice when making acall

MTN Mauritius MTN International (Mauritius) Limited

MTN Mobile Money a service that offers customers bill payment and money transferservices

MTN Mobile News a service that provides customers with the most up to date local andinternational news, sports news, entertainment news, fashion newsand finance news

MTN Nigeria MTN Nigeria Communications Limited

MTN Opera Mini a service that allows customers in certain markets to access the webfrom their mobile phones at lower costs and faster speeds

MTN Play a content portal that provides a variety of entertainment andinformative services

MTN Prolongation services that allow subscribers to borrow airtime which is thenrecouped when they next recharge

MTN Pulse a service that offers customers 10MB of free data for seven days aftera top-up of a certain amount, as well as reduced call and SMS rates toother MTN Pulse subscribers

MTN South Africa Mobile Telephone Networks Proprietary Limited

MTN Syria MTN Syria (JSC)

MTN Uganda MTN (Uganda) Limited

MTN Virtual services that allow several subscribers to share the same mobilephone with their own personal accounts and without having to swapSIM cards each time

MTN Zone dynamic tariffing services that offer discounted call rates based onavailable network capacity

MVNOs mobile virtual network operators

NCC the Nigerian Communications Commission

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NIBOR Nigerian Interbank Offered Rate

Noteholder a holder of Notes

Notes the 2022 Notes and the 2026 Notes

NPA national priority areas

OEM original equipment manufacturer

Offering the offering of the Notes pursuant to Regulation S and Rule 144A

Offering Circular this offering circular

Official List the official list of the Irish Stock Exchange

Order Article 19(5) of the Financial Services and Markets Act 2000(Financial Promotion) Order 2005

OTT “over the top” internet-based alternatives to traditional telephonyservices

participating Member States Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria,Portugal, Slovenia and Slovakia

Plaintiffs Turkcell Iletisim Hizmetleri AS and East Asian Consortium B.V

Prospectus Directive European Union Directive 2003/71/EC as amended (including byDirective 2010/73/EU), and includes any relevant implementingmeasure in a relevant Member State of the European Economic Area

PwC PricewaterhouseCoopers Inc.

QIBs qualified institutional buyers

Rand or ZAR South African Rand

Rating Agencies S&P and Moody’s

Registers means the registers in respect of the Regulation S Notes and theRule 144A Notes kept by the Registrar (and Register shall meaneither of them)

Registrar Citigroup Global Markets Deutschland AG

the Regulation the Call Termination Regulation

Regulation S Regulation S under the Securities Act

Regulation S Notes the Notes issued pursuant to Regulation S

Relative Fair Value Method the relative fair value method of revenue recognition

Resale Restriction Termination Date a date that may be required by applicable law

Residual Method the residual method of revenue recognition

Restricted Global Certificate a Global Certificate representing the Rule 144A Notes

Rm million Rand

173

RSA the New Hampshire Revised Statutes Annotated

Rule 144A Rule 144A under the Securities Act

Rule 144A Notes the Notes issued pursuant to Rule 144A

S&P Standard & Poor’s Credit Market Services Europe Limited

SA Enforcement Act the South African Recognition and Enforcement of Foreign ArbitralAwards Act, 1977

SEC the United States Securities and Exchange Commission

Securities Act the United States Securities Act of 1933, as amended

Series each of the 2022 Notes and the 2026 Notes

SIM subscriber identity module

SME small and medium enterprises

SMS short message service

SNG SizweNtsalubaGobodo Inc.

South African Companies Act the South African Companies Act, 2008

Stabilisation Manager Citigroup Global Markets Limited

Subscription Agreement the subscription agreement dated 11 October 2016 among theManagers, the Issuer and the Guarantors

Taxes any present or future taxes, duties, levies, assessments orgovernmental charges (including related interest and penalties) ofwhatever nature

Turkcell Iletisim Hizmetleri AS

UK United Kingdom of Great Britain & Northern Ireland

UMTS Universal Mobile Telecommunications System

UN United Nations

Unrestricted Global Certificate a Global Certificate representing the Regulation S Notes

US United States of America

USAF the Universal Services and Access Fund

VAS value added service

VPN Virtual Private Network

VSAT Very Small Aperture Terminal

WACS West Cable System

WiMax worldwide interoperability for microwave access

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INDEX TO FINANCIAL STATEMENTS

Page

Reviewed condensed consolidated interim financial statements of MTN Group Limited for the sixmonths ended 30 June 2016

Independent auditors’ report on condensed consolidated interim financial statements . . . . . . . . . . . . . . F-2Condensed consolidated income statement for the six months ended 30 June 2016 . . . . . . . . . . . . . . . . F-3Condensed consolidated statement of comprehensive income for the six months ended 30 June

2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4Condensed consolidated statement of financial position at 30 June 2016 . . . . . . . . . . . . . . . . . . . . . . . . F-5Consolidated statement of changes in equity for the six months ended 30 June 2016 . . . . . . . . . . . . . . . F-6Condensed consolidated statement of cash flows for the six months ended 30 June 2016 . . . . . . . . . . . . F-7Notes to the condensed consolidated financial statements for the six months ended 30 June 2016 . . . . . F-8

Audited consolidated financial statements of MTN Group Limited for the year ended 31 December2015Independent auditors’ report to the shareholders of MTN Group Limited for the year ended 31 December

2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-16Group income statement for the year ended 31 December 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18Group statement of comprehensive income for the year ended 31 December 2015 . . . . . . . . . . . . . . . . . F-19Group statement of financial position at 31 December 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-20Group statement of changes in equity for the year ended 31 December 2015 . . . . . . . . . . . . . . . . . . . . . F-21Group statement of cash flows for the year ended 31 December 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . F-22Notes to the Group annual financial statements for the year ended 31 December 2015 . . . . . . . . . . . . . . F-23

Audited consolidated financial statements of MTN Group Limited for the year ended 31 December2014

Independent auditors’ report to the shareholders of MTN Group Limited for the year ended31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-125

Group income statement for the year ended 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-127Group statement of comprehensive income for the year ended 31 December 2014 . . . . . . . . . . . . . . . . . F-128Group statement of financial position at 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-129Group statement of changes in equity for the year ended 31 December 2014 . . . . . . . . . . . . . . . . . . . . . F-130Group statement of cash flows for the year ended 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . F-131Notes to the Group annual financial statements for the year ended 31 December 2014 . . . . . . . . . . . . . . F-132

F-1

Independent auditors’ review report on condensed consolidated interim financial statements

TO THE SHAREHOLDERS OF MTN GROUP LIMITED

We have reviewed the condensed consolidated interim financial statements of MTN Group Limited in theaccompanying interim report, which comprise the condensed consolidated statement of financial position as at30 June 2016 and the related condensed consolidated income statement, statements of comprehensive income,changes in equity and cash flows for the six months then ended, and selected explanatory notes.

Directors’ responsibility for the interim financial statements

The directors are responsible for the preparation and presentation of these condensed consolidated interimfinancial statements in accordance with the International Financial Reporting Standard, (IAS) 34 InterimFinancial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committeeand Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements ofthe Companies Act of South Africa, and for such internal control as the directors determine is necessary to enablethe preparation of interim financial statements that are free from material misstatement, whether due to fraud orerror.

Auditors’ responsibility

Our responsibility is to express a conclusion on these interim financial statements. We conducted our review inaccordance with International Standard on Review Engagements 2410, Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity (ISRE 2410). ISRE 2410 requires us to conclude whetheranything has come to our attention that causes us to believe that the interim financial statements are not preparedin all material respects in accordance with the applicable financial reporting framework. This standard alsorequires us to comply with relevant ethical requirements.

A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement. Weperform procedures, primarily consisting of making enquiries of management and others within the entity, asappropriate, and applying analytical procedures, and evaluate the evidence obtained.

The procedures in a review are substantially less than and differ in nature from those performed in an auditconducted in accordance with International Standards on Auditing. Accordingly, we do not express an auditopinion on these interim financial statements.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanyingcondensed consolidated interim financial statements of MTN Group Limited for the six months ended 30 June2016 are not prepared, in all material respects, in accordance with the International Financial Reporting Standard,(IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the AccountingPractices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council andthe requirements of the Companies Act of South Africa.

PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc.Director: JR van Huyssteen Director: SY LockhatRegistered Auditor Registered AuditorSunninghill Woodmead4 August 2016 4 August 2016

F-2

Condensed consolidated income statementfor the

Note

Six monthsended

30 June2016

ReviewedRm

Six monthsended

30 June20151

ReviewedRm

Financialyear ended

31 December2015

AuditedRm

Revenue 79,115 69,304 147,063Other income 367 411 8,409Direct network and technology operating costs2 (12,291) (8,327) (18,809)Costs of handsets and other accessories (6,065) (4,449) (10,829)Interconnect and roaming costs (7,358) (6,330) (13,102)Staff costs (4,777) (4,155) (8,587)Selling, distribution and marketing expenses (9,624) (8,439) (18,412)Government and regulatory costs (2,982) (2,835) (5,888)Other operating expenses3 (7,004) (4,505) (11,433)

EBITDA before Nigeria regulatory fine 29,381 30,675 68,412Nigeria regulatory fine 17 (10,499) — (9,287)

EBITDA 18,882 30,675 59,125Depreciation of property, plant and equipment (10,913) (8,905) (19,557)Amortisation of intangible assets (2,174) (1,845) (3,736)Impairment of goodwill 8 (604) — (504)

Operating profit 5,191 19,925 35,328Net finance costs (5,945) (2,319) (3,010)Net monetary gain 919 496 1,348Share of results of joint ventures and associates after tax 9 (1,692) 2,027 1,226

(Loss)/profit before tax (1,527) 20,129 34,892Income tax expense (4,726) (6,249) (11,322)

(Loss)/profit after tax (6,253) 13,880 23,570

Attributable to:Equity holders of the Company (5,489) 11,900 20,204Non-controlling interests (764) 1,980 3,366

(6,253) 13,880 23,570

Basic (loss)/earnings per share (cents) 7 (301) 653 1,109Diluted (loss)/earnings per share (cents) 7 (301) 650 1,106

1 Restated, refer note 16.2 The increase in direct network and technology operating costs was mainly due to aggressive 3G and LTE network expansion in key

markets, higher rent and utilities cost and foreign denominated expenses mainly in Nigeria.3 Including costs amounting to R1,324 million incurred on professional services relating to the negotiations that led to a reduction of R34

billion in the Nigeria regulatory fine (note 17).

F-3

Condensed consolidated statement of comprehensive incomefor the

Six monthsended

30 June2016

ReviewedRm

Six monthsended

30 June2015

ReviewedRm

Financial yearended

31 December2015

AuditedRm

(Loss)/profit after tax (6,253) 13,880 23,570Other comprehensive (loss)/income after tax:Exchange differences on translating foreign operations including the effect

of hyperinflation1 (12,499) (3,273) 22,203

Equity holders of the Company (11,866) (3,181) 21,033Non-controlling interests (633) (92) 1,170

Net change in fair value of available-for-sale investments1, 2 2,672 — —

Equity holders of the Company 2,672 — —Non-controlling interests — — —

Total comprehensive (loss)/income (16,080) 10,607 45,773

Attributable to:Equity holders of the Company (14,683) 8,719 41,237Non-controlling interests (1,397) 1,888 4,536

(16,080) 10,607 45,773

1 This component of other comprehensive income does not attract any tax and may subsequently be reclassified to profit or loss.2 The available-for-sale investment relates to the Group’s investment in IHS Holdings Limited (IHS).

F-4

Condensed consolidated statement of financial positionas at

Note

30 June2016

ReviewedRm

30 June2015

ReviewedRm

31 December2015

AuditedRm

Non-current assets 200,447 161,219 218,435

Property, plant and equipment 93,462 85,501 106,702Intangible assets and goodwill 52,172 37,484 55,887Investment in joint ventures and associates1 32,169 24,978 35,552Deferred tax and other non-current assets2 22,644 13,256 20,294

Current assets 82,468 85,269 95,432

Non-current assets held for sale 18 466 3,959 1082,002 81,310 95,422

Other current assets 12,940 12,292 15,940Trade and other receivables 41,470 37,003 43,570Restricted cash 637 1,001 1,735Cash and cash equivalents 26,955 31,014 34,177

Total assets 282,915 246,488 313,867

Total equity 119,796 127,420 151,838

Attributable to equity holders of the Company 116,669 122,702 146,369Non-controlling interests 3,127 4,718 5,469

Non-current liabilities 84,000 51,495 72,510

Interest-bearing liabilities 12 64,190 39,511 52,661Deferred tax and other non-current liabilities 19,810 11,984 19,849

Current liabilities 79,119 67,573 89,519

Non-current liabilities held for sale 18 208 15 —78,911 67,558 89,519

Interest-bearing liabilities 12 17,757 16,548 22,510Trade and other payables 43,602 31,896 40,484Other current liabilities 17,552 19,114 26,525

Total equity and liabilities 282,915 246,488 313,867

1 The decrease in investment in joint ventures and associates since 31 December 2015 is mainly due to the Group’s share of theattributable loss, amounting to R2.5 billion (note 9) and foreign currency translation loss amounting to R3.1 billion from its investmentin Nigeria Tower InterCo B.V., offset by its increase in investment of R2,312 million in Africa Internet Holding GmbH (AIH) (note 14)during the period.

2 Other non-current assets include the revaluation of the Group’s Investment in IHS amounting to R2.7 billion.The strengthening of the rand, which is the presentation currency of the Group, against the functional currencies of the Group’s largestoperations contributed significantly to the decrease in assets and liabilities since 31 December 2015 which are translated into theGroup’s presentation currency at closing rates at the end of the reporting period.

F-5

Condensed consolidated statement of changes in equityfor the

Six monthsended

30 June2016

ReviewedRm

Six monthsended

30 June2015

ReviewedRm

Financial yearended

31 December2015

AuditedRm

Opening balance at 1 January 146,369 128,517 128,517Total comprehensive (loss)/income (14,683) 8,719 41,237

(Loss)/profit after tax (5,489) 11,900 20,204Other comprehensive (loss)/income after tax (9,194) (3,181) 21,033

Transactions with shareholdersShares issued ^ ^ —Shares cancelled — (^) (^)Decrease in treasury shares (^) — 69Share buy-back — (^) —Share-based payment transactions 130 140 532Settlement of vested equity rights — — (288)Dividends declared (15,231) (14,697) (23,506)Other movements 84 23 (192)


Closing balance 119,796 127,420 151,838

Dividends declared during the period (cents per share) 830 800 1,280Dividends declared after the period end (cents per share) 250 480 830

^ Amount less than R1 million.

F-6

Condensed consolidated statement of cash flowsfor the

Six monthsended

30 June2016

ReviewedRm

Six monthsended

30 June20151

ReviewedRm

Financial yearended

31 December2015

AuditedRm

Net cash (used in)/generated from operating activities (436) 1,432 13,122

Cash generated from operations 23,870 26,289 57,598Dividends paid to equity holders of the Company (15,212) (14,697) (23,506)Dividends paid to non-controlling interests (790) (3,042) (5,777)Dividends received from associates and joint ventures 426 285 577Other operating activities (8,730) (7,403) (15,770)

Net cash used in investing activities (14,209) (14,471) (34,290)

Acquisition of property, plant and equipment (10,134) (7,636) (21,612)Acquisition of intangible assets (3,890) (4,194) (10,412)Movement in investments and other investing activities (185) (2,641) (2,266)

Net cash from financing activities 13,608 1,558 8,101

Proceeds from borrowings 23,967 9,711 23,384Repayment of borrowings (10,363) (8,100) (14,802)Other financing activities 4 (53) (481)

Net decrease in cash and cash equivalents (1,037) (11,481) (13,067)Cash and cash equivalents at beginning of the period 34,139 43,072 43,072Exchange (losses)/gains on cash and cash equivalents (6,272) (787) 3,860Net monetary gain on cash and cash equivalents 107 134 274

Net cash and cash equivalents at end of the period 26,937 30,938 34,139

1 Restated, refer note 16.

F-7

Notes to the condensed consolidated interim financial statementsfor the six months ended 30 June 2016

1. INDEPENDENT REVIEW

The directors of the Company take full responsibility for the preparation of the condensed consolidated interimfinancial statements.

The condensed consolidated interim financial statements have been reviewed by our joint independent auditors,PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc., who have expressed an unmodified conclusion.The joint external auditors have performed their review in accordance with International Standard on ReviewEngagements (ISRE) 2410. Constant currency and other pro forma financial information disclosure have notbeen reviewed by our joint external auditors.

2. GENERAL INFORMATION

MTN Group Limited (the Company) carries on the business of investing in the telecommunications industrythrough its subsidiary companies, joint ventures and associates.

3. BASIS OF PREPARATION

These condensed consolidated interim financial statements for the six months ended 30 June 2016 have beenprepared in accordance with International Financial Reporting Standard (IAS 34) Interim Financial Reporting,the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, FinancialPronouncements as issued by the Financial Reporting Standards Council (FRSC) and the requirements of theCompanies Act of South Africa. The condensed consolidated interim financial statements should be read inconjunction with the annual financial statements for the year ended 31 December 2015, which have beenprepared in accordance with International Financial Reporting Standards (IFRS).

4. PRINCIPAL ACCOUNTING POLICIES

The Group has adopted all the new, revised or amended accounting pronouncements as issued by theInternational Accounting Standards Board (IASB) which were effective for the Group from 1 January 2016, noneof which had a material impact on the Group.

The accounting policies applied in the preparation of the condensed consolidated interim financial statements arein terms of IFRS and are consistent with those accounting policies applied in the preparation of the consolidatedfinancial statements for the year ended 31 December 2015.

5. FINANCIAL INSTRUMENTS

The Group has not disclosed the fair values of financial instruments measured at amortised cost except for itsloans and borrowings set out below, as their carrying amounts closely approximate their fair values. Other thanthe equity investment in IHS, there were no financial instruments measured at fair value that were individuallymaterial at the end of the current reporting period.

Listed long-term borrowings

The Group has listed long-term fixed interest rate senior unsecured notes in issue with a carrying amount ofR11,031 million (June 2015: R9,178 million, December 2015: R11,633 million) and a fair value ofR10,731 million (June 2015: R9,263 million, December 2015: R10,268 million) at 30 June 2016. The fair valueof these instruments is determined by reference to published market values on the relevant exchange.

Loan to Nigeria Tower InterCo B.V.

The Group has a loan to Nigeria Tower InterCo B.V. with a carrying amount of R2,877 million (June 2015:R1,092 million, December 2015: R2,704 million) and a fair value of R3,373 million as at 30 June 2016. The fairvalue of this instrument is determined using a discounted cash flow model. An external borrowing rate for fundsadvanced to the operating company, which has been adjusted for differences in risk, has been used as a proxy fora market rate.

F-8


5. FINANCIAL INSTRUMENTS (continued)

Fair value measurement of investments

The Group holds an equity investment in IHS at fair value of R11,354 million at 30 June 2016 (June 2015:R7,259 million, December 2015: R9,250 million). The investment is classified as available for sale. The fairvalue of the investment at 30 June 2016 and 30 June 2015 was determined with reference to recent transactionsbetween market participants and has consequently been transferred from level 3 to level 2 in the fair valuehierarchy.

At 31 December 2015, the absence of transactions between market participants resulted in the fair value beingdetermined using models considered to be appropriate by management. The fair value was calculated using anearnings multiple technique and was based on unobservable market inputs including average tower industryearnings multiples of between 10 – 14. Consequently, the investment was categorised within level 3 of the fairvalue hierarchy. An increase of one in the multiple would have resulted in an increase in the fair value ofR792 million and a one decrease in the multiple would have resulted in a decrease in the fair value byR792 million as at 31 December 2015.

6. SEGMENT ANALYSIS

The Group has identified reportable segments that are used by the Group executive committee (chief operatingdecision maker (CODM)) to make key operating decisions, allocate resources and assess performance. Thereportable segments are grouped according to their geographic regions/locations.

The Group has changed the composition and presentation of its segment analysis following the announcement ofa change in its operational structure subsequent to the 2015 year-end with a view to strengthen operationaloversight, leadership, governance and regulatory compliance across the 22 operations in Africa and the MiddleEast.

The MTN Group is now clustered into the following three regions based on the decision taken:• South and East Africa (SEA)

• West and Central Africa (WECA)

• Middle East and North Africa (MENA).

Comparative numbers for the segments have been restated accordingly.

Operating results are reported and reviewed regularly by the CODM and include items directly attributable to asegment as well as those that are attributable on a reasonable basis, whether from external transactions or fromtransactions with other Group segments.

EBITDA (earnings before interest, tax, depreciation, amortisation, goodwill impairment, tower sale profits andthe Nigeria regulatory fine) is used as the measure of reporting profit or loss for each segment and has remainedunchanged.

F-9


6. SEGMENT ANALYSIS (continued)

REVENUESix months

ended30 June

2016Reviewed

Rm

Six monthsended

30 June2015

ReviewedRm

Financial yearended

31 December2015

AuditedRm

SEA 25,156 24,456 51,419

South Africa 19,841 18,882 40,038Uganda 2,804 2,540 5,148Other SEA 2,511 3,034 6,233

WECA 46,347 38,296 81,443

Nigeria 28,941 24,649 51,942Ghana 5,165 3,496 7,903Cameroon 3,202 2,742 5,806Ivory Coast 3,751 3,081 6,424Other WECA 5,288 4,328 9,368

MENA 7,402 6,569 13,766

Syria1 1,068 1,329 2,605Sudan1 2,345 1,610 3,472Other MENA 3,989 3,630 7,689

Major joint venture – Iran2 8,324 6,435 13,660Head office companies and eliminations (27) (111) (275)Hyperinflation impact 237 94 710Iran revenue exclusion2 (8,324) (6,435) (13,660)

79,115 69,304 147,063

1 Excludes the increase in revenue resulting from hyperinflation accounting of: Syria R103 million (June 2015: R28 million, December2015: R391 million) and Sudan R134 million (June 2015: R66 million, December 2015: R319 million).

2 Irancell Telecommunication Company Services (PJSC) proportionate revenue forms part of the MENA region but is reported separatelyin the segment analysis as reviewed by the CODM and excluded from IFRS reported revenue due to equity accounting for joint venturesand excludes the increase in revenue resulting from hyperinflation accounting (June 2015: R271 million and December 2015: R287million). In 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was discontinuedeffective 1 July 2015.

F-10


6. SEGMENT ANALYSIS (continued)

EBITDA

Six monthsended

30 June2016

ReviewedRm

Six monthsended

30 June2015

ReviewedRm

Financial yearended

31 December2015

AuditedRm

SEA 7,213 8,555 16,903

South Africa 5,979 6,724 13,370Uganda 842 915 1,775Other SEA 392 916 1,758

WECA 20,574 19,303 38,116

Nigeria 14,421 14,132 27,504Ghana 2,004 1,387 3,197Cameroon 1,218 1,036 2,101Ivory Coast 1,349 1,126 2,195Other WECA 1,582 1,622 3,119

MENA 2,359 2,051 4,324

Syria1 305 215 460Sudan1 829 539 1,216Other MENA 1,225 1,297 2,648

Major joint venture – Iran2 3,139 2,582 5,665Head office companies and eliminations (873) 365 575Hyperinflation impact 90 49 231Nigeria regulatory fine3 (10,499) — (9,287)Tower sale profits3 18 352 8,263Iran EBITDA exclusion2 (3,139) (2,582) (5,665)

EBITDA 18,882 30,675 59,125

Depreciation, amortisation and impairment of goodwill (13,691) (10,750) (23,797)Net finance cost (5,945) (2,319) (3,010)Net monetary gain 919 496 1,348Share of results of joint ventures and associates after tax (1,692) 2,027 1,226

(Loss)/profit before tax (1,527) 20,129 34,892

1 Excludes the increase in EBITDA resulting from hyperinflation accounting of: Syria R41 million (June 2015: R25 million, December2015: R106 million) and Sudan R49 million (June 2015: R24 million, December 2015: R125 million).

2 Irancell Telecommunication Company Services (PJSC) proportionate EBITDA forms part of the MENA region but is reported separatelyin the segment analysis as reviewed by the CODM and excluded from IFRS reported EBITDA due to equity accounting for joint venturesand excludes the increase in EBITDA resulting from hyperinflation accounting (June 2015: R141 million and December 2015: R215million). During 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting wasdiscontinued effective 1 July 2015. The Group’s share of results from Irancell Telecommunication Company Services (PJSC) includesexpenses resulting from discontinuation of hyperinflation accounting amounting to R1,039 million mainly relating to the subsequentdepreciation and amortisation of previously hyper-inflated assets that were historically written up under hyperinflation reporting.

3 Tower sale profit and the expense relating to the regulatory fine imposed by the Nigerian Communications Commission (NCC) areexcluded as the CODM reviews segment results on this basis.

F-11


7. (LOSS)/EARNINGS PER ORDINARY SHARE

Number of ordinary shares in issue

Six monthsended

30 June2016

ReviewedRm

Six monthsended

30 June2015

ReviewedRm

Financial yearended

31 December2015

AuditedRm

At end of the period (excluding MTN Zakhele andtreasury shares1) 1,822,711,720 1,822,473,178 1,822,517,914

Weighted average number of sharesShares for (loss)/earnings per share 1,822,527,498 1,821,338,035 1,822,453,695Add: Dilutive shares2

– MTN Zakhele shares issued — 7,685,193 3,791,878– Share schemes — 1,333,429 965,612

Shares for dilutive (loss)/earnings per share 1,822,527,498 1,830,356,657 1,827,211,185

Reconciliation between (loss)/profit attributable to the equityholders of the Company and headline (loss)/earnings

(Loss)/profit after tax (5,489) 11,900 20,204Net (profit)/loss on disposal of property, plant and equipment

and intangible assets (IAS 16 and IAS 38) (15) 6 (2)Profit on dilution of investment in joint venture (IAS 28) (277) — —Net impairment loss on property, plant and equipment and

intangible assets (IAS 36) 265 27 38Impairment of goodwill (IAS 36) 604 — 504Realisation of deferred gain on disposal of non-current assets

held for sale (IFRS 5) (18) (13) (30)Profit on disposal of non-current assets held for sale (IFRS 5) — — (8,264)Total tax effect of adjustments 1 — (702)Total non-controlling interest effect of adjustments (2) (6) 1,852

Basic headline (loss)/earnings3 (4,931) 11,914 13,600

(Loss)/earnings per share (cents)– Basic (301) 653 1,109– Basic headline (271) 654 746

Diluted (loss)/earnings per share (cents)– Diluted (301) 650 1,106– Diluted headline (271) 651 744

1 Treasury shares of 10,206,255 (June 2015: 10,444,797 and December 2015: 11,844,233) are held by the Group and 11,131,098 (June2015: 12,575,270; December 2015: 11,131,098) shares are held by MTN Zakhele. Due to the call option over notional vendor financeshares, the MTN Zakhele shares, although legally issued to MTN Zakhele, are not deemed to be issued from a Group perspective. Theseshares are therefore excluded from this reconciliation.

2 The share options and share rights issued in terms of the Group’s share schemes, performance share plan and the MTN Zakheletransaction would not have a dilutive effect on loss per share for the period ended 30 June 2016 and have therefore not been treated asdilutive.

3 Headline (loss)/earnings is calculated in accordance with circular 2/2015 Headline Earnings as issued by the South African Institute ofChartered Accountants, as required by the JSE Limited.

F-12


8. GOODWILL IMPAIRMENT

Areeba Guinea S.A.

Areeba Guinea S.A. (Conakry) experienced a decline in EBITDA since 2013 and Guinea-Conakry hasexperienced poor economic performance countrywide. Consequently, a review of the recoverable amount ofConakry was undertaken during the period ended 30 June 2016 subsequent to which an impairment lossamounting to R402 million (June 2015: Rnil, December 2015: R504 million) was recognised. As at 30 June2016, the goodwill balance relating to Conakry is fully impaired.

Afrihost

Based on an agreement concluded by the Group to sell its 50,02% investment in Afrihost Proprietary Limited(Afrihost) for R320 million (note 18), a goodwill impairment loss of R202 million was recognised at 30 June2016 on the remeasurement of the assets to fair value less cost to sell in accordance with IFRS 5 Non-currentAssets Held for Sale and Discontinued Operations.

Six monthsended

30 June2016

ReviewedRm

Six monthsended

30 June2015

ReviewedRm

Financial yearended

31 December2015

AuditedRm

9. SHARE OF RESULTS OF JOINT VENTURES ANDASSOCIATES AFTER TAX (1,692) 2,027 1,226

Irancell Telecommunication Company Services (PJSC) 936 2,099 1,903Nigeria Tower InterCo. B.V. (2,463) 63 (545)Others (165) (135) (132)

10. CAPITAL EXPENDITURE INCURRED 13,850 10,869 29,611

11. CONTINGENT LIABILITIES 1,308 287 875

12. INTEREST-BEARING LIABILITIESBank overdrafts 18 76 38Current borrowings 17,739 16,472 22,472

Current liabilities 17,757 16,548 22,510Non-current borrowings 64,190 39,511 52,661

81,947 56,059 75,171

13. ISSUE AND REPAYMENT OF DEBT AND EQUITY SECURITIES

During the period under review the following entities raised and repaid significant debt instruments:

• MTN Nigeria repaid R3.2 billion (June 2015: R1.3 billion) relating to long-term borrowings.

• MTN Mauritius raised R3.5 billion (June 2015: R5.9 billion) in debt.

• MTN Mauritius repaid R837 million in debt.

• MTN Holdings raised R9.7 billion additional debt relating to syndicated loan facilities, R2 billion(June 2015: R3 billion) relating to general banking facilities and R2 billion in terms of the DomesticMedium Term Programme.

• MTN Holdings repaid R800 million (December 2015: R500 million) relating to the syndicated loan facilityand R1,2 billion (December 2015: R4.2 billion) relating to general banking facilities.

• MTN Uganda raised R1.2 billion relating to the draw down on a syndicated loan facility.

• Cameroon raised R775 million relating to the draw down on a syndicated loan facility.

• MTN Côte d’Ivoire raised R2.8 billion relating to a syndicated loan facility (December 2015: R1.8 billionrelating to short-term borrowings).

• MTN Côte d’Ivoire repaid R1.8 billion relating to short-term borrowings and R992 million relating to asyndicated loan facility.

F-13


14. BUSINESS COMBINATIONS AND ACQUISITION OF JOINT VENTURES AND OTHERINVESTMENTS

Investment in Africa Internet Holding GmbH (AIH)

The Group’s investment of R2,312 million in AIH became effective during March 2016. This investmentincreased the Group’s interest in the joint venture from 33.3% to 41.4%. AIH received additional investmentsfrom new investors which became effective during April, May and June 2016. These additional investmentsdiluted the Group’s investment in AIH to 31.28% and resulted in a profit on dilution of R277 million recordedduring the current reporting period. The Group retains joint control over AIH.

Travelstart

On 22 January 2016, the MTN Group made an investment in TravelLab Global AB (Travelstart) amounting toUS$27 million. Travelstart is an online travel agency focused on emerging markets. MTN Group jointly controlsTravelstart indirectly through funds managed by its venture capital fund manager, Amadeus Capital Partners.

Altech Autopage subscriber base

In March 2016, the Group concluded the acquisition of its Altech Autopage subscriber base from Altron TMTProprietary Limited for R678 million. The acquisition of the subscriber base will enable the Group to service andinteract directly with its customers and will reduce future commission expenditure. The purchase price allocationhas been finalised and the fair value of net identifiable assets acquired of R479 million resulted in goodwill ofR199 million being recognised.

15. EVENTS AFTER REPORTING PERIOD

Dividends declared

Dividends declared at the board meeting held on 4 August 2016 amounted to 250 cents per share.

16. RESTATEMENTS

16.1 Reclassification of expenses

Following the restatement of expenses disclosed in the income statement for the year ended 31 December 2015,the expense categories included below have also been disclosed separately or reclassified between expensecategories for the June 2015 reporting period to present the expenses in more appropriate categories inaccordance with the classification in the current period.


Government and regulatory costs that had previously been included in direct network operating costs(R2,534 million) and other operating expenses (R301 million) have now been disclosed as a significant categoryof expense in the income statement.


VAS costs amounting to R1,091 million were previously included in the costs of handsets and other accessories.Based on the underlying nature of these costs, this has now been reclassified and included in selling, distributionand marketing expenses.

16.2 Reclassification of cash used in investing activities

In line with the current year presentation, cash used in acquiring intangible assets of R4,194 million has nowbeen disclosed as a significant item separately from cash used in other investing activities.

17. NIGERIA REGULATORY FINE

On 10 June 2016, MTN Nigeria Communication Limited (MTN Nigeria) resolved the matter relating to thepreviously imposed regulatory fine with the Federal Government of Nigeria (FGN) after the completion of anextensive negotiation process.

F-14


17. NIGERIA REGULATORY FINE (continued)

In terms of the settlement agreement reached on 10 June 2016, MTN Nigeria has agreed to pay a total cashamount of Naira 330 billion over three years (the equivalent of R25.1 billion1) to the FGN as full and finalsettlement of the matter.


• MTN Nigeria subscribes to the voluntary observance of the Code of Corporate Governance for theTelecommunications Industry in Nigeria and will ensure compulsory compliance when the said Code ismade mandatory for the Telecommunications Industry.

• MTN Nigeria undertakes to take immediate steps to ensure the listing of its shares on the Nigerian StockExchange as soon as commercially and legally possible after the date of execution of the settlementagreement; and

• MTN Nigeria shall always ensure full compliance with its licence terms and conditions as issued bythe NCC.

The Naira 50 billion in good faith payment which was paid without prejudice by MTN Nigeria on 24 February2016 forms part of the monetary component of the settlement. A further payment of Naira 30 billion was madeon 24 June 2016 resulting in a remaining cash balance of Naira 250 billion (the equivalent of R12.9 billion2)outstanding at period end.

On 10 June 2016 the nature of the fine changed from a provision under IAS 37 Provisions, Contingent Liabilitiesand Contingent Assets to that of a financial liability under IAS 39 Financial Instruments: Recognition andMeasurement. As from this date onwards MTN Nigeria was contractually obliged to settle the fine in cash.Consequently, the outstanding balance ceased to be discounted at a pre-tax risk- free rate (in terms of IAS 37)and is instead discounted at MTN Nigeria’s incremental borrowing rate for a liability with similar cash flows (interms of IAS 39), which approximated 14.71% at the re-measurement date.

Professional services

During the period R1,324 million costs were incurred on professional services relating to the negotiations that ledto a reduction of R34 billion in the Nigeria regulatory fine. The board has exercised its judgement and approvedthe quantum of the professional fees incurred taking into account global benchmarks and the value deliveredculminating in the final settlement of the Nigeria fine.

18. NON-CURRENT ASSETS HELD FOR SALE

During the period under review, the Group concluded an agreement to sell its 50.02% investment in Afrihost forR325 million. The transaction is subject to the fulfillment of applicable conditions relevant to the transaction.

1 Amount translated at the 10 June 2016 rate of R1 = N13.15.2 Amount translated at the 30 June 2016 closing rate of R1 = N19.33.

F-15

Independent auditors’ report to the shareholders of MTN Group Limitedfor the year ended 31 December 2015

REPORT ON THE FINANCIAL STATEMENTS

We have audited the Group and Company financial statements of MTN Group Limited set out on pages 10to 145, which comprise the statements of financial position as at 31 December 2015, and the income statement,statements of comprehensive income, statements of changes in equity and statements of cash flows for the yearthen ended, and the notes, comprising a summary of significant accounting policies and other explanatoryinformation.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company’s directors are responsible for the preparation and fair presentation of these consolidated andseparate financial statements in accordance with International Financial Reporting Standards and therequirements of the Companies Act of South Africa, and for such internal control as the directors determine isnecessary to enable the preparation of consolidated and separate financial statements that are free from materialmisstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated and separate financial statements based on ouraudit. We conducted our audit in accordance with International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of therisks of material misstatement of the financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

OPINION

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, theconsolidated and separate financial position of MTN Group Limited as at 31 December 2015, and itsconsolidated and separate financial performance and its consolidated and separate cash flows for the year thenended in accordance with International Financial Reporting Standards and the requirements of the CompaniesAct of South Africa.

EMPHASIS OF MATTER

We draw attention to note 6.3 to the consolidated financial statements which describes the circumstances,uncertainty and current status of the regulatory fine imposed by the Nigerian Communications Commission(NCC) against MTN Nigeria Communications Limited. Our opinion is not qualified in respect of this matter.

OTHER REPORTS REQUIRED BY THE COMPANIES ACT

As part of our audit of the consolidated and separate financial statements for the year ended 31 December 2015,we have read the Report of the audit committee, the Certificate by the Company secretary and the Directors’report, for the purpose of identifying whether there are material inconsistencies between these reports and theaudited consolidated and separate financial statements. These reports are the responsibility of the respectivepreparers. Based on reading these reports we have not identified material inconsistencies between these reportsand the audited consolidated and separate financial statements. However, we have not audited these reports andaccordingly do not express an opinion on these reports.

F-16

Independent auditors’ report to the shareholders of MTN Group Limitedfor the year ended 31 December 2015 (continued)

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we reportthat PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc. have been the auditors of MTN Group Limitedfor 22 years and 13 years, respectively.

PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc.Director: JR van Huyssteen Director: SY LockhatRegistered auditor Registered auditorSunninghill Woodmead2 March 2016 2 March 2016

The above auditors’ report is the original auditors’ report that was issued on 2 March 2016 with respect to theFinancial Statements for the period ended 31 December 2015. These Financial Statements also contained theDirectors’ report, Report of the audit committee, Certificate of MTN Group’s secretary and MTN Group’sseparate financial statements. For purposes of this Offering Circular the Directors’ report, Report of the auditcommittee, Certificate of MTN Group’s secretary and MTN Group’s separate financial statements have beenomitted. The page references in the original auditors’ report compare to pages F-18 to F-124 in this OfferingCircular in respect of the financial statements.

F-17

Group income statementfor the year ended 31 December 2015

Note2015Rm

20141

Rm

Revenue 2.2 147,063 146,930Other income 2.3 8,409 7,928Direct network and technology operating costs (18,809) (16,354)Costs of handsets and other accessories (10,829) (10,314)Interconnect and roaming (13,102) (13,653)Staff costs 2.4 (8,587) (8,838)Selling, distribution and marketing expenses (18,412) (17,174)Government and regulatory costs (5,888) (5,734)Other operating expenses (11,433) (9,600)

EBITDA before Nigeria regulatory fine 68,412 73,191Nigeria regulatory fine 6.3 (9,287) —

EBITDA 59,125 73,191Depreciation of property, plant and equipment 5.1 (19,557) (18,262)Amortisation of intangible assets 5.2 (3,736) (3,251)Impairment of goodwill 5.2 (504) (2,033)

Operating profit 2.4 35,328 49,645Finance income 2.5 5,442 3,102Finance costs 2.5 (8,452) (6,770)Net monetary gain 1,348 878Share of results of associates and joint ventures after tax 9.2 1,226 4,208

Profit before tax 34,892 51,063Income tax expense 3.1 (11,322) (13,361)

Profit after tax 23,570 37,702

Attributable to:Equity holders of the Company 20,204 32,079Non-controlling interests 3,366 5,623

23,570 37,702

Basic earnings per share (cents) 2.7 1,109 1,752Diluted earnings per share (cents) 2.7 1,106 1,742

1 Restated, refer to note 1.6.

F-18

Group statement of comprehensive incomefor the year ended 31 December 2015

2015Rm

2014Rm

Profit after tax 23,570 37,702Other comprehensive income after tax:Exchange differences on translating foreign operations including the effect

of hyperinflation1 22,203 2,968

Attributable to equity holders of the Company 21,033 2,960Attributable to non-controlling interests 1,170 8

Total comprehensive income for the year 45,773 40,670


45,773 40,670

1 This component of other comprehensive income does not attract any tax and may subsequently be reclassified to profit or loss.

F-19

Group statement of financial positionat 31 December 2015

Note2015Rm

2014Rm

ASSETSNon-current assets 218,435 163,218

Property, plant and equipment 5.1 106,702 87,546Intangible assets and goodwill 5.2 55,887 36,618Investments 7.2 9,969 6,135Investment in associates and joint ventures 9.2 35,552 25,514Loans and other non-current receivables 7.3 9,783 6,296Deferred tax assets 3.2 542 1,109

Current assets 95,432 90,467

Non-current assets held for sale 5.3 10 3,84895,422 86,619

Inventories 4.1 5,635 3,412Trade and other receivables 4.2 43,570 32,818Taxation prepaid 3.3 1,331 564Current investments 7.4 8,811 5,651Derivative assets 7.5 163 183Restricted cash 4.3 1,735 893Cash and cash equivalents 4.4 34,177 43,098

Total assets 313,867 253,685

EQUITYOrdinary share capital and share premium 8.1 40,248 40,179Retained earnings 87,526 91,305Other reserves 8.2 18,595 (2,967)

Attributable to equity holders of the Company 146,369 128,517Non-controlling interests 5,469 4,925

Total equity 151,838 133,442

LIABILITIESNon-current liabilities 72,510 52,613

Borrowings 6.1 52,661 39,470Deferred tax liabilities 3.2 13,041 11,012Other non-current liabilities 6.2 2,184 1,585Provisions 6.3 4,624 546

Current liabilities 89,519 67,630

Trade and other payables 4.5 40,484 33,234Unearned income 8,519 7,609Provisions 6.3 7,993 3,414Taxation liabilities 3.3 10,013 9,562Borrowings 6.1 22,472 13,783Derivative liabilities 7.5 — 2

Bank overdrafts 4.4 38 26

Total liabilities 162,029 120,243

Total equity and liabilities 313,867 253,685

F-20

Group statement of changes in equityfor the year ended 31 December 2015

Attributable to equity holders of the Company

Note

Sharecapital

Rm

Sharepremium

Rm

Retainedearnings

Rm

Otherreserves

RmTotalRm

Non-controlling

interestsRm

Totalequity

Rm

Balance at 1 January 2014 * 42,598 79,872 (5,991) 116,479 5,333 121,812Total comprehensive income — — 32,079 2,960 35,039 5,631 40,670

Profit after tax — — 32,079 — 32,079 5,623 37,702Other comprehensive income — — — 2,960 2,960 8 2,968

Transactions with shareholdersShares issued during the year * 3 — — 3 — 3Shares cancelled (*) — — — (*) — (*)Settlement of vested equity rights — — (209) — (209) — (209)Share-based payment transactions — — — 110 110 — 110Dividends declared 8.3 — — (20,527) — (20,527) (6,176) (26,703)Share buy-back — (2,422) — — (2,422) — (2,422)Other movements — — 90 (46) 44 137 181

Balance at 31 December 2014 * 40,179 91,305 (2,967) 128,517 4,925 133,442

Balance at 1 January 2015 * 40,179 91,305 (2,967) 128,517 4,925 133,442Total comprehensive income — — 20,204 21,033 41,237 4,536 45,773

Profit after tax — — 20,204 — 20,204 3,366 23,570Other comprehensive income — — — 21,033 21,033 1,170 22,203

Transactions with shareholdersShares cancelled (*) — — — (*) — (*)Treasury shares * 69 — — 69 — 69Settlement of vested equity rights — — (288) — (288) — (288)Share-based payment transactions — — — 532 532 — 532Dividends declared 8.3 — — (23,506) — (23,506) (4,172) (27,678)Transfer of profit — — (127) 127 — — —Share buy-back (*) — — — (*) — (*)Other movements — — (62) (130) (192) 180 (12)

Balance at 31 December 2015 * 40,248 87,526 18,595 146,369 5,469 151,838

Note 8.1 8.1 8.2

* Amounts less than R1 million.

F-21

Group statement of cash flowsfor the year ended 31 December 2015

Note2015Rm

2014Rm

CASH FLOWS FROM OPERATING ACTIVITIESCash generated from operations 2.6 57,598 64,628Finance income received 2,591 2,584Finance costs paid (4,855) (3,993)Income tax paid 3.3 (13,506) (11,779)Dividends paid to equity holders of the Company (23,506) (20,527)Dividends paid to non-controlling interests (5,777) (4,289)Dividends received from associates 9.2 230 233Dividends received from joint ventures 347 275

Net cash generated from operating activities 13,122 27,132

CASH FLOWS USED IN INVESTING ACTIVITIESAcquisition of property, plant and equipment (21,612) (19,562)Acquisition of intangible assets (10,412) (3,282)Proceeds from sale of property, plant and equipment and intangible assets 772 541Proceeds on sale of towers 2.3 6,515 6,465Increase in investment in joint ventures — (1,524)Increase in non-current investments (3,319) (5,657)Acquisition of businesses, net of cash acquired 9.4 (3,040) (1,634)Loans granted (1,007) (1,007)Increase in investment in insurance cell captives (952) (173)Purchase of bonds, treasury bills and foreign deposits (542) (1,057)(Increase)/decrease in restricted cash (693) 899

Net cash used in investing activities (34,290) (25,991)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from the issuance of ordinary shares 8.1 — 3Proceeds from borrowings 23,384 30,603Repayment of borrowings (14,802) (25,620)Share buy-back1 (173) (2,249)Settlement of vested equity rights (288) (209)Other financing activities (20) 111

Net cash from financing activities 8,101 2,639

Net (decrease)/increase in cash and cash equivalents (13,067) 3,780Net cash and cash equivalents at beginning of the year 43,072 39,577Exchange gains/(losses) on cash and cash equivalents 3,860 (182)Net monetary gain/(loss) on cash and cash equivalents 274 (103)

Net cash and cash equivalents at end of the year 4.4 34,139 43,072

1 An amount of R173 million relating to the 2014 year was paid in January 2015.

F-22

Notes to the Group financial statementsfor the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS

1.1 Basis of preparation

The Group financial statements of MTN Group Limited (the Company) comprise the Company and itssubsidiaries and the Group’s interest in associates and joint ventures (together referred to as the “Group” andindividually as (“Group entities”). The Group financial statements and Company financial statements have beenprepared in accordance with International Financial Reporting Standards (IFRS) as issued by the InternationalAccounting Standards Board (IASB) and Interpretations as issued by the IFRS Interpretations Committee(IFRIC), and comply with the SAICA Financial Reporting Guides as issued by the Accounting PracticesCommittee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council(FRSC), the JSE Listings Requirements and the requirements of the South African Companies Act, No 71 of2008. The Group and the Company have adopted all new accounting pronouncements that became effective inthe current reporting period, none of which had a material impact on the Group or the Company.

The financial statements have been prepared on the historical cost basis adjusted for the effects of inflation whereentities operate in hyperinflationary economies and for certain financial instruments and non-current assets heldfor sale that have been measured at fair value, where applicable.

The Sudanese and Syrian economies have been considered to be hyperinflationary. Accordingly, the results, cashflows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC)have been expressed in terms of the measuring unit current at the reporting date.

Iran ceased being regarded as a hyperinflationary economy during 2015, resulting in hyperinflation accountingrelating to Irancell Telecommunication Company Services (PJSC) not being applied from 1 July 2015 onward.

The methods used to measure fair value and the adjustments made to account for the Group’s entities that operatein hyperinflationary economies are discussed further in the accounting policies and in the respective notes.

Amounts are rounded to the nearest million with the exception of earnings per share and the related number ofshares (note 2.7), number of ordinary shares (note 8.1), share-based payments (note 8.4) and directors’emoluments and interests (note 10.2).

The preparation of financial statements in conformity with IFRS requires management to make judgements,estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,liabilities, income and expenses. Actual results may differ from these estimates. Information about significantareas of estimation uncertainty and critical judgements in applying accounting policies that have the mostsignificant effect on the amounts recognised in the financial statements are included in note 1.5.

1.2 Going concern

The Group and the Company’s forecasts and projections, taking account of reasonably possible changes intrading performance, show that the Group and the Company should be able to operate within their currentfunding levels into the foreseeable future.

After making enquiries, the directors have a reasonable expectation that the Company and its subsidiaries haveadequate resources to continue in operational existence for the foreseeable future. The financial statementstherefore have been prepared on a going concern basis.

1.3 Principal accounting policies1

The principal accounting policies applied in the preparation of these financial statements are set out below and inthe related notes to the Group financial statements, and should be read in conjunction with the financialdefinitions disclosed on pages 144 and 145 of the financial statements. The principal accounting policies appliedare consistent with those adopted in the prior year, unless otherwise stated.

1 Where applicable, the principal accounting policies applied in the Company financial statements areconsistent with those applied in the Group financial statements.

F-23


1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued)

1.3 Principal accounting policies (continued)

1.3.1 Consolidation

Business combinations

The Group accounts for business combinations using the acquisition method when control is obtained by theGroup. A business is defined as an integrated set of activities and assets that are capable of being conducted andmanaged for the purposes of providing a return directly to investors or other owners, members or participants.The consideration transferred is measured at the fair value of the assets given, equity instruments issued andliabilities incurred or assumed at the acquisition date. The consideration transferred includes the fair value of anyasset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are recognisedin profit or loss. Identifiable assets acquired and liabilities and contingent liabilities assumed in a businesscombination are measured initially at their fair values at the acquisition date, irrespective of the extent of anynon-controlling interests.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in theacquiree (if any) over the net of the acquisition date fair values of the identifiable assets acquired and liabilitiesassumed. If, after reassessment, the net of the acquisition date fair values of the identifiable assets acquired andliabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interestsin the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), such excess isrecognised immediately in profit or loss as a bargain purchase gain.

An obligation to pay contingent consideration is classified as either a financial liability or equity based on therespective definitions set out in IAS 32 Financial Instruments: Presentation. The Group classifies any rights tothe return of consideration previously transferred as a financial asset. Contingent consideration that is classifiedas an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39 FinancialInstruments: Recognition and Measurement, with the corresponding gain or loss recognised in profit or loss.Contingent consideration that is classified as equity is not remeasured after the acquisition date.

Any changes resulting from additional and new information about events and circumstances that existed at theacquisition date and, if known, would have affected the measurement of the amount recognised at that date, areconsidered to be measurement period adjustments. The Group retrospectively adjusts the amounts recognised formeasurement period adjustments. The measurement period ends when the acquirer receives all the informationthat they were seeking about the facts and circumstances that existed at the acquisition date or learns thatinformation cannot be obtained. The measurement period shall, however, not exceed one year from theacquisition date. To the extent that changes in the fair value relate to post-acquisition events, these changes arerecognised in accordance with the IFRS applicable to the specific asset or liability.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with thechange in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for thepurposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. Inaddition, any amounts previously recognised in other comprehensive income in respect of that entity areaccounted for as if the Group had directly disposed of the related assets or liabilities. This may mean thatamounts previously recognised in other comprehensive income are reclassified to profit or loss.

Consolidation of subsidiaries

The Group financial statements incorporate the financial statements of MTN Group Limited and all itssubsidiaries, joint ventures, associates and structured entities (SEs) for the reporting date 31 December 2015 onthe basis outlined below.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group (acquisition date)and are deconsolidated from the date that control ceases (disposal date). When assessing whether control exists,the Group considers all existing substantive rights that result in the current ability to direct relevant activities.

F-24




1.3.1 Consolidation (continued)

All intercompany transactions, balances and unrealised gains/losses on transactions between Group companiesare eliminated on consolidation. Unrealised losses are considered an impairment indicator of the assettransferred.

Where necessary, adjustments are made to the financial statements of subsidiaries to align any difference inaccounting policies with those of the Group.

The Group does not consolidate entities where it owns more than half of the issued ordinary share capital wherethe contractual agreements are such that other shareholders have substantive rights that provide authority over therelevant activities of the entities.

The Company accounts for investments in subsidiaries at cost, less accumulated impairment losses.

Non-controlling interest

On an acquisition-by-acquisition basis, non-controlling interests in the acquiree may initially be measured eitherat fair value, or at the non-controlling shareholders’ proportion of the net identifiable assets acquired andliabilities and contingent liabilities assumed.

Non-controlling shareholders are treated as equity participants; therefore, all acquisitions of non-controllinginterests or disposals by the Group of its interests in subsidiaries, where control is maintained subsequent to thedisposal, are accounted for as equity transactions. Consequently, the difference between the fair value of theconsideration transferred and the carrying amount of a non-controlling interest purchased, is recorded in equity.All profits or losses arising as a result of the disposal of interests in subsidiaries to non-controlling shareholders(where control is subsequently maintained) are also recorded in equity.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’sequity.

Total comprehensive income is attributed to non-controlling interests even if this results in the non-controllinginterests having a deficit balance.

1.3.2 Foreign currency

Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the entity’s functionalcurrency. The Group financial statements are presented in South African rand, which is the functional andpresentation currency of the Company.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates ofthe transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from thetranslation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currenciesare recognised in profit or loss.

Translation of foreign operations

The results, cash flows and financial position of Group entities which are not accounted for as entities operatingin hyperinflationary economies and that have a functional currency different from the presentation currency ofthe Group are translated into the presentation currency as follows:

• assets and liabilities are translated at rates of exchange ruling at the reporting date;

• specific transactions in equity are translated at rates of exchange ruling at the transaction dates;

F-25




1.3.2 Foreign currency (continued)

• income and expenditure and cash flow items are translated at weighted average exchange rates for theperiod or translated at exchange rates at the date of the transaction, where applicable; and

• foreign exchange translation differences are recognised as other comprehensive income.

The results, cash flows and financial position of the Group entities which are accounted for as entities operatingin hyperinflationary economies and that have functional currencies different from the presentation currency ofthe Group are translated into the presentation currency of its immediate parent at rates of exchange ruling at thereporting date. As the presentation currency of the Group or that of the immediate parent is that of anon-hyperinflationary economy, comparative amounts are not adjusted for changes in the price level or exchangerates in the current year.

An entity may have a monetary item that is receivable from a foreign operation. An item for which settlement isneither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity’s net investmentin that foreign operation. On consolidation, exchange differences arising from the translation of the netinvestment in foreign operations are taken to other comprehensive income as part of the foreign currencytranslation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the exchange rate ruling at the reporting date. Exchangedifferences arising are recognised in other comprehensive income.

The exchange rates relevant to the Group are disclosed in note 7.6.

Disposal of foreign operations

On disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of thatoperation attributable to the equity holders of the Group are reclassified to profit or loss.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes aforeign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals, the proportionateshare of the accumulated exchange differences is reclassified to profit or loss.

Exchange differences accumulated in equity in respect of a monetary item that is part of the Group’s netinvestment in a foreign operation, is not reclassified to profit or loss on settlement of the monetary item.

1.3.3 Hyperinflation

The financial statements (including comparative amounts) of the Group entities whose functional currencies arethe currencies of hyperinflationary economies are adjusted in terms of the measuring unit current at the end of thereporting period.

As the presentation currency of the Group is that of a non-hyperinflationary economy, comparative amounts arenot adjusted for changes in the price level or exchange rates in the current year. In the first period of application,the adjustments determined at the beginning of the period are recognised directly in equity as an adjustment toopening retained earnings. In subsequent periods, the prior period adjustments related to components of owners’equity and differences arising on translation of comparative amounts are accounted for in other comprehensiveincome.

Items in the statement of financial position not already expressed in terms of the measuring unit current at thereporting period, such as non-monetary items carried at cost or cost less depreciation, are restated by applying ageneral price index. The restated cost, or cost less depreciation, of each item is determined by applying to its

F-26




1.3.3 Hyperinflation (continued)

historical cost and accumulated depreciation the change in a general price index from the date of acquisition tothe end of the reporting period. An impairment loss is recognised in profit or loss if the restated amount of a non-monetary item exceeds its estimated recoverable amount.

At the beginning of the first period of application, the components of owners’ equity, except retained earnings,are restated by applying a general price index from the dates the components were contributed or otherwisearose. Restated retained earnings are derived from all other amounts in the restated statement of financialposition. At the end of the first period and in subsequent periods, all components of owners’ equity are restatedby applying a general price index from the beginning of the period or the date of contribution, if later.


Gains or losses on the net monetary position are recognised in profit or loss.

All items in the statement of cash flows are expressed in terms of the general price index at the end of thereporting period.

The Sudanese and Syrian economies have been classified as hyperinflationary. Accordingly, the results, cashflows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC),have been expressed in terms of the measuring unit current at the reporting date. For further details, refer tonote 1.5.7.

The results, cash flows and financial position of a joint venture, Irancell Telecommunication Company Services(PJSC), has been classified as hyperinflationary since 2013. During the current year, Iran ceased to behyperinflationary, effective 1 July 2015 and consequently hyperinflationary accounting has not been appliedfrom this date onward. Accordingly, the amounts expressed in terms of the measuring unit current at 30 June2015 are treated as the basis for the carrying amounts with no further hyperinflation adjustments being passedfrom 1 July 2015 onwards.

F-27




1.3.4 Measurement principles

Key assets and liabilities shown in the statement of financial position are measured as follows:

Items included in the statementof financial position Measurement principle


ASSETS LIABILITIES

Non-current assets Non-current liabilities

Property, plant and equipment Historical cost, lessaccumulated depreciationand impairment losses

Borrowings Amortised cost

Intangible assets Historical cost, lessaccumulated amortisationand impairment losses

Deferred tax liabilities Undiscounted amountmeasured at the tax ratesthat have been enacted andare expected to apply to theperiod when the liability issettledInvestments Amortised cost/fair value

Goodwill Historical cost, lessimpairment losses

Provisions Present value of the bestestimate of the settlementamount

Investment in associates andjoint ventures

Cost adjusted for share ofmovements in net assets

Loans receivable Amortised cost

Deferred tax assets Undiscounted amountmeasured at the tax ratesthat have been enacted andare expected to apply to theperiod when the asset isrealised

Current assets Current liabilities

Non-current assets held forsale

Lower of carrying amountand fair value less costs tosell

Trade and other payables Amortised cost

Inventories Lower of cost and netrealisable value

Derivative liabilities Fair value

Trade receivables Amortised cost Unearned income Nominal value

Provisions Present value of the bestestimate of the settlementamount

Taxation liabilities Amount expected to be paidto tax authorities, using taxrates that have been enactedor substantively enacted atthe reporting date

Taxation prepaid Amount expected to berecovered from taxauthorities, using tax ratesthat have been enacted orsubstantively enacted at thereporting date


Current investments Amortised cost/fair value

Derivative assets Fair value Bank overdrafts Amortised cost

Restricted cash Amortised cost

Cash and cash equivalents Amortised cost

F-28



1.4 New accounting pronouncements

The pronouncements listed below will be effective in future reporting periods and are considered significant tothe Group. The Group has elected not to early adopt the new pronouncements. It is expected that the Group willadopt the new pronouncements on their effective dates in accordance with the requirements of thepronouncements.

Topic Key requirements Effective date

IFRS 16Leases

The International Accounting Standards Board (IASB) issued IFRS 16Leases in January 2016. IFRS 16 sets out the principles for the recognition,measurement, presentation and disclosure of leases for both parties to acontract, the customer (lessee) and the supplier (lessor).

1 January 2019

IFRS 16 replaces the previous leases standard, IAS 17 Leases, and relatedinterpretations.

The model reflects that, at the start of a lease, the lessee obtains the right touse an asset for a period of time and has an obligation to pay for that right.In response to concerns expressed about the cost and complexity to applythe requirements to large volumes of small assets, the IASB decided not torequire a lessee to recognise assets and liabilities for short-term leases (lessthan 12 months), and leases for which the underlying asset is of low value.

A lessee measures lease liabilities at the present value of future leasepayments. A lessee measures lease assets, initially at the same amount aslease liabilities, and also includes costs directly related to entering into thelease. Lease assets are amortised in a similar way to other assets such asproperty, plant and equipment. This approach will result in a more faithfulrepresentation of a lessee’s assets and liabilities and, together withenhanced disclosures, will provide greater transparency of a lessee’sfinancial leverage and capital employed.

IFRS 16 substantially carries forward the lessor accounting requirements inIAS 17. Accordingly, a lessor continues to classify its leases as operatingleases or finance leases, and to account for those two types of leasesdifferently.

One of the implications of the new standard is that there will be a change tokey financial ratios derived from a lessee’s assets and liabilities (forexample, leverage and performance ratios).

It is expected that the accounting treatment for lease contracts applicable tothe Group, such as tower and other infrastructure leases will be impacted bythe new standard. This will result in an increase in lease liabilities and rightof use assets in the statement of financial position with a correspondingreduction in operating lease expenses and an increase in depreciation andfinance costs in the income statement.

IFRS 15Revenuefrom Contractswith Customers

IFRS 15 replaces the two main revenue recognition standards, IAS 18Revenue and IAS 11 Construction Contracts and their relatedinterpretations.

1 January 2018

IFRS 15 provides a single control-based revenue recognition model andclarifies the principles for recognising revenue from contracts withcustomers. The core principle is that an entity should recognise revenue todepict the transfer of promised goods or services to customers at an amountthat reflects the consideration to which the entity expects to be entitled to inexchange for those goods or services. Revenue is recognised when acustomer obtains control of a good or service. A customer obtains controlwhen it has the ability to direct the use of and obtain the benefits from thegood or service.

F-29



1.4 New accounting pronouncements (continued)Topic Key requirements Effective date

IFRS 15Revenue fromContractswith Customers(continued)

IFRS 15 also includes a cohesive set of disclosure requirements that willresult in an entity providing users of financial statements withcomprehensive information about the nature, amount, timing anduncertainty of revenue and cash flows arising from the entity’s contractswith customers.

IFRS 15 will be applied retrospectively subject to the application of thetransitional provisions.

The impact on the financial statements has not yet been fully determinedbut it is expected to result in a change in:

• the measurement of revenue to adjust for the effects of the time valueof money; and

• the timing of the recognition of subscriber acquisition costs such asagent’s commission which will be recognised when the relatedperformance obligations are satisfied. The Group’s current accountingpolicy is to expense such costs when incurred.

Refer to Annexure 2 for the Group’s latest unaudited impact assessment inrelation to IFRS 15.

IFRS 9FinancialInstruments

IFRS 9 replaces IAS 39 Financial Instruments: Recognitionand Measurement. It retains but simplifies the mixed measurement modeland establishes three primary measurement categories for financial assets:amortised cost, fair value through other comprehensive income and fairvalue through profit or loss. The basis of classification depends on theentity’s business model and the contractual cash flow characteristics of thefinancial asset. Investments in equity instruments are required to bemeasured at fair value through profit or loss with the irrevocable option atinception to present changes in fair value in other comprehensive income.

1 January 2018

IFRS 9 also replaces the rule-based hedge accounting requirements inIAS 39. It requires an economic relationship between the hedged item andhedging instrument and for the “hedged ratio” to be the same as the onemanagement actually uses for risk management purposes.

IFRS 9 includes an expected credit loss model for calculating impairmenton financial assets. This replaces the incurred loss model used underIAS 39.

The adoption of IFRS 9 is not expected to change the measurement of theGroup’s financial assets and liabilities significantly, but will require areview of the current classification of financial assets and liabilities. Anychanges in classification will be applied retrospectively.

The hedge accounting requirements will be applied prospectively and arenot expected to have a significant impact on the financial results of theGroup.

The impact of an expected credit loss model on the financial statements hasnot yet been fully determined. Refer to Annexure 2 for the Group’s latestunaudited impact assessment on its financial results of the application ofthe expected credit loss model.

1.5 Critical accounting judgements, estimates and assumptions

The Group makes judgements, estimates and assumptions concerning the future when preparing the consolidatedfinancial statements. Actual results may differ from these estimates. Estimates and underlying assumptions arereviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the

F-30



1.5 Critical accounting judgements, estimates and assumptions (continued)

estimates are revised and in any future periods affected. The judgements, estimates and assumptions that have asignificant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the nextfinancial year are discussed below.

The “Critical accounting judgements, estimates and assumptions” note should be read in conjunction with the“Principal accounting policies” disclosed in note 1.3.

1.5.1 Provisions

The Group exercises judgement in determining the expected cash outflows related to its provisions. Judgement isnecessary in determining the timing of the outflow as well as quantifying the possible range of the cash outflowsthat may occur.

The present value of the Group’s provisions is based on management’s best estimate of the future cash outflowsexpected to be required to settle the obligations, discounted using appropriate pre-tax discount rates that reflectthe current market assessment of the time value of money and the risks specific to each provision.

The Nigerian Communications Commission (NCC) imposed a fine on MTN Nigeria that related to the timing ofthe disconnection of subscribers. The Group provided R9.3 billion based on management’s judgement. Theultimate resolution of the imposed fine may be different to the amount provided. Additional information onprovisions is disclosed in note 6.3.

1.5.2 Impairment of goodwill

The Group tests goodwill for impairment on an annual basis, in accordance with the accounting policy disclosedin note 5.2. The recoverable amounts of cash-generating units have been determined based on value-in-usecalculations. These calculations are performed internally by the Group and require the use of estimates andassumptions.

The input factors most sensitive to change are management estimates of future cash flows based on budgets andforecasts, growth rates and discount rates. Further detail on these assumptions has been disclosed in note 5.2. TheGroup has performed a sensitivity analysis by varying these input factors by a reasonably possible margin andassessing whether the changes in input factors result in any of the goodwill allocated to appropriate cash-generating units being impaired. Goodwill impairment in the current year amounted to R504 million (2014:R2,033 million), refer to note 5.2.

1.5.3 Sale of tower assets

The Group applies judgement and follows the guidance in IFRS 3 Business Combinations to determine whetherthe sale of tower assets constitutes the sale of a business or an asset.

The Group determined that its tower assets in Nigeria, which were sold in two tranches during the current andprior years (note 2.3), were an integrated set of activities capable of being conducted and managed for thepurpose of providing a return and therefore constituted the sale of businesses. In exercising its judgement, theGroup considered the following:


• the sale agreements provide for the transfer of all substantial assets required to operate the tower business,including related tower rights, site maintenance agreements, tenant leases and inventory;

• the processes involved in the tower businesses such as site management systems and site maintenanceprogrammes, were transferred along with the assets; and


F-31




1.5.4 Income taxes

The Group is subject to income taxes in numerous jurisdictions. As a result, significant judgement is required indetermining the Group’s provision for income taxes. There are numerous calculations and transactions for whichthe ultimate tax position is uncertain during the ordinary course of business. The Group recognises tax liabilitiesfor anticipated tax issues based on estimates of whether additional taxes will be payable. Where payment ispossible but not probable, the tax exposure is disclosed as a contingent liability, refer to note 6.8. Where the finaloutcome of these matters is different from the amounts that were initially recorded, such differences will impactcurrent and deferred tax in the period in which such determination is made.

Deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available againstwhich the deferred tax assets can be utilised. When recognising deferred tax assets, the Group exercisesjudgement in determining whether sufficient taxable profits will be available; this is done by assessing the futurefinancial performance of the underlying Group entities to which the deferred tax assets relate. The Group’sdeferred tax assets for the current year amounted to R542 million (2014: R1,109 million), refer to note 3.2.

1.5.5 Determining whether an arrangement contains a lease

The Group applies the principles of IFRIC 4 Determining whether an Arrangement contains a Lease in order toassess whether its arrangements constitute or contain leases. The requirements to be met in order to conclude thatan arrangement constitutes or contains a lease are as follows:



All other arrangements that do not constitute or contain leases are treated as service level agreements; the costsare expensed as incurred.

For the purpose of applying IFRIC 4 on tower space lease arrangements, the Group considers the tower asset as awhole in assessing whether the arrangement contains a lease. This is consistent with the guidance on determininga component of an asset in IAS 16 Property, Plant and Equipment. The Group has resolved that an arrangementcontains a lease as defined in IAS 17 Leases where the arrangement provides an exclusive right to use specifictower space which is more than an insignificant part of the tower asset.

1.5.6 Determining whether an arrangement qualifies as an operating lease or a finance lease

The Group applies its principal accounting policies for leases to account for arrangements which constitute orcontain leases and follows the guidance of IAS 17 to determine the classification of leases as either operating orfinance leases.

During the current and prior year, the Group entered into sale and leaseback transactions with IHS that resulted inthe sale of its mobile network towers in Nigeria, refer to note 2.3.

The critical elements that the Group considered with respect to the classification of the lease transaction were:

• whether the lease terms are for the major part of the economic life of the tower assets; and

• whether at inception of the leases, the present value of the minimum lease payments amounts to at leastsubstantially all of the fair value of the tower assets.

The Group estimated that the lease term of the tower assets is not for a major part of the economic life of thetower assets, taking into account the non-cancellable period for which the Group has contracted, and any optionsto renew such period where it is reasonably certain that the Group will exercise the option.

F-32




1.5.6 Determining whether an arrangement qualifies as an operating lease or a finance lease (continued)

The minimum lease payments were determined by separating the payments required by the lease arrangementsinto those pertaining to the lease and those pertaining to other elements such as services and cost of inputs on thebasis of their relative fair values. Management exercised judgement in estimating the fair value of the otherelements by reference to comparable cost structures of the Group and other independent tower operators. Thediscount rate used in calculating the present value of the minimum lease payments reflects the rate of interestMTN Nigeria Communications Limited would incur in borrowing the funds necessary to purchase similar assets.

The fair value of the tower assets was determined by reference to the amounts at which the tower assets weresold which represents the prices at which the assets could be sold in an orderly transaction between marketparticipants under current market conditions. The Group determined that the present value of the minimum leasepayments did not equal substantially all of the fair value of the underlying tower assets.

Following the Group’s assessment, the leaseback transactions were classified as operating leases.


The Group exercises significant judgement in determining the onset of hyperinflation in countries in whichit operates and whether the functional currency of its subsidiaries, associates or joint ventures is the currencyof a hyperinflationary economy.

Various characteristics of the economic environment of each country are taken into account. Thesecharacteristics include, but are not limited to, whether:

• the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreigncurrency;





Management exercises judgement as to when a restatement of the financial statements of a Group entity becomesnecessary. Following management’s assessment, the Group’s subsidiaries, MTN Sudan Company Limited andMTN Syria (JSC), have been accounted for as entities operating in hyperinflationary economies. The results,cash flows and financial positions of MTN Sudan Company Limited and MTN Syria (JSC) have been expressedin terms of the measuring units current at the reporting date.

Iranian economy

The decreasing inflation rates and other factors related to the characteristics of the economic environment in Iranhave indicated that the economy ceased to be hyperinflationary, effective for financial periods ending31 December 2015. Accordingly, the amounts expressed in terms of the measuring unit current at 30 June 2015are treated as the basis for the carrying amounts with no further hyperinflation adjustments being passed from1 July 2015 onwards. Refer to note 9.2.

The general price indices used in adjusting the results, cash flows and financial position of the Group’ssubsidiaries are set out below:

MTN Sudan Company Limited

The general price index used as published by the International Monetary Fund is as follows:

Date Base year

Generalpriceindex

Inflationrate(%)

31 December 2015 2007 541 15.5

F-33




1.5.7 Hyperinflation (continued)

The cumulative inflation rate over three years as at 31 December 2015 is 106.6%. The average adjustment factorused for 2015 was 1.16.

MTN Syria (JSC)

Reliable inflation data could not be obtained on the inflation rate in Syria. The general price index set out belowwas calculated by reference to the change in the United States dollar: Syrian pound exchange rate.

Date Base year

Generalpriceindex

Inflationrate(%)

31 December 2015 2014 170 70

The cumulative inflation rate over three years as at 31 December 2015 is 289.2%. The average adjustment factorused for 2015 was 1.39.

The impact of adjusting the Group’s results for the effects of hyperinflation is set out below:

2015Rm

2014Rm

Income statementIncrease in revenue 710 776Increase in EBITDA 231 241Net monetary gain 1,348 878(Decrease)/increase in share of results of associates and joint ventures after tax1 (1,768) 529(Decrease) in profit after tax2 (758) (612)

1 Including share of net monetary gain amounting to R390 million (2014: R927 million).2 Including goodwill impairment for the 2014 year relating to MTN Sudan Company Limited (note 5.2).

1.6 Restatements

1.6.1 Reclassification of expenses

Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2014,the expenses detailed below have been disclosed separately or reclassified between expense categories to presentthe expenses in accordance with the classification in the current year.


Government and regulatory costs that had previously been included in direct network operating costs and otheroperating expenses which comprises: government revenue share, regulatory fees and levies and spectrum fees,have been disclosed as a significant separate category of expense in the income statement.


VAS costs were previously included in the costs of handsets and other accessories. Based on the underlyingnature of these costs, they were reclassified and included in selling, distribution and marketing expenses.

F-34



1.6 Restatements (continued)

1.6.1 Reclassification of expenses (continued)

The impact of these reclassifications as disclosed in the financial statements for the year ended 31 December2014 is provided below:

Group income statement

31 December 2014

Previouslyreported

RmAdjustments

RmRestated

Rm

ExpensesDirect network and technology operating costs (21,604) 5,250 (16,354)Costs of handsets and other accessories (11,957) 1,643 (10,314)Selling, distribution and marketing expenses (15,531) (1,643) (17,174)Government and regulatory costs — (5,734) (5,734)Other operating expenses (10,084) 484 (9,600)

1.6.2 Reclassification of revenue

During the current year, an amount of R1,293 million in respect of 2014 was reclassified from data revenue toairtime and subscription revenue to accurately reflect the respective categories of revenue year-on-year (refer tonote 2.2).


31 December 2014

Previouslyreported

RmAdjustments

RmRestated

RmRevenueAirtime and subscription 88,347 1,293 89,640Data 27,478 (1,293) 26,185

1.6.3 Reclassification of foreign exchange gains and losses

The Group manages its risk to foreign exchange exposure on a net basis and consequently in the current year theforeign exchange gains and losses previously disclosed on a gross basis and included in the relevant financeincome or finance cost line is now disclosed on a net basis (refer to note 2.5).

The impact of the reclassification as disclosed in the financial statements for the year ended 31 December 2014 isprovided below:


31 December 2014

Previouslyreported

RmAdjustments

RmRestated

RmFinance income 6,772 (3,670) 3,102Finance cost (10,440) 3,670 (6,770)

F-35



1.6 Restatements (continued)

1.6.4 Restatement of goodwill disclosed per operation

The Group restated its previously disclosed allocation of goodwill for a number of its operations. The restatementrelates to a gain realised on a foreign currency hedge on initial acquisition of these operations. The gain waspreviously disclosed within the “other” category of goodwill. In addition, goodwill relating to the South Africanbusinesses acquired have been moved from the “other” category to be included within Mobile TelephoneNetworks Proprietary Limited (South Africa). The re-allocation adjusted the goodwill of the individualoperations as follows:

31 December 2014

Previouslyreported

RmAdjustments

RmRestated

RmScancom Limited (MTN Ghana) 6,957 (949) 6,008MTN Sudan Company Limited 784 (340) 444MTN Yemen 3,338 (455) 2,883MTN Afghanistan Limited 1,645 (224) 1,421MTN Syria (JSC) 146 (20) 126MTN Cyprus Limited 841 (115) 726Spacetel Benin SA 1,331 (181) 1,150Areeba Guinea S.A. 918 (125) 793Lonestar Communications Corporation LLC (Liberia) 332 (45) 287Mobile Telephone Networks Proprietary Limited (South Africa)2 525 1,762 2,287Other 584 841 668MTN Zambia — 298 298Spacetel Guinea-Bissau SA — 310 310

17,401 — 17,401

1 Includes reduction from gain on foreign currency hedge and increase from re-allocations.2 Includes MTN South Africa and other South African based subsidiaries.

2 RESULTS OF OPERATIONS

2.1 Operating segments

The Group has identified reportable segments that are used by the Group executive committee (chief operatingdecision maker (CODM)) to make key operating decisions, allocate resources and assess performance. Thereportable segments are geographically differentiated regions and are grouped by their relative size.

The Group’s principal activities include the provision of network IT services, local, national and internationaltelecommunications services; broadband and internet products and services; and converged fixed/mobileproducts and services.

Operating results are reported and reviewed regularly by the Group executive committee and include itemsdirectly attributable to a segment as well as those that can be attributed on a reasonable basis, whether fromexternal transactions or from transactions with other Group segments.

Unallocated items mainly comprise corporate expenses which do not directly relate to the operating activities ofthe segments or which cannot be re-allocated on a reasonable basis. Segment results are determined before anyadjustment for non-controlling interests.

F-36


2 RESULTS OF OPERATIONS (continued)

2.1 Operating segments (continued)

EBITDA is used as the measure of reporting profit or loss of each segment.

Revenue contribution(%)1

South Africa – 25Nigeria – 32Iran – 9Ghana – 5Syria – 2Cameroon – 4Ivory Coast – 4Uganda – 3Sudan – 2Small opco cluster – 14

2015

Revenue contribution(%)1


2014

EBITDA contribution(%)1,2


2015

EBITDA contribution(%)1,2


2014

1 Including Iran, excluding adjustments for hyperinflation and head office companies.2 Excludes adjustments for profit on tower sales and the regulatory fine in Nigeria (refer note 6.3).

F-37

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F-38



2.2 Revenue

Revenue is measured at the fair value of the consideration received or receivable from the sale of goods andservices in the ordinary course of the Group’s activities. Revenue is presented net of indirect taxes, estimatedreturns and trade discounts.

Revenue from the sale of goods and the rendering of services is recognised when it is probable that the economicbenefits associated with the transaction will flow to the Group and the amount of revenue, and associated costsincurred or to be incurred, can be measured reliably. The amount of revenue is not considered to be reliablymeasurable until all contingencies relating to the sale have been resolved.

Postpaid products typically include the sale of a handset, activation fee and a service contract; and prepaidproducts include a subscriber identification module (SIM) card and airtime.

Multiple element (or bundled) arrangements are divided into separate units of accounting, and revenue isrecognised through the application of the relative fair value method, resulting in the proportionate allocation ofany discount to all elements in the bundle.

The Group operates loyalty programmes in certain entities where customers accumulate points for purchasesmade, which entitle them to discounts on future purchases. The reward points are recognised as a separatelyidentifiable component of the initial sale transaction by allocating the consideration received or receivablebetween the reward points and the other components of the sale such that the reward points are initiallyrecognised as deferred income at their fair value. Revenue from the reward points is recognised when the pointsare redeemed. Breakage (forfeiture of points) is recognised when redemption becomes remote.

The main categories of revenue and the bases of recognition are as follows:

Airtime and subscription, data and SMS

• airtime, data and SMS: revenue is recognised on the usage basis commencing on the date of activation;

• subscription: revenue is recognised over the period that enables a customer to access network services;

• connection fees: revenue is recognised on the date of activation of a new SIM card; and

• SIM kits: revenue is recognised on the date of sale.

The terms and conditions of postpaid bundled airtime products may allow for the carryover of unused value orminutes. The revenue related to the unused value or minutes is deferred and recognised when utilised by thecustomer or on termination of the contract. Breakage (forfeiture of unused value or minutes) is recognised whenthe unused value or minutes expire or when usage thereof becomes remote.

Revenue received on prepaid contracts is deferred and recognised when services are utilised by the customer oron termination of the customer relationship. Breakage is recognised when the prepaid credit expires or whenutilisation thereof becomes remote.

Interconnect/roaming

Interconnect/roaming revenue is recognised on a usage basis, unless it is not probable on the transaction date thatthe interconnect revenue will be received, in which case interconnect revenue is recognised only when the cash isreceived or where a right of set-off exists with interconnect parties in settling outstanding amounts.

F-39



2.2 Revenue (continued)

Mobile telephones and accessories

Revenue on the sale of mobile telephones and accessories to third parties are recognised only when risks andrewards of ownership are transferred to the buyer.

2015(%)

Airtime and subscription(57)Roaming (1)Data (23)SMS (3)Interconnect (10)Mobile telephones andaccessories (5)Other (1)

2014(%)

Airtime and subscription(61)Roaming (1)Data (18)SMS (3)Interconnect (10)Mobile telephones andaccessories (5)Other (2)

2015Rm

2014Rm

Airtime and subscription 83,922 89,6401

Roaming 1,524 1,510Data 34,057 26,1851

SMS 4,121 4,552Interconnect 14,763 15,009Mobile telephones and accessories 6,985 7,890Other 1,691 2,144

147,063 146,930

The Group’s unearned income at the end of the year amounts to R8,519 million (2014: R7,609 million).

1 Restatement, refer to note 1.6.2.

2.3 Other income

Other income is recognised when the risks and rewards of ownership of the assets are transferred to the buyer.

2015 2014Rm Rm

Profit on tower sales – Nigeria 8,233 7,329

Sale proceeds 6,515 5,406Contingent consideration (19) 327Fair value of retained interest in Nigeria Tower InterCo B.V. and equity derivative 4,888 4,309Carrying amount of assets and related liabilities disposed (3,151) (2,713)

Profit on tower sales – other subsidiaries — 70

Sale proceeds — 1,059Carrying amount of assets and related liabilities disposed — (962)Warranty provision and consultancy cost — (27)

Total profit on tower sales 8,233 7,399

Realisation of deferred gain on Ghana tower sale1 30 31Realisation of deferred gain on asset swap for investment in BICS2 — 364Other 146 134

8,409 7,928

1 In 2011, Scancom Limited (MTN Ghana) concluded a transaction with American Tower Company (ATC), which involved the sale ofMTN Ghana’s base transceiver station (BTS) sites to Ghana Tower InterCo B.V. which is an associate of the Group. Profit waseliminated to the extent of the Group’s interest in the associate. Such unrealised profit is realised by the Group as the underlying assetsare depreciated by the associate.

2 The deferred gain arose on the contribution of various assets from MTN Dubai, MTN International Carrier Services and Uniglobe inexchange for a 20% investment in the associate, Belgacom International Carrier Services (BICS) (note 9.2). This gain was deferred andis being amortised over a five-year period. The deferred gain was fully amortised during 2014.

F-40



2.3 Other income (continued)

As part of the Group’s strategy to monetise its investment in tower infrastructure, the Group sold 8,850 of itsmobile network towers in MTN Nigeria Communications Limited, in two tranches to INT Towers Limited, awholly owned subsidiary of Nigeria Tower InterCo B.V. As a result, IHS obtained a 49% interest in NigeriaTower InterCo B.V., with the remaining 51% interest held by the Group (note 9.2). Nigeria Tower InterCo B.V.has been classified as an associate of the Group.

The first tranche of the tower sales closed on 24 December 2014 and involved the sale of 4,154 mobile networktowers by MTN Nigeria Communications Limited to INT Towers Limited for a cash consideration ofUS$451 million and the Group recognising its equity interest in Nigeria Tower InterCo B.V. amounting toUS$370 million. A receivable amounting to US$29 million was initially recognised based on management’sestimate of the contingent consideration receivable. This was reduced during the current financial year byUS$1.6 million.

The second tranche of the tower sales closed on 1 July 2015 and involved the sale of 4,696 mobile networktowers by MTN Nigeria Communications Limited to INT Towers Limited for a cash consideration ofUS$533 million and the Group recognising an additional equity interest in Nigeria Tower InterCo B.V.amounting to US$405 million.

MTN Nigeria Communications Limited is the anchor tenant on commercial terms on the towers for an initialperiod of 10 years. The transactions resulted in sale and leaseback transactions classified as operating leases(note 1.5.6).

The Group also concluded transactions with IHS in which IHS acquired 550 mobile network towers from MTNRwandacell Limited for US$48 million and 748 towers from MTN (Zambia) Limited for US$57 million during2014. IHS is a 100% shareholder of the tower companies set up in each country to manage the towers and otherpassive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited are the anchor tenants oncommercial terms of the towers for an initial term of 10 years. The transactions resulted in sale and leasebacktransactions classified as operating leases (note 1.5.6).

2.4 Operating profit

Employee benefits

Short-term employee benefits

Remuneration to employees in respect of services rendered during a reporting period is expensed in that reportingperiod. A liability is recognised for accumulated leave when there is a present legal or constructive obligation asa result of past service rendered by employees.

A liability for unvested short-term benefits is recognised when there is no realistic alternative other than to settlethe liability, and at least one of the following conditions is met:

• there is a formal plan and the amounts to be paid can be reliably estimated; or

• achievement of previously agreed bonus criteria has created a valid expectation by employees that they willreceive a bonus and the amount can be reliably estimated.

Post-employment benefits

Defined contribution plans

Group companies operate various defined contribution plans. Contributions to defined contribution plans inrespect of services rendered during a period are recognised as an employee benefit expense as the related serviceis provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in thefuture payments is available.

Share-based payment transactions

The Group operates a number of share incentive schemes. For further details, refer to note 8.4.

F-41



2.4 Operating profit (continued)

Termination benefits

Termination benefits may be payable when an employee’s employment is terminated before the normalretirement date due to retrenchment or whenever an employee accepts voluntary redundancy in exchange forthese benefits.

The Group recognises termination benefits at the earlier of the following dates:

• when the Group can no longer withdraw the offer of those benefits; and

• when the Group recognises costs for a restructuring that is within the scope of IAS 37 Provisions,Contingent Liabilities and Contingent Assets that includes the payment of termination benefits.

In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based onthe number of employees expected to accept the offer. Benefits falling due more than 12 months after thereporting date are discounted to their present value.

2015Rm

2014Rm

Staff costs (8,587) (8,838)

Salaries and wages (6,698) (7,109)Post-employment benefits (363) (405)Share options granted to directors and employees (note 8.4) (179) (110)Training (223) (244)Other (1,124) (970)

The following disclosable items have been included in arriving at operating profit:Auditors’ remuneration (130) (129)

Audit fees (107) (104)Fees for other services (15) (14)Expenses (8) (11)

Emoluments to directors and prescribed officers (note 10.1) (187) (154)

Operating lease rentals (8,692) (4,413)

Property and network sites (8,601) (4,312)Equipment and vehicles (91) (101)

Loss on disposal of property, plant and equipment and intangible assets (8) (69)Impairment loss on property, plant and equipment (note 5.1) (77) (634)Impairment loss on other intangible assets (note 5.2) — (74)(Write-down)/reversal of write-down of inventories (note 4.1) (669) 94Impairment of trade receivables (note 4.2) (1,151) (286)Reversal of impairment of non-current receivables (note 7.3) — 230

2.5 Finance income and finance costs

Finance income

Finance income comprises interest income on funds invested, changes in the fair value of financial assets at fairvalue through profit or loss, net foreign exchange gains and gains on hedging instruments that are recognised inprofit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs

Finance costs comprise interest expenses on borrowings, unwinding of the discount on provisions, changes in thefair value of financial assets at fair value through profit or loss, net foreign exchange losses and any losses onhedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss

F-42



2.5 Finance income and finance costs (continued)

using the effective interest method, unless the borrowing costs are directly attributable to the acquisition,construction or production of qualifying assets, in which case the directly attributable borrowing costs arecapitalised.

2015 20142

Rm Rm

Interest income on loans and receivables 2,173 789Interest income on bank deposits 3,269 2,313

Finance income 5,442 3,102

Interest expense on financial liabilities measured at amortised cost (6,981) (5,669)Net foreign exchange losses1 (1,471) (1,101)

Finance costs (8,452) (6,770)

Net finance costs recognised in profit or loss (3,010) (3,668)

1 The foreign exchange gains and losses have been determined on an instrument-by-instrument basis.2 Foreign exchange gains and losses have been disclosed on a net basis (refer to note 1.6.3).

2.6 Cash generated from operations

2015Rm

2014Rm

Profit before tax 34,892 51,063Adjusted for:Finance costs (note 2.5) 8,452 6,770Finance income (note 2.5) (5,442) (3,102)Depreciation of property, plant and equipment (note 5.1) 19,557 18,262Amortisation of intangible assets (note 5.2) 3,736 3,251Loss on disposal of property, plant and equipment and intangible assets (note 2.4) 8 69Loss on disposal of joint venture — 15Share of results of associates and joint ventures after tax (note 9.2) (1,226) (4,208)Increase in provisions 9,681 140Write-down of/(reversal of write-down) inventories (note 4.1) 669 (94)Impairment of goodwill (note 5.2) 504 2,033Impairment loss on other intangible assets (note 5.2) — 74Impairment loss on property, plant and equipment (note 5.1) 77 634Impairment of trade receivables (note 4.2) 1,151 286Reversal of impairment of non-current receivables (note 7.3) — (230)Profit on sale of towers (note 2.3) (8,233) (7,399)Realisation of previously deferred profit on Ghana tower sale (note 2.3) (30) (31)Realisation of deferred gain on asset swap (note 2.3) — (364)Equity-settled share-based payment transactions (note 2.4) 179 110Net monetary gain (1,348) (878)Other 192 (35)

62,819 66,366

Changes in working capital (5,221) (1,738)

Increase in inventories (2,333) (65)(Decrease)/increase in unearned income (75) 654Increase in receivables and prepayments (4,591) (1,926)Increase/(decrease) in trade and other payables 1,778 (401)

Cash generated from operations 57,598 64,628

F-43



2.7 Earnings per ordinary share

Basic earnings per share

Earnings per share is calculated using the weighted average number of ordinary shares in issue during the periodand is based on the profit after tax attributable to ordinary shareholders. For the purpose of calculating earningsper share, treasury shares are deducted from the number of ordinary shares in issue.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstandingto assume conversion of all dilutive potential ordinary shares and is based on the net profit attributable toordinary shareholders, adjusted for the after-tax dilutive effect. The Company has dilutive potential ordinaryshares which comprise share options and share rights issued in terms of the Group’s share schemes, performanceshare plan and the MTN Zakhele transaction.

For the share options and share rights the number of shares issued for value is calculated by determining thenumber of the Company’s shares that would be required at fair value to settle the monetary value of the rights,after taking into account the unamortised share-based payment value. A calculation is further done to determinethe bonus element. This is calculated as the difference between the total number of potential ordinary shares inissue and the number of shares to be issued for value. For the purposes of this calculation the average annualmarket share price of the Company is used.

Headline earnings per share

Headline earnings per share is calculated using the weighted average number of ordinary shares in issue duringthe period and is based on the earnings attributable to ordinary shareholders, after excluding those items asrequired by Circular 2/2015 issued by the South African Institute of Chartered Accountants (SAICA).

In terms of the MTN Zakhele BBBEE transaction, the Group issued notional vendor financing shares to MTNZakhele at par value (note 8.1). The Group has a call option over these shares. As these shares are potentiallydilutive shares, these are included in the diluted earnings per share calculation. A calculation is done at eachreporting period to determine the number of shares that could have been acquired at fair value.

2015 2014

’000 ’000

Weighted average number of shares (excluding treasury shares) 1,822,454 1,831,196Adjusted for:– Share options – MTN Zakhele 3,792 7,193– Share appreciation rights 413 715– Performance share plan 552 2,150

Weighted average number of shares for calculation of diluted earnings per share 1,827,211 1,841,254

Refer to note 8.1 for a reconciliation of total shares in issue.

F-44



2.7 Earnings per ordinary share (continued)

Reconciliation between net profit attributable to the equity holders of the Company and headline earnings:

2015 2014

Gross Net1 Gross Net1

Rm Rm Rm Rm

Profit after tax 20,204 32,079Adjusted for:Net (profit)/loss on disposal of property, plant and equipment and intangible

assets(IAS 16 and IAS 38) (2)2 5 69 63Impairment of goodwill (IAS 36) 504 504 2,033 2,033Net impairment loss of impairment of property, plant and equipment (IAS

36) 382 29 708 565Loss on disposal of joint venture (IAS 28) — — 15 15Realisation of deferred gain (IAS 28) — — (364) (364)Profit on disposal of non-current assets held for sale (IFRS 5) (8,264)3 (7,112) (7,399) (6,237)Realisation of deferred gain on disposal of non-current assets held for sale

(IFRS 5) (30) (30) (31) (31)

Headline earnings 13,600 28,123

2015 2014

Earnings per ordinary share (cents)– Basic earnings 1,109 1,752– Basic headline earnings 746 1,536– Diluted earnings 1,106 1,742– Diluted headline earnings 744 1,527

1 Amounts are measured after taking into account non-controlling interests and tax.2 Including net loss on disposal and net impairment loss on property, plant and equipment and intangible assets from joint ventures.3 Non-controlling interest amounting to R1,858 million (2014: R1,586 million).

Headline earnings is calculated in accordance with Circular 2/2015 Headline Earnings as issued by the SouthAfrican Institute of Chartered Accountants, as required by the JSE Limited.

3 TAXATION

3.1 Income tax expense

The tax expense for the period comprises current, deferred and withholding tax. Tax is recognised in profit orloss, except to the extent that it relates to items recognised in other comprehensive income or items recogniseddirectly in equity. For these items the tax is also recognised in other comprehensive income or directly in equity,respectively.

Current tax

Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantivelyenacted at the reporting date in the countries where the Company and its subsidiaries operate and generatetaxable income, and any adjustment to tax payable in respect of previous years. Management periodicallyevaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subjectto interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to thetax authorities.

Deferred tax

Deferred tax is recognised using the liability method, providing for temporary differences arising between the taxbases of assets and liabilities and their carrying amounts in the consolidated financial statements for financial

F-45


3 TAXATION (continued)

3.1 Income tax expense (continued)

reporting purposes. Deferred tax is not recognised if the temporary difference arises from goodwill or from theinitial recognition of an asset or liability in a transaction (other than a business combination) that at the time ofthe transaction affects neither accounting nor taxable profit or loss. Deferred tax is measured at tax rates (andlaws) that have been enacted or substantively enacted at the reporting date and are expected to apply totemporary differences when they reverse.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and jointventures where the timing of the reversal of the temporary differences is controlled by the Group and it isprobable that the temporary difference will not reverse in the foreseeable future.

A deferred tax asset is recognised for unused tax losses or deductible temporary differences only to the extentthat it is probable that future taxable profit will be available against which the temporary differences can beutilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longerprobable that the related tax benefit will be realised.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, deferred tax relating to these subsidiaries is recognised using the liability method,providing for temporary differences arising between the tax bases of assets and liabilities and their restatedcarrying amounts.

Withholding tax

Withholding tax is payable at different rates varying between 0% and 25% on amounts paid to the Groupcompanies by their subsidiaries as dividends and management fees.

2015Rm

2014Rm

Analysis of income tax expense for the yearNormal tax (10,241) (13,027)

Current year (11,021) (13,226)

Adjustments in respect of the prior year 780 199

Deferred tax (note 3.2) 530 1,400

Current year 1,329 1,466Adjustments in respect of the prior year (799) (66)

Capital gains tax — (1)Foreign income and withholding taxes (1,611) (1,733)

(11,322) (13,361)

The table below explains the differences between the expected tax expense on continuing operations, at theSouth African statutory rate of 28% and the Group’s total tax expense for each year.

The Group’s effective tax rate is reconciled to the South African statutory rate as follows:

2015 2014% %

Tax rate reconciliationTax at statutory tax rate 28.00 28.00Expenses not allowed 11.89 1.86Effect of different tax rates in other countries (0.16) 0.60Income not subject to tax (11.16) (4.51)Share of results of associates and joint ventures (0.99) (2.31)Foreign income and withholding taxes 4.62 3.39Other 0.25 (0.86)

Effective tax rate 32.45 26.17

F-46



3.1 Income tax expense (continued)

The following are the corporate tax rates applicable to the various jurisdictions in which the Group operates:

Corporate tax rate

Country2015%

2014%

Afghanistan 20 20Benin1 30 30Cameroon 33 38.5Congo1 30 30Côte d’Ivoire 30 30Cyprus 12.5 12.5Ethiopia 30.0 30.0Ghana 25 25Guinea-Bissau 25 25Guinea 35 35Kenya 30 30Liberia 25 25Monaco 0 – 33 0 – 33Namibia 33 33Netherlands 25 25Nigeria 30 30Rwanda 30 30South Africa 28 28South Sudan 20 20Sudan2 2.5 2.5Syria 14.0 14.0Uganda 30 30Yemen 50 50Zambia 35 35

1 The entity has been granted a tax holiday at 31 December 2015.2 The entity was granted a tax holiday until March 2015. From April 2015 corporate tax of 2.5% on net revenues became applicable.

3.2 Deferred taxes

Deferred tax is accounted for in accordance with the accounting policy disclosed in note 3.1.

1 January2014Rm

Recognisedin profitor loss

Rm

Exchangeand other

movements1

Rm

31 December2014Rm


Rm

Exchangeand other

movements1

Rm RmProvisions 1,074 (127) 13 960 (368) 178 770Tax loss carried forward 587 (248) (30) 309 83 (40) 352Arising due to fair value

adjustments on businesscombinations/revaluations (46) 45 23 22 5 (1,191) (1,164)

Working capital allowances 22 549 — 571 (374) (35) 162Tax allowances in excess of

depreciation (13,006) 805 418 (11,783) 1,359 (1,944) (12,368)Other temporary differences (57) 376 (301) 18 (175) (94) (251)

Net deferred tax liability (11,426) 1,400 123 (9,903) 530 (3,126) (12,499)

Comprising:Deferred tax assets 2,044 1,109 542Deferred tax liabilities (13,470) (11,012) (13,041)

(11,426) (9,903) (12,499)

1 Including the effect of hyperinflation.

F-47



3.2 Deferred taxes (continued)

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related taxbenefit through future taxable profits is probable.

There were no deductible temporary differences, unused tax losses and unused tax credits for which no deferredtax asset has been recognised in the statement of financial position in the current or prior year.

3.3 Income tax paid

2015 2014Rm Rm

At beginning of the year (8,998) (6,671)Amount recognised in profit or loss (note 3.1) (11,322) (13,361)Deferred tax charge (note 3.2) (530) (1,400)Effect of movements in exchange rates (1,626) 343Net monetary gain — 12Other 288 300At end of the year 8,682 8,998

Taxation prepaid (1,331) (564)Taxation liabilities 10,013 9,562

Total tax paid (13,506) (11,779)

4 WORKING CAPITAL

4.1 Inventories

Inventories mainly comprise handsets, SIM cards, accessories held for sale and consumable items.

Inventories are measured at the lower of cost and net realisable value. The cost of inventory is determined usingthe weighted average method. Cost comprises direct materials and where applicable, overheads that have beenincurred in bringing the inventories to their present location and condition, excluding borrowing costs. Netrealisable value represents the estimated selling price in the ordinary course of business, less applicable variableselling expenses.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, inventories relating to these subsidiaries are measured at the lower of the restatedcost and net realisable value.

2015Rm

2014Rm

Finished goods (handsets, SIM cards and accessories) – at cost 6,766 3,775Consumables 59 100Less: Write-down to net realisable value (1,190) (463)

5,635 3,412

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its inventories amounting toR47 million (2014: R39 million) (note 6.1).

F-48


4 WORKING CAPITAL (continued)

4.1 Inventories (continued)

Reconciliation of write-down of inventory

Atbeginningof the year

RmAdditions1

RmReversals1

RmUtilised

Rm

Exchangeand other

movementsRm

At endof the year

Rm

2015Movement in write down (463) (688) 19 33 (91) (1,190)

2014Movement in write down (571) (7) 101 10 4 (463)

1 A write-down on inventories of R669 million (2014: R94 million reversal of write down) was recognised in the current year. This amountis included in other operating expenses in profit or loss (note 2.4).

4.2 Trade and other receivables

Trade receivables are amounts due from customers for merchandise sold or services rendered in the ordinarycourse of business; and are accounted for as loans and receivables in accordance with the accounting policydisclosed in note 7.1.

Prepayments and other receivables are stated at their nominal values.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, prepayments relating to these subsidiaries are restated by applying the changein the general price indices from the date of payment to the current reporting date.

2015Rm

2014Rm

Trade receivables 22,764 17,253Less: Allowance for impairment of trade receivables (note 7.1.4) (3,459) (2,514)

Net trade receivables 19,305 14,739Loan to Irancell Telecommunication Company Services (PJSC)1 7,042 5,120Receivable from Irancell Telecommunication Company Services (PJSC)2 8,158 5,640Prepayments and other receivables3 4,484 2,961Sundry debtors and advances4 4,581 4,358

43,570 32,818

1 The loan to Irancell Telecommunication Company Services (PJSC) attracts interest at LIBOR +4% per annum which is capitalisedagainst the loan. The loan and capitalised interest were payable in 2015. In January 2016 financial sanctions were lifted and payment isexpected in the foreseeable future. The recoverability of the loan was assessed at the reporting date and was found not to be impaired.

2 With effect from 25 August 2015, MTN Mauritius and Irancell agreed for the unpaid dividends to bear interest at 8% per annum.In addition and with effect from 1 October 2015, MTN Mauritius and Irancell converted R2,078 million of the unpaid dividend into aloan to provide short-term funding to Irancell. This loan is repayable on 30 September 2017 and bears interest at 12% per annum.

3 Prepayments and other receivables include prepayments for Base Transceiver Station (BTS) sites and other property leases.4 Sundry debtors and advances include advances to suppliers.

An impairment loss of R1,151 million (2014: R286 million) was incurred in the current year. This amount isincluded in other operating expenses in profit or loss (note 2.4).

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its trade and other receivablesamounting to R1,672 million (2014: R1,427 million) (note 6.1).

The Group does not hold any collateral for trade and other receivables.

The Group’s exposure to credit and currency risk relating to trade and other receivables is disclosed in note 7.1.

F-49


4 WORKING CAPITAL (continued)

4.3 Restricted cash

Restricted cash comprises short-term deposits that are not highly liquid and are accounted for as loans andreceivables in accordance with the accounting policy disclosed in note 7.1.

2015Rm

2014Rm

Restricted cash deposits 1,735 893

Restricted cash deposits includes amounts of R271 million (2014: R331 million) and R1,259 million (2014:R257 million) relating to the Syrian and Nigerian operations respectively, which are not available for use by theGroup. In respect of Syria, this was due to exchange control regulations and a lack of foreign currency in thecountry. The restricted cash balance is considered to represent excess cash not required for payment of Syrianpound denominated liabilities.

Other restricted cash deposits (mainly relating to MTN Nigeria) consist of monies placed on deposit with banksto secure letters of credit, which were undrawn and not freely available at the reporting date.

4.4 Cash and cash equivalents

Cash and cash equivalents are accounted for as loans and receivables and bank overdrafts are accounted for asfinancial liabilities in accordance with the accounting policy disclosed in note 7.1.

Cash and cash equivalents comprise cash on hand and deposits held on call, all of which are available for use bythe Group. Bank overdrafts are included within current liabilities on the statement of financial position, unlessthe Group has a current legally enforceable right to set off the amounts and intends to settle on a net basis, orrealise the asset and settle the liability simultaneously, in which case it is netted off against cash and cashequivalents on the statement of financial position.

For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:

2015Rm

2014Rm

Cash at bank and on hand 34,177 43,098Bank overdrafts (38) (26)

Net cash and cash equivalents 34,139 43,072

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its cash and cash equivalentsamounting to R1,155 million (2014: R876 million) (refer to note 6.1).

4.5 Trade and other payables

Trade payables, sundry creditors and accrued expenses are obligations to pay for goods or services that have beenacquired in the ordinary course of business from suppliers; they are accounted for as financial liabilities inaccordance with the accounting policy disclosed in note 7.1.

Other payables are stated at their nominal values.

2015Rm

2014Rm

Trade payables 12,430 11,187Sundry creditors 1,940 2,728Accrued expenses 21,837 15,711Other payables 4,277 3,608

40,484 33,234

F-50


5 INFRASTRUCTURE INVESTMENTS

5.1 Property, plant and equipment

Property, plant and equipment are measured at historical cost less accumulated depreciation and impairmentlosses. Property, plant and equipment acquired through business combinations are initially shown at fair value(based on replacement cost) and are subsequently carried at the initially determined fair value less accumulateddepreciation and impairment losses.

Property, plant and equipment under construction (capital work in progress) are measured at initial cost anddepreciation commences from the date the assets are transferred to an appropriate category of property, plant andequipment, i.e. when commissioned and ready for their intended use. Purchased software that is integral to thefunctionality of the related equipment is capitalised as part of the equipment. The Group capitalises general andspecific borrowing costs directly attributable to the acquisition, construction or production of a qualifying assetas part of the cost of that asset. Other borrowing costs are expensed in profit or loss.

The present value of the expected cost for the decommissioning of an asset after its use is included in the cost ofthe respective asset if the recognition criteria for a provision are met. Refer to provisions (note 6.3) for furtherinformation about the recognised decommissioning provision and the significant accounting judgements,estimates and assumptions made.

In circumstances whereby the Group enters into an exchange transaction, the Group determines whether such anexchange has commercial substance. Property, plant and equipment acquired in an exchange transaction ismeasured at fair value unless the exchange transaction lacks commercial substance or the fair value of neither theasset received nor the asset given up is reliably measurable. If the acquired item is not measured at fair value, itscost is measured at the carrying amount of the asset given up. Any consideration paid or payable is included inthe cost of the asset received. Property, plant and equipment received for no consideration is accounted for atzero value.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, property, plant and equipment relating to these subsidiaries are restated by applyingthe change in the general price indices from the date of acquisition to the current reporting date.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items (major components) of property, plant and equipment.

Depreciation is calculated on a straight-line basis to write off the cost of the assets to their residual values overtheir estimated useful lives. Depreciation relating to the property, plant and equipment of MTN Sudan CompanyLimited and MTN Syria (JSC) is based on the restated amounts, which have been adjusted for the effects ofhyperinflation.

Useful lives and residual values are reviewed on an annual basis and the effect of any changes in estimate isaccounted for on a prospective basis.

In determining residual values, the Group uses historical sales and management’s best estimate based on marketprices of similar items.

Useful lives of property, plant and equipment are based on management estimates and take into accounthistorical experience with similar assets, the expected usage of the asset, physical wear and tear, technical orcommercial obsolescence and legal restrictions on the use of the assets.

F-51


5 INFRASTRUCTURE INVESTMENTS (continued)

5.1 Property, plant and equipment (continued)

The estimated useful lives of property, plant and equipment are as follows:

2015Years

2014Years

Buildings – owned 5 – 50 5 – 50Buildings – leased¹ 1 – 20 1 – 20Network infrastructure 2 – 20 2 – 20Information systems equipment 1 – 10 1 – 10Furniture and fittings 3 – 15 3 – 15Leasehold improvements¹ 2 – 15 2 – 15Office equipment 2 – 12 2 – 12Motor vehicles 3 – 10 3 – 10

1 Shorter of lease term and useful life.

Land is not depreciated. Assets held under finance leases are depreciated over their expected useful lives on thesame basis as owned assets or, where shorter, the expected term of the relevant lease.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, only when it isprobable that future economic benefits associated with the item will flow to the Group and the cost of the itemcan be measured reliably. The carrying amount of the replaced part is derecognised. Repairs and maintenancecosts are included in profit or loss during the financial period in which they are incurred. The gain or loss arisingon the disposal or retirement of an asset is included in profit or loss.

Impairment

An impairment loss is recognised in profit or loss if the carrying amount of an asset or a cash-generating unitexceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together intocash-generating units. The recoverable amount of an asset or cash-generating unit is the greater of its value in useand its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset. Goodwill arising from business combinations is allocated to CGUs orthe group of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amountof any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit(group of units) on a pro rata basis.

An impairment loss is subsequently reversed only to the extent that the asset or cash-generating unit’s carryingamount does not exceed the carrying amount that would have been determined had no impairment loss beenrecognised. A reversal of an impairment loss is recognised immediately in profit or loss.

F-52




The Group annually reviews the carrying amounts of its property, plant and equipment in order to determinewhether there is any indication of impairment. If any such indication exists, the recoverable amounts of the assetsare estimated in order to determine the extent, if any, of the impairment loss

Land andbuildings1

Rm

Leaseholdimprovements

Rm

Networkinfrastructure

Rm

Informationsystems,furnitureand officeequipment

Rm

Capitalwork in

progress/otherRm

Vehicles2

RmTotalRm

Carrying amount at1 January 2014 6,343 1,122 70,851 3,839 10,125 623 92,903

Additions 380 196 7,539 1,287 12,604 148 22,154Disposals — (3) (172) (25) (179) (40) (419)Re-allocations3 250 18 4,883 453 (11,711) 30 (6,077)Depreciation for the year (476) (195) (15,659) (1,570) (171) (191) (18,262)Impairment loss — — (471) — (163) — (634)Other movements — 8 (741) (73) (340) — (1,146)Effect of movements in

exchange rates4 (74) (13) (983) (43) 149 (9) (973)

Carrying amount at31 December 2014 6,423 1,133 65,247 3,868 10,314 561 87,546

Comprising:Cost 8,642 2,725 134,639 10,968 11,017 1,225 169,216Accumulated depreciation

and impairment losses (2,219) (1,592) (69,392) (7,100) (703) (664) (81,670)

6,423 1,133 65,247 3,868 10,314 561 87,546


Additions 465 177 8,802 1,484 14,700 123 25,751Disposals — (2) (328) (20) (68) (16) (434)Re-allocations3 124 311 14,099 519 (14,193) (4) 856Depreciation for the year (412) (328) (16,489) (1,849) (285) (194) (19,557)Impairment loss — — (77) — — — (77)Other movements (5) 26 425 (300) (49) (2) 95Effect of movements in

exchange rates4 443 116 9,108 520 2,264 71 12,522



and impairment losses (2,928) (2,179) (93,046) (9,524) (1,269) (822) (109,768)

7,038 1,433 80,787 4,222 12,683 539 106,702

1 Included in land and buildings are leased assets with a carrying amount of R162 million (2014: R179 million).2 Included in vehicles are leased assets with a carrying amount of R80 million (2014: R48 million).3 Re-allocations include an amount of R208 million (2014: R5,966 million) relating to network infrastructure re-allocated to non-current

assets held for sale (note 5.3).4 Includes the effect of hyperinflation.

F-53




5.1.1 Impairment loss

The following entities recognised impairment losses/(reversals) during the year:

2015Rm

2014Rm

Scancom Limited (Ghana) (13) 329MTN Nigeria Communications Limited 46 133Mobile Telephone Network Proprietary Limited (South Africa) 39 169Areeba Guinea S.A. 5 3

77 634

5.1.2 Leased property, plant and equipment

The Group leases various premises and sites which have varying terms, escalation clauses and renewal rights.

Finance lease commitments are disclosed in note 6.6.

5.1.3 Capital work in progress

There are various capital work-in-progress projects under way within the Group, a summary of which is set outbelow:

2015Rm

2014Rm

Mobile Telephone Networks Proprietary Limited (South Africa) 1,266 766Scancom Limited (Ghana) 185 990MTN Sudan Company Limited 1,402 961MTN Nigeria Communications Limited 1,184 987MTN Afghanistan Limited 165 195Areeba Guinea S.A. 308 100MTN Côte d’Ivoire S.A. 81 303MTN Uganda Limited — 313MTN (Dubai) Limited 234 68MTN Yemen 285 209MTN South Sudan Limited 69 391MTN Syria (JSC) 1,451 513MTN Congo S.A. 356 274MTN Cameroon Limited 412 115Lonestar Communications Corporation LLC 222 130Other 362 304

7,982 6,619

5.1.4 Changes in estimates

During the year, Scancom Ltd (MTN Ghana) revised the useful lives of its network infrastructure andinformation systems from five to 14 years to three to 20 years and four to five years to three to five years,respectively. This resulted in an increase in the depreciation charge of R246 million and R35 millionrespectively, for the current and future years. In 2014, MTN Afghanistan Limited revised the useful life of itsnetwork infrastructure from 10 to 6.5 years. This resulted in an increase of R86 million in the depreciation chargefor the current and future years.

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5.1.5 Encumbrances

Borrowings are secured by various categories of property, plant and equipment with the following carryingamounts (note 6.1):

2015Rm

2014Rm

Scancom Limited (Ghana) 6,510 5,600MTN Sudan Company Limited 5,140 4,030MTN Congo S.A. 18 27

11,668 9,657

5.2 Intangible assets and goodwill

Goodwill

Goodwill is measured at cost less accumulated impairment losses and is not amortised but tested for impairmentannually.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, goodwill relating to these subsidiaries is restated by applying the change inthe general price indices from the date of acquisition to the current reporting date.

Goodwill arising on the acquisition of subsidiaries is included in intangible assets. Goodwill arising on theacquisition of an associate or joint venture is included in “investment in associates and joint ventures”, and istested for impairment as part of the overall balance.

Gains or losses on the disposal of an entity include the carrying amount of goodwill allocated to the entity sold.

The Group annually reviews the carrying amounts of intangible assets with indefinite useful lives forimpairments. The recoverable amounts of the assets are estimated in order to determine the extent, if any, of theimpairment loss.


The Group’s intangible assets with finite useful lives are as follows:

• licences;

• customer relationships;

• computer software; and

• other intangible assets.

Intangible assets with finite useful lives are measured at historical cost less accumulated amortisation andimpairment losses. Intangible assets acquired through business combinations are initially shown at fair value andare subsequently carried at the initially determined fair value less accumulated amortisation and impairmentlosses. The initial cost incurred in respect of licences is capitalised. Contingent licence fees are expensed as theyare incurred.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, intangible assets relating to these subsidiaries are restated by applying thechange in the general price indices from the date of acquisition to the current reporting date.

Amortisation is calculated on a straight-line basis to write off the cost of intangible assets over their estimateduseful lives. Amortisation relating to MTN Sudan Company Limited and MTN Syria (JSC) is based on therestated amounts, which have been adjusted for the effects of hyperinflation.

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5.2 Intangible assets and goodwill (continued)

Useful lives are reviewed on an annual basis with the effects of any changes in estimate accounted for on aprospective basis. The residual values of intangible assets are assumed to be zero.


Licences




Software

The useful life is determined with reference to the licence term of the computer software. For unique softwareproducts controlled by the Group, the useful life is based on historical experience with similar assets as well asanticipation of future events such as technological changes, which may impact the useful life.



The estimated useful lives of intangible assets with finite useful lives are as follows:

2015Years

2014Years

Licences 3 – 20 3 – 20Customer relationships 5 – 10 5 – 10Software 3 – 6 3 – 6Other intangible assets 3 – 10 3 – 10

The gain or loss arising on the disposal or retirement of an intangible asset is included in profit or loss.

Costs associated with maintaining intangible assets are recognised as an expense as incurred. Costs that aredirectly associated with the production of identifiable intangible assets controlled by the Group, and that willprobably generate economic benefits, are capitalised when all criteria for capitalisation are met.

Expenditure that enhances or extends the performance of intangible assets beyond their original specifications isrecognised as a capital improvement and added to the original cost of the assets. Expenditure on researchactivities is recognised as an expense in the period in which it is incurred.

Determination of fair values

The fair value of customer relationships acquired in a business combination is determined using the multi-periodexcess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets thatare part of creating the related cash flows.

The fair value of patents and trademarks acquired in a business combination is based on the discounted estimatedroyalty payments that have been avoided as a result of the patent or trademark being owned.

The fair values of all other intangible assets acquired in a business combination applicable to the Group are basedon the discounted cash flows expected to be derived from the use and eventual sale of the assets.

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Impairment

An impairment loss is recognised in profit or loss if the carrying amount of an asset or a cash-generating unitexceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together intocash-generating units. The recoverable amount of an asset or cash-generating unit is the higher of its value in useand its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amountof any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit(group of units) on a pro rata basis.

An impairment loss is subsequently reversed only to the extent that the asset or cash-generating unit’s carryingamount does not exceed the carrying amount that would have been determined had no impairment loss beenrecognised. A reversal of an impairment loss is recognised immediately in profit or loss. An impairment loss inrespect of goodwill is not reversed.

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GoodwillRm

LicencesRm

Customerrelationships

RmSoftware1

Rm

Otherintangible

assetsRm

Capitalwork-in-progress

RmTotalRm

Carrying amount at 1 January2014 24,160 5,629 — 6,459 271 1,232 37,751

Additions2 844 71 816 2,144 247 1,108 5,230Disposals — — — (204) — — (204)Re-allocations — 210 — 2,197 — (2,296) 111Amortisation for the year — (882) (31) (2,320) (18) — (3,251)Impairment loss (2,033) — — (74) — — (2,107)Other movements — — 11 (1) (9) — 1Effect of movements in exchange

rates3 (746) (26) (5) (137) — 1 (913)

Carrying amount at 31 December2014 22,225 5,002 791 8,064 491 45 36,618

Comprising:Cost 24,258 13,841 5,212 17,023 1,134 45 61,513Accumulated amortisation and

impairment losses (2,033) (8,839) (4,421) (8,959) (643) — (24,895)

22,225 5,002 791 8,064 491 45 36,618

Carrying amount at 1 January2015 22,225 5,002 791 8,064 491 45 36,618

Additions2 — 8,948 3 2,860 4 1,000 12,815Acquisitions through business

combinations (note 9.4) 742 3,752 — — — — 4,494Disposals — (163) — (87) — — (250)Re-allocations — 217 — (498) — (783) (1,064)Amortisation for the year — (1,136) (150) (2,439) (11) — (3,736)Impairment loss (504) — — — — — (504)Other movements 456 2 — (299) — 4 163Effect of movements in exchange

rates3 4,312 2,478 20 568 — (27) 7,351




27,231 19,100 664 8,169 484 239 55,887

1 Included in software are leased assets with a carrying amount of R742 million (2014: R733 million).2 Included in additions are capitalised borrowing costs of R43 million (2014: R45 million). The capitalisation rate for the year was 8.6%

(2014: 8.6%).3 Includes the effect of hyperinflation.

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5.2.1 Goodwill

A summary of the goodwill allocation and related assumptions applied for impairment testing purposes arepresented below:

2015 2014

Growthrate%

Discountrate%

Carryingamount

Rm

Growthrate%

Discountrate%

Carryingamount

Rm1

MTN Côte d’Ivoire S.A. 3.0 18.2 3,064 2.5 12.2 2,599Scancom Limited (MTN Ghana) 7.4 21.9 6,905 7.5 19.5 6,008MTN Sudan Company Limited 5.2 23.7 1,190 10.0 32.6 444MTN Yemen 8.0 34.2 4,018 7.1 26.2 2,883MTN Afghanistan Limited 5.0 19.2 1,656 5.0 19.2 1,421MTN Uganda Limited 5.0 18.5 743 5.0 17.2 676MTN Congo S.A. 2.5 14.2 1,035 2.7 11.6 860MTN Syria (JSC) 6.0 29.0 249 6.5 25.7 126MTN Cyprus Limited 1.9 11.6 902 2.0 9.9 726Spacetel Benin SA 2.8 15.2 1,388 2.8 14.2 1,150Areeba Guinea S.A. 5.0 27.2 490 5.9 17.0 793Mobile Telephone Networks Proprietary Limited

(South Africa) 5.5 16.3 2,287 5.9 13.4 2,287Afrihost Proprietary Limited 5.5 16.3 319 5.9 13.4 319Lonestar Communications Corporation LLC (Liberia) 6.4 16.4 400 5.0 16.4 287MTN Rwandacell 5.0 16.0 449 5.0 14.6 370MTN Nigeria Communications Limited (Visafone) 7.0 20.6 742 — — —MTN Zambia 5.0 12.9 231 5.0 17.8 298Spacetel Guinea-Bissau SA 3.0 11.2 375 2.0 13.4 310Other 788 668

Total 27,231 22,225

1 Restated, refer to note 1.6.4.

Goodwill is tested annually for impairment. The recoverable amounts of CGUs were determined based on value-in-use calculations. The calculations mainly used cash flow projections based on financial budgets approved bymanagement covering a three to 10-year period. Management is confident that projections covering periodslonger than three years are appropriate based on the long-term nature of the Group’s infrastructure and operatingmodel. Cash flows beyond the above period were extrapolated using the estimated growth rates as mentionedabove.

The following key assumptions were used for the value-in-use calculations:

• growth rates: the Group used steady growth rates to extrapolate revenues beyond the budget period cashflows. The growth rates were consistent with publicly available information relating to long-term averagegrowth rates for each of the markets in which the respective CGU operated. The average growth rates usedranged from 1.9% to 8.0% (2014 2.0% to 10.0%); and

• discount rates: discount rates ranged from 11.2% to 34.2% (2014: 9.9% to 32.6%). Discount rates usedreflect both time value of money and other specific risks relating to the relevant CGU.

Goodwill impairment

During the year, an impairment loss amounting to R504 million (2014: R2,033 million) was recognised relatingto Areeba Guinea S.A. which forms part of the small opco cluster segment (2014: MTN Sudan CompanyLimited).

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5.2.2 Encumbrances

Borrowings are secured by intangible assets of Scancom Limited (MTN Ghana) with a carrying amount ofR391 million (2014: R539 million) (note 6.1).

5.2.3 Licences

Licence agreements TypeGranted/renewed Term

Mobile Telephone NetworksProprietary Limited (South Africa)

ECS licence 15/01/2009 15 years

ECNS licence 15/01/2009 20 years900MHz1,800MHz 1/01/2010 Renewable annually3G

MTN Uganda Limited 900MHz 15/04/1998 20 years1,800MHz

MTN Rwandacell Limited GSM 01/07/2008 13 yearsSNO 30/06/2006 15 years

MTN Zambia Limited 900MHz1,800MHz 23/09/2010 15 years2,100MHz

MTN Nigeria CommunicationsLimited

1,800MHz 03/11/2015 5 years

900MHz3G spectrum licence 01/05/2007 15 yearsUnified access licence (includinginternational gateway)

01/09/2006 15 years

WACS 01/01/2010 20 yearsWiMax 3.5GHz spectrum 2007 Renewable annuallyDigital Terrestrial TVbroadcasting licence

12/08/2015 10 years

800MHz 01/01/2015 10 yearsMicrowave spectrum8GHz – 26GHz 2001 Renewable annually

Scancom Limited (MTN Ghana) 900MHz 02/12/2004 15 years1,800MHz3G 23/01/2009 15 yearsInternational Gateway1 08/11/2014 5 yearsFixed access service of unifiedaccess

06/07/2015 4 years

Mobile Telephone NetworksCameroon Limited

2G

3G 15/02/2015 15 years4G

MTN Côte d’Ivoire S.A. 900MHz 02/04/1996 20 years1,800MHzWiMax 2.5 – 3.5GHz 31/07/2002 20 years3G/UMTS 1.9/2.1GHz 31/05/2012 10 yearsUniversal networks 04/01/20162 17 years

Spacetel Benin SA 900MHz 19/10/2007 25 years1,800MHzUniversal licence 19/03/2012 20 years

1 Licence renewal confirmed in 2015.2 Licence operational in 2015.

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5.2.3 Licences (continued)


Areeba Guinea S.A. 900MHz 31/08/2005 18 years1,800MHz3G 14/08/2013 10 yearsWiMax 04/08/2014 5 years

MTN Congo S.A. 900MHz 25/11/2011 15 years1,800MHz 25/11/2011 15 yearsInternational gateway 05/02/2002 15 yearsOptical fibre licence 02/04/2010 15 years3G 25/11/2011 17 years2G 25/11/2011 15 yearsInternational gateway by opticalfibre 03/06/2013 10 years

Lonestar CommunicationsCorporation LLC (Liberia)

Universal Telecommunicationlicence

04/08/2015 15 years

Spacetel Guinea-Bissau SA 900MHz 23/05/2014 10 years1,800MHz3G4G 17/07/2015 10 years

MTN Syria (JSC) 900MHz 29/06/2002 15 years1,800MHz 22/03/2007 10 years3G 29/04/2009 8 yearsISP 2009 Renewable annuallyFreehold licence 01/01/2015 20 years

MTN Sudan Company Limited 2G + 3GTransmissionVSAT gateway 25/10/2003 20 yearsVSAT hubVSAT terminal

MTN Afghanistan Limited 3G unified licence 01/07/2012 15 years

MTN Yemen 900MHz1 31/07/2000 15 years1,800MHz 17/02/2008

MTN Cyprus Limited 900MHz1,800MHz 01/12/2003 20 years4G (LTE) 2,100MHz

1 Renewal application lodged. Licence fees are accrued for a monthly basis.

During the year, the Group concluded negotiations on behalf of Lonestar Communications Corporation LLC(Liberia) for a universal licence. This resulted in the termination of the 900MHz, 1,800MHz, WiMax and 3Glicences and the acquisition of a Universal Telecom licence with a term of 15 years with effect from 4 August2015.

5.2.4 Events after reporting period

Scancom Limited (MTN Ghana) acquisition of licence

During December 2015, Scancom Limited (MTN Ghana) was successful in its bid to obtain a 15-year 4G/LTElicence in the 800MHz spectrum band for an amount of US$67.5 million. 10% of the purchase consideration was

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5.2.4 Events after reporting period (continued)

settled before year end as part of the bidding process with the remainder settled on 27 January 2016, followingwhich time the National Communications Authority provided MTN Ghana with provisional authorisationpending issuance of the licence.

5.3 Non-current assets held for sale

Non-current assets (or disposal groups) are classified as held for sale when their carrying amount will berecovered principally through sale rather than use.

The asset or disposal group must be available for immediate sale in its present condition and the sale should behighly probable, with an active programme to find a buyer and the appropriate level of management approvingthe sale. Immediately before classification as held for sale, all assets and liabilities are remeasured in accordancewith the Group’s accounting policies.

Non-current assets (or disposal groups) held for sale are measured at the lower of the carrying amount and fairvalue less incremental directly attributable cost to sell and are not depreciated.

Gains or losses recognised on initial classification as held for sale and subsequent remeasurements are recognisedin profit or loss, regardless of whether the assets were previously measured at revalued amounts.

2015Rm

2014Rm

Balance at beginning of the year 3,848 1,281Additions 255 6,899

Re-allocations from property, plant and equipment 208 5,966Other additions 47 933

Disposals (3,151) (3,675)Effect of movements in exchange rates (942) (657)

Balance at end of the year 10 3,848

The assets held for sale at 31 December 2015 relate to vehicles that MTN Nigeria Communications Limited hasplans to dispose of.

The Group sold its mobile network towers in MTN Nigeria Communications Limited in two tranches to INTTowers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V.

The first tranche of the tower sale closed on 24 December 2014 and involved the sale of 4,154 mobile networktowers by MTN Nigeria Communications Limited to INT Towers Limited. The second tranche of the tower salesinvolved the sale of 4,696 mobile network towers and closed on 1 July 2015 (note 2.3).

The Group concluded transactions with IHS in which IHS acquired 550 mobile network towers from MTNRwandacell Limited for US$48 million and 748 mobile network towers from MTN (Zambia) Limited forUS$57 million during the prior year. IHS is a 100% shareholder of the tower companies set up in each country tomanage the towers and other passive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited willbe the anchor tenants on commercial terms on the towers for an initial term of 10 years.

6 FINANCING STRUCTURE AND COMMITMENTS

6.1 Borrowings

Borrowings are accounted for as financial liabilities in accordance with the accounting policy disclosed innote 7.1.

Fees paid on the establishment of loan facilities are recognised as transaction costs and capitalised to the extentthat it is probable that some or all of the facility will be drawn down. When the draw down is made, the

F-62


6 FINANCING STRUCTURE AND COMMITMENTS (continued)

6.1 Borrowings (continued)

transaction costs are amortised to profit or loss using the effective interest method. To the extent there is noevidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as aprepayment for liquidity services and amortised over the period of the facility to which it relates.

Details of the Group’s significant unsecured borrowings are provided below:

2015Rm

2014Rm

Denominatedcurrency

Nominalinterest

(%)*Interestpayment Final maturity

UnsecuredMTN HoldingsProprietary Limited 15,829 13,139

4,517 4,506 ZAR1,2 7.9 Quarterly February 20163,105 — ZAR1,2 7.9 Semi-annual December 20172,268 2,767 ZAR2,3 8.0 Quarterly June 20161,309 2,618 ZAR4,5 10.1 Semi-annual July 20171,996 1,994 ZAR2,6 7.7 Quarterly May 2017

— 1,003 ZAR2,3 7.1 — Loan repaid duringthe year

2,634 251 ZAR5,7 7.2 Monthly January 2016

MTN NigeriaCommunicationsLimited 26,153 24,673

19,474 17,697 NGN1,2 18.8 Annual November 20193,026 2,904 US$1,2 3.7 Semi-annual April 20192,540 1,351 US$2,5,8 1.7 Semi-annual August 2019

— 1,009 US$5,8 1.7 — Loan repaid duringthe year

1,113 915 US$2,9 3.9 Semi-annual December 2019— 381 US$5,8 1.4 — Loan repaid during

the year— 291 US$5,8 3.3 — Loan repaid during



the yearMTN InternationalMauritius Limited 10,364 — US$2,3 1.4 Quarterly November 2019MTN (Mauritius)Investments Limited 11,633 8,686 US$5,10 4.8 Semi-annual November 2024

1 Syndicated term loan facility2 Variable interest rate3 Revolving credit facility4 Domestic medium-term notes5 Fixed interest rate6 Bilateral term loan facility7 General bank facility8 Export credit facility9 Vendor finance facility10 Senior unsecured notes11 Bank borrowings12 Bridge finance* Contractual interest rates on loans as at 31 December 2015.

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2015Rm

2014Rm

Denominatedcurrency

Nominalinterest


MTN Zambia Limited 1,251 1,362

723 688 US$2,11 3.9 Semi-annual June 2019528 674 ZMK1,2 21.5 Semi-annual January 2016

Spacetel Benin SA 1,075 945

753 664 XOF1,5 7.3 Semi-annual May 2020322 281 XOF5,6 7.5 Semi-annual September 2019

MTN Côte d’Ivoire S.A. 2,838 745

— 426 XOF5,11 3.9 — Loan repaid duringthe year

— 319 XOF5,11 4.0 — Loan repaid duringthe year

502 — XOF5,6 4.0 Quarterly January 2016377 — XOF5,11 4.0 Semi-annual April 201675 — XOF5,11 6.0 Quarterly February 2016

1,884 — XOF5,12 5.0 Bi-monthly February 2016

MTN Cyprus Limited 1,092 254

830 1 EUR2,6 5.5 Semi-annual September 2020262 253 EUR2,6 5.6 Quarterly October 2020

Mobile Telephone NetworksCameroon Limited

769 134 XAF1,5 4.3 Semi-annual September 2020

Other unsecured borrowings 501 550

Total unsecured borrowings 71,505 50,488


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Details of the Group’s significant secured borrowings are provided below:

2015Rm

2014Rm

Denominatedcurrency

Nominalinterest


Security/collateral

SecuredMTN Sudan Company

Limited 2,435 1,933

1,216 817 EUR2,9 6.0 Quarterly June 2020 Pledge of networkand capital work-in-progress assets

714 506 US$2,5,9 10.0 Quarterly September 2017 Pledge of networkand capital work-in-progress assets

505 588 EUR2,9 3.5 Semi-annual December 2019 Pledge of networkand capital work-in-progress assets

— 22 US$5,11 10.0 — Loan repaidduring the year

Deposit equivalentto 140% of the loan

MTN Afghanistan Limited — 138


Pledge of shares


Pledge of shares

Scancom Limited(MTN Ghana) 1,175 646

826 211 GHS1,2 25.5 Semi-annual May 2017 Floating charge onCompany assets

349 435 US$1,2 3.5 Semi-annual May 2017 Floating charge onCompany assets

Other secured borrowings 18 48

Total secured borrowings 3,628 2,765Total unsecured borrowings 71,505 50,488

Total borrowings 75,133 53,253


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2015Rm

2014Rm

The classification of the Group’s borrowings is as follows:Current 22,472 13,783Non-current 52,661 39,470

75,133 53,253

The carrying amounts of the Group’s borrowings are denominated in the followingcurrencies:

Nigerian naira 19,474 17,697United States dollar 30,462 17,722South African rand 15,829 13,139Euro 2,813 1,659Benin Communauté Financière Africaine franc 1,075 945Côte d’Ivoire Communauté Financière Africaine franc 2,838 745Zambian kwacha 528 674Congo-Brazzaville Communauté Financière Africaine franc 175 306Cameroon Communauté Financière Africaine franc 769 134Other currencies 1,170 232

75,133 53,253

The Group has the following undrawn committed facilities:Floating rate 19,043 25,282Fixed rate 9,560 7,561

28,603 32,843

6.1.1 Events after reporting period

Facilities

During January and February 2016, additional loan facilities amounting to R14.9 billion were obtained by MTNHoldings. These facilities are expected to mature in the next five years.

Additionally, facilities amounting to R2.6 billion have been refinanced for a further period of three to six months.

During January 2016, a loan amounting to R481 million payable by MTN Zambia Limited was refinanced for afurther three months.

6.2 Other non-current liabilities

Finance leases are accounted for in accordance with the accounting policy disclosed in note 6.6, deferred incomeis accounted for in accordance with the policy disclosed in note 2.2 and other liabilities are accounted for inaccordance with the accounting policy disclosed in note 7.1.

2015Rm

2014Rm

Finance lease obligations (note 6.6) 711 696Deferred income 527 542Licence renewal liability 495 —Other 451 347

2,184 1,585

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6.3 Provisions

A provision is recognised when there is a present legal or constructive obligation as a result of a past event forwhich it is more likely than not that an outflow of resources will be required to settle the obligation and a reliableestimate can be made of the amount of the obligation. A provision to pay a levy is not recognised until theobligating event specified in the legislation occurs, even if there is no realistic opportunity to avoid theobligation. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihood ofan outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expected outflow of resources required to settle the obligationusing a pre-tax rate that reflects current market assessments of the time value of money and the risks specific tothe obligation. The increase in the provision due to the passage of time is recognised as a finance cost.


RmAdditions

RmReversals

RmUtilised

Rm

Netmonetary

lossRm

Exchangeand other

movements1

Rm

At endof theyearRm

2015Non-currentDecommissioning provision 229 45 — (12) — 31 293Licence obligations 137 — — — — (60) 77Nigeria provision for regulatory fine — 4,104 — — — — 4,104Other provisions 180 143 (29) (33) 27 (138) 150

546 4,292 (29) (45) 27 (167) 4,624

CurrentBonus provision 754 735 (91) (722) — 114 790Decommissioning provision 21 — (19) — — 4 6Nigeria provision for regulatory fine — 5,183 — — — — 5,183Licence obligations 74 — — (40) — 60 94Other provisions 2,565 620 (997) (327) — 59 1,920

3,414 6,538 (1,107) (1,089) — 237 7,993

1 Includes the effect of hyperinflation.


RmAdditions

RmReversals

RmUtilised

Rm

Netmonetary

gainRm

Exchangeand other

movements1

Rm

At endof theyearRm

2014Non-currentDecommissioning provision 186 107 (34) (30) — — 229Licence obligations — 137 — — — — 137Other provisions 171 91 (43) (16) (38) 15 180

357 335 (77) (46) (38) 15 546

CurrentBonus provision 763 861 (100) (761) — (9) 754Decommissioning provision 84 3 (74) (1) — 9 21Licence obligations 257 — (183) — — — 74Other provisions 3,533 442 (1,065) (340) — (5) 2,565

4,637 1,306 (1,422) (1,102) — (5) 3,414


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6.3 Provisions (continued)

Bonus provision

The bonus provision consists of a performance-based bonus, which is determined by reference to the overallCompany performance with regard to a set of predetermined key performance measures. Bonuses are payableannually after the Group annual results have been approved.

Decommissioning provision

This provision relates to the estimate of the cost of dismantling and removing an item of property, plant andequipment and restoring the site on which the item was located to its original condition. The Group provides forthe anticipated costs associated with the restoration of leasehold property to its original condition at inception ofthe lease, including removal of items included in property, plant and equipment that are erected on leased land.

The Group only recognises these decommissioning costs for the proportion of its overall number of sites forwhich it expects decommissioning to take place. The expected percentage has been based on actual experience inthe respective operations.

Licence obligations

The licence obligations provision represents the estimated costs to be incurred in fulfilling the Universal ServicesObligation (USO) in South Africa. USOs are governed by the Electronic Communications Act.

Nigeria provision for regulatory fine

During October 2015, the Nigerian Communications Commission (NCC) imposed a fine of N1.04 trillion(R80.7 billion1) on MTN Nigeria Communications Limited (MTN Nigeria). This fine relates to the timing of thedisconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September 2015and is based on a fine of N200,000 for each unregistered subscriber. Subsequently, during December 2015, theNCC revised the amount to N780 billion (R60.6 billion1).

MTN Nigeria, acting on external legal advice, has resolved that the manner of the imposition of the fine and thequantum thereof is not in accordance with the NCC’s powers under the Nigerian Communications Act, 2003 andtherefore believes there to be valid grounds upon which to challenge the fine. Accordingly, MTN Nigeriafollowed due process and instructed its lawyers to proceed with an action in the Federal High Court in Lagosseeking the appropriate reliefs.

On 22 January 2016, the judge adjourned the matter to 18 March 2016, in order to enable the parties to try tosettle the matter.

Pursuant to the ongoing engagement with the Nigerian authorities, MTN Nigeria on 24 February 2016 made anagreed-without-prejudice good-faith payment of N50 billion (R3.9 billion2) to the Federal Government of Nigeriaon the basis that this will be applied towards a settlement, when one is eventually, hopefully, arrived at. In aneffort to achieve an amicable settlement, MTN has agreed to withdraw the matter from the Federal High Court inLagos.

In arriving at an appropriate provision at 31 December 2015, management has applied its judgement resulting ina provision being recorded as required in accordance with IFRS, amounting to N119.6 billion (R9.3 billion1).

In light of the engagement with the Nigerian authorities, the Group has provided limited disclosure relating to theprovision in accordance with IFRS.

Other provisions

The Group is involved in various regulatory and indirect tax matters specific to the respective jurisdictions inwhich the Group operates. These matters may not necessarily be resolved in a manner that is favourable to theGroup. The Group has therefore recognised provisions in respect of these matters based on estimates and theprobability of an outflow of economic benefits and should not be construed as an admission of legal liability.1 Amounts translated at the closing rate at year end of R1 = N12.88.2 Translated at the 24 February 2016 closing rate of R1 = N12.76.

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6.4 Capital commitments

Commitments for the acquisition of property, plant and equipment and software:

2015Rm

2014Rm

Capital expenditure authorised not yet incurred at the reporting date is as follows:– Contracted 12,501 10,034– Not contracted 18,313 19,659

Total commitments for property, plant and equipment and software 30,814 29,693

Capital expenditure will be funded from operating cash flows, existing borrowing facilities and where necessaryby raising additional facilities.

6.5 Operating lease commitments

Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classifiedas operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basisover the term of the relevant lease.

Sub-lease income is recognised in profit or loss on a straight-line basis over the term of the lease.

In all significant operating lease arrangements in place during the year, the Group acted as the lessee.

Sale and leaseback

In sale and leaseback transactions that result in operating leases, where it is clear that the transaction is priced atfair value, any profit or loss is recognised on the effective date of the sale transaction. If the sale price is belowfair value, any profit or loss is recognised on the effective date of the sale transaction except that, if a loss iscompensated for by future lease payments at below market price, it is deferred and amortised in proportion to thelease payments over the period during which the asset is expected to be used. If the sale price is above fair value,the excess over fair value is deferred and amortised over the period for which the asset is expected to be used.

If the fair value, at the time of a sale and leaseback transaction, is less than the carrying amount of the asset, aloss equal to the amount of the difference between the carrying amount and fair value is recognised immediatelyin profit or loss.

The Group leases various premises and sites under non-cancellable/cancellable operating lease agreements. Theleases have varying terms, escalation clauses and renewal rights. Penalties are chargeable on certain leasesshould they be cancelled before the end of the agreement.

2015Rm

2014Rm

The future aggregate minimum lease payments under non-cancellable operating leasearrangements are as follows:

Not later than one year 7,373 4,280Later than one year and no later than five years 30,363 16,203Later than five years 30,696 13,973

68,432 34,456

6.6 Finance lease commitments

Assets held under finance leases are capitalised at the lower of the fair value of the leased asset and the estimatedpresent value of the minimum lease payments at the inception of the lease. The corresponding liability to thelessor, net of finance charges, is included in the statement of financial position under other non-current/currentliabilities. Each lease payment is allocated between the liability and finance charges. Finance charges, which

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6.6 Finance lease commitments (continued)

represent the difference between the total lease commitments and fair value of the assets acquired, are charged toprofit or loss over the term of the relevant lease so as to produce a constant periodic rate of interest on theremaining balance of the obligation for each accounting period.

In all significant finance lease arrangements in place during the period, the Group acted as the lessee.

Sale and leaseback

In sale and leaseback transactions that result in finance leases, any excess of sale proceeds over the carryingamount is deferred and amortised over the lease term.

At the reporting date, the Group had outstanding commitments under non-cancellable finance leases which falldue as follows:

Minimumlease

paymentsRm

Futurefinancecharges

Rm

PresentvalueRm

2015CurrentNot later than one year 100 (35) 65Non-current (note 6.2) 945 (234) 711Later than one year and no later than five years 419 (135) 284Later than five years 526 (99) 427

1,045 (269) 776

Minimumlease

paymentsRm


Rm

PresentvalueRm

2014CurrentNot later than one year 143 (36) 107Non-current (note 6.2) 921 (225) 696

Later than one year and no later than five years 395 (135) 260Later than five years 526 (90) 436

1,064 (261) 803

6.7 Commercial commitments

Incentives for handset upgrades

The Group’s present policy is to pay incentives to service providers (SPs) for handset upgrades. These upgradesare only payable once the subscribers have completed a 21-month period with the SP since the initialcommencement of their contract or previous upgrade and the eligible subscribers have exercised their rights toreceive upgrades for new postpaid contracts with minimum terms. The value of the obligation may varydepending on the prevailing business rules at the time of the upgrade. The total number of eligible subscriberswho had not yet exercised their right to upgrade at 31 December 2015 was 1,233,652 (2014: 1,555,033) and theestimated commitment in respect of these incentives amounts to R972 million (2014: R841 million).

6.8 Contingent liabilities

The Group does not recognise contingent liabilities in the statement of financial position until future eventsindicate that it is probable that an outflow of resources will take place and a reliable estimate can be made, atwhich time a provision is raised.

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6.8 Contingent liabilities (continued)2015Rm

2014Rm

Contingent liabilities 875 932Licence fee and regulatory matters — 598Litigation and other matters 865 323Other 10 11

Litigation and other matters

Uncertain tax exposures in various tax jurisdictions where the Group operates.

7 FINANCIAL RISK

7.1 Financial risk management and financial instruments

Accounting for financial instruments

Financial assets and liabilities are recognised in the Group’s statement of financial position when the Groupbecomes a party to the contractual provisions of the instruments.

All financial assets and liabilities are initially measured at fair value, including transaction costs, except for thoseclassified as at fair value through profit or loss which are initially measured at fair value excluding transactioncosts. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fairvalue through profit or loss are recognised immediately in profit or loss. Financial assets are recognised(derecognised) on the date the Group commits to purchase (sell) the instruments (trade date accounting).

Financial assets and liabilities are classified as current if expected to be realised or settled within 12 months; ifnot, they are classified as non-current.

Offsetting financial instruments

Offsetting of financial assets and liabilities is applied when there is a legally enforceable right to offset therecognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liabilitysimultaneously. The net amount is reported in the statement of financial position.

Financial instrument classification

The Group classifies its financial instruments into the following categories:

• financial assets at fair value through profit or loss;

• loans and receivables;

• held-to-maturity investments;

• available-for-sale;

• financial liabilities at fair value through profit or loss; and

• financial liabilities at amortised cost.

The classification is dependent on the purpose for which the financial instruments were acquired. Managementdetermines the classification of financial instruments at initial recognition.

Financial instruments comprise investments in equity and debt securities, loans receivable, trade and otherreceivables (excluding prepayments), investments in self-insurance cell captives, cash and cash equivalents,restricted cash, borrowings, other non-current liabilities (excluding provisions), bank overdrafts, derivatives andtrade and other payables.

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7 FINANCIAL RISK (continued)

7.1 Financial risk management and financial instruments (continued)

Subsequent measurement

Subsequent to initial recognition, financial instruments are measured as described below.

Financial assets at fair value through profit or loss

Financial instruments at fair value through profit or loss are subsequently measured at fair value and changestherein are recognised in profit or loss. Derivatives are also categorised as held for trading unless they aredesignated as hedging instruments.

Loans and receivables

The Group’s loans and receivables comprise loans and other receivables, certain of its current investments, tradeand other receivables (excluding prepayments), restricted cash and cash and cash equivalents. Loans andreceivables are subsequently measured at amortised cost using the effective interest method, less anyimpairment losses.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when therecognition of interest would be immaterial.

Held-to-maturity investments

Held-to-maturity investments are subsequently measured at amortised cost using the effective interest method,less any impairment losses.

Available-for-sale

Available-for-sale financial assets are included in non-current assets unless the investment matures ormanagement intends to dispose of it within 12 months of the end of the reporting period. Available-for-salefinancial assets are subsequently measured at fair value and changes therein, other than impairment losses andforeign currency differences on debt instruments, are recognised in other comprehensive income.

Financial liabilities

Financial liabilities comprise trade and other payables, bank overdrafts, borrowings, derivative liabilities andother non-current liabilities (excluding provisions).

All financial liabilities, excluding derivative liabilities, are subsequently measured at amortised cost using theeffective interest method. Derivative liabilities are subsequently measured at fair value and changes therein arerecognised in profit or loss.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have beentransferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities arederecognised when the obligations specified in the contracts are discharged, cancelled or expire.

Substantial modification

A substantial modification of the terms of an existing debt instrument or part of it is accounted for as anextinguishment of the original debt instrument and the recognition of a new debt instrument.

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Impairment

The Group assesses at the end of each reporting period whether there is any objective evidence that a financialasset is impaired. A financial asset or group of financial assets is impaired if objective evidence indicates that oneor more events have had a negative effect on the estimated future cash flows of that asset. In the case of equityinvestments classified as available-for-sale, a significant or prolonged decline in the fair value of the securitybelow cost is also evidence that the assets are impaired. If any such evidence exists for available-for-salefinancial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fairvalue, less any impairment loss on that financial asset previously recognised in profit or loss – is removed fromequity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments arenot reversed through profit or loss.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the differencebetween its carrying amount and its recoverable amount, being the present value of the estimated future cashflows discounted at the original effective interest rate.

When a loan or receivable is impaired, the Group reduces the carrying amount to its recoverable amount, andcontinues unwinding the discount as interest income. Interest income on impaired loans and receivables isrecognised using the effective interest rate.

Significant financial assets are tested for impairment on an individual basis. The financial assets that are notimpaired or are not individually significant are collectively assessed for impairment in groups that share similarcredit risk characteristics.

All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after theimpairment loss was recognised.


An impairment of trade receivables is established when there is objective evidence that the Group will not beable to collect all amounts due according to the original terms of the receivables. Significant financial difficultiesof the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default ordelinquency in payments are considered indicators that the trade receivable is impaired.

The carrying amount of the trade receivable is reduced through the use of an allowance account and the amountof the loss is recognised in profit or loss. When a trade receivable is uncollectible, it is written off against theallowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited toprofit or loss.

Gains or losses arising on modification of debt instruments

Gains or losses arising from the modification of the terms of a debt instrument are recognised immediately inprofit or loss where the modification does not result in the derecognition of the existing instrument.

Risk management

Introduction

The Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk andmarket risk (foreign exchange, interest rate and price risk). This note presents information about the Group’sexposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managingrisk, and the Group’s management of capital. Further quantitative disclosures are included throughout theseconsolidated financial statements.

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Risk profile

The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Group. The Group uses derivativefinancial instruments, such as forward exchange contracts and interest rate swaps to hedge certain exposures, butas a matter of principle, the Group does not enter into derivative contracts for speculative purposes. The Groupdoes not apply hedge accounting.

Risk management is carried out under policies approved by the board of directors of the Group and of relevantsubsidiaries. The MTN Group executive committee identifies, evaluates and hedges financial risks inco-operation with the Group’s operating units. The board provides written principles for overall riskmanagement, as well as for specific areas such as foreign exchange risk, interest rate risk, credit risk, use ofderivative financial instruments, and investing excess liquidity.

7.1.1 Categories of financial instruments

Assets Liabilities

Loans andreceivables

Rm

Fair valuethroughprofit or

loss1

Rm

Held-to-maturity

Rm

Available-for-sale

Rm

AmortisedcostRm


loss1

Rm

Totalcarryingamount

Rm2015Non-current financial assetsLoans and non-current receivables 8,269 — — — — — 8,269Investments — — 262 9,707 — — 9,969Current financial assetsTrade and other receivables 38,587 — — — — — 38,587Current investments 802 1,187 6,822 — — — 8,811Derivative assets — 163 — — — — 163Restricted cash 1,735 — — — — — 1,735Cash and cash equivalents 34,177 — — — — — 34,177

83,570 1,350 7,084 9,707 — — 101,711

Non-current financial liabilitiesBorrowings — — — — 52,661 — 52,661Other non-current liabilities — — — — 1,514 — 1,514Current financial liabilitiesTrade and other payables — — — — 37,957 — 37,957Borrowings — — — — 22,472 — 22,472Bank overdrafts — — — — 38 — 38

— — — — 114,642 — 114,642

1 All financial instruments at fair value through profit or loss are held for trading.

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7.1.1 Categories of financial instruments (continued)

Assets Liabilities


Rm


loss1

Rm

Held-to-maturity

Rm

Available-for-sale

Rm

AmortisedcostRm


loss1

Rm

Totalcarryingamount

Rm2014Non-current financial assetsLoans and other non-current

receivables 5,277 — — — — — 5,277Investments — — 223 5,912 — — 6,135Current financial assetsTrade and other receivables 29,655 — — — — — 29,655Current investments 1,276 906 3,469 — — — 5,651Derivative assets — 183 — — — — 183Restricted cash 893 — — — — — 893Cash and cash equivalents 43,098 — — — — — 43,098

80,199 1,089 3,692 5,912 — — 90,892

Non-current financial liabilitiesBorrowings — — — — 39,470 — 39,470Other non-current liabilities — — — — 1,016 — 1,016Current financial liabilitiesTrade and other payables — — — — 31,208 — 31,208Borrowings — — — — 13,783 — 13,783Derivative liabilities — — — — — 2 2Bank overdrafts — — — — 26 — 26

— — — 85,503 2 85,505


7.1.2 Financial assets and liabilities subject to offsetting

The following table presents the Group’s financial assets and liabilities that are subject to offsetting:

Grossamount

Rm

AmountoffsetRm

Netamount

Rm

2015Current financial assetsTrade and other receivables 4,320 (826) 3,494Current financial liabilitiesTrade and other payables 858 (826) 32

2014Current financial assetsTrade and other receivables 3,130 (987) 2,143Current financial liabilitiesTrade and other payables 1,920 (987) 933

The amounts subject to offsetting include interconnect receivables and payables and sundry receivables andpayables.

7.1.3 Fair value estimation

A number of the Group’s accounting policies and disclosures require the measurement of fair values.

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7.1.3 Fair value estimation (continued)

The table on the next page presents the Group’s assets and liabilities that are measured at fair value. Theclassification into different levels is based on the extent that quoted prices are used in the calculation of fair valueand the levels have been defined as follows:

• level 1: fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• level 2: fair value based on inputs other than quoted prices included within level 1 that are observable forthe asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); or

• level 3: fair value based on inputs for the asset or liability that are not based on observable market data (thatis, unobservable inputs).

The following table presents the fair value measurement hierarchy of the Group’s assets and liabilities:

Level 1Rm

Level 2Rm

Level 3Rm

TotalRm

2015Current financial assetsInvestments — — 9,707 9,707Investment in cell captives — — 1,187 1,187Derivative assets — 163 — 163

Total assets — 163 10,894 11,057

2014Current financial assetsInvestments — 5,912 — 5,912Investments in cell captives — — 906 906Derivative assets 42 141 — 183

Total assets 42 6,053 906 7,001

Current financial liabilitiesDerivative liabilities — 2 — 2

Valuation methods and assumptions

The following methods and assumptions were used to estimate the fair values:

Unquoted ordinary shares – The fair values of the unquoted ordinary shares have been estimated using adiscounted cash flow and earnings multiple model. The valuation requires management to make certainassumptions about the model inputs, including forecast cash flows, the discount rate, credit risk and volatility.The probabilities of the various estimates within the range can be reasonably assessed and are used inmanagement’s estimate of fair value for these unquoted equity investments.

Derivatives – The Group enters into derivative financial instruments with various counterparties. Interest rateswaps, foreign exchange contracts and equity derivatives are valued using valuation techniques, which employthe use of market observable inputs. The most frequently applied valuation techniques include forward pricingand swap models using present value calculations. The models incorporate various inputs including the creditquality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies,currency basis spreads between the respective currencies and interest rate curves.

Investment in insurance cell captives – The fair value of the investment in cell captives is determined based onthe net asset value of the cell captive at the reporting date.

Loans and receivables and financial liabilities at amortised cost – The carrying value of current receivables andliabilities measured at amortised cost approximates their fair value.

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7.1.3 Fair value estimation (continued)

For the majority of the non-current receivables and liabilities measured at amortised cost, their fair values arealso not significantly different to their carrying values.

The listed long-term fixed interest rate senior unsecured notes in issue with a carrying amount of R11,633 million(2014: R8,686 million) have a fair value of R10,268 million (2014: R8,686 million) at 31 December 2015. Thefair value of this instrument is determined by reference to published market values on the relevant exchange. Thisinstrument is classified as a level one instrument in the fair value hierarchy.

Valuation techniques and significant unobservable inputs

The significant unobservable inputs used in the fair value measurements categorised within level 3 of the fairvalue hierarchy, together with a quantitative sensitivity analysis are as shown below:

TypeValuationtechnique

Significantunobservable

inputs RangeSensitivity of the input

to the fair value

Available-for-sale financial assets –unquoted ordinary shares

Earningsmultiples

Average towerindustry earningsmultiple

2015: 10-142014: 12-14

1 multiple (2014:1 multiple) increase wouldresult in an increase in thefair value of R792 million(2014: R434 million), and1 multiple decrease wouldresult in a decrease in thefair value of R792 million(2014: R434 million).

Reconciliation of level 3 financial assets

The table below sets out the reconciliation of financial assets that are measured at fair value based on inputs thatare not based on observable market data (level 3):

Cell captivesRm

Balance at 1 January 2014 691Contributions paid 563Claims received (390)Gain recognised in profit or loss (unrealised) 42

Balance at 31 December 2014 906

Balance at 1 January 2015 906Contributions paid 965Claims received (13)Loss recognised in profit or loss (unrealised) (671)

Balance at 31 December 2015 1,187

InvestmentsRm

Balance at 1 January 2015 —Transfers from level 21 5,912Acquisitions 1,410Foreign exchange differences 2,385

Balance at 31 December 2015 9,707

1 The fair value of investments was previously determined with reference to recent transactions between market participants. The absenceof recent transactions resulted in the fair value being determined using models considered to be appropriate by management,consequently investments have been transferred from level 2 to level 3 of the fair value hierarchy. The Group considers transfersbetween fair value hierarchy levels to have occurred at the beginning of the reporting period.

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7.1.4 Credit risk

Credit risk, or the risk of financial loss to the Group due to customers or counterparties not meeting theircontractual obligations, is managed through the application of credit approvals, limits and monitoring procedures.

The Group’s maximum exposure to credit risk is represented by the carrying amount of the financial assets thatare exposed to credit risk.

The Group considers its maximum exposure per class, without taking into account any collateral and financialguarantees, to be as follows:

2015Rm

2014Rm

Loans and other non-current receivables 8,269 5,277Investments 262 223Trade and other receivables 38,587 29,655Current investments 8,811 5,651Derivative assets 163 183Restricted cash 1,735 893Cash and cash equivalents 34,177 43,098

92,004 84,980


The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregatevalues of transactions concluded are spread among approved financial institutions. The Group actively seeks tolimit the amount of credit exposure to any one financial institution and credit exposure is controlled bycounterparty limits that are reviewed and approved by the credit risk department.

The operations in Nigeria, Dubai and South Africa (including head office entities) hold their cash balances infinancial institutions with a rating range from B- to AAA.


Trade receivables

The Group has no significant concentrations of credit risk, due to its wide spread of customers across variousoperations and dispersion across geographical locations. The Group has policies in place to ensure that retailsales of products and services are made to customers with an appropriate credit history.

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7.1.4 Credit risk (continued)

The recoverability of interconnect receivables in certain international operations is uncertain; however, this isactively managed within acceptable limits and has been incorporated in the assessment of an appropriate revenuerecognition policy (note 2.2) and the impairment of trade receivables where applicable. In addition, in certaincountries there exists a right of set-off with interconnect parties to assist in settling outstanding amounts.

Ageing and impairment analysis

2015Rm

Gross

2015Rm

Impaired

2015RmNet

2014Rm

Gross

2014Rm

Impaired

2014RmNet

Fully performing trade receivables 13,478 — 13,478 12,994 — 12,994

Interconnect receivables 1,922 — 1,922 2,165 — 2,165Contract receivables 1,863 — 1,863 3,826 — 3,826Other receivables 9,693 — 9,693 7,003 — 7,003

Past due trade receivables 9,286 (3,459) 5,827 4,259 (2,514) 1,745

Interconnect receivables 4,180 (1,437) 2,743 1,352 (752) 600

0 to 3 months 1,047 — 1,047 234 (1) 2333 to 6 months 841 (3) 838 103 — 1036 to 9 months 454 (187) 267 54 — 549 to 12 months 1,838 (1,247) 591 961 (751) 210

Contract receivables 3,330 (1,524) 1,806 2,195 (1,344) 851

0 to 3 months 1,373 (219) 1,154 674 (243) 4313 to 6 months 653 (471) 182 592 (454) 1386 to 9 months 149 (17) 132 183 (48) 1359 to 12 months 1,155 (817) 338 746 (599) 147

Other receivables 1,776 (498) 1,278 712 (418) 294

0 to 3 months 644 (126) 518 102 (4) 983 to 6 months 236 (65) 171 137 (27) 1106 to 9 months 149 — 149 210 (126) 849 to 12 months 747 (307) 440 263 (261) 2

Total 22,764 (3,459) 19,305 17,253 (2,514) 14,739

Total past due per significant operation

Inter-connect

receivablesRm

Contractreceivables

Rm

Otherreceivables

RmTotalRm

2015MTN South Africa 157 1,129 196 1,482MTN Nigeria 1,729 587 171 2,487MTN Côte d’Ivoire 277 379 516 1,172MTN Yemen 464 165 48 677MTN Cameroon 185 264 — 449MTN Benin 193 16 152 361Other operations 1,175 790 693 2,658

4,180 3,330 1,776 9,286

2014MTN South Africa 59 850 80 989MTN Nigeria 839 327 26 1,192Other operations 454 1,018 606 2,078

1,352 2,195 712 4,259

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7.1.4 Credit risk (continued)

Allowance for impairment of trade receivables


RmAdditions1

RmReversals1

RmUtilised

Rm

Netmonetary

gainRm

Exchangedifferencesand other

movements2

Rm

At endof the year

Rm

2015Allowance for impairment of trade

receivables (2,514) (1,200) 49 485 45 (324) (3,459)

2014Allowance for impairment of trade

receivables (2,679) (650) 364 443 43 (35) (2,514)

1 A net impairment loss of R1,151 million (2014: R286 million) was recognised during the year. This amount is included in otheroperating expenses in profit or loss (note 2.4).

2 Including the effect of hyperinflation.

The Group does not hold any collateral for trade receivables.

Loans and other non-current receivables

The recoverability of all loans were assessed at reporting date and were not found to be impaired.

An impairment reversal of R230 million in respect of non-current interconnect receivables was recognised in2014. The impairment analysis is set out below and on the next page:

GrossRm

ImpairedRm

NetRm

2015Non-current interconnect receivables 405 — 405



RmAdditions

RmReversals

RmUtilised

Rm


movementsRm

At endof the year

Rm

2015Allowance for impairment on non-current

interconnect receivables — — — — — —

2014Allowance for impairment on non-current

interconnect receivables (223) — 230 — (7) —

7.1.5 Liquidity risk

Liquidity risk is the risk that an entity in the Group will be unable to meet its obligations as they become due.

The Group’s approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet itsliabilities when due under both normal and stressed conditions, without incurring unacceptable losses or riskingdamage to the Group’s reputation.

The Group ensures it has sufficient cash on demand (currently the Group is maintaining a positive cash position)or access to facilities to meet expected operational expenses, including the servicing of financial obligations;this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as naturaldisasters.

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7.1.5 Liquidity risk (continued)

The following liquid resources are available:

2015Rm

2014Rm

Trade and other receivables 38,587 18,895Current investments 1,989 2,182Cash and cash equivalents, net of overdrafts 34,139 43,072

74,715 64,149

The Group’s undrawn borrowing facilities are disclosed in note 6.1.

During the year, currency constraints in Nigeria caused loan repayment delays by MTN Nigeria amountingto R991 million on loans denominated in US dollar. The defaults resulting from the delays were remedied beforeyear end.

The following are the contractual cash flows of financial liabilities:

Carryingamount

RmTotalRm

Payablewithin

onemonthor on

demandRm

Morethan onemonthbut not

exceedingthree

monthsRm

Morethanthree

monthsbut not

exceedingone year

Rm

Morethan one

yearbut not

exceedingtwo years

Rm

Morethan two

yearsbut not

exceedingfive years

Rm

Morethan five

yearsRm

2015Borrowings 75,133 83,298 4,079 8,010 14,012 17,567 28,064 11,566Other non-current liabilities 1,514 1,524 — — — 373 462 689Trade and other payables 37,957 37,957 23,160 10,352 4,445 — — —Bank overdrafts 38 38 38 — — — — —

114,642 122,817 27,277 18,362 18,457 17,940 28,526 12,255

2014Borrowings 53,253 68,775 442 3,227 14,510 14,288 25,537 10,771Other non-current liabilities 1,016 1,273 — — — 134 323 816Trade and other payables 31,208 31,208 14,873 9,760 6,575 — — —Derivative liabilities 2 2 — — 2 — — —Bank overdrafts 26 26 26 — — — — —

85,505 101,284 15,341 12,987 21,087 14,422 25,860 11,587

7.1.6 Market risk

Market risk is the risk that changes in market prices (such as, interest rates and foreign currencies) will affect theGroup’s income or the value of its holding of financial instruments. The objective of market risk management isto manage and control market risk exposures within acceptable parameters, while optimising the return.

7.1.6.1 Interest rate risk

Interest rate risk is the risk that arises on an interest-bearing asset or liability, due to variability of interest rates.

Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents, restricted cash,trade and other receivables/payables, loans receivable/payable, bank overdrafts and other non-current liabilities.The interest rates applicable to these financial instruments are a combination of floating and fixed rates in linewith those currently available in the market.

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7.1.6 Market risk (continued)

The Group’s interest rate risk arises from the repricing of the Group’s forward cover and floating rate debt,incremental funding or new borrowings, the refinancing of existing borrowings and the magnitude of thesignificant cash balances which exist.

Debt in the South African entities, MTN (Mauritius) Investment Limited and all holding companies (includingMTN (Dubai) Limited and MTN International (Mauritius) Limited) is managed on an optimal fixed versusfloating interest rate basis, in line with the approved Group treasury policy. Significant cash balances are alsoconsidered in the fixed versus floating interest rate exposure mix.

Debt in the majority of the Group’s non-South African operations is at floating interest rates. This is due to theunderdeveloped and expensive nature of derivative products in these financial markets. The Group continues tomonitor developments which may create opportunities as these markets evolve in order that each underlyingoperation can be aligned with the Group Treasury Policy.

The Group makes use of various products including interest rate derivatives and other appropriate hedging toolsas a way to manage these risks; however, derivative instruments may only be used to hedge existing exposures.

Profile

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

2015 2014

Fixed rateinstruments

Rm

Variable rateinstruments

Rm


Rm

Variable rateinstruments

Rm

Non-current financial assetsLoans and other non-current receivables 6,040 1,253 3,071 905Investments 262 — 223 —Current financial assetsTrade and other receivables 136 16,235 74 5,988Current investments 7,624 — 4,745 —Restricted cash 498 276 155 366Cash and cash equivalents 18,731 5,874 20,788 7,395

33,291 23,638 29,056 14,654

Non-current financial liabilitiesBorrowings 15,785 36,938 11,947 27,523Other non-current liabilities 1,202 279 693 298Current financial liabilitiesTrade and other payables 1,536 945 107 54Borrowings 3,852 18,295 4,220 9,563Bank overdrafts — 38 — 26

22,375 56,495 16,967 37,464


The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss of aninstantaneous increase or decrease of 1% (100 basis points) in market interest rates, from the rate applicable at31 December, for each class of financial instrument with all other variables remaining constant. This analysis isfor illustrative purposes only, as in practice market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in the following market interest rates: JIBAR, LIBOR, NIBOR,Prime, EURIBOR and money market rates. Changes in market interest rates affect the interest income or expenseof floating rate financial instruments. Changes in market interest rates only affect profit or loss in relation tofinancial instruments with fixed interest rates if these financial instruments are subsequently measured at theirfair value.

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A change in the above market interest rates at the reporting date would have increased/(decreased) profit beforetax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period andassumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performedon the same basis as was used for 2014.

2015 2014

(Decrease)/increase in profit before tax (Decrease)/increase in profit before tax

Change ininterest rate

%

Upwardchange in

interest rateRm

Downwardchange in

interest rateRm


%

Upwardchange in

interest rateRm

Downwardchange in

interest rateRm

JIBAR 1 (118.3) 118.3 1 (102.7) 102.7LIBOR 1 28.9 (28.9) 1 1.4 (1.4)Three-month LIBOR 1 (0.0) 0.0 1 (0.8) 0.8NIBOR 1 (194.7) 194.7 1 (174.9) 174.9EURIBOR 1 (25.8) 25.8 1 (14.3) 14.3Money market 1 14.5 (14.5) 1 22.8 (22.8)Prime 1 25.5 (25.5) 1 — —Other 1 (20.4) 20.4 1 40.4 (40.4)

7.1.6.2 Currency risk

Currency risk is the exposure to exchange rate fluctuations that have an impact on cash flows and financingactivities.

The Group operates internationally and is exposed to currency risk arising from various currency exposures.Refer to the table below for the Group’s exposure to foreign currency risk based on notional amounts. Currencyrisk arises when future commercial transactions or recognised assets and liabilities are denominated in a currencythat is not the entity’s functional currency. The Group is also exposed to translation risk as holding companies donot report in the same currencies as operating entities.

Where possible, entities in the Group use forward contracts to hedge their actual exposure to foreign currency.Refer to note 7.5 for the Group’s outstanding foreign exchange contracts. The Group’s Nigerian subsidiarymanages foreign currency risk on major foreign purchases by placing foreign currency on deposit as securityagainst letters of credit when each order is placed.

The Group has foreign subsidiaries whose assets are exposed to foreign currency translation risk, which ismanaged primarily through borrowings denominated in the relevant foreign currencies to the extent that suchfunding is available on reasonable terms in the local capital markets.

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Included in the Group statement of financial position are the following amounts denominated in currencies otherthan the functional currency of the reporting entities:

2015Rm

2014Rm

AssetsNon-current assets– United States dollar 419 318– CFA franc 261 —– Iranian rial 2,128 —

2,808 318

Current assets– United States dollar 6,421 9,169– Euro 1,435 2,477– Iranian rial 9,592 5,640– British pound sterling 3 —– South African rand 16 29

17,467 17,315

Total assets 20,275 17,633

LiabilitiesNon-current liabilities– United States dollar 27,677 14,651– Euro 1,059 1,135

28,736 15,786

Current liabilities– United States dollar 8,853 8,375– Euro 2,304 1,043– South African rand 7 57– Ugandan shilling 75 —– British pound sterling 9 6– Botswana pula — 2

11,248 9,483



The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss andequity of an instantaneous 10% strengthening or weakening in the rand against all other currencies, from the rateapplicable at 31 December, for each class of financial instrument with all other variables remaining constant.This analysis is for illustrative purposes only, as in practice, market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in foreign exchange rates in respect of the US dollar, euro, Iranianrial and Nigerian naira. This analysis considers the impact of changes in foreign exchange rates on profit,excluding foreign exchange translation differences resulting from the translation of Group entities that havefunctional currencies different from the presentation currency, into the Group’s presentation currency which arerecognised in the foreign currency translation reserve.

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A change in the foreign exchange rates to which the Group is exposed at the reporting date would have increased/(decreased) profit before tax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period andassumes that all other variables, in particular interest rates, remain constant. The analysis is performed on thesame basis as applied in 2014.

(Decrease)/increase in profit before tax

Denominated: Functional currency

Change inexchange

rate%

Weakeningin functional

currencyRm


currencyRm

2015US$:ZAR 10 (1,256.4) 1,256.4US$:SYP 10 (105.8) 105.8US$:SDG 10 (136.9) 136.9US$:SSP 10 (73.9) 73.9US$:NGN 10 (861.7) 861.7EUR:SDG 10 (222.1) 222.1EUR:US$ 10 9.8 (9.8)US$:GNF 10 (63.2) 63.2US$:ZMK 10 (37.1) 37.1IRR:ZAR 10 1,028.6 (1,028.6)

2014US$:ZAR 10 (144.8) 144.8US$:SYP 10 (42.8) 42.8US$:SDG 10 (109.2) 109.2US$:SSP 10 (265.5) 265.5US$:NGN 10 (492.0) 492.0EUR:SDG 10 (160.5) 160.5EUR:US$ 10 (28.1) 28.1US$:GNF 10 (155.3) 155.3US$:ZMK 10 (63.4) 63.4IRR:ZAR 10 564.0 (564.0)

7.1.6.3 Price risk

The Group is exposed to equity price risk, which arises from available-for-sale investments (see note 7.2).

Refer to note 7.1.3 for disclosure of the sensitivity of the fair values of the investments to a change in the inputsused to determine their fair values. Other comprehensive income (before tax) will be affected by the amountsdisclosed in respect of these investments in note 7.1.3.

The sensitivity analysis presented in the prior year assumed a 10% change in the market value of the investment.The basis on which the sensitivity analysis is presented in the current year has changed. The absence of recentmarket transactions resulted in a change in the valuation technique applied to determine the fair value.

7.1.7 Capital management

The Group’s policy is to maximise borrowings at an operating company level, on a non-recourse basis, within anacceptable level of debt for the maturity of the local company.

Equity funding for existing operations or new acquisitions is raised centrally, first from excess cash and thenfrom new borrowings while retaining an acceptable level of debt for the consolidated Group. Where funding is

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7.1.7 Capital management (continued)

not available to the operation locally or in specific circumstances where it is more efficient to do so, funding issourced centrally and on-lent. The Group’s policy is to borrow using a mixture of long-term and short-termcapital market issues and borrowing facilities from the local and international capital markets as well asmultilateral organisations together with cash generated to meet anticipated funding requirements.

Management regularly monitors and reviews the following: net debt : EBITDA, net debt : equity and netinterest : EBITDA. Net debt is defined as borrowings and bank overdrafts less cash and cash equivalents,restricted cash and current investments (excluding investments in cell captives). Equity approximates sharecapital and reserves. Net interest comprises of finance costs less finance income and EBITDA is defined asearnings before interest, tax, depreciation, amortisation and goodwill impairment/losses.

The Group’s net debt : EBITDA, net debt : equity and net interest : EBITDA at the end of the year are set outbelow:

2015 2014

Net debt: EBITDABorrowings and bank overdrafts (Rm) 75,171 53,279Less: Cash and cash equivalents, restricted cash and current investments (Rm) (43,536) (48,736)

Net debt (Rm) 31,635 4,543

EBITDA (Rm) 59,125 73,191Net debt/EBITDA ratio 0.54 0.1Net debt: total equityNet debt (Rm) 31,635 4,543Total equity (Rm) 151,838 133,442Net debt/total equity (%) 20.8 3.4Net interest: EBITDANet finance costs (Rm) (3,010) (3,668)EBITDA (Rm) 59,125 73,191Net interest/EBITDA (%) (5.1) (5.0)

7.2 Investments

Investments consist of held-to-maturity and available-for-sale financial assets that are accounted for inaccordance with the accounting policy disclosed in note 7.1.

2015 2014Rm Rm

Held-to-maturity financial assetsTreasury bills and bonds with fixed rates of 5.8% to 6.3% (2014: 5.9% to 6.3% andmaturity dates between 2018 and 2019 (2014: 2018 and 2019)1 262 223Available-for-sale financial assetsInvestment in IHS 9,250 5,773Unlisted equity investment 457 139

9,969 6,135

1 Denominated in Côte d’Ivoire Communauté Financière Africaine franc.

The recoverability of the investments was assessed at the reporting date and was found not to be impaired.

7.3 Loans and other non-current receivables

Loans and other non-current receivables are accounted for as loans and receivables in accordance with theaccounting policy disclosed in note 7.1.

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7.3 Loans and other non-current receivables (continued)

Prepayments include costs paid relating to subsequent financial years and are stated at nominal value.

2015 2014Rm Rm

Irancell Telecommunications Services Company (PJSC)1 2,128 —Loan to Uganda Tower InterCo B.V.2 1,159 887Loan to Ghana Tower InterCo B.V.3 1,109 2,023Loan to Nigeria Tower InterCo B.V.4 2,704 1,039Non-current interconnect receivables 405 355Other non-current receivables 1,216 973Non-current prepayments 1,062 1,019

9,783 6,296

1 The loan to Irancell attracts interest at 12% per annum. The loan is repayable in a bullet payment on 30 September 2017 (note 4.2).2 The loan to Uganda Tower InterCo B.V. attracts interest at LIBOR +5.3% per annum. The loan is repayable in 2019.3 The loan to Ghana Tower InterCo B.V. attracts interest at a fixed interest rate of 21.87% per annum. The loan is repayable in 2019.4 The loan to Nigeria Tower InterCo B.V. attracts interest at a fixed interest rate of 10% per annum subject to review, and is repayable in

2024.

The recoverability of the loans was assessed at the reporting date and was found not to be impaired.

No impairment was recognised in the current year. An impairment reversal of R230 million in respect of non-current interconnect receivables was recognised in 2014 (note 2.4).

7.4 Current investments

Current investments consist of loans and receivables, financial assets held at fair value and held-to-maturityfinancial assets that are accounted for in accordance with the accounting policy disclosed in note 7.1.

2015 2014Rm Rm

Loans and receivablesForeign currency fixed deposits with fixed interest rates of 3.5% to 4.3% (2014: 2.0% to 2.8%)1 428 1,098Commercial paper with fixed interest rates of 13.5% to 13.6%2 374 —Foreign currency fixed deposits with fixed interest rates of 2.0%1 — 178

802 1,276

Financial assets held at fair value through profit or lossInvestment in insurance cell captives – Guardrisk (note 7.1.3) 1,187 906Held-to-maturity financial assetsTreasury bills with fixed interest rates of 12.9% to 15.8% (2014: 10.8% to 14.5%) and maturity

dates between January and July 2016 (2014: January and December 2015)2 6,822 3,469

Total current investments 8,811 5,651

1 Denominated in United States dollar.2 Denominated in Nigerian naira.

No allowance for impairment has been recognised as at the reporting date as all investments are considered to befully performing.

There were no significant disposals of held-to-maturity financial assets during 2015 and 2014.

7.5 Derivatives

The Group uses derivative financial instruments, such as forward exchange contracts and interest rate swaps, tohedge its foreign currency risks, and interest rate risks, respectively. Such derivative financial instruments areinitially recognised at fair value on the date on which a derivative contract is entered into and are subsequentlyremeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financialliabilities when the fair value is negative.

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7.5 Derivatives (continued)

All gains and losses from changes in the fair value of derivatives are recognised immediately in profit or loss.

All remaining derivatives are accounted for in accordance with the accounting policy disclosed in note 7.1.

2015 2014Rm Rm

Derivatives held for tradingCurrent assetsForward exchange contracts 163 49Equity derivative — 134

163 183

Current liabilitiesFloating-to-fixed interest rate swap — (2)

— (2)

Gains accounted for directly in profit or loss 141 23Notional principal amount (US$ forward exchange contracts) 2,789 3,837Notional principal amount (EUR forward exchange contracts) — 83Notional principal amount (US$ interest rate swap) — 672

7.6 Exchange rates to South African randClosing rates Average rates

2015 2014 2015 2014United States dollar US$ 0.06 0.09 0.08 0.09Uganda shilling UGX 217.67 239.02 253.16 240.06Rwanda franc RWF 47.84 58.02 55.33 63.12Cameroon CommunautéFinancière Africaine franc XAF 39.02 46.94 46.67 45.77Nigerian naira NGN 12.88 15.93 15.63 15.27Iranian rial1 IRR 1,947.05 2,341.99 2,265.98 2,389.54Botswana pula BWP 0.73 0.82 0.80 0.83Côte d’Ivoire CommunautéFinancière Africaine franc CFA 39.81 46.94 47.00 45.81Congo-Brazzaville CommunautéFinancière Africaine franc XAF 39.81 46.94 46.56 45.81Zambian kwacha ZMK 0.71 0.55 0.65 0.57Swaziland lilangeni E 1.00 1.00 1.00 1.00Afghanistan afghani AFN 4.42 5.05 4.81 5.31Euro EUR 0.06 0.07 0.07 0.07Ghanaian cedi GHS 0.25 0.28 0.30 0.27Benin Communauté FinancièreAfricaine franc XOF 39.81 46.94 47.10 45.71Guinean franc GNF 502.98 612.70 579.71 643.39Sudanese pound1 SDG 0.39 0.52 0.47 0.53Syrian pound1 SYP 21.76 17.15 21.64 15.43Guinea-Bissau CommunautéFinancière Africaine franc XOF 39.81 46.94 47.34 45.97Yemen rial YER 13.89 18.62 17.80 19.93Ethiopian birr ETB 1.36 1.74 1.64 1.79

1 The financial results. positions and cash flows of foreign operations trading in hyperinflationary economies are translated as set out innote 1.3.3. Iran ceased to be hyperinflationary with effect from 1 July 2015.

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8 EQUITY STRUCTURE

8.1 Ordinary share capital and share premium

Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of newordinary shares or share options are recognised in equity as a deduction (net of tax) from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the considerationpaid, including any directly attributable incremental external costs (net of tax), is deducted from equityattributable to the Company’s equity holders until the shares are cancelled or reissued. Where such ordinaryshares are subsequently reissued, any consideration received, net of any directly attributable incrementaltransaction costs and the related income tax effects, is included in equity attributable to the Company’s equityholders.

Ordinary share capital (par value of 0.01 cents)

2015Numberof shares

2014Numberof shares

Authorised 2,500,000,000 2,500,000,000Issued (fully paid up) 1,845,493,245 1,848,355,889

In issue at beginning of the year 1,848,355,889 1,873,278,848Options exercised and allotted — 72,170Strike priceR27.00 — 8,340R40.50 — 63,830

MTN Zakhele shares cancelled and delisted4 (2,862,644) (2,657,377)Treasury shares cancelled — (22,337,752)

In issue at end of the year 1,845,493,245 1,848,355,889Shares cancelled but not delisted at year end2 (1,444,172) —Options – MTN Zakhele transaction1 (11,131,098) (14,492,564)Treasury shares2 (10,400,061) (11,649,825)

In issue at end of the year – excluding MTN Zakhele transaction andtreasury shares3 1,822,517,914 1,822,213,500

1 Due to the call option over the notional vendor finance shares, these shares, although legally issued to MTN Zakhele, are not deemed tobe issued in terms of IFRS and are shown as such in the share capital reconciliation.

2 Treasury shares held by the Company and MTN Holdings Proprietary Limited.3 There are no restrictions, rights or preferences including restrictions on dividend distributions attached to these shares.4 Included in shares cancelled are 945,350 shares acquired in 2014 and cancelled in the current year.

2015Rm

2014Rm

Share capitalBalance at beginning of the year * *Options exercised — *Shares cancelled (*) (*)Share buy-back (*) —

Balance at end of the year * *

Share premiumBalance at beginning of the year 40,179 42,598Options exercised — 3Share buy-back — (2,422)Decrease in treasury shares 69 —

Balance at end of the year 40,248 40,179


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8 EQUITY STRUCTURE (continued)

8.1 Ordinary share capital and share premium (continued)

MTN Zakhele transaction

The Group concluded its broad-based black economic empowerment (BBBEE) transaction “MTN Zakhele”during October 2010. This was done through a separate unconsolidated structured entity, MTN Zakhele (RF)Limited (MTN Zakhele). The transaction is designed to provide long-term, sustainable benefits to all BBBEEparticipants and will run for a period of six years.

MTN Zakhele acquired 75,363,138 of the Company’s shares at a price of R107,46 per share. The acquisition of45,368,186 shares was funded using equity raised from the allotment of MTN Zakhele shares totalling R1,618million, third-party preference share funding of R2,160 million and a donation of R1,294 million (equal to12,045,412 shares) received from the Group. The Company also issued 29,994,952 notional vendor financeshares (NVF shares) at par value to MTN Zakhele amounting to approximately R3,214 million. A total of18,863,854 (2014: 14,557,038) of these shares were cancelled and delivered back to the Group as at31 December 2015.

The total cost of this transaction for the Group was R2,973 million which was recognised as a once-off charge inprofit or loss in 2010. This charge included the once-off share-based payment transaction charges for NVF ofR1,382 million, the employee share option plan of R171 million and the donation of R1,294 million. Transactioncosts amounted to R126 million.

The MTN Zakhele shares started trading on an over the counter platform (managed by an independent party)from November 2013 onwards, on which date MTN Holdings Proprietary Limited provided a guarantee in favourof the funders to MTN Zakhele. The guarantee expires on extinguishment of funding in MTN Zakhele, which isestimated at three years. On 16 October 2015, MTN Zakhele ceased operating its trading platform. On5 November 2015, MTN Zakhele listed its shares on the Empowerment segment of the JSE’s Main Board. MTNHoldings Proprietary Limited subsequently expanded the guarantee in favour of the funders of MTN Zakhele,less amounts actually recovered by third parties, for all possible losses incurred by the funders as a result of theJSE listing.

MTN Zakhele’s sole business is holding shares in the Group and administering the associated funding of theseshares. Its success is therefore dependent on the success of the Group as well as the ongoing receipt of dividendsfrom the Group to service and repay debt.

MTN has not provided any additional funding or liquidity to MTN Zakhele and there is no intention to do so at31 December 2015.

Notional Vendor Finance (NVF) shares

The Group has a call option over the NVF shares. The fair value of the call option is R721 million (2014: R1,593million) and was determined using a Monte Carlo valuation model.

The significant inputs into the Monte Carlo valuation model were as follows:

2015 2014

Share price (R) 132.89 221,41NVF balance (Rm) 612 1,220NVF shares (number) 11,131,098 14,492,564Volatility (%) 37.98 25.47Dividend yield (%) 11.26 6.14Expected option life (years) 1 2Annual risk-free rate (%) 7.4 6.7

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2015 2014Rm Rm

A reconciliation of the NVF balance is provided below:Balance at beginning of the year 1,220 1,685Interest accrued 81 117Settlement (689) (582)

Balance at end of the year 612 1,220

In terms of the NVF arrangement, the notional funding provided by the MTN Group earns notional interest at85% of the prime rate per annum.

MTN Zakhele settled R689 million (2014: R582 million) of the NVF funding in 2015 via acquiring 3,361,466(2014: 2,537,561) of the Company’s shares in the open market and delivering an equivalent number of shares,initially issued by the Company to MTN Zakhele, back to the Company. During the year, MTN Group Limitedcancelled all of these shares delivered by MTN Zakhele. 1,444,172 (2014: 945,350) of these shares have not beendelisted at year end, and are held as treasury shares.

Third-party preference share funding obtained by MTN Zakhele

A reconciliation of the third-party preference share funding obtained by MTN Zakhele to purchase shares of theCompany is provided below:

2015Rm

2014Rm

Class A cumulative redeemable non-participating preference sharesBalance at beginning of the year 3,182 3,176Accrued interest paid (211) (202)Interest accrued at effective interest rate 218 208


The Class A preference shares are held by Newshelf 1041 Proprietary Limited. Voluntary redemption can beeffected before the redemption date. The Class A preference shares are redeemable on 24 November 2016.However, mandatory redemption must be made out of available cash after three years and one day from the issuedate, subject to a cash waterfall. Interest is required to be paid on 30 April of each year, following the receipt ofthe annual dividend from the Group.

The payment obligation accrues interest at a rate of 71% of the prime rate per annum.

Preference share refinancing

During 2013, the directors of MTN Zakhele sought to find a cheaper source of funding in order to reduce theNVF. The entity made a subsequent issue of 1,700,000 Class A preference shares at an issue price of R1,000 on1 August 2013. The subsequent issue of the Class A preference share is held by Newshelf 1041 ProprietaryLimited. The dividend rate in the floating period which came to effect on 1 May 2013 was reduced from 77% ofprime to 71% of prime from the subscription date (1 August 2013). Interest is required to be paid on 30 April and30 September of each year. No such issue was made in the current year or in the prior year.

Dividends paid to MTN Zakhele

Dividends paid by the Company to MTN Zakhele amounted to R965 million (2014: R837 million) for the year.

The dividend income earned on the MTN shares held by MTN Zakhele is required to firstly, pay permittedoperational fees, costs, expenses and tax liabilities and thereafter, to meet the dividend obligations to thethird-party funders.

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Share buy-back

In the current year, MTN Holdings Proprietary Limited did not acquire any shares. During 2014,10,704,475 shares in the Company were acquired at an average price of R226.24 per share, inclusive oftransaction costs, on the JSE Limited. The total amount paid to acquire the shares in 2014, inclusive oftransaction costs, was R2,422 million. The shares are fully paid shares and are held as treasury shares.

The Group’s objective in terms of buy-backs is to enhance shareholder value over time and improve the capitalstructure of the Group.

8.2 Other reserves

2015Rm

2014Rm

Balance at beginning of the year (2,967) (5,991)Share-based payment transactions 532 110Exchange differences on translating foreign operations 21,033 2,960Transfer from retained earnings 127 —Other (130) (46)

Balance at end of the year 18,595 (2,967)

Consisting of:Contingency reserve (as required by insurance regulations)1 4 4Statutory reserve (as required by Rwanda and Congo-Brazzaville legislation)2 211 211Transactions with non-controlling interests3 (11,396) (11,396)Share-based payment transactions4 3,046 2,514Foreign currency translation reserve5 26,823 5,791Other (93) (91)

18,595 (2,967)

1 A contingency reserve has been created in terms of the Short-term Insurance Act, 1988. Transfers to the contingency reserve are treatedas an appropriation of income, and the balance of the reserve is disclosed in the statement of financial position as a non-distributablereserve, forming part of shareholders’ funds. On dissolution of the structured entities to which these reserves relate, they will becomeavailable for distribution.

2 A statutory reserve has been created in terms of local legislation. Transfers to the statutory reserve are treated as an appropriation ofincome, and the balance of the reserve is disclosed in the statement of financial position as a non-distributable reserve, forming part ofthe shareholders’ funds.

3 Non-controlling shareholders are treated as equity participants and, therefore, all acquisitions of non-controlling interests or disposalsby the Group of its interests in subsidiary companies where control is maintained subsequent to the disposal are accounted for as equitytransactions. Consequently, the difference between the fair value of the consideration transferred and the carrying amount of anon-controlling interest purchased is recorded in equity. All profits or losses arising as a result of the disposal of interests in subsidiariesto non-controlling shareholders, where control is maintained subsequent to the disposal, are also recorded in equity.

4 Refer to the accounting policy in note 8.4 with regards to equity-settled share-based payments.5 Refer to the translation and disposal of foreign operations sections in accounting policy 1.3.2 Foreign currency. The devaluation of the

rand, which is the presentation currency of the Group, against the functional currencies of the Group’s largest operations, contributedsignificantly to the increase in the carrying amounts of assets and liabilities reflected in the Statement of Financial Position which aretranslated into the Group’s presentation currency at closing rates at the end of the reporting period.

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8.3 Dividends

Dividends declared to the Company’s shareholders are recognised as a liability in the Group’s financialstatements in the period in which the dividends are approved by the Company’s directors.

2015Cents

per share2015Rm

2014Cents

per share2014Rm

Dividends paidFinal dividend paid in respect of the prior year 800 14,6982 665 12,3022

Interim dividend paid in respect of the current year 480 8,8082 445 8,2252

23,506 20,527

Dividends declaredApproved after the reporting date and not recognised as a liability 8301 15,2192 800 14,694

1 Declared at the board meeting on 2 March 2016.2 Excluding dividends on 10,400,061 (2014: 10,704,475) treasury shares.

8.4 Share-based payments

Equity-settled share-based payments

The schemes described below are accounted for as equity-settled share-based payments to employees. Equity-settled share-based payments are measured at fair value (excluding the effect of service or non-market-basedvesting conditions) at the grant date. The fair value is measured using a stochastic model. The expected life usedin the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,exercise restrictions and behavioural considerations where applicable. The fair value determined at the grant dateof the equity-settled share-based options or rights is expensed on a straight-line basis over the vesting period,with a corresponding increase in equity, based on the Group’s estimate of the shares that will eventually vest.The expense is adjusted to reflect the actual number of options and share rights for which the related service andnon-market-based vesting conditions are met.

Where employees exercise options or share rights in terms of the rules and regulations of the schemes, newshares are issued to participants as beneficial owners. The directors procure a listing of these shares on the JSELimited, the securities exchange on which the Company’s shares are listed. In terms of the Share Option Schemeparticipants entitled to share options pay a consideration equal to the option price when the options are exercised.The nominal value of shares issued is credited to share capital and the difference between the nominal value andthe option price is credited to share premium. Settlement of the performance share plan (PSP) awards are donethrough the acquisition of shares in the open market and the subsequent delivery to participants.

The MTN Group share options, share appreciation rights and share rights schemes and performanceshare plan

The Group operates a number of equity-settled share-based payment schemes for the benefit of eligibleemployees, including executive directors, in accordance with the schemes’ rules. The schemes are designed toretain and recognise the contributions of executive directors and eligible employees and to provide additionalincentives to contribute to the Group’s continued growth.

The performance share plan is the active scheme which superseded the share option scheme, the shareappreciation rights and the share rights scheme. The superseded schemes will be wound up once all unvestedand/or unexercised awards previously made have run their remaining course.

The vesting periods under the share rights scheme, share option scheme and share appreciation rights scheme areas follows: 20%, 20%, 30% and 30% on the anniversary of the second, third, fourth and fifth years, respectively,after the grant date. The strike price for these schemes is determined as the closing market price for the MTNGroup Limited shares on the day prior to the date of allocation. Unexercised options and rights lapse 10 yearsfrom the date of grant and are forfeited if the employee leaves the Group before they vest.

The vesting period for the performance share plan is three years and the awards vest in full based on setperformance targets.

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8.4 Share-based payments (continued)

The total number of shares which may be allocated for the purposes of the schemes shall not exceed 5% of thetotal issued ordinary share capital of the Company, being 92,274,662 shares as approved by shareholders in 2001.

MTN Group share options

No new options were granted in the current or prior year and no expense was recognised as the above optionsvested in prior periods. During the current year, no share options were exercised (2014: 63,830 share optionsexercised).

This share option scheme has been superseded by the introduction of the Group share appreciation rightsschemes described below.

MTN Group Share Appreciation Rights Scheme and Share Rights Scheme (the rights schemes)

The Share Appreciation Rights Scheme was implemented on 31 May 2006, and superseded the share optionscheme.

On 26 August 2008, the board approved the Share Rights Scheme, which superseded the Share AppreciationRights Scheme. Both the rights schemes operate under the same provisions with the exception that the sharerights scheme was extended to allow participation by junior managers.

Share rights under the rights schemes are granted to eligible employees by the relevant employer subsidiarycompany. Exercised rights are equity-settled whereby the relevant subsidiary purchases the required MTN sharesin the open market.

Details of the outstanding share appreciation rights are as follows:

Strikeprice

R

Numberoutstanding at31 December

2014

Forfeitedduring2015

Exercisedduring2015


2015

Offer date31 May 2006 56.83 186,200 — (59,440) 126,76021 November 2006 71.00 46,500 — (700) 45,80022 June 2007 96.00 12,240 — — 12,24019 March 2008 126.99 191,801 — (901) 190,900

Total 436,741 — (61,041) 375,700

Details of the outstanding share rights are as follows:

Strikeprice

R


2014

Forfeitedduring2015

Exercisedduring2015


2015

Offer date1 September 2008 118.64 197,706 (3,900) (56,416) 137,39028 June 2010 107.49 701,430 (3,100) (295,690) 402,640

Total 899,136 (7,000) (352,106) 540,030

The share rights and share appreciation rights outstanding at the end of the year have a weighted averageremaining contractual life of three years (2014: four years).

There were no new grants during the 2015 or 2014 financial year.

MTN performance share plan (PSP)

During prior financial years the Group granted eligible employees share rights under the PSP, established in2010. The rights were granted to employees on level 3, 4, 5 and 6. The PSP was established in order to attract,

F-94



8.4 Share-based payments (continued)

retain and reward selected employees who are able to contribute to the business of the employer companies andto stimulate their personal involvement thereby encouraging their continued service and encouraging them toadvance the interests of the relevant employer company and the Group in general.

The share rights vest after three years from date of grant. The following performance conditions must be fulfilledto qualify for the percentage of the shares granted as stated in the table below:

Proportion of grant

Employeelevel 3 – 4

%


%

Vesting conditions for shares grantedTotal shareholder return 37.5 50.0Adjusted free cash flow growth 37.5 50.0Individual retention (guaranteed, subject to remaining on the PSP for the duration of the

award fulfilment period) 25.0 —

For the total shareholder return vesting condition, vesting is based on a sliding scale that ranges from 25%vesting at the median to 100% vesting at the 75 percentile of the performance of a comparable group ofcompanies listed on the JSE. For the adjusted free cash flow vesting condition, vesting is based on a sliding scalebetween 11% and 19% compound annual growth in the adjusted free cash flow, for all grants prior to 2014. Thesliding scale has been revised by the board of directors to between 6% and 10% compound annual growth in theadjusted free cash flow, for all grants made in 2014 and thereafter. The individual return retention condition isguaranteed subject to the employee remaining employed by the Group for the duration of the vesting period.

Details of the outstanding equity-settled performance share plan rights are as follows:


2014 Offered Forfeited

Exercisedduring2015


2015

Offer date29 December 2011 1,145,581 — (304,414) (841,167) —28 December 2012 1,556,933 — (278,450) — 1,278,48320 December 2013 2,090,403 — (458,030) — 1,632,37319 December 2014 2,291,800 — (487,162) — 1,804,638

Total 7,084,717 — (1,528,056) (841,167) 4,715,494

A valuation has been prepared using a stochastic model to determine the fair value of the performance share planand the expense to be recognised for share rights granted during the prior year. No new grants were made duringthe year.

The range of inputs into the stochastic model used for rights granted during the prior year was as follows:

2014

Share price 221.41Expected life 3 yearsRisk-free rate 6.48% to 6.85%Expected volatility 20.63% to 21.26%Dividend yield 4.66%

The risk-free rate was estimated using the implied yield on SA zero-coupon government bonds.

Volatility was estimated using the weekly closing share price and the dividend yield was estimated by using aone-year moving average of the dividend yield at valuation date.

2015Rm

2014Rm

Expense arising from equity-settled share-based payment transactions (note 2.4) 179 110

F-95


9 GROUP COMPOSITION

9.1 Interest in subsidiaries and joint ventures

HOLDING COMPANIES

Mobile Telephone NetworksHoldings Proprietary Limited

South Africa100%

MTN InternationalProprietary Limited

South Africa100%

MTN International (Mauritius)Limited

Mauritius

100%

MTN Group

TELECOMMUNICATIONS/ISP

MTN NetworkSolutions

Proprietary LimitedSouth Africa

100%

Afrihost ProprietaryLimited2

South Africa50,2%

MTN Media HoldingsProprietary Limited

South Africa6

100%

MTN BusinessSolutions BotswanaProprietary Limited

Botswana80%

MTN BusinessLimited (Kenya)

Kenya

70%

MTN BusinessKenya Limited

Kenya

70%

Satalite DataNetworks MauritiusProprietary Limited

Mauritius100%

MTN BusinessSolutions NamibiaProprietary Limited

Namibia100%

Cell PlaceProprietary Limited

South Africa100%

iTalk CellularProprietary Limited

South Africa100%

Mobile TelephoneNetworks Proprietary

LimitedSouth Africa

100%

MTN BusinessSolutions


100%

Swazi MTNLimited1

Swaziland

30%


HOLDING COMPANYTELECOMMUNICATION/ISP

MascomWireless BotswanaProprietary Limited1

Botswana53,1%

IrancellTelecommunicationCompany Services

(PJSC)1

Iran49%

MTN Publicom LimitedUganda

96%

Mobile TelephoneNetworks Cameroon

LimitedCameroon

70%

MTN NetworkSolutions Limited

Cameroon

70%

AfnetCôte d’Ivoire4

58,83%

ArobaseCôte d’Ivoire4

58,83%

MTN Côte d’Ivoire S.A.Côte d’Ivoire4

58,83%

MTN NigeriaCommunications

LimitedNigeria

78,83%

XS BroadbandLimitedNigeria

78,83%

MTN UgandaLimitedUganda

96%

MTN (Zambia)LimitedZambia

86%

HOLDING COMPANIES

MTN Group ManagementServices Proprietary Limited

South Africa100%

MANAGEMENT SERVICES

ELECTRONIC SERVICES

MTN Mobile Money LimitedZambia

86%

Electronic FundsTransfer Operations

Nigeria Limited

50%

ELECTRONIC SERVICES

Africa InternetHolding GmbH1 Berlin

33,3%

PROPERTY

MTN PropcoProprietary Limited

South Africa

100%

Aconcagua 11 ProprietaryLimited

South Africa

100%

1 Joint venture.2 Subsidiary acquired during 2014 (see note 9.4.2).3 Subsidiary incorporated during 2014.

Effective shareholding of 66,8% (see note 9.3).4

5 Subsidiary acquired during the year (see note 9.4) indirectly held through MTN Nigeria.6 Subsidiary incorporated during 2015.

There were no changes in the effective holding in any of the Group’s subsidiaries during the year unless otherwise indicated.

STRUCTURED ENTITY

MTN (Mauritius)Investment Limited3

Mauritius

100%

Munyati BuffaloZambia Limited

Zambia

100%

MobileBotswana

LimitedMauritius

100%

DeciInvestmentsProprietary

Limited1

Botswana 33,3%

Cotel HoldingsLimitedZambia100%

EconetWireless Citizens

LimitedMauritius

82,8%

MTN RwandacellLimitedRwanda

80%

MTN Congo S.A.Republic ofthe Congo

100%

VisafoneCommunications

Limited5

Nigeria

78,83%

F-96


9 GROUP COMPOSITION (continued)

9.1 Interest in subsidiaries and joint ventures (continued)

HOLDING COMPANY

MTN (Dubai)Limited

100%

MTN Group

HOLDING COMPANIES

Investcom MobileBenin Limited

British Virgin Islands

Investcom MobileCommunications

Limited


InvestcomTelecommunicationsAfghanistan Limited


99% 100% 100%

MTN NICBV

Netherlands

MTN (Netherlands)BV

Netherlands

MTN (Netherlands)Co-Op UA

Netherlands

100% 100% 100%

Galactic EngineeringProjects SA

Panama

VernisAssociates SA

Panama

Starcom GlobalLimited


78% 100% 89%

Easy DialInternational Limited


99%

InvestcomTelecommunications

Guinea (Conakry)Limited


99%

InvestcomConsortiumHolding S.A.


99%

Investcom GlobalLimited


Fourteenth AvenueInvestment Holding

Limited

UAE

99% 100%

Servico SAL

Lebanon

99,97%

PROCUREMENT

Global TradingCompany LLC

UAE

100%

Global SourcingCompany LLC

UAE

100%

Telecom SourcingServices FZ-LLC

UAE

100%

MTN InvestmentsLimited

UAE

100%

MTN SEA SharedServices Limited

Uganda

100%

INTERNATIONAL BUSINESS

Interserve Overseas LimitedBritish Virgin Islands

99%

MANAGEMENT SERVICES

99,8

LebanonInteltec Offshore SAL

99,8%


MTN Yemen

Yemen

82,8%

Easynet SearchLimited

Ghana

99,6%

MTN ICT ServicesPLC

Ethiopia

99,9%

MTN Nigeria TowersSPV B.V.

Netherlands

100%


Yemen LimitedBritish Virgin Islands

100%

MTN SudanCompany Limited

Sudan

85%

LonestarCommunicationsCorporation LLC

Liberia

MTN Cyprus Limited

Cyprus

100%

MTN AfghanistanLimited

Afghanistan

100%

MTN South SudanLimited

South Sudan

100%60%

Scancom Limited

Ghana

97,7%

Spacetel Guinea-

Bissau S.A.

Guinea-Bissau

100%

MTN Syria (JSC)

Syria

75%

Areeba Guinea S.A.

Guinea

75%

Spacetel Benin SA

Benin

75%

ELECTRONIC SERVICES

International Digital ServicesMiddle East Limited (IME)1

UAE

50%

Middle East InternetHolding S.A.R.L1

Luxemburg

50%

F-97



9.2 Investment in associates and joint ventures

Associates and joint ventures are accounted for using the equity method and are recognised initially at cost. TheGroup’s investment in associates and joint ventures includes goodwill identified on acquisition, net of anyaccumulated impairment losses. The consolidated financial statements include the Group’s share of post-acquisition accumulated profits or losses of associated companies and joint ventures in the carrying amount ofthe investments, which are generally determined from their latest audited annual financial statements ormanagement accounts and the annual profit attributable to the Group is recognised in profit or loss. The Group’sshare of any post-acquisition movement in reserves is recognised in other comprehensive income. Thecumulative post-acquisition movements are adjusted against the carrying amount of the investment.

Where an associate or joint venture’s functional currency is the currency of a hyperinflationary economy, theresults and financial position of the associate or joint venture are restated in order to calculate the Group’s shareof net assets and profit or loss.

The carrying amount of the Group’s investments in associates and joint ventures is reduced to recognise anypotential impairment in the value of individual investments. When the Group’s share of losses in an associate orjoint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise furtherlosses, unless the Group has an obligation, issued guarantees or made payments on behalf of the associate or jointventure.

Dilution gains or losses arising on investments in associates and joint ventures are recognised in profit or loss. Ifthe ownership interests in an associate or joint venture is reduced but significant influence is retained, only aproportionate share of the amounts previously recognised in other comprehensive income is reclassified to profitor loss. Profits or losses resulting from upstream and downstream transactions between the Group and itsassociates and joint ventures are recognised in the Group’s financial statements only to the extent of unrelatedinvestors’ interests in the associates and joint ventures. Unrealised losses are eliminated unless the transactionprovides evidence of an impairment of the asset transferred.

Adjustments have been made where necessary to bring the accounting policies of the associates and jointventures in line with those of the Group.

2015Rm

2014Rm

Investment in associates 12,624 5,975Investment in joint ventures 22,928 19,539

Total investment in associates and joint ventures 35,552 25,514

Share of results of associates after tax (493) (127)Share of results of joint ventures after tax 1,719 4,335

Total share of results of associates and joint ventures after tax 1,226 4,208

Share of results of associates after tax comprises:Share of results of associates after tax (493) (28)Amortisation of customer relationships – BICS — (146)

(493) (174)Unwind of deferred tax on customer relationships – BICS — 47

(493) (127)

Investment in associates

Significant judgement: Existence of significant influence

The Group together with another shareholder, hold the shares in Nigeria Tower InterCo B.V., Uganda TowerInterCo B.V. and Ghana Tower InterCo B.V. The other shareholder has substantive rights that give it power overthe relevant activities of these entities. However, the Group participates in the significant financial and operatingdecisions and consequently it has determined that it has significant influence over these entities, resulting in thembeing classified as associates of the Group.

F-98



9.2 Investment in associates and joint ventures (continued)

Unless otherwise stated, the Group’s associates’ countries of incorporation are also their principal place ofoperation.

The Group has the following effective interest in associates:

Effective % interest in issuedordinary share capital

Associate Principal activityCountry of

incorporation 2015 2014

Belgacom International Carrier Services SA(BICS)

Telecommunications Belgium 20 20

Nigeria Tower InterCo B.V. Management oftelecommunicationinfrastructure

Netherlands 51 51

Uganda Tower InterCo B.V. Management oftelecommunicationinfrastructure

Netherlands 49 49

Ghana Tower InterCo B.V. Management oftelecommunicationinfrastructure

Netherlands 49 49

Number Portability Proprietary Limited Porting South Africa 20 20Content Connect Africa Proprietary Limited Telecommunications South Africa 36 36

BelgacomInternational

CarrierServices

SA (BICS)Rm

UgandaTower

InterCoB.V.Rm

GhanaTower

InterCoB.V.2Rm

NigeriaTower

InterCoB.V.1Rm

OtherRm

TotalRm

2014Balance at beginning of the year 1,786 304 — — 5 2,095Additions — 46 — 4,178 — 4,224Other income (note 2.3) — — 31 — — 31Share of results after tax including amortisation of

customer relationships 112 (221) — (64) (1) (174)Dividend income (233) — — — — (233)Other equity movements — — (31) — — (31)Effect of movements in exchange rates (4) 34 — 34 (1) 63

Balance at end of the year 1,661 163 — 4,148 3 5,975

2015Balance at beginning of the year 1,661 163 — 4,148 3 5,975Additions — 217 1,342 4,962 — 6,521Other income (note 2.3) — — 30 — — 30Share of results after tax 216 (301) 136 (545) 1 (493)Dividend income (230) — — — — (230)Other equity movements — — (30) — — (30)Effect of movements in exchange rates 342 (31) (1,478) 2,017 1 851


1 The Group sold its mobile network towers in MTN Nigeria Communications Limited to INT Towers Limited, a wholly owned subsidiaryof Nigeria Tower InterCo B.V. The tower sales resulted in IHS obtaining a 49% interest in Nigeria Tower InterCo B.V. and the Groupobtaining an equity interest of US$775 million (note 2.3).

2 The Group accounted for the conversion of a portion of its loan to Ghana Tower InterCo B.V. into equity for an amount of R1.3 billion.

F-99




Summarised financial information of associates

Set out below is the summarised financial information of each associate that is material to the Group.The summarised financial information is adjusted to reflect adjustments made by the Group when applying theequity method, including fair value adjustments at acquisition and modifications for differences in accountingpolicy.

Belgacom InternationalCarrier Services SA

(BICS)Uganda TowerInterCo B.V.

2015Rm

2014Rm

2015Rm

2014Rm

Summarised statement of financial positionTotal assets 14,609 12,652 3,083 2,597

Non-current assets 2,575 2,441 2,609 2,308Current assets 12,034 10,211 474 289

Total liabilities 10,982 9,195 2,986 2,264

Non-current liabilities 170 139 2,395 1,767Current liabilities 10,812 9,056 591 497

Net assets 3,627 3,457 97 333% ownership interest held 20 20 49 49

Interest in associate excluding goodwill 725 691 48 163Goodwill 1,264 970 — —

Balance at end of the year 1,989 1,661 48 163

Summarised income statementRevenue 22,547 22,784 716 608EBITDA 2,241 1,944 196 109Profit/(loss) before tax 1,827 908 (614) (450)Income tax expense (747) (348) — —

Profit/(loss) after tax 1,080 560 (614) (450)% ownership interest held 20 20 49 49

Share of results of associates after tax 216 112 (301) (221)

F-100




Nigeria TowerInterCo B.V.

Ghana TowerInterCo B.V.

2015Rm

2014Rm

2015Rm

2014Rm


Non-current assets 23,353 9,627 1,237 1,047Current assets — 525 1,887 1,201


Non-current liabilities 2,480 2,005 2,150 4,124Current liabilities 124 14 1,160 693

Net assets 20,749 8,133 (186) (2,569)% ownership interest held 51 51 49 49

Interest in associate 10,582 4,148 (91) (1,259)Accumulated unrecognised share of losses from associate — — — 9821

Accumulated unrecognised share of other comprehensive income fromassociate — — 911 2771

Balance at end of the year 10,582 4,148 — —

Summarised income statementRevenue — — 1,203 1,053EBITDA (1,069) (125) 570 445(Loss)/profit before tax (1,069) (125) 303 (1,227)Income tax expense — — (25) 33

(Loss)/profit after tax (1,069) ( 125) 278 (1,194)% ownership interest held 51 51 49 49

Share of results after tax (545) (64) 136 (585)2

Unrecognised share of losses from associate — — — 585

Share of results of associates after tax (545) (64) 136 —

1 Translated at rates of exchange ruling at the reporting date.2 Includes amortisation of customer relationships.

There are no significant contingent liabilities relating to the Group’s interests in these associates at the end of thecurrent or prior year.

Classification of significant joint arrangements

Joint arrangements are all arrangements where two or more parties contractually agree to share control of thearrangement, which only exists when decisions about the relevant activities require unanimous consent ofthe parties sharing control. Joint ventures are joint arrangements whereby the parties that have joint controlof the arrangement have rights to the net assets of the arrangement.

The Group exercises judgement in determining the classification of its joint arrangements. The Group’s jointarrangements provide the Group and the other parties to the agreements with rights to the net assets of theentities. The Group has joint control over these arrangements as, under the contractual arrangements, unanimousconsent is required for all decisions made with regards to the relevant activities. Judgement has been applied indetermining that the following entities should be classified as joint ventures of the Group:

• Irancell Telecommunication Company Services (PJSC) (49%).

• Mascom Wireless Botswana Proprietary Limited (Mascom) (53.11%).

• Middle East Internet Holding S.A.R.L (MEIH) (50%).

F-101




• Africa Internet Holding GmbH (AIH) (33.3%).

• International Digital Services Middle East Limited (iME) (50%).

Investment in joint ventures

The Group has the following effective interests in joint ventures:


Joint venture Principal activityCountry of

incorporation 2015 2014

Irancell Telecommunication Company Services(PJSC)

Network operator Iran 49 49

Mascom Wireless Botswana ProprietaryLimited

Network operator Botswana 53.1 53.1

Swazi MTN Limited Network operator Swaziland 30 30Deci Investments Proprietary Limited Holding company Botswana 33.3 33.3Middle East Internet Holding S.A.R.L (MEIH)1 Telecommunications Luxembourg 50 50Africa Internet Holding GmbH (AIH)2 Telecommunications Berlin 33.3 33.3International Digital Services Middle East

Limited (iME)3

Telecommunications Dubai 50 —

1 The entity operates in various countries across the Middle East.2 The entity operates in various countries across Africa.3 The entity operates in Iran.

The joint ventures listed above are unlisted and their countries of incorporation are also their principal place ofoperation unless otherwise indicated.

The Iranian economy was previously classified as hyperinflationary. Iran ceased being regarded as ahyperinflationary economy during 2015, resulting in hyperinflation accounting relating to IrancellTelecommunication Company Services (PJSC) not being applied from 1 July 2015 onward. The amountsexpressed in measuring unit current at 30 June 2015 are treated as the basis for the carrying amounts of Irancellgoing forward.

Baseyear

Generalpriceindex

Inflationrate(%)

31 December 2013 2011 187 19.6931 December 2014 2011 224 20.0030 June 2015 2011 247 14.00

The cumulative inflation rate over three years as at 30 June 2015 was 63.74% (31 December 2014: 102.80%).

The average adjustment factor used for 2015 was 1.09 (2014: 1.11).

All joint ventures have a year end consistent with that of the Company with the exception of IrancellTelecommunication Company Services (PJSC) that has a year end of 21 December, in line with statutoryrequirements in Iran.

F-102




IrancellTelecom-

municationCompanyServices(PJSC)

Rm

MascomWireless

BotswanaProprietary

LimitedRm

AfricaInternetHoldingGmbH(AIH)Rm

MiddleEast

InternetHoldingS.A.R.L(MEIH)

Rm

Inter-nationalDigital

ServicesMiddle

EastLimited(iME)Rm

OtherRm

TotalRm

2014Balance at beginning of the year 8,830 1,396 — — — 322 10,548Additions — — 2,453 1,773 — — 4,226Share of results after tax 4,113 250 (94) (30) — 96 4,335Dividend income (2,400) (243) — — — (71) (2,714)Other equity movements — (87) — — — — (87)Other comprehensive income and effect of

movements in exchange rates includingthe effect of hyperinflation1 3,433 13 (106) (105) — (4) 3,231

Balance at end of the year 13,976 1,329 2,253 1,638 — 343 19,539

2015Balance at beginning of the year 13,976 1,329 2,253 1,638 — 343 19,539Share of results after tax 1,903 345 (418) (129) (78) 96 1,719Dividend income (2,513) (231) — — — (116) (2,860)Other comprehensive income and effect of

movements in exchange rates includingthe effect of hyperinflation1 3,908 (92) 432 (364) 656 (10) 4,530

Balance at end of the year 17,274 1,351 2,267 1,145 578 313 22,928

1 Refer to note 1.3.3 for the Group’s accounting policy with regard to those entities whose functional currency is the currency of a hyper-inflationary economy.

F-103




Summarised financial information of joint ventures

Set out below is the summarised financial information of each joint venture that is material to the Group. Thesummarised financial information is adjusted to reflect adjustments made by the Group when applying the equitymethod including fair value adjustments at acquisition and modifications for differences in accounting policy.


(PJSC)Africa Internet

Holding GmbH (AIH)1

Mascom WirelessBotswana Proprietary

Limited

2015 2014 2015 2014 2015 2014Rm Rm Rm Rm Rm Rm

Summarised statement of financial positionASSETSNon-current assets 52,921 35,184 1,856 44 1,393 1,050

Property, plant and equipment 44,096 28,221 120 38 1,172 903Intangible assets 8,706 6,955 5 5 219 128Loans and other non-current receivables 12 8 1,731 1 1 1Investment in associate 107 — — — — —Deferred tax assets — — — 1 18

Current assets 28,946 25,925 1,405 3,586 349 679

Inventories 106 141 142 109 8 10Trade and other receivables 8,778 11,856 255 3,116 154 108Restricted cash 206 1,345 — — — —Cash and cash equivalents 19,856 12,583 616 329 187 561Other current assets — — 392 32 — —

Total assets 81,867 61,109 3,261 3,630 1,742 1,729

LIABILITIESNon-current liabilities 9,757 4,193 16 13 189 301

Borrowings 2,117 — 14 — — 121Deferred tax liabilities 7,304 3,951 1 — 120 109Provisions 333 242 — — — —Other non-current liabilities 3 — 1 13 69 71

Current liabilities 37,057 28,575 808 336 654 381

Trade and other payables 26,044 20,034 440 223 484 337Unearned income 1,760 1,507 6 — — —Provisions 291 183 29 16 — —Taxation liabilities 1,903 1,714 333 74 33 4Borrowings 7,059 5,137 — 15 137 40Other current liabilities — — — 8 — —

Total liabilities 46,814 32,768 824 349 843 682

Net assets 35,053 28,341 2,437 3,281 899 1,047Non-controlling interests – deficit in net

assets — — 450 268 — —

Total net assets 35,053 28,341 2,887 3,549 899 1,047% ownership interest held 49 49 33.3 33.3 53.1 53.1

Interest in joint venture excluding goodwill 17,176 13,887 961 1,183 477 556Adjustment up to 31 December — — (101) (42) — —Goodwill 98 89 1,407 1,112 874 773

Balance at end of the year 17,274 13,976 2,267 2,253 1,351 1,329

1 Summarised financial information presented with regard to the Group’s interest in AIH is as per the latest available managementaccounts at 30 September. Preparation of financial statements at 31 December by AIH was impracticable. Appropriate adjustments havebeen made to the Group’s interest and share of results for the effects of significant transactions and events that occurred for the threemonths up to the reporting date.

F-104



9.2 Investment in associates and joint ventures (continued)Irancell

TelecommunicationCompany Services

(PJSC)Africa Internet

Holding GmbH (AIH)1

Mascom WirelessBotswana Proprietary

Limited

2015 2014 2015 2014 2015 2014Rm Rm Rm Rm Rm Rm

Summarised income statementRevenue 28,463 27,113 2,150 383 1,779 1,578Other income — 119 — — — —Operating expenses (17,338) (15,480) (4,198) (888) (734) (763)

EBITDA 11,125 11,752 (2,048) (505) 1,045 815Depreciation of property, plant and equipment (4,707) (4,300) — — (138) (131)Amortisation of intangible assets (1,174) (955) — — (97) (90)

Operating profit/(loss) 5,244 6,497 (2,048) (505) 810 594Finance income 3,003 2,459 — 224 15 15Finance costs (1,601) (692) — (1) (11) (13)Net monetary gain 797 1,892 — — — —

Profit/(loss) before tax 7,443 10,156 (2,048) (282) 814 596Income tax expense (3,560) (1,763) — — (165) (125)

Profit/(loss) after tax 3,883 8,393 (2,048) (282) 649 471

Non-controlling interests — — (794) — — —Profit/(loss) attributable to equity holders of the

Company 3,883 8,393 (1,254) (282) 649 471

% ownership interest held 49 49 33.3 33.3 53.1 53.1

Share of results of joint ventures after tax 1,903 4,113 (418) (94) 345 250

A receivable of R8,158 million (2014: R5,640 million) from Irancell Telecommunication Company Services(PJSC) has not been received by the Group as at 31 December 2015 but is still considered recoverable, as thefinancial sanctions in Iran have been lifted.

During 2014, the Group acquired a 50% interest in Middle East Internet Holding S.A.R.L (MEIH), a jointventure, for EUR120 million consisting of a EUR40 million cash payment and EUR80 million contingentconsideration. The net fair values of the joint venture’s assets and liabilities were provisional at the end of 2014.The net fair values of the assets and liabilities were finalised during 2015 and no material changes to thepreviously reported results were required. MEIH is unlisted and has a year end consistent with that of the Group.

During the year, the Group formed iME by moving EUR40 million, being the Iranian business interestspreviously held in MEIH to the newly formed entity. There was no resulting change in the total investment heldprior to and subsequent to the restructure.

During 2014, the Group acquired a 33.3% interest in Africa Internet Holding GmbH (AIH) for EUR168 million.Millicom International Cellular SA (Millicom) initially also agreed to acquire 33.3% of the shares in AIH, butheld a back-out right in terms of which it was entitled to cancel a portion of its take-up of these shares. Millicomexercised this back-out right on 8 May 2015. MTN and Rocket Internet SE, the two other shareholders in AIH,held an additional investment right which entitled them to take up these shares released under Millicom’s back-out right. MTN exercised its right to take up half of these shares on 10 July 2015. Subsequently, otheragreements subject to conditions precedent were entered into between the shareholders resulting in theimplementation of the back-out right and the additional investment rights not yet being effective at 31 December2015. Consequently, MTN’s interest in AIH at year end remains 33.3%.

1 Summarised financial information presented with regard to the Group’s interest in AIH is as per the latest available managementaccounts at 30 September. Preparation of financial statements at 31 December by AIH was impracticable. Appropriate adjustments havebeen made to the Group’s interest and share of results for the effects of significant transactions and events that occurred for the threemonths up to the reporting date.

F-105




Events after reporting period

The Group committed a further EUR135 million investment in AIH, the ultimate parent company of Jumia. Theinvestment forms part of a wider capital funding to AIH. The funds will enable it to leverage the significantgrowth of Jumia and to capitalise on the significant opportunities in Africa. This investment will increase MTNGroup’s interest in the joint venture from 33.3% to 41.4%. The transaction is subject to customary closingprocedures.

Summarised financial information was not presented with regards to the Group’s interest in MEIH in 2014, as theentity was in its start-up phase and preparation of financial statements at the Group reporting date wasimpracticable. Appropriate adjustments were made to the Group’s interest and share of results for the effects ofsignificant transactions and events that occurred up to the reporting date.

Middle EastInternet

Holdings S.A.R.L

InternationalDigital Services

Middle EastLimited (iME)1

2015Rm

2015Rm

Summarised statement of financial positionASSETSNon-current assets 679 457Current assets 489 39

Total assets 1,168 496

LIABILITIESCurrent liabilities 90 18

Total liabilities 90 18

Net assets 1,078 478Non-controlling interest – deficit in net assets 16 —

Total net assets 1,094 478% ownership interest held 50 50

Interest in joint venture excluding goodwill 547 239Adjustment up to 31 December2 (39) (20)Goodwill 637 359

Balance at end of the year 1,145 578

Summarised income statementRevenue 126 38Operating expenses (383) (194)

EBITDA and loss after tax (257) (156)% ownership interest held 50 50

Share of results after tax (129) (78)

1 No comparative information disclosed as IME was incorporated during the current year.2 Summarised financial information presented with regard to the Group’s interest in MEIH and iME is as per the latest available

management accounts at 30 September. Preparation of the financial statements at 31 December by MEIH and iME was impracticable.Appropriate adjustments have been made to the Group’s interest and share of results for the effects of significant transactions and eventsthat occurred for the three months up to the reporting date .

F-106




Commercial commitments


The investment in Irancell is subject to a number of sovereign, regulatory and commercial risks, which couldresult in the Group failing to realise full market value of its investment should it be required to dispose of anyportion thereof. In this regard, 21% of Irancell is required to be offered to members of the Iranian public withinapproximately three years from the date of the licence. Such offering could have a proportional dilutory effect onthe Company’s 49% shareholding, effectively reducing its shareholding by 10.3% to 38.7%. Local managementtogether with the shareholders continue to engage the regulator on this matter.

2015 2014Rm Rm

Capital commitmentsShare of capital commitments of joint ventures for the acquisition of property, plant and

equipment and software– Contracted 3,077 3,153– Authorised but not contracted 1,046 1,064

4,123 4,217

Operating lease commitmentsThe Group’s share of future aggregate minimum lease payments under non-cancellable operating

lease arrangements are as follows:Not later than one year 24 16

24 16

Contingent liabilities relating to joint ventures

There are no significant contingent liabilities relating to the Group’s interests in its joint ventures.

Licences

Licences awarded to the joint ventures are set out below:


Irancell Telecommunication CompanyServices (PJSC)

2GWimax1

3GLTE

07/09/200628/02/200917/08/201423/08/2015

15 years6 years7 years6 years

Mascom Wireless Botswana 900MHz1,800MHz2,100MHz

13/06/2013 15 years

Swazi MTN Limited 900MHz1,800MHz2,100MHz

28/11/2008

26/09/2011

10 years

7 years

1 Renewal application lodged.

Events after reporting period

Investment in TravelLab Global AB (Travelstart)

On 22 January 2016, MTN Group made an investment amounting to US$30 million in Travelstart. Travelstart isan online travel agency focused on emerging markets. MTN Group jointly controls Travelstart, indirectly througha fund managed by its venture capital fund manager Amadeus Capital Partners.

F-107



9.3 Changes in shareholding

Changes in shareholding of subsidiaries are transactions that result in increases or reductions in the interest heldin a subsidiary of the Group, but which do not result in a loss of control and are accounted for as transactionswith non-controlling shareholders as disclosed in note 1.3.1.

9.3.1 Current year changes in shareholding

9.3.1.1 MTN Côte d’Ivoire SA

New licence requirements in Ivory Coast require that 15% of the share capital of MTN Côte d’Ivoire SA be heldby an Ivorian citizen. On 21 May 2015, MTN Mauritius disposed of 8% of its interest in MTN Côte d’Ivoire SAto Teyliom Global Capital Limited (TGCL), a fellow subsidiary of an entity which already holds a 7% interest inMTN Côte d’Ivoire SA. MTN Dubai advanced an interest-bearing loan to TGCL in order to effect the purchase.The loan is repayable in 20 years’ time, and is secured by the 8% holding in MTN Côte d’Ivoire SA. Thetransaction was subject to certain conditions subsequent at agreement signature date, consequently although theshares were legally sold at that date, the transaction was only effective on 15 December 2015 for accountingpurposes. At a Group level, it is viewed that an option was granted to TGCL, consequently neither the loan toTGCL nor the disposal of the 8% interest is recognised. As a result, the legal ownership percentage and theaccounting ownership percentage differs by 8% at 31 December 2015. The option resulted in the recognition ofan IFRS 2 charge at a Group level. This charge was capitalised as part of the licence cost as it is considered to bea cost which is directly attributed to the cost of acquiring this licence.

9.3.2 Prior year changes in shareholding

The were no transactions with non-controlling shareholders or changes in shareholding of any of the Group’ssubsidiaries during 2014.

9.4 Business combinations

9.4.1 Current year business combinations

9.4.1.1 Visafone Communications Limited

On 31 December 2015, MTN Nigeria acquired 100% of the share capital of Visafone Communications Limited(Visafone) for R3.432 million. As a result, the Group obtained control of Visafone. Control over Visafone willenable the Group to improve the quality of broadband services for its subscribers. The acquisition seeks toleverage resources for service enhancement and reflects the Group’s concerted efforts to deepen the growth androll-out of broadband services across Nigeria.

Visafone contributed no revenues and net profit to the Group for the period ended 31 December 2015 as thebusiness was acquired on the last day of the year. The consolidated pro forma revenue and profit for the yearended 31 December 2015 as though the acquisition had occurred on 1 January 2015 cannot be disclosed as theaudited financial statements of Visafone for the year ended 31 December 2015 are not yet available.

The following table summarises the consideration transferred by the Group, the fair value of assets acquired andliabilities assumed at the acquisition date:

2015Rm

Consideration transferredCash outflow on acquisition 3,040Retention amount 392

Cash outflow 3,432

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9.4 Business combinations (continued)

9.4.1 Current year business combinations (continued)

Retention amount

The retention amount represents an amount deposited into an escrow account by the Group as agreed bythe parties to the acquisition, to be utilised for the satisfaction of outstanding liabilities, the shareholder debt,warranty claims and termination payments arising from the termination of supplier contracts in respect of theacquisition. The Group did not assume any liabilities, other than deferred tax, from the acquisition of Visafone.The retention amount is disclosed as restricted cash as at 31 December 2015.

2015Rm

Assets acquiredIntangible assets 3,752Liabilities assumedDeferred tax liabilities (1,062)

Total identifiable net assets 2,690

Total consideration paid 3,432Net identifiable assets acquired (2,690)

Goodwill 742

The composition of goodwill will be analysed on finalisation of the business combination accounting.

Measurement of fair values

The valuation techniques applied in measuring the fair value of material assets acquired are as follows:

Asset acquired Valuation technique

Intangible assets Market approach or comparable transaction method was used which estimates the fair value ofa licence by referring to the purchase prices paid for similar licences across different markets.

The fair values of the acquired identifiable assets have been determined on a provisional basis, pending receipt ofthe final valuations for the assets.

9.4.2 Prior year business combinations

9.4.2.1 Afrihost Proprietary Limited

In November 2014, the Group acquired 50% plus one share of the share capital of Afrihost Proprietary Limited(Afrihost) for R408 million. As a result, the Group obtained control of Afrihost. Afrihost was acquired to enablethe Group to drive their accelerated SME strategy and provide scale for the Group’s virtual market, content andcloud offering.

The Group elected to measure the non-controlling interest in the acquiree at the proportionate share of its interestin the acquiree’s identifiable net assets.

F-109




9.4.2 Prior year business combinations (continued)

The fair values of the identifiable assets and liabilities as at the date of acquisition were:

2014Rm

Consideration transferredCash 408Cash in subsidiary acquired (20)

Cash outflow on acquisition 388

Assets acquired 383

Property, plant and equipment 44Intangible assets 307Deferred tax assets 2Inventories 1Trade and other receivables 9Cash and cash equivalents 20

Liabilities assumed 204

Deferred tax liabilities 86Other non-current liabilities 7Trade and other payables 109Taxation payable 2

Total identifiable net assets 179

Total consideration paid 408Non-controlling interest in Afrihost Proprietary Limited 90Net identifiable assets acquired (179)

Goodwill 319

The net assets recognised in the 31 December 2014 financial statements were based on a provisional assessment.The amounts were finalised during 2015, and no material changes to the previously reported results wererequired.

9.4.2.2 Nashua Mobile subscriber base

During November 2014, the Group acquired its Nashua Mobile subscriber base from Nashua Mobile ProprietaryLimited for R1,246 million. The subscriber base was acquired to enable the Group to consolidate the MobileTelephone Networks Proprietary Limited postpaid subscriber base in one entity and own the relationship with thesubscribers.

F-110




9.4.2 Prior year business combinations (continued)


2014Rm

Consideration transferredCash outflow on acquisition 1,246

Assets acquired 926

Intangible assets 732Loans and other non-current receivables 194


Deferred tax liabilities 205


Total consideration paid 1,246Net identifiable assets (721)

Goodwill 525

The net assets recognised in the 31 December 2014 financial statements were based on a provisional assessment.The amounts were finalised during 2015, and no material changes to the previously reported results wererequired.

9.4.3 Business combinations subsequent to reporting period

9.4.3.1 Altech Autopage subscriber base

On 11 February 2016, the Group acquired its Altech Autopage subscriber base from Altron TMT ProprietaryLimited for R670 million, including contingent consideration of R30 million payable to MTN. The acquisition ofthe subscriber base will enable the Group to service and interact directly with its customers and will reduce therelated commission expense.


Rm

Consideration transferredCash 670Contingent consideration (30)

Total consideration transferred 640

Contingent consideration

The contingent consideration arrangement requires an adjustment to the purchase price based on the size andfinancial quality of the base as at the effective date.

F-111




9.4.3 Business combinations subsequent to reporting period (continued)

Recognised amounts of identifiable assets acquired and liabilities assumed:

Assets acquired 595



Deferred tax liabilities 167


Total consideration 640Net identifiable assets (428)

Goodwill 212

The goodwill of R212 million comprises the fair value of expected synergies arising from acquisition.

Measurement of fair value


Asset acquired Valuation technique

Intangible assets Multi-period excess earnings methodReceivables Present value of expected cash flows

Given the limited period between the acquisition date and the authorisation date of the financial statements,management has not yet completed the purchase price allocation and the fair values of the acquired identifiableassets as well as the contingent consideration have been determined on a provisional basis, pending receipt of thefinal valuations for the assets.

9.5 Joint operations

In respect of its interest in joint operations, the Group recognises in its financial statements its share of the assetsheld jointly, classified according to the nature of the assets, any liabilities that it has incurred, its share of anyliabilities incurred jointly with the other joint operators in relation to the joint operation, any income from thesale or use of its share of the output of the joint operation, together with its share of any expenses incurred by thejoint operation and any expenses that it has incurred in respect of its interest in the joint operation.

When the Group acquires an interest in a joint operation in which the activity of the joint operation constitutes abusiness, identifiable assets acquired and liabilities assumed are measured initially at their fair values at theacquisition date. Acquisition-related costs are recognised in profit or loss. Goodwill is measured as the excess ofthe sum of the consideration transferred over the net of the acquisition date amounts of the identifiable assetsacquired and liabilities assumed.

When the Group increases its interest in a joint operation in which the activity of the joint operation constitutes abusiness, by acquiring an additional interest in the joint operation, the Group’s previously held interests in thejoint operation are not remeasured if the joint operator retains joint control.

The Group has entered into agreements with several other companies to construct high capacity fibre-opticsubmarine cable systems.

F-112



9.5 Joint operations (continued)

The Group has the following interests in jointly controlled operations:

Ownership interest held

2015 2014% %

Joint operationEurope India Gateway Submarine Cable System 7.12 7.09West Africa Cable System 11.06 11.45Eassy Cable System 16.26 16.26Africa Coast to Europe Cable System 8.67 —

During the year, the Group entered into a new agreement to construct a high capacity fibre-optic submarine cablesystem, named Africa Coast to Europe Cable System. The cost to the Group amounts to US$51.6 million.

The following table presents, on a condensed basis, the Group’s share of assets and liabilities, revenue andexpenses of the jointly controlled operations which are included in the consolidated statement of financialposition and income statement:

2015 2014Rm Rm

Revenue 35 21Expenses (299) (212)

Total assets 3,133 1,977Total liabilities (excluding unearned income) (129) (124)Unearned income (161) (132)

9.6 Interest in subsidiaries

The subsidiaries in which MTN Group Limited has direct and indirect interests are set out innote 9.1. A summary of the Group’s subsidiaries with material non-controlling interests is presented below:

Non-controlling interests

Principal place ofbusiness

2015Rm

2014Rm

SubsidiaryMTN Nigeria Communications Limited Nigeria 2,365 2,306MTN Côte d’Ivoire S.A. Côte d’Ivoire 1,284 971Spacetel Benin SA Benin 392 346Mobile Telephone Networks Cameroon Limited Cameroon 469 450Other 959 852

5,469 4,925

F-113



9.6 Interest in subsidiaries (continued)

Set out on the next page is the summarised financial information for each subsidiary that has non-controllinginterests that are material to the Group. Unless otherwise stated, the Group’s subsidiaries’ countries ofincorporation are also their principal place of operation. The summarised financial information presented isbefore intercompany eliminations.

MTN NigeriaCommunications Limited

MTNCôte d’Ivoire S.A.

2015 2014 2015 2014

% ownership interest held by non-controlling interests 21.17 21.17 33.172 33.172

Rm Rm Rm Rm

Summarised statement of financial positionNon-current assets1 47,026 35,423 8,420 4,818Current assets 30,011 25,267 2,126 1,676

Total assets 77,037 60,690 10,546 6,494

Non-current liabilities 31,871 27,541 871 302Current liabilities 33,993 22,256 5,804 3,264


Summarised income statementRevenue 51,942 53,995 6,424 6,418EBITDA 18,180 31,620 2,195 2,475Profit before tax 7,221 19,184 1,283 1,704Income tax expense (4,264) (5,360) (313) (587)

Profit after tax 2,957 13,824 970 1,117

Profit attributable to non-controlling interests 626 2,927 322 371Dividends paid to non-controlling interests 1,328 3,366 373 341Summarised statement of cash flowsNet cash generated from operating activities 13,065 11,226 486 1,195Net cash used in investing activities (8,929) (7,078) (2,247) (1,158)Net cash (used in)/from financing activities (4,188) (49) 1,865 (286)

Net (decrease)/increase in cash and cash equivalents (52) 4,099 104 (249)Net cash and cash equivalents at beginning of the year 13,032 9,513 437 707Exchange gains/(loss) on cash and cash equivalents 2,597 (580) (111) (21)

Net cash and cash equivalents at end of the year 15,577 13,032 430 437

1 Excludes goodwill on consolidation of subsidiaries.2 The non-controlling interests hold 41.17% of the issued ordinary share capital of MTN Côte d’Ivoire S.A. However, the effective

ownership for accounting purposes is 33.17% due to outstanding funding provided by the Group to the non-controlling interests toacquire ordinary share capital in MTN Côte d’Ivoire (see note 9.3.1.1).

F-114



9.6 Interest in subsidiaries (continued)

Spacetel Benin SA


Limited

2015 2014 2015 2014

% ownership interest held by non-controlling interests 25 25 201 201

Rm Rm Rm Rm


Total assets 4,858 3,628 8,010 6,687

Non-current liabilities 1,039 683 983 200Current liabilities 2,250 1,562 4,682 4,235


Summarised income statementRevenue 3,633 3,316 5,806 6,194EBITDA 1,280 1,380 2,101 2,651Profit before tax 791 878 1,212 1,905Income tax expense 1 1 (635) (852)

Profit after tax 792 879 577 1,053

Profit attributable to non-controlling interests 198 220 115 211Dividends paid to non-controlling interests 263 173 175 365Summarised statement of cash flowsNet cash generated from operating activities 21 961 276 1,105Net cash used in investing activities (121) (264) (3,165) (608)Net cash (used in)/from financing activities (30) (204) 537 (272)

Net (decrease)/increase in cash and cash equivalents (130) 493 (2,352) 225Net cash and cash equivalents at beginning of the year 927 467 2,971 2,857Exchange gains/(losses) on cash and cash equivalents 173 (33) 25 (111)

Net cash and cash equivalents at end of the year 970 927 644 2,971

1 The non-controlling interests hold 30% of the issued ordinary share capital of Mobile Telephone Networks Cameroon. However, theeffective ownership for accounting purposes is 20% due to outstanding funding provided by the Group to the non-controlling interests toacquire ordinary share capital in Mobile Telephone Networks Cameroon.

2 Excludes goodwill on consolidation of subsidiaries.

F-115


10 RELATED PARTIES

10.1 Related party transactions

Related party transactions constitute the transfer of resources, services or obligations between the Group and aparty related to the Group, regardless of whether a price is charged. For the purposes of defining related partytransactions with key management, key management has been defined as directors and the Group’s executivecommittee and includes close members of their families and entities controlled or jointly controlled by theseindividuals.

2015Rm

2014Rm

Key management compensationSalaries and other short-term employee benefits 97 77Post-employment benefits 8 7Other benefits 26 8Bonuses 2 62Compensation for loss of office 54 —

Total 187 154

Details of directors’ remuneration are disclosed in note 10.2 of the financial statements.

Subsidiaries

Details of investments in subsidiaries are disclosed in note 9.1 of the financial statements.

Changes in shareholding

There were no transactions with non-controlling shareholders or changes in shareholding in any of the Group’ssubsidiaries during the current and prior years (see note 9.3).

Joint ventures

Details of the Group’s investments in and share of results and dividend income from its joint ventures aredisclosed in note 9.2 of the financial statements.

Details of other transactions and balances with joint ventures are set out below:

Net income for the yearNet balance receivable/

(payable)

2015Rm

2014Rm

2015Rm

2014Rm

Swazi MTN Limited 50 6 101 36Mascom Wireless Botswana Proprietary Limited 1 2 8 —Irancell Telecommunication Company Services (PJSC) 713 212 17,988 11,070Middle East Internet Holding S.A.R.L (MEIH) — — (672) (1,115)African Internet Holding GmbH (AIH) — — (100) (1,592)International Digital Services Middle East Holding GmbH

(iME) — (334)

Associates

Details of the Group’s investments in and share of results and dividend income from its associates are disclosedin note 9.2 of the financial statements.

F-116


10 RELATED PARTIES (continued)

10.1 Related party transactions (continued)

Details of other transactions and balances with associates are set out below:

Net income for the year Net balance receivable

2015Rm

2014Rm

2015Rm

2014Rm

Belgacom International Carrier Services SA 331 386 112 141Ghana Tower InterCo B.V. 177 159 1,112 2,025Uganda Tower InterCo B.V. 50 44 1,162 889Nigeria Tower InterCo B.V. 166 — 2,900 1,039

Transactions between members of the Group

Scancom Limited (MTN Ghana) entered into operating lease agreements with Ghana Tower InterCo B.V. Theoperating lease commitments amount to R8,353 million at 31 December 2015 (2014: R2,762 million). The rentalamounts escalate every year by inflation and the initial term is 10 years, followed by four times five-year renewalperiods.

MTN Uganda Limited entered into operating lease agreements with Uganda Tower InterCo B.V. The operatinglease commitments amount to R3,109 million (2014: R2,364 million) at 31 December 2015. The rental amountsescalate every year by inflation and the initial term is 10 years, followed by four times five-year renewal periods.

MTN Nigeria Communications Limited entered into operating lease agreements with INT Towers Limited, awholly owned subsidiary of Nigeria Tower InterCo B.V. The operating lease commitments amounted to R42,616million (2014: R17,843 million) at 31 December 2015. The initial term is 10 years, followed by four timesfive-year renewal periods.

Shareholders

The principal shareholders of the Company are disclosed in Annexure 1, which is unaudited.

10.2 Emoluments, equity compensation and dealings in ordinary shares

Directors’ emoluments and related payments

2015Date

appointed Salaries

Post-employment

benefitsOther

benefits*

Compensationfor lossof office Sub-total

Sharegains** Total

R000 R000 R000 R000± R000 R000 R000

Executive directorsRS Dabengwa^ 1/10/2001 8,426 1,080 2,882 23,664 36,052 4,529 40,581BD Goschen 22/07/2013 7,567 970 292 — 8,829 427 9,256PF Nhleko^^ 9/11/2015 5,000 — — — 5,000 — 5,000

Total 20,993 2,050 3,174 23,664 49,881 4,956 54,837

* Includes medical aid and unemployment insurance fund.** Pre-tax gains on share-based payments.^ Resigned 9/11/2015.^^ Fees paid to Captrust Investments Proprietary Limited.± Compensation for loss of office comprises notice pay and a restraint of trade.

F-117



10.2 Emoluments, equity compensation and dealings in ordinary shares (continued)Date

appointed Retainer# Attendance#Specialboard

Strategysession

Ad hocwork Total

R000 R000 R000 R000 R000 R000

Non-executive directorsPF Nhleko^ 28/05/2013 1,976 1,021 60 371 57 3,485KC Ramon@ 1/06/2014 322 661 52 154 96 1,285KP Kalyan 13/06/2006 343 602 40 154 8 1,147AT Mikati*† 18/07/2006 1,181 1,126 181 241 384 3,113MJN Njeke 13/06/2006 331 442 56 106 20 955JHN Strydom 11/03/2004 309 585 60 154 41 1,149AF van Biljon 1/11/2002 212 480 60 154 73 979J van Rooyen 18/07/2006 369 827 60 106 108 1,470MLD Marole 1/01/2010 332 681 60 154 8 1,235NP Mageza 1/01/2010 403 743 40 106 20 1,312A Harper* 1/01/2010 1,215 1,358 181 241 104 3,099F Titi± 1/07/2012 260 397 52 154 — 863S Kheradpir^^^^* 8/07/2015 425 675 26 239 — 1,365

Total 7,678 9,598 928 2,334 919 21,457

* Fees have been paid in euro.† Fees are paid to M1 Limited.^^^^ Appointed 8/07/2015.± Resigned 31/12/2015.# Retainer and attendance fees include fees for board and committee representation and meetings.@ Fees paid to Anglogold Ashanti Limited.^ Fourth quarter fees paid to Captrust Investments Proprietary Limited.

2014Date

appointed Salaries

Post-employment

benefitsOther

benefits* Bonuses Sub-totalShare

gains** TotalR000 R000 R000 R000 R000 R000 R000

Executive directorsRS Dabengwa 1/10/2001 9,334 1,197 858 13,257 24,646 3,482 28,128BD Goschen 22/07/2013 5,567 714 286 6,777 13,344 — 13,344

Total 14,901 1,911 1,144 20,034 37,990 3,482 41,472

* Includes medical aid and unemployment insurance fund.** Pre-tax gains on share-based payments.

Dateappointed Retainer# Attendance#

Specialprojects

Strategysession

Ad hocwork Total

R000 R000 R000 R000 R000 R000

Non-executive directorsPF Nhleko 28/05/2013 1,084 608 92 183 — 1,967KC Ramon^ 1/06/2014 123 187 — 96 21 427KP Kalyan 13/06/2006 332 487 97 96 — 1,012AT Mikati*† 18/07/2006 1,163 707 111 219 97 2,297MJN Njeke 13/06/2006 311 388 20 96 — 815JHN Strydom 11/03/2004 299 459 20 96 42 916AF van Biljon 1/11/2002 312 401 68 96 63 940J van Rooyen 18/07/2006 364 533 90 96 21 1,104MLD Marole 1/01/2010 310 775 21 96 — 1,202NP Mageza 1/01/2010 361 566 42 96 20 1,085A Harper* 1/01/2010 1,177 852 — 219 — 2,248F Titi 1/07/2012 253 352 — 48 — 653

Total 6,089 6,315 561 1,437 264 14,666

* Fees have been paid in euro.† Fees are paid to M1 Limited.# Retainer and attendance fees include fees for board and committee representation and meetings.^ Fourth quarter fees paid to Anglogold Ashanti Limited.

F-118



10.2 Emoluments, equity compensation and dealings in ordinary shares (continued)

Prescribed officers’ emoluments and related payments

2015 Salaries

Post-employment

benefitsOther

benefits

Compensationfor lossof office Bonuses Sub-total

Sharegains Total

R000 R000 R000 R000 R000 R000 R000 R000

Prescribed officersJA Desai 9,490 949 2,586 — — 13,025 295 13,320PD Norman 4,473 573 60 — — 5,106 1,465 6,571A Farroukh1 5,444 544 555 — — 6,543 2,208 8,751SA Fakie2 331 44 1,209 — — 1,584 755 2,339KW Pienaar3 4,831 619 10,965 — — 16,415 982 17,397P Verkade4 1,021 102 21 — — 1,144 345 1,489Z Bulbulia5 3,691 473 785 13,254@ 1,475 19,678 621 20,299M Ikpoki5 6,603 754 2,274 17,260# — 26,891 — 26,891MD Fleischer 5,044 647 123 — — 5,814 — 5,814M Nyati 3,644 467 3,326 — 634 8,071 — 8,071H Singh6 508 65 129 — — 702 — 702S Sooklal7 4,006 514 88 — — 4,608 — 4,608A Fernandez8 5,503 550 88 — — 6,141 — 6,141

Total 54,589 6,301 22,209 30,514 2,109 115,722 6,671 122,393

1 Resigned on 31/07/2015.2 Retired on 16/02/2015.3 Retired on 31/12/2015.4 Contract ended on 31/03/2015.5 Mutual separation on 31/12/2015.6 Appointed on 1/11/2015.7 Appointed on 1/02/2015.8 Appointed on 1/04/2015.@ Compensation for loss of office comprises severance, restraint of trade and gratuity pay.# Severance, leave and lifestyle benefits.

2014 Salaries

Post-employment

benefitsOther

benefits Bonuses Sub-totalSharegains Total

R000 R000 R000 R000 R000 R000 R000

Prescribed officersJA Desai 7,865 786 2,230 9,217 20,098 1,460 21,558PD Norman 4,233 543 256 3,634 8,666 1,179 9,845A Farroukh 7,747 775 942 6,573 16,037 1,440 17,477SA Fakie 3,161 412 402 2,991 6,966 911 7,877KW Pienaar 4,570 586 363 5,309 10,828 1,018 11,846P Verkade 4,144 414 1,067 3,515 9,140 — 9,140Z Bulbulia 3,527 452 286 858 5,123 598 5,721M Ikpoki 6,505 586 1,896 4,440 13,427 — 13,427M Fleischer^ 4,433 568 40 4,271 9,312 — 9,312M Nyati^^ 871 112 18 837 1,838 — 1,838

Total 47,056 5,234 7,500 41,645 101,435 6,606 108,041

^ Appointed 1/02/2014.^^ Appointed 1/10/2014.

F-119




Equity compensation benefits for executive directors and directors of major subsidiaries in respect of the shareappreciation rights and share rights schemes

Offer date

Strikeprice

RVesting

date

Numberoutstanding

at31 December

2014Exercised

2015Exercise

date

Exerciseprice

R

Numberoutstanding

at31 December

2015

RS Dabengwa*31/05/2006 56.83 30/11/2008 13,920 — — — 13,92031/05/2006 56.83 30/11/2009 26,440 — — — 26,44031/05/2006 56.83 30/11/2010 40,440 — — — 40,44021/11/2006 71.00 21/11/2008 8,680 — — — 8,68021/11/2006 71.00 21/11/2009 8,680 — — — 8,68021/11/2006 71.00 21/11/2010 13,020 — — — 13,02021/11/2006 71.00 21/11/2011 13,020 — — — 13,02019/03/2008 126.99 19/03/2010 14,440 — — — 14,44019/03/2008 126.99 19/03/2011 14,440 — — — 14,44019/03/2008 126.99 19/03/2012 21,660 — — — 21,66019/03/2008 126.99 19/03/2013 21,660 — — — 21,660

Total 196,400 — — — 196,400

* Resigned 9/11/2015.

BD Goschen19/03/2008 126.99 19/03/2010 12,260 — — — 12,26019/03/2008 126.99 19/03/2011 12,260 — — — 12,26019/03/2008 126.99 19/03/2012 18,390 — — — 18,39019/03/2008 126.99 19/03/2013 18,390 — — — 18,390

Total 61,300 — — — 61,300

F Moolman19/03/2008 126.99 19/03/2010 10,200 — — — 10,20019/03/2008 126.99 19/03/2011 10,200 — — — 10,20019/03/2008 126.99 19/03/2012 15,300 — — — 15,30019/03/2008 126.99 19/03/2013 15,300 — — — 15,300

Total 51,000 — — — 51,000

F-120




Equity compensation benefits for executive directors, prescribed officers, Company secretary of the MTN Groupand directors of major subsidiaries in respect of the performance share plan

Offer dateVesting

date

Numberoutstanding

at31 December

2014 Exercised ForfeitedExercise

date

Exerciseprice

R

Numberoutstanding

at31 December

2015

RS Dabengwa*29/12/2011 29/12/2014 111,600 (21,985) (89,615) 17/03/2015 218.62 —28/12/2012 28/12/2015 94,600 — (94,600) — — —20/12/2013 19/12/2016 87,800 — (87,800) — — —19/12/2014 18/12/2017 83,100 — (83,100) — — —

Total 377,100 (21,985) (355,115) — — —

* Resigned 9/11/2015.

BD Goschen29/12/2011 29/12/2014 22,300 (4,393) (17,907) 17/03/2015 218.62 —28/12/2012 28/12/2015 26,500 — — — — 26,50020/12/2013 19/12/2016 43,700 — — — — 43,70019/12/2014 18/12/2017 54,700 — — — — 54,700

Total 147,200 (4,393) (17,907) — — 124,900

PD Norman29/12/2011 29/12/2014 36,100 (7,112) (28,988) 17/03/2015 218.62 —28/12/2012 28/12/2015 30,600 — — — — 30,60020/12/2013 19/12/2016 28,400 — — — — 28,40019/12/2014 18/12/2017 27,000 — — — — 27,000

Total 122,100 (7,112) (28,988) — — 86,000

Z Bulbulia^29/12/2011 29/12/2014 15,300 (3,014) (12,286) 17/03/2015 218.62 —28/12/2012 28/12/2015 15,500 — — — — 15,50020/12/2013 19/12/2016 24,500 — (7,914) — — 16,58619/12/2014 18/12/2017 22,200 — (14,544) — — 7,656

Total 77,500 (3,014) (34,744) — — 39,742

^ Mutual separation on 31/12/2015.

KW Pienaar#

29/12/2011 29/12/2014 24,200 (4,767) (19,433) 17/03/2015 218.62 —28/12/2012 28/12/2015 33,000 — — — — 33,00020/12/2013 19/12/2016 30,600 — (9,884) — — 20,71619/12/2014 18/12/2017 29,100 — (19,064) — — 10,036

Total 116,900 (4,767) (48,381) — — 63,752

# Retired on 31/12/2015.

F-121




Offer dateVesting

date

Numberoutstanding

at31 December


date

Exerciseprice

R

Numberoutstanding

at31 December

2015

M Nyati19/12/2014 18/12/2017 21,900 — — — — 21,900

Total 21,900 — — — — 21,900

JA Desai29/12/2011 29/12/2014 43,600 (8,589) (35,011) 17/03/2015 218.62 —28/12/2012 28/12/2015 41,400 — — — — 41,40020/12/2013 19/12/2016 44,400 — — — — 44,40019/12/2014 18/12/2017 44,500 — — — — 44,500

Total 173,900 (8,589) (35,011) — — 130,300

M Ikpoki*20/12/2013 19/12/2016 36,900 — (14,619) — — 22,28119/12/2014 18/12/2017 37,400 — (24,502) — — 12,898

Total 74,300 — (39,121) — — 35,179

* Mutual separation on 31/12/2015.

A Farroukh^29/12/2011 29/12/2014 42,900 (8,451) (34,449) 17/03/2015 218.62 —28/12/2012 28/12/2015 40,800 — (40,800) — — —20/12/2013 19/12/2016 43,800 — (43,800) — — —19/12/2014 18/12/2017 43,900 — (43,900) — — —

Total 171,400 (8,451) (162,949) — — —

^ Resigned on 31/07/2015.

M Fleischer19/12/2014 18/12/2017 30,400 — — — — 30,400

Total 30,400 — — — — 30,400

F Moolman29/12/2011 29/12/2014 15,200 (2,994) (12,206) 17/03/2015 218.62 —28/12/2012 28/12/2015 14,600 — — — — 14,60020/12/2013 19/12/2016 15,700 — — — — 15,70019/12/2014 18/12/2017 15,700 — — — — 15,700

Total 61,200 (2,994) (12,206) — — 46,000

SB Mtshali29/12/2011 29/12/2014 9,005 (3,582) (5,423) 17/03/2015 218.62 —28/12/2012 28/12/2015 6,400 — — — — 6,40020/12/2013 19/12/2016 6,000 — — — — 6,00019/12/2014 18/12/2017 5,800 — — — — 5,800

Total 27,205 (3,582) (5,423) — — 18,200

SA Fakie^^29/12/2011 29/12/2014 18,609 (3,666) (14,943) 17/03/2015 218.62 —

Total 18,609 (3,666) (14,943) — — —

^^ Retired on 16/02/2015.

F-122




Offer dateVesting

date

Numberoutstanding

at31 December


date

Exerciseprice

R

Numberoutstanding

at31 December

2015

S Ntsele±29/12/2011 29/12/2014 6,800 (2,705) (4,095) 17/03/2015 218.62 —28/12/2012 28/12/2015 4,500 — — — — 4,50020/12/2013 19/12/2016 5,300 — — — — 5,30019/12/2014 18/12/2017 5,000 — — — — 5,000

Total 21,600 (2,705) (4,095) — — 14,800

± Appointed 1/04/2015.

Directors, prescribed officers, Company secretary of the MTN Group and directors and company secretaries ofmajor subsidiaries’ shareholding and dealings in ordinary shares

December2015

December2014 Beneficial

RS Dabengwa^ 1,473,552 1,473,552 DirectNP Mageza 400 400 IndirectPD Norman#* 300,970 300,970 DirectMJN Njeke 10 10 DirectBD Goschen#* 44,393 40,000 DirectKW Pienaar#@ 455,261 455,261 DirectS Ntsele# 4,000 — DirectKC Ramon 3,244 — DirectKC Ramon 9,901 — IndirectKP Kalyan 1,373 — Direct

Total 2,293,104 2,270,193

^ Resigned 9/11/2015.* Prescribed officer.# Major subsidiary director.@ Retired 31/12/2015.

Subsequent to the year end there were no changes in the directors’ beneficial interest in MTN Group.

Directors, prescribed officers, Company secretary of the MTN Group and directors and company secretaries ofmajor subsidiaries relating to MTN Zakhele

F-123




The following persons, being directors of MTN Group Limited and its major subsidiaries and the companysecretary were allocated the following number of MTN Zakhele shares which has a shareholding in MTN GroupLimited shares:

BeneficiaryNature ofinterest Shares

PF Nhleko Direct beneficial 2,010,700KP Kalyan Direct beneficial 27,700MLD Marole Direct beneficial 15,700MJN Njeke Direct beneficial 6,700NP Mageza Indirect beneficial 51,420SB Mtshali Indirect beneficial 6,500CWN Molope Direct beneficial 1,000F Titi* Indirect beneficial 15,500SA Fakie** Direct beneficial 1,000

Total 2,136,220

* Resigned 31/12/2015.** Retired 16/02/2015.

Subsequent to the year end there were no changes in the directors’ beneficial interest in MTN Zakhele.

F-124

Independent auditors’ report to the shareholders of MTN Group Limitedfor the year ended 31 December 2014

We have audited the consolidated annual financial statements and separate annual financial statements of MTNGroup Limited, which comprise the consolidated and separate statements of financial position as at 31 December2014, the consolidated income statement and the consolidated and separate statements of comprehensive income,changes in equity and cash flows for the year then ended, and notes, comprising a summary of principalaccounting policies and other explanatory information on pages 10 to 143.

DIRECTORS’ RESPONSIBILITY FOR THE ANNUAL FINANCIAL STATEMENTS

The Company’s directors are responsible for the preparation and fair presentation of these consolidated andseparate annual financial statements in accordance with IFRS and the requirements of the Companies Act ofSouth Africa, and for such internal control as the directors determine is necessary to enable the preparation of theconsolidated and separate annual financial statements that are free from material misstatements, whether due tofraud or error.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these annual financial statements based on our audit. We conductedour audit in accordance with International Standards on Auditing. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated andseparate annual financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in theannual financial statements. The procedures selected depend on the auditor’s judgement, including theassessment of the risks of material misstatement of the annual financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation andfair presentation of the annual financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof accounting estimates made by management, as well as evaluating the overall presentation of the annualfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

OPINION

In our opinion, the consolidated and separate annual financial statements present fairly, in all material respects,the consolidated and separate financial position of MTN Group Limited as at 31 December 2014, and itsconsolidated and separate financial performance and its consolidated and separate cash flows for the year thenended in accordance with IFRS and the requirements of the Companies Act of South Africa.

F-125

Independent auditors’ report to the shareholders of MTN Group Limitedfor the year ended 31 December 2014 (continued)

OTHER REPORTS REQUIRED BY THE COMPANIES ACT

As part of our audit of the consolidated and separate annual financial statements for the year ended 31 December2014, we have read the directors’ report, the report of the audit committee and the certificate by the companysecretary for the purpose of identifying whether there are material inconsistencies between these reports and theaudited annual financial statements. These reports are the responsibility of the respective preparers. Based onreading these reports we have not identified material inconsistencies between these reports and the auditedconsolidated and separate annual financial statements. However, we have not audited these reports andaccordingly do not express an opinion on these reports.

PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc.Director: JR van Huyssteen Director: SY LockhatRegistered auditor Registered auditorSunninghill Woodmead3 March 2015 3 March 2015

The above auditors’ report is the original auditors’ report that was issued on 3 March 2015 with respect to theFinancial Statements for the period ended 31 December 2014. These Financial Statements also contained theDirectors’ report, Report of the audit committee, Certificate of MTN Group’s secretary and MTN Group’sseparate financial statements. For purposes of this Offering Circular the Directors’ report, Report of the auditcommittee, Certificate of MTN Group’s secretary and MTN Group’s separate financial statements have beenomitted. The page references in the original auditors’ report compare to pages F-127 to F-229 in this OfferingCircular in respect of the financial statements.

F-126

Group income statementfor the year ended 31 December 2014

2014 20131

Note Rm Rm

Revenue 4 146,930 137,270Other income 5 7,928 1,327Direct network operating costs (21,604) (18,299)Costs of handsets and other accessories (11,957) (10,744)Interconnect and roaming (13,653) (13,816)Staff costs 6 (8,838) (8,670)Selling, distribution and marketing expenses (15,531) (16,362)Other operating expenses (10,084) (10,276)

EBITDA 73,191 60,430Depreciation of property, plant and equipment 11 (18,262) (16,458)Amortisation of intangible assets 12 (3,251) (2,820)Impairment of goodwill 12 (2,033) —

Operating profit 6 49,645 41,152Finance income 7 6,772 11,422Finance costs 7 (10,440) (12,656)Net monetary gain 878 —Share of results of associates and joint ventures after tax 14 4,208 3,431

Profit before tax 51,063 43,349Income tax expense 8 (13,361) (12,487)

Profit after tax 37,702 30,862


37,702 30,862

Basic earnings per share (cents) 9 1,752 1,460Diluted earnings per share (cents) 9 1,742 1,452

1 Restated, refer to note 48.

F-127

Group statement of comprehensive incomefor the year ended 31 December 2014

2014Rm

20131

Rm

Profit after tax 37,702 30,862Other comprehensive income after tax:Exchange differences on translating foreign operations including the effect

of hyperinflation2 2,968 11,078

Attributable to equity holders of the Company 2,960 10,179Attributable to non-controlling interests 8 899

Total comprehensive income for the year 40,670 41,940


40,670 41,940

1 Restated, refer to note 48.2 This component of other comprehensive income does not attract any tax and may subsequently be reclassified to profit or loss.

F-128

Group statement of financial positionat 31 December 2014

2014 20131 20131

December December JanuaryNote Rm Rm Rm

ASSETSNon-current assets 163,218 153,083 127,365

Property, plant and equipment 11 87,546 92,903 73,905Intangible assets and goodwill 12 36,618 37,751 32,594Investments 13 6,135 111 —Investment in associates and joint ventures 14 25,514 12,643 10,208Loans and other non-current receivables 15 6,296 7,631 9,367Deferred tax assets 16 1,109 2,044 1,291

Current assets 90,467 76,573 56,465

Non-current assets held for sale 17 3,848 1,281 1,37386,619 75,292 55,092

Inventories 18 3,412 3,226 2,547Trade and other receivables 19 32,818 24,821 17,234Taxation prepaid 31 564 859 555Current investments 20 5,651 4,542 6,585Derivative assets 21 183 22 191Restricted cash 22 893 2,222 5,272Cash and cash equivalents 23 43,098 39,600 22,708

Total assets 253,685 229,656 183,830

EQUITYOrdinary share capital and share premium 24 40,179 42,598 42,593Retained earnings 91,305 79,872 69,389Other reserves 25 (2,967) (5,991) (15,834)


Total equity 133,442 121,812 100,029

LIABILITIESNon-current liabilities 52,613 49,860 33,327

Borrowings 26 39,470 34,664 21,322Deferred tax liabilities 16 11,012 13,470 9,325Other non-current liabilities 27 1,585 1,369 2,262Provisions 28 546 357 416Derivative liabilities — — 2

Current liabilities 67,630 57,984 50,474

Trade and other payables 29 33,234 27,449 22,157Unearned income 7,609 7,004 6,604Provisions 28 3,414 4,637 3,931Taxation liabilities 31 9,562 7,530 6,790Borrowings 26 13,783 11,338 10,593Derivative liabilities 21 2 3 14Put option liability — — 216Bank overdrafts 23 26 23 169

Total liabilities 120,243 107,844 83,801

Total equity and liabilities 253,685 229,656 183,830


F-129

Group statement of changes in equityfor the year ended 31 December 2014

Attributable to equity holders of the Company

Note

Sharecapital

Rm

Sharepremium

Rm

Retainedearnings

Rm

Otherreserves

RmTotalRm

Non-controlling

interestsRm

Totalequity

Rm

Balance at 1 January 2013 * 42,593 67,810 (15,834) 94,569 3,881 98,450Restatement for voluntary change in

accounting policy 48 — — 1,579 — 1,579 — 1,579

Restated balance at 1 January 2013 * 42,593 69,389 (15,834) 96,148 3,881 100,029Shares issued during the year * 5 — — 5 — 5Shares cancelled (*) — — — (*) — (*)Transactions with non-controlling

interests 41 — — — (495) (495) (138) (633)Share-based payment transactions — — — 215 215 — 215Total comprehensive income — — 26,751 10,179 36,930 5,010 41,940


Dividends declared 10 — — (16,210) — (16,210) (3,608) (19,818)Other movements — — (58) (56) (114) 188 74


Balance at 1 January 2014 * 42,598 79,872 (5,991) 116,479 5,333 121,812Shares issued during the year * 3 — — 3 — 3Shares cancelled (*) — — — (*) — (*)Settlement of vested equity rights — — (209) — (209) — (209)Share-based payment transactions — — — 110 110 — 110Total comprehensive income — — 32,079 2,960 35,039 5,631 40,670


Dividends declared 10 — — (20,527) — (20,527) (6,176) (26,703)Share buy-back — (2,422) — — (2,422) — (2,422)Other movements — — 90 (46) 44 137 181


Note 24 24 25


F-130

Group statement of cash flowsfor the year ended 31 December 2014

Note2014Rm

2013Rm

CASH FLOWS FROM OPERATING ACTIVITIESCash generated from operations 30 64,628 59,708Finance income received 2,584 1,752Finance costs paid (3,993) (3,947)Income tax paid 31 (11,779) (11,184)Dividends paid to equity holders of the Company (20,527) (16,187)Dividends paid to non-controlling interests (4,289) (3,571)Dividends received from associates 14 233 220Dividends received from joint ventures 275 234

Net cash generated from operating activities 27,132 27,025

CASH FLOWS USED IN INVESTING ACTIVITIESAcquisition of property, plant and equipment (19,562) (24,568)

– to maintain operations (33) (99)– to expand operations (19,529) (24,469)

Acquisition of intangible assets (3,282) (3,586)Proceeds from sale of property, plant and equipment and intangible assets 541 106Proceeds on sale of towers 6,465 2,378Increase in investment in joint ventures (1,524) —Increase in non-current investments (5,657) (128)Acquisition of businesses, net of cash acquired 42 (1,634) (47)Loans granted (1,007) (64)Increase in investment in associates — (69)Increase in investment in insurance cell captives (173) (628)(Investments in)/proceeds from bonds, treasury bills and foreign deposits (1,057) 3,423Decrease in restricted cash 899 3,348

Net cash used in investing activities (25,991) (19,835)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from the issuance of ordinary shares 24 3 5Net cash outflows from changes in shareholding 41.3 — (881)Proceeds from borrowings 30,603 33,279Repayment of borrowings (25,620) (25,951)Share buy-back1 (2,249) —Settlement of vested equity rights (209) —Other financing activities 111 (188)

Net cash from financing activities 2,639 6,264

Net increase in cash and cash equivalents 3,780 13,454Net cash and cash equivalents at beginning of the year 39,577 22,539Exchange (losses)/gains on cash and cash equivalents (182) 3,584Net monetary loss on cash and cash equivalents (103) —

Net cash and cash equivalents at end of the year 23 43,072 39,577

1 An amount of R173 million was paid in January 2015.

F-131

Notes to the Group annual financial statementsfor the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES

1.1 Basis of preparation

The consolidated and separate annual financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) andInterpretations as issued by the IFRS Interpretations Committee (IFRIC), and comply with the SAICA FinancialReporting Guides as issued by the Accounting Practices Committee, financial pronouncements as issued by theFinancial Reporting Standards Council (FRSC), the JSE Listings Requirements and the requirements of the SouthAfrican Companies Act, No 71 of 2008. The Group and the Company have adopted all new accountingpronouncements that became effective in the current reporting period, none of which had a material impact onthe Group or the Company.

The annual financial statements have been prepared on the historical cost basis adjusted for the effects ofinflation where entities operate in hyperinflationary economies and for certain financial instruments that havebeen measured at fair value.

The Sudanese, Syrian and Iranian economies have been considered to be hyperinflationary. Accordingly, theresults, cash flows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTNSyria (JSC) and the Group’s joint venture, Irancell Telecommunication Company Services (PJSC), have beenexpressed in terms of the measuring unit current at the reporting date.

The methods used to measure fair value and the adjustments made to account for the Group’s entities that operatein hyperinflationary economies are discussed further in the accounting policies and in the respective notes.

Amounts are rounded to the nearest million with the exception of earnings per share and the related number ofshares (note 9), number of ordinary shares (note 24) and share-based payments (note 44).

The preparation of financial statements in conformity with IFRS requires management to make judgements,estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,liabilities, income and expenses. Actual results may differ from these estimates. Information about significantareas of estimation uncertainty and critical judgements in applying accounting policies that have the mostsignificant effect on the amounts recognised in the consolidated and separate annual financial statements areincluded in note 2.

1.2 Going concern

The Group and Company’s forecasts and projections, taking account of reasonably possible changes in tradingperformance, show that the Group and Company should be able to operate within their current funding levels intothe foreseeable future.

After making enquiries, the directors have a reasonable expectation that the Group and Company have adequateresources to continue in operational existence for the foreseeable future. The Group and Company thereforecontinue to adopt the going-concern basis in preparing the annual financial statements.

1.3 Principal accounting policies1

The principal accounting policies applied in the preparation of these consolidated annual financial statements areset out below and in the related notes to the Group annual financial statements, and should be read in conjunctionwith the financial definitions disclosed on pages 142 and 143 of the annual financial statements. The principalaccounting policies applied are consistent with those adopted in the prior year, except as set out under “Voluntarychange in accounting policy” below.

1 The principal accounting policies applied in the Company annual financial statements are consistent with those applied in the Groupannual financial statements.

F-132


1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued)


Voluntary change in accounting policy

IAS 18 Revenue

Previously, the Group accounted for arrangements with multiple deliverables (i.e. multiple element revenuearrangements) by dividing these arrangements into separate units of accounting and recognising revenue throughthe application of the residual value method.

During the year under review, the Group resolved to change its accounting policy in recognising revenue relatingto these arrangements from applying the residual value method to the relative fair value method. This change waseffected by the Group on a voluntary basis.

Previously under the residual value method, fair value was ascribed to each of the undelivered elements(typically the service contract) and any consideration remaining (after reducing the total consideration of thearrangement with the fair value of the undelivered elements) was allocated to the delivered element(s) in thetransaction (typically the handset). This resulted in limited amounts of revenue being allocated to the elementsdelivered upfront (i.e. the handset). Under the relative fair value method, the consideration received or receivableis allocated to each of the elements (delivered and undelivered) according to the relative fair value of theelements included in the arrangement.

The Group believes that the change results in more relevant and reliable information being presented in respectof revenue recognised in relation to multiple element revenue arrangements, as revenue is now being recognisedin relation to each of the elements delivered and to be delivered based on the relative fair value of the elements inrelation to the total consideration received or receivable. The new accounting policy also results in an improvedcorrelation between the recognition of revenue and associated costs and also aligns the Group’s policy moreclosely with the requirements of IFRS 15 Revenue from Contracts with Customers which is effective for periodscommencing on 1 January 2017.

As required in terms of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the change inaccounting policy was applied retrospectively which resulted in an increase in revenue, other operating andincome tax expenses, trade and other receivables, non-current loans and other receivables, equity and deferredtax liabilities in prior years. The impact on the Group’s financial results and position is disclosed in note 48.

1.3.1 Consolidation of subsidiaries

The Group annual financial statements incorporate the financial statements of MTN Group Limited and all itssubsidiaries, joint ventures, associates and structured entities (SEs) for the reporting date 31 December 2014 onthe basis outlined below.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group (acquisition date)and are deconsolidated from the date that control ceases (disposal date). All intercompany transactions, balancesand unrealised gains or losses on transactions between Group companies are eliminated on consolidation.Unrealised losses are considered an impairment indicator of the asset transferred.

The acquisition method is used to account for the acquisition of subsidiaries by the Group. The considerationtransferred is measured at the fair value of the assets given, equity instruments issued and liabilities incurred orassumed at the acquisition date. The consideration transferred includes the fair value of any asset or liabilityresulting from a contingent consideration arrangement. Acquisition-related costs are recognised in profit or loss.Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination aremeasured initially at their fair values at the acquisition date, irrespective of the extent of any non-controllinginterests.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in theacquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and liabilities

F-133




1.3.1 Consolidation of subsidiaries (continued)

assumed. If, after re-assessment, the net of the acquisition date amounts of the identifiable assets acquired andliabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interestsin the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), such excess isrecognised immediately in profit or loss as a bargain purchase gain.

When the consideration transferred by the Group in a business combination includes assets or liabilities resultingfrom a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fairvalue and included as part of the consideration transferred.

Changes in the fair value of a contingent consideration that qualify as measurement period adjustments areadjusted retrospectively, with corresponding adjustments against goodwill. Those that do not qualify areaccounted for based on the classification of the contingent consideration. Contingent consideration that isclassified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted forwithin equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequentreporting dates in accordance with IAS 39 Financial Instruments: Recognition and Measurement, with thecorresponding gain or loss recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree isremeasured to fair value at acquisition date (i.e. the date when the Group obtains control) and the resulting gainor loss, if any, is recognised in profit or loss. Amounts arising from an interest in the acquiree prior to theacquisition date that have been previously recognised in other comprehensive income, are reclassified to profit orloss where such treatment would be appropriate if that interest was disposed of.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with thechange in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for thepurposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. Inaddition, any amounts previously recognised in other comprehensive income in respect of that entity areaccounted for as if the Group had directly disposed of the related assets or liabilities. This may mean thatamounts previously recognised in other comprehensive income are reclassified to profit or loss.

Accounting policies of subsidiaries have been changed where necessary to align them with the policies adoptedby the Group.

The Company accounts for investments in subsidiaries at cost, less accumulated impairment losses.

On an acquisition-by-acquisition basis, non-controlling interests in the acquiree may initially be measured eitherat fair value or at the non-controlling shareholders’ proportion of the net fair value of the identifiable assetsacquired and liabilities and contingent liabilities assumed.

Non-controlling shareholders are treated as equity participants; therefore, all acquisitions of non-controllinginterests or disposals by the Group of its interests in subsidiaries, where control is maintained subsequent to thedisposal, are accounted for as equity transactions. Consequently, the difference between the fair value of theconsideration transferred and the carrying amount of a non-controlling interest purchased, is recorded in equity.All profits or losses arising as a result of the disposal of interests in subsidiaries to non-controlling shareholders(where control is subsequently maintained) are also recorded in equity.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’sequity.

Total comprehensive income is attributed to non-controlling interests even if this results in the non-controllinginterests having a deficit balance.

F-134




1.3.2 Foreign currency

Functional and presentation currency

Items included in the annual financial statements of each entity in the Group are measured using the entity’sfunctional currency. The Group annual financial statements are presented in South African rand, which is thefunctional and presentation currency of the parent company.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates ofthe transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from thetranslation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currenciesare recognised in profit or loss.

Translation of foreign operations

The results, cash flows and financial position of Group entities which are not accounted for as entities operatingin hyperinflationary economies and that have a functional currency different from the presentation currency ofthe Group are translated into the presentation currency as follows:

• assets and liabilities are translated at rates of exchange ruling at the reporting date;

• specific transactions in equity are translated at rates of exchange ruling at the transaction dates;

• income, expenditure and cash flow items are translated at weighted average exchange rates for the period;and

• foreign exchange translation differences are recognised as other comprehensive income.

The results, cash flows and financial position of Group entities which are accounted for as entities operating inhyperinflationary economies and that have functional currencies different from the presentation currency of theGroup are translated into the presentation currency of its immediate parent at rates of exchange ruling at thereporting date. As the presentation currency of the Group or that of the immediate parent is that of a non-hyperinflationary economy, comparative amounts are not adjusted for changes in the price level or exchangerates in the current year.

An entity may have a monetary item that is receivable from or payable to a foreign operation. An item for whichsettlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity’s netinvestment in that foreign operation. On consolidation, exchange differences arising from the translation of thenet investment in foreign operations are taken to other comprehensive income as part of the foreign currencytranslation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the exchange rate ruling at the reporting date. Exchangedifferences arising are recognised in other comprehensive income.

The exchange rates relevant to the Group are disclosed in note 38.

Disposal of foreign operations

On disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of thatoperation attributable to the equity holders of the Group are reclassified to profit or loss.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includesa foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals, the proportionateshare of the accumulated exchange differences is reclassified to profit or loss.

F-135




1.3.2 Foreign currency (continued)

Exchange differences accumulated in equity in respect of a monetary item that is part of the Group’s netinvestment in a foreign operation, is not reclassified to profit or loss on settlement of the monetary item.


The financial statements (including comparative amounts) of Group entities, whose functional currencies are thecurrencies of hyperinflationary economies, are adjusted in terms of the measuring unit current at the end of thereporting period.

As the presentation currency of the Group is that of a non-hyperinflationary economy, comparative amountsare not adjusted for changes in the price level or exchange rates in the current year. In the first period ofapplication, the adjustments determined at the beginning of the period are recognised directly in equity as anadjustment to opening retained earnings. In subsequent periods, the prior period adjustments related tocomponents of owners’ equity and differences arising on translation of comparative amounts are accounted for inother comprehensive income.

Items in the statement of financial position not already expressed in terms of the measuring unit current at thereporting period, such as non-monetary items carried at cost or cost less depreciation, are restated by applying ageneral price index. The restated cost, or cost less depreciation, of each item is determined by applying to itshistorical cost and accumulated depreciation the change in a general price index from the date of acquisitionto the end of the reporting period. An impairment loss is recognised in profit or loss if the restated amount of anon-monetary item exceeds its estimated recoverable amount.

At the beginning of the first period of application, the components of owners’ equity, except retained earnings,are restated by applying a general price index from the dates the components were contributed or otherwisearose. Restated retained earnings are derived from all other amounts in the restated statement of financialposition. At the end of the first period and in subsequent periods, all components of owners’ equity are restatedby applying a general price index from the beginning of the period or the date of contribution, if later.


Gains or losses on the net monetary position are recognised in profit or loss.

All items in the statement of cash flows are expressed in terms of the general price index at the end of thereporting period.

The Sudanese and Syrian economies have been classified as hyperinflationary. Accordingly, the results, cashflows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC),have been expressed in terms of the measuring unit current at the reporting date.

The results, cash flows and financial position of a joint venture, Irancell Telecommunication Company Services(PJSC), that operates in a hyperinflationary economy have also been expressed in terms of the measuring unitcurrent at the reporting date. For further details, refer to note 14.

F-136




1.3.4 Measurement principles

Key assets and liabilities shown in the consolidated statement of financial position are measured as follows:



Assets LiabilitiesNon-current assets Non-current liabilitiesProperty, plant and equipment Historical cost, less

accumulated depreciationand impairment losses


Intangible assets Historical cost, lessaccumulated amortisationand impairment losses

Deferred tax liabilities Undiscounted amountmeasured at the tax ratesthat have been enacted andare expected to apply to theperiod when the liability issettled

Goodwill Historical cost, lessimpairment losses

Provisions Present value of settlementamount

Investments Amortised cost/fair value Finance lease obligations Amortised cost

Investment in associates andjoint ventures

Pro rata value ofinvestment’s equity plusgoodwill


Loans receivable Amortised cost

Prepayments Nominal value

Deferred tax assets Undiscounted amountmeasured at the tax ratesthat have been enacted andare expected to apply to theperiod when the asset isrealised

Current assets Current liabilities

Non-current assets held forsale

Lower of carrying amountand fair value less costs tosell

Trade payables Amortised cost

Inventories Lower of cost and netrealisable value

Other payablesUnearned income

Nominal valueNominal value

Trade receivables Amortised cost Provisions Present value of settlementamount

Prepayments Nominal value Taxation liabilities Amount expected to be paidto tax authorities, using taxrates that have been enactedor substantively enacted atthe reporting date

Sundry debtors and advances Amortised cost Borrowings Amortised cost

Taxation prepaid Amount expected to berecovered from taxauthorities, using tax ratesthat have been enacted orsubstantively enacted at thereporting date


Current investments Amortised cost/fair value Bank overdrafts Amortised cost

Derivative assets Fair value

Restricted cash Amortised cost

Cash and cash equivalents Amortised cost

F-137



1.4 New accounting pronouncements

The pronouncements listed below will be effective in future reporting periods and are considered significant to theGroup. The Group has elected not to early adopt the new pronouncements. It is expected that the Group will adoptthe new pronouncements on their effective dates in accordance with the requirements of the pronouncements.

Topic Key requirement Effective date

IFRS 15Revenue fromContracts withCustomers

IFRS 15 replaces the two main revenue recognition standards, IAS 18 andIAS 11 Construction Contracts and their related interpretations.

1 January 2017

IFRS 15 provides a single control-based revenue recognition model andclarifies the principles for recognising revenue from contracts with customers.The core principle is that an entity should recognise revenue to depict thetransfer of promised goods or services to customers at an amount that reflectsthe consideration which the entity expects to be entitled to in exchange forthose goods or services. Revenue is recognised when a customer obtains controlof a good or service. A customer obtains control when it has the ability to directthe use of and obtain the benefits from the good or service.

IFRS 15 also includes a cohesive set of disclosure requirements that will resultin an entity providing users of financial statements with comprehensiveinformation about the nature, amount, timing and uncertainty of revenue andcash flows arising from the entity’s contracts with customers.

IFRS 15 will be applied retrospectively subject to the application of thetransitional provisions.

The impact on the annual financial statements has not yet been fullydetermined but it is expected to result in a change in:

• the measurement of revenue to adjust for the effects of the time valueof money; and

• the timing of the recognition of subscriber acquisition costs such asagent’s commission which will be recognised when the relatedperformance obligations are satisfied. The Group’s current accountingpolicy is to expense such costs when incurred.

Refer to Annexure 2 for the Group’s full unaudited preliminary assessmenton the impact of IFRS 15.

IFRS 9FinancialInstruments

IFRS 9 replaces IAS 39. It retains but simplifies the mixed measurementmodel and establishes three primary measurement categories for financialassets: amortised cost, fair value through other comprehensive income andfair value through profit or loss. The basis of classification depends on theentity’s business model and the contractual cash flow characteristics of thefinancial asset. Investments in equity instruments are required to bemeasured at fair value through profit or loss with the irrevocable option atinception to present changes in fair value in other comprehensive income.

1 January 2018

IFRS 9 also replaces the rule-based hedge accounting requirements in IAS39. It requires an economic relationship between the hedged item andhedging instrument and for the “hedged ratio” to be the same as the onemanagement actually uses for risk management purposes.

IFRS 9 includes an expected credit loss model for calculating impairment onfinancial assets. This replaces the incurred loss model used under IAS 39.

The adoption of IFRS 9 is not expected to change the measurement of theGroup’s financial assets and liabilities significantly, but will require areview of the current classification of financial assets and liabilities. Anychanges in classification will be applied retrospectively.

The hedge accounting requirements are not expected to have a significantimpact on the financial results of the Group.

The impact of an expected credit loss model on the annual financialstatements has not yet been fully determined. Refer to Annexure 2 for theGroup’s preliminary unaudited assessment on its financial results from theapplication of the expected credit loss model.

F-138


2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS1

The Group makes judgements, estimates and assumptions concerning the future when preparing the consolidatedannual financial statements. Actual results may differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period inwhich the estimates are revised and in any future periods affected. The judgements, estimates and assumptionsthat have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below.

The “Critical accounting judgements, estimates and assumptions” note should be read in conjunction with the“Principal accounting policies” disclosed in note 1.

2.1 Impairment of goodwill

The Group tests goodwill for impairment on an annual basis, in accordance with the accounting policy disclosedin note 12. The recoverable amounts of cash-generating units have been determined based on value-in-usecalculations. These calculations are performed internally by the Group and require the use of estimates andassumptions.

The input factors most sensitive to change are management’s estimates of future cash flows based on budgets andforecasts, growth rates and discount rates. Further detail on these assumptions has been disclosed in note 12. TheGroup has performed a sensitivity analysis by varying these input factors by a reasonably possible marginand assessing whether the changes in input factors result in any of the goodwill allocated to appropriate cash-generating units being impaired. Goodwill impairment in the current year amounted to R2,033 million(2013: Rnil), refer to note 12.

2.2 Impairment of trade and other non-current receivables

The Group determines impairment of trade and other non-current receivables when objective evidence indicatesthat one or more events have had a negative effect on the estimated future cash flows of the receivables.Management exercises significant judgement in assessing the impact of adverse indicators and events on therecoverability of receivables using the indicators disclosed in the accounting policy in note 43.

The impairment loss is determined as the difference between the carrying amount of the receivables and thepresent value of their estimated future cash flows (excluding future credit losses that have not been incurred)discounted at the receivables’ original effective interest rate. In the current year, an impairment charge ofR286 million (2013: R743 million2) and an impairment reversal of R230 million (2013: R223 million charge)were recognised on trade receivables and non-current receivables respectively (note 6).

2.3 Connection incentives and subscriber acquisition costs

Connection incentives paid to service providers are expensed by the Group in the period incurred. Serviceproviders utilise the incentives received from the Group to fund a variety of administrative costs and/or toprovide incentives to maintain/sign up customers on behalf of the Group, at their own discretion. The portion ofthe incentive used by the respective service providers as an incentive to retain/acquire existing/new subscriberson behalf of the Group is capitalised only to the extent that it is reliably measurable (prepaid discount). Inaccordance with the Conceptual Framework under IFRS, the Group has resolved not to capitalise these fees dueto the portion of incentives utilised to retain/acquire subscribers on behalf of the Group by the respectiveindependent service providers not being reliably measurable.

In accordance with the recognition criteria in IAS 38 Intangible Assets, the Group has also resolved not tocapitalise commissions paid to dealers, utilised to acquire new subscribers, as intangible assets (subscriberacquisition cost), due to the portion utilised to acquire subscribers on behalf of the Group not being reliablymeasurable.

1 The critical accounting judgements, estimates and assumptions applied in the Company annual financial statements are consistent withthose applied in the Group annual financial statements.


F-139


2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)

2.4 Interconnect revenue recognition

Due to the receipt of interconnect revenue in certain operations not being certain at transaction date, the Grouphas resolved only to recognise interconnect revenue relating to these operations as the cash is received or where aright of set-off exists with interconnect parties in settling outstanding amounts.

2.5 Sale of tower assets

The Group applies judgement and follows the guidance in IFRS 3 Business Combinations to determine whetherthe sale of tower assets constitutes the sale of a business or an asset.

The Group determined that its tower assets in Nigeria which were sold during the year (note 5) were anintegrated set of activities capable of being conducted and managed for the purpose of providing a return andtherefore constituted a sale of a business. In exercising its judgement, the Group considered the following:


• the sale agreement provides for the transfer of all substantial assets required to operate the tower businessincluding related tower rights, site maintenance agreements, tenant leases and inventory;

• the processes involved in the tower business, such as site management systems and site maintenanceprogrammes, were transferred along with the assets; and


2.6 Income taxes

The Group is subject to income taxes in numerous jurisdictions. As a result, significant judgement is required indetermining the Group’s provision for income taxes. There are numerous calculations and transactions for whichthe ultimate tax position is uncertain during the ordinary course of business. The Group recognises tax liabilitiesfor anticipated tax issues based on estimates of whether additional taxes will be payable. Where the finaloutcome of these matters is different from the amounts that were initially recorded, such differences will impactcurrent and deferred tax in the period in which such determination is made.

Deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available againstwhich the deferred tax assets can be utilised. When recognising deferred tax assets, the Group exercisesjudgement in determining whether sufficient taxable profits will be available; this is done by assessing the futurefinancial performance of the underlying Group entities to which the deferred tax assets relate. The Group’sdeferred tax assets for the current year amounted to R1,109 million (2013: R2,044 million), refer to note 16.

2.7 Property, plant and equipment

Property, plant and equipment represent a significant proportion of the Group’s asset base. Therefore, thejudgements made in determining their estimated useful lives and residual values are critical to the Group’sfinancial position and performance. Useful lives and residual values are reviewed on an annual basis with theeffects of any changes in estimates accounted for on a prospective basis.

In determining residual values, the Group uses historical sales and management’s best estimates based on marketprices of similar items.

Useful lives of property, plant and equipment are based on management’s estimates and take into accounthistorical experience with similar assets, the expected usage of the asset, physical wear and tear, technical orcommercial obsolescence and legal restrictions on the use of the assets.

F-140




The estimated useful lives of property, plant and equipment are as follows:

2014 2013Years Years

Buildings – owned 5 – 50 5 – 50Buildings – leased1 1 – 20 1 – 20Network infrastructure 2 – 20 2 – 20Information systems equipment 1 – 10 1 – 10Furniture and fittings 3 – 15 3 – 15Leasehold improvements1 2 – 15 2 – 15Office equipment 2 – 12 2 – 12Motor vehicles 3 – 10 3 – 10

1 Shorter of lease term and useful life.

2.8 Intangible assets with finite useful lives

The relative size of the Group’s intangible assets with finite useful lives makes the judgements surrounding theirestimated useful lives and residual values critical to the Group’s financial position and performance. Useful livesare reviewed on an annual basis with the effects of any changes in estimate accounted for on a prospective basis.The residual values of intangible assets are assumed to be zero.


Licences




Software

The useful life is determined with reference to the licence term of the computer software. For unique softwareproducts controlled by the Group, the useful life is based on historical experience with similar assets as well asanticipation of future events such as technological changes, which may impact the useful life.



The estimated useful lives of intangible assets with finite useful lives are as follows:

2014 2013Years Years

Licences 3 – 20 3 – 20Customer relationships 5 – 10 5 – 10Software 3 – 6 3 – 6Other intangible assets 3 – 10 3 – 10

F-141



2.9 Classification of significant joint arrangements

Joint arrangements are all arrangements where two or more parties contractually agree to share control of thearrangement, which only exists when decisions about the relevant activities require unanimous consent of theparties sharing control. Joint ventures are joint arrangements whereby the parties that have joint control of thearrangement have rights to the net assets of the arrangement.

The Group exercises judgement in determining the classification of its joint arrangements.


The Group holds an effective interest of 49% in the issued ordinary share capital of Irancell TelecommunicationCompany Services (PJSC). Under the contractual agreement unanimous consent is required for all key activities.The entity has therefore been classified as a joint venture of the Group.

Mascom Wireless Botswana Proprietary Limited

The Group holds an effective interest of 53.11% in the issued ordinary share capital of Mascom WirelessBotswana Proprietary Limited (Mascom). The joint arrangement provides the Group and the other parties to theagreement with rights to the net assets of the entity. The Group has joint control over this arrangement as underthe contractual agreement, no party has the right to control the managing company unilaterally. The entity hastherefore been classified as a joint venture of the Group.

Middle East Internet Holding

The Group holds an effective interest of 50% in the issued ordinary share capital of Middle East Internet Holding(MEIH). The joint arrangement provides the Group and the other parties to the agreement with rights to the netassets of the entity. Under the contractual agreement unanimous consent is required for all decisions made withregard to the relevant activities of MEIH. The entity has therefore been classified as a joint venture of the Group.

Africa Internet Holding

The Group holds an effective interest of 33.3% in Africa Internet Holding (AIH). The joint arrangement providesthe Group and the other parties to the agreement with rights to the net assets of the entity. Under the contractualagreement unanimous consent is required for all key activities. The entity has therefore been classified as a jointventure of the Group.

2.10 Provisions

The Group exercises judgement in determining the expected cash outflows related to its provisions. Judgement isnecessary in determining the timing of outflow as well as quantifying the possible range of the financialsettlements that may occur.

The present value of the Group’s provisions is based on management’s best estimate of the future cash outflowsexpected to be required to settle the obligations, discounted using appropriate pre-tax discount rates that reflectthe current market assessment of the time value of money and the risks specific to each provision. Additionalinformation on provisions is disclosed in note 28.

2.11 Restricted cash

The Group exercises judgement in determining the appropriate treatment of restricted cash. The judgement exercisedtakes into account the severity of exchange control regulations, the availability of foreign currency in the operationsaffected and the purpose for which the funds will be used. The Group has determined that an amount of R331 million(2013: R1,633 million) relating to its Syrian operation should be treated as restricted cash, refer to note 22.

F-142



2.12 Determining whether an arrangement contains a lease

The Group applies the principles of IFRIC 4 Determining whether an Arrangement contains a Lease in order toassess whether its arrangements constitute or contain leases. The requirements to be met in order to conclude thatan arrangement constitutes or contains a lease are as follows:



All other arrangements that do not constitute or contain leases are treated as service level agreements; the costsare expensed as incurred.

For the purpose of applying IFRIC 4 on tower space lease arrangements, the Group considers the tower asset as awhole in assessing whether the arrangement contains a lease. This is consistent with the guidance on determininga component of an asset in IAS 16 Property, Plant and Equipment. The Group has resolved that an arrangementcontains a lease as defined in IAS 17 Leases where the arrangement provides an exclusive right to use specifictower space which is more than an insignificant part of the tower asset.

2.13 Determining whether an arrangement qualifies as an operating lease or a finance lease

The Group applies its principal accounting policies for leases to account for arrangements which constitute orcontain leases and follows the guidance of IAS 17 to determine the classification of leases as either operating orfinance leases.

During the year, the Group entered into a sale and lease back transaction with IHS that resulted in the sale of aportion of its mobile network towers in Nigeria, refer to note 5.

The critical elements that the Group considered with respect to the classification of the lease transaction were:

• whether the lease term is for the major part of the economic life of the tower assets; and

• whether at inception of the lease, the present value of the minimum lease payments amounts to at leastsubstantially all of the fair value of the tower assets.

The Group estimated that the lease term of the tower assets is not for a major part of the economic life of thetower assets, taking into account the non-cancellable period for which the Group has contracted, and any optionsto renew such period where it is reasonably certain that the Group will exercise the option.

The minimum lease payments were determined by separating the payments required by the lease arrangementsinto those pertaining to the lease and those pertaining to other elements such as services and cost of inputs on thebasis of their relative fair values. Management exercised judgement in estimating the fair value of the otherelements by reference to comparable cost structures of the Group and other independent tower operators. Thediscount rate used in calculating the present value of the minimum lease payments reflects the rate of interestMTN Nigeria Communications Limited would incur in borrowing the funds necessary to purchase similar assets.

The fair value of the tower assets was determined by reference to the value at which the tower assets were soldwhich represents the amount at which the tower assets could be exchanged between knowledgeable, willingparties in an arm’s-length transaction. The Group resolved that the present value of the minimum lease paymentsdid not equal substantially all of the fair value of the underlying tower assets.

Following the Group’s assessment, the leaseback transaction was classified as an operating lease.

2.14 Non-consolidation of entities in which the Group holds more than 50%

The Group has resolved not to consolidate entities where it owns more than half of the issued ordinary sharecapital where the contractual agreements are such that other shareholders have substantive rights that provideauthority over the day-to-day activities of the entities.

F-143



2.15 Hyperinflation

The Group exercises significant judgement in determining the onset of hyperinflation in countries in which itoperates and whether the functional currency of its subsidiaries, associates or joint ventures is the currency of ahyperinflationary economy.

Various characteristics of the economic environment of each country are taken into account. Thesecharacteristics include, but are not limited to, whether:

• the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency;





Management exercises judgement as to when a restatement of the financial statements of a Group entity becomesnecessary. Following management’s assessment, the Group’s subsidiaries, MTN Sudan Company Limited andMTN Syria (JSC) and Irancell Telecommunication Company Services (PJSC), a joint venture of the Group, havebeen accounted for as entities operating in hyperinflationary economies. The results, cash flows and financialpositions of MTN Sudan Company Limited and MTN Syria (JSC) have been expressed in terms of the measuringunits current at the reporting date and the results and financial position of Irancell Telecommunication CompanyServices (PJSC) have been adjusted in order to calculate the Group’s share of its net assets and profit or loss(note 14).

The general price indices used in adjusting the results, cash flows and financial position of the Group’ssubsidiaries are set out below:

MTN Sudan Company Limited

The general price index used as published by the International Monetary Fund is as follows:

Date Base year

Generalpriceindex

Inflationrate(%)

31 December 2014 2007 480 28.7

The cumulative inflation rate over three years as at 31 December 2014 is 163.8%.The average adjustment factor used for 2014 was 1.16.

MTN Syria (JSC)

Reliable inflation data could not be obtained on the inflation rate in Syria. The general price index set out belowwas calculated by reference to the change in the United States dollar: Syrian pound exchange rate.

Date Base year

Generalpriceindex

Inflationrate(%)

31 December 2014 2013 138 37.7

The cumulative inflation rate over three years as at 31 December 2014 is 265.7%.

The average adjustment factor used for 2014 was 1.32.

F-144



2.15 Hyperinflation (continued)

The impact of adjusting the Group’s results for the effects of hyperinflation is set out below:

Income statement2014Rm

2013Rm

Increase in revenue 776 —Increase in EBITDA 241 —Net monetary gain 878 —Increase in share of results of associates and joint ventures after tax1 529 318(Decrease)/increase in profit after tax2 (612) 318

1 Including share of net monetary gain amounting to R927 million (2013: R627 million).2 Including goodwill impairment for the year relating to MTN Sudan Company Limited (note 12).

3 OPERATING SEGMENTS

The Group has identified reportable segments that are used by the Group executive committee (chief operatingdecision maker) to make key operating decisions, allocate resources and assess performance. The reportablesegments are geographically differentiated regions and are grouped by their relative size.

The Group’s principal activities include the provision of network IT services, local, national and internationaltelecommunications services; broadband and internet products and services; and converged fixed/mobileproducts and services.

Operating results are reported and reviewed regularly by the Group executive committee and include itemsdirectly attributable to a segment as well as those that can be attributed on a reasonable basis, whether fromexternal transactions or from transactions with other Group segments.

Unallocated items mainly comprise corporate expenses which do not directly relate to the operating activities ofthe segments or which cannot be re-allocated on a reasonable basis. Segment results are determined before anyadjustment for non-controlling interests.

EBITDA is used as a measure of reporting profit or loss for each segment.

During the year under review, the Group executive committee resolved to review segment results on a basisexcluding profits realised in respect of the sale of towers during the respective financial year. In addition, IrancellTelecommunication Company Services (PJSC), which previously formed part of the large opco cluster in termsof the segmental presentation of financial results, is now presented to the Group executive committee on a stand-alone basis and not as part of the large opco cluster any longer. Due to the change in the segment informationpresented to the CODM during the current financial year, the comparatives were adjusted accordingly.

Revenue contribution (%)1 2014 2013

South Africa 25 27Nigeria 34 33Iran 7 6Ghana 5 6Syria 2 2Cameroon 4 4Ivory Coast 4 4Uganda 3 3Sudan 2 2Small opco cluster 14 13

EBITDA contribution (%)1,2 2014 2013

South Africa 18 22Nigeria 46 45Iran 7 6Ghana 4 5Syria 1 1Cameroon 4 3Ivory Coast 4 3Uganda 3 3Sudan 1 1Small opco cluster 12 11

1 Includes Iran, excludes adjustments for hyperinflation and head office companies.2 Excludes adjustments for profit on tower sales.

F-145

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F-146


4 REVENUE

Revenue is measured at the fair value of the consideration received or receivable from the sale of goods andservices in the ordinary course of the Group’s activities. Revenue is presented net of indirect taxes, estimatedreturns and trade discounts.

Revenue from the sale of goods and the rendering of services is recognised when it is probable that the economicbenefits associated with the transaction will flow to the Group and the amount of revenue, and associated costsincurred or to be incurred, can be measured reliably. The amount of revenue is not considered to be reliablymeasurable until all contingencies relating to the sale have been resolved.

Postpaid products typically include the sale of a handset, activation fee and a service contract; and prepaidproducts include a subscriber identification module (SIM) card and airtime.

Multiple element (or bundled) arrangements are divided into separate units of accounting, and revenue isrecognised through the application of the relative fair value method, resulting in the proportionate allocation ofany discount to all elements in the bundle.

The Group operates loyalty programmes in certain entities where customers accumulate points for purchasesmade, which entitle them to discounts on future purchases. The reward points are recognised as a separatelyidentifiable component of the initial sale transaction by allocating the consideration received or receivablebetween the reward points and the other components of the sale such that the reward points are initiallyrecognised as deferred income at their fair value. Revenue from the reward points is recognised when the pointsare redeemed. Breakage (forfeiture of points) is recognised when redemption becomes remote.

The main categories of revenue and the bases of recognition are as follows:

Airtime and subscription, data and SMS

• airtime, data and SMS: revenue is recognised on the usage basis commencing on the date of activation;

• connection fees: revenue is recognised on the date of activation of a new SIM card; and

• SIM kits: revenue is recognised on the date of sale.

The terms and conditions of postpaid bundled airtime products may allow for the carryover of unused value orminutes. The revenue related to the unused value or minutes is deferred and recognised when utilised by thecustomer or on termination of the contract. Breakage (forfeiture of unused value or minutes) is recognised whenthe unused value or minutes expire or when usage thereof becomes remote.

Revenue received on prepaid contracts is deferred and recognised when services are utilised by the customer oron termination of the customer relationship. Breakage is recognised when the prepaid credit expires or whenutilisation thereof becomes remote.

Interconnect/roaming

Interconnect/roaming revenue is recognised on a usage basis, unless it is not probable on the transaction date thatthe interconnect revenue will be received, in which case interconnect revenue is recognised only when the cash isreceived or where a right of set-off exists with interconnect parties in settling outstanding amounts.

F-147


4 REVENUE (continued)

Mobile telephones and accessories

Revenue on the sale of mobile telephones and accessories to third parties is recognised only when risks andrewards of ownership are transferred to the buyer.

2014 (%) 2013 (%)

3

Airtime and subscriptionRoamingDataSMSInterconnectMobile telephones andaccessoriesOther

Airtime and subscriptionRoamingDataSMSInterconnectMobile telephones andaccessoriesOther

621

154

11

61

119

10

52

60

2014 20131

Rm Rm

Airtime and subscription 88,347 85,464Roaming 1,510 1,292Data 27,478 20,504SMS 4,552 5,364Interconnect 15,009 15,367Mobile telephones and accessories 7,890 7,541Other 2,144 1,738

146,930 137,270


The Group’s unearned income at the end of the year amounts to R7 609 million (2013: R7 004 million).

5 OTHER INCOME

Other income is recognised when the risks and rewards of ownership of the assets are transferred to the buyer.

2014 2013Rm Rm

Profit on tower sales – Nigeria 7,329 —Sale proceeds 5,406 —Contingent consideration 327 —Fair value of retained interest in Nigeria Tower InterCo B.V. and equity derivative 4,309 —Carrying amount of assets and related liabilities disposed (2,713) —Profit on tower sales – other subsidiaries 70 930Sale proceeds 1,059 2,536Carrying amount of assets and related liabilities disposed (962) (1,416)Warranty provision and consultancy cost (27) (190)Total profit on tower sales 7,399 930

Realisation of deferred gain on Ghana tower sale1 31 38Realisation of deferred gain on asset swap for investment in BICS2 364 357Other 134 2

7,928 1,327

1 In 2011, Scancom Limited (MTN Ghana) concluded a transaction with American Tower Company (ATC), which involved the sale ofMTN Ghana’s base transceiver station (BTS) sites to TowerCo Ghana which is an associate of the Group. Profit was eliminated to theextent of the Group’s interest in the associate. Such unrealised profit is realised by the Group as the underlying assets are depreciated bythe associate.

2 The deferred gain arose on the contribution of various assets from MTN Dubai, MTN International Carrier Services and Uniglobe, inexchange for a 20% investment in the associate, Belgacom International Carrier Services (BICS) (note 14). This gain was deferred andis being amortised over a five-year period. The deferred gain was fully amortised during the year.

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5 OTHER INCOME (continued)

As part of the Group’s strategy to monetise its investment in tower infrastructure, the Group entered into atransaction with IHS which involves the sale of 9,132 of its mobile network towers in MTN NigeriaCommunications Limited, in two tranches to INT Towers Limited, a wholly owned subsidiary of Nigeria TowerInterCo B.V. The transaction resulted in IHS obtaining a 49% interest in Nigeria Tower InterCo B.V., with theremaining 51% interest held by the Group (note 14). Nigeria Tower InterCo B.V. has been classified as anassociate of the Group.

The first tranche of the tower sale closed on 24 December 2014 which involved the sale of 4,154 mobile networktowers by MTN Nigeria Communications Limited to INT Towers Limited for a cash consideration of US$451million and the Group recognising its equity interest in Nigeria Tower InterCo B.V. amounting to US$370million. A receivable amounting to US$29 million has been recognised based on management’s estimate of thecontingent consideration receivable.

MTN Nigeria Communications Limited will be the anchor tenant on commercial terms on the towers for aninitial period of 10 years. The transaction resulted in a sale and leaseback transaction classified as an operatinglease (note 2.13).

The second tranche of the transaction is expected to close in the second quarter of 2015 subject to customaryclosing conditions.

In addition, the Group also concluded transactions with IHS in which IHS acquired 550 mobile network towersfrom MTN Rwandacell Limited for US$48 million and 748 towers from MTN (Zambia) Limited forUS$57 million during the year. IHS is a 100% shareholder of the tower companies set up in each country tomanage the towers and other passive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited arethe anchor tenants on commercial terms of the towers for an initial term of 10 years. The transactions resulted insale and leaseback transactions classified as operating leases.

In 2013, MTN Côte d’Ivoire S.A. and Mobile Telephone Networks Cameroon Limited concluded transactionswith IHS in which IHS acquired 911 mobile network towers from MTN Côte d’Ivoire S.A. for US$141 millionand 820 towers from Mobile Telephone Networks Cameroon Limited for US$143 million. IHS is a 100%shareholder of the tower companies set up in each country to manage the towers and other passive infrastructure.The transactions resulted in sale and leaseback transactions classified as operating leases.

6 OPERATING PROFIT

Connection incentives

Connection incentives are expensed in the period in which they are incurred.

Employee benefits

Remuneration to employees in respect of services rendered during a reporting period is expensed in that reportingperiod. A liability is recognised for accumulated leave when there is a present legal or constructive obligation asa result of past service rendered by employees.

A liability for unvested short-term benefits is recognised when there is no realistic alternative other than to settlethe liability, and at least one of the following conditions is met:

• there is a formal plan and the amounts to be paid are determined before the time of issuing the annualfinancial statements; or

• achievement of previously agreed bonus criteria has created a valid expectation by employees that they willreceive a bonus and the amount can be determined before the time of issuing the annual financialstatements.

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6 OPERATING PROFIT (continued)

Post-employment benefits

Defined contribution plans

Group companies operate various defined contribution plans. Contributions to defined contribution plans inrespect of services rendered during a period are recognised as an employee benefit expense when they are due.Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the futurepayments is available.

Share-based payment transactions

The Group operates a number of share incentive schemes. For further details refer to note 44.

Termination benefits

Termination benefits may be payable when an employee’s employment is terminated before the normalretirement date due to death or retrenchment or whenever an employee accepts voluntary redundancy inexchange for these benefits.

The Group recognises termination benefits at the earlier of the following dates:

• when the Group can no longer withdraw the offer of those benefits; and

• when the Group recognises costs for a restructuring that is within the scope of IAS 37 Provisions,Contingent Liabilities and Contingent Assets that includes the payment of termination benefits.

In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based onthe number of employees expected to accept the offer. Benefits falling due more than 12 months after thereporting date are discounted to their present value.

2014 2013Rm Rm

Staff costs (8,838) (8,670)

Salaries and wages (7,109) (6,709)Post-employment benefits (405) (381)Share options granted to directors and employees (110) (215)Training (244) (293)Other (970) (1,072)

The following disclosable items have been included in arriving at operating profit:Auditors’ remuneration (129) (125)

Audit fees (104) (105)Fees for other services (14) (10)Expenses (11) (10)

Emoluments to directors and prescribed officers (note 40) (154) (149)Operating lease rentals (4,413) (3,373)

Property (4,312) (3,063)Equipment and vehicles (101) (310)

Loss on disposal of property, plant and equipment and intangible assets (69) (42)Impairment loss on property, plant and equipment (note 11) (634) (7)Reversal of impairment charge on property, plant and equipment (note 11) — 35Impairment loss on other intangible assets (note 12) (74) —Reversal of write-down/(write-down charge) of inventories (note 18) 94 (64)Impairment of trade receivables (note 19) (286) (743)1

Reversal of impairment/(impairment) of non-current receivables (note 15) 230 (223)


F-150


7 FINANCE INCOME AND FINANCE COSTS

Finance income

Finance income comprises interest income on funds invested, changes in the fair value of financial assets at fairvalue through profit or loss, foreign exchange gains and gains on hedging instruments that are recognised inprofit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs

Finance costs comprise interest expenses on borrowings, unwinding of the discount on provisions, changes in thefair value of financial assets at fair value through profit or loss, foreign exchange losses and any losses onhedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or lossusing the effective interest method, unless the borrowing costs are directly attributable to the acquisition,construction or production of qualifying assets, in which case the directly attributable borrowing costs arecapitalised.

2014 2013Rm Rm

Interest income on loans and receivables 789 653Interest income on bank deposits 2,313 1,706Foreign exchange gains1 3,670 9,063

Finance income 6,772 11,422

Interest expense on financial liabilities measured at amortised cost (5,669) (4,659)Foreign exchange losses1 (4,771) (7,997)

Finance costs (10,440) (12,656)

Net finance costs recognised in profit or loss (3,668) (1,234)

1 The foreign exchange gains and losses have been determined on an instrument-by-instrument basis.

8 INCOME TAX EXPENSE

The tax expense for the period comprises current, deferred and withholding tax. Tax is recognised in profit orloss, except to the extent that it relates to items recognised in other comprehensive income or items recogniseddirectly in equity. For these items the tax is also recognised in other comprehensive income or directly in equity,respectively.

Current tax

Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantivelyenacted at the reporting date in the countries where the Company and its subsidiaries operate and generatetaxable income, and any adjustment to tax payable in respect of previous years. Management periodicallyevaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subjectto interpretation and establishes provisions, where appropriate, on the basis of amounts expected to be paid to thetax authorities.

Deferred tax

Deferred tax is recognised using the liability method, providing for temporary differences arising between the taxbases of assets and liabilities and their carrying amounts in the consolidated annual financial statements forfinancial reporting purposes. Deferred tax is not recognised if the temporary difference arises from goodwill orfrom the initial recognition of an asset or liability in a transaction (other than a business combination) that, at thetime of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is measured at tax rates(and laws) that have been enacted or substantively enacted at the reporting date and are expected to apply totemporary differences when they reverse.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and jointventures except for deferred tax liabilities where the timing of the reversal of the temporary differences iscontrolled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

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8 INCOME TAX EXPENSE (continued)

A deferred tax asset is recognised for unused tax losses or deductible temporary differences only to the extentthat it is probable that future taxable profit will be available, against which the temporary differences can beutilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longerprobable that the related tax benefit will be realised.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, deferred tax relating to these subsidiaries is recognised using the liability method,providing for temporary differences arising between the tax bases of assets and liabilities and their restatedcarrying amounts.

Withholding tax

Withholding tax is payable at different rates varying between 0% and 20% on amounts paid to the Group by itssubsidiaries as dividends and management fees.

2014 20131

Rm Rm

Analysis of income tax expense for the yearNormal tax (13,027) (8,974)

Current year (13,226) (9,106)Adjustments in respect of the prior year 199 132

Deferred tax (note 16) 1,400 (2,192)

Current year 1,466 (2,453)Adjustments in respect of the prior year (66) 261

Capital gains tax (1) 1Foreign income and withholding taxes (1,733) (1,322)

(13,361) (12,487)


The table below explains the differences between the expected tax expense on continuing operations, at the SouthAfrican statutory rate of 28%, and the Group’s total tax expense for each year.

The Group’s effective tax rate is reconciled to the South African statutory rate as follows:

2014 20131

% %

Tax rate reconciliationTax at statutory tax rate 28.00 28.00Expenses not allowed 1.86 1.32Effect of different tax rates in other countries 0.60 1.30Income not subject to tax (4.51) (1.32)Share of results of associates and joint ventures (2.31) (2.22)Foreign income and withholding taxes 3.39 3.05Other (0.86) (1.32)

Effective tax rate 26.17 28.81


F-152


8 INCOME TAX EXPENSE (continued)

The following are the corporate tax rates applicable to the various jurisdictions in which the Group operates:

Corporate tax rate2014 2013

Country % %

Afghanistan 20 20Benin1 30 30Cameroon 38.5 38.5Congo1 30 30Côte d’Ivoire 30 30Cyprus 12.5 12.5Ethiopia 30 30Ghana 25 25Guinea 35 35Guinea-Bissau 25 25Kenya 30 30Liberia 25 25Monaco 0 – 33 0 – 33Namibia 33 33Netherlands 25 25Nigeria 30 30Rwanda 30 30South Africa 28 28South Sudan 20 20Sudan1 2.5 2.5Syria 14.7 14.7Uganda 30 30Yemen 50 50Zambia 35 35

1 The entity has been granted a tax holiday at 31 December 2014.

9 EARNINGS PER ORDINARY SHARE

Basic earnings per share

Earnings per share is calculated using the weighted average number of ordinary shares in issue during the periodand is based on the net profit attributable to ordinary shareholders. For the purpose of calculating earnings pershare, treasury shares are deducted from the number of ordinary shares in issue.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstandingto assume conversion of all dilutive potential ordinary shares and is based on the net profit attributable toordinary shareholders, adjusted for the after-tax dilutive effect. The Company has dilutive potential ordinaryshares which comprise share options and share rights issued in terms of the Group’s share schemes, performanceshare plan and the MTN Zakhele transaction.

For the share options and share rights, a calculation is done to determine the number of the Company’s sharesthat would be required at fair value to settle the monetary value of the rights, after taking into account theunamortised share-based payment value. For the purposes of this calculation the average annual market shareprice of the Company is used.

Headline earnings per share

Headline earnings per share is calculated using the weighted average number of ordinary shares in issue duringthe period and is based on the earnings attributable to ordinary shareholders, after excluding those items asrequired by Circular 2/2013 issued by the South African Institute of Chartered Accountants (SAICA).

F-153


9 EARNINGS PER ORDINARY SHARE (continued)

In terms of the MTN Zakhele B-BBEE transaction, the Group issued notional vendor financing shares toMTN Zakhele at par value (note 24). The Group has a call option over these shares. As these shares arepotentially dilutive shares, these are included in the diluted earnings per share calculation. A calculation is doneat each reporting period to determine the number of shares that could have been acquired at fair value.

2014 2013

’000 ’000

Weighted average number of shares (excluding treasury shares) 1,831,196 1,832,730Adjusted for:– Share options – MTN Zakhele 7,193 6,741– Share options — 50– Share appreciation rights 715 985– Performance share plan 2,150 1,953

Weighted average number of shares for calculation of diluted earnings per share 1,841,254 1,842,459

Refer to note 24 for a reconciliation of total shares in issue.

Reconciliation between net profit attributable to the equity holders of the Company and headline earnings:

2014 20131

RmGross

RmNet2

RmGross

RmNet2

Profit after tax 32,079 26,751Adjusted for:Net loss on disposal of property, plant and equipment and intangible assets

(IAS 16 and IAS 38) 69 63 453 34Impairment of goodwill (IAS 36) 2,033 2,033 — —Net impairment loss/(reversal of impairment) of property, plant and

equipment and intangible assets (IAS 36) 708 565 (28) (20)Loss on disposal of investment in joint venture(IAS 28) 15 15 — —Realisation of deferred gain (IAS 28) (364) (364) (357) (357)Profit on disposal of non-current assets held for sale (IFRS 5) (7,399) (6,237) (930) (510)Realisation of deferred gain on disposal of non-current assets held for sale

(IFRS 5) (31) (31) (38) (38)

Headline earnings 28,123 25,860

2014 20131

Earnings per ordinary share (cents)– Basic earnings 1,752 1,460– Basic headline earnings 1,536 1,411– Diluted earnings 1,742 1,452– Diluted headline earnings 1,527 1,404

1 Restated, refer to note 48.2 Amounts are measured after taking into account non-controlling interests and tax.3 Including profit on disposal of property, plant and equipment from joint ventures.Headline earnings is calculated in accordance with Circular 2/2013 Headline Earnings as issued by SAICA at the request of the JSE Limited.

F-154


10 DIVIDEND

Dividends distributed to the Company’s shareholders are recognised as a liability in the Group’s financialstatements in the period in which the dividends are approved by the Company’s directors.

2014 2013

Dividends paidCents

per share RmCents

per share RmFinal dividend paid in respect of the prior year 665 12,3022 503 9,3622

Interim dividend paid in respect of the current year 445 8,2252 370 6,8482

20,527 16,210

Dividends declaredApproved after the reporting date and not recognised as a liability 8001 14,6942 665 12,3022

1 Declared at the board meeting on 3 March 2015.2 Excluding dividends on 10,704,475 (2013: 22,337,752) treasury shares.

11 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are measured at historical cost less accumulated depreciation and impairmentlosses. Property, plant and equipment acquired through business combinations are initially shown at fair value(based on replacement cost) and are subsequently carried at the initially determined fair value less accumulateddepreciation and impairment losses.

Property, plant and equipment under construction (capital work-in-progress) are measured at initial cost anddepreciation commences from the date the assets are transferred to an appropriate category of property, plant andequipment, i.e. when commissioned and ready for their intended use. Purchased software that is integral to thefunctionality of the related equipment is capitalised as part of the equipment. The Group capitalises general andspecific borrowing costs directly attributable to the acquisition, construction or production of a qualifying assetas part of the cost of that asset. Other borrowing costs are expensed in profit or loss.

In circumstances whereby the Group enters into an exchange transaction, the Group determines whether such anexchange has commercial substance. Property, plant and equipment acquired in an exchange transaction ismeasured at fair value unless the exchange transaction lacks commercial substance or the fair value of neither theasset received nor the asset given up is reliably measurable. If the acquired item is not measured at fair value, itscost is measured at the carrying amount of the asset given up. Any consideration paid or payable is included inthe cost of the asset received. Property, plant and equipment received for no consideration is accounted for atzero value.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, property, plant and equipment relating to these subsidiaries are restated by applyingthe change in the general price indices from the date of acquisition to the current reporting date.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items (major components) of property, plant and equipment.

Depreciation is calculated on a straight-line basis to write off the cost of the assets to their residual values overtheir estimated useful lives. Depreciation relating to the property, plant and equipment of MTN Sudan CompanyLimited and MTN Syria (JSC) is based on the restated amounts, which have been adjusted for the effects ofhyperinflation.

Useful lives and residual values are reviewed on an annual basis and the effect of any changes in estimate isaccounted for on a prospective basis. For a summary of useful lives, refer to note 2.

Land is not depreciated. Assets held under finance leases are depreciated over their expected useful lives on thesame basis as owned assets or, where shorter, the expected term of the relevant lease.

F-155


11 PROPERTY, PLANT AND EQUIPMENT (continued)

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, only when it isprobable that future economic benefits associated with the item will flow to the Group and the cost of the itemcan be measured reliably. The carrying amount of the replaced part is derecognised. Repairs and maintenancecosts are included in profit or loss during the financial period in which they are incurred.

The gain or loss arising on the disposal or retirement of an asset is included in profit or loss.

Impairment

An impairment loss is recognised in profit or loss if the carrying amount of an asset or a cash-generating unitexceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together intocash-generating units. The recoverable amount of an asset or cash-generating unit is the greater of its value in useand its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted totheir present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset. Goodwill arising from business combinations is allocated to CGUs orthe group of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amountof any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit(group of units) on a pro rata basis.


Property, plant and equipment with finite useful lives

The Group annually reviews the carrying amounts of its property, plant and equipment and intangible assets withfinite useful lives in order to determine whether there is any indication of impairment. If any such indicationexists, the recoverable amounts of the assets are estimated in order to determine the extent, if any, of theimpairment loss.

F-156



Land andbuildings1

Rm

Leaseholdimprovements

Rm

Networkinfrastructure

Rm

Informationsystems,furnitureand officeequipment

Rm

Capitalwork-in-progress/

otherRm

Vehicles2

RmTotalRm


Additions 581 181 12,332 1,496 11,966 248 26,804Disposals (23) (4) (644) (23) — (20) (714)Reallocations3 240 3 12,104 96 (13,799) 50 (1,306)Depreciation for the year (425) (199) (14,190) (1,341) (126) (177) (16,458)Impairment loss — — (7) — — — (7)Reversal of impairment loss — — 32 — 3 — 35Other movements 57 (42) 33 (173) (131) — (256)Effect of movements in

exchange rates 373 111 8,034 518 1,774 90 10,900




6,343 1,122 70,851 3,839 10,125 623 92,903


Additions 380 196 7,539 1,287 12,604 148 22,154Disposals — (3) (172) (25) (179) (40) (419)Reallocations3 250 18 4,883 453 (11,711) 30 (6,077)Depreciation for the year (476) (195) (15,659) (1,570) (171) (191) (18,262)Impairment loss — — (471) — (163) — (634)Other movements — 8 (741) (73) (340) — (1,146)Effect of movements in

exchange rates4 (74) (13) (983) (43) 149 (9) (973)




6,423 1,133 65,247 3,868 10,314 561 87,546

1 Included in land and buildings are leased assets with a carrying amount of R179 million (2013: R180 million).2 Included in vehicles are leased assets with a carrying amount of R48 million (2013: R82 million).3 Reallocations include an amount of R5,966 million (2013: R1,265 million) relating to network infrastructure reallocated to non-current

assets held for sale (note 17).4 Includes the effect of hyperinflation.

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11.1 Impairment loss

The following entities recognised impairment losses amounting to R634 million during the year:

2014Rm

Scancom Limited (MTN Ghana) 329MTN Nigeria Communications Limited 133Mobile Telephone Networks Proprietary Limited (South Africa) 169Areeba Guinea S.A. 3

634

In 2013, MTN Nigeria Communications Limited reversed a portion of its previously recognised impairmentlosses amounting to R32 million.

11.2 Leased property, plant and equipment

The Group leases various premises and sites which have varying terms, escalation clauses and renewal rights.

Finance lease commitments are disclosed in note 36.

11.3 Capital work-in-progress

There are various capital work-in-progress projects under way within the Group, a summary thereof is setout below:

2014Rm

2013Rm

Mobile Telephone Networks Proprietary Limited (South Africa) 766 385Scancom Limited (MTN Ghana) 990 661MTN Sudan Company Limited 961 117MTN Nigeria Communications Limited 987 1,276MTN Afghanistan Limited 195 295Areeba Guinea S.A. 100 175MTN Côte d’Ivoire S.A. 303 95MTN Uganda Limited 313 263MTN (Dubai) Limited 68 243MTN Yemen 209 240MTN South Sudan Limited 391 601MTN Syria (JSC) 513 467MTN Congo S.A. 274 301

MTN Cameroon Limited 115 271

Lonestar Communications Corporation LLC 130 421

Other 304 194

6,619 5,111

1 Previously included in “Other”.

11.4 Changes in estimates

During the year, MTN Afghanistan Limited revised the useful life of its network infrastructure from 10 to6.5 years. This resulted in an increase of R86 million in the depreciation charge for the current and future years.

In 2013, MTN Uganda Limited revised the useful life of its network equipment from 12 to 10 years. MTN Syria(JSC) revised the useful life of its motor vehicles and other fixed assets from 5 to 4 years. This resulted in anincrease of R40 million and R104 million in the depreciation charge, respectively.

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11.5 Encumbrances

Borrowings are secured by various categories of property, plant and equipment with the following carryingamounts (note 26):

2014 2013Rm Rm

Scancom Limited (MTN Ghana) 5,600 6,087MTN Sudan Company Limited 4,030 3,027MTN Congo S.A. 27 —MTN Uganda Limited — 2,568MTN Rwandacell Limited — 1,419MTN Côte d’Ivoire S.A. — 127

9,657 13,228

12 INTANGIBLE ASSETS AND GOODWILL

Intangible assets with an indefinite useful life

Goodwill is measured at cost less accumulated impairment losses and is not amortised but annually tested forimpairment.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, goodwill relating to these subsidiaries is restated by applying the change in thegeneral price indices from the date of acquisition to the current reporting date.

Goodwill arising on the acquisition of subsidiaries is included in intangible assets. Goodwill arising on theacquisition of an associate or joint venture is included in “investment in associates and joint ventures” and istested for impairment as part of the overall balance.

Gains or losses on the disposal of an entity include the carrying amount of goodwill allocated to the entity sold.


The Group’s intangible assets with finite useful lives are as follows:

• licences;

• customer relationships;

• computer software; and

• other intangible assets.

Intangible assets with finite useful lives are measured at historical cost less accumulated amortisation andimpairment losses. Intangible assets acquired through business combinations are initially shown at fair value andare subsequently carried at the initially determined fair value less accumulated amortisation and impairmentlosses. The initial cost incurred in respect of licences is capitalised. Contingent licence fees are expensed as theyare incurred.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, intangible assets relating to these subsidiaries are restated by applying the changein the general price indices from the date of acquisition to the current reporting date.

Amortisation is calculated on a straight-line basis to write off the cost of intangible assets over their estimateduseful lives. Amortisation relating to MTN Sudan Company Limited and MTN Syria (JSC) is based on therestated amounts, which have been adjusted for the effects of hyperinflation. For a summary of useful lives, referto note 2.

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12 INTANGIBLE ASSETS AND GOODWILL (continued)

The gain or loss arising on the disposal or retirement of an intangible asset is included in profit or loss.

Costs associated with maintaining intangible assets are recognised as an expense as incurred. Costs that aredirectly associated with the production of identifiable intangible assets controlled by the Group, and that willprobably generate economic benefits, are capitalised when all the criteria for capitalisation are met.

Expenditure that enhances or extends the performance of intangible assets beyond their original specifications isrecognised as a capital improvement and added to the original cost of the assets. Expenditure on researchactivities is recognised as an expense in the period in which it is incurred.

Determination of fair values

The fair value of customer relationships acquired in a business combination is determined using the multi-periodexcess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets thatare part of creating the related cash flows.

The fair value of patents and trademarks acquired in a business combination is based on the discounted estimatedroyalty payments that have been avoided as a result of the patent or trademark being owned.

The fair values of all other intangible assets acquired in a business combination applicable to the Group are basedon the discounted cash flows expected to be derived from the use and eventual sale of the assets.

Impairment

An impairment loss is recognised in profit or loss if the carrying amount of an asset or cash-generating unitexceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together intocash-generating units. The recoverable amount of an asset or cash-generating unit is the greater of its value in useand its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted totheir present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amountof any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit(group of units) on a pro rata basis.


F-160



GoodwillRm

LicencesRm

Customerrelationships

RmSoftware1

Rm

Otherintangible

assetsRm

Capitalwork-in-progress

RmTotalRm

Carrying amount at 1 January 2013 21,320 5,318 — 5,592 364 — 32,594Additions — 139 — 1,991 — 1,369 3,499Disposals — — — (9) — — (9)Re-allocations — 85 — 255 4 (303) 41Amortisation for the year — (829) — (1,895) (96) — (2,820)Other movements — (50) — 36 (33) 148 101Effect of movements in exchange

rates 2,840 966 — 489 32 18 4,345

Carrying amount at 31 December2013 24,160 5,629 — 6,459 271 1,232 37,751

Comprising:Cost 24,160 13,624 4,408 13,480 1,119 1,232 58,023Accumulated amortisation and

impairment losses — (7,995) (4,408) (7,021) (848) — (20,272)

24,160 5,629 — 6,459 271 1,232 37,751

Carrying amount at 1 January 2014 24,160 5,629 — 6,459 271 1,232 37,751Additions 844 71 816 2,144 247 1,108 5,230Disposals — — — (204) — — (204)Re-allocations — 210 — 2,197 — (2,296) 111Amortisation for the year — (882) (31) (2,320) (18) — (3,251)Impairment loss (2,033) — — (74) — — (2,107)Other movements — — 11 (1) (9) — 1Effect of movements in exchange

rates2 (746) (26) (5) (137) — 1 (913)




22,225 5,002 791 8,064 491 45 36,618

1 Included in software are leased assets with a carrying amount of R733 million (2013: R670 million).2 Includes the effect of hyperinflation.

F-161



12.1 Goodwill

A summary of the goodwill allocation and related assumptions applied for impairment testing purposes arepresented below:

2014 2013

Growthrate%

Discountrate% Rm

Growthrate%

Discountrate% Rm

MTN Côte d’Ivoire S.A. 2.5 12.2 2,599 2.5 13.1 2,697Scancom Limited (MTN Ghana) 7.5 19.5 6,957 7.0 17.9 8,760MTN Sudan Company Limited 10.0 32.6 784 10.0 28.4 2,385MTN Yemen 7.1 26.2 3,338 7.5 36.1 3,040MTN Afghanistan Limited 5.0 19.2 1,645 5.0 17.0 1,560MTN Uganda Limited 5.0 17.2 676 5.0 16.1 674MTN Congo S.A. 2.7 11.6 860 2.6 12.4 892MTN Syria (JSC) 6.5 25.7 146 6.7 29.2 183MTN Cyprus Limited 2.0 9.9 841 1.8 12.8 873Spacetel Benin SA 2.8 14.2 1,331 2.8 11.2 1,381Areeba Guinea S.A. 5.9 17.0 918 6.0 21.7 860Mobile Telephone Network Proprietary Limited

(South Africa) 5.9 13.4 525 — — —Afrihost Proprietary Limited 5.9 13.4 319 — — —Lonestar Communications Corporation LLC (Liberia)1 5.0 16.4 332 5.0 12.4 303MTN Rwandacell1 5.0 14.6 370 5.0 13.3 336Other 584 216

Total 22,225 24,160


Goodwill is tested annually for impairment. The recoverable amounts of CGUs were determined based on value-in-use calculations. The calculations mainly used cash flow projections based on financial budgets approved bymanagement covering a 3 to 10-year period. Management is confident that projections covering periods longerthan five years are appropriate based on the long-term nature of the Group’s infrastructure and operating model.Cash flows beyond the above period were extrapolated using the estimated growth rates measured below. Thefollowing key assumptions were used for the value-in-use calculations:

• growth rates: the Group used steady growth rates to extrapolate revenues beyond the budget period cashflows. The growth rates were consistent with publicly available information relating to long-term averagegrowth rates for each of the markets in which the respective CGU operated. The average growth rates usedranged from 2.0% to 10.0% (2013: 1.8% to 10.0%); and

• discount rates: discount rates ranged from 9.9% to 32.6% (2013: 11.2% to 36.1%). Discount rates usedreflect specific risks relating to the relevant CGU.

Goodwill impairment

During the year, an impairment loss amounting to R2,033 million (2013: Rnil) was recognised relating to MTNSudan Company Limited.

Individually material intangible assets

Other than goodwill, network licences and software, there were no items of intangible assets that wereindividually material at the end of the current or prior year.

12.2 Encumbrances

Borrowings are secured by intangible assets of Scancom Limited (MTN Ghana) with a carrying amount ofR539 million (2013: R560 million).

F-162



12.3 Licences


Mobile Telephone NetworksProprietary Limited (South Africa)

ECS licence 15/01/2009 15 years

ECNS licence 15/01/2009 20 years900MHz1,800MHz 1/01/2010 Renewable annually3G

MTN Uganda Limited 900MHz 15/04/1998 20 years1,800MHz

MTN Rwandacell Limited GSM 1/07/2008 13 yearsSNO 30/06/2006 15 years

MTN Zambia Limited 900MHz1,800MHz 23/09/2010 15 years2,100MHz

MTN Nigeria CommunicationsLimited

1,800MHz 9/02/2001 15 years

3G spectrum licence 1/05/2007 15 yearsUnified access licence (includinginternational gateway)

1/09/2006 15 years

WACS 1/01/2010 20 yearsWiMax 3.5GHz spectrum 2007 Renewable annuallyMicrowave spectrum 2001 Renewable annually8GHz – 26GHz

Scancom Limited (MTN Ghana) 900MHz 2/12/2004 15 years1,800MHz3G 23/01/2009 15 years

Mobile Telephone Network 900MHz1 15/02/2000 15 years

Cameroon Limited

First category network for internetaccess and VPN

31/03/2006 10 years

MTN Côte d’Ivoire S.A. 900MHz 2/04/1996 20 years1,800MHzWiMax 2.5 – 3.5GHz 31/07/2002 20 years3G/UMTS 1.9/2.1GHz 31/05/2012 10 years

Spacetel Benin SA 900MHz 19/10/2007 25 years1,800MHzUniversal licence 19/03/2012 20 years

Areeba Guinea S.A. 900MHz 31/08/2005 18 years1,800MHzWiMax1 4/06/2009 5 years3G 14/08/2013 10 years

MTN Congo S.A. 900MHz 25/11/2011 15 years1,800MHz 25/11/2011 15 yearsInternational gateway 5/02/2002 15 yearsOptical fibre licence 2/04/2010 15 years3G 25/11/2011 17 years2G 25/11/2011 15 yearsInternational gateway byoptical fibre

3/06/2013 10 years

F-163



12.3 Licences (continued)


Lonestar CommunicationsCorporation LLC(Liberia)

900MHz

1,800MHz 24/03/2009 15 yearsWiMax3G 19/02/2013 10 years

Spacetel Guinea-Bissau SA 1,800MHz900MHz 23/05/2014 10 years

MTN Syria (JSC)1 900MHz 29/06/2002 15 years1,800MHz 22/03/2007 10 years3G 29/04/2009 8 yearsISP 2009 Renewable annually

MTN Sudan Company Limited Frequency 2G + 3GTransmissionVSAT gateway 25/10/2003 20 yearsVSAT hubVSAT terminal

MTN Afghanistan Limited 3G unified licence 1/07/2012 15 years

MTN Yemen 900MHz 31/07/2000 15 years1,800MHz 17/02/2008 15 years

MTN Cyprus Limited 900MHz1,800MHz 1/12/2003 20 years4G (LTE) 2 100MHz


13 INVESTMENTS

Investments consist of held-to-maturity and available-for-sale financial assets that are accounted for inaccordance with the accounting policy disclosed in note 43.

2014 2013Rm Rm

Held-to-maturity financial assetsTreasury bills with a fixed interest rate of 6,3% (2013: 6,3%) which mature in 20181 107 111Bonds with a fixed interest rate of 5,8% which mature in 20191 116 —Available-for-saleInvestment in IHS 5,773 —Unlisted equity investment 139 —

6,135 111

1 Denominated in Côte d’Ivoire Communauté Financière Africaine franc.

The recoverability of the investments was assessed at the reporting date and was found not to be impaired.

There were no held-to-maturity or available-for-sale financial assets disposed of in 2013 or in 2014.

F-164


14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES

Associates and joint ventures are accounted for using the equity method and are recognised initially at cost. TheGroup’s investment in associates and joint ventures include goodwill identified on acquisition net of anyaccumulated impairment losses. The consolidated annual financial statements include the Group’s share of post-acquisition accumulated profits or losses of associated companies and joint ventures in the carrying amount ofthe investments, which are generally determined from their latest audited annual financial statements ormanagement accounts and the annual profit attributable to the Group is recognised in profit or loss. The Group’sshare of any post-acquisition movement in reserves is recognised in other comprehensive income. Thecumulative post-acquisition movements are adjusted against the carrying amount of the investment.

Where an associate or joint venture’s functional currency is the currency of a hyperinflationary economy, theresults and financial position of the associate or joint venture are restated in order to calculate the Group’s shareof net assets and profit or loss.

The carrying amount of the Group’s investments in associates and joint ventures is reduced to recognise anypotential impairment in the value of individual investments. When the Group’s share of losses in an associate orjoint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise furtherlosses, unless the Group has an obligation, issued guarantees or made payments on behalf of the associate or jointventure.

Dilution gains or losses arising on investments in associates and joint ventures are recognised in profit or loss. Ifthe ownership interests in an associate or joint venture is reduced but significant influence is retained, only aproportionate share of the amounts previously recognised in other comprehensive income is reclassified to profitor loss. Profits or losses resulting from upstream and downstream transactions between the Group and itsassociates and joint ventures are recognised in the Group’s annual financial statements only to the extent ofunrelated investors’ interests in the associates and joint ventures. Unrealised losses are eliminated unless thetransaction provides evidence of an impairment of the asset transferred.

Accounting policies of associates and joint ventures have been changed where necessary to align them with thepolicies of the Group.

2014Rm

2013Rm

Investment in associates 5,975 2,095Investment in joint ventures 19,539 10,548

Total investment in associates and joint ventures 25,514 12,643

Share of results of associates after tax (127) 23Share of results of joint ventures after tax 4,335 3,408

Total share of results of associates and joint ventures after tax 4,208 3,431

Share of results of associates after tax comprises:Share of results of associates after tax (28) 120Amortisation of customer relationships – BICS (146) (150)

(174) (30)Unwind of deferred tax on customer relationships – BICS 47 53

(127) 23

Investment in associates

Unless otherwise stated, the Group’s associates’ countries of incorporation are also their principal place ofoperation.

F-165


14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)

The Group has the following effective interests in associates:

Associate Principal activityCountry of

incorporation


2014 2013

Belgacom International CarrierServices SA (BICS) Telecommunications

Belgium 20 20

Nigeria Tower InterCo B.V. Management oftelecommunicationinfrastructure

Netherlands 51 —

Uganda Tower InterCo B.V. Management oftelecommunicationinfrastructure

Netherlands 49 49

Ghana Tower InterCo B.V. Management oftelecommunicationinfrastructure

Netherlands 49 49

Number Portability Proprietary Limited Porting South Africa 20 20

Content Connect Africa Proprietary Limited Telecommunications South Africa 36 —

BelgacomInternational

CarrierServices

SA (BICS)Rm

UgandaTower

InterCo B.V.Rm

GhanaTower

InterCo B.V.Rm

NigeriaTower

InterCo B.V.1Rm

OtherRm

TotalRm

2013Balance at beginning of the year 1,493 270 — — 2 1,765Additions — 69 — — — 69Other income (note 5) — — 38 — — 38Share of results after tax including

amortisation of customer relationships 44 (77) — — 3 (30)Dividend income (220) — — — — (220)Other equity movements — (45) (38) — — (83)Effect of movements in exchange rates 469 87 — — — 556

Balance at end of the year 1,786 304 — — 5 2,095

2014Balance at beginning of the year 1,786 304 — — 5 2,095Additions — 46 — 4,178 — 4,224Other income (note 5) — — 31 — — 31Share of results after tax including

amortisation of customer relationships 112 (221) — (64) (1) (174)Dividend income (233) — — — — (233)Other equity movements — — (31) — — (31)Effect of movements in exchange rates (4) 34 — 34 (1) 63


1 During the year, the Group entered into a transaction with IHS in which it sold its mobile network towers in MTN NigeriaCommunications Limited to INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V. The transaction resulted inIHS obtaining a 49% interest in Nigeria Tower InterCo B.V. and the Group increasing its equity interest by US$370 million (note 5).

F-166



Summarised financial information of associates

Set out below is the summarised financial information of each associate that is material to the Group. Thesummarised financial information is adjusted to reflect adjustments made by the Group when applying the equitymethod as required by IFRS 12 Disclosure of Interests In Other Entities.

Belgacom InternationalCarrier Services SA

(BICS)Uganda TowerInterCo B.V.

2014 2013 2014 2013Rm Rm Rm Rm


Non-current assets 2,441 3,386 2,308 2,190Current assets 10,211 9,532 289 216


Non-current liabilities 139 99 1,767 1,459Current liabilities 9,056 8,530 497 326

Net assets 3,457 4,289 333 621% ownership interest held 20 20 49 49

Interest in associate excluding goodwill 691 858 163 304Goodwill 970 928 — —

Balance at end of the year 1,661 1,786 163 304

Summarised income statementRevenue 22,784 21,279 608 474EBITDA 1,944 1,798 109 42Profit before tax 908 500 (450) (156)Income tax expense (348) (283) — —

Profit/(loss) after tax 560 217 (450) (156)% ownership interest held 20 20 49 49

Share of results of associates after tax including amortisationof customer relationships 112 44 (221) (77)

F-167



Nigeria TowerInterCo B.V.

Ghana TowerInterCo B.V.

2014 2013 2014 2013Rm Rm Rm Rm

Summarised statement of financial positionTotal assets 10,152 — 2,248 3,169

Non-current assets 9,627 — 1,047 2,001Current assets 525 — 1,201 1,168

Total liabilities 2,019 — 4,817 4,185

Non-current liabilities 2,005 — 4,124 3,557Current liabilities 14 — 693 628

Net assets 8,133 — (2,569) (1,016)% ownership interest held 51 — 49 49

Interest in associate excluding goodwill 4,148 — (1,259) (498)Unrecognised share of losses from associate — — 9821 3311

Unrecognised share of other comprehensive losses from associate — — 2771 1671

Balance at end of the year 4,148 — — —

Summarised income statementRevenue — — 1,053 893EBITDA (125) — 445 367Loss before tax (125) — (1,227) (879)Income tax expense — — 33 260

Loss after tax (125) — (1,194) (619)% ownership interest held 51 — 49 49

Share of results after tax including amortisation of customerrelationships (64) — (585) (303)

Unrecognised share of losses from associate — — 585 303

Share of results of associates after tax (64) — — —

1 Translated at rates of exchange ruling at the reporting date.

There are no significant contingent liabilities relating to the Group’s interests in these associates at the end of thecurrent or prior year.

Investment in joint ventures

The Group has the following effective interests in joint ventures:

Joint venture Principal activityCountry of

incorporation

Effective %interest in issued

ordinary share capital

2014 2013

Irancell TelecommunicationCompany Services (PJSC) Network operator Iran 49 49

Mascom Wireless BotswanaProprietary Limited Network operator Botswana 53.1 53.1

Swazi MTN Limited Network operator Swaziland 30 30MTN Mobile Money Holdings Proprietary

Limited Wireless banking services South Africa — 50Deci Investments Holding company Botswana 33.3 33.3Middle East Internet Holding S.A.R.L (MEIH)1 Telecommunications Luxemburg 50 —Africa Internet Holding GmbH (AIH)2 Telecommunications Berlin 33.3 —

1 The entity operates in various countries across the Middle East.2 The entity operates in various countries across Africa.

F-168



The joint ventures listed above are unlisted and their countries of incorporation are also their principal place ofoperation unless otherwise indicated.

During the year the Group acquired a 50% interest in Middle East Internet Holding S.A.R.L (MEIH), a jointventure, for EUR120 million consisting of a EUR40 million cash payment and EUR80 million contingentconsideration, and a 33.3% interest in Africa Internet Holding GmbH (AIH) for EUR168 million.

The net fair values of the joint ventures’ assets and liabilities at acquisition date are provisional and will befinalised in 2015.

The economy of Iran has been classified as hyperinflationary. As a result, the Group’s joint venture in Iran hasbeen accounted for as an entity operating in a hyperinflationary economy. The results for the period ended31 December 2014 and 2013 and financial position at 31 December 2014 and 2013 of the joint venture have beenrestated in order to calculate the Group’s share of its net assets and profit or loss. The general price index used aspublished by the IMF is set out below:

Base year

Generalpriceindex

Inflationrate%

31 December 2014 2011 224 20.0031 December 2013 2011 187 19.69

The cumulative inflation rate over three years as at 31 December 2014 is 102.80%.

The average adjustment factor used for 2014 was 1.11 (2013: 1.09).

All joint ventures have year ends consistent with that of the Company with the exception of IrancellTelecommunication Company Services (PJSC) that has a year end of 21 December, in line with statutoryrequirements in Iran.

IrancellTelecommunication

CompanyServices(PJSC)

Rm

MascomWireless

BotswanaProprietary

LimitedRm

AfricaInternetHolding

GmbH (AIH)Rm

OtherRm

TotalRm

2013Balance at beginning of the year 1,543 1,039 — 298 2,880Hyperinflation adjustment1 5,563 — — — 5,563Share of results after tax 3,115 237 — 56 3,408Dividend income (1,391) — — (61) (1,452)Other comprehensive income and effect of

movements in exchange rates — 120 — 29 149

Balance at end of the year 8,830 1,396 — 322 10,548

2014Balance at beginning of the year 8,830 1,396 — 322 10,548Additions — — 2,453 1,773 4,226Share of results after tax 4,113 250 (94) 66 4,335Dividend income (2,400) (243) — (71) (2,714)Other equity movements — (87) — — (87)Other comprehensive income and effect of

movements in exchange rates including theeffect of hyperinflation1 3,433 13 (106) (109) 3,231

Balance at end of the year 13,976 1,329 2,253 1,981 19,539

1 Refer to note 1.3.3 for the Group’s accounting policy with regards to those entities whose functional currency is the currency of ahyperinflationary economy.

F-169



Summarised financial information of joint ventures

Set out below is the summarised financial information of each joint venture that is material to the Group. The summarisedfinancial information is adjusted to reflect adjustments made by the Group when applying the equity method.

Irancell TelecommunicationCompany Services (PJSC)

Africa InternetHolding GmbH

Mascom Wireless BotswanaProprietary Limited

2014Rm

2013Rm

2014Rm

2013Rm

2014Rm

2013Rm

Summarised statement offinancial position

ASSETSNon-current assets 35,184 27,657 44 — 1,050 875Property, plant and equipment 28,221 21,020 38 — 903 726Intangible assets 6,955 2,702 5 — 128 133Loans and other non-current

receivables 8 3,935 1 — 1 —Deferred tax assets — — — — 18 16Current assets 25,925 14,591 3,586 — 679 1,086Inventories 141 76 109 — 10 6Trade and other receivables 11,856 3,238 3,116 — 108 772Restricted cash 1,345 253 — — — —Cash and cash equivalents 12,583 11,024 329 — 561 308Other current assets — — 32 — — —

Total assets 61,109 42,248 3,630 — 1,729 1,961

LIABILITIESNon-current liabilities 4,193 3,360 13 — 301 428Borrowings — — — — 121 240Deferred tax liabilities 3,951 2,788 — — 109 103Provisions 242 548 — — — —Other non-current liabilities — 24 13 — 71 85Current liabilities 28,575 20,895 336 — 381 345Trade and other payables 20,034 13,444 223 — 337 329Unearned income 1,507 1,450 — — — —Provisions 183 185 16 — — —Taxation liabilities 1,714 1,332 74 — 4 16Borrowings 5,137 4,484 15 — 40 —Other current liabilities — — 8 — — —

Total liabilities 32,768 24,255 349 — 682 773

Net assets 28,341 17,993 3,281 — 1,047 1,188Non-controlling interests-

deficit in net assets — — 268 — — —

Total net assets 28,341 17,993 3,549 — 1,047 1,188% ownership interest held 49 49 33.3 — 53.1 53.1

Interest in joint ventureexcluding goodwill 13,887 8,816 1,183 — 556 631

Adjustment up to 31 December20141 — — (42) — — —

Goodwill 89 14 1,112 — 773 765

Balance at end of the year 13,976 8,830 2,253 — 1,329 1,396

1 Summarised financial information presented above with regards to the Group’s interest in AIH is as per the latest available managementaccounts at 30 September 2014. Preparation of the financial statements at 31 December 2014 by AIH was impracticable. Appropriateadjustments have been made to the Group’s interest and share of results for the effects of significant transactions and events thatoccurred for the three months up to the reporting date.

F-170



Irancell TelecommunicationCompany Services (PJSC)

Africa InternetHolding GmbH

Mascom Wireless BotswanaProprietary Limited

2014 2013 2014 2013 2014 2013Rm Rm Rm Rm Rm Rm

Summarised income statementRevenue 27,113 22,916 383 — 1,578 1,483Other income 119 — — — — —Operating expenses (15,480) (13,090) (888) — (763) (721)

EBITDA 11,752 9,826 (505) — 815 762Depreciation of property, plant and

equipment (4,300) (3,438) — — (131) (179)Amortisation of intangible assets (955) (645) — — (90) (10)

Operating profit/(loss) 6,497 5,743 (505) — 594 573Finance income 2,459 1,452 224 — 15 17Finance costs (692) (587) (1) — (13) (19)Net monetary gain 1,892 1,280 — — — —

Profit/(loss) before tax 10,156 7,888 (282) — 596 571Income tax expense (1,763) (1,531) — — (125) (125)

Profit/(loss) after tax 8,393 6,357 (282) — 471 446% ownership interest held 49 49 33.3 — 53.1 53.1

Share of results after tax 4,113 3,115 (94) — 250 237

Summarised financial information has not been presented with regards to the Group’s interest in MEIH as theentity is in its start-up phase and preparation of financial statements at the Group reporting date wasimpracticable. Appropriate adjustments have been made to the Group’s interest and share of results for theeffects of significant transactions and events that occurred up to the reporting date.

Cash and cash equivalents and other funds relating to Irancell Telecommunication Company Services (PJSC) aresubject to sanctions, but is available for use within the Iranian operation. Dividends receivable of R5,640 million(2013: R3,110 million) declared by Irancell Telecommunication Company Services (PJSC) have not beenreceived by the Group as at 31 December 2014 but are still considered recoverable. The Group continues toexplore acceptable channels that are compliant with ongoing sanctions for repatriation of these funds.

Commitments relating to joint ventures

Commercial commitments


The investment in Irancell is subject to a number of sovereign, regulatory and commercial risks, which couldresult in the Group failing to realise full market value of its investment should it be required to dispose of anyportion thereof. In this regard, 21% of Irancell is required to be offered to members of the Iranian public withinapproximately three years from the date of the licence. Such offering could have a proportional dilutory effect onthe Company’s 49% shareholding, effectively reducing its shareholding by 10.3% to 38.7%. Local managementtogether with the shareholders continue to engage the regulator on this matter.

F-171



2014Rm

2013Rm

Capital commitmentsShare of capital expenditure of joint ventures for the acquisition of property, plant and equipment

and software not yet incurred at the reporting date is as follows:– Contracted 3,153 1,653– Authorised but not contracted 1,064 1,610

4,217 3,263

Operating lease commitmentsThe Group’s share of future aggregate minimum lease payments under non-cancellable operating

lease arrangements are as follows:Not later than one year 16 —

16 —

Contingent liabilities relating to joint ventures

There are no significant contingent liabilities relating to the Group’s interests in its joint ventures.

Licences

Licences awarded to the joint ventures are set out below:


Irancell Telecommunication Company 2G 07/09/2006 15 yearsServices (PJSC) WiMax1 28/02/2009 6 years

3G 17/08/2014 7 years

Mascom Wireless Botswana 900MHz1,800MHz 13/06/2013 15 years2,100MHz

Swazi MTN Limited 900MHz1,800MHz 28/11/2008 10 years2,100MHz 26/09/2011 7 years


15 LOANS AND OTHER NON-CURRENT RECEIVABLES

Loans and other non-current receivables are accounted for as loans and receivables in accordance with theaccounting policy disclosed in note 43.

2014Rm

20131

Rm

Loan to Uganda Tower InterCo B.V.2 887 704Loan to Ghana Tower InterCo B.V.3 2,023 1,688Loan to Nigeria Tower InterCo B.V.4 1,039 —Non-current interconnect receivables 355 203Other non-current receivables 973 2,398Non-current prepayments and advances 1,019 2,638

6,296 7,631

1 Restated, refer to note 48.2 The loan to Uganda Tower InterCo B.V. attracts interest at LIBOR +5.3% per annum. The loan is repayable in 2019.3 The loan to Ghana Tower InterCo B.V. attracts interest at a fixed interest rate of 9.0% per annum. The loan is repayable in 2016.4 The loan to Nigeria Tower InterCo B.V. attracts interest at a fixed interest rate of 10.0% per annum subject to review, and is repayable

in 2024.

F-172


15 LOANS AND OTHER NON-CURRENT RECEIVABLES (continued)

The recoverability of the loans was assessed at the reporting date and was found not to be impaired.

An impairment reversal of R230 million (2013: R223 million charge) in respect of non-current interconnectreceivables was recognised in 2014 (note 6).

16 DEFERRED TAXES

Deferred tax is accounted for in accordance with the accounting policy disclosed in note 8.

1 January20131

Rm


Rm

Exchangeand other

movementsRm

31 December20131

Rm


Rm

Exchangeand other

movements2

Rm

31 December2014Rm

Provisions 952 301 (179) 1,074 (127) 13 960Tax loss carried forward 30 540 17 587 (248) (30) 309Arising due to fair value

adjustments on businesscombinations/revaluations (250) (23) 227 (46) 45 23 22

Working capitalallowances 209 (188) 1 22 549 — 571

Tax allowances in excessof depreciation (8,579) (3,124) (1,303) (13,006) 805 418 (11,783)

Other temporarydifferences (396) 302 37 (57) 376 (301) 18

Net deferred tax liability (8,034) (2,192) (1,200) (11,426) 1,400 123 (9,903)

Comprising:Deferred tax assets 1,291 2,044 1,109Deferred tax liabilities (9,325) (13,470) (11,012)

(8,034) (11,426) (9,903)

1 Restated, refer to note 48.2 Includes the effect of hyperinflation.

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related taxbenefit through future taxable profits is probable.

There were no deductible temporary differences, unused tax losses or unused tax credits for which no deferredtax asset has been recognised in the statement of financial position in the current or prior year.

17 NON-CURRENT ASSETS HELD FOR SALE

Non-current assets (or disposal groups) are classified as non-current assets held for sale and are stated at thelower of their carrying amounts and fair value less costs to sell when their carrying amounts are to be recoveredprincipally through sale rather than continued use and the sale is considered to be highly probable.

2014Rm

2013Rm

Balance at beginning of the year 1,281 1,373Additions 6,899 1,265

Re-allocations from property, plant and equipment 5,966 1,265Other additions 933 —

Disposals (3,675) (1,416)Effect of movements in exchange rates (657) 59


F-173


17 NON-CURRENT ASSETS HELD FOR SALE (continued)

The Group entered into a transaction with IHS which involves the sale of its mobile network towers in MTNNigeria Communications Limited in two tranches to INT Towers Limited, a wholly owned subsidiary of NigeriaTower InterCo B.V.

The first tranche of the tower sale closed on 24 December 2014 which involved the sale of 4,154 mobile networktowers by MTN Nigeria Communications Limited to INT Towers Limited (note 5).

The second tranche of the transaction involves approximately 4,978 mobile network towers and is expected toclose in the second quarter of 2015 subject to customary closing conditions. The carrying value of the mobiletowers to be sold has been included in non-current assets held for sale.

In addition, the Group concluded transactions with IHS in which IHS acquired 550 mobile network towers fromMTN Rwandacell Limited for US$48 million and 748 mobile network towers from MTN (Zambia) Limited forUS$57 million during the year. IHS is a 100% shareholder of the tower companies set up in each country tomanage the towers and other passive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited willbe the anchor tenants on commercial terms on the towers for an initial term of 10 years.

18 INVENTORIES

Inventories mainly comprises handsets, SIM cards, accessories held for sale and consumable items.

Inventories are measured at the lower of cost and net realisable value. The cost of inventory is determined usingthe weighted average method. Cost comprises direct materials and, where applicable, overheads that have beenincurred in bringing the inventories to their present location and condition, excluding borrowing costs. Netrealisable value represents the estimated selling price in the ordinary course of business, less applicable variableselling expenses.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, inventories relating to these subsidiaries are measured at the lower of restated costand net realisable value.

2014Rm

2013Rm

Finished goods (handsets, SIM cards and accessories) – at cost 3,775 3,746Consumables 100 51Less: Write-down to net realisable value (463) (571)

3,412 3,226

The following subsidiaries have secured facilities through the pledge of their inventories(note 26):

Scancom Limited (MTN Ghana) 39 64MTN Uganda Limited — 33

39 97

Reconciliation of write-down of inventory


RmAdditions1

RmReversals1

RmUtilised

Rm

Exchangemovements

Rm

At end ofthe year

Rm

2014Movement in write-down (571) (7) 101 10 4 (463)

2013Movement in write-down (469) (95) 31 1 (39) (571)

1 A reversal of impairment charges on inventories of R94 million (2013: R64 million write-down) was recognised in the current year. Thisamount is included in other operating expenses in profit or loss (note 6).

F-174


19 TRADE AND OTHER RECEIVABLES

Trade receivables are amounts due from customers for merchandise sold or services rendered in the ordinarycourse of business; and are accounted for as loans and receivables in accordance with the accounting policydisclosed in note 43.

Prepayments and other receivables are stated at their nominal values.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies ofhyperinflationary economies, prepayments relating to these subsidiaries are restated by applying the change inthe general price indices from the date of payment to the current reporting date.

2014Rm

20131

Rm

Trade receivables 17,253 15,020Less: Allowance for impairment of trade receivables (note 43.4) (2,514) (2,679)

Net trade receivables 14,739 12,341Loan to Irancell Telecommunication Company Services (PJSC)2 5,120 4,468Dividend receivable from Irancell Telecommunication Company Services (PJSC)2 5,640 3,110Prepayments and other receivables3 2,961 2,943Sundry debtors and advances4 4,358 1,959

32,818 24,821

1 Restated, refer to note 48.2 The loan to Irancell Telecommunication Company Services (PJSC) attracts interest at Libor +4% per annum which is capitalised

against the loan. The loan and capitalised interest were payable in 2014; however, due to sanctions imposed on Iran, this loan anddividends declared remain unpaid. The Group continues to explore acceptable channels that are compliant with ongoing sanctions forrepatriation of these funds. The recoverability of these funds was assessed at the reporting date and was found not to be impaired.

3 Prepayments and other receivables include prepayments for base transceiver station (BTS) sites and other property leases.4 Sundry debtors and advances include advances to suppliers.

An impairment loss of R286 million (2013: R743 million1) was incurred in the current year. This amount isincluded in other operating expenses in profit or loss (note 6).

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its trade and other receivablesamounting to R1,427 million (2013: R949 million).

The Group does not hold any collateral for trade and other receivables.

The Group’s exposure to credit and currency risk relating to trade and other receivables is disclosed in note 43.

20 CURRENT INVESTMENTS

Current investments consist of loans and receivables, financial assets held at fair value and held-to-maturityfinancial assets that are accounted for in accordance with the accounting policy disclosed in note 43.

2014Rm

2013Rm

Loans and receivablesForeign currency fixed deposits with fixed interest rates of 2.0% – 2.8%(2013: 1.1% – 2.5%)1 1,098 1,283Foreign currency fixed deposits with a fixed interest rate of 2.0%1 178 —

1,276 1,283

Financial assets held at fair valueInvestment in insurance cell captives (note 43.3) 906 691Held-to-maturity financial assetsTreasury bills with fixed interest rates of 10.8% – 14.5% (2013: 11.6% – 12.4%) and maturity

dates between January and December 2015 (2013: January and April 2014)2 3,469 2,568

Total current investments 5,651 4,542

1 Denominated in United States dollar.2 Denominated in Nigerian naira.

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20 CURRENT INVESTMENTS (continued)

No provision for impairment has been raised as at the reporting date as all investments are considered to befully performing.

There were no disposals of held-to-maturity financial assets in 2013 or in 2014.

21 DERIVATIVES

Derivatives are accounted for in accordance with the accounting policy disclosed in note 43.

2014 2013Rm Rm

Derivatives held for tradingCurrent assetsForward exchange contracts 49 20Floating-to-fixed interest rate swap — 2Equity derivative 134 —

183 22Current liabilitiesFloating-to-fixed interest rate swap (2) (3)

181 19

Gains/(losses) accounted for directly in profit or loss 23 (29)Notional principal amount (US$ forward exchange contracts) 3,837 305Notional principal amount (EUR forward exchange contracts) 83 29Notional principal amount (US$ interest rate swap) 672 152

22 RESTRICTED CASH

Restricted cash comprises short-term deposits that are not highly liquid and are accounted for as loans andreceivables in accordance with the accounting policy disclosed in note 43.

2014Rm

2013Rm

Restricted cash deposits 893 2,222

Restricted cash deposits include an amount of R331 million (2013: R1 633 million) relating to the Syrianoperations which is not available for use by the Group due to exchange control regulations and a lack of foreigncurrency in Syria. The cash balance is considered to represent excess cash not required for payment of Syrianpound denominated liabilities.

Other restricted cash deposits consist of monies placed on deposit with banks to secure letters of credit, whichwere undrawn and not freely available at the reporting date.

23 NET CASH AND CASH EQUIVALENTS

Cash and cash equivalents are accounted for as loans and receivables and bank overdrafts are accounted for asfinancial liabilities in accordance with the accounting policy disclosed in note 43.

Cash and cash equivalents comprise cash on hand and deposits held on call, all of which are available for use bythe Group. Bank overdrafts are included within current liabilities on the statement of financial position, unlessthe Group has a legally enforceable right to set off the amounts and intends to settle on a net basis, or realise theasset and settle the liability simultaneously, in which case it is netted off against cash and cash equivalents on thestatement of financial position.

F-176


23 NET CASH AND CASH EQUIVALENTS (continued)

For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:

2014Rm

2013Rm

Cash at bank and on hand 43,098 39,600Bank overdrafts (26) (23)

43,072 39,577

The following subsidiaries have secured facilities through the pledge of their cash and cash equivalents (note 26):

2014Rm

2013Rm

Scancom Limited (MTN Ghana) 876 1,325MTN Sudan Company Limited — 29MTN Uganda Limited — 628

876 1,982

24 ORDINARY SHARE CAPITAL AND SHARE PREMIUM

Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of newordinary shares or share options are recognised in equity as a deduction (net of tax) from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the considerationpaid, including any directly attributable incremental external costs (net of tax), is deducted from equityattributable to the Company’s equity holders until the shares are cancelled or re-issued. Where such ordinaryshares are subsequently re-issued, any consideration received, net of any directly attributable incrementaltransaction costs and the related income tax effects, is included in equity attributable to the Company’s equityholders.

Number of shares

2014 2013

Ordinary share capital (par value of 0.01 cents)Authorised 2,500,000,000 2,500,000,000Issued (fully paid up) 1,848,355,889 1,873,278,848

In issue at beginning of the year 1,873,278,848 1,883,484,324Options exercised and allotted 72,170 173,160

Strike priceR27.00 8,3405 169,850R40.50 63,830 3,310

MTN Zakhele shares cancelled (2,657,377) (10,378,636)

Treasury shares cancelled (22,337,752) —

In issue at end of the year 1,848,355,889 1,873,278,848Shares cancelled but not delisted at year end1 — (1,065,166)Options – MTN Zakhele transaction2 (14,492,564) (17,030,125)Treasury shares3 (11,649,825) (22,337,752)

In issue at end of the year – excluding MTN Zakhele transaction andtreasury shares4 1,822,213,500 1,832,845,805

1 These shares were delisted on 2 January 2014.2 Due to the call option over the notional vendor finance shares, these shares, although legally issued to MTN Zakhele, are not deemed to

be issued in terms of IFRS and are shown as such in the share capital reconciliation.3 Treasury shares held by the Company and MTN Holdings Proprietary Limited.4 There are no restrictions, rights and preferences including restrictions on dividend distributions attached to these shares.5 8,340 share options exercised and allotted in 2013 were listed in 2014.

F-177


24 ORDINARY SHARE CAPITAL AND SHARE PREMIUM (continued)

2014Rm

2013Rm

Share capitalBalance at beginning of the year * *Options exercised * *Shares cancelled (*) (*)

Balance at end of the year * *

Share premiumBalance at beginning of the year 42,598 42,593Options exercised 3 5Share buy-back (2,422) —



MTN Zakhele transaction

The Group concluded its broad-based black economic empowerment (B-BBEE) transaction “MTN Zakhele”during October 2010. This was done through a separate unconsolidated structured entity, MTN Zakhele (RF)Limited (MTN Zakhele). The transaction is designed to provide long-term, sustainable benefits to all B-BBEEparticipants and will run for a period of six years.

MTN Zakhele acquired 75,363,138 of the Company’s shares at a price of R107.46 per share. The acquisition of45,368,186 shares was funded using equity raised from the allotment of MTN Zakhele shares totallingR1,618 million, third-party preference share funding of R2,160 million and a donation of R1,294 million (equalto 12,045,412 shares) received from the Group. The Company also issued 29,994,952 notional vendorfinance shares (NVF shares) at par value to MTN Zakhele amounting to approximately R3,214 million. A total of14,557,038 (2013: 12,964,827) of these shares were cancelled and delivered back to the Group as at 31 December2014. An additional 945,350 shares were delivered back to the Group, and cancelled after year end. These shareswere treated as treasury shares as at 31 December 2014.

The total cost of this transaction for the Group was R2,973 million which was recognised as a once-off charge inprofit or loss in 2010. This charge included the once-off share-based payment transaction charges for NVF ofR1,382 million, the employee share option plan of R171 million and the donation of R1,294 million. Transactioncosts amounted to R126 million.

The MTN Zakhele shares started trading on an over the counter platform (managed by an independent party)from 22 November 2013 onwards, on which date, MTN Holdings Proprietary Limited provided a guarantee infavour of the funders to MTN Zakhele. The guarantee expires on extinguishment of funding in MTN Zakhele,which is estimated at three years. The guarantee is provided for potential claims arising out of losses suffered as aresult of operating the share trading platform.

MTN Zakhele’s sole business is holding shares in the Group and administering the associated funding of theseshares. Its success is therefore dependent on the success of the Group as well as the ongoing receipt of dividendsfrom the Group to service and repay debt.

MTN has not provided any additional funding or liquidity to MTN Zakhele and there is no intention to do so at31 December 2014.

Notional vendor finance (NVF) shares

The Group has a call option over the NVF shares. The fair value of the call option is R1,593 million (2013:R1,463 million) and was determined using a Monte Carlo valuation model.

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The significant inputs into the Monte Carlo valuation model were as follows:

2014 2013

Share price (R) 221.41 217.02NVF balance (Rm) 1,220 1,685NVF shares (number) 14,492,564 17,030,125Volatility (%) 25.47 26.28Dividend yield (%) 6.14 5.37Expected option life (years) 2 3Annual risk-free rate (%) 6.7 6.6

Rm Rm

A reconciliation of the NVF balance is provided below:Balance at beginning of the year 1,685 3,525Interest accrued 117 216Settlement (582) (2,056)


In terms of the NVF arrangement, the notional funding provided by the MTN Group earns notional interest at85% of the prime rate per annum.

MTN Zakhele settled R582 million (2013: R2,056 million) of the NVF in 2014 via acquiring 2,537,561 (2013:11,443,802) of the Company’s shares in the open market and delivering an equivalent number of shares, initiallyissued by the Company to MTN Zakhele, back to the Company. MTN Group Limited cancelled 1,592,211 ofthese shares delivered by MTN Zakhele and 945,350 was held as treasury shares, cancelled subsequent to yearend.

Third-party preference share funding acquired by MTN Zakhele

A reconciliation of the third-party preference share funding obtained by MTN Zakhele to purchase shares of theCompany is provided below:

2014 2013Rm Rm

Class A cumulative redeemable non-participating preference sharesBalance at beginning of the year 3,176 1,492Issued — 1,700Accrued interest paid (202) (153)Interest accrued at effective interest rate 208 137


The Class A preference shares are held by Newshelf 1041 Proprietary Limited. Voluntary redemption can beeffected before the redemption date. The Class A preference shares are redeemable on 24 November 2016;however, mandatory redemption must be made out of available cash after three years and one day from the issuedate, subject to a cash waterfall. Interest is required to be paid on 30 April of each year, following the receipt ofthe annual dividend from the Group.

The payment obligation accrues interest at a rate of 71% of the prime rate per annum.

Preference shares refinancing

In the prior year, the directors of MTN Zakhele sought to find a cheaper source of funding in order to reducethe NVF. The entity made a subsequent issue of 1,700,000 Class A preference shares at an issue price of R1,000on 1 August 2013. The subsequent issue of the Class A preference share is held by Newshelf 1041 ProprietaryLimited. The dividend rate in the floating period which came to effect on 1 May 2013 was reduced from 77% ofprime to 71% of prime from the subscription date (1 August 2013). Interest is required to be paid on 30 April and30 September of each year. No such issue was made in the current year.

F-179



Dividends paid to MTN Zakhele

Dividends paid by the Company to MTN Zakhele amounted to R837 million (2013: R658 million) for the year.

The dividend income earned on the MTN shares held by MTN Zakhele is required to firstly, pay permittedoperational fees, costs, expenses and tax liabilities and thereafter, to meet the dividend obligations to the third-party funders.

Share buy-back

In the current year, MTN Holdings Proprietary Limited acquired 10,704,475 shares at an average price ofR226.24 per share, inclusive of transaction costs, in the Company on the JSE Limited. The total amount paid toacquire the shares, inclusive of transaction costs, was R2,422 million. The shares are fully paid shares and areheld as treasury shares.

The Group’s objective in terms of the buy-back is to enhance shareholder value over time and improve thecapital structure of the Group.

25 OTHER RESERVES

2014 2013Rm Rm

Balance at beginning of the year (5,991) (15,834)Transactions with non-controlling interests — (495)Share-based payment transactions 110 215Exchange differences on translating foreign operations 2,960 10,179Other (46) (56)

Balance at end of the year (2,967) (5,991)

Consisting of:Contingency reserve (as required by insurance regulations)1 4 4Statutory reserve (as required by Rwanda and Congo-Brazzaville legislation)2 211 211Transactions with non-controlling interests3 (11,396) (11,396)Share-based payment transactions4 2,514 2,404Foreign currency translation reserve5 5,791 2,831Other (91) (45)

(2,967) (5,991)

1 A contingency reserve has been created in terms of the Short-Term Insurance Act, 1988. Transfers to the contingency reserve are treatedas an appropriation of income, and the balance of the reserve is disclosed in the statement of financial position as a non-distributablereserve, forming part of shareholders’ funds. On dissolution of the structured entities to which these reserves relate, they will becomeavailable for distribution.

2 A statutory reserve has been created in terms of local legislation. Transfers to the statutory reserve are treated as an appropriation ofincome, and the balance of the reserve is disclosed in the statement of financial position as a non-distributable reserve, forming part ofthe shareholders’ funds.

3 Non-controlling shareholders are treated as equity participants and, therefore, all acquisitions of non-controlling interests or disposalsby the Group of its interests in subsidiary companies where control is maintained subsequent to the disposal are accounted for as equitytransactions. Consequently, the difference between the fair value of the consideration transferred and the carrying amount of a non-controlling interest purchased is recorded in equity. All profits or losses arising as a result of the disposal of interests in subsidiaries tonon-controlling shareholders, where control is maintained subsequent to the disposal, are also recorded in equity.

4 Refer to the accounting policy in note 44 with regards to equity-settled share-based payments.5 Refer to the translation and disposal of foreign operations sections in accounting policy 1.3.2 Foreign currency.

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26 BORROWINGS

Borrowings are accounted for as financial liabilities in accordance with the accounting policy disclosed in note 43.

Fees paid on the establishment of loan facilities are recognised as transaction costs and capitalised to the extentthat it is probable that some or all of the facility will be drawn down. When the draw down is made, thetransaction costs are amortised to profit or loss using the effective interest method. To the extent there is noevidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as aprepayment for liquidity services and amortised over the period of the facility to which it relates.


2014Rm

2013Rm

Denominatedcurrency

Nominalinterest* % Repayment details

UnsecuredMTN Holdings ProprietaryLimited 13,139 12,886

4,506 4,482 ZAR1,2 7.4 Quarterly. Final repayment:December 2015

2,767 751 ZAR2,3 7.6 Quarterly. Final repayment:June 2016

2,618 3,953 ZAR4,5 9.4 – 10.2 Semi-annual. Final repayment:July 2015 – July 2017

1,994 — ZAR2,6 7.2 Quarterly. Final repayment:May 2017

1,003 — ZAR2,3 7.1 Quarterly. Final repayment:March 2015

251 — ZAR5,7 6.5 Monthly. Final repayment:January 2015

— 1,096 ZAR5,8 5.5 Loan repaid during the year— 1,000 ZAR2,6 7.1 Loan repaid during the year— 1,604 ZAR5,7 5.6 – 5.7 Loan repaid during the year

MTN NigeriaCommunications Limited 24,673 24,757

17,697 18,515 NGN1,2 15.0 Annual. Final repayment:November 2019

2,904 2,932 US$1,2 3.2 Semi-annual. Final repayment:April 2019

1,351 1,031 US$2,9 1.3 Semi-annual. Final repayment:August 2019

1,009 — US$5,9 1.7 Semi-annual. Final repayment:June 2015

915 373 US$2,10 3.4 Semi-annual. Final repayment:December 2019




60 133 US$2,9 3.0 Semi-annual. Final repayment:June 2015

MTN (Mauritius) Semi-annual. Final repayment:Investments Limited 8,686 — US$5,11 4.8 November 2024

1 Syndicated term loan facility2 Variable interest rate3 Revolving credit facility4 Domestic medium-term notes5 Fixed interest rate6 Bilateral term loan facility7 General bank facility8 Commercial paper9 Export credit facility10 Vendor finance facility

F-181


26 BORROWINGS (continued)

11 Senior unsecured notes12 Bank borrowings* Nominal interest rates are the contractual interest rates on loans as at 31 December 2014.


2014Rm

2013Rm

Denominatedcurrency

Nominalinterest*

% Repayment details

MTN (Zambia) Limited 1,362 1,495

688 340 US$2,12 3.8 Semi-annual. Finalrepayment: June 2019

674 — ZMK1,2 19.5 Semi-annual. Finalrepayment: January 2016

— 1,155 ZMK1,2 13.4 Loan repaid during the year

Spacetel Benin SA 945 1,186

664 965 XOF1,5 7.8 Semi-annual. Finalrepayment: March 2017

281 — XOF5,6 7.5 Semi-annual. Finalrepayment: September 2019

— 221 XOF1,5 8.3 Loan repaid during the year

MTN Côte d’Ivoire S.A. 745 1,114

426 — XOF5,12 3.9 Semi-annual. Finalrepayment: May 2015

319 — XOF5,12 4.0 Semi-annual. Finalrepayment: May 2015

— 8 XOF5,6 8.3 Loan repaid during the year— 442 XOF5,12 4.0 Loan repaid during the year— 442 XOF5,12 4.8 Loan repaid during the year— 222 XOF5,12 4.8 Loan repaid during the year

Other unsecured borrowings 938 1,428

Total unsecured borrowings 50,488 42,866

* Nominal interest rates are the contractual interest rates on loans as at 31 December 2014.

F-182



Details of the Group’s significant secured borrowings are provided below:

2014Rm

2013Rm

Denominatedcurrency

Nominalinterest*

% Repayment details Security/collateralSecuredMTN Sudan Company Limited 1,933 1,872

817 815 EUR2, 10 6.0 Quarterly. Finalrepayment:June 2020

Pledge of networkand capital work-in-progress assets

506 697 US$5, 10 10.0 Quarterly. Finalrepayment:December 2016


588 339 EUR2, 10 5.0 Semi-annual. Finalrepayment:December 2019


22 21 US$5, 12 10.0 Repayment:July 2015

Deposit equivalentto 140% of the loan

MTN Uganda Limited — 184

— 131 UGX1, 2 13.7 Loan repaid duringthe year

— 53 US$1, 2 4.4 Loan repaid duringthe year

MTN Afghanistan Limited 138 29432 69 US$2, 6 5.5 Quarterly. Final

repayment:September 2015

Pledge of shares

106 225 US$2, 6 5.5 Quarterly. Finalrepayment:September 2015

Pledge of shares

1 Syndicated term loan facility2 Variable interest rate3 Revolving credit facility4 Domestic medium-term notes5 Fixed interest rate6 Bilateral term loan facility7 General bank facility8 Commercial paper9 Export credit facility10 Vendor finance facility11 Senior unsecured notes12 Bank borrowings* Nominal interest rates are the contractual interest rates on loans as at 31 December 2014.

2014Rm

2013Rm

Denominatedcurrency

Nominalinterest*

% Repayment details Security/collateralScancom Limited

(MTN Ghana) 646 621

211 77 GHS1,2 26.4 Semi-annual. Finalrepayment: May 2017

Floating charge oncompany assets

— 22 GHS2,3 19.3 Loan repaid duringthe year

435 522 US$1,2 3.7 Semi-annual. Finalrepayment: May 2017

Floating charge oncompany assets

Other secured borrowings 48 165

Total secured borrowings 2,765 3,136Total unsecured borrowings 50,488 42,866

Total borrowings 53,253 46,002

* Nominal interest rates are the contractual rates on loans as at 31 December 2014.

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2014 2013Rm Rm

The classification of the Group’s borrowings is as follows:Current 13,783 11,338Non-current 39,470 34,664

53,253 46,002

The carrying amounts of the Group’s borrowings are denominated in the followingcurrencies:

Nigerian naira 17,697 18,515United States dollar 17,722 8,496South African rand 13,139 12,886Euro 1,659 1,454Benin Communauté Financière Africaine franc 945 1,186Côte d’Ivoire Communauté Financière Africaine franc 745 1,155Zambian kwacha 674 1,155Congo-Brazzaville Communauté Financière Africaine franc 306 487Cameroon Communauté Financière Africaine franc 134 418Various currencies 232 250

53,253 46,002

The Group has the following undrawn committed facilities:Floating rate 25,282 34,785Fixed rate 7,561 8,766

32,843 43,551

27 OTHER NON-CURRENT LIABILITIES

Finance leases are accounted for in accordance with the accounting policy disclosed in note 36 and otherliabilities are accounted for in accordance with the accounting policy disclosed in note 43.

2014 2013Rm Rm

Finance lease obligations (note 36) 696 756Deferred gain on asset swap1 — 358Deferred income 542 1282

Other 347 485

1,585 1,727Less: current portion of deferred gain on asset swap — (358)

1,585 1,369

1 The deferred gain arose on the contribution of various assets from MTN (Dubai) Limited, MTN International Carrier Services andUniglobe in exchange for a 20% investment in the associate, Belgacom International Carrier Services SA (BICS) (note 5). This gain wasdeferred and is being amortised over a five-year period, which is the period of the commitment to use the international gateway of BICS(note 14). The deferred gain was fully amortised during the year.


28 PROVISIONS

A provision is recognised when there is a present legal or constructive obligation as a result of a past event forwhich it is more likely than not that an outflow of resources will be required to settle the obligation and a reliableestimate can be made of the amount of the obligation. A provision to pay a levy is not recognised until theobligating event specified in the legislation occurs, even if there is no realistic opportunity to avoid theobligation. Provisions are not recognised for future operating losses.

F-184


28 PROVISIONS (continued)

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihood ofan outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expected outflow of resources required to settle the obligationusing a pre-tax rate that reflects current market assessments of the time value of money and the risks specific tothe obligation. The increase in the provision due to the passage of time is recognised as a finance cost.

Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from acontract are lower than the unavoidable costs of meeting its obligations under the contract. The provision ismeasured at the present value of the lower of the expected cost of terminating the contract or the expected netcost of continuing with the contract. Before a provision is established, the Group recognises any impairment losson the assets associated with the contract.

Atbeginningof the year Additions Reversals Utilised

Netmonetary

gain

Exchangeand other

movements1

At endof theyear

Rm Rm Rm Rm Rm Rm Rm

2014Non-currentDecommissioning provision 186 107 (34) (30) — — 229Licence obligations — 137 — — — — 137Other provisions 171 91 (43) (16) (38) 15 180

357 335 (77) (46) (38) 15 546

CurrentBonus provision 763 861 (100) (761) — (9) 754Decommissioning provision 84 3 (74) (1) — 9 21Licence obligations 257 — (183) — — — 74Other provisions 3,533 442 (1,065) (340) — (5) 2,565

4,637 1,306 (1,422) (1,102) — (5) 3,414


Atbeginningof the year Additions Reversals Utilised

Exchangeand other

movements

At endof theyear

Rm Rm Rm Rm Rm Rm

2013Non-currentDecommissioning provision 158 33 (49) (15) 59 186Other provisions 258 92 (14) (5) (160) 171

416 125 (63) (20) (101) 357

CurrentBonus provision 760 788 (105) (915) 235 763Decommissioning provision 79 32 (1) — (26) 84Licence obligations 257 — — — — 257Other provisions 2,835 1,190 (357) (260) 125 3,533

3,931 2,010 (463) (1,175) 334 4,637

Bonus provision

The bonus provision consists of a performance-based bonus, which is determined by reference to the overallCompany performance with regard to a set of predetermined key performance measures. Bonuses are payableannually after the Group annual results have been approved.

F-185


28 PROVISIONS (continued)

Decommissioning provision

This provision relates to the estimate of the cost of dismantling and removing an item of property, plant andequipment and restoring the site on which the item was located to its original condition. The Group provides forthe anticipated costs associated with the restoration of leasehold property to its original condition at inception ofthe lease, including removal of items included in plant and equipment that are erected on leased land.

The Group only recognises these decommissioning costs for the proportion of its overall number of sites forwhich it expects decommissioning to take place. The expected percentage has been based on actual experience inthe respective operations.

Licence obligations

The licence obligation provision represents the estimated costs to be incurred in fulfilling the Universal ServicesObligation (USO) in South Africa. USOs are governed by the Electronic Communications Act.

Other provisions

The Group is involved in various regulatory and tax matters specific to the respective jurisdictions in which theGroup operates. These matters may not necessarily be resolved in a manner that is favourable to the Group. TheGroup has therefore recognised provisions in respect of these matters based on estimates and the probability ofan outflow of economic benefits and should not be construed as an admission of legal liability.

29 TRADE AND OTHER PAYABLES

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course ofbusiness from suppliers; they are accounted for as financial liabilities in accordance with the accounting policydisclosed in note 43.

Other payables are stated at their nominal values.

2014Rm

2013Rm

Trade payables 11,187 7,451Sundry creditors 2,728 1,254Accrued expenses 15,711 15,502Current portion of deferred gain (note 27) — 358Other payables 3,608 2,884

33,234 27,449

F-186


30 CASH GENERATED FROM OPERATIONS

2014Rm

20131

Rm

Profit before tax 51,063 43,349Adjusted for:Finance costs (note 7) 10,440 12,656Finance income (note 7) (6,772) (11,422)Depreciation of property, plant and equipment (note 11) 18,262 16,458Amortisation of intangible assets (note 12) 3,251 2,820Loss on disposal of property, plant and equipment and intangible assets (note 6) 69 42Loss on disposal of joint venture 15 —Share of results of associates and joint ventures after tax (note 14) (4,208) (3,431)Increase in provisions 140 1,437(Reversal of write-down)/write-down of inventories (note 18) (94) 64Impairment of goodwill (note 12) 2,033 —Impairment loss on intangible assets (note 12) 74 —Impairment loss on property, plant and equipment (note 11) 634 7Reversal of impairment charge on property, plant and equipment (note 11) — (35)Impairment of trade receivables (note 19) 286 743(Reversal of impairment)/impairment of non-current receivable (note 15) (230) 223Profit on sale of towers (note 5) (7,399) (930)Realisation of previously deferred profit on Ghana tower sale (note 5) (31) (38)Realisation of deferred gain on asset swap (note 5) (364) (357)Equity-settled share-based payment transactions (note 6) 110 215Net monetary gain (878) —Other (35) 166

66,366 61,967Changes in working capital (1,738) (2,259)

Increase in inventories (65) (627)Increase/(decrease) in unearned income 654 (183)Increase in receivables and prepayments (1,926) (1,827)(Decrease)/increase in trade and other payables (401) 378

Cash generated from operations 64,628 59,708

31 INCOME TAX PAID

At beginning of the year (6,671) (6,235)Amount recognised in profit or loss (note 8) (13,361) (12,487)Deferred tax charge (note 8) (1,400) 2,192Effect of movements in exchange rates 343 (1,497)Net monetary gain 12 —Other 300 172At end of the year 8,998 6,671

Taxation prepaid (564) (859)Taxation liabilities 9,562 7,530

Total tax paid (11,779) (11,184)


F-187


32 CONTINGENT LIABILITIES

The Group does not recognise contingent liabilities in the statement of financial position until future eventsindicate that it is probable that an outflow of resources will take place and a reliable estimate can be made, atwhich time a provision is raised.

2014Rm

2013Rm

Contingent liabilities 932 1,023

Licence fee and regulatory matters 598 502Litigation and other matters 323 521Other 11 —

33 COMMERCIAL COMMITMENTS

Incentives for handset upgrades

The Group’s present policy is to pay incentives to Service Providers (SPs) for handset upgrades. These upgradesare only payable once the subscribers have completed a 21-month period with the SP since the initialcommencement of their contract or previous upgrade and the eligible subscribers have exercised their rights toreceive upgrades for new postpaid contracts with minimum terms. The value of the obligation may varydepending on the prevailing business rules at the time of the upgrade. The total number of eligible subscriberswho had not yet exercised their right to upgrade at 31 December 2014 was 1,555,033 (2013: 1,268,708) and theestimated commitment in respect of these incentives amounts to R841 million (2013: R859 million).

34 CAPITAL COMMITMENTS

Commitments for the acquisition of property, plant and equipment and software:

2014Rm

2013Rm

Capital expenditure not yet incurred at the reporting date is as follows:– Contracted 10,034 11,260– Authorised but not contracted 19,659 14,891

Total commitments for property, plant and equipment and software 29,693 26,151

Capital expenditure will be funded from operating cash flows, existing borrowing facilities and where necessaryby raising additional facilities.

35 OPERATING LEASE COMMITMENTS

Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classifiedas operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basisover the term of the relevant lease.

Sub-lease income is recognised in profit or loss on a straight-line basis over the term of the lease.

In all significant operating lease arrangements in place during the year, the Group acted as the lessee.

Sale and leaseback

In sale and leaseback transactions that result in operating leases, where it is clear that the transaction is priced atfair value, any profit or loss is recognised on the effective date of the sale transaction. If the sale price is belowfair value, any profit or loss is recognised on the effective date of the sale transaction except that, if a loss iscompensated for by future lease payments at below market price, it is deferred and amortised in proportion to thelease payments over the period during which the asset is expected to be used. If the sale price is above fair value,the excess over fair value is deferred and amortised over the period for which the asset is expected to be used.

F-188


35 OPERATING LEASE COMMITMENTS (continued)

If the fair value, at the time of a sale and leaseback transaction, is less than the carrying amount of the asset, aloss equal to the amount of the difference between the carrying amount and fair value is recognised immediatelyin profit or loss.

The Group leases various premises and sites under non-cancellable/cancellable operating lease agreements. Theleases have varying terms, escalation clauses and renewal rights. Penalties are chargeable on certain leasesshould they be cancelled before the end of the agreement.

2014Rm

20131

Rm

The future aggregate minimum lease payments under non-cancellable operating leasearrangements are as follows:

Not later than one year 4,280 2,326Later than one year and no later than five years 16,203 7,572Later than five years 13,973 6,117

34,456 16,015


36 FINANCE LEASE COMMITMENTS

Assets held under finance leases are capitalised at the lower of the fair value of the leased asset and the estimatedpresent value of the minimum lease payments at the inception of the lease. The corresponding liability to thelessor, net of finance charges, is included in the statement of financial position under other non-current/currentliabilities. Each lease payment is allocated between the liability and finance charges. Finance charges, whichrepresent the difference between the total lease commitments and fair value of the assets acquired, are charged toprofit or loss over the term of the relevant lease so as to produce a constant periodic rate of interest on theremaining balance of the obligation for each accounting period.

In all significant finance lease arrangements in place during the period, the Group acted as the lessee.

Sale and leaseback

In sale and leaseback transactions that result in finance leases, any excess of sale proceeds over the carryingamount is deferred and amortised over the lease term.

At the reporting date, the Group had outstanding commitments under non-cancellable finance leases which falldue as follows:

Minimumlease

payments


Presentvalue

Rm Rm Rm

2014CurrentNot later than one year 143 (36) 107Non-current (note 27) 921 (225) 696Later than one year and no later than five years 395 (135) 260Later than five years 526 (90) 436

1,064 (261) 803

2013CurrentNot later than one year 195 (91) 104Non-current (note 27) 1,088 (332) 756

Later than one year and no later than five years 471 (183) 288Later than five years 617 (149) 468

1,283 (423) 860

F-189


37 JOINT OPERATIONS

In respect of its interest in joint operations, the Group recognises in its financial statements its share of the assetsheld jointly, classified according to the nature of the assets, any liabilities that it has incurred, its share of anyliabilities incurred jointly with the other joint operators in relation to the joint operation, any income from thesale or use of its share of the output of the joint operation, together with its share of any expenses incurred by thejoint operation and any expenses that it has incurred in respect of its interest in the joint operation.

When the Group acquires an interest in a joint operation in which the activity of the joint operation constitutes abusiness, identifiable assets acquired and liabilities assumed are measured initially at their fair values at theacquisition date. Acquisition-related costs are recognised in profit or loss. Goodwill is measured as the excess ofthe sum of the consideration transferred over the net of the acquisition date amounts of the identifiable assetsacquired and liabilities assumed.

When the Group increases its interest in a joint operation in which the activity of the joint operation constitutes abusiness, by acquiring an additional interest in the joint operation, the Group’s previously held interests in thejoint operation are not remeasured if the joint operator retains joint control.

The Group has entered into agreements with several other companies to construct high-capacity fibre-opticsubmarine cable systems.

The Group has the following interests in jointly controlled operations:

Ownership interest held

2014 2013% %

Joint operationEurope India Gateway Submarine Cable System 7.09 7.09West Africa Cable System 11.45 11.78EASSy Cable System 16.26 15.31

The following table presents, on a condensed basis, the Group’s share of assets and liabilities, revenue andexpenses of the jointly controlled operations which are included in the consolidated statement of financialposition and income statement:

2014 2013Rm Rm

Revenue 21 199Expenses (212) (201)

Total assets 1,977 1,827Total liabilities (excluding unearned income) (124) (114)Unearned income (132) (132)

F-190


38 EXCHANGE RATES TO SOUTH AFRICAN RAND

Closing rates Average rates

2014 2013 2014 2013

United States dollar US$ 0.09 0.10 0.09 0.10Uganda shilling UGX 239.02 239.81 240.06 264.66Rwanda franc RWF 58.02 63.90 63.12 67.01Cameroon Communauté FinancièreAfricaine franc XAF 46.94 45.23 45.77 51.96Nigerian naira NGN 15.93 15.23 15.27 16.46Iranian rial1 IRR 2,341.99 2,355.94 2,389.54 2,554.14Botswana pula BWP 0.82 0.83 0.83 0.87Côte d’Ivoire Communauté FinancièreAfricaine franc CFA 46.94 45.23 45.81 51.50Congo-Brazzaville CommunautéFinancière Africaine franc XAF 46.94 45.23 45.81 51.96Zambian kwacha ZMK 0.55 0.53 0.57 0.55Swaziland lilangeni E 1.00 1.00 1.00 1.00Lebanese pound LBP 130.77 142.82 135.05 157.10Afghanistan afghani AFN 5.05 5.33 5.31 5.72Euro EUR 0.07 0.07 0.07 0.08Ghanaian cedi GHS 0.28 0.22 0.27 0.21Benin Communauté Financière Africaine franc XOF 46.94 45.23 45.71 51.44Guinean franc GNF 612.70 654.29 643.39 705.86Sudanese pound1 SDG 0.52 0.54 0.53 0.50Syrian pound1 SYP 17.15 13.67 15.43 13.57Guinea-Bissau Communauté FinancièreAfricaine franc XOF 46.94 45.23 45.97 51.64Yemen rial YER 18.62 20.44 19.93 22.39Ethiopian birr ETB 1.74 1.81 1.79 1.86

1 The financial results, positions and cash flows of foreign operations trading in hyperinflationary economies are translated as set out innote 1.3.2.

39 EVENTS AFTER THE REPORTING PERIOD

Syria freehold licence

MTN Syria (JSC) operated under a contractual service arrangement granted and controlled by the SyrianTelecommunication Establishment (STE). The contract known as Build, Operate and Transfer (BOT) providedfor revenue sharing between MTN Syria (JSC) and the STE and required the handing over of the network to theSTE at the end of the licence period. Subsequent to the reporting period, the Group concluded its negotiationswith the STE for a freehold licence. This resulted in the termination of the BOT contract and acquisition of afreehold licence with a term of 20 years with effect from 1 January 2015. The initial licence fee of SYP25 billionwas funded through cash balances maintained within the local operation.

F-191


40 RELATED PARTY TRANSACTIONS

Related party transactions constitute the transfer of resources, services or obligations between the Group and aparty related to the Group, regardless of whether a price is charged. For the purposes of defining related partytransactions with key management, key management has been defined as directors and the Group’s executivecommittee and includes close members of their families and entities controlled or jointly controlled by theseindividuals.

2014Rm

2013Rm

Key management compensationSalaries and other short-term employee benefits 77 69Post-employment benefits 7 6Other benefits 8 15Bonuses 62 59

Total 154 149

Details of directors’ remuneration are disclosed in note 46 of the annual financial statements.

Subsidiaries

Details of investments in subsidiaries are disclosed in note 47 of the annual financial statements.

Changes in shareholding

There were no transactions with non-controlling shareholders or changes in shareholding in any of the Group’ssubsidiaries during the year.

The following changes in shareholding transactions took place in 2013 (note 41):

• The Group increased its shareholding in MTN Cyprus Limited from 50% to 100% for R690 million.

• The Group sold 0.84% of its shareholding in MTN Côte d’Ivoire S.A. for R57 million.

• The non-controlling shareholders of MTN Afghanistan Limited sold their shareholding of 9.1% to MTN(Dubai) Limited for R248 million in terms of a put option.

Joint ventures

Details of the Group’s investments in and share of results and dividend income from its joint ventures aredisclosed in note 14 of the annual financial statements.

Details of other transactions and balances with joint ventures are set out below.

Net income for the year Net balance receivable/(payable)

2014 2013 2014 2013Rm Rm Rm Rm

Swazi MTN Limited 6 40 36 42Mascom Wireless Botswana Proprietary Limited 2 3 — 2Irancell Telecommunication Company Services

(PJSC) 212 184 11,070 7,810Middle East Internet Holding S.A.R.L (MEIH) — — (1,115) —African Internet Holding GmbH (AIH) — — (1,592) —

Associates

Details of the Group’s investments in and share of results and dividend income from its associates are disclosedin note 14 of the annual financial statements.

F-192


40 RELATED PARTY TRANSACTIONS (continued)

Details of other transactions and balances with associates are set out below.

Net income for the year Net balance receivable

2014 2013 2014 2013Rm Rm Rm Rm

Belgacom International Carrier Services SA (BICS) 386 460 141 125Ghana Tower InterCo B.V. 159 131 2,025 1,689Uganda Tower InterCo B.V. 44 38 889 705Nigeria Tower InterCo B.V. — — 1,039 —

Scancom Limited (MTN Ghana) entered into operating lease agreements with Ghana Tower InterCo B.V. Theoperating lease commitments amounted to R2,762 million at 31 December 2014 (2013: R3,516 million1). Therental amounts escalate every year by inflation and the initial term is 10 years, followed by four times five-yearrenewal periods.

MTN Uganda Limited entered into operating lease agreements with Uganda Tower InterCo B.V. The operatinglease commitments amounted to R2,364 million at 31 December 2014 (2013: R2,411 million). The rentalamounts escalate every year by inflation and the initial term is 10 years, followed by four times five-year renewalperiods.

MTN Nigeria Communications Limited entered into operating lease agreements with INT Towers Limited, awholly owned subsidiary of Nigeria Tower InterCo B.V. The operating lease commitments amounted toR17,843 million at 31 December 2014. The initial term of the lease agreements is 10 years, followed byfour times five-year renewal periods.


Shareholders

The principal shareholders of the Company are disclosed in Annexure 1 which is unaudited.

41 CHANGES IN SHAREHOLDING

Changes in shareholding of subsidiaries are transactions that result in increases or reductions in the interest heldin a subsidiary of the Group and are accounted for as transactions with non-controlling shareholders as disclosedin note 1.3.1.

41.1 Current year changes in shareholding

There were no transactions with non-controlling shareholders or changes in shareholding in any of the Group’ssubsidiaries during the year.

41.2 Prior year changes in shareholding

41.2.1 MTN Cyprus Limited

The Group increased its shareholding in MTN Cyprus Limited from 50% to 100% for R690 million.

The impact on equity arising from the acquisition was as follows:

Carrying amount onacquisition date

Rm

Purchase consideration (690)Net asset value acquired 163

Difference included in equity on consolidation (527)

F-193


41 CHANGES IN SHAREHOLDING (continued)

41.2 Prior year changes in shareholding (continued)

41.2.2 MTN Côte d’Ivoire S.A.

The Group sold 0.84% of its shareholding in MTN Côte d’Ivoire S.A. for R57 million.

The impact on equity arising from the disposal was as follows:

Carrying amount ondisposal date

Rm

Consideration received 57Net asset value disposed (25)

Difference included in equity on consolidation 32

41.2.3 MTN Afghanistan Limited

The International Finance Corporation (IFC) exercised its put option and sold its non-controlling interest of 9.1%in MTN Afghanistan to MTN (Dubai) Limited for R248 million. MTN Afghanistan Limited is now a whollyowned subsidiary of MTN (Dubai) Limited.

41.3 Net cash flows relating to changes in shareholdings

2014Rm

2013Rm

Changes in shareholding of subsidiariesConsideration for acquisition of shares from non-controlling interests– MTN Cyprus Limited — (690)Proceeds from sale of shares to non-controlling interests– MTN Côte d’Ivoire S.A. — 57Consideration for the settlement of put option– MTN Afghanistan Limited — (248)

— (881)

42 BUSINESS COMBINATIONS

42.1 Current year business combinations

42.1.1 Afrihost Proprietary Limited

In November 2014, the Group acquired 50% plus one share of the share capital of Afrihost Proprietary Limitedfor R408 million. As a result, the Group obtained control of Afrihost Proprietary Limited. Control over AfrihostProprietary Limited will enable the Group to drive its accelerated SME strategy and provide scale for theGroup’s virtual market, content and cloud offering.

Since acquisition, the entity contributed revenue of R55 million and profit of R4 million to the Group’s results. Ifthe acquisition had occurred on 1 January 2014, management estimates that the Group’s revenue and profit forthe year would have increased by R512 million and reduced by R6 million, respectively. In determining theseamounts, management has assumed that the fair value adjustments, determined provisionally, that arose on dateof acquisition would have been the same if the acquisition had occurred on 1 January 2014.

F-194


42 BUSINESS COMBINATIONS (continued)

42.1 Current year business combinations (continued)

42.1.1 Afrihost Proprietary Limited (continued)

The following table summarises the consideration transferred by the Group, the fair value of assets acquired,liabilities assumed and the non-controlling interest at the acquisition date.

2014Rm

Consideration transferredCash 408Cash in subsidiary acquired (20)

Cash outflow on acquisition 388

Assets acquired 383

Property, plant and equipment 44Intangible assets 307Deferred tax assets 2Inventories 1Trade and other receivables 9Cash and cash equivalents 20


Deferred tax liabilities 86Other non-current liabilities 7Trade and other payables 109Taxation payable 2


GoodwillTotal consideration paid 408Non-controlling interest in Afrihost Proprietary Limited 90Net identifiable assets acquired (179)

319



Assets acquired Valuation technique

Property, plant and equipment Replacement costIntangible assets Multi-period excess earnings method and royalty payments avoidedTrade receivables Discounted cash flow methodInventories Replacement cost

The fair value of the acquired identifiable assets has been determined on a provisional basis in terms of IFRS 3.

42.1.2 Nashua subscriber base

During November 2014, the Group acquired its Nashua Mobile subscriber base from Nashua Mobile ProprietaryLimited for R1,246 million. The acquisition of the subscriber base will enable the Group to consolidate theMobile Telephone Networks Proprietary Limited postpaid subscriber base in one entity and own the relationshipwith the subscribers.

Since acquisition to 31 December 2014, the subscriber base contributed revenue of R120 million and profit ofR113 million to the Group’s results. If the acquisition had occurred on 1 January 2014, management estimatesthat the Group’s revenue and profit for the year would have increased by R1,276 million and R1,202 million

F-195


42 BUSINESS COMBINATIONS (continued)

42.1 Current year business combinations (continued)

42.1.2 Nashua subscriber base (continued)

respectively. In determining these amounts, management has assumed that the fair value adjustments, determinedprovisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on1 January 2014.

The following table summarises the consideration transferred by the Group, the fair value of assets acquired andliabilities assumed at the acquisition date.

2014Rm

Consideration transferredCash outflow on acquisition 1,246Assets acquired 926


Liabilities assumedDeferred tax liabilities 205


GoodwillTotal consideration paid 1,246Net identifiable assets acquired (721)

525



Assets acquired Valuation techniqueIntangible assets Multi-period excess earnings method and royalty payments avoidedLoans and other non-current receivables Discounted cash flow method

The fair values of the acquired identifiable assets have been determined on a provisional basis in terms ofIFRS 3.

42.2 Prior year business combinations

During 2013, the Group increased its shareholding in Satalite Data Networks Limited from 60% to 100% forR47 million. The entity was previously a joint venture of the Group.

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Accounting for financial instruments

Financial assets and liabilities are recognised in the Group’s statement of financial position when the Groupbecomes a party to the contractual provisions of the instruments.

All financial assets and liabilities are initially measured at fair value, including transaction costs, except for thoseclassified as being at fair value through profit or loss, which are initially measured at fair value excludingtransaction costs. Transaction costs directly attributable to the acquisition of financial assets or financialliabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial assets arerecognised (derecognised) on the date the Group commits to purchase (sell) the instruments (trade dateaccounting).

F-196


43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)

Financial assets and liabilities are classified as current if expected to be realised or settled within 12 months; ifnot, they are classified as non-current.

Offsetting financial instruments

Offsetting of financial assets and liabilities is applied when there is a legally enforceable right to offset therecognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liabilitysimultaneously. The net amount is reported in the statement of financial position.

Financial instrument classification

The Group classifies its financial instruments into the following categories:

• financial assets at fair value through profit or loss;

• loans and receivables;

• held-to-maturity investments;

• available-for-sale;

• financial liabilities at fair value through profit or loss; and

• financial liabilities at amortised cost.

The classification is dependent on the purpose for which the financial instruments were acquired. Managementdetermines the classification of financial instruments at initial recognition.

Financial instruments comprise investments in equity and debt securities, loans receivable, trade and otherreceivables (excluding prepayments), investments in self-insurance cell captives, cash and cash equivalents,restricted cash, borrowings, other non-current liabilities (excluding provisions), bank overdrafts, derivatives andtrade and other payables.

Subsequent measurement

Subsequent to initial recognition, financial instruments are measured as described below.

Financial assets at fair value through profit or loss

Financial instruments at fair value through profit or loss are subsequently measured at fair value and changestherein are recognised in profit or loss. Derivatives are also categorised as held for trading unless they aredesignated as hedging instruments.


The Group’s loans and receivables comprise loans and other receivables, certain of its investments, trade andother receivables (excluding prepayments), restricted cash and cash and cash equivalents. Loans and receivablesare subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when therecognition of interest would be immaterial.

Held-to-maturity investments

Held-to-maturity investments are subsequently measured at amortised cost using the effective-interest method,less any impairment losses.

Available-for-sale

Available-for-sale assets are included in non-current assets unless the investment matures or management intendsto dispose of it within 12 months of the end of the reporting period. Available-for-sale financial assets aresubsequently measured at fair value and changes therein are recognised in other comprehensive income.

F-197



Financial liabilities

Financial liabilities comprise trade and other payables, bank overdrafts, borrowings, derivative liabilities andother non-current liabilities (excluding provisions).

All financial liabilities, excluding derivative liabilities, are subsequently measured at amortised cost using theeffective-interest method. Derivative liabilities are subsequently measured at fair value and changes therein arerecognised in profit or loss.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have beentransferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities arederecognised when the obligations specified in the contracts are discharged, cancelled or expire.

Impairment

The Group assesses at the end of each reporting period whether there is any objective evidence that a financialasset is impaired. A financial asset or group of financial assets is impaired if objective evidence indicates that oneor more events have had a negative effect on the estimated future cash flows of that asset. In the case of equityinvestments classified as available-for-sale, a significant or prolonged decline in the fair value of the securitybelow cost is also evidence that the assets are impaired. If any such evidence exists for available-for-salefinancial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fairvalue, less any impairment loss on that financial asset previously recognised in profit or loss – is removed fromequity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments arenot reversed through profit or loss.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the differencebetween its carrying amount and its recoverable amount, being the present value of the estimated future cashflows discounted at the original effective interest rate.

When a loan or receivable is impaired, the Group reduces the carrying amount to its recoverable amount, andcontinues unwinding the discount as interest income. Interest income on impaired loans and receivables isrecognised using the effective interest rate.

Significant financial assets are tested for impairment on an individual basis. The financial assets that are notimpaired or are not individually significant are collectively assessed for impairment in groups that share similarcredit risk characteristics.

All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after theimpairment loss was recognised.


An impairment of trade receivables is established when there is objective evidence that the Group will not beable to collect all amounts due according to the original terms of the receivables. Significant financial difficultiesof the debtor, probability that the debtor will enter bankruptcy or financial re-organisation, and default ordelinquency in payments are considered indicators that the trade receivable is impaired.

The carrying amount of the trade receivable is reduced through the use of an allowance account and the amountof the loss is recognised in profit or loss. When a trade receivable is uncollectible, it is written off against theallowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited toprofit or loss.

F-198



Risk management

Introduction

The Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk andmarket risk (foreign exchange and interest rate risk). This note presents information about the Group’s exposureto each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, andthe Group’s management of capital. Further quantitative disclosures are included throughout these consolidatedannual financial statements.

Risk profile

The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Group. The Group uses derivativefinancial instruments, such as forward exchange contracts and interest rate swaps, to hedge certain exposures, butas a matter of principle the Group does not enter into derivative contracts for speculative purposes. The Groupdoes not apply hedge accounting.

Risk management is carried out under policies approved by the board of directors of the Group and of relevantsubsidiaries. The MTN Group executive committee identifies, evaluates and hedges financial risks in co-operation with the Group’s operating units. The board provides written principles for overall risk management, aswell as for specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financialinstruments and investing excess liquidity.

43.1 Categories of financial instruments

Assets Liabilities


Rm


loss1

Rm

Held-to-maturity

Rm

Available-for-sale

Rm

AmortisedcostRm


loss1

Rm

Totalcarryingamount

Rm2014Non-current financial assetsLoans and other non-current

receivables 5,277 — — — — — 5,277Investments — — 223 5,912 — — 6,135

Current financial assetsTrade and other receivables 29,655 — — — — — 29,655Current investments 1,276 906 3,469 — — — 5,651Derivative assets — 183 — — — — 183Restricted cash 893 — — — — — 893Cash and cash equivalents 43,098 — — — — — 43,098

80,199 1,089 3,692 5,912 — — 90,892

Non-current financial liabilitiesBorrowings — — — — 39,470 — 39,470Other non-current liabilities — — — — 1,016 — 1,016

Current financial liabilitiesTrade and other payables — — — — 31,208 — 31,208Borrowings — — — — 13,783 — 13,783Derivative liabilities — — — — — 2 2Bank overdrafts — — — — 26 — 26

— — — — 85,503 2 85,505


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43.1 Categories of financial instruments (continued)

Assets Liabilities


Rm


loss1

Rm

Held-to-maturity

Rm

Available-for-sale

Rm

AmortisedcostRm


loss1

Rm

Totalcarryingamount

Rm

20132

Non-current financial assetsLoans and other non-current

receivables 4,993 — — — — — 4,993Investments — — 111 — — — 111

Current financial assetsTrade and other receivables 21,710 — — — — — 21,710Current investments 1,283 691 2,568 — — — 4,542Derivative assets — 22 — — — — 22Restricted cash 2,222 — — — — — 2,222Cash and cash equivalents 39,600 — — — — — 39,600

69,808 713 2,679 — — — 73,200

Non-current financial liabilitiesBorrowings — — — — 34,664 — 34,664Other non-current liabilities — — — — 1,093 — 1,093

Current financial liabilitiesTrade and other payables — — — — 25,354 — 25,354Borrowings — — — — 11,338 — 11,338Derivative liabilities — — — — — 3 3Bank overdrafts — — — — 23 — 23

— — — — 72,472 3 72,475

1 All financial instruments at fair value through profit or loss are held for trading.2 Restated, refer to note 48.

43.2 Financial assets and liabilities subject to offsetting

The following table presents the Group’s financial assets and liabilities that are subject to offsetting:

Grossamount

Rm

AmountoffsetRm

Netamount

Rm

2014Current financial assetsTrade and other receivables 3,130 (987) 2,143

Current financial liabilitiesTrade and other payables 1,920 (987) 933

2013Current financial assetsTrade and other receivables 3,826 (1,238) 2,588

Current financial liabilitiesTrade and other payables 2,798 (1,238) 1,560

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43.3 Fair value estimation

The table below presents the Group’s assets and liabilities that are measured at fair value. The classification intodifferent levels is based on the extent that quoted prices are used in the calculation of fair value and the levelshave been defined as follows:

• level 1: fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• level 2: fair value based on inputs other than quoted prices included within level 1 that are observable forthe asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); or

• level 3: fair value based on inputs for the asset or liability that are not based on observable market data (thatis, unobservable inputs).

The following table presents the Group’s assets and liabilities that are measured at fair value:

Level 1Rm

Level 2Rm

Level 3Rm

TotalRm

2014Current financial assetsInvestments — 5,912 — 5,912Current investments — — 906 906Derivative assets 42 141 — 183

Total assets 42 6,053 906 7,001


Level 1Rm

Level 2Rm

Level 3Rm

TotalRm

2013Current financial assetsCurrent investments — — 691 691Derivative assets 20 2 — 22

Total assets 20 2 691 713


The fair value of financial instruments traded in active markets is based on quoted market prices at the reportingdate. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,broker, industry group, pricing service or regulatory agency and those prices represent actual and regularlyoccurring market transactions on an arm’s length basis. The quoted market price used for financial assets held bythe Group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market is determined by using valuationtechniques. These valuation techniques maximise the use of observable market data where it is available and relyas little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument areobservable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included inlevel 3.

Specific valuation techniques used to value financial instruments include:

• the fair value of forward foreign exchange contracts is determined using forward exchange rates at thereporting date;

• quoted market prices or dealer quotes for similar instruments;

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43.3 Fair value estimation (continued)

• the fair value of interest rate swaps is calculated as the present value of estimated future cash flows based onobservable yield curves; and

• other techniques, such as discounted cash flow analysis, are used to determine fair value of the remainingfinancial instruments.

Reconciliation of level 3 financial assets

The table below sets out the reconciliation of financial assets that are measured at fair value based on inputs thatare not based on observable market data (level 3):

RmBalance at 1 January 2013 —Reclassification of investment in insurance cell captives1 557Contributions paid to insurance cell captives 281Claims received from cell captives (177)Gain recognised in profit or loss 30


Balance at 1 January 2014 691Contributions paid to insurance cell captives 563Claims received from cell captives (390)Gain recognised in profit or loss 42


1 The Group invested in insurance cell captives created by Guardrisk, whereby Guardrisk’s insurance licence was extended for use for theinsurance of the Group’s own assets (first-party cells). The Group previously considered the insurance cells to be separate portions of anentity subject to consolidation under IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – SpecialPurpose Entities (effective for periods prior to 1 January 2013). With the adoption of IFRS 10 Consolidated Financial Statements, theGroup concluded that the cell captive structures did not satisfy the criteria of IFRS 10 to be regarded “deemed separate entities” andare accordingly not subject to consolidation. The cell captive arrangements have therefore been accounted for as financial assetsreceivable from these cells.

The effect on profit or loss of a reasonable possible change in assumptions used in determining the fair value ofcurrent investments is negligible.

43.4 Credit risk

Credit risk, or the risk of financial loss to the Group due to customers or counterparties not meeting theircontractual obligations, is managed through the application of credit approvals, limits and monitoring procedures.

The Group’s maximum exposure to credit risk is represented by the carrying amount of the financial assets thatare exposed to credit risk.

The Group considers its maximum exposure per class, without taking into account any collateral and financialguarantees, to be as follows:

2014 20132

Rm RmLoans and other non-current receivables 5,277 4,993Investments 223 111Trade and other receivables 29,655 21,710Current investments 5,651 4,542Derivative assets 183 22Restricted cash 893 2,222Cash and cash equivalents 43,098 39,600

84,980 73,200


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43.4 Credit risk (continued)


The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregatevalues of transactions concluded are spread among approved financial institutions. The Group actively seeks tolimit the amount of credit exposure to any one financial institution and credit exposure is controlled bycounterparty limits that are reviewed and approved by the credit risk department.

The operations in Nigeria, Dubai and South Africa (including head office entities) hold their cash balances infinancial institutions with a rating range from B- to AA+.


Trade receivables

The Group has no significant concentrations of credit risk, due to its widespread customer base across variousoperations and dispersion across geographical locations. The Group has policies in place to ensure that retailsales of products and services are made to customers with an appropriate credit history.

The recoverability of interconnect receivables in certain international operations is uncertain; however, this isactively managed within acceptable limits and has been incorporated in the assessment of an appropriate revenuerecognition policy (note 4) and the impairment of trade receivables, where applicable. In addition, in certaincountries there exists a right of set-off with interconnect parties to assist in settling outstanding amounts.

Ageing and impairment analysis

2014Rm

Gross

2014Rm

Impaired

2014RmNet

20131

RmGross

20131

RmImpaired

20131

RmNet

Fully performing trade receivables 12,994 — 12,994 9,750 — 9,750

Interconnect receivables 2,165 — 2,165 1,701 — 1,701Contract receivables 3,826 — 3,826 2,1312 — 2,1312

Other receivables 7,003 — 7,003 5,9182 — 5,9182

Past due trade receivables 4,259 (2,514) 1,745 5,270 (2,679) 2,591

Interconnect receivables 1,352 (752) 600 1,666 (1,033) 633

0 to 3 months 234 (1) 233 232 (1) 2313 to 6 months 103 — 103 130 (38) 926 to 9 months 54 — 54 120 (25) 959 to 12 months 961 (751) 210 1,184 (969) 215

Contract receivables 2,195 (1,344) 851 2,599 (1,287) 1,312

0 to 3 months 674 (243) 431 900 (77) 8233 to 6 months 592 (454) 138 503 (266) 2376 to 9 months 183 (48) 135 407 (243) 1649 to 12 months 746 (599) 147 789 (701) 88

Other receivables 712 (418) 294 1,005 (359) 646

0 to 3 months 102 (4) 98 141 (2) 1393 to 6 months 137 (27) 110 77 (7) 706 to 9 months 210 (126) 84 533 (201) 3329 to 12 months 263 (261) 2 254 (149) 105

Total 17,253 (2,514) 14,739 15,020 (2,679) 12,341

1 Restated, refer to note 48.2 An amount of R4 billion relating to retail contracts was reclassified from contract receivables to other receivables.

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Total past due per significant operation

Interconnectreceivables

Rm

Contractreceivables

Rm

Otherreceivables

RmTotalRm

2014MTN South Africa 59 850 80 989MTN Nigeria Communications Limited 839 327 26 1,192Other operations 454 1,018 606 2,078

1,352 2,195 712 4,259

2013MTN South Africa 177 1,017 334 1,528MTN Nigeria Communications Limited 766 502 19 1,287Other operations 723 1,080 652 2,455

1,666 2,599 1,005 5,270

Provision for impairment of trade receivables


RmAdditions2

RmReversals2

RmUtilised

Rm

Netmonetary

gainRm


movements3

Rm

At endof the year

Rm

2014Provision for impairment of trade

receivables (2,679) (650) 364 443 43 (35) (2,514)

20131

Provision for impairment of tradereceivables (1,925) (831) 88 192 — (203) (2,679)

1 Restated, refer to note 48.2 A net impairment charge of R286 million (2013: R743 million) was recognised during the year. This amount is included in other

operating expenses in profit or loss (note 6).3 Includes the effect of hyperinflation.

The Group does not hold any collateral for trade receivables.


The recoverability of all loans was assessed at reporting date and none were found to be impaired.

An impairment reversal of R230 million (2013: R223 million charge) in respect of non-current interconnectreceivables was recognised in 2014. The impairment analysis is set out below:

GrossRm

ImpairedRm

NetRm


2013Non-current interconnect receivables 426 (223) 203

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RmAdditions

RmReversals

RmUtilised

Rm


movementsRm

At endof the year

Rm

2014Provision for impairment on non-current

interconnect receivables (223) — 230 — (7) —

2013Provision for impairment on non-current

interconnect receivables — (223) — — — (223)

43.5 Liquidity risk

Liquidity risk is the risk that an entity in the Group will be unable to meet its obligations as they become due.

The Group’s approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet itsliabilities when due under both normal and stressed conditions, without incurring unacceptable losses or riskingdamage to the Group’s reputation.

The Group ensures it has sufficient cash on demand (currently the Group is maintaining a positive cash position)or access to facilities to meet expected operational expenses, including the servicing of financial obligations;this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such asnatural disasters.

The following liquid resources are available:

2014Rm

2013Rm

Trade and other receivables 18,895 14,1321

Current investments 2,182 1,974Cash and cash equivalents, net of overdrafts 43,072 39,577

64,149 55,683


The Group’s undrawn borrowing facilities are disclosed in note 26.

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43.5 Liquidity risk (continued)

The following are the contractual cash flows of financial liabilities:

Carryingamount

RmTotalRm

Payablewithin

onemonthor on

demandRm

Morethanone

monthbut not

exceedingthree

monthsRm

Morethanthree

monthsbut not

exceedingone year

Rm

Morethan

one yearbut not

exceedingtwo years

Rm

Morethan twoyears but

notexceedingfive years

Rm

Morethan five

yearsRm

2014Borrowings 53,253 68,775 442 3,227 14,510 14,288 25,537 10,771Other non-current liabilities 1,016 1,273 — — — 134 323 816Trade and other payables 31,208 31,208 14,873 9,760 6,575 — — —Derivative liabilities 2 2 — — 2 — — —Bank overdrafts 26 26 26 — — — — —

85,505 101,284 15,341 12,987 21,087 14,422 25,860 11,587

2013Borrowings 46,002 61,491 3,517 3,492 8,294 14,693 26,005 5,490Other non-current liabilities 1,093 1,453 — — — 225 260 968Trade and other payables 25,354 25,354 13,868 9,118 2,368 — — —Derivative liabilities 3 3 — 3 — — — —Bank overdrafts 23 23 23 — — — — —

72,475 88,324 17,408 12,613 10,662 14,918 26,265 6,458

43.6 Market risk

Market risk is the risk that changes in market prices (interest rate and currency risk) will affect the Group’sincome or the value of its holding of financial instruments. The objective of market risk management is tomanage and control market risk exposures within acceptable parameters, while optimising the return.

43.6.1 Interest rate risk

Interest rate risk is the risk borne by an interest-bearing asset or liability, due to variability of interest rates.

Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents, restricted cash,current investments, trade and other receivables/payables, loans receivable/payable, bank overdrafts and othernon-current liabilities. The interest rates applicable to these financial instruments are a combination of floatingand fixed rates in line with those currently available in the market.

The Group’s interest rate risk arises from the repricing of the Group’s forward cover and floating rate debt,incremental funding or new borrowings, the refinancing of existing borrowings and the magnitude of thesignificant cash balances that exist.

Debt in the South African entities and all holding companies (including MTN (Dubai) Limited and MTNInternational (Mauritius) Limited is managed on an optimal fixed versus floating interest rate basis, in line withthe approved Group Treasury Policy. Significant cash balances are also considered in the fixed versus floatinginterest rate exposure mix.

Debt in the majority of the Group’s non-South African operations is at floating interest rates. This is due to theunderdeveloped and expensive nature of derivative products in these financial markets. The Group continues tomonitor developments which may create opportunities as these markets evolve in order that each underlyingoperation can be aligned with the Group Treasury Policy.

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43.6 Market risk (continued)

43.6.1 Interest rate risk (continued)

The Group makes use of various products, including interest rate derivatives and other appropriate hedging tools,as a way to manage these risks; however, derivative instruments may be used only to hedge existing exposures.

Profile

At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was asfollows:

2014 2013


Rm

Variablerate

instrumentsRm


Rm

Variablerate

instrumentsRm

Non-current financial assetsLoans and other non-current receivables 3,071 905 1,736 856Investments 223 — 111 —Current financial assetsTrade and other receivables 74 5,988 123 5,255Current investments 4,745 — 3,851 —Restricted cash 155 366 189 1,663Cash and cash equivalents 20,788 7,395 25,729 7,252

29,056 14,654 31,739 15,026

Non-current financial liabilitiesBorrowings 11,947 27,523 4,850 29,772Other non-current liabilities 693 298 723 347Current financial liabilitiesTrade and other payables 107 54 128 69Borrowings 4,220 9,563 7,623 3,715Bank overdrafts — 26 12 11

16,967 37,464 13,336 33,914


The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss of aninstantaneous increase or decrease of 1% (100 basis points) in market interest rates, from the rate applicable at31 December, for each class of financial instrument with all other variables remaining constant. This analysis isfor illustrative purposes only, as in practice market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in the following market interest rates: JIBAR, LIBOR, NIBOR andEURIBOR, money market rates and prime rates. Changes in market interest rates affect the interest income orexpense of floating rate financial instruments. Changes in market interest rates only affect profit or loss inrelation to financial instruments with fixed interest rates if these financial instruments are recognised at their fairvalue.

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43.6.1 Interest rate risk (continued)

A change in the above market interest rates at the reporting date would have increased/(decreased) profit beforetax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period andassumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performedon the same basis as was used for 2013.

2014(Decrease)/increase in profit before tax

2013(Decrease)/increase in profit before tax


%

Upwardchange in

interest rateRm

Downwardchange in

interest rateRm


%

Upwardchange in

interest rateRm

Downwardchange in

interest rateRm

JIBAR 1 (102.7) 102.7 1 (62.5) 62.5LIBOR 1 1.4 (1.4) 1 (187.3) 187.3Three-month LIBOR 1 (0.8) 0.8 1 (3.6) 3.6NIBOR 1 (174.9) 174.9 1 — —EURIBOR 1 (14.3) 14.3 1 (10.2) 10.2Money market 1 22.8 (22.8) 1 31.1 (31.1)Prime 1 — — 1 (1.3) 1.3Other 1 40.4 (40.4) 1 44.9 (44.9)

43.6.3 Currency risk

Currency risk is the exposure to exchange rate fluctuations that have an impact on cash flows and financingactivities.

The Group operates internationally and is exposed to currency risk arising from various currency exposures.Refer to the table that follows for the Group’s exposure to foreign currency risk based on notional amounts.Currency risk arises when future commercial transactions or recognised assets and liabilities are denominated ina currency that is not the entity’s functional currency. The Group is also exposed to translation risk as holdingcompanies do not report in the same currencies as operating entities.

Where possible, entities in the Group use forward contracts to hedge their actual exposure to foreign currency.Refer to note 21 for the Group’s outstanding foreign exchange contracts. The Group’s Nigerian subsidiarymanages foreign currency risk on major foreign purchases by placing foreign currency on deposit as securityagainst Letters of Credit (LCs) when each order is placed.

The Group has foreign subsidiaries whose assets are exposed to foreign currency translation risk, which ismanaged primarily through borrowings denominated in the relevant foreign currencies to the extent that suchfunding is available on reasonable terms in the local capital markets.

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43.6.3 Currency risk (continued)


Included in the Group statement of financial position are the following amounts denominated in currencies otherthan the functional currency of the reporting entities:

2014Rm

2013Rm

ASSETSNon-current assets– United States dollar 318 203

318 203

Current assets– United States dollar 9,169 6,935– Euro 2,477 1,406– Iranian rial 5,640 3,110– South African rand 29 13

17,315 11,464

Total assets 17,633 11,667

LIABILITIESNon-current liabilities– United States dollar 14,651 5,832– Euro 1,135 540

15,786 6,372

Current liabilities– United States dollar 8,375 6,624– Euro 1,043 1,332– South African rand 57 32– British pound sterling 6 3– Botswana pula 2 4

9,483 7,995



The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss andequity of an instantaneous 10% strengthening or weakening in the rand against all other currencies, from the rateapplicable at 31 December, for each class of financial instrument, with all other variables remaining constant.This analysis is for illustrative purposes only, as in practice, market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in foreign exchange rates in respect of the US dollar, Euro andIranian rial. This analysis considers the impact of changes in foreign exchange rates on profit, excluding foreignexchange translation differences resulting from the translation of Group entities that have functional currenciesdifferent from the presentation currency, into the Group’s presentation currency (and recognised in the foreigncurrency translation reserve).

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43.6.3 Currency risk (continued)

A change in the foreign exchange rates to which the Group is exposed at the reporting date would have increased/(decreased) profit before tax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period andassumes that all other variables, in particular interest rates, remain constant. The analysis is performed on thesame basis as applied in 2013.

Increase/(decrease) in profit before tax

Denominated:functional currency

Change inexchange rate

%

Weakeningin functional

currencyRm


currencyRm

2014US$:ZAR 10 (144.8) 144.8US$:SYP 10 (42.8) 42.8US$:SDG 10 (109.2) 109.2US$:SSP 10 (265.5) 265.5US$:NGN 10 (492.0) 492.0EUR:SDG 10 (160.5) 160.5EUR:US$ 10 (28.1) 28.1US$:GNF 10 (155.3) 155.3US$:ZMK 10 (63.4) 63.4IRR:ZAR 10 564.0 (564.0)2013US$:ZAR 10 365.8 (365.8)US$:SYP 10 (80.2) 80.2US$:SDG 10 (91.5) 91.5US$:SSP 10 (181.3) 181.3US$:NGN 10 (627.3) 627.3EUR:SDG 10 (121.3) 121.3EUR:US$ 10 59.0 (59.0)US$:GNF 10 (109.5) 109.5US$:ZMK 10 (151.5) 151.5IRR:ZAR 10 311.0 (311.0)

43.6.4 Price risk

Price risk is the risk that a decline in the value of assets adversely impacts on the profitability of the Group. TheGroup is not directly exposed to commodity price risk. The Group is exposed to material equity securities pricerisk on its investments in available-for-sale financial assets held at 31 December 2014 (note 13). The Group hadno exposure to equity securities price risk at 31 December 2013.


The estimated change in other comprehensive income of an instantaneous 10% appreciation or depreciation ofthe market value to which the Group is exposed at the reporting date would have increased/(decreased) othercomprehensive income before tax by the amounts shown below:

2014Increase/(decrease) inother comprehensive

income before tax

Appreciationin market

valueRm

Depreciationin market

valueRm

Available-for-sale financial assets 591 (591)

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43.7 Capital risk management

The Group’s policy is to maximise borrowings at an operating company level, on a non-recourse basis, within anacceptable level of debt for the maturity of the local company.

Equity funding for existing operations or new acquisitions is raised centrally, first from excess cash and thenfrom new borrowings while retaining an acceptable level of debt for the consolidated Group. Where funding isnot available to the operation locally or in specific circumstances where it is more efficient to do so, funding issourced centrally and on-lent. The Group’s policy is to borrow using a mixture of long-term and short-termcapital market issues and borrowing facilities from local and international capital markets as well as multilateralorganisations together with cash generated, to meet anticipated funding requirements.

The board of directors has approved three key debt protection ratios at a consolidated level, being netdebt:EBITDA, net debt:equity and net interest:EBITDA. Net debt is defined as borrowings and bank overdraftsless cash and cash equivalents, restricted cash and current investments (excluding investments in cell captives).Equity approximates share capital and reserves. Net interest comprises finance charges less finance income andEBITDA is defined as earnings before interest, tax, depreciation, amortisation and goodwill impairment.

These internal ratios establish levels of debt that the Group should not exceed other than for relatively shortperiods of time and are shared with the Group’s debt rating agencies, being Moody’s and Fitch.The Group’s net debt:EBITDA, net debt:equity and net interest:EBITDA ratios at the end of the year are set outbelow:

2014 2013

Net debt:EBITDABorrowings and bank overdrafts (Rm) 53,279 46,025Less: Cash and cash equivalents, restricted cash and current investments (Rm) (48,736) (45,673)

Net debt (Rm) 4,543 352

EBITDA (Rm) 73,191 60,4301

Net debt/EBITDA ratio 0.1 0.0Net debt: total equityNet debt (Rm) 4,543 352Total equity (Rm) 133,442 121,8121

Net debt/total equity (%) 3.4 0.3Net interest:EBITDANet finance costs (Rm) (3,668) (1,234)EBITDA (Rm) 73,191 60,4301

Net interest/EBITDA (%) (5.0) (2.0)1


44 SHARE-BASED PAYMENTS

Equity-settled share-based payments

The schemes described below are accounted for as equity-settled share-based payments to employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vestingconditions) at the grant date. The fair value is measured using a stochastic model. The expected life used in themodel has been adjusted, based on management’s best estimate, for the effects of non-transferability, exerciserestrictions and behavioural considerations where applicable. The fair value determined at the grant date of theequity-settled share-based options or rights is expensed on a straight-line basis over the vesting period, based onthe Group’s estimate of the shares that will eventually vest. The expense is adjusted to reflect the actual numberof options and share rights for which the related service and non-market-based vesting conditions are met.

Where employees exercise options or share rights in terms of the rules and regulations of the schemes, newshares are issued to participants as beneficial owners. The directors procure a listing of these shares on the JSE

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44 SHARE-BASED PAYMENTS (continued)

Limited, the securities exchange on which the Company’s shares are listed. In terms of the share option schemeparticipants entitled to share options pay a consideration equal to the option price when the options are exercised.The nominal value of shares issued is credited to share capital and the difference between the nominal value andthe option price is credited to share premium. Settlement of Performance Share Plan (PSP) awards is donethrough the acquisition of shares on the open market and the subsequent delivery to participants.

The MTN Group share options, share appreciation rights and share rights schemes and performance shareplan

The Group operates a number of equity-settled share-based payment schemes for the benefit of eligibleemployees, including executive directors, in accordance with the schemes’ rules. The schemes are designed toretain and recognise the contributions of executive directors and eligible employees and to provide additionalincentives to contribute to the Group’s continued growth.

The performance share plan is the active scheme which superseded the share option scheme, the shareappreciation rights and the share rights scheme. The superseded schemes will be wound up once all unvestedand/or unexercised awards previously made have run their remaining course.

The vesting periods under the share rights scheme, share option scheme and share appreciation rights scheme areas follows: 20%, 20%, 30% and 30% on the anniversary of the second, third, fourth and fifth years respectively,after the grant date. The strike price for these schemes is determined as the closing market price for MTN GroupLimited shares on the day prior to the date of allocation. Unexercised options and rights lapse 10 years from thedate of grant and are forfeited if the employee leaves the Group before they vest.

The vesting period for the performance share plan is three years and the awards vest in full based on setperformance targets.

The total number of shares which may be allocated for the purposes of the schemes shall not exceed 5% of thetotal issued ordinary share capital of the Company, being 91,110,675 shares (2013: 91,642,290) (excludingZakhele transaction and treasury shares) as approved by shareholders in 2001.

MTN Group share options

Details of the outstanding share options under this scheme are as follows:

Offer date

Strikeprice

R

Numberoutstanding

at31 December

2013

Forfeitedduring2014

Exercisedduring2014

Numberoutstanding

at31 December

2014

1 December 2004 40.50 63,830 — (63,830) —

Total 63,830 — (63,830) —

No new options were granted in the current or prior year and no expense was recognised as the above optionsvested in prior periods.

This share option scheme has been superseded by the introduction of the Group share appreciation rightsschemes described below.

MTN Group Share Appreciation Rights Scheme and Share Rights Scheme (the rights schemes)

The Share Appreciation Rights Scheme was implemented on 31 May 2006, and superseded the share optionscheme.

On 26 August 2008, the board approved the share rights scheme, which superseded the share appreciation rightsscheme. Both the rights schemes operate under the same provisions with the exception that the share rightsscheme was extended to allow participation by junior managers.

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Share rights under the rights schemes are granted to eligible employees by the relevant employer subsidiarycompany.

Exercised rights are equity-settled whereby the relevant subsidiary purchases the required MTN shares in theopen market.

Details of the outstanding share appreciation rights are as follows:

Offer dateStrike

price R

Numberoutstanding

at31 December

2013

Forfeitedduring2014

Exercisedduring2014

Numberoutstanding

at31 December

2014

31 May 2006 56.83 209,810 — (23,610) 186,20021 November 2006 71.00 127,430 — (80,930) 46,50022 June 2007 96.00 41,600 — (29,360) 12,24019 March 2008 126.99 226,611 — (34,810) 191,801

Total 605,451 — (168,710) 436,741

Details of the outstanding share rights are as follows:

Offer dateStrike

price R

Numberoutstanding

at31 December

2013

Forfeitedduring2014

Exercisedduring2014

Numberoutstanding

at31 December

2014

1 September 2008 118.64 432,170 — (234,464) 197,70628 June 2010 107.49 1,358,947 (31,290) (626,227) 701,430

Total 1,791,117 (31,290) (860,691) 899,136

The share rights and share appreciation rights outstanding at the end of the year have a weighted averageremaining contractual life of four years (2013: five years).

There were no new grants during the 2013 or 2014 financial year.

MTN performance share plan (PSP)

During the 2013 and 2014 financial years, the Group granted eligible employees share rights under the PSP,established in 2010. The rights were granted to employees on level 3 – 4 and 5 – 6. The PSP was established inorder to attract, retain and reward selected employees who are able to contribute to the business of the employercompanies and to stimulate their personal involvement thereby encouraging their continued service andencouraging them to advance the interests of the relevant employer company and the Group in general.

The share rights vest after three years from date of grant. The following performance conditions must be fulfilledto qualify for the percentage of the shares granted as stated in the table below:

Proportion of grant

Vesting conditions for shares granted


%


%

Total shareholder return 37.5 50.0Adjusted free cash flow 37.5 50.0Individual retention (guaranteed, subject to remaining on thePSP for the duration of the award fulfilment period) 25.0 —

For the total shareholder return vesting condition, vesting is based on a sliding scale that ranges from 25%vesting at the median to 100% vesting at the 75 percentile of the performance of a comparable group ofcompanies listed on the JSE. For the adjusted free cash flow vesting condition, vesting is based on a sliding scalebetween 11% – 19% compound annual growth in the adjusted free cash flow, for all grants prior to 2014. The

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sliding scale has been revised by the board of directors to between 6% – 10% compound annual growth in theadjusted free cash flow, for all grants made in 2014 and thereafter. The individual retention condition isguaranteed subject to the employee remaining employed by the Group for the duration of the vesting period.

Details of the outstanding equity-settled performance share plan are as follows:

Offer date


2013

Offeredduring2014

Forfeitedduring2014

Exercisedduring2014

Numberoutstanding

at31 December

2014

29 June 2011 1,330,426 — (1,009,306) (321,120) —29 December 2011 1,195,293 — (49,712) — 1,145,58128 December 2012 1,733,727 — (176,794) — 1,556,93320 December 2013 2,427,307 — (336,904) — 2,090,40319 December 2014 — 2,292,700 (900) — 2,291,800

Total 6,686,753 2,292,700 (1,573,616) (321,120) 7,084,717

A valuation has been prepared using a stochastic model to determine the fair value of the performance share planand the expense to be recognised for share rights granted during the year.

The range of inputs into the stochastic model used for rights granted during the year was as follows:

2014 2013

Share price 221.41 207.02Expected life 3 years 3 yearsRisk-free rate 6.48% – 6.85% 5.61% – 6.57%Expected volatility 20.63% – 21.26% 24.63% – 22.15%Dividend yield 4.66% 4.60%

The risk-free rate was estimated using the implied yield on SA zero-coupon government bonds.

Volatility was estimated using the weekly closing share price and the dividend yield was estimated by using aone-year moving average of the dividend yield at valuation date.

2014Rm

2013Rm

Expense arising from equity-settled share-based payment transactions (note 6) 110 215

45 INTEREST IN SUBSIDIARIES

The subsidiaries in which MTN Group Limited has direct and indirect interests in are set out in note 47.

A summary of the Group’s subsidiaries with material non-controlling interests is presented below.

Non-controlling interests

SubsidiaryPrincipal place ofbusiness

2014Rm

2013Rm

MTN Nigeria Communications Limited Nigeria 2,306 2,795MTN Côte d’Ivoire S.A. Côte d’Ivoire 971 955Spacetel Benin SA Benin 346 305Mobile Telephone Networks Cameroon Limited Cameroon 450 627Other 852 651

4,925 5,333

Set out below and on the next page is the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. Unless otherwise stated, the Group’s subsidiaries’ countriesof incorporation are also their principal place of operation. The summarised financial information presented isbefore intercompany eliminations.

F-214


45 INTEREST IN SUBSIDIARIES (continued)

MTN NigeriaCommunications Limited MTN Côte d’Ivoire S.A.

2014 2013 2014 2013

% ownership interest held by non-controlling interests 21.17 21.17 33.17 33.17

Rm Rm Rm Rm


Total assets 60,690 63,246 6,494 6,427

Non-current liabilities 27,541 30,937 302 248Current liabilities 22,256 19,107 3,264 3,300


Summarised income statementRevenue 53,995 48,159 6,418 5,480EBITDA 31,620 29,235 2,475 2,8132

Profit before tax 19,184 18,862 1,704 2,165Income tax expense (5,360) (5,707) (587) (447)

Profit after tax 13,824 13,155 1,117 1,718

Profit attributable to non-controlling interests 2,927 2,785 371 568Dividends paid to non-controlling interests 3,366 2,378 341 667

1 Excludes goodwill on consolidation of subsidiaries.2 Includes profit on sale of towers.

MTN NigeriaCommunications Limited MTN Côte d’Ivoire S.A.

2014 2013 2014 2013Rm Rm Rm Rm

Summarised statement of cash flowsNet cash generated from/(used in) operating activities 11,226 11,037 1,195 (578)Net cash (used in)/from investing activities (7,078) (12,799) (1,158) 377Net cash (used in)/from financing activities (49) 8,517 (286) 293

Net increase/(decrease) in cash and cash equivalents 4,099 6,755 (249) 92Net cash and cash equivalents at beginning of the year 9,513 1,939 707 489Exchange (losses)/gains on cash and cash equivalents (580) 819 (21) 126

Net cash and cash equivalents at end of the year 13,032 9,513 437 707

F-215


45 INTEREST IN SUBSIDIARIES (continued)

Spacetel Benin SAMobile Telephone Networks

Cameroon Limited

2014 2013 2014 2013% ownership interest held by non-controlling interests 25 25 201 201

Rm Rm Rm Rm

Summarised statement of financial positionNon-current assets2 2,204 2,473 2,629 2,707Current assets 1,424 782 4,058 3,747

Total assets 3,628 3,255 6,687 6,454

Non-current liabilities 683 694 200 154Current liabilities 1,562 1,342 4,235 3,168


Summarised income statementRevenue 3,316 2,659 6,194 5,204EBITDA 1,380 1,065 2,651 2,5503

Profit before tax 878 592 1,905 1,875Income tax expense 1 1 (852) (545)

Profit after tax 879 593 1,053 1,330

Profit attributable to non-controlling interests 220 148 211 266Dividends paid to non-controlling interests 173 113 365 173

1 The non-controlling interests hold 30% of the issued ordinary share capital of Mobile Telephone Networks Cameroon Limited; however,the effective ownership for accounting purposes is 20% due to outstanding funding provided by the Group to the non-controllinginterests to acquire ordinary share capital in Mobile Telephone Networks Cameroon Limited.

2 Excludes goodwill on consolidation of subsidiaries.3 Includes profit on sale of towers.

Spacetel Benin SAMobile Telephone Networks

Cameroon Limited

2014Rm

2013Rm

2014Rm

2013Rm

Summarised statement of cash flowsNet cash generated from operating activities 961 544 1,105 609Net cash (used in)/from investing activities (264) (428) (608) 549Net cash used in financing activities (204) (195) (272) (243)

Net increase/(decrease) in cash and cash equivalents 493 (79) 225 915Net cash and cash equivalents at beginning of the year 467 428 2,857 1,359Exchange (losses)/gains on cash and cash equivalents (33) 118 (111) 583

Net cash and cash equivalents at end of the year 927 467 2,971 2,857

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARYSHARES

46.1 Directors’ emoluments and related payments

2014Date

appointedSalaries

R000

Post-employment

benefitsR000

Otherbenefits*

R000Bonuses

R000Sub-total

R000

Sharegains**R000

TotalR000

Executive directorsRS Dabengwa 01/10/01 9,334 1,197 858 13,257 24,646 3,482 28,128BD Goschen 22/07/13 5,567 714 286 6,777 13,344 — 13,344

Total 14,901 1,911 1,144 20,034 37,990 3,482 41,472

* Includes medical aid and unemployment insurance fund.** Pre-tax gains and post-brokerage cost on share appreciation rights scheme and share rights plan.

F-216


46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARYSHARES (continued)

46.1 Directors’ emoluments and related payments (continued)

Dateappointed

Retainer#

R000Attendance#

R000

Specialprojects

R000

StrategysessionR000

Ad hocworkR000

TotalR000

Non-executive directorsPF Nhleko 28/05/13 1,084 608 92 183 — 1,967KC Ramon^ 01/06/14 123 187 — 96 21 427KP Kalyan 13/06/06 332 487 97 96 — 1,012AT Mikati*† 18/07/06 1,163 707 111 219 97 2,297MJN Njeke 13/06/06 311 388 20 96 — 815JHN Strydom 11/03/04 299 459 20 96 42 916AF van Biljon 01/11/02 312 401 68 96 63 940J van Rooyen 18/07/06 364 533 90 96 21 1,104MLD Marole 01/01/10 310 775 21 96 — 1,202NP Mageza 01/01/10 361 566 42 96 20 1,085A Harper* 01/01/10 1,177 852 — 219 — 2,248F Titi 01/07/12 253 352 — 48 — 653

Total 6,089 6,315 561 1,437 264 14,666

* Fees have been paid in Euro.† Fees are paid to M1 Limited.# Retainer and attendance fees include fees for board and committee representation and meetings.^ 4th quarter fees paid to Anglogold Ashanti Limited.

2013Date

appointedSalaries

R000

Post-employment

benefitsR000

Otherbenefits*

R000Bonuses

R000Sub-total

R000

Sharegains**R000

TotalR000

Executive directorsRS Dabengwa 01/10/01 8,913 1,143 2,621 16,163 28,840 19,237 48,077NI Patel† 27/11/09 3,081 395 2,856 — 6,332 1,223 7,555BD Goschen 22/07/13 2,336 292 37 3,661 6,326 — 6,326

Total 14,330 1,830 5,514 19,824 41,498 20,460 61,958

* Includes medical aid and unemployment insurance fund.** Pre-tax gains and post-brokerage cost on share appreciation rights scheme and share rights plan.† Resigned 21 July 2013.

F-217



46.1 Directors’ emoluments and related payments (continued)

Dateappointed

Retainer#

R000Attendance#

R000

SpecialboardR000

Specialprojects

R000

Ad hocworkR000

TotalR000

Non-executive directorsMC Ramaphosa^ 01/10/01 412 191 248 — — 851PF Nhleko^^ 28/05/13 624 218 284 175 — 1,301KP Kalyan 13/06/06 316 348 226 132 — 1,022AT Mikati*† 18/07/06 1,054 578 657 339 10 2,638MJN Njeke 13/06/06 296 282 268 111 — 957JHN Strydom 11/03/04 296 324 289 132 51 1,092AF van Biljon 01/11/02 298 304 268 169 10 1,049J van Rooyen 18/07/06 370 440 268 209 — 1,287MLD Marole 01/01/10 285 325 268 112 — 990NP Mageza 01/01/10 339 410 222 189 — 1,160A Harper* 01/01/10 1,083 593 557 291 10 2,534F Titi 01/07/12 231 243 246 150 — 870

Total 5,604 4,256 3,801 2,009 81 15,751

^ Resigned 28 May 2013.^^ Appointed 28 May 2013.* Fees have been paid in Euro.† Fees are paid to M1 Limited.# Retainer and attendance fees include fees for board and committee representation and meetings.

46.2 Prescribed officers’ emoluments and related payments

2014Salaries

R000

Post-employment

benefitsR000

Otherbenefits

R000Bonuses

R000Sub-total

R000

SharegainsR000

TotalR000

Prescribed officersJA Desai 7,865 786 2,230 9,217 20,098 1,460 21,558PD Norman 4,233 543 256 3,634 8,666 1,179 9,845A Farroukh 7,747 775 942 6,573 16,037 1,440 17,477SA Fakie 3,161 412 402 2,991 6,966 911 7,877KW Pienaar 4,570 586 363 5,309 10,828 1,018 11,846P Verkade 4,144 414 1,067 3,515 9,140 — 9,140Z Bulbulia 3,527 452 286 858 5,123 598 5,721M Ikpoki 6,505 586 1,896 4,440 13,427 — 13,427M Fleischer^ 4,433 568 40 4,271 9,312 — 9,312M Nyati^^ 871 112 18 837 1,838 — 1,838

Total 47,056 5,234 7,500 41,645 101,435 6,606 108,041

^ Appointed 1 February 2014.^^ Appointed 1 October 2014.

F-218



46.2 Prescribed officers’ emoluments and related payments (continued)

2013Salaries

R000

Post-employment

benefitsR000

Otherbenefits

R000Bonuses

R000Sub-total

R000

SharegainsR000

TotalR000

Prescribed officersJA Desai 6,957 790 1,791 10,178 19,716 — 19,716PD Norman 4,041 518 251 4,501 9,311 — 9,311C de Faria^ 517 52 2,353 — 2,922 — 2,922A Farroukh 6,853 685 932 6,982 15,452 — 15,452KL Shuenyane^^ 1,946 249 869 — 3,064 — 3,064SA Fakie 3,013 400 142 4,171 7,726 3,530 11,256KW Pienaar 4,356 558 210 3,637 8,761 — 8,761BD Goschen 3,310 274 65 3,528 7,177 — 7,177P Verkade* 3,402 340 794 3,763 8,299 — 8,299Z Bulbulia** 2,057 264 419 — 2,740 4,925 7,665M Ikpoki*** 2,603 201 1,053 2,411 6,268 3,032 9,300

Total 39,055 4,331 8,879 39,171 91,436 11,487 102,923

^ Retired 31 January 2013.^^ Resigned 30 June 2013.* Appointed 1 February 2013.** Appointed 1 June 2013.*** Appointed 24 July 2013.

46.3 Equity compensation benefits for executive directors and directors of major subsidiaries in respect ofthe share appreciation rights and share rights schemes

Offer date

Strikeprice

RVesting

date

Numberoutstanding

at31 December

2013Exercised

2014Exercise

date

Exerciseprice

R

Numberoutstanding

at31 December

2014

RS Dabengwa31/5/2006 56.83 30/11/2008 13,920 — — — 13,92031/5/2006 56.83 30/11/2009 26,440 — — — 26,44031/5/2006 56.83 30/11/2010 40,440 — — — 40,44021/11/2006 71.00 21/11/2008 8,680 — — — 8,68021/11/2006 71.00 21/11/2009 8,680 — — — 8,68021/11/2006 71.00 21/11/2010 13,020 — — — 13,02021/11/2006 71.00 21/11/2011 13,020 — — — 13,02019/3/2008 126.99 19/03/2010 14,440 — — — 14,44019/3/2008 126.99 19/03/2011 14,440 — — — 14,44019/3/2008 126.99 19/03/2012 21,660 — — — 21,66019/3/2008 126.99 19/03/2013 21,660 — — — 21,660

Total 196,400 — 196,400

AR Bing*31/5/2006 56.83 30/11/2010 4,860 (4,860) 18/03/2014 211.97 —21/11/2006 71.00 21/11/2010 960 (960) 18/03/2014 211.97 —21/11/2006 71.00 21/11/2011 960 (960) 18/03/2014 211.97 —22/6/2007 96.00 22/6/2011 6,330 (6,330) 18/03/2014 211.97 —22/6/2007 R96.00 22/6/2012 6,330 (6,330) 18/03/2014 211.97 —

Total 19,440 (19,440) —

* Retrenched 31 August 2014.

F-219



46.3 Equity compensation benefits for executive directors and directors of major subsidiaries in respect ofthe share appreciation rights and share rights schemes (continued)

Offer date

Strikeprice

RVesting

date

Numberoutstanding

at31 December

2013Exercised

2014Exercise

dateExerciseprice R

Numberoutstanding

at31 December

2014

BD Goschen19/03/2008 126.99 19/03/2010 12,260 — — — 12,26019/03/2008 126.99 19/03/2011 12,260 — — — 12,26019/03/2008 126.99 19/03/2012 18,390 — — — 18,39019/03/2008 126.99 19/03/2013 18,390 — — — 18,390

Total 61,300 — 61,300

P Sibiya28/06/2010 107.49 28/06/2011 5,800 (5,800) 19/05/2014 224.10 —28/06/2010 107.49 28/06/2012 5,800 (5,800) 19/05/2014 224.10 —28/06/2010 107.49 28/06/2013 8,700 (8,700) 19/05/2014 224.10 —28/06/2010 107.49 28/06/2014 8,700 (8,700) 11/08/2014 234.44 —

Total 29,000 (29,000) —

F Moolman^19/03/2008 126.99 19/03/2010 10,200 — — — 10,20019/03/2008 126.99 19/03/2011 10,200 — — — 10,20019/03/2008 126.99 19/03/2012 15,300 — — — 15,30019/03/2008 126.99 19/03/2013 15,300 — — — 15,300

Total 51,000 — 51,000

^ Appointed 1 August 2014.

46.4 Equity compensation benefits for executive directors, prescribed officers and directors of majorsubsidiaries in respect of the performance share plan

Offer dateVesting

date OfferedExercised

2014Forfeited

2014Exercise

date

Exerciseprice

R

Numberoutstanding

at31 December

2014

PD Norman29/06/2011 31/12/2013 36,500 (5,931) (30,569) 25/03/2014 198.80 —29/12/2011 29/12/2014 36,100 — — — — 36,10028/12/2012 28/12/2015 30,600 — — — — 30,60020/12/2013 19/12/2016 28,400 — — — — 28,40019/12/2014 18/12/2017 27,000 — — — — 27,000

Total 158,600 (5,931) (30,569) 122,100

Z Bulbulia29/06/2011 31/12/2013 18,500 (3,006) (15,494) 25/03/2014 198.80 —29/12/2011 29/12/2014 15,300 — — — — 15,30028/12/2012 28/12/2015 15,500 — — — — 15,50020/12/2013 19/12/2016 24,500 — — — — 24,50019/12/2014 18/12/2017 22,200 — — — — 22,200

Total 96,000 (3,006) (15,494) 77,500

F-220



46.4 Equity compensation benefits for executive directors, prescribed officers and directors of majorsubsidiaries in respect of the performance share plan (continued)

Offer dateVesting


2014Forfeited

2014Exercise

date

Exerciseprice

R

Numberoutstanding

at31 December

2014

RS Dabengwa29/06/2011 13/06/2006 107,800 (17,517) (90,283) 25/03/2014 198.80 —29/12/2011 18/07/2006 111,600 — — — — 111,60028/12/2012 13/06/2006 94,600 — — — — 94,60020/12/2013 11/03/2004 87,800 — — — — 87,80019/12/2014 01/11/2002 83,100 — — — — 83,100

Total 484,900 (17,517) (90,283) 377,100

KW Pienaar29/06/2011 01/01/2010 31,500 (5,119) (26,381) 25/03/2014 198.80 —29/12/2011 01/01/2010 24,200 — — — — 24,20028/12/2012 01/07/2012 33,000 — — — — 33,00020/12/2013 19/12/2016 30,600 — — — — 30,60019/12/2014 18/12/2017 29,100 — — — — 29,100

Total 148,400 (5,119) (26,381) 116,900

AR Bing*29/06/2011 31/12/2013 20,600 (3,347) (17,253) 25/03/2014 198.80 —29/12/2011 29/12/2014 15,600 — — — — 15,60028/12/2012 28/12/2015 14,900 — — — — 14,90020/12/2013 19/12/2016 16,000 — — — — 16,000

Total 67,100 (3,347) (17,253) 46,500

SA Fakie29/06/2011 31/12/2013 28,200 (4,582) (23,618) 25/03/2014 198.80 —29/12/2011 29/12/2014 18,609 — — — — 18,609

Total 46,809 (4,582) (23,618) 18,609

BD Goschen29/12/2011 29/12/2014 22,300 — — — — 22,30028/12/2012 28/12/2015 26,500 — — — — 26,50020/12/2013 19/12/2016 43,700 — — — — 43,70019/12/2014 18/12/2017 54,700 — — — — 54,700

Total 147,200 — — 147,200

A Farroukh29/06/2011 31/12/2013 44,600 (7,247) (37,353) 25/03/2014 198.80 —29/12/2011 29/12/2014 42,900 — — — — 42,90028/12/2012 28/12/2015 40,800 — — — — 40,80020/12/2013 19/12/2016 43,800 — — — — 43,80019/12/2014 18/12/2017 43,900 — — — — 43,900

Total 216,000 (7,247) (37,353) 171,400

* Retrenched 31 August 2014.

F-221




Offer dateVesting


2014Forfeited

2014Exercise

date

Exerciseprice

R

Numberoutstanding

at31 December

2014

JA Desai29/06/2011 31/12/2013 45,200 (7,345) (37,855) 25/03/2014 198.80 —29/12/2011 29/12/2014 43,600 — — — — 43,60028/12/2012 28/12/2015 41,400 — — — — 41,40020/12/2013 19/12/2016 44,400 — — — — 44,40019/12/2014 18/12/2017 44,500 — — — — 44,500

Total 219,100 (7,345) (37,855) 173,900

SB Mtshali^29/06/2011 31/12/2013 6,500 (2,417) (4,083) 25/03/2014 198.80 —29/12/2011 29/12/2014 9,005 — — — — 9,00528/12/2012 28/12/2015 6,400 — — — — 6,40020/12/2013 19/12/2016 6,000 — — — — 6,00019/12/2014 18/12/2017 5,800 — — — — 5,800

Total 33,705 (2,417) (4,083) 27,205

MML Mokoka^^†29/06/2011 31/12/2013 5,300 (1,971) (3,329) 25/03/2014 198.80 —29/12/2011 29/12/2014 6,400 — — — — 6,40028/12/2012 28/12/2015 5,800 — — — — 5,80020/12/2013 19/12/2016 5,500 — — — — 5,500

Total 23,000 (1,971) (3,329) 17,700

M Ikpoki20/12/2013 19/12/2016 39,600 — — — — 39,60019/12/2014 18/12/2017 37,400 — — — — 37,400

Total 77,000 — — 77,000

P Sibiya20/12/2013 19/12/2016 14,700 — — — — 14,70019/12/2014 18/12/2017 15,700 — — — — 15,700

Total 30,400 — — 30,400

^ Group secretary.^^ Company secretary.† Retrenched 30 September 2014.

F-222




Offer dateVesting


2014Forfeited

2014Exercise

date

Exerciseprice

R

Numberoutstanding

at31 December

2014

P Verkade29/11/2011 31/06/2014 15,900 — — — — 15,90028/12/2012 28/12/2015 13,200 — — — — 13,20020/12/2013 19/12/2016 25,400 — — — — 25,400

Total 54,500 — — 54,500

M Fleischer#

19/12/2014 18/12/2017 30,400 — — — — 30,400

Total 30,400 — — 30,400

M Nyati+19/12/2014 18/12/2017 21,900 — — — — 21,900

Total 21,900 — — 21,900

F Moolman*29/12/2011 29/12/2014 15,200 — — — — 15,20028/12/2012 28/12/2015 14,600 — — — — 14,60020/12/2013 19/12/2016 15,700 — — — — 15,70019/12/2014 18/12/2017 15,700 — — — — 15,700

Total 61,200 — — 61,200

# Appointed 1 February 2014.+ Appointed 1 October 2014.* Appointed 1 August 2014.

46.5 Directors, prescribed officers, company secretary of the MTN Group and directors and companysecretaries of major subsidiaries shareholding and dealings in ordinary shares

December2014

December2013 Beneficial

RS Dabengwa 1,473,552 1,473,552 DirectNP Mageza 400 400 IndirectPD Norman#* 300,970 266,002 DirectKL Shuenyane — 1,640 DirectMJN Njeke 10 10 DirectBD Goschen*# 40,000 40,000 DirectKW Pienaar* 455,261 455,261 DirectAR Bing^ — 136,836 Direct

Total 2,270,193 2,373,701

* Prescribed officer.# Major subsidiary director.^ Retrenched 31 August 2014.

F-223



46.6 Directors, prescribed officers, company secretary of the MTN Group and directors and companysecretaries of major subsidiaries relating to MTN Zakhele

The following persons, being directors of MTN Group Limited and its major subsidiaries, and the companysecretary were allocated the following number of MTN Zakhele shares. MTN Zakhele has a shareholding inMTN Group Limited shares.

BeneficiaryNature ofinterest Shares

PF Nhleko Direct beneficial 2,010,700KP Kalyan Direct beneficial 27,700MLD Marole Direct beneficial 15,700MJN Njeke Direct beneficial 6,700NP Mageza Indirect beneficial 51,420SB Mtshali Indirect beneficial 6,500F Jakoet Direct beneficial 30,700CWN Molope Direct beneficial 1,000F Titi Indirect beneficial 15,500SA Fakie Direct beneficial 1,000

Total 2,166,920

F-224

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F-225


47 INTERESTS IN SUBSIDIARIES AND JOINT VENTURES

HOLDING COMPANIES

Mobile Telephone NetworksHoldings Proprietary Limited

South Africa

100%

MTN InternationalProprietary Limited

South Africa

100%

MTN International (Mauritius)Limited

Mauritius

100%

MTN Group


MTN BusinessSolutions BotswanaProprietary Limited

Botswana

80%

Satalite DataNetworks MauritiusProprietary Limited

Mauritius

100%

iTalk CellularProprietary Limited

South Africa

100%

MTN NetworkSolutions


100%

Afrihost ProprietaryLimited3

South Africa

50,2%

MTN BusinessLimited (Kenya)

Kenya

70%

MTN BusinessSolutions NamibiaProprietary Limited

Namibia

100%

Mobile TelephoneNetworks Proprietary

LimitedSouth Africa

100%

MTN BusinessSolutions Limited

(Zambia)2

Zambia

80%

MTN BusinessKenya Limited

Kenya`

70%

Cell PlaceProprietary Limited

South Africa

100%

MTN BusinessSolutions


100%

Swazi MTN Limited1

Swaziland

30%


HOLDING COMPANY


LimitedCameroon

70%

ArobaseCôte d’Ivoire

66,83%

XS BroadbandLimitedNigeria

78,83%

MascomWireless BotswanaProprietary Limited1

Botswana

53,1%

MTN NetworkSolutions Limited

Cameroon

70%

MTN Côte d’Ivoire S.A.Côte d’Ivoire

66,83%

MTN UgandaLimitedUganda

96%


(PJSC)1

Iran

49%

MTN Publicom LimitedUganda

96%

AfnetCôte d’Ivoire

66,83%

MTN NigeriaCommunications

LimitedNigeria

78,83%

MTN (Zambia)LimitedZambia

86%

HOLDING COMPANIES

MobileBotswana

LimitedMauritius

100%

DeciInvestmentsProprietary

Limited1

Botswana

33,3%

Cotel HoldingsLimitedZambia

100%

MTN Group ManagementServices Proprietary Limited

South Africa100%

MANAGEMENT SERVICES

ELECTRONIC SERVICES

MTN Mobile MoneyLimitedZambia

86%

Electronic FundsTransfer Operations

Nigeria LimitedNigeria

50%

Middle East InternetHolding1

Luxemburg

50%

ELECTRONIC SERVICES

Africa InternetHolding GmbH1 Berlin

There were no changes in the effective holding in any of the Group’s subsidiaries during the year unless otherwise indicated.

33,3%

PROPERTY

MTN PropcoProprietary Limited

South Africa

100%

Aconcagua 11 ProprietaryLimited

South Africa

100%

DORMANT

Satalite Data NetworksProprietary Limited

100%

MTN Service ProviderProprietary Limited

South Africa

100%

1 Joint venture.2.The operation has been restructured in 2014 and forms part of MTN(Zambia) Limited.

3 Subsidiary acquired during the year (note 42).4 Subsidiary incorporated during the year.

STRUCTURED ENTITY

MTN (Mauritius)Investment Limited4

Mauritius

100%

Munyati BuffaloZambia Limited

Zambia

100%

EconetWireless Citizens

LimitedMauritius

82,8%

MTN RwandacellLimitedRwanda

80%

MTN Congo S.A.Republic ofthe Congo

100%

F-226


47 INTERESTS IN SUBSIDIARIES AND JOINT VENTURES (continued)

HOLDING COMPANY

MTN (Dubai)Limited100%

MTN Group

HOLDING COMPANIES

Easy DialInternational Limited


InvestcomConsortiumHolding S.A.



Guinea (Conakry)Limited


99% 99%99%

Investcom MobileBenin Limited


Investcom MobileCommunications

Limited


InvestcomTelecommunicationsAfghanistan Limited


99% 100% 100%

MTN NICBV

Netherlands

MTN (Netherlands)BV

Netherlands

MTN (Netherlands)Co-Op UA

Netherlands

100% 100% 100%

Galactic EngineeringProjects SA

Panama

VernisAssociates SA

Panama

Starcom GlobalLimited


78% 100% 89%

Investcom GlobalLimited


Fourteenth AvenueInvestment Holding

Limited

UAE

99% 100%

Servico SAL

Lebanon

99,97%

PROCUREMENT

Global TradingCompany LLC

UAE

100%

Global SourcingCompany LLC

UAE

100%

Telecom SourcingServices FZ-LLC

UAE

100%

MTN InvestmentsLimited

UAE

100%

MTN SEA SharedServices Limited1

Uganda

100%

DORMANT

SpacetelInternational Limited

United Kingdom

100%

Investom InternationalLimited


99%

INTERNATIONAL BUSINESS

Interserve Overseas LimitedBritish Virgin Islands

99%

MANAGEMENT SERVICES

99,8

Inteltec Offshore SALLebanon

99,8%


MTN SudanCompany Limited

Sudan

85%

Scancom Limited

Ghana

97,7%

Spacetel Guinea-

Bissau S.A.

Guinea-Bissau

100%

MTN Syria (JSC)

Syria

75%

Areeba Guinea S.A.

Guinea

75%

Spacetel Benin SA

Benin

75%

MTN Yemen

Yemen

82,8%

Easynet SearchLimited

Ghana

99,6%

MTN ICT ServicesPLC

Ethiopia

99,9%

LonestarCommunicationsCorporation LLC

Liberia

MTN Cyprus Limited

Cyprus

100%

MTN AfghanistanLimited

Afghanistan

100%

MTN South SudanLimited

South Sudan

100%60%

MTN Nigeria TowersSPV B.V.

Netherlands

100%


Yemen LimitedBritish Virgin Islands

100%

1 The shared services hub has been restructured in 2014 and forms part of MTN Uganda Limited.

F-227


48 RESTATEMENTS

Voluntary change in accounting policy

Previously, the Group accounted for arrangements with multiple deliverables (i.e. multiple element revenuearrangements) by dividing these arrangements into separate units of accounting and recognising revenue throughthe application of the residual value method.

During the period under review, the Group resolved to change its accounting policy in recognising revenuerelating to these arrangements from applying the residual value method to the relative fair value method. Thischange was effected by the Group on a voluntary basis.

Under the relative fair value method, the consideration received or receivable is allocated to each of the elements(delivered and undelivered) according to the relative fair value of the elements included in the arrangement.

The use of the relative fair value method results in more relevant and reliable information being presented inrespect of revenue recognised in relation to multiple element revenue arrangements, as revenue is now beingrecognised in relation to each of the elements delivered and to be delivered based on the relative fair value of theelements in relation to the total consideration received. In addition, there is an improved correlation between therecognition of revenue and associated costs and a closer alignment of the Group’s policy with the requirementsof IFRS 15 Revenue from Contracts with Customers, which is effective for periods commencing on 1 January2017.

The impact of the voluntary change in accounting policy on the Group’s financial results is disclosed below:


31 December 2013

Previouslyreported

Rm

Adjustmentsfor change

in accountingpolicyRm

RestatedRm

Revenue 136,495 775 137,270Other operating expenses (10,143) (133) (10,276)EBITDA 59,788 642 60,430Operating profit 40,510 642 41,152Profit before tax 42,707 642 43,349Income tax expense (12,307) (180) (12,487)Profit after tax 30,400 462 30,862

Profit attributable to equity holders of the Company 26,289 462 26,751Headline earnings 25,398 462 25,860Earnings per share (cents)– Basic earnings 1,434 26 1,460– Diluted earnings 1,427 25 1,452Headline earnings per share (cents)– Basic headline earnings 1,386 25 1,411– Diluted headline earnings 1,378 26 1,404

F-228


48 RESTATEMENTS (continued)

Group statement of financial position

31 December 2013 1 January 2013

Previouslyreported

Rm

Adjustmentsfor

change inaccounting

policyRm

RestatedRm

Previouslyreported

Rm

Adjustmentsfor

change inaccounting

policyRm

RestatedRm

ASSETSNon-current assets 150,910 2,173 153,083 125,7621 1,603 127,365Adjusted for:Loans and other non-current receivables 5,458 2,173 7,631 7,764 1,603 9,367Current assets 75,911 662 76,573 55,875 590 56,465Adjusted for:Trade and other receivables 24,159 662 24,821 16,644 590 17,234

Total assets 226,821 2,835 229,656 181,637 2,193 183,830

EQUITYTotal equity 119,771 2,041 121,812 98,4501 1,579 100,029Adjusted for:Retained earnings 77,831 2,041 79,872 67,8101 1,579 69,389LIABILITIESNon-current liabilities 49,066 794 49,860 32,713 614 33,327Adjusted for:Deferred tax liabilities 12,676 794 13,470 8,711 614 9,325Current liabilities 57,984 — 57,984 50,474 — 50,474

Total liabilities 107,050 794 107,844 83,187 614 83,801

Total equity and liabilities 226,821 2,835 229,656 181,6371 2,193 183,830

1 Including restatement of investment in associates and joint ventures for impact of hyperinflation at 1 January 2013.

49 RECLASSIFICATION OF OPERATING LEASE COMMITMENTS

IAS 17 requires a lessee to disclose the total minimum lease payments under non-cancellable operating leases.This refers to any lease payments that are unavoidable in the future, reflecting the least net cost of fulfilling orexiting from the lease contract.

Following a review of the underlying contracts, certain operating lease commitments that were previouslyidentified and disclosed as cancellable have been reclassified as non-cancellable as at 31 December 2013. Thishas resulted in reclassification adjustments in the disclosure of non-cancellable operating lease commitments(note 35), as set out below.

31 December 2013

Previouslyreported

RmAdjustments

RmRestated

Rm

The future aggregate minimum lease payments under non-cancellableoperating lease arrangements are as follows:

Not later than one year 417 1,909 2,326Later than one year and not later than five years 220 7,352 7,572Later than five years 1 6,116 6,117

638 15,377 16,015

As a result, the operating lease commitments of Scancom Limited (MTN Ghana) to Ghana Tower InterCo B.V.have also been restated (note 40).

F-229

THE ISSUER

MTN (MAURITIUS) INVESTMENTS LIMITED1st Floor, Anglo-Mauritius House

Intendance StreetPort LouisMauritius

THE GUARANTORS

MTN Group Limited Mobile Telephone Networks MTN International216 14th Avenue Holdings Limited (Mauritius) Limited

Fairland 216 14th Avenue 1st Floor, Anglo-Mauritius HouseRoodepoort, 2195 Fairland Intendance Street

South Africa Roodepoort, 2195 Port LouisSouth Africa Mauritius

MTN International Proprietary Mobile Telephone NetworksLimited Proprietary Limited

216 14th Avenue 216 14th AvenueFairland Fairland

Roodepoort, 2195 Roodepoort, 2195South Africa South Africa

FISCAL AGENT, PRINCIPAL PAYING AGENT AND TRANSFER AGENT

Citibank N.A., London Branch13th Floor, Citigroup Centre

Canada SquareLondon E14 5LB

REGISTRAR

Citigroup Global Markets Deutschland AGReuterweg 16

Frankfurt 60323Germany

LEGAL ADVISERS

To the Issuer as toEnglish and United States law

To the Issuer as toSouth African law

To the Issuer as toMauritius law

Freshfields Bruckhaus DeringerLLP

Webber Wentzel TM&S Gujadhur Chambers90 Rivonia Road River Court

65 Fleet Street Sandton St. Denis StreetLondon EC4Y 1HS Johannesburg 2196 Port Louis

United Kingdom South Africa Mauritius

To the Managers as toEnglish and United States law

To the Managersas to South African law

To the Managersas to Mauritian law

Allen & Overy LLP Allen & Overy (South Africa) LLP BLC Robert & AssociatesOne Bishops Square 6th Floor, 90 Grayston Drive 2nd Floor

London E1 6AD Sandton The AxisUnited Kingdom Johannesburg 2196 26 Bank Street

South Africa CybercityEbene 72201

Mauritius

AUDITORS OF THE ISSUER AND MTN INTERNATIONAL (MAURITIUS) LIMITED

PricewaterhouseCoopers Ltd.18 Cyber CityEbène 72201

Mauritius

AUDITORS OF MOBILE TELEPHONE NETWORKS PROPRIETARY LIMITED

PricewaterhouseCoopers Inc.2 Eglin Road

Sunninghill 2157South Africa

AUDITORS OF MOBILE TELEPHONE NETWORKS HOLDINGS LIMITED AND MTNINTERNATIONAL PROPRIETARY LIMITED

SizweNtsalubaGobodo Inc.20 Morris Street East

Woodmead 2191South Africa

AUDITORS OF MTN GROUP LIMITED

PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc.2 Eglin Road 20 Morris Street East

Sunninghill 2157 Woodmead 2191South Africa South Africa

LISTING AGENT

A&L Listing LimitedIFSC, North Wall Quay

Dublin 1Ireland

JOINT BOOKRUNNERS

Barclays Bank PLC Citigroup Global Markets Limited Merrill Lynch International5 The North Colonnade Citigroup Centre 2 King Edward Street

Canary Wharf Canada Square London EC1A 1HQLondon E14 4BB Canary Wharf United KingdomUnited Kingdom London E14 5LB

United Kingdom

The Standard Bank of South Africa Limited3rd Floor, East Wing

30 Baker StreetRosebank

Johannesburg 2196South Africa

CO-MANAGERS

J.P. Morgan Securities plc25 Bank StreetCanary Wharf

London E14 5JPUnited Kingdom

Mizuho Securities USA Inc.320 Park Avenue, 12th Floor

New York, NY 10022United States of America

MUFG Securities EMEA plcRopemaker Place

25 Ropemaker StreetLondon EC2Y 9AJUnited Kingdom

SMBC Nikko Capital Markets LimitedOne New Change

London EC4M 9AFUnited Kingdom

Standard Chartered Bank1 Basinghall AvenueLondon EC2V 5DD

United Kingdom

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