MTN Group Limited · 2019-02-15 · Strong growth in data revenue –Cameroon, Ghana and Ivory Coast key contributors Limited 3G device penetration in SOC resulted in low growth in

Results presentation for the period ended 30 June 2015

MTN Group Limited

Agenda

01 Strategic and operational reviewSifiso DabengwaGroup President and CEO

02 Group financial reviewBrett GoschenGroup CFO

03 Looking aheadSifiso DabengwaGroup President and CEO

Strategic and

operational review

4

Impacted by a challenging operating environment

Group financial results

* Reported (including hyperinflation and/or tower profits)

3.4%

to 231.0 million

Group subscribers

21.3%

to R15.4 billion

Data revenue

4.9%

to R69.2 billion

Revenue

7.9%

to 480 cents

Interim dividend

10.3%

to 654 cents

HEPS*

2.6 pp

to 43.7%

EBITDA margin

Note: Results are presented based on operational performance (excluding hyperinflation and tower profits)

5

Ongoing price competition (voice and data) in most markets

Encouraging data traffic growth

Increasing internet penetration and adoption of 3G devices, affordability key

Outsourcing of non-core business activities

Continued focus on operating efficiencies

Dominance declaration in Nigeria

Declining termination rates impacting revenues

Securing additional spectrum in Nigeria and South Africa

Good progress on licence renewals

Relatively weak local currencies negatively impacted results

Weak macro economic conditions in most markets

Industrial action in South Africa impacted performance

Positive outlook for removal of sanctions in Iran

Continued security challenges in Syria, Sudan, Yemen and Afghanistan

Focus on addressing operational challenges

Operating context

A rapidly

evolving

operating

environment

Regulatory

considerations

Economic

and social

landscape

6

The digital journey

Central organisation established

Increased MoMo registered subscribers by 45.8% to 32.4m

Continued engagement with content partners across our markets

Good progress on e-commerce venture with 128 operations across 30 markets

Shareholders

Maintained dividend pay-out in line with policy

Driving growth

New executive roles for Consumer and Digital areas

Drive growth in existing and new business areas

Maintaining and growing market share

Enterprise Business Unit

Significant strides made to build capability in servicing the Enterprise segment

Launched “Internet of Things” platform

IP MPLS network: 44 POPs in 29 countries to support corporate clients

Developing strategic partnerships to launch ICT services

Participation in ACE undersea cable extension to South Africa

Voice and data evolution

Higher 3G device penetration supported data growth – up 36.4%

Lower voice and data tariffs – down 25.3% and 62.5% respectively (USD terms)

Increased voice and data traffic – up 11.2% and 87.0% respectively

Satisfactory progress on strategic priorities

H1-15 Strategic update

7

Cost optimisation

Efficiencies from headcount rationalisation

Optimisation through outsourcing non-core functions

Disciplined cost control

Continued centralisation of procurement

Network quality, capacity and customer experience

Investments to improve network quality capacity and 3G/LTE expansion – up 18%

Added 1 335 2G sites, 5 048 largely co-located 3G sites and 2 475 LTE sites

Rolled out 722km of long distance fibre

Continuous monitoring of NPS

Asset optimisation

Completed Nigeria tower transaction with tranche 2 concluded on 1 Jul 2015

Network managed services

Implemented across 11 operations

Back office transformation – Project Next!

Implemented in Ghana

Completion of Cameroon expected in Sep 2015 and Benin by year end

SSC implemented in South Africa

Increased focus on customer experience and operational efficiencies

H1-15 Strategic update

8

Better positioned for improved performance

MTN South Africa

1.8%

Subscribers

1.4%

Revenue

133.9%

Capex

2.3 pp

EBITDA margin

Good subscriber growth in prepaid segment supported by competitive voice offerings – up 2.7%

Consolidation of Afrihost supported data revenue growth – up 26.6%

Lower handset sales impacted data subscribers – up 18.1%

Increased focus on internet services, including Music+ 9.3m users

Launched IoT to drive M2M

Staff rationalisation complete and good cost control

Call centre performance challenged due to industrial action

Greater focus on self service portals, retail experience and call centre performance

Improved network quality in Western Cape, focus now on Gauteng

Added 267 2G, 1 939 largely co-located 3G and 1 891 LTE sites

Spectrum re-farming 80% complete – maximised spectral efficiency

Capex rollout on track to provide best in class data services

Driving

sustainable

growth

Creating a

distinct

customer

experience

9

Challenging revenue growth performance

MTN Nigeria

* Constant currency (“organic”) information

4.9%

Subscribers

1.1%*

Revenue

63.2%

Capex

2.8 pp

EBITDA margin

Market share stable at 49%

Satisfactory subscriber growth

12% and 64% reduction in effective voice and data tariffs respectively

Limited elasticity, 6.7% increase in billable minutes

Increased 3G device penetration (up 84.6%) supported data revenue – up 21.3%*

Gained traction on Diamond Yellow with 3 500 merchants and 4.3m registered accounts

Aggressive rollout of EBU offerings, 600 000 SME’s added to MTN yellow directory

Continued uptake of digital offering supported by MTN Music+ and lifestyle services

Strong focus on improving NPS

Improved customer analytics enables segmented offerings

Lower capex spend due to sufficient headroom on network and use of existing inventory

Added 286 2G and 744 largely co-located 3G sites

Addressing consistency of data speeds

Driving

sustainable

growth

Creating a

distinct

customer

experience

10

Delay in number range and registration requirements resulted in lower subscriber growth

Increase in 3G enabled devices (up 59.4%) supported data revenue – up 84.7%*

Improved growth in data users – up 22.3%

Gained traction in digital services supported by introducing innovative content

EBITDA margin impacted by regulatory fees, content providers and transmission costs

Implemented customer service “must win battles”, achieved NPS improvement of 8pp

Increased capex with focus on data

Rolled out 1 401 largely co-located 3G and 117 LTE sites

Driving

sustainable

growth

Creating a

distinct

customer

experience

Sound performance

Irancell


0.5%

Subscribers

13.9%*

Revenue

108%

Capex

4.3 pp

EBITDA margin

11

Large opco and small opco cluster


4.4%

Subscribers

3.4%*

Revenue

13.9%

Capex

1.7 pp

EBITDA margin

Encouraging growth in Ghana despite weak macro economic conditions – revenue up 13.4%*

Strong competition in Cameroon impacting voice revenue – down 7.7%*

Subdued results in Liberia and Guinea Conakry impacted by Ebola, Liberia now recovering

MoMo and 3G penetration supported data revenue – up 26.8%*

Strong growth in data revenue – Cameroon, Ghana and Ivory Coast key contributors

Limited 3G device penetration in SOC resulted in low growth in data revenue – up 29.2%*

Adopted partnership model driving 3G penetration

Registered 24 303k MoMo accounts – up 17.6%

Good NPS in Ghana (up 3pp) and Uganda (up 14pp)

Continued focus on network quality and coverage

Rolled out 610 2G and 964 largely co-located 3G sites

Licence renewal in Cameroon finalised in Mar 2015

Driving

sustainable

growth

Creating a

distinct

customer

experience

Group financial

review

13

Group highlights

5%

to R69 304m

9%

to R30 675m

2.1pp

to 44.3%

0.7pp

to 31.0%

R94m R49m - 1.3pp

R352m 0.6pp 0.6pp

5%

to R69 210m

10%

to R30 274m

2.6pp

to 43.7%

1.4pp

to 32.9%

Revenue EBITDAEBITDA

margin

Effective

tax rate

Positive impact on reported results

Note: Results from slide 14 to 20 are presented based on operational performance (excluding hyperinflation and tower profits)

Reported

Hyperinflation

impact

Tower profit

impact

Operational

14

Revenue and EBITDA performance negatively impacted by currency

Financial highlights

15 34524 464 19 422

12 792

9 19910 852

28 137

33 66330 274

36 789

39 096

38 936

64 926

72 75969 210

H1-13 H1-14 H1-15

* Excl tower profit Jun 15: ZAR 352m (Jun 14: ZAR 99m, Jun 13: ZAR 856m)

** EBITDA less capex (approximates free cash flow)

43.3% 46.3% 43.7% EBITDA margin

44.7% 46.4% 44.3% EBITDA margin (incl tower profit)

19.7% 12.6% 15.7% Capex / revenue

Revenue negatively impacted by exchange

rates and declining tariffs

− Currency movements decreased revenue by 6%

− RSA revenue affected by handset disruption

− Nigeria organic revenue down 1%

Organic opex increase mainly driven by:

− Maintenance, rent and utilities

− Increased marketing spend

EBITDA down 10%, exchange rate impact of

6%

− RSA margin up 2.3pp

− Nigeria margin down 2.8pp

Capex up 18%

− RSA capex up 134%, rollout of 3G sites

Rev

Opex

EBITDA*

Capex

AFCF**

5%

0%

10%

18%

21%

1%

5%

4%

21%

14%

Reported’14 - ’15

Organic’14 - ’15

Group summary ZAR (million)

15

Supported by data growth

Revenue

Outgoing revenue down 10% (organic down 4%)

− Nigeria impacted by weaker economy and operational

execution challenges

− RSA flat, 102% increase in billable minutes offset by lower

on-net tariffs

− Outgoing minutes for Group up 11%

Incoming voice revenue down 8% (organic

down 2%)

− MTR glide path in key markets

− YoY incoming minutes up 4%

Data revenue up 21%, (organic up 28%)

− Data subs up 4% to 105.2m from Dec 2014 and 19% YoY

− Data traffic increased 87% YoY,114% increase in Nigeria

− 3G devices increased by 36%

Devices revenue down 22% (organic down 22%)

− RSA contributes 87%, handset revenue down 28% YoY,

distribution channel challenges and strike affected supply

chain

− 2.4m prepaid handsets sold, postpaid 454k

Revenue growth Organic % Reported %

South Africa (1) (1)

Nigeria (1) (9)

Ghana 13 (8)

Cameroon - (10)

Ivory Coast 6 (5)

Uganda 3 (3)

Syria - (26)

Sudan 17 24

SOC 1 1

Iran 14 14

H1-15CR is at constant prior year FX rate

LOC – Large opco cluster

SOC – Small opco cluster

HOE – Head office companies and eliminations

FXHOE H1-15H1-15CRSOCLOCNIGRSAH1-14

Revenue breakdown ZAR (million)

69 210

4 09073 3006390970

30727572 759

+1%

-6%

16

Strong data growth across operations

Revenue – data

Data revenue up 21% (organic up 28%)

− Contributes 22% to total revenue, (25% incl SMS)

− SMS volumes continue to decline as a result of OTT

apps, SMS revenue down 12%

− RSA and Nigeria contribute 70% to total data revenue

− Total usage up 87% to 85.9 Petabyte YoY

− Strong organic growth in LOC and SOC, 44% and

29% respectively 1 733 2 830 3 692 4 314 4 6753 472

3 8134 533

5 514 5 0603 9424 714

4 4834 781 5 677

9 14711 357

12 70814 609 15 41214%

16%18%

20%22%

H1-13 H2-13 H1-14 H2-14 H1-15

Data revenue ZAR (million)

Data growth Organic % Reported %

South Africa 27 27

Nigeria 21 12

Ghana 76 44

Cameroon 46 32Ivory Coast 59 43

Uganda 9 2

Syria 24 (9)

Sudan 76 87

SOC 29 29

Iran 85 85

OtherNigeriaRSA % of Rev

17

4 535 4 740

7 179 7 341

4 289 4 153

6 734 6 324

5 667 5 531

10 692 10 847

39 096 38 936

H1-14 H1-15

OpexZAR (million)

Effective cost control contains opex growth

Opex

Direct network operating cost up 1% (organic up 10%)

− 2G & 3G sites increased 7% and 56% respectively

− Higher diesel and electricity cost

− Nigeria tower transaction

− Currency weakness impacting USD-denominated contracts

Cost of handset and other accessories down 2%

− Mainly driven by RSA

− RSA down 6%, lower volume due to distribution channel challenges and strike action

Interconnect and roaming down 6%

− Lower MTR’s and forex impact

Selling, distribution and marketing expenses up 2%

− Nigeria up 6% YoY on increased marketing activity and commissions

Other operating expenses up 5%

− Increase in provision for doubtful debt in RSA (postpaid) and Nigeria (interconnect)

Direct network operating costs

Cost of handsets and other accessories

Interconnect and roaming

Staff costs

Selling, distribution and marketing expenses

1%

2%

6%

3%

2%

28%

14%

16%

11%

19%

Other operating expenses

5% 12%

0%

Reported’14 - ’15

% share of opex

18

EBITDA margin

EBITDA margin down 2.6pp to 43.7% YoY

South Africa

− Margin up 2.3pp to 35.6%

− Lower handset sales and lower staff costs

Nigeria

− Margin down 2.8pp to 57.3%, impacted by:

• Lower revenue growth, tower deal and foreign denominated expenses

• Increased commissions, digital services revenue share, marketing expenses and interconnect charges

LOC

− Ghana margin up 1.0pp – no management fee in 2015

− Cameroon margin down 4.6pp – increase in competition and network expansion

− Ivory Coast margin down 1.0pp – largely maintenance costs

− Uganda margin down 0.9pp – one-network effect

SOC

− Margin improvement in Congo B, Rwanda, Zambia, Bissau and S Sudan

− Yemen margin down 9.8pp – civil war

HOE

− Increase professional fees for Next!

− BICS deferred gain fully amortised in 2014

H1-15FXH1-15CRHOESOCLOCNIGRSAH1-14

EBITDA margin reconciliation (%)

46.3

0.6-2.3pp

1.0

0.30.4

1.2

44.0 0.343.7

19

Net finance cost ZAR (million) H1-15 H1-14 H1-13

Net interest paid 839 932 1 102

Net forex losses/(gains) 1 481 736 (1 014)

Total 2 320 1 668 88

Net forex losses/(gains) ZAR (million) H1-15 H1-14 H1-13

Mauritius 253 104 (1 497)

Nigeria 769 129 52

Ghana 81 158 11

Zambia 93 27 23

RSA 77 54 2

Other 208 264 395

Total 1 481 736 (1 014)

Finance cost

Net interest paid ZAR 839m

Net forex loss ZAR 1 481m

− Mauritius losses as a result of USD denominated

borrowings and foreign denominated intercompany

receivables

− Nigeria USD borrowings and trade payables,

devaluation of Naira (8% depreciation from Dec 2014)

− Forex losses due to depreciation of Ghanaian Cedi by

36% and Zambian Kwacha by 18% from Dec to June

− Other primarily relates to forex exposures in tower

companies

20

4 320

-461 -472

1 569

6 672

5 672

592

1 042

1 023

6 481

7 253

6 223

H1-13 H1-14 H1-15

Tax ZAR (million)

Taxation

Group effective tax rate of 32.9%

(1H-14: 31.5%)

− Reported effective tax rate of 31.0% (1H-14: 31.7%)

impacted by tower profit and hyperinflation

− Lower PBT (excluding hyperinflation) due to decrease

in equity income from joint ventures and associates

− Sudan tax holiday ended

Withholding tax

− 5.41% (prior year 4.53%) – Higher WHT % due to

lower PBT base

Deferred tax – income statement

− MTN Nigeria – Reversal of deferred tax liability on

fixed assets: ZAR339m

− MTN RSA – Deferred tax asset due to revenue

deferred on postpaid contracts: ZAR224m

− Cameroon – deferred tax asset reduced following a

change in tax rate

Normal taxDef taxWHT

+12% -14%

31.2% 31.5% 32.9% Eff tax rate%

21

669 729

654

742

807

1 411

1 536

2013 2014 H1-15

Headline earnings per shareZAR (cents)

H1 H2

Headline earnings per share

ZAR (cents) H1-15 H1-14 Change %

Attributable earnings per

share653 731 (11)

Profit on disposal of non-

current assets- (14) NM

Impairment of PPE and non-

current assets1 12 (92)

Basic headline earnings

per share654 729 (10)

22

5 145 5 979 6 8808 225

8 8088 9409 362

12 302

14 694930

2 088

2 422

15 015

17 429

19 182

25 341

2011 2012 2013 2014 H1-15

Dividends and share buy-backsZAR (million)

H1 H2 Share buy back

Shareholder returns

Dividends

− Interim dividend 480cps, 7.9% growth

Share buy-backs

− H2-2011 repurchased 6.8m shares (ZAR 930m)

− H1-2012 repurchased 15.6m shares (ZAR 2.1bn)

− H2-2014 repurchased 10.7m shares (ZAR 2.4bn)

− Total repurchase of 1.8% of issued shares since 2011

23

ZAR (million) H1-15 H1-14 Change %

Revenue 69 304 72 759 (5)

Other income 411 303 36

EBITDA 30 675 33 762 (9)

Depreciation and amortisation 10 750 10 886 1

Profit from operations 19 925 22 876 (13)

Net finance cost 2 319 1 668 (39)

Share of results from joint ventures and associates after tax 2 027 1 691 20

Net monetary gain 496 - NM

Profit before tax 20 129 22 899 (12)

Income tax expense 6 249 7 261 14

Profit after tax 13 880 15 638 (11)

Non-controlling interests 1 980 2 248 12

Attributable profit 11 900 13 390 (11)

EBITDA margin 44.3% 46.4% (2.1pp)

Profit on sale of towers 352 99 NM

EBITDA margin % excl tower profit 43.8% 46.3% (2.5pp)

Effective tax rate 31.0% 31.7% (0.7pp)

Income statement (IFRS)

24

ZAR (million) Jun 2015 Dec 2014

Property, plant and equipment 85 501 87 546

Intangible assets and goodwill 37 484 36 618

Other non-current assets 38 234 39 054

Cash 31 014 43 098

Other current assets* 50 296 43 521

Non-current assets held for sale 3 959 3 848

Total assets 246 488 253 685

Total equity 127 420 133 442

Interest-bearing liabilities 56 059 53 279

Other liabilities 63 009 66 964

Total liabilities 119 068 120 243

Total equity and liabilities 246 488 253 685

Net debt 17 161 4 543

Net debt / annualised EBITDA 0.28 0.06

*Includes foreign currency deposits of ZAR 642m (Dec 2014: ZAR 1 276m) and treasury bills of ZAR 6 241m (Dec 2014: ZAR 3 469m)

Statement of financial position (IFRS)

25


Cash generated by operations 26 289 30 078 (13)

Dividends paid to equity holders of the Company (14 697) (12 284) (20)

Dividends paid to non-controlling interests (3 042) (2 644) (15)

Dividends received from associates and joint ventures 285 349 (18)

Net interest paid (934) (957) 2

Tax paid (6 469) (8 308) 22

Cash generated from operating activities 1 432 6 234 (77)

Acquisition of property, plant and equipment and intangible

assets (11 830) (10 172) (16)

Movement in investments and other investing activities (2 641) 1 565 NM

Cash used in investing activities (14 471) (8 607) (68)

Cash generated from financing activities 1 558 1 439 8

Cash and cash equivalents at the beginning of the year 43 072 39 577 9

Effect of exchange rates on cash and equivalents (787) (1 071) 27

Net monetary gain on cash and cash equivalents 134 - NM

Net cash and cash equivalents at the end of the year* 30 938 37 572 (18)

Statement of cash flows (IFRS)

*Includes bank overdraft of R76m

03 Looking ahead

27

Delivering on our strategy

Looking ahead

Maintain absolute dividend growth of between 5% - 15%

Continue with opportunistic share buy-backs

Continue to seek value accretive opportunities

Continue to invest in our networks to support data growth through 3G and LTE

Ensure customer experience improvements through NPS measure

Improve value and segmentation of offers through customer analytics

Maintain momentum on improving processes and organisation effectiveness

Further commercialisation of tower infrastructure

Rollout of Project Next! in Cameroon, Benin and management companies

Grow data revenues by driving uptake, smartphone penetration and new pricing strategies

Grow the MoMo and Financial Services eco-systems

Rollout of e-commerce offering supported by Rocket partnership

Accelerate development of EBU prioritising SME and MNC

Drive innovation in existing and new business areas

Ensure agility and sharing best practice to leverage new business opportunities

Stakeholder

value

Customer

experience

Operating

model

Sustainable

growth

Innovation &

best practice

28

Mar 15 (‘000)

Jun 15(‘000)

South Africa 2 400 1 800

Nigeria 4 750 5 000

Iran 1 750 1 600

Large opco cluster 5 100 4 850

Ghana 1 100 1 500

Cameroon 1 500 1 150

Ivory Coast 800 800

Sudan 500 -

Syria - -

Uganda 1 200 1 400

Small opco cluster 3 380 3 380

Other JV’s 120 120

Total 17 500 16 750

Net subscriber additions

Guidance 2015

29

ZAR (million)Authorised

2015 Jun 2015 Jun 2014

South Africa 10 000 4 678 2 000

Nigeria 8 784 1 172 3 189

Large opco cluster 5 320 2 669 2 480

Ghana 1 254 355 597

Cameroon 1 239 943 373

Ivory Coast 979 422 584

Uganda 959 556 407

Syria* 442 56 38

Sudan* 447 337 481

Small opco cluster 3 734 1 761 1 408

Head office companies 1 855 572 122

Total 29 693 10 852 9 199

Hyperinflation - 17 -

Total reported 29 693 10 869 9 199

Iran (49%)* 3 991 1 854 891

* Excluding hyperinflation

Capex

Appendix

31

Performance underpinned by data

South Africa

Subscriber growth

− Subscribers up 1.8% to 28.5m for H1-15

− Data subscribers up 18.1% to 17.3m

Revenue

− Revenue decline of 1.4% impacted by 27.5% reduction

in handset revenue

− ERM declined 47.7% to 46 cents

− Data revenue increased 26.6% supported by Afrihost

consolidation

− Data revenue contributes 30.1% of total revenue

20 695 22 574 23 176

5 0055 419 5 328

25 70027 993 28 504

Dec 13 Dec 14 Jun 15

Total subscribers ‘000

Postpaid

Prepaid

* Not adjusted for BTS recovery

19 157 19 157

21 325 19 765

40 482 38 922

18 882

Dec 13* Dec 14 Jun 15

Revenue ZAR (million)

H2

H1

Launched Jun 1994 Market share 32.8% Population 54.0m Market size 2016 96m Penetration 154% Shareholding 100%

32

Aggressive rollout of 3G and LTE

South Africa

Lower costs boost margin

− Lower handset and commission costs due to strike

action, these are expected to increase in H2-15

− Reduced roaming costs

− Reduction in staff

Focus on network quality and roll out of 3G

and LTE

− Data traffic up 20.8% YoY, voice traffic up 102% YoY

− 267 2G, 1 939 largely co-located 3G and 1 891 LTE

sites added

− Significant increase of capex in 2015 focused on

expanding 3G and LTE coverage in key cities

12 775 12 775

13 640 13 638

26 415 26 413

12 158

Dec 13* Dec 14 Jun 15

Expenses ZAR (million)

H2

H1

* Not adjusted for BTS recovery

2 151 2 000

3 684 3 676

5 835 5 676

4 678


Capex ZAR (million)

H2

H1

34.7% 32.1% 35.6% EBITDA margin

33

Operating environment constraints

Nigeria

Subscriber growth

− Subscribers up 4.9% and market share maintained

− Growth underpinned by improved segmented

offerings, churn management and attractive

promotions

− Performance impacted by weak economy

Revenue

− Revenue declined 1.1%*, impacted by

• Lower voice tariffs

• Pressure on consumer spending and multiple SIMs (50%

of the subscriber base)

− Data revenue increased 21.3%*, contributing

20.5% to total revenues

− Momentum from MoMo with 4.3m accounts

− EBU products such as MTN Biz Life gained traction

with 600 000 SME’s added to MTN yellow directory

56 766

59 893

62 813


Total subscribers ‘000


383 057 413 611

410 557 411 195

793 614 824 806

408 999


Revenue NGN (million)

H2

H1

Launched Aug 2001 Market share 49.4% Population 170.3 m Market size 2016 133m Penetration 75% Shareholding 78.8%

34

Focus on cost containment and network flexibility

Nigeria

Margin impacted by higher costs

− Despite good cost management across the board,

margins impacted by

• Increased commission costs due to competition

• Higher lease costs from tower sales

• Naira depreciation

Focus on network quality

− 63.2% decline in capex due to sufficient inventory

− Continued network roll out: 286 2G and

744 largely co-located 3G sites

− Network remains flexible to rollout as required

131 440 165 121

181 033176 896

312 473342 017

174 603


Expenses NGN (million)

H2

H1

* Normalised EBITDA assumes no management fee recognised

6 5713 189

7 727

5 186

14 298

8 375

1 172


Capex ZAR (million)

H2

H1

58.2%* 58.5% 57.3% EBITDA margin

35

Data driving performance

Iran

Subscriber growth of 0.5%

− Impacted by delay in obtaining new number range and

aggressive competition

Revenue supported by data and 3G adoption

− Data revenue increased 84.7%* and contributes

26.7% to revenue

− Data users increased 22.3% to 15.5m

− 3G devices grew 59.4% to 21.4m

Margin impacted by network rollout and

regulatory fees

Investment in network to support data

− 1 401 largely co-located 3G and 117 LTE sites rolled

out

23 945 27 260

25 59929 466

49 544

56 726

31 038

Dec 13** Dec 14** Jun 15**

Revenue IRR (billion)

(100%)

H2

H1

*Constant currency (“organic”) information

**Excluding hyperinflation

445891

1 313

2 2211 758

3 112

3 783

Dec 13* Dec 14* Jun 15*

Capex ZAR (million)

(49%)

H2

H1

42.9% 42.8% 40.1% EBITDA margin

Launched Oct 2006 Market share 45.9% Population 79.5m Market size 2016 101m Penetration 121% Shareholding 49%

36

Data supports performance

Ghana

Subscriber growth of 7.5%

− Expanded distribution network and strong churn

management

Revenue underpinned by data

− Data revenue up 75.9%* contributing 27.2% to total

revenue

− Data growth underpinned by 3G network expansion

Strong MoMo performance (4.6m accounts) supported

by awareness campaigns and expanded agent

network

Cost optimisation mitigated impact of weaker

currency

− EBITDA margin supported by the expiration of the

management fee agreement on 31 March 2014

Network roll out impacted by implementation

of managed services

− Added 136 largely co-located 3G and 18 2G sites

− Capex to accelerate in H2-15

845 961

9081 032

1 7531 993

1 091


Revenue Cedi (million)

H2

H1


685 597

1 005803

1 690

1 400

355


Capex ZAR (million)

H2

H1

37.5% 36.7% 40.2% EBITDA margin

Launched Nov 1996 Market share 50.6% Population 27.1m Market size 2016 31.8m Penetration 108% Shareholding 97.7%

37

Aggressive competition

Cameroon

Performance impacted by 3rd mobile operator

exclusivity on 3G, ended on 31 Mar

Subscribers up 7.3% and market share

maintained

Revenue declined 0.5%*

− 15.7% decrease in effective tariff

− 7.7%* decrease in outgoing voice revenue

− Data revenue up 45.8%* supported by finalisation of

3G licence on 15 Mar

Margin impacted by significant 3G rollout

Investment in network to support data

− 153% increase in capex

− 95 2G and 282 largely co-located 3G sites rolled out

125 025 136 593

139 739146 776

264 764283 369

135 986


Revenue CFA (million)

H2

H1

528373

240 489

768862

943


Capex ZAR (million)

H2

H1

42.7% 42.8% 37.8% EBITDA margin

Launched Feb 2000 Market share 59.3% Population 22.5m Market size 2016 18.5m Penetration 78% Shareholding 70%


38

Data underpins performance

Ivory Coast

Subscribers up 5.9%

− Supported by retention programmes and penetration

to lower segments

Revenue underpinned by data and outgoing

revenue

− Data revenue up 58.7%* due to 3G network expansion

and MoMo

− 2.8m MoMo accounts supported by remittances

between Ivory Coast and Burkina Faso

Costs impacted by 3G rollout and international

transmission costs

Investment in 3G and fibre network

− Added 75 new 2G sites and 211 largely co-located 3G

sites

137 806 144 830

141 714 148 801

279 520 293 631

152 856


Revenue CFA (million)

H2

H1

546 584

284

601830

1 185

422


Capex ZAR (million)

H2

H1

40.7% 38.6% 36.5% EBITDA margin

Launched Apr 1996 Market share 38.6% Population 24.6m Market size 2016 20.6m Penetration 89% Shareholding 66.8%


39

Leading the MTN financial services offering

Uganda

Subscribers up 7.2%

− Market share up 0.8 pp to 57.6% despite tough

competition

− MoMo registered accounts up 12.8% to 8.2m

Revenue up 2.6%*

− Data revenue up 8.5%*

• Low 3G handset penetration

• Cancellation of 3rd party content providers

− Incoming voice revenue declined 12.8%* due to

reduced roaming

EBITDA margin impacted by commission

costs and US dollar expenses

Improved quality and capacity on network

− Added 110 2G sites and 57 largely co-located 3G sites

577 807 618 467

608 336 649 118

1 186 1431 267 585

633 861


Revenue UGX (million)

H2

H1


253407

300

260

553

667

556


Capex ZAR (million)

H2

H1

35.8% 39.5% 36.0% EBITDA margin

Launched Oct 1998 Market share 57.6% Population 39.1m Market size 2016 20.3m Penetration 49% Shareholding 96%

40

Extremely challenging environment

Syria

Subscribers decreased by 1.6% in extremely

challenging conditions

Revenue marginally up

− Supported by 23.9%* increase in data revenue

EBITDA margin declined 2.6 pp to 16.2%

− High inflation

− High costs to maintain network 19 54626 436

23 567

26 844

43 113

53 280

26 468

Dec 13 Dec 14** Jun 15**

Revenue SYP (million)

H2

H1



29538

597

319

892

357

56

Dec 13 Dec 14 Jun 15*

Capex ZAR (million)

H2

H1

17.7% 18.9% 16.2% EBITDA margin

Launched Jun 2002 Market share 42.1% Population 16.5m Market size 2016 14.8m Penetration 83% Shareholding 75%

41

Encouraging progress in tough conditions

Sudan

Subscribers declined 2.2%

− Impacted by weak economy and subscriber

registration

Revenue growth supported by data

− Data revenue increased 76.1%*, contributes 18% of

revenue

EBITDA declined slightly despite inflation

Capex of R337m to support data

589 692

644738

1 2331 430

811

Dec 13 Dec 14** Jun 15**

Revenue SDG (million)

H2

H1

434 481

638

911

1 072

1 392

337

Dec 13 Dec 14* Jun 15*

Capex ZAR (million)

H2

H1

32.0% 33.8% 33.4% EBITDA margin

Launched Sep 2005 Market share 33.9% Population 36.7m Market size 2016 30.3m Penetration 70% Shareholding 85%



42

ZAR (million)Actual

H1-15

Hyper-

inflation

Tower

profit*

Actual H1-15

excl hyper-

inflation and

tower profit

Actual

H1-14

Hyper-

inflation

Tower

profit*

Actual H1-14

excl hyper-

inflation and

tower profit

Adjusted

change %

Revenue 69 304 94 - 69 210 72 759 - - 72 759 (5)

Other income 411 - 352 59 303 - 99 204 (71)

EBITDA 30 675 49 352 30 274 33 762 - 99 33 663 (10)

Depreciation and amortisation 10 750 35 - 10 715 10 886 - - 10 886 2

Profit from operations 19 925 14 352 19 559 22 876 - 99 22 777 (14)

Net finance cost 2 319 (1) - 2 320 1 668 - - 1 668 (39)

Share of results of joint ventures and associatesafter tax

2 027 362 - 1 665 1 691 (197) - 1 888 (12)

Net monetary gain 496 496 - - - - - - NM

Profit before tax 20 129 873 352 18 904 22 899 (197) 99 22 997 (18)

Income tax expense 6 249 26 - 6 223 7 261 - 8 7 253 14

Profit after tax 13 880 847 352 12 681 15 638 (197) 91 15 744 (19)

Non-controlling interests 1 980 105 75 1 800 2 248 - 1 2 247 20

Attributable profit 11 900 742 277 10 881 13 390 (197) 90 13 497 (19)

EBITDA margin 44.3% 43.7% 46.4% 46.3% (2.6pp)

Effective tax rate 31.0% 32.9% 31.7% 31.5% 1.4pp

*Tower sale profits for the period include: The re-measurement of the contingent consideration receivable relating to Nigeria tower transaction tranche 1 of

R339m and the Ghana release of deferred profit R13m (H1-14: Zambia R60m, Rwanda R5m, Ghana R19m and Ghana release of deferred profit R15m)

Income statement

Hyperinflation and tower sales impact

43

ZAR (million)

Cash and

cash

equivalents*

Interest-

bearing

liabilities

Intercompany

eliminations

Net interest-

bearing

liabilities

Net

debt/(cash)

Jun 2015

Net

debt/(cash)

Dec 2014

South Africa 1 350 22 402 (22 402) - (1 350) (1 828)

Nigeria 18 698 23 230 - 23 230 4 532 6 820

Large opco cluster 4 177 4 779 (1 528) 3 251 (926) (4 842)

Ghana 508 684 - 684 176 (230)

Cameroon 911 - - - (911) (2 877)

Ivory Coast 749 722 - 722 (27) 308

Uganda 230 - - - (230) (576)

Syria 1 554 1 528 (1 528) - (1 554) (3 149)

Sudan 225 1 845 - 1 845 1 620 1 682

Small opco cluster 4 708 7 703 (4 737) 2 966 (1 742) (1 962)

Head office companies 9 965 50 322 (23 710) 26 612 16 647 6 355

Total 38 898 108 436 (52 377) 56 059 17 161 4 543

Iran (49%) 7 613 2 650 - 2 650 (4 963) (4 316)

* Includes restricted cash and current investments

Net debt

44

Net debt composition

ZAR (million)Naira

denominatedUSD

denominatedZAR

denominatedEuro

denominated

Nigeria borrowings 17 163 6 067 - -

Nigeria cash 17 515 1 131 - 52

Head office borrowings - 15 195 11 417 -

Head office cash - 4 532 4 387 1 046

Nigeria and Head office

Net debt composition

Nigeria borrowings(%)

Nigeria cash(%)

Head office borrowings(%)

Head office cash(%)

USD26%

Euro11%

ZAR44% USD

45%

USD57%

ZAR43%

Naira74%

USD6%

Naira94%

45

349 334 202

404 452 244

481

1 423 1 679

2 238

2 3192 919

3 472

4 533

5 060

H1-13 H1-14 H1-15

Nigeria ZAR (million)

272 127 110 129 505 416 228

604 586 462

584 595 742

2 1222 767

3 832

3 942

4 483

5 677

H1-13 H1-14 H1-15

South Africa ZAR (million)

South Africa and Nigeria

Revenue – data

VAS ISP

Afrihost*

InternetBlackberry Other Mobile Money

Internet VAS BlackberryLeased line/Wimax Mobile Money

+14%

+27%

+31%

+12%

* Acquired in November 2014. Revenue from Afrihost previously included in ISP

912

5 16

46


Iran 2 099 1 547 36

− Operational 1 737 1 744 -

− Hyperinflation adjustment 362 (197) NM

Swaziland 48 39 23

Botswana 150 107 40

Digital Group (324) - NM

Tower companies (64) (92) (30)

− Ghana 22 (3) NM

− Uganda (149) (89) 67

− Nigeria 63 - NM

BICS 118 90 31

Share of results of joint ventures and associates after tax 2 027 1 691 20

Share of results of joint ventures and associates after tax (IFRS)

47

USD: Local currency H1-15 H2-14 H1-14 Change % YoY

ZAR 12.14 11.55 10.63 (14)

Naira 199.30 184.00 163.00 (22)

Rial 29 160 27 043 25 609 (14)

Cedi 4.35 3.19 3.33 (31)

Cameroon XAF 588.14 542.07 479.12 (23)

Ivory Coast CFA 588.14 542.07 479.12 (23)

Uganda shilling 3 295.00 2 760.00 2 595.00 (27)

Syrian pound 276.36 197.98 164.15 (68)

Sudanese pound 5.97 5.97 5.69 (5)

ZAR: Local currency

Naira 16.42 15.93 15.34 (7)

Rial 2 402 2 342 2 410 -

Cedi 0.36 0.28 0.31 (16)

Cameroon XAF 48.45 46.94 45.09 (7)

Ivory Coast CFA 48.45 46.94 45.09 (7)

Uganda shilling 271.44 239.02 244.22 (11)

Syrian pound 22.77 17.15 15.45 (47)

Sudanese pound 0.49 0.52 0.54 9

FX trends

Closing rate

48

USD: Local currency H1-15 H2-14 H1-14 Change % YoY

ZAR 11.85 11.04 10.67 (11)

Naira 196.49 167.17 162.89 (21)

Rial 28 024 26 109 25 609 (9)

Cedi 3.76 3.27 2.73 (38)

Cameroon XAF 587.24 512.52 478.14 (23)

Ivory Coast CFA 587.07 514.44 478.11 (23)

Uganda shilling 2 956.18 2 676.54 2 514.59 (18)

Syrian pound 237.91 186.42 156.25 (52)

Sudanese pound 5.97 5.80 5.69 (5)

ZAR: Local currency

Naira 16.59 15.27 15.26 (9)

Rial 2 364 2 367 2 410 2

Cedi 0.32 0.30 0.26 (23)

Cameroon XAF 49.58 46.68 44.81 (11)

Ivory Coast CFA 49.58 46.77 44.81 (11)

Uganda shilling 249.48 243.96 235.70 (6)

Syrian pound 20.07 16.27 14.66 (37)

Sudanese pound 0.50 0.53 0.53 6

FX trends

Average rate

thank you

Documents

MTN Group Limited · 2019-02-15 · Strong growth in data revenue –Cameroon, Ghana and Ivory Coast key contributors Limited 3G device penetration in SOC resulted in low growth in