Nigeria Presentation 2010

7/28/2019 Nigeria Presentation 2010

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Introduction and OverviewIntroduction and Overview

Nigeria

Ahmad Farroukh- CEO Nigeria


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Country overviewCountry overview

Population 150m Market sizing 111m (2014) Penetration 45.8%

Economics

* ,

Inflation13% (National Bureau ofStatistics)

Commercial banks'prime lending rate 17.8% (averge)

=Exchange rate

est. av.)

Demographics

LanguageEnglish, several locallanguages

Religion Christian and Muslim

2Source: Economist Intelligence Unit (EIU) Monthly Country Report August 2010


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Market dynamicsMarket dynamics

Political Uncertainty pending general elections in 2011

env ronmen elections

Real GDP rowth rate forecast 2010 - 6.9%

Economic

Average inflation forecast 2010 - 11.5%

On going tightening of banking supervision aimed at strengthening thesector

env ronment Economic growt - 7.68% H210

Growth in non-oil sector (agriculture, retail trade, services andconstruction)

Voluntarily SIM card registration implemented May 10

Regulatoryenvironment

c ent use o current sa es an str ut on c anne s

Appointment of a new Executive Vice Chairman and Chief ExecutiveOfficer for the Regulator (NCC) - Jul 10

Significant improvement in network quality

3


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GSM competitorsGSM competitors Jun 10Jun 10

MTNN ZAIN Globacom Etisalat

Launch date 2001 2001 2003 2007

Subscribers 35.0m 15.1m 14.9m 3.1m

Market share 51.27% 22.17% 21.90% 4.66%

EMTS 40%

Shareholders **MTNI (76%)Private (24%)

Bharti Airtel (65.7%)Private (34.3%)

Nigerian shareholders

Mubadala (30%)PTHNV (30%)*

Initiatives

MTN Fastlink

MTN One WorldBlackberry

International roaming

One network

National fibrebackbone

Fixed line services(corporate segment)

GSM/EDGE

Home ZoneMy cluB premiershipGoogle SMS

3G packagesGlo-1 submarine cable

Easynet internet link

4

rem um e ecommun ca ons o ngs m e , a spec a purpose ve c e w c o s e n eres o ger an nves ors nEtisalat Nigeria. PTHNV offered 35 million shares (17.5%) for sale via Private Placement in March 2009

** Legal Holding


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Fixed wireless and CDMA segmentFixed wireless and CDMA segment

4.71%

2.50%4.14%

F xe w re ess operators 31 Dec 09

21.90%14.52%

CDMA mo e operators 31 Dec 09

8.60%

2.43%

.

27.20%

68.47%

36.30%

Starcomms Visafone Multilinks

Reltel 21st Century O'Net

NITEL

Starcomms Visafone Multilinks Reltel

5CMDA collective market share of total market 10.15%


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Management teamManagement team

ma arrouChief Executive Officer

Andrew BingChief Financial

Karl ToriolaChief Technical

Bola AkingbadeChief Marketing

Akin BraithwaiteCustomer Relations

cercer cer xecu ve

Amina OyagbolaHuman

Resources

Executive

Abdul IsmailChief

Information

Officer

Michael IkpokiSales &

Distribution

Executive

Wale GoodluckCorporateServices

Executive

Derek AppiahChief Enterprise

SolutionsOfficer

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Radio network rolloutRadio network rollout

,

2,367 cities and towns

ver , v ages ancommunities

41 645 km of hi hwa

97 MSCs

Adopt lower cost rollout

methodologies such as co-locationand infrastructure sharing

8


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3G network coverage3G network coverage

,

3G has enabled the launch and

rapid growth of mobile internetand other data servicesincluding corporate services

WiMax is expected to furtherimprove MTNs positioning inthe data services segment

High density

9


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Backbone routeBackbone route

10


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Distribution channelDistribution channel

Trade Partners alignment to captive markets and

Selection of competent.

aligned to particular TradePartners down to the retail level

clusters with joint responsibility for marketdevelopment.

Drive towards the evolution of trade partners as

federation and the Federal Capitalterritory:

Driven by

120 whole sale dealers

42 franchise operations

System support and processes in trade partnerenvironment.

Automated order processing and fulfillmentDeployment of competitive commission reward

2 electronic channel distributors

96,000 Bizlift members till date

Effective Business intelligence toolsExcellent distribution logistics/structures

Trade partners profitability/ SustainabilityExcellent market development/ Penetration

To enhance

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p m sa onon o ne wor n ras ruc ureEvolution of reliable and competent brand

ambassadors.


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DataData

Licence Unified licence

Customers Large corporations and Small and Medium Enterprises (SMEs)

Data solutions lease lines, high speed internet (ADSL), dedicatedProducts internet, satellite links, high speed internet (Wimax)

Voice fixed voice (prepaid and post paid)

Coverage

Lagos, Ibadan, Port Harcourt, Abuja high speed internet andfixed voice

Organisation

r ven y e n erpr se o u ons v s on Focus on mobile, fixed and converged sales and marketing The approach to customer relations is that a single customer

service interface is maintained for enter rises

Recent

Etisalat leased lines contract spanning two and a half years Banks leased lines contract spanning multiple years

12samp e

contracts

anu ac ur ng an osp a y - an ease ne con rac s

Oil and Gas leased line and IP-MPLS contracts spanning multipleyears


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Product and servicesProduct and services

Product Customer Benefit Segment

Blackberry WeeklyWeekly mobile email and PIM subscription forprepaid.

Youth/young professionals

MTN PulseCustomers can be where they want to be seen,

Youth/young professionals.

MTN Eye

MTN EYE gives you a view of major streets andtraffic hot spots, using a network of camerasstrategically located around the city.

All segments

MTN Play

A one-stop-shop Mobile portal where you can

download exciting videos, full track music,ringtones, both local and international right onyour mobile phone

All segments

New Value Proposition Life is richer with MTN. All segments

MicroSIMs Provides enjoyable and convenient internet access High Value/Professionals.

MTN In-Flight Roaming

Another way of keeping in touch with family andfriends while on air across Europe, Asia, MiddleEast and Australia.

High Value/Professionals

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MTN Fastlink

High speed internet access on the go. Best and

most expansive 3.5G network in Nigeria

Youth


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Product and servicesProduct and services

Product Customer Benefit Segment

Blackberry from MTNo e ema an . rs an on y prepa

solution in NigeriaYouth/young professionals

Google SMS Search the web without the internet. Knowledge onthe go enabled by MTN

Youth/young professionals

DSTV Mobile from MTNNever miss your favorite sports, news or movieprogrammes. Mobile entertainment- only on MTN

High Value

MTN Video Cam.

your loved ones

High Value

MTN One WorldRoam like you never left home! Pay what the locals

pay, and recharge locallyHigh Value/Professionals

MTN Back Up Back up your important SIM contactsHigh

Value/Mass/Youth/professionals

MTN Care Emer enc Hi h

Services) service to MTNNs customers Value/Mass/Youth/professionals

MTN E-Care Self

Registration

Allows customers manage their postpaid accountwith ease

Professionals

14

Caller Tunez Reloaded Ring back tone platform allows customers to uploadDIY ring back tones Youth/Mass/Corporates


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Brand leadershipBrand leadership

Market Share 51.0%

Brand Preference 59.9%

ran wareness .

Brand Affinity 61.6%

MTN remains the leading brand in the Nigerian telecoms space

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Nigerias mae wo oc a- en or anager ger a


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Revenue analysisRevenue analysis

Increase in the number of revenuegenerating subscribers

235.99

.17.7%

Increase in the number of blackberrysubscribers from 4,242 in Jun 09 to

33 015

Interconnect Revenues Reduction in interconnect rates

24.9%

Dec 09

Others

35.67

16.1626.77 25.50

57.8%

2010 FIFA promotion

Increase in handset sales due increasein blackberr and introduction of Nokia

Subscription fees

Total revenue

5330 for DSTV Mobile 17. n . n


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Operating expenses analysisOperating expenses analysis

33.16

Decrease primarily as a result of

decrease in interconnect rates by 24.9826.25

26.3%

Direct network operating costs

Increase in number of sites in

18.79

.

2010 resulting in increased rent,maintenance costs and fuel usage

Cost of handsets and accessories

6.37

10.7%

Increase in quantity of handsetssold

Interconnect & Roamin Direct Network o eratin Cost of handsetscost

accessories, etc

Total Opex

. n .

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Operating expenses analysisOperating expenses analysis

Marginal growth in head count Annual salary increases for staff

26.78

34.35

27.17

28.3%

,marketing expenses Increased sponsorships with

new events added e. . Pro ect19.12

42.1%

Fame competition, FIFAPromotion, etc

Rise in the business' need to 7.9210.28

29.8%

suppor s s r u on ne worpartners

Others

maintenance and repairs of MTNfleet

increase in revenue which led to

,Marketing

Total Opex

increase in technical services

fees

. n .

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Tax considerationsTax considerations

Effective tax rates%

Education tax 2.8%

43

33 33

.

Additional deferred tax 3.2%

(2.4%) Dec-07 Dec-08 Dec-09 Jun-10

75

Nigeria expected trends in effective tax ratesIllustrative %

4643

3433

25 23 2525

50

tax rate

Cash tax rate

0Dec-07 Dec-08 Dec-09 Jun-10

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Capital trendsCapital trends

80.0%2.5E-07

71.0%

60.0%

70.0%

0.0000002

596

13845.0%

40.0%

50.0%1.5E-07

GNB

illions

8168

8024.0% 22.0% 28.2% 32.0% 30.0%0.0000001

191

10.0%

.

5E-08

0.0%02004 2005 2006 2007 2008 2009

CAPEX CAPEX to revenue %

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Nigeria

Ahmad Farroukh- CEO Nigeria


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MTN FoundationMTN Foundation

Established in Jul 04 as a separate entity

General

MTN Nigeria invests up to 1% of its PTA

Focus areas Economic Empowerment, education and health

Objectives

Facilitate economic empowerment of Nigerian citizens

Provide access to educational opportunities

Alleviate health challenges

Rural Telephone Project - improving the social economic status of ruralwomen

-persons living with disability

Science and Technology Scholarship Programme - scholarships of N200,000

each to 500 deserving students in tertiary institutions UniversitiesConnect and SchoolsConnect Projects - establishment of ICT

centres in universities and secondary schools

Partners Against AIDS and Malaria in Communities (PAMAC) project -HIV/AIDS and Malaria education treatment and em owerment ro rammes

23

MTNF refurbished Sickle Cell Clinics - Sickle cell education, treatment and

empowerment


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Looking forwardLooking forward

Opportunities Challenges

Poor infrastructure Rural area penetration

Increasing competition from PTOs Strong brand

Devaluation of local currency Industry leader

Dependence on oil production andrevenue

Strong demand

Political uncertainty Capex rollout

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NigeriaNigeria--

NGN millions Jun 10 Jun 09%

change

Revenue 330,121 287,820 14.7%

, , .

EBITDA margin (%) 61.3% 61.1%

Depreciation & amortisation 50,885 42,295 20.3%

Net finance costs 13,198 13,557 (2.6%)

Profit before taxation 138,359 120,003 15.3%

Income tax expense 45,757 39,508 15.8%

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Profit after taxation 92,602 80,495 12.6%


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Thank youThank you

Questions


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NigeriaNigeria--

NGN millions as at Jun 10 as at Jun 09

Non-Current Assets 461,537 441,996

Property. plant and equipment 431,566 400,312

Intangible assets 126 186

Other non-current assets 29,845 41,498

Current Assets 219,012 180,641

Bank and cash 152,768 107,739

Other current assets 66,244 72,902

Total assets 680,549 622,637

Non-current liabilities 300,221 253,267

Long term liabilities 227,108 210,559

e erre axa on an o er non-curren a es , ,

Current liabilities 223,931 220,215

Noninterest bearing liabilities 208,897 209,216

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Interest bearing liabilities 15,034 10,999

Total equity and liabilities 680,549 622,637


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NigeriaNigeria--

US$400m foreign currency term loan facility

facility

Outstanding balance of US$250m (as at Jun 10)

Currently in repayment with final repayment in Oct 12

Restructuredlocal

currenc

NGN206bn term loan facility

5.5 years tenor

facility Repaid in 4 equal annual installments from Dec 12 Dec 15

New buyerscredit facility

5 year tenor

Repaid in 7 equal semi-annual installments from Jun 12 Jun 15

New ECA-backed

US$250m foreign currency term loan facility linked to Ericsson equipmentpurchases

95% Comprehensive cover provided by EKN of Sweden

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facility 5 year tenor

Repayment in 8 equal semi-annual installments as of Dec 11 Jun15

Documents

Nigeria Presentation 2010