MTN Group Limited Results presentation for the six month period ended 30 June 2016

Transcription

1 MTN Group Limited Results presentation for the six month period ended 30 June 2016

2 AGENDA 1 Strategic and operational update 2 Financial review Guidance 4 Key matters and immediate priorities

3 Strategic and operational update

4 STRATEGIC AND OPERATIONAL UPDATE Group financial results for the six months ended 30 June 16 Performance reflects a confluence of material issues which created a perfect storm On 10 June MTN settled Nigerian regulatory fine with Federal Government of Nigeria Nigeria fine settlement; significant negative impact on results MTN to pay 330 billion naira (USD 1.67 billion) over three years in full and final settlement, in addition to complying with certain other regulatory conditions 50 billion naira (USD 250 million) paid on 24 February 2016 forms part of the monetary component of the settlement June 2016, first schedule of 30 billion naira paid (USD 124 million) Accrued present value of remaining, 280 billion naira (USD 1.42 billion) Impact - EBITDA: negative re-measurement impact of R million (provision R9 287m made in H2 15) - Headline earnings: R8 632 million - HEPS: 474 cents - Cash flow: R million 4

5 A challenging operating environment Slowing reliant economies, regulatory pressure and tough competition Key challenges impacted growth Depreciation in local currencies resulted in higher US dollar expenses Forex losses of R3 606 million STRATEGIC AND OPERATIONAL UPDATE Liquidity constraints impacting repatriation of funds from Nigeria Weak macro economic conditions in most markets resulted in lower consumer spending Negative GDP growth in South Africa and Nigeria expected in 2016, our two largest markets Regulatory pressure, notably withdrawal of regulatory services in Nigeria until May million disconnected of subscribers registration requirements in Nigeria, Uganda and Cameroon (approximately 18 million since October 15) The economic landscape in key MTN markets (%) South Africa Nigeria Iran Ghana Cameroon Ivory Coast Uganda Source of GDP growth: IMF 2015 GDP 2016 GDP f/c Inflation 2016 f/c 5

6 STRATEGIC AND OPERATIONAL UPDATE Group financial results for the six months ended 30 June 16 Despite challenges MTN declared an interim dividend of 250 cents for the period million Group subscribers flat 7.5 million subscriber disconnections in Nigeria, Uganda and Cameroon to ensure regulatory compliance, approximately 18 million since October 2015 Competition and economic pressure in South Africa, negatively impacted growth 14.0% to R78.9 billion Revenue (Organic growth of 1.5%) 32.2 % increase in data revenue despite 46.9% decline in effective data tariff Effective voice tariff declined 12.2% (USD), negatively impacted by free minutes offered in subscriber registration campaigns, approximately 1bn free minutes offered in Nigeria Nigeria: outgoing voice and data revenue impacted by withdrawal of regulatory services in Nigeria until May 2016 South Africa: revenue supported by strong device sales and increase in data revenue Note: Results are presented based on operational performance (excluding hyperinflation, Nigerian regulatory fine and tower profits) 6

7 STRATEGIC AND OPERATIONAL UPDATE Group financial results for the six months ended 30 June 16 Excluding once-off costs organic EBITDA declined 12.8% % to R29.3 billion EBITDA (Organic decline of 25.9%) Reported NIG fine Hyp and Operational Fx H1-16 TowerCo CR Excluding once-off costs headline earnings declined 11.7% South Sudan imp Professional fees Adjusted 271 cents Headline loss per share (Adjusted HEPS declined 11.7%) (271) Reported H1-16 NIG fine Hyperinflation Digital Group losses TowerCo losses Fx losses Professional fees Adjusted H1-16 7

8 Strategic update STRATEGIC AND OPERATIONAL UPDATE To lead the delivery of a bold, new Digital World to our customers Group Consumer Group Digital Services Enterprise Business Unit Improving customer analytics is a key priority forms part of strategic review Introduced Global Value Propositions to drive transition to data and enable global roaming Improved commission structure and retail experience Net promoter score improved from 24% to 27% Leveraging a strong brand, distribution, access to customer wallets and scale - Largest distributor of digital music in Africa and recently launched Games Club Good progress made by e-commerce ventures AIH and MEIH - AIH recorded 3 million customers and 2.5 million transactions impacted by macro-economic slow down in Nigeria - MEIH recorded customers and 3.3 million transactions - IIG gained strong momentum benefiting from youthful population and high internet penetration MoMo customers increased 5.0% to 36.5 million, supported by Uganda, Ghana, Rwanda and Benin MoMo revenue up 40,8% to R1 289 million Aligned operations to become ICT Partner of Choice to corporates, public sector and SMEs The Group will embark on a process aimed to accelerate growth as part of the strategic group review Continued focus on MTN Business Cloud now providing independent software vendor solutions Expansion of MTN Global, multi protocol label switching (MPLS) bringing the footprint to 27 POPs Launched dedicated internet services to clients in 11 markets and Internet of Things platform to Ghana and Cameroon 8

9 Operational performance STRATEGIC AND OPERATIONAL UPDATE Nigeria Performance compromised by the disconnection of subscribers and the suspension of regulatory services until May 2016 Increased market share to 46.2% despite 3.7% decline in subscriber base Revenue impacted by lower data revenue given regulatory restrictions on out-of-bundle data tariffs; multi-sim s and delays in competitive offerings and free minutes offered EBITDA impacted by - Transfer of 2 nd tranche passive infrastructure into TowerCo and USD expenses - Increased marketing costs related to subscriber registration - Nigeria fine professional fees Capex increased by 78.9%* to R million; rollout remains a priority South Africa Disappointing performance impacted by network outages, competition and lower consumer spending Subscriber base down 2.6%, negatively impacted by competition in highly penetrated market Increased revenue by 5% supported by handset sales and data usage Embarked on a deliberate project to drive 3G and LTE quality and high-speed data in key locations EBITDA margin impacted by higher volumes of devices and network related costs Capex of R million; added 369 3G and 284 LTE sites; 175 sites connected to fibre LTE spectrum critical for high-speed data connectivity submitted application to ICASA Entered into sales agreement to dispose of 50.02% stake in Afrihost (Proprietary) Ltd 9

10 Operational performance STRATEGIC AND OPERATIONAL UPDATE Sound performance in Iran and Ghana; Cameroon well managed subscriber registration campaigns and Ivory Coast impacted by competition Sound performance despite highly competitive environment and regulatory pressure on data tariffs Iran Subscribers up 2.0% due to attractive offerings Revenue up 8.7%* supported by 65.3%* growth in data revenue contributing 40.6% to total revenue Smartphones increased 25,8% to 25,8 million with digital revenue contributing 32,6% to data revenue Ghana Strong subscriber growth of 8.1% due to uptake in value propositions Revenue increased by 18.9%* supported by strong growth in voice and data revenue Digital revenue underpinned by lifestyle and momentum gained in Mobile Financial Services Launch of LTE services Cameroon Subscribers increased 5.0% supported by aggressive subscriber registration campaigns Revenue declined 8.7%* while data revenue increased 49.5%* Strong focus on 3G and LTE network quality and coverage and smartphone penetration Ivory Coast Subscribers down 1.3% impacted by subscriber registration requirements and competition Revenue down 3.9%* impacted by lower outgoing voice revenue while data revenue up 13.4%* Digital revenue contributed 50.2% to data revenue, driven by increased digital services Constant currency ('organic') information 10

11 Financial review

12 Group highlights FINANCIAL REVIEW Revenue EBITDA EBITDA margin HEPS Reported 14% to R79 115m 38% to R18 882m 20.4pp to 23.9% 141pp to (271) cents Hyperinflation R237m R90m 0.1pp 20 cents Tower profit impact R18m Nigeria regulatory fine R10 499m 13.3pp 474 cents Operational 14% to R78 878m 3% to R29 273m 6.6pp to 37.1% 63pp to 223 cents Positive impact on reported results Negative impact on reported results Note: Results from slide 13 to 19 are presented based on operational performance (excluding hyperinflation, tower profits and Nigeria regulatory fine) 12

13 Financial highlights FINANCIAL REVIEW Reported revenue and EBITDA performance positively impacted by exchange rates Organic revenue up 1% Negatively impacted by Nigeria due to regulatory challenges Disappointing service revenue growth in RSA impacted by network outage in February 2016 Supported by healthy double digit data revenue growth Uganda and Cameroon also faced regulatory challenges Organic EBITDA down 26%, impacted by South Sudan impairment on PPE R2 632m Professional fees relating to fine settlement R1 324m Higher costs in Nigeria and RSA EBITDA margin declined 6.6pp to 37.1% Capex up 27% Aggressive rollout of 3G & LTE sites in Nigeria and RSA Group summary ZAR (million) H1-14 H1-15 H1-16 Rev Opex EBITDA Capex AFCF* Reported % 27% 3% 27% 20% Organic % 23% 26% 15% 49% 46.3% 43.7% 37.1% EBITDA margin 12.6% 15.7% 17.5% Capex/Revenue * EBITDA less capex (approximates free cash flow) 13

14 Revenue FINANCIAL REVIEW Impacted by a decline in outgoing voice revenue growth Outgoing revenue up 8% (organic down 5%), negatively impacted by Muted subscriber growth to 232.6m disconnections in Nigeria, Cameroon and Uganda impacted by registration requirements Withdrawal of regulatory services in Nigeria until May Network outages and increased post-paid churn in RSA Effective tariff down 21.7% (organic down 12.2%), impacted by competition Billable MOU up 8% driven by free minutes Data revenue up 32% (organic up 20%) Healthy double digit growth in majority of the markets Nigeria impacted by restrictions on out-of-bundle rates Devices revenue up 34% (organic up 36%) RSA contributes 86%, handset revenue up 33% Number of prepaid handsets sold 3.2m (up 33%) post-paid 641k (up 41%) Incoming voice revenue up 13% (organic down 3%) Decline in MTR Group incoming minutes remained flat Revenue breakdown ZAR (million) H1-15 RSA Other NIG Other MENA HOE H1-16 FX H1-16 SEA WECA CR H1-16 CR is at constant prior year FX rate HOE Head office companies and eliminations Revenue breakdown per category (%) Data 25% Incoming voice 10% Other 1% Devices 5% SMS 2% Outgoing 57% %

15 Revenue data FINANCIAL REVIEW Increased data revenue contribution at 25% Data revenue up 32% (organic up 20%) Strong data revenue growth despite 59% decline in data tariff (organic decline 47%) Continued improvements of 3G and LTE networks across operations (data traffic up 135%) Increased device penetration (no. of smartphones on network up 26%) Increased contribution from digital service revenue Data revenue ZAR (million) % Nigeria data revenue Impacted by regulatory restrictions on out of bundle data tariffs H1-15 RSA Other NIG Other MENA HOE H1-16 FX H1-16 SEA WECA CR Digital and MFS services revenue contributed 32% to data revenue Increased up-take in lifestyle content Continued growth in MFS Data breakdown per category (%) Digital 26% ICT 6% MFS 6% Access data 58% VAS 4% H1-16 CR is at constant prior year FX rate HOE Head office companies and eliminations 15

16 Opex FINANCIAL REVIEW Opex driven by rent and utilities, maintenance and professional fees Direct network and operating costs up 33%* impacted by USD denominated exposure associated with the tower transaction and build-to-suit sites in Nigeria Increase in network costs related to the significant rollout of 3G and LTE sites in key markets Opex ZAR (million) +27% Reported Organic % share Reported opex Cost of handset and other accessories up 34%* Mainly driven by SA, up 46% aggressive smartphone penetration drive, volumes 18% higher Other operating expenses up 94%* impacted by Impairment of property, plant and equipment in South Sudan Professional fees associated with the Nigeria regulatory fine Costs associated with subscriber registration in Nigeria Direct network and technology operating costs Cost of handsets and other accessories Interconnect and roaming Staff costs Selling, distribution and marketing expenses Government and regulatory costs Other operating expenses 47% 36% 16% 15% 14% 4% 50% 33% 34% 2% 8% 1% 5% 94% 25% 12% 15% 10% 19% 6% 13% H1-15 H1-16 * Organic growth 16

17 EBITDA margin FINANCIAL REVIEW Impacted by lower margins in South Africa and Nigeria Organic EBITDA excluding South Sudan impairment of PPE and professional fees relating to the settlement of the Nigeria fine down 12.8% EBITDA ZAR (million) Underlying EBITDA negatively impacted by Higher device and network related costs in SA Foreign denominated expenses mainly in Nigeria and Uganda EBITDA was supported by Efficient cost control in Ghana, Cameroon and Sudan, despite the depreciation of local currencies against the USD Lower revenue share in Syria from 50% to 30% H1-15 RSA Other NIG Other MENA HOE H1-16 FX H1-16 SEA WECA CR EBITDA margin reconciliation (%) EBITDA margin declined 6.6 pp to 37.1% South Africa margin down 5.5 pp to 30.1% Nigeria margin down 7.5 pp to 49.8% pp H1-15 RSA Other NIG Other MENA HOE H1-16 FX H1-16 SEA WECA CR H1-16 CR is at constant prior year FX rate HOE Head office companies and eliminations 17

18 Finance cost FINANCIAL REVIEW Impacted by higher net interest paid and fx losses Net interest paid more than doubled to ZAR 1 855m Increase in net debt by 187%: ZAR 49.3bn (H1-15: ZAR 17.2bn) Forex loss ZAR 3 606m impacted by fx movements Nigeria losses mainly due to USD denominated intercompany loans and third party payables Mauritius forex losses mainly on Iran receivables South Sudan forex losses mainly on USD third party trade payables Sudan forex losses on settlement of USD denominated third party trade payables RSA forex losses on derivatives hedging foreign payables Net finance cost ZAR (million) H1-16 H1-15 H1-14 Net interest paid Net forex losses Total Net forex losses/(gains) ZAR (million) H1-16 H1-15 H1-14 Nigeria Mauritius South Sudan Sudan 395 (83) (4) RSA Manco 141 (4) (3) Other Total

19 Taxation FINANCIAL REVIEW Normalised Group effective tax rate of 49.2% (H1-15: 32.9%) Reported group effective tax rate impacted by the Nigeria regulatory fine and hyperinflation Normalised group effective tax rate impacted by lower PBT due to - Decrease in equity income from joint ventures and associates - Nigeria professional fees - South Sudan unrealised forex losses and PPE impairment and - Conakry goodwill impairment Normalised withholding tax 6.3% (prior year 5.4%) WHT is lower than prior year in absolute terms due to lower dividends up-streamed Current tax Current tax largely unchanged Deferred tax income statement Nigeria unrealised forex losses on USD denominated intercompany loans and third party payables Tax ZAR (million) % (461) (472) -25% (1 573) H1-14 H1-15 H % 32.9% 49.2% Eff tax rate % WHT Group effective tax ZAR (million) Eff Tax rate Share of results JVs and assoc 3.4 Professional fees NIG -16.2pp Forex losses S Sdn Def tax Goodwill impairment PPE impairment S Sdn Normal tax Adj eff tax rate 19

20 Income statement (IFRS) FINANCIAL REVIEW Impacted by losses from JV s and fx ZAR (million) H1-16 H1-15 Change % Revenue Other income (11) COS and operating expenses EBITDA before Nigeria regulatory fine (4) Nigeria regulatory fine EBITDA (38) Depreciation, amortisation and impairment of goodwill Profit from operations (74) Net finance cost Share of results from joint ventures and associates after tax (1 692) (184) Net monetary gain (Loss)/profit before tax (1 527) (108) Income tax expense (24) (Loss)/profit after tax (6 253) (145) Non-controlling interests (764) (139) Attributable (loss)/profit (5 489) (146) 20

21 Headline (loss)/earnings per share FINANCIAL REVIEW Headline (loss)/earnings per share ZAR (cents) ZAR (cents) H1-16 H1-15 Change % Reported attributable (loss)/earnings per share Profit on disposal of non-current assets (including tower profits) (301) 653 (146) (2) - (100) Profit of dilution of investment in joint venture Impairment of goodwill, PPE and noncurrent assets (15) - (100) 47 1 NM (271) Reported basic headline (loss)/earnings per share (271) 654 (141) Nigerian regulatory fine Basic headline (loss)/earnings per share excluding Nigerian regulatory fine (69) Hyperinflation 20 (40) H1-16 H1 H2 Impact of Nigerian regulatory fine Contingent consideration included in tower sale profits Operational basic headline earnings per share (excluding Nigerian regulatory fine, hyperinflation, tower profits) - (15) (63) 21

22 Shareholder returns FINANCIAL REVIEW Dividends Interim dividend 250cps, 48% decline Dividends and share buy-backs ZAR (million) Share buy-backs H2-11 repurchased 6.8m shares (ZAR 930m) H1-12 repurchased 15.6m shares (ZAR 2.1bn) H2-14 repurchased 10.7m shares (ZAR 2.4bn) Total repurchase of 1.8% of issued shares since H1-16 H1 H2 Share buy back 22

23 Statement of financial position (IFRS) FINANCIAL REVIEW Total assets impacted by FCTR ZAR (million) 2016 Dec 2015 Property, plant and equipment Goodwill and other intangible assets Other non-current assets Cash Current assets* Total assets Total equity Interest-bearing liabilities Other liabilities Total liabilities Total equity and liabilities Net debt Annualised net debt/ebitda excluding Nigerian regulatory fine ZAR strengthened against most other African currencies (Naira 50%, Cedi 4%, Uganda Shilling 7% and Syrian Pound 52%) since Dec 2015 *Includes foreign currency deposits of ZAR 1 123m (Dec 2015 ZAR 428m), treasury bills and commercial papers of ZAR 3 926m (Dec 2015 ZAR 7 196m) and bonds of ZAR 49m (Dec 2015 ZARnil) 23

24 Statement of cash flows (IFRS) FINANCIAL REVIEW Impacted by R5.9bn payment made on Nigerian regulatory fine ZAR (million) H1-16 H1-15 Change % Cash generated from operations^ (9) Dividends paid to equity holders of the Company (15 212) (14 697) (4) Dividends paid to non-controlling interests (790) (3 042) 74 Dividends received from associates and joint ventures Net interest paid (2 143) (934) (129) Tax paid (6 587) (6 469) (2) Cash (used in)/generated from operating activities (436) (130) Acquisition of property, plant and equipment and intangible assets (14 024) (11 830) (19) Movement in investments and other investing activities (185) (2 641) 93 Cash used in investing activities (14 209) (14 471) 2 Cash generated by financing activities NM Cash and cash equivalents at the beginning of the year (21) Effect of exchange rates on cash and equivalents (6 272) (787) NM Net monetary gain on cash and cash equivalents (20) Cash and cash equivalents at the end of the year* (13) ^Cash generated from operations decreased by R2.4bn mainly as a result of Nigerian payments on regulatory fine (R5.9bn) * Includes bank overdraft of R18m (H1-15: R76m) 24

25 2016 Guidance

26 Net additions guidance 2016 GUIDANCE Guidance 2016 ( 000) Guidance provided March 2016 Updated guidance June 2016 SEA South Africa Uganda Other 615 (200) WECA Nigeria Ghana Cameroon Ivory Coast Other MENA Iran Syria - (100) Sudan Other 160 (300) Total

27 Capex guidance 2016 GUIDANCE ZAR (million) Authorised 2016 Capitalised June 2016 Capitalised June 2015 SEA South Africa Uganda Other WECA Nigeria Ghana Cameroon Ivory Coast Other MENA Syria # Sudan # Other Head office companies and eliminations Total Hyperinflation Total reported Iran (49%) # # Excluding hyperinflation 27

28 Key matters and immediate priorities

29 Key matters and immediate priorities KEY MATTERS AND IMMEDIATE PRIORITIES Appointment of the right CEO to take MTN forward into new growth phase New Group CEO Appointment of Rob Shuter, new Group president and CEO, as soon as practically possible in 2017 (no later than July 2017) Brings extensive experience in Africa and Europe previously CEO Vodafone Europe cluster In the interim, Phuthuma to hand over more operational responsibility to key executives VP s to strengthen management team, further changes to be completed by year-end High calibre Management team Stephen van Coller, VP for M&A and strategy Godfrey Motsa, VP for SEA region (excluding South Africa) Gunter Engling to act as CFO, following the resignation of Brett Goschen Babak Fouladi, Group CTIO and CTO of South Africa for 12 months Phuthuma Nhleko to revert to non-executive Chairman role as soon as Rob Shuter joins the Group More in-depth commercial, risk and governance skills and experience Refreshed composition of the board Stan Miller, Paul Hanratty and Nkululeko Nkunku Sowazi appointed to Group board Mike Harper, Mike Bosman, Lerato Phalatse and Trudi Makhaya appointed to MTN South Africa board 29

30 Prospects KEY MATTERS AND IMMEDIATE PRIORITIES Deep and fundamental strategic review of operations and processes to ensure the Group is operating far more optimally Advanced analytics will support network quality, high speed data connectivity, improved customer service and segmented offerings Areas to be addressed Increased operating efficiencies and improving customer services focusing on improved service channels productivity and MoMo as a distribution channel Creating value through leveraging its extensive infrastructure Embark on a process of housing new revenue streams, particularly digital services, outside the core business enabling more agility and greater flexibility to accelerate growth New revenue streams expected to increase contribution in next months Investments in towers with IHS evidenced by substantial ownership interest in INT and direct investments in IHS Tower investments IHS is well positioned for future growth and build-out from 3G upgrades and move to LTE across its key markets IHS is now the largest independent tower operator in EMEA by tower count and tenth largest independent tower company in the world with towers Recently led in-country consolidation through its acquisition of Helios Towers Nigeria 30

31 Prospects KEY MATTERS AND IMMEDIATE PRIORITIES Operating conditions Expect improved operating conditions supported by permanent and refreshed management team Strong operational oversight ensuring regulatory compliance across operations Nigeria Aims to list MTN Nigeria on Nigeria Stock Exchange during 2017, subject to prevailing market conditions and appropriate regulatory approval Expect improved competitiveness and performance following reinstatement of regulatory services Data performance to benefit from increased investment in 3G and LTE and recently acquired spectrum South Africa Expect improved performance supported by strong focus on customer service and improving the network quality, capacity and speed Data growth will benefit from significant investment and deliberate focus in 3G and LTE Significant opportunities to expand digital services supported by easing of sanctions Iran Expect improvements in operating environment supported by a reduction in inflation and normalised exchange rate Working towards remittance of approximately R15.4 billion 31

32 Questions

33 thank you

34 Appendices

35 South Africa Launched Jun 1994 Market share 32.3% Population 55.7m Market size m Penetration 162% Shareholding 100% Revenue growth of 5.1% Subscribers down 2.6% to 29.8 million Negatively impacted by network outages in some areas, competition and economic pressure affecting consumer spending Pre-paid and post-paid segments declined by 2.7% to 24.7 million and 2.1% to 5.1 million respectively Strong data revenue growth, supported by smartphones Strong data revenue growth, up 19.2%, contributing 34.1% to total revenue attributable to - Smartphones up 18.4% to 9.3 million - Improved 3G and LTE network quality - Additional services being offered in digital, including international content Device sales in the previous comparable period were impacted by the industrial strike action and supply chain challenges Total subscribers Dec 14 Dec 15 Jun 16 Revenue ZAR (million) Dec 14 Dec 15 Jun 16 Postpaid Prepaid H2 H1 35

36 South Africa Strong focus on network experience EBITDA margin down 5.5 pp Mainly due to - Increased device costs relating to higher volumes sold - Impact of network related costs as a result of the rollout of 3G and LTE sites Expenses ZAR (million) Focus on improving network quality and capacity Capex of R4 773 million Rollout of 369 co-located 3G sites and 284 LTE sites 175 sites were connect to fibre homes passed with fibre to the home, 40% rolled out over the six month period Invitation to apply for high demand spectrum 700MHz, 800MHz and 2.6GHz bands Dec 14 Dec 15 Jun 16 H2 H1 32.1% 33.4% 30.1% EBITDA margin Capex ZAR (million) Dec 14 Dec 15 Jun 16 H2 H1 36

37 Nigeria Launched Aug 2001 Market share 46.2% Population m Market size m Penetration 72% Shareholding 78.8% Challenging operating environment Subscriber decline of 3.7% Market share increased by 46.2% despite the decline in subscriber base to 58.9 million (including Visafone subscribers) Inability to offer competitive prices as a result of the suspension of regulatory services until May 2016, when approval was received Total subscribers Revenue declined 4.8%* Lower outgoing voice and data revenue impacted by regulatory requirements, multi-sims and tough economic conditions Data revenue declined 2.7%*, contributing 19.3% to total revenue % increase in smartphones to 16 million - Digital revenue continued to gain momentum music and lifestyle - Diamond Yellow increased to 6.5 million registered accounts Dec 14 Dec 15 Jun 16 Revenue NGN (million) Dec 14 Dec 15 Jun 16 * Constant currency ('organic') information H2 H1 37

38 Nigeria Network quality and rollout of LTE remains a priority EBITDA margin reduced 7.5 pp impacted by Transfer of 2 nd tranche of passive infrastructure into TowerCo USD denominated expenses associated with TowerCo and build-to-suit suites Marketing costs relating to subscriber registration process Wide range of professional services in relation to the settlement of the regulatory fine Expenses NGN (million) Dec 14 Dec 15 Jun 16 H2 H1 Improving network quality and customer experience Capex increased 78.9%* to R2 534 million Delays in network re-planning and equipment purchases Rolled out 428 co-located 3G sites and 507 LTE sites Purchase of additional LTE spectrum 58.6%** 53.0%** 49.8%** EBITDA margin Capex ZAR (million) Dec 14 Dec 15 Jun 16 H2 H1 * Constant currency ('organic') information ** In ZAR terms 38

39 Iran Launched Oct 2006 Market share 46.4% Population 80.6m Market size m Penetration 126% Shareholding 49% Revenue growth of 8.7%* supported by increased data revenue growth Subscriber growth of 2.0% to 47.3 million Attractive segmented offerings, data bundles and improved network experience Strong data revenue Data revenue increased 65.3%*, contributing 40.6% to total revenue despite regulatory pressure on data tariffs Smartphones increased 25.8% to 25.8 million Digital revenue contributed 32.6% to data revenue due to strong growth in local lifestyle content based usage Outgoing voice revenue negatively impacted by the continuous substitution of data services Revenue IRR (billion) (100%) Dec 14*** Dec 15*** Jun 16*** H2 H1 42.8%** 41.5%** 37.7%** EBITDA margin EBITDA down 2.4 pp Mainly due to increased transmission costs associated with the data network expansion, as well as marketing costs related to 3G and LTE campaigns 3G and LTE networks expansion Added co-located 3G sites and 851 LTE sites Capex ZAR (million) (49%) *Constant currency ('organic') information **In ZAR terms ***Excluding hyperinflation Dec 14*** Dec 15*** Jun 16*** H2 H1 39

40 Ghana Launched Nov 1996 Market share 53.8% Population 27.8m Market size m Penetration 117% Shareholding 97.7% Voice and data delivered a strong performance Subscriber growth of 8.1% to 17.6 million Supported by the launch of LTE services and value propositions Revenue up 18.9%* supported by data and outgoing voice Data revenue up 68.0%* contributing 38.5% to total revenue supported by data bundles, including 4G data bundles Smartphones increased by 21.7% to 3.6 million Digital revenue underpinned by attractive lifestyle content bundles MoMo subscribers increased by 23.3% to 7.0 million supported by international remittances EBITDA margin declined 0.9 pp, attributable to Higher transmission costs Impact of foreign denominated expenses following the depreciation of the cedi as well as high inflation Superior data network quality Capex increased by more than 100% to R1 646 million Key focus on LTE rollout Added 110 co-located 3G sites and 435 LTE sites Capex includes the 4G licence acquired in H2 15 Revenue Cedi (million) *Constant currency ('organic') information **In ZAR terms Dec 14 Dec 15 Jun 16 Capex ZAR (million) Dec 14 Dec 15 Jun 16 H2 H1 37.4%** 40.5%** 38.8%** EBITDA margin H2 H1 40

41 Cameroon Launched Feb 2000 Market share 57.4% Population 23.6m Market size m Penetration 71% Shareholding 70% Aggressive subscriber registration campaigns Subscribers up 5.0% to 9.6 million Market share growth attributable to improved network quality, expansion of LTE footprint and increased smartphone penetration Revenue declined 8.7%* Decline in outgoing voice revenue impacted by price competition and free minutes used as part of subscriber registration process Data revenue increased 49.5%* and contributes 18.8% to total revenue, supported by increased 3G device penetration and network rollout Smartphones increased by 34.1% to 2.6 million Mobile Money brand campaign increased activity Revenue CFA (million) Dec 14 Dec 15 Jun 16 H2 H1 42.8%** 36.2%** 38.0%** EBITDA margin Capex ZAR (million) EBITDA margin up 0.2 pp Supported by strong cost optimisation Reduction in transmission costs due to WACS cable Focus on 3G and LTE network rollout and quality 6.9%* increase in capex to R1 121 million 189 co-located 3G sites and 64 LTE sites rolled out *Constant currency ('organic') information **In ZAR terms Dec 14 Dec 15 Jun 16 H2 H1 41

42 Ivory Coast Launched Apr 1996 Market share 32.8% Population 23.9m Market size m Penetration 105% Shareholding 58.8% Data growth supported by strong focus on 3G and LTE network rollout Subscribers down 1.3% to 8.2 million Negatively impacted by the subscriber registration requirements and aggressive competition Revenue down 3.9%* mainly due to lower outgoing voice revenue Data revenue up 13.4%* and now contributes 17.1% to total revenue Introduction of new segmented data bundles MoMo subscribers up 10.4% to 3.2 million EBITDA margin decreased marginally by 0.6 pp Supported by cost optimisation Capex increased 57.1%* to R842 million Added 151 co-located 3G sites and 343 LTE sites Revenue CFA (million) Dec 14 Dec 15 Jun 16 H2 H1 38.6%** 34.2%** 36.0%** EBITDA margin Capex ZAR (million) Dec 14 Dec 15 Jun 16 H2 H1 *Constant currency ('organic') information **In ZAR terms 42

43 Uganda Launched Oct 1998 Market share 52.7% Population 40.5m Market size m Penetration 46% Shareholding 96% Gaining momentum post subscriber registration process Subscribers increased 10.8% to 9.9 million Supported by voice bundle propositions and continued success of MTN Zone MoMo decreased registered subscribers by 24.4% to 7.2 million mainly due to H disconnections during the subscriber registration process Revenue decreased 2.3%* Voice revenue impacted by One Network Area, decline in mobile termination rates and disconnections Data revenue up 22.7%*, contributing 32.8% to total revenue supported by data bundles Digital revenue contributed 70.5% to data revenue supported by local content services including MTN Play. Revenue UGX (million) Dec 14 Dec 15 Jun 16 H2 H1 39.2%** 34.5%** 30.0%** EBITDA margin Capex ZAR (million) 951 EBITDA margin down 6.0 pp Higher network operating costs and associated USD denominated expenses Higher transmission costs, marketing and distribution costs following the launch of 3G and 4G services. Capex spend down 42.1%* to R364 million Delay in supply chain process Added 195 co-located 3G sites and 100 LTE sites *Constant currency ('organic') information **In ZAR terms Dec 14 Dec 15 Jun 16 H2 H1 43

44 Syria Launched Jun 2002 Market share 40.9% Population 17.0m Market size m Penetration 84% Shareholding 75% Operational growth despite a challenging environment Subscribers decreased by 2.4% Revenue increased 10.5%* Supported by 16.9%* increase in data revenue, contributing 28.8% to total revenue Revenue SYP (million) EBITDA margin increased 12.3 pp Supported by the conversion of the BOT licence and cost optimisation Capex increased by 241.1% to R191 million Added 92 co-located 3G sites and 3 LTE sites Dec 14*** Dec 15*** Jun 16*** H2 H1 18.9%** 17.7%** 28.6%** EBITDA margin Capex ZAR (million) Dec 14*** Dec 15*** Jun 16*** H2 H1 *Constant currency ('organic') information **In ZAR terms ***Excluding hyperinflation 44

45 Sudan Launched Sep 2005 Market share 33.8% Population 37.6m Market size m Penetration 69% Shareholding 85% Progress in tough conditions Subscribers increased 4.2% to 8.8 million Driven by targeted marketing campaigns Revenue increased by 15.7%* Data revenue increased 78.3%* and contributes 27.7% to total revenue as a result of increased data users EBITDA margin down 1.9 pp Capex up 62.9% to R549 million Added 44 co-located 3G sites Revenue SDG (million) Dec 14*** Dec 15*** Jun 16*** H2 H1 33.8%** 35.0%** 35.4%** EBITDA margin Capex ZAR (million) Dec 14*** Dec 15*** Jun 16*** H2 H1 *Constant currency ('organic') information **In ZAR terms ***Excluding hyperinflation 45

46 Income statement Hyperinflation, Nigeria regulatory fine and tower sales impact ZAR (million) Actual H1-16 Tower profit* Nigeria regulatory fine Actual 2016 adjusted Actual H1-15 Hyperinflation Hyperinflation Tower profit* Actual 2015 adjusted Adjusted change % Revenue Other income EBITDA (10 499) (3) Depreciation, amortisation and impairment of goodwill Profit from operations (10 499) (20) Net finance cost (1) Share of results of joint ventures & associates after tax (1 692) (1 039) - - (653) (139) Net monetary gain NM (Loss)/profit before tax (1 527) (139) 18 (10 951) (50) Income tax expense (25) (Loss)/profit after tax (6 253) (171) 18 (10 951) (62) Non-controlling interests (764) (2 319) (25) Attributable (loss)/profit (5 489) (375) 18 (8 632) (68) EBITDA margin 23.9% 37.1% 44.3% 43.7% (6.6)pp Effective tax rate (309.6%) 49.2% 31.0% 32.9% 16.3pp *Tower sale profits for the period relates to Ghana release of deferred profit of R18m (H1-15: The measurement of the contingent consideration receivable relating to Nigeria tower transaction tranche 1 of R339m and the Ghana release of deferred profit of R13m) 46

47 Net debt ZAR (million) Cash and cash equivalents* Net interest-bearing liabilities Net debt/(cash) H1-16 Net debt/(cash) Dec 2015 South and East Africa (2 054) (1 652) South Africa (3 457) (1 507) Uganda (86) Other (59) West and Central Africa Nigeria Ghana Cameroon Ivory Coast Other (271) Middle East and North Africa (585) Syria (736) (1 525) Sudan Other (865) (949) Head office companies & eliminations Total * Includes restricted cash and current investments 47

48 Net debt composition Nigeria and Head office Nigeria borrowings (%) USD 33% (26%) Naira 67% (74%) Head office borrowings (%) USD 49% (57%) ZAR 51% (43%) Nigeria cash (%) USD 13% (6%) Head office cash (%) Euro 10% (11%) ZAR 33% (44%) Net debt composition ZAR (million) Naira 87% (94%) Naira denominated USD denominated ZAR denominated Euro denominated Nigeria borrowings Nigeria cash Head office borrowings Head office cash USD 57% (45%) 48

49 Revenue data South Africa and Nigeria South Africa ZAR (million) Nigeria ZAR (million) +24% -4% +17% +2% H1-15 H2-15 H H1-15 H2-15 H1-16 Access data ISP Digital Afrihost Internet VAS Blackberry Leased line/ict Digital Mobile money 49

50 Share of results of joint ventures and associates after tax (IFRS) ZAR (million) H1-16 H1-15 Change % Telco joint ventures Iran Swaziland Botswana Tower companies (2 480) (64) NM Ghana (17) 22 (177) Uganda - (149) (100) Nigeria * (2 463) 63 NM BICS Share of results of telco joint ventures and associates after tax excluding hyperinflation Iran Hyperinflation (H1-16: Mainly depreciation and amortisation of assets written up) Share of results of telco joint ventures & associates after tax including hyperinflation (159) (108) (1 039) 362 NM (1 198) (151) Digital Group (494) (324) (52) AIH (370) (249) (49) MEIH (69) (42) (64) IME (55) (33) (67) Share of results of joint ventures and associates after tax (1 692) (183) * Includes forex losses of R2 282m resulting from the devaluation of the Naira 50

51 FX trends Closing rate USD: Local currency H1-16 H2-15 H1-15 H H1-16 LC strengthening/ (weakening) ZAR Naira (30) Rial (1) Cedi Cameroon XAF Ivory Coast CFA Uganda shilling (1) Syrian pound (31) Sudanese pound ZAR: Local currency H1-16 H2-15 H1-15 H H1-16 ZAR strengthening Naira Rial Cedi Cameroon XAF Ivory Coast CFA Uganda shilling Syrian pound Sudanese pound

52 FX trends Average rate H H1-16 USD: Local currency H1-16 H2-15 H1-15 LC weakening ZAR (22) Naira (5) Rial (7) Cedi (2) Cameroon XAF (1) Ivory Coast CFA (2) Uganda shilling (12) Syrian pound (43) Sudanese pound (2) ZAR: Local currency H1-16 H2-15 H1-15 H H1-16 ZAR strengthening/ (weakening) Naira (19) Rial (16) Cedi (22) Cameroon XAF (22) Ivory Coast CFA (21) Uganda shilling (12) Syrian pound Sudanese pound (20) 52