MTN Group Limited. Reviewed interim results for the six months ended 30 June 2008

Transcription

1 MTN Group Limited Reviewed interim results for the six months ended 30 June 2008

2 Agenda Strategic & operational overview Phuthuma Nhleko Group President and CEO Financial overview Rob Nisbet Group Finance Director Looking ahead Phuthuma Nhleko 2

3 Strategic and operational overview Phuthuma Nhleko Group President and CEO

4 MTN vision To be the leader in telecommunications in emerging markets Consolidation Leverage existing footprint Convergence Increased competitiveness Best practice Hub and cluster Diversification Procurement synergies Skills optimisation Brand Value proposition Execution excellence 4

5 Group highlights Group subscribers Up 53% to 74.1 million Revenue Up 35% to ZAR 46,128 billion EBITDA Up 29% to ZAR 19,647 billion PAT Up 11% to 6,964 billion Adjusted headline EPS Up by 26% to cents Market opportunity Market size 306m (2012) 189m (current) All comparatives to June 07 5

6 Key developments Competition Rollout Convergence Inflation Expansion opportunities Increasing competitive environment New entrants expected to launch in various ops in the next 6 to 12 months including Nigeria, Ghana, Iran, Syria and Uganda Execution of replicated product offering (MTN Zone) Capability in challenging markets Execution to take advantage of far larger market potential Capex rollout of ZAR10,311 billion, up 65% from H107 Mobile Money - Move toward money payment and transfers rather than banking - Rollout to extend beyond SA ISP s - SA Verizon (subject to CC approval) - Côte d Ivoire Afnet Mobile TV - JV with MultiChoice - Launched in Nigeria and Kenya Inflationary pressures experienced throughout emerging markets No material negative impact on spending patterns to date Decline in ARPU s in line with lower income segment penetration Continue seeking value enhancing opportunities in existing and new territories 6

7 Key indicators Subscribers ( 000) Jun 08 % change Jun 07 ARPU (ZAR/US$) Jun 08 ARPU (ZAR/US$) Jun 07 South and East Africa South Africa R145 R144 Uganda $9 $11 Botswana $13 $14 Rwanda $11 $13 Swaziland $15 $18 Zambia $12 $11 West and Central Africa Nigeria $16 $16 Ghana $14 $16 Côte d Ivoire $11 $14 Cameroon $12 $14 Guinea Conakry $10 $15 Benin $16 $15 Congo Brazzaville $23 $18 Liberia $16 $19 Guinea Bissau $12 $18 Middle East and North Africa Iran $9 $10 Syria $19 $20 Sudan $7 $15 Yemen $8 $10 Afghanistan $6 $11 Cyprus $45 $39 Total MTN $14 $17 7

8 Subscriber contribution by region MTN Group Total (subscriber million) Proportionate* (subscriber million) % 49% % 48% % 46% 28% 44% % 46% % 46% % 45% 23% 43% % 35% 31% 28% % 39% 36% 34% 0 Dec-06 Jun-07 Dec-07 Jun-08 * Based on % ownership SEA WECA MENA Increased diversification 0 Dec-06 Jun-07 Dec-07 Jun-08 8

9 Relative ARPU performance R144 R145 $17 (Jun 07) $14 (Jun 08) $16 $16 $16 $14 $15 $20 $19 Avg ARPU (group) $7 $10 $9 South Africa Nigeria Ghana Sudan Syria Iran Jun-07 Jun-08 * All ARPUs YTD 9

10 EBITDA analysis EBITDA Contribution % EBITDA Margin % SEA WECA MENA *MTN Group * Difference in HQ companies 10

11 South & East Africa (SEA) region Subs 21m (28% group) Revenue ZAR17.6bn (38% group) EBITDA ZAR5.9bn (30% group) PAT ZAR3.2bn (45% group) Regulatory SA Mobile licence conversion Awaiting final publication from ICASA Issues remain with proposed provisions Competition Commission (CST s) Final submission from complainant awaited Expect hearing H109, subject to required process Interconnection and facilities leasing Further consultation with ICASA concluded Awaiting publication of final regulations RICA Further deliberations on subscriber registration in Parliament currently Anticipate publication end 2008 Handset subsidies ICASA postponed implementation date from 18 August 2008 to 1 February 2009 MTN will engage with ICASA re remaining issues 1 South Africa 2 Uganda 3 Botswana 4 Rwanda 5 Swaziland 6 Zambia Population: 102,4m 11

12 South Africa operational highlights Launched Jun 1994 Market share 36% Population 48m Market sizing 56m (2012) Penetration 90% Shareholding 100% Strong prepaid value-proposition MTN Zone (4.5m subs) Increased customer value Lower denomination vouchers Postpaid subscriber growth Low voice and hybrid plans migrating to prepaid Continued unwinding of on-biller Distribution strategy execution Acquisition of the remaining 51% of I- Talk (subject to CC approval) and Cell Place Ranked as one of SA s Top 10 Brands** Non-recurring investment in strategic initiatives, diluting EBITDA *9 months ** Ipsos Markinor / Sunday Times Top Brands Results Subscribers ( 000) Prepaid Postpaid Net additions ( 000) H2 H1 14,799 15,590 12, ,306 13,002 10,368 8,596 1,784 2,288 2,493 2,588 Dec-05 Dec-06 Dec-07 Jun-08 1,198 2,379 2, Dec-05* Dec-06 Dec-07 Jun-08 12

13 South Africa operational highlights Stable prepaid ARPU MTN zone stimulated revenue 30% of prepaid revenue Increased postpaid ARPU Impact of on-biller unwinding Acquisition of Verizon (subject to CC approval) ARPU ZAR Postpaid Blended Prepaid Avg. total MOU comprises both incoming and outgoing minutes Dec-05* Dec-06 Dec-07 Jun Outgoing MOU * 9 months 13

14 South Africa infrastructure and data highlights Improved capacity on networks 2G - 9% 3G - 26% 79 (2G) and 89 (3G) new sites built Fibre optic metropolitan network Trials completed in June 5000km national fibre network Tender completed Build to start Q408 Improved data value propositions Reduced pricing on Blackberry MTN Xploaded Two new low-end data plans Capex ZAR (million) H2 H1 Capex as % of revenue Data revenue ZAR (million) H2 H1 2,843 2,256 2, ,549 1,772 1,186 1,666 1,772 1,205 1,294 Dec-05* Dec-06 Dec-07 Jun ,756 1,938 1,535 1,696 1,083 1, ,696 1, * 9 months As % of SA revenue (excluding handsets) Dec-05* Dec-06 Dec-07 Jun

15 West & Central Africa (WECA) region Subs 33m (44% group) Revenue ZAR21bn (46% group) EBITDA ZAR11bn (57% group) PAT ZAR4bn (57% group) Regulatory: Nigeria New numbering plan approved (10m more numbers) Significant QoS improvements should assist in resolving advertising ban still in place Paid N175 per subscriber over May and Jun 08 Ghana Introduction of 6% CST on revenue effective Jun 08 3G bidding initiated terms and conditions almost finalised Liberia Ongoing negotiation following licence standardisation process initiated by regulator Nigeria Ghana Côte d Ivoire Cameroon Conakry Benin Congo B Liberia Bissau Population: 230,1m 15

16 Nigeria operational highlights Launched Aug 2001 Market share 43% Population 141m Market sizing 80m (2012) Penetration 31% Shareholding 76%** Increased competition 1 new entrant expected in Q408 Aggressive competitor activity including PTO s Voluntary reduction of SIM s in channel to manage quality in Q208 Stable MOU and tariffs Decentralised distribution Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) 8,370 12,281 16,511 18, Dec-05* Dec-06 Dec-07 Jun-08 Outgoing MOU Net additions ( 000) Intensive trade marketing Private placement concluded *9 months **Legal MTN IFRS interest now 78% H2 H1 2,475 2,645 3,978 1,755 2,054 1,266 Dec-05* Dec-06 Dec-07 Jun-08 16

17 Nigeria infrastructure and data highlights Network quality remains a priority 1407 BTS s rolled out in 12 months 768 BTS s including 494 3G co-located on 2G sites Capex ZAR (million) H2 H1 3,849 1,665 3,674 2,121 4,789 2,979 3,942 3,942 Transmission expansion continued 2,184 1,553 1,810 Availability of network still a challenge Data increasingly important: Data as % of revenue 3% Mobile TV (launched Apr 08) SMS 86% (from 99%) of total revenue Capex as % of revenue BTS rollout Dec-05* Dec-06 Dec-07 Jun Renewed focus on leveraging VGC and XS Broadband H2 H * 9 months Dec-05* Dec-06 Dec-07 Jun-08 17

18 Ghana operational highlights Launched Nov 1996 Market share 52% Population 23.1m Market sizing 15m (2012) Penetration 42% Shareholding 98% Strong subscriber growth 47% (from Jun 07) Enhanced value propositions MTN zone launched in Jun 08 (2.5m subs) Increased MOU Usage based promos (MTN family) Increasing competition New entrants expected to launch in next 12 months Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) 2, , , Dec-06 Dec-07 Jun-08 Outgoing MOU Net additions ( 000) Privatisation of parastatal to foreign operator H2 H Dec-06 Dec-07 Jun-08 18

19 Ghana infrastructure and data highlights Network rollout gaining momentum Significant improved network quality Dropped calls 32% Fibre rollout of 492km Data initiatives Launch of Blackberry Data products for higher value customers Extensive edge deployment Capex ZAR (million) H2 H1 Capex as % of revenue BTS rollout 1, Dec-06 Dec-07 Jun H2 H * 9 months Dec-06 Dec-07 Jun-08 19

20 Middle East & North Africa (MENA) region Subs 21m (28% group) Revenue ZAR7.3bn (16% group) EBITDA ZAR2.1bn (11% group) PAT ZAR0.6bn (9% group) Regulatory: Iran Interconnect Agreement signed and payment received New interconnect rate negotiations Sudan Interconnect rate set by regulator Syria 3 rd operator anticipated Iran Syria Sudan Yemen Afghanistan Cyprus Population: 184,4m 20

21 Iran operational highlights Launched Dec 2006 Market share 32% Population 71.3m Market sizing 52m (2012) Penetration 50% Shareholding 49% High subscriber growth Promotional campaigns including bonus SIMS (BOGOF) Strong brand image Marginal decline in ARPU Increased penetration into lower income segments Reduced free minutes Enhanced products to reduce churn and dormancy Spring campaign (price plan promos) 3 rd operator expected to be granted licence in Dec 08 Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) , ,593 Dec-06 Dec-07 Jun-08 Outgoing MOU Net additions ( 000) H2 H1 4, , ,829 Dec-06 Dec-07 Jun-08 21

22 Iran infrastructure and data highlights Slower than anticipated rollout Equipment shortages Bad weather conditions Norouz Expect to catch up in H2 Data increasingly important 8% of total revenue SMS 93% of data revenue VAS launched Capex ZAR (million) 49% ownership H2 H1 Capex as % of revenue BTS rollout 1, Dec-06 Dec-07 Jun , H2 H Dec-06 Dec-07 Jun-08 22

23 Sudan operational highlights Launched Sep 2005 Market share 25% Population 37m Market sizing 18.3m (2012) Penetration 22% Shareholding 85% Disappointing growth NTC s (regulator) requirement to disconnect subscribers without personal info 1.1 million subs disconnected in Q208 Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) 1, ,090 2, Market share loss to 25% Increased and aggressive competition to capture disconnected subscribers Reduced effective tariffs and connection fee to match competition Dec-06 Dec-07 Jun-08 Outgoing MOU Net additions ( 000) Revitalised distribution and value proposition strategy to be implemented in H208 H2 H Dec-06 Dec-07 Jun-08 23

24 Sudan infrastructure and data highlights Deployment of 3G (core) IN platform change to facilitate deployment of products Rollout in South Sudan in H208 Capex ZAR (million) H2 H Dec-06 Dec-07 Jun-08 Capex as % of revenue BTS rollout H2 H * 9 months Dec-06 Dec-07 Jun-08 24

25 Syria operational highlights Launched Jun 2002 Market share 46% Population 19.5m Market sizing 11.7m (2012) Penetration 38% Shareholding 75% Subscriber growth extended validity on selected products Enhanced promo products (discounts) Postpaid disconnections in H108 (bad debts) Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) 3,109 3,375 2, Dec-06 Dec-07 Jun-08 Stable market share Outgoing MOU Net additions ( 000) H2 H Dec-06 Dec-07 Jun-08 25

26 Syria infrastructure and data highlights Network rollout in Q208 to improve service quality Increased radio network capacity Core network renovation 3G trials continued Enhanced data products Reduction in GPRS tariffs Flat rate SIM promos Capex ZAR (million) H2 H1 Capex as % of revenue BTS rollout Dec-06 Dec-07 Jun H2 H Dec-06 Dec-07 Jun-08 26

27 Financial overview Rob Nisbet, Group Finance Director

28 Financial trends Group revenue ZAR billion H1 CAGR 39% Group EBITDA ZAR billion H1 CAGR 39% Adjusted HEPS* cents H1 CAGR 21% 34.9% 29.2% 25.8% Dec-06 Dec-07 Jun-08 Dec-06 Dec-07 Jun-08 Dec-06 Dec-07 Jun-08 H1 H2 * Basic headline earnings Jun cents (Jun cents) Adjustment to reverse the utilisation of previously raised deferred tax and the put option impact 28

29 Key accounting considerations Group tax PPA Amortisation Put option Change in ownership IFRIC 12 (BOT) FX Total tax ZAR5 472m (Normal tax ZAR3 554m, deferred tax ZAR1 534m, STC ZAR263m and withholding taxes ZAR121m) 44.0% effective tax rate YTD (2007: 33%) AHEPS effect (MTN share): Unwind of pioneer status deferred tax assets ZAR425m (total ZAR542m) PPA amortisation ZAR756m (2007: ZAR688m) Investcom ZAR590m (2007: ZAR568m) 2007 Profit after tax by operation has been adjusted to reflect PPA entries Impact of put option (MTN share ZAR865m) (Jun 07 ZAR167m) Finance cost ZAR161m Fair Value adj. ZAR520m Forex Loss ZAR243m Minority share of profits (ZAR59m) Reduced accounting interest in Nigeria from 84.57% to 78.61% - Feb 08 (Legal interest: 76.08%) (Proceeds from disposal USD594m) Reduced stake in Cyprus from 99% subsidiary to 50% JV - subject to competition commission approval Acquisition of 100% of Verizon subject to competition commission approval Syria, however immaterial, will be reviewed in December Forex gain (ZAR794m) in MTNI Mauritius (ZAR functional currency) after transfer to reserves (IAS21) (Jun 07 ZAR19m) Net forex gain ZAR288m excl Put ZAR597m (Jun 07 Net forex loss ZAR130m) 29

30 Earnings per share cents 6 months ended Jun 08 6 months ended Jun 07 % change Basic headline earnings per share Reversal of put option in respect of subsidiary Reversal of the subsequent utilisation of deferred tax asset (3.0) Reversal of deferred tax asset - (12.0) (100.0) Adjusted headline earnings per share (43.9) (38.3) South & East Africa West & Central Africa Middle East & North Africa Head Office Companies

31 Technical analysis of the Nigeria Put Option Rationale In terms of IFRS, MTN has no control over the exercising of the put and therefore cannot avoid an outflow of cash, hence must provide for potential liability, regardless of the fact that in return for the cash outflow an asset will be acquired at fair market value Inception Each reporting period 1) De-recognise the sale to minorities 2) Raise the liability at fair value a) Fair value reassessed at each reporting period b) Revalue the liability (USD ZAR) c) Put only exercisable between therefore present value the liability d) Reverse out current period minority profit 31

32 Exchange rates analysis Average (PAT) Closing Jun 08 Jun 07 % var Jun 08 Jun 07 % var Rand per Dollar 7,57 7,13 (6.2) 7,81 7,01 (11.4) Nigerian Naira per Dollar 116,72 128, ,85 127, Nigerian Naira per Rand 15,41 17, ,09 18, Iranian Rials per Dollar 8 990, , , ,00 (0.3) Iranian Rials per Rand 1 186, , , , Ghana Cedis per Rand 0,13 0,13-0,13 0,13 - Sudanese Dinars per Rand 0,27 0, ,26 0, Syrian Pounds per Rand 6,11 7, ,88 7,

33 Income statement ZAR million 6 months ended Jun 08 6 months ended Jun 07 % change Revenue EBITDA EBITDA MARGIN 42.6% 44.4% (1.8 pts) Depreciation (4 395) (3 210) 36.9 Amortisation (1 319) (1 099) 20.0 Profit from operations Net finance costs (1 499) (1 491) 0.5 Share of profits of associates 2 5 (60.0) Profit before taxation Income tax expense (5 472) (3 101) 76.5 Profit after taxation Minority interest (724) (750) (3.5) Attributable profit

34 Revenue analysis ZAR million 6 months ended Jun 08 6 months ended Jun 07 % change ZAR % change LC s South & East Africa South Africa Other operations / 35.4 West & Central Africa Nigeria Ghana Other operations Middle East & North Africa Iran Syria Sudan (7.8) (13.4) Other operations Head Office Companies Total

35 Revenue analysis Airtime revenue mainly on prepaid growth in subscriber base (Nigeria, Iran, Ghana) Interconnect revenue: Nigeria up 48% on high growth in traffic volumes Iran significantly higher due to high fixed line penetration and increased subscriber base RSA interconnect up 11% yearon-year with strong contribution from prepaid growth Handset sale: RSA handset revenue up 19% year on year Strong growth in low cost handset sales in other markets 35,000 30, % 25,000 20,000 15,000 10,000 5, ,0 34,1 Airtime & Subscription Fees (ZAR34.2bn) (ZAR46.1bn) 36.1% 6,4 8,7 Interconnect 25.9% 11.2% 1,4 1,7 Cellular telephones and accessories 1,4 Other 1,6 35

36 EBITDA analysis ZAR million 6 months ended Jun 08 6 months ended Jun 07 % change ZAR % change LC s South & East Africa South Africa Other operations / 25.7 West & Central Africa Nigeria Ghana Other operations Middle East & North Africa Iran 563 (181) Syria Sudan (31.6) (40.4) Other operations Head Office Companies (42.9) Total

37 EBITDA margin analysis ZAR million Jun 08 EBITDA margin % South & East Africa 33,5 South Africa 32,1 Other operations 43,4 West & Central Africa 52,9 Nigeria 58,5 Ghana 46,3 Other operations 41,1 Middle East & North Africa 29,5 Iran 29,4 Syria 32,1 Sudan 27,5 Other operations 26,2 Head Office Companies - Total 42,6 Jun 07 EBITDA margin % 35,5 34,3 45,9 54,2 58,8 51,7 42,6 25,4 (42,0) 31,7 37,0 30,3-44,4 % change pts (1.9) (2.2) (2.5) (1.3) (0.3) (5.4) (1.5) (9.5) (4.1) (1.8) 37

38 Operating expenses analysis Direct network operating costs 15% of the increase from Nigeria Rent and rates up 150% Fuel and electricity up 101% from Jun 07 Revenue share Iran (79%), Syria (34%) from Jun 07 Employee benefits Nigeria monetisation of benefits and long term incentive provision Selling, distribution and marketing RSA connection incentives (higher value phone upgrades) AFCON Increased marketing activity in Nigeria Other RSA and Group standardisation professional consulting fees Asset and inventory write-downs 49.8% 3, ,9 Direct network operating costs 22.8% 2,0 (ZAR19.0bn) (ZAR26.5bn) 2,4 Cost of handsets and accessories 4,7 6,2 31.1% 36.8% Interconnect and Roaming 38.9% 1,6 2,2 Employee benefits 4,7 6,4 Selling, distribution and marketing 59.7% 2,1 3,4 Other 38

39 Finance costs ZAR million 6 months ended Jun 08 6 months ended Jun 07 Year ended Dec 07 Finance costs (3 550) (2 666) (4 953) Interest paid (1 959) (1 666) (3 151) Put option - finance costs (206) (139) (273) - Revaluation of liability (Forex losses) (309) Fair value (663) (156) (310) Forex losses (300) (450) (746) Revaluation and settlement of FEC s (Forex losses) (113) (255) (473) Finance income Interest received Forex gains Put option - revaluation of liability Functional currency gains (Forex gains) Revaluation and settlement of FEC s Net finance cost (1 499) (1 491) (3 173) 39

40 Profit after tax ZAR million 6 months ended Jun 08 6 months ended Jun 07 % change ZAR % change LC s South & East Africa South Africa Other operations West & Central Africa (6.5) Nigeria (17.0) (28.0) Ghana Other operations Middle East & North Africa Iran 71 (344) Syria Sudan (93) 141 (166.0) (151.9) Other operations Head Office Companies (819) (832) 1.6 Total

41 Tax considerations Material reconciling items: Effective rate reconciliation to 28.00% Nigeria 10.32% Non allowable interest on Investcom acquisition 1.11% STC and net withholding taxes suffered 2.87% Nigeria Put Option effect 2.6% Looking forward Dec 08 Group effective rate expected in higher 30 s based on : Nigerian tax Effect of Nigeria Put Option Disallowed expenses Nigeria effective tax rate 53% this period, expected to decline to lower 40 s Nigerian tax 2008 (ZAR million) Tax 2,871 Normal tax 1, Effective tax rates % MTN Group Investcom Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Nigeria expected trends in effective tax rates Illustrative % Accounting tax rate Cash tax rate Deferred tax 1,522 Effective tax rate 53% 0 Dec-07 Dec-08 Dec-09 Dec-10 41

42 Balance sheet ZAR million As at Jun 08 As at Jun 07 Non-current assets Property, plant and equipment Goodwill and other intangible assets Other non-current assets Current assets Bank balances Other current assets Total assets Capital and reserves Non-current liabilities Long term liabilities Deferred taxation and other non-current liabilities Current liabilities Put Option Non interest bearing liabilities Interest bearing liabilities Total equity and liabilities * Net debt

43 Analysis of net debt position As at 30 Jun 08 ZAR million Net debt/ (Cash) Interest bearing liabilities* Cash and cash equivalents South & East Africa South Africa Other operations (269) West & Central Africa Nigeria Ghana (1 746) Other operations Middle East & North Africa Iran Sudan Syria (2 987) Other operations (465) Head Office Companies Total * Including long-term borrowings, short-term borrowings and overdrafts 43

44 Interest bearing liabilities as at Jun 08 Fundraising at operational level Zambia approx. USD39m (100% LC) Intercompany funding from head office co s currently totals ZAR12.2bn including allocations: Iran ZAR3.6bn RSA ZAR5.2bn Unproductive interest reduced further to ZAR10.9bn (Jun 08) from ZAR13.5b (Feb 08) Cash accumulation Holding Co s July repayment of capital on term loans Syria, Ghana, Nigeria Net debt to EBITDA of 0.36x (Dec 07:0.5x) Fitch rating upgrade National scale rating to AA-(zaf) from A+(zaf) Outlook remains stable Interest bearing liabilities ZAR USD/EUR Local currency Cash and cash equivalents ZAR USD/EUR Local currency 29% 40% 23% 48% 25% 35% 44

45 Cash flow statement ZAR million 6 months ended Jun 08 6 months ended Jun 07 Net cash generated by operations Net interest paid (1 004) (1 200) Taxation paid (3 406) (2 280) Dividends paid (2 536) (1 674) Cash inflows from operating activities Cash outflows from investing activities (7 444) (7 170) Acquisitions of PP&E (excluding software) (9 882) (5 966) Other investing activities (1 204) Cash inflows from financing activities Net movement in cash and cash equivalents

46 Capital expenditures (incl. software) ZAR million Approved 2008 Actual 2008 Committed 2008 Actual 2007 South & East Africa South Africa Other operations West & Central Africa Nigeria Ghana Other operations Middle East & North Africa Iran Sudan Syria Other operations Head Office Companies 84 Total * * Balance sheet impact expected to be R25bn at Dec (5)

47 MTN Group - capital expenditure trends (USD m) Increased investment in infrastructure to cater for increasing demand Significant network infrastructure spend in most operations drive year-on-year growth in capex spend and marginal capex / subscriber H1 spend represents 40% of ZAR25bn target for 2008 in line with 2007 H1 spend USD 3bn committed at Jun 08, including accelerated approvals for H network capex 2006 marginal capex / subscriber impacted by Investcom acquisition 2008 capex spend in ZAR influenced by changes in fx rates (2008 target of ZAR25bn estimated at average fx rate of 7.22) , , Dec-05* Dec-06 Dec-07 Jun-08 Capex / Revenue % Cumulative Capex per subscriber US$ Marginal Capex / subscriber US$ Cumulative Capex 9,764 10,

48 South Africa - capital expenditure trends (ZAR bn) Network quality improvement top priority, reflected by sharp increase in marginal capex / subscriber H1 spend ZAR2.2bn is 30% of full year target Significant spend expected in H2 IS projects in progress include wholesale and retail billing systems, CRM tools (ZAR0.8bn) Dec-06 Dec-07 Jun-08 Capex / Revenue % Cumulative Capex per subscriber (ZAR '000) Marginal Capex / subscriber (ZAR '000) Cumulative Capex 48

49 Nigeria - capital expenditure trends (USD m) 45% of full year target capex spent H Significant investments in network capacity and coverage, transmission (fibre/microwave) (758 2G and 494 3G completed) Marginal capex trend reflects increased investment in network Total 2008 spend estimated at USD1.2bn , , , , Dec-05* Dec-06 Dec-07 Jun-08 Capex / Revenue % Cumulative Capex per subscriber US$ Marginal Capex / subscriber US$ Cumulative Capex 49

50 Looking forward Phuthuma Nhleko

51 Looking forward Expansion opportunities Actively seeking value-accretive opportunities in emerging markets Rollout Ongoing infrastructure investment to ensure appropriate levels of capacity and quality of service for enlarged market potential Convergence Ensuring the Group is well positioned to benefit from a rapidly converging technology market Optimise operations Optimise efficiencies in maintaining and improving a competitive position Regulations Constructive engagement with regulatory authorities 51

52 Subscriber guidance 2008 Net additions guidance at Dec 07 Net additions guidance at Jun 08 South Africa 2,200 2,200 Nigeria 5,000 5,000 Ghana 1,300 1,300 Iran 7,000 8,500 Syria Sudan 1, Rest 4,500 4,500 21,780 22,680 52

53 Thank you Questions

54 Notice The information contained in this document has not been verified independently. No representation or warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Opinions and forward looking statements expressed represent those of the Company at the time. Undue reliance should not be placed on such statements and opinions because by nature, they are subjective to known and unknown risk and uncertainties and can be affected by other factors that could cause actual results and Company plans and objectives to differ materially from those expressed or implied in the forward looking statements. Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation and do not undertake to publicly update or revise any of its opinions or forward looking statements whether to reflect new information or future events or circumstances otherwise. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. 54