Agenda. Overview and introduction. Strategic and operational overview. Marketing, sales and distribution. Financial overview.

Transcription

1 Agenda Overview and introduction Christian De Faria Vice President, WECA Strategic and operational overview Ahmad Farroukh CEO Marketing, sales and distribution Bola Akingbade / Michael Ikopki CMO S&D Executive Financial overview Andrew Bing CFO Looking forward Ahmad Farroukh CEO 1

2 Introduction and Overview Christian De Faria Vice President West and Central Africa (WECA)

3 Nigeria in regional context **USD 5,865m 1 Nigeria 2 Ghana 3 Côte d Ivoire 4 Cameroon 5 Conakry 6 Benin 7 Congo B 8 Liberia 9 Bissau Population: 232,9m **Converted at 8.13 *March

4 Regional synergies Hub and Cluster Transfer of knowledge and skills Regional opportunity Standardisation of processes and systems Regional procurement Supplier relationships Bargaining power Supporting local and regional businesses Products and services MTN One World Mobile Money WECA interconnectivity Own infrastructure backbone to ensure direct connectivity between MTN operations in region Supporting cost efficiencies West African Cable System 4

5 Country overview Source: Economist Intelligence Unit (EIU) Monthly Country Report - March

6 Market dynamics Political environment Relatively stable political environment change of President in 2008 Militant activities in the Niger Delta region Economic environment Real GDP growth rate for 2009 forecast at 2.7% (forecast 4.4% in 2010) Devaluation of the Nigerian Naira against the US dollar of 25% since November 2008 Tighter currency controls again implemented in late 2008 following reforms taken to liberalise the foreign exchange regime in recent years Declining oil revenue and production Declining foreign reserves below $50 billion Increasing inflation rate - headline rate of 14.4% in March 2009 Impact of risk aversion and global economic circumstances Regulatory environment Introduction of new licensing regime (UASL) in 2006 resulted in increased competition from PTOs 6

7 Shareholders and board of directors MTN Group *76.08% IFC Individual local shareholders 3% 11.47% Individual shareholders through private placement 9.45% MTN Nigeria *Legal 7

8 Strategic and operational overview Ahmad Farroukh CEO

9 Licences Period Upfront fees Obligations Coverage Digital Mobile Licence (DML): February 2001 January 2016 Unified Access Service License (UASL): September 2006 August GHz Spectrum: May 2007 April 2022 Originally launched August 2001 DML USD 285 million UASL NGN million 2GHz USD 150 million 3.5GHz NGN 13.9 million Rollout obligations achieved Increased focus on quality of service 2007 promotional ban Ban lifted in October 2008 Ongoing reporting of QoS to NCC 223 cities and towns Over 10,000 villages and communities Highways spanning the 36 states and the Federal Capital Territory 5.4% geographic coverage (Dec 08) 62% population coverage (Dec 08) 9

10 Management team Ahmad Farroukh Chief Executive Officer Karl Toriola Chief Technical Officer Andrew Bing Chief Financial Officer Bola Akingbade Chief Marketing Officer Akin Braithwaite Customer Relations Executive Wale Goodluck Corporate Services Executive Amina Oyagbola Human Resources Executive Abdul Ismail Chief Information Officer Michael Ikpoki Sales & Distribution Executive 10

11 Nigeria operational highlights Significant investment results in improved network quality and capacity Subscribers ( 000) /ARPU ($) Strong subscriber growth New competitor launched in Q408 Aggressive competition from PTO s Declining USD ARPU ( relatively stable LC ARPU, decreased by 6% in Q109) Naira devaluation Slower rollout in Q109, now picking up again Outgoing MOU Net additions ( 000) Q1 3,978 2,645 2,475 4,512 **Legal * 9 months 11

12 Annual capex spend Capex/MOU (total including free minutes) NGN (billion) BTS rollout 1560 Q

13 Radio network rollout MTN Nigeria operational base transceiver stations network 4,949 BTS s 223 cities and towns Over 10,000 villages and communities 1,170 km s of highway 92 MSC s Adopt lower cost roll out methodologies such as collocation and infrastructure sharing 13

14 3G network rollout MTN Nigeria 2G and 3G network coverage 551 live 3G sites to date 3G has enabled the launch and rapid growth of mobile internet and other data services including corporate services WiMax is expected to further improve MTN s positioning in the data services segment High density 14

15 Data - VGC Licence MTN unified licence Customers Large corporations and Small and Medium Enterprises (SMEs) Products Coverage Organisation Recent sample contracts Data solutions lease lines, high speed internet (ADSL), dedicated internet, satellite links, planned: high speed internet (Wimax) Voice fixed voice i.e. prepaid ad post paid Nigeria wide leased lines and satellite links Lagos, Ibadan, Port Harcourt, Abuja high speed internet and fixed voice 5-10 new cities planned for 2009 high speed internet and fixed voice Enterprise solutions mobile, fixed and converged sales and marketing Network group BCG networks have been integrated Customer relations single customer service interface for Enterprises First City Monument Bank 85 branch wide area network Central Bank of Nigeria - 23 branch wide area network Galaxy Backbone high bandwidth internet connection 15

16 Marketing, sales and distribution Bola Akingbade / Michael Ikopki CMO S&D Executive

17 Economic average crude oil price Average crude prices not expected to drop below USD 40 per barrel in 2009 The 2009 budget by the Federal Government of Nigeria is based on an assumed benchmark price of USD 45 per barrel and forecast production of mbpd A budget deficit of NGN 1,351.6 billion is planned and this will be financed from various sources including foreign reserves and domestic borrowing 17

18 GSM competitors March 09 * PTHNV has offered 35 million shares (17.5%) for sale via Private Placement Alheri Engineering 3G licence 18

19 Fixed services Acquired unified access service licences extended geographic footprint Fixed line generated USD1.03bn in 2008 Visafone Starcomms Plans to raise N30bn via private placement to invest in network ACER laptops, internet bundles and broadband EVDO launched in Lagos and Abuja 19

20 Brand strategy MTN Brand Platform Quality brand that Enriches Lives Differentiating MTN Enriches Lives Unique products and services tailored to satisfy the needs and aspirations of target customers Customer Connection in ways that are specific to their personal requirements MASTERBRAND (Clarity of brand meaning) PRODUCTS & SERVICES (Consistent innovation leadership with target customer relevance) NEEDS BASED SEGMENT OFFERINGS & PASSION POINTS 20

21 Brand (GSM) Market leadership MTN remains the leading brand in the Nigerian telecoms space 21

22 Products and services 22

23 Distribution Efficient distribution channels aimed at reaching the customers Spread across the 36 states of the Federation and the Federal Capital: 103 wholesale dealers 25 franchise operations Distribution strategy Use of Streamline trade partners 15 own shops 2 electronic dealers By driving Automated systems Realignment of B2B support Deployment of commission structure Rewards To enhance Profitability Sustainability Support Penetration 23

24 Nigeria Financials Andrew Bing CFO

25 Income statement 25

26 Revenue analysis Airtime and subscriptions fees Increased by 24.5% due to increase in subscriber base by 39.8% into lower segment groups 24.5% Interconnect Revenues Increase of 25.6% due to increase in subscriber numbers recorded in 2008 which translated into an increase in incoming mobile traffic from both GSM operators as well as PTOs Others 25.6% Components include Capacity revenue, Roaming and SMS and Value added services 42.3% Total revenue 2007 (NGN 365.7bn) 2008 (NGN 458.7bn) 26

27 Operating expenses analysis Interconnect and roaming Increase primarily as a result of growth in subscriber numbers although increase in on net traffic decreased costs Direct network operating costs Increase in number of sites in 2008 resulting in increased rent, maintenance costs and fuel usage 13.4% 41.8% High price of fuel (diesel) in 2008, a direct fallout of the high crude oil prices in 2008 Increased site rental costs 2.3% Minimal handset & accessory sales (4.5% of revenue) Total opex 2007 (NGN 157.3bn) 2008 (NGN 192.9bn) 27

28 Operating expenses analysis Staff costs Head count increase to cater for expanded network Annual salary increases for staff 37.7% Monetisation of benefits previously reflected in other categories 28.0% Selling, distribution and marketing expenses Increased sponsorships with new events added e.g. Project Fame competition, AFCON 2008 Games, Sarafina show and MTN People Police Marathon 39.4% Others Higher distribution cost in line with increased revenue Increase in professional fees, fleet and security due to business growth Total opex 2007 (NGN 157.3bn) 2008 (NGN 192.9bn) 28

29 Tax considerations Material reconciling items: Effective tax rate reconciliation to 30.0% Effective tax rates % Education tax 3.6% Commencement provisions 7.5% Additional deferred tax 2.6% Investment allowance relief (2.1%) Looking forward Dec 09 Nigeria effective tax rate expected to be in low 30 s. Final impact of commencement provisions taken in 2008 Nigeria expected trends in effective tax rates Illustrative % Impact of high capex rollout 29

30 Balance sheet 30

31 Capital trends 31

32 Capex / depreciation % % % 350% NGN Billions % % 139.0% % % 250% 200% 150% 100% 50% CAPEX Spend Depreciation CAPEX as a %age of depreciation 0% Average Capex / depreciation ratio 95.7% 32

33 Average exchange rate NGN/USD rate was fairly stable until November 2008 Devaluation of NGN against USD by 25% since November 2008 CBN has taken several steps to stem the devaluation and reduce volatility Impact on Capex for 2009 resulted in an increase of NGN 17bn 33

34 Funding structure Syndicated medium term facility totalling approximately USD 2bn and made up of three facilities. The currency mix was 80% local currency and 20% in USD Facility A Facility B Facility C Local Facility (N142bn) in the form of underwritten medium term discounted notes 5 Years Tenor and moratorium of 2 years Repayments of 50% in Oct 2010 and Oct 2012 Competitively indexed against NIBOR Local facility (N63bn) Revolving medium term discounted issuance facility 5 Years tenor Utilised only 50% of committed amount as 31st March 2009 USD400m foreign currency term loan facility 5 Years tenor 18 months moratorium with 8 equal installments Fully utilised as at 31st December 2008 First repayment has been effected as at 15th March 2009 Final payment Oct 2012 This was adjudged as African Telecoms deal of the Year 2007 by Euromoney Project Finance Magazine 34

35 Looking forward Ahmad Farroukh CEO

36 MTN foundation General Established in July 2004 as a separate entity Founded to manage Corporate Social Responsibility initiatives across Nigeria MTN Nigeria invests up to 1% of its PAT Has formed strategic partnerships with several organisations Objectives Alleviate health challenges Provide access to educational opportunities Facilitate economic empowerment of Nigerian citizens Projects HIV aids education and treatment programmes (with HOPE) Establishment of Sickle Cell Clinics (with Sickle Foundation) Donating virtual libraries to universities and secondary schools 36

37 Looking forward Rural area penetration Poor infrastructure Strong brand Increasing competition from PTOs Industry leader Devaluation of local currency Strong demand Dependence on oil production and revenue Capex rollout 37

38 Thank you Questions

39 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. 39