MTN Group Limited. it Interim results for the six months ended 30 June 2011

Transcription

1 MTN Group Limited it Interim results for the six months ended 30 June 2011

2 Agenda Strategic and operational overview Sifiso Dabengwa Group President and CEO Financial overview Nazir Patel Group Chief Financial Officer Looking ahead Sifiso Dabengwa Group President and CEO

3 Strategic and operational overview Sifiso Dabengwa Group President and CEO

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

5 Group highlights Group subscribers EBITDA margin Approximate FCF Up 7,5% to Up 1,3% points to Up 23,7% to 152,3 million 44,6*% ZAR 19,494 million Adjusted HEPS Interim dividend Dividend payout Up 7.2% to per share of ratio cents 273 cents Increased to 65% *Including R445m profit on sale of first 400 towers in Ghana and R147m Guinea Conakry settlement

6 Strategic considerations Revenue growth Market share remains a priority Penetration levels still offer growth opportunity Further leverage data service opportunities, currently 12,3% of total revenue Distribution of smartphones and other data devices Focus on local content partnerships Business Solutions revenue up 16,5% Continue rollout of Mobile money, currently 5,1 million subscribers in 12 countries Investment in infrastructure to support both voice and non-voice revenue Cost optimisation initiatives Procurement initiative gaining momentum with cost savings targets being established Share services and outsourcing Infrastructure sharing and value unlock Other opportunities being explored 6

7 Macro considerations Exposure to currencies other than reporting currency Continued rand strength dampened H1 results as 68% of revenue is non-rand Some local currency (naira, cedi and rial) weakness exacerbated FX impact Constant currency revenue growth up 9,4% Constant currency EBITDA growth up 14%* Net finance costs and capex positively impacted Country risk considerations Continued political unrest creates a more difficult business environment Syria conversion of BOT to licence delayed South Sudan project in progress Côte d Ivoire gaining momentum slowly Guinea Conakry dispute resolved *Including R445m profit on sale of first 400 towers in Ghana and R147m Guinea Conakry settlement 7

8 Regulatory sector considerations SIM registration status at 30 June 2011 South African deadline 30 Jun 2011; suspended Nigerian deadline 28 Sep 2011; 50% of the base registered Ghanaian deadline 30 Sep 2011 deadline extended from 31 Jul % registered Mobile money licences Licences obtained in 12 countries Nigeria expected to use a partnership model Frequencies Ghz in South Africa 3G in Congo Brazzaville and Benin MTR South African glide path; year 2 reduction from 89 cents to 73cents (peak) March

9 Operational considerations N A L Brand preference Quality service Efficient distribution I N T E R Customer Experience e E R E X T Products and value added services Segmentation N A L Experienced people

10 Characteristics of the period under review Increased competition Market share Voice and data tariffs declining rapidly Significant increase in incoming traffic Billed minutes increasing Political instability Operations kept functioning (Côte d Ivoire, Yemen and Syria) Growth in data services Usage showing sound growth Handset strategy key Established partnership with RIM and Nokia in WECA region Cost optimisation First tower deal implemented Procurement transformation project gaining momentum Other shared services advancement - IT Managed services outsourcing Marketing cost reduced post 2010 FIFA World Cup Lower capital expenditure Rollout slower than planned, timing of capitalisation Expected to pick up in H2 as major commitments already made 10

11 South Africa Launched Jun 1994 Market share 35% Population 50.6m Market sizing 57.0m (2016) Penetration 112% Shareholding 100% Subscribers ( 000)/ARPU(R) Prepaid Postpaid 5,1% 18,842 19,799 16, Dec-09 Dec-10 Jun-11 Prepaid growth - MTN Zone Mahala Classical postpaid growth migrating to hybrid packages Relatively stable market share Increased on-net traffic Outgoing MOU Revenue ZAR (million) 33,149 35,822 Data revenue of up 14,1% (incl SMS) and 17,9% (excl SMS) ,9% 18,143 4,6 million 3G devices of which 2,6 million are smartphones H2 H1 Data (incl SMS as % of SA revenue (excl. Handsets, incl. SMS) Dec-09 Dec-10 Jun ,5 million data users Airtime and subscription revenue up 4,8% Increase in number of handsets distributed

12 South Africa (cont) Opex ZAR (million) 22,739 23,634 Successful reduction in commission and distribution costs ,1% 11,782 Lower marketing and advertising costs Maintenance costs stable while quality of service retained Higher upgrade costs for handsets H2 H1 Dec-09 Dec-10 Jun-11 EBITDA margin % Capex ZAR (million) 6, , , H2 H1 Dec-09 Dec-10 Jun-11 Most projects on track Enhanced network technology Fibre projects progressing g LTE trials Self provisioning Capex as % of revenue

13 Nigeria Launched Aug 2001 Market share 49% Population 155m Market sizing 118.2m (2016) Penetration 53% Shareholding 76%* Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ,9 10,6 4,8% ,8 Dec-09 Dec-10 Jun-11 Slow response to Q2 pricing competition resulted in loss of market share, being addressed Lower gross connections due SIM registration Increased on-net traffic Reduction in tariff Outgoing MOU Revenue NGN (million) H2 H1 691, ,488 13,1% , Interconnect revenue up due to increased incoming calls Slower airtime and subscription growth Strong data growth Dec-09 Dec-10 Jun-11 Data (incl sms) as % of Nigeria revenue *Legal shareholding

14 Nigeria (cont) Opex NGN (million) 244, , ,1% 136,889 Well managed cost base Network operating costs up 17,9%: site leases and fuel cost escalate as network expanded Deploying hybrid power systems Marketing expenses down 4,9% H2 H1 Dec-09 Dec-10 Jun-11 Reduction of transmission costs following the commencement of Main One EBITDA margin % Capex ZAR (million) 10,222 Slower than planned, anticipated to pick up in H ,700 2,168 2, Busy hour congestion 1,25% QoS remains a priority H2 H1 Dec-09 Dec-10 Jun-11 Capex as % of revenue

15 Ghana Launched Nov 1996 Market share 53% Population 25m Market sizing 20.4m (2016) Penetration 74% Shareholding 98% Subscribers ( 000) /ARPU ($) ,6% Maintained market share despite aggressive competition Increased off-net traffic MTN Subscribers ('000) ARPU (USD) 7,7 7,2 7,0 Dec-09 Dec-10 Jun-11 Stable tariff Outgoing MOU Revenue Cedi (million) 1, ,9% Interconnect revenue up 48,0% due to lower off-net rates offered by competition Airtime and subscription revenue up 9,5% Good data growth excl SMS H2 H1 Dec-09 Dec-10 Jun-11 Data (incl sms) as % of Ghana revenue

16 Ghana (cont) Opex Cedi (million) H2 H ,5% Dec-09 Dec-10 Jun-11 EBITDA margin % * Opex up 19% excluding profit from sale of first 400 sites (Cedi 102 million) Network operating costs up 51,9% due to price hike in rent and utilities Selling, distribution and marketing costs down 1% Interconnect costs up due to tariff trends in the market Minimal impact of leasing of outsourced towers in period *Excluding profit from sale of first 400 towers Capex ZAR (million) 3,092 2, H2 H Dec-09 Dec-10 Jun-11 Slow rollout due to changes in tower approval process Change in tower strategy as first tranche outsourcing arrangement completed Increase in busy hour congestion in Q2, being managed Capex as % of revenue

17 Iran Launched Aug 2006 Market share 44% Population 74m Market sizing 86.1m (2016) Penetration 99% Shareholding 49% Subscribers ( 000) /ARPU ($) 23,260 29,743 32,182 8,2% Maintained market share Maintained on-net traffic Stable tariff MTN Subscribers ('000) ARPU (USD) 7,8 7,8 7,9 Usage stimulated by promo s Dec-09 Dec-10 Jun-11 Outgoing MOU Revenue (100%) Rial (billion) 26,294 High growth in SMS revenue due to introduction of Farsi SMS in H210 18, ,689 28,2% Good growth in subscription and airtime revenue Data continued to gain momentum H2 H1 Dec-09 Dec-10 Jun-11 Data (incl sms) as % of Iran revenue

18 Iran (cont) Opex Rial bn 15,469 Cost containment initiatives in various areas 12, ,5% 9, Well managed distribution costs Lower costs offset high price hikes in electricity and fuel costs due to withdrawal of government subsidies H2 H1 Dec-09 Dec-10 Jun-11 EBITDA margin % Capex (49%) 3,326 Slower rollout due to delays in equipment ZAR m delivery and site approvals H2 H Improved population and geographic 1,661 coverage Dec-09 Dec-10 Jun-11 Busy hour congestion less than 1% Continued increase in WIMAX coverage Capex as % of revenue

19 Syria Launched Jun 2002 Market share 45% Population 23m Market sizing 11.4m (2016) Penetration 45% Shareholding 75% Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) ,6% 17,8 16,4 14,1 Dec-09 Dec-10 Jun-11 Political unrest impacting the economy, customer behaviour and business efficiency Conservative marketing and promotions until finalisation of BOT Stable tariffs Cost efficiencies Outgoing MOU Revenue SYP (million) 43,462 39, ,747 0,4% Instability impacted revenue Airtime and subscription revenue remained flat Data revenue up 44,8% H2 H1 Dec-09 Dec-10 Jun-11 Data (incl sms) as % of Syria revenue

20 Syria (cont) Opex SYP (million) 31,681 33,202 Lower commissions due to lower revenue Network operating costs down ,435 Selling, distribution and marketing costs down General expenses down marginally H2 H ,7% Dec-09 Dec-10 Jun-11 EBITDA margin % Capex ZAR (million) Delay in licence conversion Lack of availability of equipment and security concerns delayed rollout and maintenance H2 H Dec-09 Dec-10 Jun-11 Network under pressure in some areas Capex as % of revenue

21 Capital expenditure unpacked H1 spend as % of revised guidance Committed as % of revised guidance South Africa Nigeria Ghana Iran Guidance (ZARm) (49%) 21

22 Financial overview Nazir Patel Group Chief Financial Officer

23 Financial highlights Strong free cash flow growth low capex Group summary: (ZAR m) Reported Organic % +1% 57,269 55,989 56,542 Rev +1% +9% 32,757 31,740 31,340 OpEx +1% -5% 25,202 24,512 24,249 +4% +14% EBITDA 5,708 CapEx 8,496-33% -26% 15,504 9,008 6 months ended Jun 09 15,753 6 months ended Jun 10 19,494 6 months ended Jun 11 AFCF* +24% +35% 42.8% 43.3% 3% 44.6% EBITDA margin Capex / Rev 27.1% 15.2% 10.1% *EBITDA Capex (approximates free cash flow) Strong underlying organic growth in key markets ZAR strength dampened d reported results Avg ZAR/USD R6.80 vs R7.52 PY Higher EBITDA margin mainly due to Nigeria, Iran, RSA, and Ghana tower sale EBITDA includes: Ghana tower sale profit of ZAR 445m Conakry settlement ZAR 147m EBITDA margin excl above 44.0% Capex 33% lower YOY mainly due to delay in projects and outstanding orders Strong free cash flow generated, 24% YOY, as EBITDA increased and capex reduced Interim dividend payout 273 cents 23

24 Key accounting considerations Change in ownership Zambia shareholding reduced from 90.0% to 86.0% - Apr 11, consolidating 98.7% Ghana tower sale - 1st phase completed May 11, 2nd phase completed Aug 11, and final phase to be completed by year end (MTN share in TowerCo 49%) Events after reporting period IFC put 3% Nigeria shares back to MTN at USD 390m effective Aug 11; 0.4% of these shares made available to Nigeria non-controlling shareholders Put options Put options net impact: Nigeria Finance costs ZAR 240m Fair value adjustment (ZAR 275m) Forex loss ZAR 51m Non-controlling interests share of profits - (ZAR 120m) Afghanistan - Forex loss ZAR 46m Non-controlling interests share of profits (ZAR 12m) Taxation Group effective tax rate of 36.95% due to: STC 3.83% Withholding taxes 3.28% Education tax (Nigeria) 1.14% 24

25 FX Trends (average rate) ZAR strength severely impacting results USD: Local Currency ZAR Cedi Rial Naira % -2% % YTD -08 H1-09 YTD -09 H1-10 YTD -10 H % ZAR: Local Currency Naira Cedi Rial % -16% -13% YTD -08 H1-09 YTD -09 H1-10 YTD -10 H

26 Revenue Strong organic growth impacted by strong ZAR Revenue (ZAR m) Revenue breakdown (ZAR m) 111, ,684 +9% 1, ,263 4,721 54,678 58,695 2,163 1,008-8% 57,269 55,989 56,542 55,989 LC ZAR NIG 13% 0% RSA 6% 6% IRA 28% 12% GHA 12% -4% 56, H2 H NIG RSA IRA GHA Other 2011CR FX CR is at constant prior year FX rate Airtime and subscription revenue decreased by 3% Interconnect revenue increased by 4% Data and SMS are on par as % of total revenue, and increased by 14% (Data 24%) Revenue 9% higher than constant currency rate FX results in 8% negative impact on ZAR reported numbers Group YOY subscribers increased by 18% Nigeria LC growth driven by subscriber growth, data revenue and increased interconnect revenue RSA growth driven by pre-paid and data revenue Iran LC growth driven by increase in subscribers, data and SMS revenue growth and stable ARPU Ghana LC revenue increase driven by subscribers, data revenue and increased incoming revenue 26

27 Revenue Strong underlying local currency growth Revenue (ZAR m) 55,989 1,463 1,631 2,866 3,217 8,314 38,498 6 months ended Jun 10 +1% 56,542 1,334 2,227 3,558 3,392 8,630 37,401 6 months ended Jun 11 Other Cellular phones and accessories Data SMS Interconnect Airtime and subscription Reported % 3% +37% 4% +24% 6% +5% 6% +4% 15% -3% 66% % share of total Revenue ZAR airtime and subscription revenue decreased by 3% LC RSA airtime and subscription revenue increased by 5%, Nigeria by 7% and Iran by 26% RSA subscribers increased by 16%, Nigeria by 16% and Iran by 19% Interconnect revenue increased by 4%. Strong LC interconnect growth on increased subscribers and incoming calls SMS revenue increased by 5% Iran SMS revenue increased by 48% driven by popular cheaper Farsi SMS RSA and Nigeria LC SMS increased by 9% and 17% Group data revenue increased by 24% RSA and Nigeria LC data increased by 18% and 160% Handsets and accessories increased by 37% RSA increase in pre-paid p handsets sold More data enabled devices sold 27

28 Interconnect Group interconnect (ZAR m) 6 months ended Jun 11 6 months ended Jun 10 Cost -5,684 8,630-5,736 8,314 2,578 MTR changes in RSA RSA peak and off-peak rate dropped; Revenue Peak 89 cents to 73 cents Off-peak 77 cents to 65 cents Group GoupInterconnect teco ectrevenue e increased by 4% RSA revenue decreased 10% Nigeria revenue increased by 63% (LC). Margin % 2,946 Unified tariff (on-and off-net) )b by 34% competitors pushed incoming traffic higher Ghana interconnect revenue increased by 48% (LC) due to flat competitor offnet tariffs Net interconnect margin increased from 31% to 34% Nigeria on-net increased from 80% to 83% Margin % RSA pre-paid on-net increased to 65% 31% from 61% while post-paid paid decreased to 47% from 49% Ghana on-net decreased from 85% to 80% 28

29 OpEx Cost optimisation OpEx (ZAR m) 31,740 8,320 2,992 6,191 2,793 7,748 +1% 31,340 8,755 3,657 Direct network operating costs Costs of handsets and other accessories Reported % share of total opex Direct network operating costs Increased electricity cost in RSA, Ghana and Iran (subsidies withdrawn) -5% 28% Higher bandwidth usage drove transmission costs up in RSA Nigeria increase in diesel prices avg N162.2 in 2011 from N134.1 in 2010 Handsets costs up mainly due to 30% increase in pre- paid volumes in RSA Marketing cost reduced in most opco s (high football sponsorship in 2010) -22% 12% Interconnect 6,206 0% 20% and roaming 2,975 Employee benefits -7% 9% 6,615 Selling, distribution and marketing expenses +15% 21% Commission cost lower (RSA and Nigeria) 3,696 3,132 Other operating expenses % 6 months ended Jun 10 6 months ended Jun 11 29

30 EBITDA Strong organic EBITDA growth EBITDA (ZAR m) 46,063 50,511 EBITDA breakdown (ZAR m) 1, % ,635 2,433-10% 21,551 26,262 24,249 25, % 24, % 24,249 25, % LC ZAR NIG +17% +4% RSA +9% +9% IRA +31% +14% GHA* +2% -12% NIG RSA IRA GHA Other 2011CR FX 2011 H2 H1 EBITDA margin 2011CR is at constant prior year FX rate Group EBITDA increased to 44.6% reported (44.0% adjusted for Ghana tower sale and Conakry settlement) 2011 EBITDA at constant prior year FX rates would be 14% higher than prior year Nigeria EBITDA increased by 4% (LC 17%) due to: LC revenue growth of 13%, total cost growth 7% Reduced marketing and commission cost RSA EBITDA growth due to: Revenue increase higher data and pre-paid paid revenue Reduced commissions Reduced marketing spend Iran EBITDA growth due to: Revenue increase on strong subscriber growth Reduced marketing spend *Excl Ghana tower sale profit 30

31 EBITDA margin Margin expansion in Nigeria, Iran and RSA EBITDA margin reconciliation (%) Nigeria Margin increased 2pts to 63% due to reduced marketing spend and commissions i 43.3% 3% pts % %* +1.3 pts RSA Margin up from 34% to 35% on higher revenue and lower marketing spend and commissions Net interconnect margin down from 21% to 20% on lower revenue Iran Margin increased 1pt (from 41% to 42%) mainly due to revenue growth arising from SMS, and marketing spend reduction Ghana 2010 NIG RSA IRA GHA 2011CR is at constant prior year FX rate Other 2011CR FX 2011 Margin excl the tower transaction decreased to 38.7% due to increased off-net traffic and increase in utilities cost Sudan and Côte d Ivoire Sudan margin increased from 11% to 18%, due to increase in revenue and reduced marketing spend, professional fees, rent and utilities and transmission i costs * Incl profit on Ghana tower sale and Conakry settlement Côte d Ivoire margin improved to 38% from 28% on strong cost control focus 31

32 CapEx Capex reduction in most operations CapEx (ZAR m) 31,248 CapEx breakdown (ZAR m) -26% 15,744 19,466 8, , , ,708-7% 10,970 27% 15,504 15% 8,496 5,708 10% LC ZAR NIG -7% -18% RSA +27% +27% IRA -47% -54% GHA -89% -90% NIG RSA IRA GHA Other 2011CR FX 2011 H2 H1 Capex/Rev Spend ZAR 7.6bn below June authorised mainly due to: Logistic delays Significant portion of capex committed Marginal FX impact ZAR 0.6bn 2011CR is at constant prior year FX rate South Africa Fibre, BSS and IN delayed rollout Over 90% expected to be capitalised by year end Nigeria Delayed Transmission and site rollout (65% committed) Iran Sanctions embargo delayed delivery of certain network equipment 90% to be capitalised by year end 32

33 (ZAR m) CapEx guidance Significant capex reduction vs prior year 6 months ended Jun 11 6 months ended Authorised Revised Jun 10 Dec 11 Dec 11 South and East Africa South Africa Other operations West and Central Africa Nigeriai Ghana Other operations Middle East and North Africa Iran Syria Other operations Head office companies Total USD:ZAR USD:ZAR 7.67 Authorised USD:ZAR 7.42 Revised USD:ZAR

34 EBITDA - CapEx Strong free cash flow growth EBITDA - CapEx (ZAR m) 31,045 EBITDA - CapEx breakdown (ZAR m) 15,292 19,494 15,753 1, % 989 1, ,323 1,829 19,494-11% 14,815 5, % 9, % 15, % LC ZAR NIG +25% +11% RSA +6% +6% IRA NM NM GHA NM NM NIG RSA IRA GHA Other 2011CR FX 2011 H2 H1 % revenue 2011CR is at constant prior year FX rate Strong organic operational growth Low capex spend, leading to high h adjusted d free cash flow Increased adjusted free cash flow on higher revenues and lower capex in all key countries 34

35 Interest and tax Lower interest charge and increase in effective tax rate Net finance cost (ZAR m) 6 months ended Jun 11 6 months ended Jun 10 6 months ended Jun 09 Net interest paid Net forex losses Functional (414) (70) currency losses/(gains) Put options (845) Net interest paid lower due to interest income in Mauritius Net forex losses reduced d due to forex gains in Dubai on Iran loans ZAR 239m vs ZAR 563m loss PY Functional currency gain ZAR 414m mainly due to bank balances Bank balances gain ZAR 544m Intercompany account loss ZAR 130m Total Tax (ZAR m) 4, % 3, months ended Jun 09 Eff rate 5, , % 3,333 6 months ended Jun 10 STC & other WHT Def tax 6,343 1, % 4,438 6 months ended Jun 11 Normal tax Effective tax 36.95% mainly due to Increase in STC by 86% YOY expected STC relief in 2012 Withholding taxes increased by 46% YOY, mainly due to dividend declared by Ghana CGT from the Ghana tower sale Approximately 50% of Group s PBT taxed at 33% weighted average statutory rate Higher cash upstreaming increases withholding tax Increasing unreasonable demands from local tax authorities 35

36 AHEPS Increased Adjusted Headline Earnings per share AHEPS (ZAR cents) Adjusted EPS increased by 7.2% to cents YOY Profit on disposal of non-current assets mainly due to Ghana tower sale, profit of ZAR 445m Reversal of put option in respect of subsidiaries Nigeria (ZAR 104m) Afghanistan ZAR 34m H2 H1 ZAR cents 6 months 6 months Variance % ended Jun 11 ended Jun 10 Attributable earnings per share Profit on disposal of non-current assets (34.4) (2.6) * Reversal of impairment of PPE and non-current assets (1.3) (5.0) (74.0) Basic headline earnings per share (Reversal)/recognition of the put options in respect of (3.8) 6.5 (158.5) 5) subsidiaries Adjusted headline earnings per share * - Not meaningful 36

37 Net debt Group in net cash position 2% 18% 34% 46% ZAR m Gross debt 30,937 Repayment schedule (ZAR m) Holdco's and SA Nigeria Iran Ghana Syria Rest >2014 Pre Jun 11 Post Jun 11 1% 10% 11% 9% 41% Gross cash 40,822* Gross debt reduced mainly at Holdco s and SA, notwithstanding payment of final dividend as robust upstreaming continues Gross intercompany loans reduced - excl holding companies and RSA now total ZAR 6,176m Investments are principally to increase yield on Nigerian cash reclassified 28% Net cash 9,885 Upgrade in Fitch short term credit rating to F1 + (zaf) * Including ZAR 7,219m of investments

38 Income statement ZAR m 6 months ended Jun 11 6 months ended Jun 10 Variance % Revenue EBITDA EBITDA Margin % 44.6% 43.3% 1.3pts Depreciation Amortisation (7) Profit from operations Net finance cost (73) Share of results of associates after tax (14) 59 (124) Profit before tax Income tax expense (17) Profit after tax Non-controlling interests (10) Attributable profit Effective tax rate 36.95% 36.77% 0.18pts 38

39 Statement of financial position ZAR m Jun 11 Dec 10 Non-current assets Property, plant and equipment Goodwill and other intangible assets Other non-current assets Current assets Cash and cash equivalents Restricted cash Other current assets* Assets of a disposal group classified as held for sale Total assets * Incl in other current assets are bonds of ZAR 190m, treasury bills of ZAR 6,004m and foreign currency deposits of ZAR 1,025m which have been incl in the net debt calculation Total equity Non-current liabilities Interest-bearing non-current liabilities Deferred tax and other non-current liabilities Current liabilities Interest-bearing current liabilities Trade and other payables Equity & liabilities Net debt* (9 840) 904 Net debt/ebitda USD:ZAR

40 Statement of cash flows ZAR m 6 months 6 months ended ended Jun 11 Jun 10 Variance % Cash generated by operations (2) Net interest paid (921) (1 866) 51 Taxation paid (3 391) (3 406) - Dividends paid (6 576) (3 534) (86) Cash inflows from operating activities (17) Acquisition of property, plant and equipment (excl software) (5 580) (7 811) 29 Other investing activities (6 700) 605 NM Cash outflow from investing activities (12 280) (7 206) (70) Cash outflows from financing activities (4 750) (1 801) (164) Net movement in cash and cash equivalents (4 310) (169) Cash and cash equivalents at the beginning of year Effect of exchange rate changes Cash and cash equivalents at the end of the period* * Incl in bank balance ZAR 32,760m (2010:ZAR 30,149m) and bank overdraft ZAR 419m (2010:ZAR 1,067m) 40

41 Looking ahead Sifiso Dabengwa Group President and CEO

42 Looking forward Strategic considerations Leverage revenue and cost optimisation opportunities Evolve the business model to support ICT convergence Leadership and market share remains a priority Rollout Increase short term pace of network investments and rollout Upgrade and optimise networks to maintain quality and meet increased demand Shareholder returns Dividend payout ratio policy of 65% Continue to investigate options to improve returns to shareholders 42

43 Subscriber guidance 2011 Net additions guidance for 2011 Net additions guidance for (Old) 000(New) South Africa 2,000 2,000 Nigeria 4,400 4,400 Ghana 900 1,300 Iran 4,200 4,200 Syria Rest 6,435 7,700 18,435 20,100

44 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.