MTN Group Limited Final audited results for the year ended 31 December 2009
2 Agenda Strategic and operational overview Phuthuma Nhleko Group President and CEO Financial overview Nazir Patel Group Finance Director Looking ahead Phuthuma Nhleko Group President and CEO
Strategic and operational overview Phuthuma Nhleko Group President and CEO
4 MTN vision To be the leader in telecommunications in emerging markets Consolidation & diversification Leverage existing footprint & intellectual capacity Convergence & operational evolution Increased competitiveness Best practice Hub and cluster Diversification Procurement synergies Skills optimisation Brand Value proposition Execution excellence
5 Solid operational performance We delivered Strong subs growth Maintained or improved market share Strong brand preference through Network rollout execution Improved distribution model Segmental value propositions Increased focus on data Under challenging market conditions Aggressive competition Increased regulatory requirements Slowing economies Negatively impacted by FX
6 Group highlights Group subscribers Revenue EBITDA Up 28,0% to Up 9,2% to Up 6,7% to 116,0 million ZAR 111,9 billion ZAR 46,1 billion Adjusted headline EPS (excluding the impact of functional currency losses) Up 8,5% to 878.9 cents Dividend per share of 192 cents Capex execution Up by 10,6% to ZAR 31,2 billion
7 Group initiatives Standardisation and operational efficiencies Centralised procurement Standardisation of equipment Rationalisation of network suppliers Best practice guidelines to ensure operational efficiencies Site build, network management, radio access network deployment and electro magnetic field safety toolkits rolled out in 09 Activity based accounting pilot in Nigeria, Iran and Syria Infrastructure sharing Convergence Data Fixed MTN Business Successful integration Launched Sep09 Pan African opportunity 23% market share Enterprise Solutions Integration of VGC into MTN Nigeria Focus on corporate segment Continued expansion of fixed network Mobile Continued 3G rollout Wimax Rolled out in Uganda, Rwanda, Cameroon, Iran, Nigeria i (trial), Cote d Ivoire, Liberia and Congo B Main focus on SME segment Coverage in high density areas Product drive
8 Group initiatives Submarine cables Committed USD 191 m to date Access to cable capacity on EASSy (H2:10), EIG (H2:10), SAT- 3/SAFE(operational), TEAMs (operational Nov09) and WACS (H2:11) People MTN Academy Talent management Y ello stars Knowledge share Mobile money Focus on money transfers Rolled out in RSA, Uganda, Rwanda, Ghana, Cote d Ivoire, Benin and Yemen Uganda surpassed 680 000 subscribers to date SA business model slightly different with innovative products such as mdirect and Eazi recharge
9 Subscriber contribution by region Total (subscriber million) MTN Group Proportionate* (subscriber million) 90.7 116.0 70.4 88.5 61.4 29% 32% 50.4 23% 26% 23% 19% 46% 44% 45% 45% 45% 47% 31% 27% 23% 36% 32% 27% Dec-07 Dec-08 Dec-09 Dec-07 Dec-08 Dec-09 SEA WECA MENA Increased diversification
10 Revenue and EBITDA by region Contribution* Contribution* EBITDA margin% (Revenue) (EBITDA) SEA 35.4% 36.6% SEA 27.6% 29.8% Group 41.1% 1% 42.1% SEA 32.0% 34.4% WECA 45.2% 46.5% WECA 58.7% 58.7% WECA 53.5% 5% 53.1% MENA 19.2% 16.8% MENA 12.6% 10.8% MENA 26.9% 27.0% 2009 2008 *Difference in Head Office Mix variance due to lower margins in SA and Syria
11 South Africa - operational highlights Launched Jun 1994 Market share 32% Population 49.4m Market sizing 64.3m (2014) Penetration 103% Shareholding 100% Marginal increase in postpaid Strong growth in hybrid packages Loyalty programs Disappointing prepaid growth H1 system challenges and competition H2 RICA System improvements remain a key focus Subscribers ( 000) Prepaid Postpaid Net additions ( 000) 17,169 16,067 14,799 12,655 14,415 13,044 12,306 10,368 2,288 2,493 2,754 3,023 Dec-06 Dec-07 Dec-08 Dec-09 2,275 2,144 2,370 Improved brand awareness in H2 2,062 1,198 1,579 Ayoba campaign 5.5 million prepaid subs RICA d H2 H1 213 946 791 62-1,164-1,102 Dec-06 Dec-07 Dec-08 Dec-09
12 South Africa - operational highlights Declining postpaid ARPU indicating slowing consumer spend ARPU ZAR Lower out of bundle usage Migration onto lower value packages 441 396 403 365 Increased prepaid ARPU Impact of disconnections post RICA Mobile termination rates Peak rate decrease effective 1 Mar10 from ZAR 1.25 to ZAR 0.89 Postpaid Blended Prepaid 159 149 148 145 95 92 97 100 Dec-06 Dec-07 Dec-08 Dec-09 ICASA to provide feedback in Jun10 Reducing fixed to mobile interconnect traffic Avg. total MOU comprises both incoming and 124 106 102 100 outgoing minutes Outgoing MOU 79 65 64 64
13 South Africa - infrastructure and data highlights Capacity increased by 12% (2G) and 22% (3G) 496 (2G) and 659 (3G) BTS s integrated Improved 3G population coverage from 35% to 48% Fibre deployment Ongoing deployment of national long distance Gauteng northern ring to be completed by Jul10 Modernisation and efficiency programs implemented Improved data focus and offerings Capex ZAR (million) 6,034 H2 H1 Capex as % of revenue Data revenue ZAR (million) 2,391 1,186 2,843 1,549 1,205 1,294 4,868 3,096 1,772 3,034 3,000 Dec-06 Dec-07 Dec-08 Dec-09 1,938 9.7 10.1 15.0 18.2 1.9 million 3G devices 1,159 1,696 2,052 H2 H1 75% increase in data traffic 1,221 779 Packet switch data rev increased 44% Dec-06 Dec-07 Dec-08 Dec-09 SMS contribution to data rev As % of SA revenue decreased to 45% from 50% (excluding handsets) 2,756 1,535 3,596 1,900 4,496 2,444 9.0 11.0 12.4 14.8
14 Nigeria - operational highlights Launched Aug 2001 Market share 50% Population 147m Market sizing 111m (2014) Penetration 42% Shareholding 76%* Strong subscriber growth Continued improvements in network quality and capacity Innovative segmental value propositions Efficient sales and distribution framework Declining USD ARPU 25% devaluation of the Naira against the USD in H1 Relatively stable in H2 Reduction in interconnect tariffs, effective 31 Dec09 In line with expectation to NGN8.3 79% on net traffic reducing impact SIM card registration *Legal To be implemented on 1 May10 Strong distribution to assist registration process Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) Net additions ( 000) 12,281 16,511 23,077 30,827 18 17 16 12 Dec-06 Dec-07 Dec-08 Dec -09 Outgoing MOU 53 52 55 53 H2 H1 3,911 2,645 1,266 4,230 2,475 6,566 4,512 1,755 2,054 7,750 3,489 4,261 Dec-06 Dec-07 Dec-08 Dec-09
15 Nigeria - infrastructure and data highlights Significantly improved quality and capacity on network Completed phase 2 of 3G rollout 561 3G sites rolled out Phase 3 underway Capex ZAR (million) H2 H1 4,789 3,674 2,979 2,121 1,553 1,810 9,610 5,668 3,942 10,222 4,519 5,703 Transmission expansion 1 562 km of new backbone 99% complete 110 km of metro fibre (87% complete) Capex as % of revenue BTS Rollout Dec-06 Dec-07 Dec-08 Dec-09 24.6 23.6 30.5 30.7 1,560 25 363 active Blackberry subscribers 785 802 1,220 78 331 data modems 398 726 H2 H1 209 639 758 494 189 146 Dec-06 Dec-07 Dec-08 Dec-09
16 Ghana - operational highlights Launched Nov 1996 Market share 55% Population 24m Market sizing 22.5m (2014) Penetration 61% Shareholding 98% Maintained market share in extremely competitive market Significant increase in subs in Q4 Improvements in network quality and capacity Enhanced value propositions o s (MTN Zone Opt) Reduced churn and improved MOU from Jun09 Mega - promotions Increased distribution footprint Declined ARPU 27% depreciation of the Cedi against USD 13% decline in local currency ARPU Further competition expected to launch in H1:10, 6 in total SIM registration to commence 1 Jul10 Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) 2,585 17 4,016 6,428 8,001 14 12 8 Dec-06 Dec-07 Dec-08 Dec-09 Outgoing MOU - 104 119 105 Net additions ( 000) H2 H1 567 567 1,431 624 807 2,412 1,431 981 1,573 782 791 Dec-06 Dec-07 Dec-08 Dec-09
17 Ghana - infrastructure and data highlights Significantly improved network quality Capex ZAR (million) 1,854 2,586 1,411 Completed major fibre rings Enhanced data offerings Increase in data usage 10% increase in H2 H2 H1 1,239 938 801 977 484 840 1,175 317 262 Dec-06 Dec-07 Dec-08 Dec-09 3G mobile broadband Internet SIM launched PAYG Unlimited bundles corporate customers MTN Loaded (1 million unique hits) Capex as % of revenue 28.5 32.8 30.7 45.6 BTS Rollout 729 718 390 704 221 440 Data is 6% of rev 302 483 H2 H1 302 328 289 Dec-06 Dec-07 Dec-08 Dec-09
18 Iran - operational highlights Launched Aug 2006 Market share 40% Population 72,5m Market sizing 75.8m (2014) Penetration 80% Shareholding 49% Subscribers ( 000) /ARPU ($) 16,039 52% share of net adds Attractive acquisition promo s (WOW, MTN 154 6,006 BOGOF, reduction in price of SIMS Subscribers ('000) packs) 9 10 9 8 Increased market share Loyalty programs (magic number and family and friend) Improved capacity and coverage of network Focus on increased sales and distribution footprint and electronic channels Reducing churn and dormancy remains a priority Decision on launch of 3rd operator is unclear *Restated to exclude free minutes ARPU (USD) Net additions ( 000) 23,260 Dec-06 Dec-07 Dec-08 Dec-09 Outgoing MOU - 69* 60* 62 H2 H1 154 5,852 4,023 1,829 10,033 4,446 5,587 7,221 4,073 3,148 Dec-06 Dec-07 Dec-08 Dec-09
19 Iran - infrastructure and data highlights Continued aggressive rollout 1 429 towns and cities now covered 4 996km additional road coverage (10 928km in total) t Network quality remains a priority in main cities (Tehran, Tabriz and Esfahan) Site acquisitions still a concern, colocation with other operators Successful launch of Wimax Dec09 Coverage focus on high density areas 328 integrated sites Capex (49%) ZAR (million) H2 H1 Capex as % of revenue BTS Rollout 3,326 2,743 2,282 1,559 2,142 773 845 675 714 601 1,044 98 Dec-06 Dec-07 Dec-08 Dec-09-116.3 55.6 43.6 2,043 1,642 1,529 1,250 894 833 H2 H1 361 361 748 696 793 Dec-06 Dec-07 Dec-08 Dec-09
20 Syria - operational highlights Launched Jun 2002 Market share 45% Population 20,5m Market sizing 12.7m (2014) Penetration 46% Shareholding 75% Strong subscriber uptake in H2 Improved promos (MTN Gold and billing per a second) Segmental product offerings (youth) Churn management remains a priority Subscribers ( 000) /ARPU ($) MTN Subscribers ('000) ARPU (USD) 2,237237 22 3,109 3,539 20 19 4,249 18 Dec-06 Dec-07 Dec-08 Dec-09 Outgoing MOU 134 130 124 120 Rev share now at 50% Progress on BOT Net additions ( 000) 872 710 Government consultant appointed Expected to resolve by year end 517 494 430 164 699 494 H2 355 266 H1 11 Dec-06 Dec-07 Dec-08 Dec-09
21 Syria - infrastructure and data highlights Continued but limited expansion and upgrades on network due to BOT uncertainty Outsourced maintenance of sites Implementation of new network management system Transmission expansion and optimisation Capex ZAR (million) H2 H1 Capex as % of revenue 1,039 748 730 418 362 338 171 219 386 247 309 119 Dec-06 Dec-07 Dec-08 Dec-09 9.8 9.0 16.0 10.7 Limited 3G services BTS Rollout 596 Focus mainly on internet access for corporates and consumers 504 Services to be offered by ISP 260 317 444 283 193 H2 H1 191 69 124 152 221 Dec-06 Dec-07 Dec-08 Dec-09
22 In summary Total subs increased 28% from Dec08 Iran -45% Syria 20% Strong subs Nigeria 34% growth Ghana 24% Rest 38% SA is the exception Maintained or improved market share Improved market share in Nigeria and Iran Maintained market share in Ghana and Syria (from Jun09) Marginal loss of market share in SA Percentage share of net additions Strong brand Iran 52% preference Nigeria 78% Ghana 55%
Financial overview Nazir Patel Group Finance Director
24 Group summary ZAR m Key Points Dec Dec Variance Strong ZAR and Naira weakness impact ZAR reported results EBITDA margin decline mainly due to RSA and Syria 2009 2008 % Revenue 111 947 102 526 9.2 EBITDA 46 063 43 166 6.7 Negative functional currency impact on AHEPS ZAR 124.6 cents (2008: 94.2 cents positive impact) Peak capex year to sustain subscriber growth Continued strong operating free cash flow generation EBITDA margin % 41.1 42.1 (1.0pts) AHEPS 754.3 904.44 (16.6) 6) CAPEX (incl. 31 248 28 263 10.6 software) % of rev 27.9 27.6 0.3pts Free cash flow 6 580 5 863 12.2
25 2009 Financial Overview Trading conditions Difficult economic and trading conditions Stagnant and declining GDP s impact customer spending behaviour Foreign Exchange Rates ZAR reported results negatively impacted by weakening of key currencies vs US dollar 09 Functional currency loss ZAR 3.2bn vs ZAR 2.4bn gain in 08 ZAR strength has positive impact on capex spend Regulatory RICA implementation adversely impacts RSA performance Limited effect of MTR changes across footprint
26 Key accounting considerations Acquisition of 100% of Verizon SA (Feb09), 59% of italk (Jan09) Swapped ICS assets for 20% stake in Belgacom International Change in Carrier Services ownership Uganda step-up from 95% to 97% Zambia shareholding reduced from 100% to 97.8% Disposal of DMTV JV stake of 50% (Jan09) Impact of put option MTN share ZAR 906m credit (Dec08: ZAR 825m debit) Financial cost - ZAR 537m Put Option Fair value adjustment (ZAR 537m) Forex gain - (ZAR 701m) Minority share of profits - (ZAR 205m) Taxation Group effective tax rate declines to 33.4% (Dec08: 39.9%) due to expiry of Nigeria commencement provisions in Mar08 and put option credit
27 Average exchange rates USD: Local currency 9 086 9 830 9 943 9 169 9 243 9 300 9 175 9 365 129 128 128 126 117 147 Rial 148 118 Naira 6.3 7.0 7.1 7.0 7.6 8.1 9.1 8.3 ZAR Cedis 0.9 0.9 0.9 0.9 1.0 1.1 1.4 1.4 H1-06 H2-06 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09 ZAR: Local currency 1 450 1 365 1 292 1 320 20.3 18.7 17.9 17.9 1 198 1 195 1 091 1 152 Rial 15.4 14.5 17.8 16.1 Naira 0.14 0.13 0.13 0.13 0.13 0.13 0.15 0.17 Cedis H1-06 H2-06 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09
28 Revenue trends ZAR m Key Points FX impact ZAR 10.9bn Strong underlying organic growth in key markets except RSA ZAR reported revenues adversely impacted by decline in Naira and Cedi vs US dollar 111,94 47 7,548 1,738 1,653 122,8 886 19.9% 102,526 2009 revenues at constant prior year fx would be 19.9% higher than the prior year 2009 Nigeria Ghana Other Rev @ PY FX 2008 Nigeria, Ghana and Iran revenue driven by strong subscriber growth Revenue growth ZAR % LC % Nigeriai 56 5.6 30.00 Iran 54.5 60.0 Ghana (6.3) 25.1 Syria 74 7.4 82 8.2 Uganda 9.3 26.4 South Africa 3.1 3.1
29 Revenue trends (cont.) ZAR m Airtime and subscription revenue Dec Dec 2009 2008 contribution decreased due to fx impact, RSA flat YoY Data contribution increase due to RSA GPRS up 39% SMS contribution increased due to Iran and Nigeria 76% and 13% respectively increase due to growth in subscriber base Interconnect contribution decreased due to Nigeria - 6% YoY decrease (increase 15% in LC) Cellular phones and accessories contribution decreased due to RSA handset volumes up but reduced selling prices Other contribution up increase to acquisition of Verizon Airtime and subscription Data SMS Interconnect 76 814 68.6% 3 329 3.0% 5 437 4.9% 70 963 69.2% 2 690 2.6% 4 394 4.3% 19 516 18 364 17.4% 17.9% Cellular phones and 3 279 3 551 accessories Other 2.9% 3.5% 3 572 2 564 32% 3.2% 25% 2.5% Revenue 111 947 102 526
30 EBITDA trends ZAR m Strong organic EBITDA growth in key markets Nigeria margins higher 1.4pts to 59.3% on lower fuel costs, opex control RSA margins lower 1.5pts due to integration of italk, CellPlace, IT outsourcing costs and lower net interconnect Iran margins increase 4.7pts to 34.9pts on higher revenue, opex control Full year revenue share impact lowers Syria margin 8.5pts to 19.6% 09 EBITDA at constant prior year fx would be 18.4% higher than the prior year 063 46, 200 09 FX impact ZAR 5.1bn 4,310 Niger ria EBITDA growth 725 na Gha 31 Oth her ZAR % 51 1,129 FX EBITDA @ PY 18.4% 43,1 166 200 08 LC % Nigeria 82 8.2 32.4 Iran 78.6 85.3 Ghana (6.5) 25.1 Syria (24.9) (23.5) Uganda 8.6 23.7 South Africa (1.7) (1.7)
31 EBITDA ZAR m Direct network cost increased due to Syria revenue share and increase in number of sites in Iran Handsets and accessories costs decreased due to RSA - distribution of cheaper prepaid handsets Interconnect and roaming cost increased due to RSA - increase in traffic to other mobile operators and international traffic Employee costs increased due to RSA increase in headcount due to Cellplace and italk integration Selling, distribution and marketing increased due to FIFA and distribution cost Other expenses include the ZAR 354m recovery of Cell C settlement Dec Dec 2009 2008 Revenue 111 947 102 526 Direct network operating costs Cost of handsets and other accessories Interconnect and roaming Employee benefits Selling, distribution and marketing expenses Other expenses EBITDA EBITDA margin % 15 925 14 140 14.2% 13.8% 6 297 5 985 5.6% 5.8% 15 166 13.5% 5 843 5.2% 13 217 12.9% 4 776 4.7% 14 649 13 274 13.1% 12.9% 8 004 7 968 7.1% 7.8% 46 063 41.1% 43 166 42.1%
32 EBITDA margin recon (%) Nigeria Fixed cost control and opex savings Syria RSA Full year impact of revenue share increase Interconnect margin lower Selling, distribution costs from acquisitions IT outsourcing costs Positive benefits from Cell C settlement / licence fee charge EBITDA margin 2008 42.1 Nigeria 0.7 Syria (0.6) RSA (0.5) Other opcos (0.6) Other opcos EBITDA margin 2009 41.1 Verizon margin dilution
33 Interest and tax ZAR m Net finance cost Dec 2009 Dec 2008 Net interest paid 2 201 1 851 Net forex losses 1 106 1 249 Effective tax rate 39.5% 39.9% Functional currency losses /(gains) 3 204 (2 442) 33.4% Put option (701) 1 259 Total 5 810 1 917 Income tax Dec 2009 Dec 2008 Normal tax 6 425 7 338 Deferred tax 992 3 060 STC and witholding taxes 1 195 957 Total 8 612 11 355 2007 2008 2009 Functional currency loss mainly due to Iran loans and cash balances Group effective tax lower than prior year due to favourable put impact and expiry of commencement provision in Nigeria Future Group effective tax rate is expected to remain in the lower 30 s
34 Earnings per share cents Dec Dec Variance 2009 2008 % Attributable earnings per share 791.4 821.0 (3.6) Loss on disposal of non-current assets 3.8 6.0 (36.7) Impairment of PPE / Investments 8.0 9.5 (15.8) Basic headline earnings per share 803.2 836.5 (4.0) Reversal of the subsequent utilisation of deferred tax asset Reversal of the put option in respect of subsidiary - 23.6 (48.9) 44.3 Adjusted headline earnings per share 754.3 904.4 (16.6) Functional currency impact loss / (gain) (net of deferred tax) Adjusted headline earnings per share net of functional currency impact 124.6 (94.2) 878.9 810.2 8.5 ZAR strength vs US dollar adversely impacted attributable earnings per share Functional currency impact in adjusted headline earnings per share 124.6
35 Income statement ZAR m Dec Dec Variance 2009 2008 % Revenue 111 947 102 526 9.2 EBITDA 46 063 43 166 67 6.7 EBITDA Margin % 41.1% 42.1% (1.0pts) Depreciation (11 807) (9 939) (18.8) Amortisation (2 668) (2 820) 5.4 Profit from operations 31 588 30 407 3.9 Net finance cost (5 810) (1 917) (203.1) Share of losses from associate (5) - - Profit before tax 25 773 28 490 (9.5) Income tax expense (8 612) (11 355) 24.22 Profit after tax 17 161 17 135 0.2 Minority interests (2 511) (1 820) (38.0) Attributable profit 14 650 15 315 (4.3) Effective tax rate 33.4% 39.9% 6.5pts
36 Balance sheet ZAR m Dec Dec 2009 2008 Non-current assets 110 213 115 319 Property, plant and equipment 67 541 64 193 Goodwill and other intangible assets 37 526 45 786 Other non-current assets 5 146 5 340 Current assets 46 024 54 787 Bank balances 23 999 26 961 Restricted cash 742 1 778 Other current assets 21 283 26 048 Total assets 156 237 170 106 Capital and reserves 72 866 80 542 Non-current liabilities 28 426 34 973 Long term liabilities 21 066 29 100 Deferred taxation and other non-current liabilities 7 360 5 873 Current liabilities 54 945 54 591 Non interest bearing liabilities 39 094 42 101 Interest bearing liabilities 15 851 12 490 Total equity and liabilities 156 237 170 106 Net debt Net debt / EBITDA 12 176.26 12 851.30
37 Analysis of net debt Net debt to EBITDA of 0.26x USD 462.5m of non recourse fundraising closed in 09 Investcom unproductive reduced to ZAR 600m and eliminated after year end Intercompany loans (excl holding companies and SA) total ZAR 7.6bn mainly to Iran, Sudan and Afghanistan Debt repayment profile 15 818 11 928 Debt of ZAR 36,916bn 15% 1% 52% 32% Cash of ZAR 24,741bn 11% 14% Holdco's and SA Nigeria Iran Ghana Syria Other 2% 48% 4 847 7% 1 340 1 746 2010 2011 2012 2013 2104 18% Net debt of ZAR 12, 176bn
38 Cash flow statement ZAR m Dec Dec 2009 2008 Net cash generated by operations 49 634 44 836 Net interest paid (3 127) (1 283) Taxation paid (6 843) (6 781) Dividends paid (3 382) (2 536) Cash inflows from operating activities 36 282 34 236 Acquisitions of PPE (excluding software) (27 720) (26 896) Acquisition of intangible assets (1 982) (1 477) Other investing activities (3 490) 1 196 Cash outflows from investing activities (33 192) (27 177) Cash (out) / in flows from financing activities (926) 292 Net movement in cash and cash equivalents 2 164 7 351 Cash and cash equivalents at the beg. of the year 25 596 15 546 Realised (losses)/ gains on bank accounts (5 114) 2 699 Cash and cash equivalents at the end of the year 22 646 25 596
39 Capex (cont) ZAR m 09 peak capex year for the Group Underspend ZAR 7.2bn Higher spend vs competition in key markets justified by strong subscriber / revenue growth 42,031-3,560-3,382-1,607-154 -2,080 31,248 Actual spend of ZAR 31.2bn positively impacted by fx ZAR 3.5bn Low spend vs authorised, based on optimization of spend vs traffic / network capacity demand Bud dget FX Nige eria ana Gh Iran Ot ther 27.6% 27.9% Act tual 19.0% 21.0% 9,778 15,348 28,263 31,24 48 2006 2007 2008 2009 Actual spend Capex as % of Revenue
40 Capital expenditures ZAR m (incl. software) Actual Authorised Actual Dec Dec 2009* 2010** 2008*** South & East Africa 8 645 6 111 7 350 South Africa 6 034 4 245 4 868 Other operations 2 611 1 866 2 482 West & Central Africa 16 518 10 414 15 024 Nigeria 10 222 6 424 9 610 Ghana 2 586 1 551 1 854 Other operations 3 710 2 439 3 560 Middle East & North Africa 5 785 6 123 5 772 Iran 3 326 2 666 2 743 Syria 748 456 1 039 Other operations 1 711 3 001 1 990 Head Office Companies 300 951 117 Total 31 248 23 599 28 263 * USD:ZAR 8.30 ** USD:ZAR 8.07 *** USD:ZAR 8.13
Looking forward Phuthuma Nhleko
42 Looking forward Expansion opportunities Actively seeking value-accretive opportunities in emerging markets to reduce concentration risk and leverage economies of scale Rollout Monitoring infrastructure investments to ensure appropriate levels of capacity and quality of service continued investment in fibre and cable to service evolving voice and data requirements Operational evolution Optimising efficiencies including infrastructure sharing, standardisation of systems and process, rationalisation of suppliers, cost management and cash optimisation Regulatory Continued engagement with regulatory authorities in the development and refinement of the telecommunications sector BEE The implementation of MTN s BEE transaction
43 Subscriber guidance 2010 Net additions guidance for 2010 South Africa 800 Nigeria 6 000 Ghana 800 Iran 5 000 Syria 400 Rest 7 000 20 000
Thank you Questions
45 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 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.
Annexures
47 South Africa (excl. NS and BS) ZAR m Revenue 905 320 28 9.1 32,148 (252) 33,149 6.3 7.0 71 7.1 7.0 7.6 8.1 8.3 ZAR:USD 2008 EBITDA 2008 10,585 1,001 Airt & Subs Reve enue Interco Sell & distr (4 458) Access s (1,260) Interco & Roam Other 542 Other 10,410 2009 2009 H1-06 H2-06 H1-07 H2-07 Handset volumes up YoYY as average selling prices reduced, costs decreased driving margins up Net interconnect margin lower due to higher international rates and lower fixed to mobile traffic Trading down of postpaid subscribers and lower out of bundle usage Initial i cost of launch of loyalty l programmes Increased costs due to increased distribution costs H1-08 H2-08 H1-09 H2-09
Nigeria g ZAR m Revenue 48 20.3 146.9 148.0 18.7 17.9 17.9 17.8 ZAR Dollar 15.4 128.8 128.5 128.2 118.2 126.0 16.1 116.7 14.5 2008 Airt & Subs Interco 31,558 8,966 6 38 Access 20 Other (308) Rev @ PY FX 40,874 FX (7,548) 2009 33,326 H1-06 H2-06 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09 EBITDA Overall cost savings Average 18% drop in fuel price resulting in margin improvement Control of marketing and consulting projects Increase in on-net traffic 2008 Revenue Sell & distr Interco & Roam (1, (5 18,248 9,316,053) 37) Dir net oper (604) Handsets (361) Other (953) EBITDA @ PY FX 24,056 FX (4,310) 2009 19,746
Ghana ZAR m Revenue 1.42 1.37 0.17 0.14 0.13 0.13 0.13 1.04 1.06 0.15 0.13 0.13 0.92 0.92 0.93 0.93 ZAR 49 Dollar 2008 Airt & Subs Interco 6,047 934 330 Access 28 Other 66 Rev @ PY FX 7,405 FX (1,738) 2009 5,667 H1-06 H2-06 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09 EBITDA Communication service tax of 6% on revenue effective Jun08 Selling and distribution increase FIFA advertising i Increase in site lease rentals (network expansion) and increase in local fuel Increase in on-net net traffic MTN Zone 2008 Revenue Sell & distr 2,786 1,358 (219) Dir net oper (216) Handsets (113) Other (30 5) EBITDA @ PY FX 3,291 FX (725) 2009 2,566
50 Iran ZAR m Revenue 1,450.0 1,365.3 9 1,320.4 9,830.1 1,291.9 1,197.8 1,151.9 9, 924.7 534 7,832 7,625 9,168.9 1,090.6 1,195.0 935 4, 373 2, (10) (207) 9,243.2 9,300.1 9,174.9 9,365.0 ZAR Dollar 9,085.5 20 008 Airt & Su ubs Inte erco Ot her Rev @ PY FX FX 20 009 H1-06 H2-06 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09 EBITDA 1,492 2,897 (148) (956) (532) 2,753 (89) 2,664 Cost optimisation from single vendor maintenance Sims/recharge vouchers locally sourced; intro of virtual recharge vouchers Positive improvement in interconnect margins due to growth in on-net traffic 2008 Reve enue Sell & distr oper Dir net Other EBITDA @ PY FX FX 2009 Focus on general cost control e.g. marketing campaigns and overall cost efficiencies Increase in on-net traffic
Syria ZAR m Revenue 7.3 7.1 7.1 7.1 6.1 51.2 51.5 51.1 5.7 49.9 5.3 47.4 4 5.6 ZAR Dollar 51 6,508 251 34 8 89 6,890 97 6,987 46.6 46.0 46.9 2008 Airt & Subs Interco Access Other Rev @ PY Rates FX 2009 H1-06 H2-06 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09 EBITDA Revenue share increase Increase in on-net traffic 2008 Revenue Dir net oper Other EBITDA @ PY FX FX 2009 1 1,829 382 (669) (233) 1,309 64,373
52 Net debt ZAR m Cash and cash equivalents Interest Net debt / bearing Intercompany (cash) liabilities* eliminations Dec 2009 Net debt / (cash) Dec 2008 South & East Africa (4 209) 12 327 (8 901) (783) 248 South Africa (3 390) 9 347 (7 809) ( 1 852) (100) Other operations (819) 2 980 (1 092) 1 069 348 West & Central Africa (6 165) 15 840 (702) 8 973 7 209 Nigeria (4 547) 12 008-7 461 7 440 Ghana (469) - - (469) (1 770) Other operations (1 149) 3 832 (702) 1 981 1 539 Middle East & North Africa (5 867) 7 906 (7 108) (5 069) (4 445) Iran (1 665) 4 491 (4 176) (1 350) 59 Syria (3 331) - - (3 331) (4 160) Other operations (871) 3 415 (2 932) (388) (344) Head Office Companies (8 500) 25 201 (7 646) 9 055 9 839 Total (24 741) 61 274 (24 357) 12 176 12 851 * Including long-term and short-term borrowings and overdrafts
53 Exchange rates analysis Average (EBITDA) Closing Dec 09 Dec 08 % var Dec 09 Dec 08 % var Rand per Dollar 8.32 8.13 (2) 7.39 9.35 21 Nigerian i Naira per Dollar 148.34 118.22 (25) 149.9797 141.00 (6) Nigerian Naira per Rand 17.83 14.54 (23) 20.29 15.07 (35) Iranian Rials per Dollar 9 942 9 364.98 (6) 10 004.00 9 801.00 (2) Iranian Rials per Rand 1 195.03 1 151.90 (4) 1 353.72 1 047.81 (29) Ghanaian Cedis per Rand 0.17 0.13 (31) 0.19 0.13 (46) Syrian Pounds per Rand 5.60 5.74 2 6.20 4.96 (25)
MTN data sheet part 1 Market overview Group SEA WECA MENA RSA Nigeria Ghana Syria Iran Population (m) 519.9 107.8 222.0 190.1 49.4 146.6 24.0 20.5 72.5 Mobile penetration (%) 103 42 61 46 80 Number of operators 78 20 40 18 3 5 6 2 3 Operational data Subscribers ( 000) 116 025 26 152 52 859 37 014 16 067 30 827 8 001 4 249 23 260 ARPU (USD) 17 12 8 18 8 Outgoing MOU (mins) 64 53 105 120 62 Market share (%) 32 50 55 45 40 Operational data (ZAR m) Revenue 111 947 39 669 50 543 21 525 33 149 33 326 5 667 6 987 7 625 EBITDA 46 063 12 701 27 029 5 782 10 410 19 746 2 566 1 373 2 664 EBITDA margin (%) 41.1 32.0 53.5 26.9 31.4 59.3 45.3 19.7 34.9 CAPEX 31 248 8 645 16 518 5 785 6 034 10 222 2 586 748 3 326 DEPRECIATION 11 807 2 744 6 693 2 362 1 995 4 809 553 645 832 AMORTISATION 2 668 508 1 375 762 220 215 447 315 161
MTN data sheet part 2 (SEA) Sub Total RSA Botswana Zambia Swaziland Uganda Rwanda Shareholding (%) 100 53 98 30 97 55 Licence period (years) 20 15 15 10 20 13 Market overview Population (m) 107.8 49.4 1.9 13.1 1.0 32.4 10.0 Mobile penetration (%) 103 120 28 54 25 19 Market position 2 1 2 1 1 1 Number of operators 3 3 3 1 7 3 Market size (m) (2014) 102.9 64.3 2.8 10.9 1.0 19.2 4.8 Operational data Subscribers ( 000) 26 152 16 067 1 202 1 165 642 5 222 1 854 ARPU (USD) 17 11 7 13 6 6 Market share (%) 32 56 32 100 63 88
MTN data sheet part 3 (WECA) Sub Total Nigeria Ghana Cameroon Congo B Benin G. Bissau G. Conakry Liberia Cote d Ivoire Shareholding (%) 76 98 70 100 75 100 75 60 65 Licence period (years) 15 15 15 15 10 10 18 15 20 Market overview Population (m) 222.0 146.6 24.0 18.1 4.1 8.8 1.5 10.5 3.7 22.7 Mobile penetration (%) 42 61 39 67 45 34 29 32 51 Market position 1 1 1 1 1 1 1 1 1 Number of operators 5 6 3 3 6 3 5 4 5 Market size (m) (2014) 185.5 110.7 22.5 9.7 4.1 6.1 1.0 6.9 1.8 23.0 Operational data Subscribers ( 000) 52 859 30 827 8 001 4 364 1 274 1 564 413 1 273 719 4 424 ARPU (USD) 12 8 9 13 12 10 7 11 9 Market share (%) 50 55 61 46 40 78 41 66 38
MTN data sheet part 4 (MENA) Sub Total Sudan Iran Afghanistan Cyprus Syria Yemen Shareholding (%) 85 49 100 51 75 85 Licence period (years) 20 15 15 20 15(BOT) 15 Market overview Population (m) 190.1 39.1 72.5 33.5 0.8 20.5 23.4 Mobile penetration (%) 34 80 30 106 46 25 Market position 2 2 1 2 2 1 Number of operators 3 3 4 2 2 4 Market size (m) (2014) 148.6 26.6 75.8 18.0 1.0 12.7 14.5 Operational data Subscribers ( 000) 37 014 3 773 23 260 3 186 205 4 249 2 343 ARPU (USD) 5 8 5 39 18 7 Market share (%) 28 40 32 24 45 40