MTN Group Limited Results presentation for the six month period - PowerPoint PPT Presentation

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

AGENDA 1 Strategic and operational update 2 Financial review 3 2016 Guidance 4 Key matters and immediate priorities

Strategic and operational update

STRATEGIC AND OPERATIONAL UPDATE Group financial results for the six months ended 30 June 16 Performance reflects a confluence of material issues which created a ‘perfect storm’  On 10 June MTN settled Nigerian regulatory fine with Federal Government of Nigeria  MTN to pay 330 billion naira (USD 1.67 billion) over three years in full and final settlement, in addition to complying with certain other regulatory conditions Nigeria fine  50 billion naira (USD 250 million) paid on 24 February 2016 forms part of the monetary component of the settlement settlement;  June 2016, first schedule of 30 billion naira paid (USD 124 million) significant negative  Accrued present value of remaining, 280 billion naira (USD 1.42 billion) impact on  Impact results - EBITDA: negative re-measurement impact of R10 499 million (provision R9 287m made in H2 15) - Headline earnings: R8 632 million - HEPS: 474 cents - Cash flow: R 5 870 million 4

STRATEGIC AND OPERATIONAL UPDATE A challenging operating environment Slowing reliant economies, regulatory pressure and tough competition  Depreciation in local currencies resulted in higher US dollar expenses  Forex losses of R3 606 million Key  Liquidity constraints impacting repatriation of funds from Nigeria challenges  Weak macro economic conditions in most markets resulted in lower consumer spending impacted  Negative GDP growth in South Africa and Nigeria expected in 2016, our two largest markets growth  Regulatory pressure, notably withdrawal of regulatory services in Nigeria until May 2016  7.5 million disconnected of subscribers – registration requirements in Nigeria, Uganda and Cameroon (approximately 18 million since October 15) The economic landscape in key MTN markets (%) 20 15.7 16 10.4 12 8.9 6.5 8.6 8.5 6.7 8 5.9 5.3 5.0 4.9 4.5 4.0 3.5 2.1 4 2.2 1.3 2.7 0.1 0.0 0 -4 -1.8 South Africa Nigeria Iran Ghana Cameroon Ivory Coast Uganda 2015 GDP 2016 GDP f/c Inflation 2016 f/c Source of GDP growth: IMF 5

STRATEGIC AND OPERATIONAL UPDATE Group financial results for the six months ended 30 June 16 Despite challenges MTN declared an interim dividend of 250 cents for the period  7.5 million subscriber disconnections in Nigeria, Uganda and Cameroon to ensure 232.6 million regulatory compliance, approximately 18 million since October 2015 Group subscribers flat  Competition and economic pressure in South Africa, negatively impacted growth  32.2 % increase in data revenue despite 46.9% decline in effective data tariff  14.0%  Effective voice tariff declined 12.2% (USD), negatively impacted by free minutes offered in subscriber registration campaigns, approximately 1bn free minutes offered in Nigeria to R78.9 billion  Nigeria: outgoing voice and data revenue impacted by withdrawal of regulatory services Revenue in Nigeria until May 2016 (Organic growth of 1.5%)  South Africa: revenue supported by strong device sales and increase in data revenue Note: Results are presented based on operational performance (excluding hyperinflation, Nigerian regulatory fine and tower profits) 6

STRATEGIC AND OPERATIONAL UPDATE Group financial results for the six months ended 30 June 16 Excluding once-off costs organic EBITDA declined 12.8% 10 499 29 737 108 6 839  3.3% 26 390 1 324 2 632 to R29.3 billion 22 434 EBITDA 18 882 (Organic decline of 25.9%) Reported NIG fine Operational Fx H1-16 South Professional Adjusted Hyp and CR Sudan imp fees TowerCo Excluding once-off costs headline earnings declined 11.7% 594 73 135 271 cents 136 27 20 Headline loss per share 474 (Adjusted HEPS declined 11.7%) (271) Reported NIG fine Hyperinflation Digital TowerCo Fx Professional Adjusted H1-16 Group losses losses fees H1-16 losses 7

STRATEGIC AND OPERATIONAL UPDATE Strategic update To lead the delivery of a bold, new Digital World to our customers  Improving customer analytics is a key priority – forms part of strategic review  Introduced Global Value Propositions to drive transition to data and enable global roaming Group Consumer  Improved commission structure and retail experience  Net promoter score improved from 24% to 27%  Leveraging a strong brand, distribution, access to customer wallets and scale - Largest distributor of digital music in Africa and recently launched ‘Games Club’  Good progress made by e-commerce ventures AIH and MEIH - AIH recorded 3 million customers and 2.5 million transactions – impacted by macro-economic slow Group Digital down in Nigeria Services - MEIH recorded 600 000 customers and 3.3 million transactions - IIG gained strong momentum benefiting from youthful population and high internet penetration  MoMo customers increased 5.0% to 36.5 million, supported by Uganda, Ghana, Rwanda and Benin  MoMo revenue up 40,8% to R1 289 million  Aligned operations to become ‘ICT Partner of Choice’ to corporates, public sector and SMEs  The Group will embark on a process aimed to accelerate growth as part of the strategic group review Enterprise  Continued focus on MTN Business Cloud now providing independent software vendor solutions Business Unit  Expansion of MTN Global, multi protocol label switching (MPLS) bringing the footprint to 27 POPs  Launched dedicated internet services to clients in 11 markets and Internet of Things platform to Ghana and Cameroon 8

STRATEGIC AND OPERATIONAL UPDATE Operational performance  Performance compromised by the disconnection of subscribers and the suspension of regulatory services until May 2016  Increased market share to 46.2% despite 3.7% decline in subscriber base  Revenue impacted by lower data revenue given regulatory restrictions on ‘out -of- bundle’ data tariffs; multi- SIM’s and delays in competitive offerings and free minutes offered Nigeria  EBITDA impacted by - Transfer of 2 nd tranche passive infrastructure into TowerCo and USD expenses - Increased marketing costs related to subscriber registration - Nigeria fine professional fees  Capex increased by 78.9%* to R 2 534 million; rollout remains a priority  Disappointing performance impacted by network outages, competition and lower consumer spending  Subscriber base down 2.6%, negatively impacted by competition in highly penetrated market  Increased revenue by 5% supported by handset sales and data usage  Embarked on a deliberate project to drive 3G and LTE quality and high-speed data in key locations South Africa  EBITDA margin impacted by higher volumes of devices and network related costs  Capex of R 4 773 million; added 369 3G and 284 LTE sites; 175 sites connected to fibre  LTE spectrum critical for high-speed data connectivity – submitted application to ICASA  Entered into sales agreement to dispose of 50.02% stake in Afrihost (Proprietary) Ltd 9

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

Financial review

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