MTN Group Limited Results presentation for the year ended 31 - PowerPoint PPT Presentation

MTN Group Limited Results presentation for the year ended 31 December 2016

Agenda 1 Strategic and operational update 2 Financial review 3 2017 Prospects and Guidance

Strategic and Operational Update

Overview – despite the most challenging period, we maintain a positive outlook Oct 15 – June 16 June 16 – Dec 16 2017 and beyond MTN’s Most Building a challenging period sustainable business outlook Negative impact on FY 16 Results Improved growth trends in H2 16 Prospects  Nigerian regulatory fine imposed in Oct 15  Settled Nigerian regulatory fine in June  Despite recent disruptions, EMEA still expected to be the key growth regions  Withdrawal of regulatory services in Nigeria  Deep and fundamental strategic review  MTN uniquely positioned to participate  Macro-economic challenges • IGNITE and new revenue streams  High calibre management team in place •  Infusion of senior management Impacted by 2015 decline in oil price to take the Group forward • Volatile currencies  Re-instated VP organisational structure  Management focus on • Policy changes  Included more diverse skill set onto Board • IGNITE  Difficult regulatory environment  Managing the balance sheet, including • New revenue streams • Compliance with subscriber registration • Repatriation of cash from MTN Irancell across markets • Bond issuance (USD 1bn)  More complex and competitive telecom sector  Operational improvement in H2 in South Africa,  Underperformance in South Africa, Nigeria and Nigeria and Tier 2 operations some Tier 2 operations Results presentation for the year ended 31 December 2016 4

Economic landscape of our key markets Uganda Iran Nigeria South Africa  Presidential and  P5+1 nuclear deal  Slow down in GDP  Contracting economy  Increase in GDP growth growth parliamentary elections  High inflation  Benefited from increase  Risk of ratings in Q1 16 resulted in policy  Significant currency downgrade continuity of > 50% in the oil price depreciation  Relatively stable political  Regulatory Ghana uncertainty in sector and security environment  Successful political transition  Relatively stable regulatory environment 6.00 17.14 7.22 9.97 2.20 1.50 5.11 8.4 8.0 Cameroon 5.9  Slower economic 5.2 4.9 4.8 4.5 3.6 3.3 growth as a result 2.9 1.3 of lower oil 0.8 0.1 production -1.7 South Africa Nigeria Iran Ghana Cameroon Ivory Coast Uganda Ivory Coast 2015 GDP growth % 2016 GDP growth % 2017 inflation forecast %  Resilient GDP growth Results presentation for the year ended 31 December 2016 5

Volatile currencies and difficult regulatory environment Impact YTD13-YTD16 USD: Local currencies  Weaker currencies against the USD negatively LC:USD (closing rate) impacted results (weakening) • Negative translation impact on top-line growth ZAR (30%) • Lower EBITDA growth impacted by higher USD- denominated costs Naira (95%) • Forex losses more than a 100% higher than Rial (30%) previous year  Difficult regulatory environment Cedi (83%) Macro challenges, Ugandan • Subscriber disconnections, approximately shilling (42%) difficult regulatory 23 million 2013 2014 2015 2016 environment and • Withdrawal of regulatory services in Nigeria Net additions – subscribers competitive sector • Dominant operator ruling in Nigeria continued to (‘000) impact commercial success 7 800 7 601 • New regulations on data offerings impacting data revenue growth in Nigeria  Pressure on traditional connectivity intensified as economies slowed 1 503  Tariffs % LC (2013 - 2016) • Nigeria - Data 84% decline; Voice 25% decline (77) -77 • South Africa - Data 50% decline; Voice 42% decline H1 15 H2 15 H1 16 H2 16 Results presentation for the year ended 31 December 2016 6

Most challenging period – negative impact on EBITDA Nigeria EBITDA margin*  13,2% to (%) 52.2% R51 981 million 47.9% 45.0% 41.6% 40.1% EBITDA Once-off costs Reported Operational Organic R4 538 million EBITDA EBITDA EBITDA (  18.5%) (  31.1%) (  13.2%) Q1 Q2 Q3 Q4 YTD South Africa EBITDA margin^ (%) 535 53 318 36.9% 535 33.9% 1 324 51 981 32.9% 10 499 2 679 30.4% 29.8% 3 201 48 780 1 008 40 751 (277) 277 Reported MTN Professional Adjusted Q1 Q2 Q3 Q4 YTD Hyperinflation Project Operational South Nigerian FX 2016CR 2016 Zakhele fees EBITDA Winback and Tower co EBITDA Sudan fine Futhi impairment Impact * Constant currency (‘organic’) information ^ Excludes MTN Zakhele Futhi impact Results presentation for the year ended 31 December 2016 7

Group financial results – HEPS and dividend 77 cents** Despite challenges MTN declared a Headline loss per share (110%** decline) final dividend of 450 40 751  Significantly impacted by the Nigerian regulatory fine of 500 cents cents per share for the period 1 113 73 73 329 1 113 124 124 329 39 39 37 37 88 88 500 500 (77) (77) Towerco Fx Professional Adjusted MTN Reported Nigerian Hyperinflation Digital Group Zakhele losses losses fees 2016 2016 fine losses Futhi Impact **Reported - includes hyperinflation and the relating goodwill impairment, tower profits, the Nigerian regulatory fine and the MTN Zakhele Futhi impact Results presentation for the year ended 31 December 2016 8

Building a sustainable business - managing the balance sheet Funding successfully secured Net debt / EBITDA 1.01  Successfully refinanced maturing facilities (excluding the Nigerian regulatory fine)  Secured additional longer-term  Dividend payment financing facilities  Increase in cash capital expenditure and licences • US $1 billion international debt  Investments made mainly in Amadeus, TravelStart and AIH capital calls capital market issuance  Diversified sources of funding and improved debt maturity profile R6 308 million (€ 425 million)  Repatriated from Iran 2016^^  Paid by MTN Irancell - €468 million in 2017^^^  Total - €893million Monies repatriated from Irancell: ^^Loan – advanced from licence fee in 2005 ^^^Operational dividends of the last five years Results presentation for the year ended 31 December 2016 9

Building a sustainable business - improved revenue growth trends in H2 16 Nigeria’s QoQ revenue improvement Naira (million) 16% 210 248  0,4% to 194 992 194 354 194 079 4% to R146 894 million -1% -3% -6% Revenue Q1 Q2 Q3 Q4 Jan-17 (Organic growth of 2.9%) YoY growth %  YoY quarterly revenue growth improvement South Africa positive QoQ service revenue growth trend • Regained lost revenue market share in Nigeria ZAR (million) • Significant improvement in network quality and capacity in South Africa 9 716 8 754  Corrective measures to ensure delivery of the company strategy 6% 8 093 8 062  Accelerated network investment of R34 920 million across our markets, 4% driving the increase in data revenue in 2016, 19.7%* higher 2% 2%  NPS Group – improved from 24% to 35% in December 2016 • -1% • Nigeria - more than doubled in Q4 2016 Q1 Q2 Q3 Q4 Jan-17 South Africa – significantly increased by 8pp to 81% in Q4 16 • YoY growth % *Constant currency (‘organic’) information Note: Results are presented based on operational performance (excluding hyperinflation, Nigeria regulatory fine, Zakhele Futhi impact and tower profits) Results presentation for the year ended 31 December 2016 10

Building a sustainable business – positive revenue trends Iran (49% Joint Venture) revenue QoQ growth Ghana revenue QoQ growth Rial (billion) Cedi (million) 773 703 22% 663 634 21% 20% 19% 19% 9 269 9 146 22% Q1 Q2 Q3 Q4 Jan-17 19% 8 623 YoY growth % 14% 7 909 11% Uganda revenue QoQ growth Ugandan shilling (million) 7% 342 807 316 644 8% Q1 Q2 Q3 Q4 Jan-17 313 235 302 790 3% 2% YoY growth % -3% -7% Q1 Q2 Q3 Q4 Jan-17 YoY growth % Results presentation for the year ended 31 December 2016 11

Building a sustainable business – strategic review of the business and processes IGNITE Implementing measures to deliver on strategy Group digital services  Wide-ranging strategic review of operations and processes  Transformation of MTN’s operating model • IGNITE  Accelerating growth of new revenue streams Enterprise business unit • Group Digital Services • Enterprise Business Unit • Tower Investments  Infusion of senior management Tower Investments  Board refresh Infusion of senior management and board refresh Results presentation for the year ended 31 December 2016 12