MTN Group Limited Final audited results for the year ended 31 December 2006
Agenda Strategic & operational overview Phuthuma Nhleko Group President and CEO Financial overview Rob Nisbet Group Finance Director Looking ahead … Phuthuma Nhleko 2
Strategic and operational overview Phuthuma Nhleko Group President and CEO
MTN Vision To be the leader in telecommunications in emerging markets
Key considerations for the period… • Investcom acquisition – Integration almost complete – Synergy benefits included in 2007 budgets, including rebranding – Asset base increased • Significant interest in emerging markets, operations more competitive • Increased regulatory intervention • Margin management key • Changes in ownership levels – Increased shareholding in Côte d’Ivoire, Uganda, Botswana and Nigeria Significantly different Group going forward 5
MTN an emerging market leader… National Player African Player Emerging Market Player 1993 - 1997 1998 - 2005 2006 Operations 1 11 21 Population 41m 274m 501m 2006 Revenue Subscriber #’s 1998 - 2005 1993 - 1997 Successfully delivering on our vision 6
Group highlights for the 12 months ending 31 December 2006 Group Revenue 49% higher EBITDA up 53% to subscribers up to ZAR 51,6 billion ZAR 22,4 billion against 12 months against 12 months 73% to 31 December 2005* to 31 December 2005* to 40.1 million PAT increased to Adjusted headline EBITDA margin EPS increased by ZAR 12,1 billion from increased to 43.4% 73% to 584.7 cents ZAR 6,7 billion against from 42.4% against 9 months to against 9 months 12 months 31 December 2005 to 31 December 2005 to 31 December 2005* Dividend of 90 cents per share declared * Unaudited 7
Subscriber growth... MTN Group Split of subscribers by region Comparative annual growth 40.1 40 No. of operations: 21 +110% 12% 35 30 Population (m): 501 +83% 23.2 25 Subscribers (m): 40.1 +73% 49% 20 27% 15 10 73% 39% 5 0 Dec-05 Dec-06 SEA WECA MENA Subscriber growth increasingly diversified 8
Relative ARPU performance USD per month South African ARPU: ZAR164 (Dec 05 – ZAR167) $35 $23 $21 $20 $20 $20 $19 $18 $18 $18 $17 $17 $17 $17 $16 $15 $14 $12 $12 $10 $9 Rwanda Zambia Iran Afghanistan South Africa Uganda Swaziland Botswana Benin G. Conakry Liberia Sudan Syria Ghana Nigeria Cameroon Congo B. G. Bissau Cyprus Yemen Côte d'Ivoire 9
Relative EBITDA margins 80% Group Region Key operations 57% 54% 53% 57% 60% 53% 52% 43% 42% 35% 34% 35% 34% 40% 30% 19% 20% 0% 0% MTN South Africa Nigeria Ghana Sudan Iran SEA WECA MENA -20% -40% -60% -55% 'Dec-06 'Dec-05 -80% -75% New Operations: Iran – 21 October * 12-month comparison Group EBITDA margin expansion 10
Risk management • Comprehensive risk management structures aligned to King II and best practice Governance structures • Ultimate board responsibility with dedicated group executive risk officer • Senior executive and board involvement on the ground • Not politically aligned • Commitment to local and regional regulatory forums Political / regulatory • Constructive engagement regimes • Extensive pre-investment research – deep understanding • Strong corporate responsibility –social investment, governance, tax etc • Positive contribution through broadbased infrastructure roll-out Committed and involved 11
Risk management (cont.) • Expanded regions/ markets limit concentration exposure to any single region • Co-investment with local partners Emerging market • Experienced and committed local management teams limit execution risk risks • Detailed market analysis and robust business plan preparation contributes to informed risk decisions • Local currency funding maximised to limit revenue / liability mismatch • Operations hedge foreign currency obligations where possible FX risk • Translation risk not hedged - income statement impact • Diversification of assets and earnings reduces risk profile 12
South & East Africa (SEA) region Deeper mobile penetration over last 12 months Dec 06 Growth % Countries in region 6 + 0% Population (m) 98.9m + 2% Mobile penetration 40% +6% pts Subscriber numbers (m) South Africa 12,483 + 22% Swaziland 268 + 26% Botswana 600 + 25% Zambia 187 + 93% Uganda 1,595 + 63% Rwanda 384 + 40% Total SEA 15,517 + 26% 39% % to Group 26% increase in subscribers 13
SEA region – Overview Botswana, South Africa, Swaziland, Zambia, Uganda, Rwanda Population : 98.9m 16m Subs Revenue ZAR27bn EBITDA ZAR9bn CAPEX ZAR3bn PAT ZAR5bn (20%Group) (39% Group) (52% Group) (42% Group) (31% Group) (42% Group) Revenue EBITDA Subscribers 178 195 103 1164 615 384 1595 37 187 128 77 268 343 174 600 24578 8340 12483 South Africa Botswana Swaziland Zambia Uganda Rwanda • No contribution from Investcom, inclusion of Uganda and Rwanda, previously in MENA • Appointment of key roles in progress • South Africa key driver of growth and profitability • Strong performance from Uganda, subscribers up 63% • Zambia negatively affected by slow start to roll-out South & East Africa EBITDA margin 35.2% 14
SEA region South Africa – Financial and operational highlights Launched Jun 1994 Market share 36% Population 47m Market sizing 48m (2011) Penetration 68% Shareholding 100% Dec 2006 Dec 2005* • Market share improvements ~ 36% up 1% Revenue ZAR25bn ZAR20bn • Highly competitive market EBITDA margin 34% 34% • Expanded distribution channels Capex/ Revenue 9% 13% • Customer centricity through improved *Unaudited 12-month period service initiatives Subscribers/ARPU 12,483 million 10,235 • Impact of regulatory changes still unclear 206 203 8,001 6,270 164 4,723 184 • Margins still healthy due to effective cost 169 management • Continued focus on data revenue growth Mar-03 Mar-04 Mar-05 Dec-05 Dec-06 MTN Subscribers ('000) ARPU - Blended (ZAR) MTN well positioned for change 15
SEA region South Africa – Financial and operational highlights (cont.) ARPU ZAR per month • Increased prepaid ARPU’s due to lower denomination vouchers 596 576 541 • Prepaid pricing segmentation 487 • Lower end packages boost postpaid subscribers but negatively affect ARPU 203 184 169 164 – MyChoice TopUp: 582k from 281k 104 94 97 93 – MyCall 100: 806k from 761k Mar-04 Mar-05 Dec-05 Dec-06 Postpaid Prepaid Blended • MOU decline slowing due to larger subscriber base Avg. MOU 155 140 129 124 per sub ARPU pressure 16
SEA region South Africa – Data highlights Data revenue • SMS approx 79% of total data revenue ZAR million • 3G roll-out on track 1,938 – Expanded to 793 from 431 at June 2006 – Approx 20% subscribers under coverage 1159 1 082 905 – Approx 280k users at December 2006 403 670 502 – Good HSDPA uptake 384 779 679 403 286 • Mobile money transfer system showing Mar-04 Mar-05 Dec-05 Dec-06 good over past six month – 203% increase in registered users First Half Second Half As % of 5,9% MTN SA 5,0% 8,2% 8.0% • Data tariffs reduced to improve competitive revenue* position and stimulate traffic * Includes data revenue from subscriptions from Dec 05 Competitive tariffs 17
SEA region South Africa – Regulatory changes • Electronic Communications Act (ECA) Promulgated on 19 July 2006 – Licence conversion process still pending – Existing rights and obligations “protected” - new terms still unclear • Interconnect Ongoing dialogue – COA/CAM submitted to ICASA in March 2007, awaiting approval – Market definitions as prescribed in ECA now proposed • Re alignment of ICT BEE charter in process New DTI codes announced in December 2006 • Other – Court rules Cell C CST roll-out irregular – interconnect settlement pending – MNP operational from 10 Nov 2006 – limited impact, 40k subscribers to end Feb 2007 – RICA, MTN ready but final implementation still outstanding Constructive engagement 18
West & Central Africa (WECA) region Footprint opportunities significantly increased Dec 06 Growth % Countries in region 9 + 125 Population (m) 224m + 25% Mobile penetration 19% +6% pts Subscriber numbers (m) Nigeria 12,281 + 47% Ghana* 2,585 Acquired Cameroon 1,783 + 43% Côte d’Ivoire 1,625 + 50% Benin* 476 Acquired Congo B. 280 + 33% G. Conakry* 276 New Liberia* 218 Acquired G. Bissau* 98 Acquired Total WECA 19,622 + 80% % to Group + 49% G. Conakry: Launch 18 April * Acquired as part of Investcom LLC acquisition 80% increase in subscribers 19
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