MTN Group Limited Results for the year ended 31 December 2013 - PowerPoint PPT Presentation

MTN Group Limited Results for the year ended 31 December 2013

Agenda 01 Strategic and operational review Sifiso Dabengwa Group President and CEO 02 Group financial review Brett Goschen Group CFO 03 Looking ahead Sifiso Dabengwa Group President and CEO

Strategic and operational review Say goodbye to the briefcase and say welcome to the tablet. Welcome to the Bold New Digital World.

Our strategy pillars Supporting the delivery of a Bold, New Digital World CREATING AND MANAGING STAKEHOLDER VALUE • Corporate governance, values and ethics • Great place to work • Sustainable shareholder returns DRIVING SUSTAINABLE CREATING A DISTINCT GROWTH CUSTOMER EXPERIENCE • Digital adjacent and enterprise • Brand leadership businesses • Exceeding customer expectations • Data and voice evolution • Consistent customer experience • M&A and strategic partnerships across all touch points • Network quality and coverage INNOVATION AND BEST TRANSFORMING OUR PRACTICE OPERATING MODEL • Operating under principle of • Asset and resource optimisation innovation in everything we do • Centralised procurement and SCM • Sharing best practice • Shared services • Network managed services 4

Group highlights Satisfactory performance across the group 9,8% 12,0% 41,4% to 207,8 million to R136,5 billion to R20,7 billion Group subscribers *Revenue Data revenue 13,0% 27,3% 25,6% up to R58,8 billion to 1,386 cents to 1,035 cents ** EBITDA HEPS Total dividend * On a constant currency basis Revenue increased 3,1% ** On a constant currency basis EBITDA increased 1,6%. EBITDA excludes tower profits 5

2013 Operational highlights Satisfactory performance despite some challenges Revenue growth − Good local currency revenue growth across most operations Other − Surpassed 200 million customers on our network 2% SMS Subscriber growth − Challenging growth in SA given slow response 4% to aggressive competition Interconnect Handsets 11% − Iran impacted by weaker economic environment 4% − Voice traffic up 19,0% Voice Data 15% − Revenue up 12,3%, US$ APPM down 14,9% − Promotions driving market activity − Total data traffic increased 78,7% to 54,548TB Data and − Increased smartphone penetration with 34,8m smartphones related services on our network − Slower than expected growth in Mobile Money − Driving data growth; devices and network capacity − Group capex R30,2bn, ahead of guidance Network quality of R27,2bn and capacity − 5,161 2G and 4,413 3G sites rolled out Outgoing voice − Global transaction processing hub in SA Improved cost 64% − Group headcount reduction of 5,4% management − Managed network services in Nigeria Revenue Contribution − Passive infrastructure disposal in Cameroon and Ivory Coast 6

South Africa Performance improvements in second half Launched Jun 1994 Market share 34,6% Population 51,7m Market size 2016 : 96m Penetration 135% Shareholding 100% Subscribers Disappointing subscriber growth ‘000 − Net adds 699k in H2 from 420k disconnections in H1 Prepaid 22,033 25,421 25,700 − Ineffective response to aggressive competition in H1 Postpaid − Regained market relevance in pre-paid offering in H2 − Good post paid performance 20,695 20,923 − 6,4% growth in data subscribers to 14,3m 18,199 Revenue growth impacted by lower tariffs 5,005 4,498 − Revenue down 6,1% incl handset revenue adjustment 3,834 Dec-11 Dec-12 Dec-13 − Effective tariff down 4,5% − Significant reduction in free minutes Revenue* − Interconnect revenue 24,9% lower due to MTR cut ZAR (million) H2 39,664 42,285 39,707 − Data revenue up 20,2%, now contributes 22,2% H1 − 9,7m 3G devices on network incl 7,3m smartphones 21,855 19,561 21,042 20,146 20,430 18,622 * Prior year numbers adjusted to include MTN Business Solutions Dec-11 Dec-12 Dec-13 7

South Africa Focus on cost containment Expenses* Operating costs down 5,6% ZAR (million) − Improved management of costs 26,000 27,852 26,283 H2 − Reduction in commissions and distribution costs H1 − Review of staffing requirements 14,445 Reduction in interconnect impacted margin 13,785 12,641 − Higher off-net traffic despite lower interconnect 13,407 12,215 13,642 − Handset costs up 14,4%, driven by higher value smartphones Dec-11 Dec-12 Dec-13 Continued investment in 3G and LTE EBITDA 34,4 34,1 33,8 margin % − 1,133 new 3G sites on-air Capex* − 761 LTE sites in 2013 up 171% ZAR (million) − 76% 3G population coverage H2 4 ,189 6,495 5,835 H1 − LTE spectrum availability and allocation remain a challenge 4,515 3,684 2,813 1,980 2,151 1,376 * Prior year numbers adjusted to include MTN Business Solutions Dec-11 Dec-12 Dec-13 8

Nigeria Notable turnaround in tough conditions Launched Aug 2001 Market share 49,4% Population 164,5m Market size 2016: 133,2m Penetration 69% Shareholding 78,8% Subscribers Strong subscriber growth ‘000 − 9,3m net adds despite SIM registration and network suspension in 3 states MTN Subscribers − Improved competitiveness in market offerings − Focus on churn reduction and dormancy management 56,766 Encouraging revenue growth trends 47,441 − Revenue up 5,3% (LC) 41,641 − Effective outgoing tariff down 32,9% (LC) − Interconnect revenue down 23,0% (LC) , lower MTR Dec-11 Dec-12 Dec-13 − MOU up 22,9% to 101mins per subscriber Revenue − Q4 revenue growth of 15,3% from Q4 2012 NGN (million) − Data revenue up 27,2% (LC), contributes 15,1% H2 757,978 753,578 793,614 H1 − 6,5m 3G devices on network incl 216,000 dongles − Off-net price cap due to “market dominance” finding 410,557 384,525 363,686 383,057 389,892 373,453 Dec-11 Dec-12 Dec-13 9

Nigeria Strong focus on network rollout Expenses Costs well contained NGN (million) − Reduction in commissions and marketing expenses 289,908 313 904 312,473 H2 − Site rental and fuel costs key challenge H1 − Network costs up 28,3% (LC) 159,862 153,019 181,033 Improved network quality and capacity 154,042 136,889 − Accelerated network roll-out 131,440 − 1,607 new 3G sites and 2,743 new 2G sites Dec-11 Dec-12 Dec-13 EBITDA − 452 hybrid powered sites rolled out 61,7 58,3 56,3* margin % − 5,038km fibre roll out Capex − Auction of 2.3GHz spectrum announced in Q1 2014 ZAR (million) H2 − Ongoing discussion with Regulator regarding 6,331 13,733 14,298 H1 additional spectrum 7,727 9,301 4,263 6,571 4,432 2,068 * Normalised EBITDA assumes no management fee recognised Dec-11 Dec-12 Dec-13 10

Iran Good result in challenging environment Launched Oct 2006 Market share 46,5% Population 77,8m Market size 2016:101m Penetration 114,3% Shareholding 49% Revenue Muted subscriber growth of 2,2% IRR (billion) − Increased competition and penetration levels − Delay in allocation of new number ranges 33,252 41,980 49,544 H2 H1 − Weaker economic environment 25,599 Solid revenue growth despite challenges 21,855 − Revenue up 18,0% (LC), stable tariff 17,563 − MOU up 5,3% to 80mins per subscriber 20,125 23 945 15,689 − Data revenue (excl sms) up 63,0% (LC) Dec-11 Dec-12 Dec-13 − Data contributes 10,3% of revenue EBITDA 42,5 44,3 42,9 margin % − 10,3m smartphones on network Capex Significant investment in network ZAR (million) − Added 743 2G sites and rolled out 408km of fibre H2 1,168 1,122 1,758 H1 Continued focus on sanctions compliance − No cash repatriated in 2013 − Continued monitoring of sanctions status 1,313 704 755 445 418 413 Dec-11 Dec-12 Dec-13 11

Ghana Solid performance despite competition Launched Nov 1996 Market share 50,2% Population 26,0m Market size 2016 31,8m Penetration 96% Shareholding 97,7% Revenue Good subscriber growth Cedi (million) − Subscribers up 10,2% to 12,9m 1,277 1,552 1,753 H2 − Acquisition campaign, bonus offers and segmentation H1 − High levels of competition and penetration 908 818 Maintained revenue growth trends 677 − Revenue up 13,0% (LC), stable tariff 734 845 600 − MOU down 4,7% to 122mins per subscriber Dec-11 Dec-12 Dec-13 − Data revenue (excl sms) up 80,9% (LC) EBITDA 38,1 37,0 37,5 margin % Good cost containment Capex − EBITDA margin expanded 0,5pp ZAR (million) − Network operating costs up 15,8% (LC) due to H2 851 1,091 1,690 tower lease structure H1 − Controlled marketing and maintenance costs 1,005 Strong investment in network 818 − 110 2G and 175 3G sites added 714 685 − 408km of fibre rolled out 273 137 Dec-11 Dec-12 Dec-13 12

Cameroon Driving value and customer experience Launched Feb 2000 Market share 59,3% Population 21,4m Market size 2016 18,5m Penetration 69% Shareholding 70% Revenue Subscribers increased 19,2% to 8,7m CFA (million) − Market share up to 59,3% − Increased promotional activity and 217,444 236,858 264,764 H2 H1 segmented offerings − Enhanced customer experience, improved net 139,739 120,720 promoter score 112,305 Solid revenue growth despite macro environment 116,138 125,025 105,139 − Revenue up 11,8% (LC) − MOU up 51,1% to 73mins per subscriber Dec-11 Dec-12 Dec-13 EBITDA − Data revenue (excl sms) increased 68,4% (LC) 43,7 45,9 42,7 margin % Operating lease costs from tower sale impacted Capex margin ZAR (million) − EBITDA margin down 3,2 pp H2 326 724 768 H1 − Network costs up 64,6% (LC) 240 Improved network quality 450 − 191 2G sites added − Tower transaction completed 528 274 − No 3G licence, exclusivity expires Dec 2014 234 92 Dec-11 Dec-12 Dec-13 13