Mtn Group Limited · JSE:MTN
Mtn — H1 2014 Earnings Presentation
49 slides from Mtn's earnings presentation, August 2014
Slide 1: MTN Group Limited results presentation for six months ended 30 June 2014
MTN Group Limited Results presentation for the six months ended 30 June 2014 #MTNInterimResults
Slide 2: Agenda
Agenda 01 Strategic & 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
Slide 3: Strategic and operational review
01 Strategic and operational review Say goodbye to the briefcase and say welcome to the tablet. Welcome to the Bold New Digital World.
Slide 4: Group highlights
Group highlights Satisfactory performance across the group 3.5% 10.7% 38.9% to 215.0 million to R72.8 billion to R12.7 billion Group subscribers *Revenue Data revenue 3.5% points 9.0% 20.3% up to 46.3% to 729 cents to 445 cents ** EBITDA margin HEPS Interim dividend * On a organic basis revenue incr
Slide 5: 2014 Operational highlights
2014 Operational highlights − Total minutes on networks at 99.6 billion, 1.1% decline Network traffic − Total data traffic increased 84.8% to 47 PB − 3G devices up 38.5% to 45.6 million Network − 1 716 2G and 2 332 3G sites added − 39 LTE sites added performance − 1 211 km of fibre rolled out − MoMo
Slide 6: South Africa
South Africa
Slide 7: South Africa
South Africa Improved competitiveness in prepaid segment Launched Jun 1994 Market share 31.9% Population 53.0m Market size 2016 : 96m Penetration 149% Shareholding 100% Challenging subscriber growth Subscribers ‘000 − Competitive pre-paid offering launched in 2Q14 25 421 25 700 25 269 − Negative net
Slide 8: South Africa
South Africa Continued focus on cost optimisation Expenses ZAR (million) Expenses down 1.2%* 27 852 26 676 − Good progress on reduction of commissions, distribution and marketing costs 14 445 13 749 − Reduction in use of contractors 12 775 − Increasing electricity costs − Interconnect costs down 11.
Slide 9: Nigeria
Nigeria
Slide 10: Nigeria
Nigeria Digital services gaining traction Launched Aug 2001 Market share 49.5% Population 166.1m Market size 2016: 133m Penetration 71% Shareholding 78.8% Satisfactory subscriber growth Subscribers ‘000 − 1.7 million net adds despite SIM sale ban in Mar14 56 766 58 446 − May and June net adds impact
Slide 11: Nigeria
Nigeria Improved capacity on network Good progress on cost containment Expenses NGN (million) 313 904 312 473 − Continued reduction in dealer commissions and marketing expenses 159 862 − Increased rent and utilities costs 181 033 165 121 Network performance 154 042 165 121 131 440 H2 − Focus on qual
Slide 12: Large opco cluster
Large opco cluster Solid subscriber growth 1.3 million net additions in Iran Subscribers ‘000 Sudan 98 520 8 836 − Impacted by high penetration and increased Syria competition 5 653 Uganda 9 920 Iran Cameroon surpassed 10 million subs 42 697 − Improved churn management and segmentation Ivory Coast 7
Slide 13: Large opco cluster
Large opco cluster Positive revenue growth Organic revenue up 13.4% Organic revenue Sudan contribution 9% − Outgoing revenue negatively impacted by lower tariffs 15 790 ZAR (million) Syria Ghana Increased data contribution 15% 29% − Organic data revenue up 111%, now contributes Uganda 15.8% to large
Slide 14: Large opco cluster
Large opco cluster Good cost containment Organic EBITDA up 12.0% (excluding tower Organic EBITDA Sudan contribution 9% profit) 5 599 ZAR (million) − Margin relatively stable at 36.1% Syria 8% Ghana 32% Solid cost saving initiatives made across Uganda markets 14% − Margin expansion in Uganda, Syria a
Slide 15: Large opco cluster
Large opco cluster Continued investment to ensure network quality and capacity 3G network expansion is a key focus Capex Sudan Distribution 19% − Expanded 3G coverage in Ghana, Ivory Coast and 2 480 ZAR (million) Uganda Syria 2% Ghana − Increased 3G population coverage to 31.5% in Ghana 24% − 33 cit
Slide 16: Small opco cluster
Small opco cluster Satisfactory performance Sound delivery Subscribers ‘000 32 726 − Good subscriber growth in Yemen, Afghanistan, Benin Afghanistan 6 182 and Conakry Yemen 5 268 Organic revenue up 5.7% Zambia 4 010 − Strong growth in Zambia, Afghanistan, Benin Rwanda 3 621 − EBITDA margins up 2.9 p
Slide 17: Accelerating MTNs brand and social impact
Accelerating MTNs brand and social impact We owe our success to our people whose hard work attracts notable global acclaim Some of the recognition MTN received in the first half of 2014 includes − Top 500 Sustainable Global Business – Newsweek − Global Champions List – Citi Group − The only African
Slide 18: Group financial review
02 Group financial review Say goodbye to the briefcase and say welcome to the tablet. Welcome to the Bold New Digital World.
Slide 19: Financial highlights for six months ended
Financial highlights for six months ended Revenue and EBITDA performance boosted by currency Group summary YoY revenue growth 12.1% ZAR (million) Reported Organic ’13 - ’14 ’13 - ’14 − ZAR weakness resulted in a 6.7% positive impact on reported numbers, ave ZAR:USD R10.67 vs R9.18 PY 72 759 Rev +12%
Slide 20: Revenue
Revenue Strong performance from LOC Outgoing revenue up 10.5% Revenue breakdown ZAR (million) 4 339 72 759 − Group subscribers up 6.7% from Jun 2013 to 215.0m +5% +7% − South Africa impacted by aggressive, competitive 1 871 518 1 68 420 environment 1 772 − Nigerian revenue growth impacted by operati
Slide 21: Revenue - data
Revenue - data Significant growth from LOC and SOC Revenue data Data revenue up 38.9% ZAR (million) 18% 16% − Contributes 17.5% of total revenue, 20.7% 13% 14% 12 708 incl sms 11% 11 357 8 006 9 147 4 483 − SMS volumes continue to decline 6 612 4 714 3 942 3 835 4 533 − South Africa and Nigeria cont
Slide 22: Opex
Opex Cost control supports lower opex growth Direct network operating cost up 25.2%, Opex ZAR (million) Reported % share organic up 20.7% ’13 - ’14 of opex +6% − Increased number of sites 39 096 − Higher diesel and electricity 36 789 − Impact of tower deals ** 10 692 Direct network -25% 27% Cost of
Slide 23: EBITDA margin
EBITDA margin Marked improvement in Group margin EBITDA margin up 3.0pp to 46.3% YoY EBITDA margin reconciliation (%) 0.8 46.3 South Africa +2.2pp 1.6 45.5 − Margin at 33.3%, from 34.8% on a comparative basis − Impacted by lower revenue 0.4 0.1 − Continued focus on cost control and headcount reducti
Slide 24: Interest
Interest Currency movements impacting forex Net finance cost Net interest paid ZAR 932.4m ZAR (million) 2014 2013 2012 − Mauritius increase in interest income on higher Net interest paid 932 1 102 148 average cash balances Net forex losses/(gains) 736 (1 014) 1 536 Forex loss ZAR 735.5m Total 1 668
Slide 25: Taxation
Taxation Tax Group effective tax rate of 31.7% ZAR (million) +8% WHT 4.6% -4% − Increased dividend upstream mainly to Mauritius 7 261 6 999 1 042 6 730 Current tax 592 1 586 − Higher balance mainly due to increase cash tax from 486 1 533 increased profits and lower investment allowance due to lower
Slide 26: Headline earnings per share
Headline earnings per share ZAR (cents) 2014 2013 Variance % Basic earnings per share 731 700 4.4 Profit on disposal of non-current assets (14) (33) NM Impairment of PPE and non-current assets 12 2 NM Basic headline earnings per share 729 669 9.0 26
Slide 27: Shareholder returns
Shareholder returns Commitment to shareholder returns Dividends Dividends and share buy-backs ZAR (million) − Interim dividend up 20.3% to 445cps 19 182 17 429 15 015 2 088 930 12 302 9 356 9 362 8 940 8 225 6 577 8 225 5 979 6 880 5 145 2 779 2010 2011 2012 2013 2014 H1 H2 Share buy back 27
Slide 28: Income Statement
Income Statement ZAR (million) 2014 2013 Variance % Revenue 72 759 64 926 12 Other income 303 1 027 -71 EBITDA 33 762 28 993 16 Depreciation and amortisation 10 886 9 003 -21 Profit from operations 22 876 19 990 14 Net finance cost 1 668 88 NM Share of results from joint ventures and associates 1 69
Slide 29: Statement of financial position
Statement of financial position ZAR (million) Jun 2014 Dec 2013 Property, plant and equipment 88 689 92 903 Intangible assets and goodwill 33 785 37 751 Other non-current assets 24 692 22 429 Current assets 75 356 75 292 Non-current assets held for sale 137 1 281 Total assets 222 659 229 656 Total e
Slide 30: Statement of cash flows
Statement of cash flows ZAR (million) 2014 2013 Variance % Cash generated by operations 30 078 25 633 17 Dividends paid to owners of MTN Group Limited (12 284) (9 362) -31 Dividends paid to non-controlling interests (2 644) (1 852) -43 Dividends received from joint ventures and 349 255 37 associates
Slide 31: Looking ahead
03 Looking ahead Say goodbye to the briefcase and say welcome to the tablet. Welcome to the Bold New Digital World.
Slide 32: Looking ahead
Looking ahead Prospects remain positive 01 Maintain absolute dividend growth Continue to focus on improving capital structure Continue to seek value accretive opportunities 02 Maintain market competitiveness Improve network quality and capacity Value driven and segmented products Focus on improving
Slide 33: Subscribers guidance 2014
Subscribers Guidance 2014 Dec 2013 Jun 2014 South Africa 2 000 1 500 Nigeria 5 000 5 000 Large opco cluster 6 750 8 050 Iran 2 500 2 500 Ghana 800 900 Cameroon 500 2 000 Ivory Coast 750 1 000 Sudan 1 250 400 Syria (50) (250) Uganda 1 000 1 500 Small opco cluster 3 000 2 700 Total 16 750 17 250 33
Slide 34: Capex
Capex Authorised ZAR (million) Jun 2014 Jun 2013 2014 South Africa 2 000 2 151 6 290 Nigeria 3 189 6 571 10 959 Large opco cluster 2 480 2 741 4 443 Ghana 597 685 1 535 Cameroon 373 528 697 Ivory Coast 584 546 662 Uganda 407 253 585 Syria 38 295 385 Sudan 481 434 579 Small opco cluster 1 408 1 217 4
Slide 35: Thank you
everywhere you go
Slide 36: Appendix
Appendix Say goodbye to the briefcase and say welcome to the tablet. Welcome to the Bold New Digital World.
Slide 37: Iran
Iran Satisfactory performance Launched Oct 2006 Market share 46.3% Population 78.4m Market size 2016:101m Penetration 118% Shareholding 49% Subscriber growth impacted by high Revenue IRR (billion) penetration 49 544 − 1.3 million net additions 41 980 − Increased competition 25 599 27 260 21 855 Reve
Slide 38: Ghana
Ghana Pleasing results in a slowing economy Launched Nov 1996 Market share 50.3% Population 26.4m Market size 2016 31.8m Penetration 101% Shareholding 97.7% Subscriber growth impacted by competition Revenue Cedi (million) − 509k net adds 1 753 1 552 − Continued roll- out of acquisition promo’s 908 −
Slide 39: Cameroon
Cameroon Surpassed 10 million subscribers Launched Feb 2000 Market share 62.5% Population 21.8m Market size 2016 18.5m Penetration 77% Shareholding 70% Gained market share Revenue CFA (million) − 1.5 million net adds 264 764 236 858 − Improved churn management and segmentation − Improved NPS 120 720
Slide 40: Ivory Coast
Ivory Coast Data services gaining momentum Launched Apr 1996 Market share 39.4% Population 24.0m Market size 2016 20.6m Penetration 82% Shareholding 66.8% Solid subscriber growth Revenue CFA (million) 279 520 − 664 000 net adds 256 386 − Attractive acquisition promotions 141 714 − Highest NPS score
Slide 41: Uganda
Uganda Continued success in Mobile Money Launched Oct 1998 Market share 56.8% Population 37.8m Market size 2016 20.3m Penetration 46% Shareholding 96% Strong subscriber growth Revenue UGX (million) − 1.1 million net additions 1 186 143 1 007 386 − Attractive acquisition promo’s and BTL offers − Impr
Slide 42: Syria
Syria Good operational performance despite a challenging environment Launched Jun 2002 Market share 43.9% Population 16.5m Market size 2016 14.8m Penetration 78% Shareholding 75% Weak subscriber growth Revenue SYP (million) 44 860 43 113 − Subscriber numbers down 3.0% − Focus on network availability
Slide 43: Sudan
Sudan Weak economic environment Launched Sep 2005 Market share 33.0% Population 35.8m Market size 2016 30.3m Penetration 75% Shareholding 85% Marginal subscriber growth Revenue SDG (million) 1 233 − 111 000 net additions − Impacted by SIM registration 929 644 692 − Weak economic environment 515 Reve
Slide 44: Net debt
Net debt Cash Interest Net interest Net Net and cash bearing Intercompany bearing debt/(cash) debt/(cash) ZAR (million) equivalents liabilities eliminations liabilities Jun 14 Dec 13 South Africa 2 125 18 086 (18 086) - (2 125) (2 562) Nigeria 11 321 25 249 - 25 249 13 928 11 121 Large opco cluster
Slide 45: Revenue – data
Revenue – data South Africa Nigeria ZAR (million) +14% ZAR (million) +31% +13% 4 533 4 483 +60% 3 942 3 502 3 472 2 319 2 767 2 122 2 166 2 238 584 1 423 595 505 416 481 127 110 404 452 604 586 349 334 9 5 H1-12 H1-13 H1-14 H1-12 H1-13 H1-14 Internet VAS Blackberry Internet VAS Blackberry MMS BS SA
Slide 46: South Africa revenue adjustments
South Africa Revenue adjustments Revenue ZAR (million) H1-14 H2-13 H1-13 Var % YoY Previously reported 19 157 21 449* 20 146 -5 Change in accounting policy - 314 461 Reported 19 157 21 763 20 607 -7 Handset adjustment - (974) (914) BTS Recovery adjustment - 130 131 Like for like comparison 19 157 20
Slide 47: Share of results of joint ventures and associates after tax
Share of results of joint ventures and associates after tax ZAR (million) H1-14 H1-13 Dec-13 Var %YoY Iran 1 547 1 361 3 115 14 − Reported 1 744 1 361 2 797 28 − Hyperinflation adjustment (197) - 318 100 Swaziland 39 30 62 30 Botswana 107 102 237 5 Others (2) 165 17 NM Equity Income 1 691 1 658 3 43
Slide 48: FX trends: closing rate
FX trends Closing rate USD: Local currency H1-14 H2-13 H1-13 Var %YoY ZAR 10.63 10.52 9.87 8 Naira 163.00 160.12 162.71 - Rial 25 609 24 777 24 770 -3 Cedi 3.33 2.31 2.03 -64 Cameroon XAF 479.12 475.68 503.88 5 Ivory Coast CFA 479.12 475.68 503.88 5 Uganda shilling 2 595.00 2 522.00 2 588.00 - Syria
Slide 49: FX trends: average rate
FX trends Average rate USD: Local currency H1-14 H2-13 H1-13 Var %YoY ZAR 10.67 10.11 9.18 16 Naira 162.89 160.59 158.62 -3 Rial 25 609 24 797 24 651 -4 Cedi 2.73 2.14 1.95 -40 Cameroon XAF 478.14 488.16 501.77 5 Ivory Coast CFA 478.11 487.41 501.08 5 Uganda shilling 2 514.59 2 543.46 2 605.54 4 Syr