Mtn Group Limited · JSE:MTN
Mtn — Investor Day (May 2019)
151 slides from Mtn's investor day presentation, May 2019
Slide 1: MTN Group Capital markets day May 2019
MTN Group Capital markets day May 2019
Slide 2: Disclaimer
Disclaimer The information contained in this document has not been verified independently. No representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Opinion
Slide 3: Welcome, objectives and introductions
Welcome, objectives and introductions
Slide 4: Agenda
Agenda Time Presentation* Key speakers 08:30 Welcome Rob Shuter 08:40 Business overview and strategy Rob Shuter & Ralph Mupita 09:55 Growth opportunities Jens Schulte-Bockum 10:40 Break 10:55 Fintech Serigne Dioum 11:25 Digital David Gilarranz 11:55 Technology & sourcing Charles Molapisi & Dirk Karl
Slide 5: MTN at a glance
MTN at a glance
Slide 6: MTN at a glance
MTN at a glance Our vision is to lead the delivery of a bold new digital world Our belief is that everyone deserves the benefits of a modern connected life Service revenue of R125 billion 233 million 35,9% subscribers EBITDA margin 79 million + 22% active data users SEAGHA Data revenue WECA 19k MENA
Slide 7: Our telco subsidiaries – contribution to EBITDA
Our telco subsidiaries – contribution to EBITDA MTN Group 34% 35% 17% 9% 5% MTN MTN SEAGHA WECA MENA South Africa Nigeria MTN MTN MTN Ghana Cameroon Syria MTN MTN MTN Uganda Ivory Coast Yemen MTN MTN MTN Rwanda Benin Afghanistan MTN MTN MTN Zambia Guinea-Conakry Sudan MTN MTN South Sudan Guinea-Biss
Slide 8: A compelling investment case
A compelling investment case Strong Exciting position in the right demographic markets opportunity • High growth MEA region • Fast growing youthful population • In 3 of 4 largest economies • Low data, fintech and digital adoption • Top two positions in all markets • Enterprise and wholesale opportun
Slide 9: Building the Digital Operator
Building the Digital Operator The evolving telco The digital player MTN The Digital Operator Voice Data Enterprise Wholesale Digital Media, messaging & mobile advertising The fintech player Fintech Transfers, Payments, loans, deposits, insurance, marketplace One network One distribution One registra
Slide 10: Incorporating the Digital Operator in BRIGHT
Incorporating the Digital Operator in B R IG HT Best Return s an d Ignite G rowth Hearts Technolog y customer effi ci en cy com m ercial throug h d ata and minds excellence exp erien ce focu s p erform an ce and d ig ital Voice Data Enterprise Digital Wholesale Fintech 10 Notes:
Slide 11: 2019 Q1 progress
2019 Q1 progress 1 Solid operational performance 2 Group double-digit service revenue growth 3 MTN SA and MTN Nigeria achieved service revenue targets 4 Asset realisation programme on track 5 Group board evolution and the establishment of an International Advisory Board 11 Notes:
Slide 12: Key take-aways for the day
Key take-aways for the day 1 A compelling and attractive investment case 2 Uniquely positioned to capture growth in our markets Asset realisation programme to simplify portfolio and 3 support de-gearing of holdco debt 4 Enhanced risk and regulatory framework in place Strong and experienced managemen
Slide 13: MTN’s position in the industry
MTN’s position in the industry
Slide 14: Many global industry headwinds do not apply to emerging markets
Many global industry headwinds do not apply to emerging markets Global mobile revenue projections Mobile operator capex projections Global EBITDA margin (US$ bn) (US$ bn) (%) Developed Developing Global capex Global monthly data traffic Developed Developing 37% 37% 1 051 1 080 1 094 -0. 9% 36% 35% 3
Slide 15: Emerging markets have lower internet adoption
Emerging markets have lower internet adoption Developing Developed Central and Africa Asia Europe North America South America Service revenue (US$ bn) 52 431 67 184 260 Service rev. CAGR (%) 4.0% 0.2% 1.2% 2.1% 3.5% Smartphone penetration (%) 33% 61% 65% 93% 86% Mobile internet (%) 23% 40% 49% 69% 7
Slide 16: There are 3 categories of megatrends operators need to address
There are 3 categories of megatrends operators need to address Efficiency trends Growth trends Ecosystem innovation trends Connectivity and New interfaces Fixed & mobile convergence media convergence – voice, AR, VR Digital inside for efficiency Time for operator 5G Open source Market consolidation
Slide 17: Building a BRIGHTER, more sustainable MTN
Building a BRIGHTER, more sustainable MTN
Slide 18: How we manage the business
How we manage the business VP: MENA VP: WECA VP: SEAGHA Ismail Jaroudi Karl Toriola Ebenezer Asante Group President & CEO Rob Shuter COO CEO Nigeria CEO South Africa Jens Schulte-Bockum Ferdi Moolman Godfrey Motsa Chief Reg & Average numbers of years combined CFO Chief Human Resources Corporate Affa
Slide 19: A compelling investment case
A compelling investment case Strong Exciting position in the right demographic markets opportunity • High growth MEA region • Fast growing youthful population • In 3 of 4 largest economies • Low data, fintech and digital adoption • Top two positions in all markets • Enterprise and wholesale opportun
Slide 20: Strong position in the right markets
Strong position in the right markets Forecast mobile revenue CAGR (2016-2020) by region (%) 7% 4% 3% 2% 2% 0% -2% Sub-Saharan Latin CIS Asia Pacific MENA Europe North Africa Africa America Source: GSMA intelligence 20 Notes:
Slide 21: We are #1 or #2 across our markets
We are #1 or #2 across our markets #1 player in 14 markets #2 player in 7 markets South Africa Nig eria I ran Uganda Ghana Cam eroon I vory Coas t Market 2/4 1/4 2/3 1/8 1/9 1/4 2/3 position Subscriber market 31% 50% 43% 54% 51% 47% 33% share 21 Numbers at December 2018 Notes:
Slide 22: GDP growth and urbanisation in our regions supports opportunity
GDP growth and urbanisation in our regions supports opportunity Compound annual real GDP1 growth Compound annual urban population growth 2015 - 2025 2015 - 2025 Asia 5,3 Sub-Saharan Africa 4,0 Egypt 4,6 North Africa 2,1 North Africa 3,8 Western Asia (Middle East) 2,1 World 3,5 Asia 2,0 Sub-Saharan A
Slide 23: A compelling investment case
A compelling investment case Strong Exciting position in the right demographic markets opportunity • High growth MEA region • Fast growing youthful population • In 3 of 4 largest economies • Low data, fintech and digital adoption • Top two position in all markets • Enterprise and wholesale opportuni
Slide 24: Fast growing and youthful populations with low data adoption
Fast growing and youthful populations with low data adoption 2018 2021 SSA MENA China US Population (millions) 1 050 514 1 379 325 Population growth1 670m to 717m Population below 24 66% 50% 30% 32% Smartphone adoption2 GDP per capita PPP ($) 3 900 8 000 8 500 60 000 30% to 55% SSA MENA China US Pop
Slide 25: Nascent digital services; underpenetrated mobile financial services
Nascent digital services; underpenetrated mobile financial services 2018 2021 SSA MENA China US TV 36% 95% 95% 96% Active Mobile Money customers 27m to 60m Pay TV 9% 65% 61% 79% Digital subscriptions Netflix/iQiyi 0% 30% 17% 28m to 40m Whatsapp/WeChat/FB 18% 67% 73% 66% SSA MENA China US Unbanked po
Slide 26: We have access to six value pools
We have access to six value pools, creating growth & value potential Voice Data Digital Maturing, large pool Inflection to explosive growth Unique EM opportunity ~-2% Ù ~20% Ù ~50% Ù R240bn R265bn R25bn Fintech Enterprise Wholesale Transformational opportunity SME and converged services Explosive tr
Slide 27: A compelling investment case
A compelling investment case Strong Exciting position in the right demographic markets opportunity • High growth MEA region • Fast growing youthful population • In 3 of 4 largest economies • Low data, fintech and digital adoption • Top two position in all markets • Enterprise and wholesale opportuni
Slide 28: Our financial framework to drive value creation
Our financial framework to drive value creation EBITDA Lower Higher Service revenue margin - capex cash growth growth intensity ratio • Accelerating FCF • Consumer voice • Cost control • Scale advantages • Working capital • Mobile data • Operating leverage efficiencies • Fintech and digital • Digita
Slide 29: Service revenue opportunities - data, digital and fintech
Service revenue opportunities - data, digital and fintech Service revenue by services offered Service revenue by top opcos and regions (Rm) 2018 (Rm) 2018 Wholesale Other MENA 2% 5% SMS 7% 2% Fintech South Africa 6% WECA 29% 16% Digital 3% Service Service revenue revenue Data R125bn Voice R125bn 23%
Slide 30: Driving capital efficiencies while building a world class network
Driving capital efficiencies while building a world class network Capex (Rm) 2018 Capex allocation (%) Capex intensity* Capex* Capex for digital, GlobalConnect and ERP 40 000 50 Other Core capex network 35 000 3% 2% 40 30 000 1 635 35 IT systems 25 000 19% 30 23,8% 23,7% 20 000 25 19,3% 15 000 20 35
Slide 31: A strong balance sheet getting stronger
A strong balance sheet getting stronger Holdco net debt, mix of debt and leverage R6 2 ,0 bn R5 7 ,5 bn 2021 ambitions R5 1 ,7 bn • Reducing holdco net debt USD/EUR • Maintaining holdco leverage 54,4% 51,4% 51,6% within target range • Improving debt mix • Dividend covered by operating cashflow by 20
Slide 32: Asset realisation will support further balance sheet strength
Asset realisation will support further balance sheet strength E-commerce portfolio Tower companies Subsidiaries Telco associates & JVs (carrying value◊ – R5bn) (carrying value◊ – R25bn) SA & Nigeria Irancell Jumia IHS Assets SEAGHA eSwatini MEIH ATC Uganda WECA Mascom IIG ATC Ghana MENA BICS and aYo
Slide 33: Improving returns for shareholders
Improving returns for shareholders Historical performance Target Key drivers of return improvement 22 50 20 Adjusted headline earnings 45 ROE = 18 40 Equity attributable to equity 16 holders of the company 35 • EBIT expansion 14 13,4% 12,7% 30 • Stable depreciation and 12 11,5% 25 amortisation for n
Slide 34: Capital allocation priorities over the medium term
Capital allocation priorities over the medium term 1 Organic growth Improving capex intensity post IFRS 16 implementation 2 Stabilise leverage • Target holdco leverage of 2,0x to 2,5x • Rebalance the holding company debt mix - target rand debt to > 60% of total debt 3 Return cash to shareholders thr
Slide 35: Thank you
Thank you
Slide 36: Growth opportunities
Growth opportunities
Slide 37: Voice
Voice
Slide 38: Voice is a growing business
Voice is a growing business The opportunity and Voice today Our ambition growth drivers Customers: The opportunity: Ultra-rural site roll-out 233 million subscribers R240bn Personal pricing with AI Revenue: R82,2 billion in 2018, growth of 7,3%* Market growth drivers: • People penetration Coverage a
Slide 39: Voice decline in MTN markets is lower than global benchmarks
Voice decline in MTN markets is lower than global benchmarks Total addressable mobile voice opportunity, 2019-20211 Voice opportunity drivers benchmark, 2019 -2021 (R bn) 2019 3 year CAGR 2021 Africa 1320 2% 1386 MTN markets Asia South America Asia 4585 1% 4662 P o pu la t io n North America Europe
Slide 40: Protect & grow voice through customer value management
Protect & grow voice through customer value management From To Mass segments Carpet bombing Gross additions Micro segments Targeted offers Base management K ey CV M a ch i ev emen t s Net in c re m e n tal CVM Academy S c ale up C V M S tan d ard ise d In boun d 4 5 c om m e rc ial revenue 1300+ hou
Slide 41: Data
Data
Slide 42: Data is our core medium-term growth driver
Data is our core medium-term growth driver The opportunity and Data today Our ambition growth drivers Customers: The opportunity: 200 million active data subscribers R265bn 79 million active data users 66% data penetration Revenue: R28,5 billion in 2018, growth of 22%* Market growth drivers: Ubiquit
Slide 43: We will target two key segments to capture the data opportunity
We will target two key segments to capture the data opportunity Value Volume Segments Established Emerging Entry Revenue 50% 30% 20% opportunity % of 20% 40% 40% population • Largely the customers of today • Connecting our customers in to the mobile internet world • Already on data-capable Customer
Slide 44: CHASE connecting the unconnected
CHASE connecting the unconnected SERVICE COVERAGE HANDSETS AFFORDABILITY EDUCATION BUNDLING Ensure Increase Increase Simplify bundling Enhance digital sufficient data affordability and data service and selling of data literacy and coverage access to data- affordability and services to awareness of t
Slide 45: Coverage - sufficient data coverage in rural low-income areas
Coverage - sufficient data coverage in rural low-income areas Population coverage U900 rollout P o p u la t io n c o v e r a g e A d d it io n a l p o p u la t io n c o v e r e d in 2 0 1 8 S it e r o llo u t Pop (m) 58 59 8 483 U900 sites deployed 86% 68% 2G 3G 9 3G population coverage growth 2G 3G
Slide 46: Handsets - innovating low-cost technologies
Handsets - innovating low-cost technologies Driving smartphone sales MTN $20 “smeature” phone Develop $20 smartphone KaiOS Sales at informal telco markets Focused and structured approach Android 3G smartphone World first launch by Sep 2019 Currently in progress in 86 telco markets 45 000 units sold
Slide 47: Affordability - price transformation
Affordability - price transformation Flattening the price curve… R e d u c in g d a t a p r ic e s in o u r m a r k e t s OOB Small Bundle L a r g e Bun d l e …..while ensuring data profitability Avg. Cost of Production* Incremental Cost 2018 reductions • 50% reduction in OOB ERGB • 30% reduction in
Slide 48: Service bundling - improving data usage with enhanced value propositions
Service bundling- improving data usage with enhanced value propositions Aver age us age per s ubs c r i ber Jan-18 4000 13% Jan-19 21% 30% MB/subs 2241 1983 2000 1583 1381 1310 1064 0 South Africa Nigeria Ghana Integrated bundles for Youth bundles CVM initiatives high value customers Nigeria Cameroo
Slide 49: Education - key focus for 2019
Education - key focus for 2019 Achieved in 2018 2019 step-change initiatives Electronic #MTNBrighterLives voucher distribution Right-SIM- Free data environment MISTT right-settings (EVD) platform 8 training modules The internet WhatsApp Youtube Google $19.00 Facebook Wikipedia Cost Safety 49 Notes:
Slide 50: Enterprise
Enterprise
Slide 51: Grow market share in high growth segment
Grow market share in high growth segment The opportunity and Enterprise today Our ambition growth drivers Revenue: The opportunity: Preferred connectivity solution R13,4 billion in 2018, growth of 8,4%* partner for enterprise within the R245bn MTN footprint Streamlining: Accelerate growth through se
Slide 52: Enterprise opportunity is highly concentrated in a few markets
Enterprise opportunity is highly concentrated in a few markets Top 6 enterprise revenue by market, 2018 Top 5 market enterprise revenue by product, 2018 (R m) (R bn) (excluding MTN SA) 0,7 4 152 3 766 691 526 477 329 4,9 Sou th Niger ia Ivor y C oast Camero on Gha na Ug and a Mobile voice and data I
Slide 53: Ensuring the right product portfolio for each segment
Ensuring the right product portfolio for each segment 2 0 1 8 S e g m e n t r e v e n u e m ix SME Large enterprise 2% 10% 8% 35% 55% 90% Mobility Fixed Connectivity UC/ IoT/ Cloud Mobility Fixed Connectivity UC/ IoT/ Cloud Technology enablers Automated Customer Billing & revenue CRM Order managemen
Slide 54: Enterprise business priorities
Enterprise business priorities Small and medium Understand and address the SME opportunity via sub-segmentation enterprise Large enterprise Elevate multi-national client (MNC) accounts and build-up MNC organisation Partnerships Use strategic alliances to accelerate growth and improve channel deliver
Slide 55: Wholesale
Wholesale
Slide 56: Build scale Pan-African infrastructure group
Build scale Pan-African infrastructure group The opportunity and Wholesale today Our ambition growth drivers Revenue: The opportunity: Unlock revenue and savings in opcos R2,8 billion revenue, growth at 63,7%* Connectivity: Delivered 120G of connectivity R55bn Build leading connectivity platform in
Slide 57: Solid performance of MTN GlobalConnect in 2018
Solid performance of MTN GlobalConnect in 2018 Revenue EBITDA Capex Cashflow Target achieved Ahead of budget 500 Gbps dry fibre finalized Self-funded since start up with Liquid Telecom Fuelled by external sales Growth ahead of revenue Effective working capital Roaming signalling & VAS management Eff
Slide 58: Develop the most complete backbone in Africa – traffic growth
Develop the most complete backbone in Africa – traffic growth Building 3 Messaging Buying Co-locating ACE 2 Subsea Cables System Utilisation WACS < 50% ACE AAE-1 > 50% & < 75% EIG 2 2 2 2 EIG AAE-1 SMW5 > 75% 2 TEAMS WACS 2 EASSy 2 TEAMS New projects Global IP MPLS PoPs EASSy Landing Stations Mobile
Slide 59: Leverage scale and opportunities with Y’ello connect mobile hubs
Leverage scale and opportunities with Y’ello connect mobile hubs Voice Messaging Roaming From fully fragmented approach… …to centralised management of routing, quality control Verticalising key domains in platforms Opco Increasing revenues & quality while reducing Opco Opco Opco costs Opco Opco New
Slide 60: Opco mobile national wholesale opportunities
Opco mobile national wholesale opportunities South Africa Iran • Telkom roaming deal • Spectrum lease deal with RighTel, the third mobile • CellC roaming deal operator 60 Notes:
Slide 61: Thank you
Thank you
Slide 62: Fintech opportunity
Fintech opportunity
Slide 63: Our fintech business is a significant driver of value
Our fintech business is a significant driver of value The opportunity and Fintech today Our ambition growth drivers Customers: The opportunity: 27m active users in 14 operations 60 million active MoMo users Revenue: R7,8 billion in 2018, growth of 46,8%* ~R90bn #1 fintech in Africa Usage: Live 18 co
Slide 64: Our fintech business is already at scale
Our fintech business is already at scale… Live 27 million active R 1 trillion transactions R 7,8 billion revenue in 14 markets monthly users in 2018 64 Notes:
Slide 65: Evolving into fintech platform enabling the entire ecosystem
…and is evolving into fintech platform enabling the entire ecosystem 1 Sc al e M oM o b as i c s 2 Dev el op ec os y s t em 3 Fi nt ec h pl at f or m API OTT • Further scale P2P transfers • Enable payment by adding • Open the MTN fintech ecosystem - customer acquisition merchants & enterprises (MoMo
Slide 66: Accelerating MoMo basics by leveraging our assets
Accelerating MoMo basics by leveraging our assets Fintech today (2018) Our ambition Consumers Drive user 27 m 60 m Active users Active users adoption Build One distribution network distribution 378 k Agents for GSM and fintech network Geographic 14 18 Active markets Active markets expansion Agents D
Slide 67: We still have further opportunity to accelerate
We still have further opportunity to accelerate Fi n tech s u bs cri ber p en etrati on of m obi le s u bs cri bers s i n ce fi n tech lau n ch 1 M-Pesa % Safaricom M-Pesa benchmark MoMo 100% Customer penetration (fintech subs/GSM subs) 90% 80% Significant potential to 70% accelerate fintech adoptio
Slide 68: MoMo will launch in four of our markets this year
In addition, MoMo will launch in four of our markets this year 2023 market fee Opco revenue potential1 Nig eria R1 5 ,1 bn • Launch pending regulation South Africa R1 2 ,4 bn • Launch Q2 2019 Sudan R7 ,7 bn • Launch pending regulation A fg han i s tan R1 ,0 bn • Launch Q3 2019 Notes: 1Total 2023 add
Slide 69: Enable payments by adding merchants and enterprises
Enable payments by adding merchants and enterprises Fintech today (2018) Our ambition Consumers Digitise the African MoMoPay 102 k Active users payments space Merchants Capture the Corporate Leverage GSM business to enterprise 10 k accounts scale enterprise segment Digitise R54 m Transaction Digitis
Slide 70: Participating in verticals is key to becoming an end-to-end platform
Participating in verticals is key to becoming an end-to-end platform Fintech today (2018) Our ambition Stimulate fintech ecosystem Consumers MoMoAPI Live in Uganda by opening key assets across opcos FSPs Merchants • Empower merchant with MoMo- Pilot planning in Ghana ecommerce and access Market • Sc
Slide 71: Evolving from a payment enabler to a financial services market place
Evolving from a payment enabler to a financial services market place ile Mob ce Op ran pa en lo Insu ym op en ts e E-c ket pl mi le nc Ma Re Mobi Data tta om r MTN and 3rd party products me ce will be sold via MoMo app rce a Channel Payment M oM o API P ortal ts Mer ne fint chan Onli Pay 2B2C Ad ura
Slide 72: Evolving into a platform allows us to capture the opportunity
Evolving into a platform allows us to capture the opportunity 1 2 3 Sc al e M oM o b as i c s Dev el op ec os y s t em Fi nt ec h pl at f or m Ad d ressable m ark et (Z AR) P2P transfers 1,4 bn MoMoMarket 28,7 bn Payments 11,5 bn Cash out 14,5 bn Banktech 22,1 bn Remittances 4,3 bn Airtime 7,2 bn In
Slide 73: As well as fundamentally impact our core business
As well as fundamentally impact our core business Fintech today (2018) Core business impact 5% to 30% contribution to opco Secure revenue growth Diversify revenue revenues 20% of airtime sold through Mobile • Reducing cost of sales Control GSM cost of sales • Gross margin increase Money 39% (exclude
Slide 74: Fintech is a significant driver of value
Fintech is a significant driver of value Fintech companies by valuation1,2,3,4 R bn 1803 Similar business Good comparable Lower multiple likely 1 803 1 739 1739 model as MTN fintech given region & driven by AliPay end-state business model strategic partnership investment at a discount Comparable com
Slide 75: Thank you
Thank you
Slide 76: Digital
Digital
Slide 77: Digital drives new revenues and data adoption
Digital drives new revenues and data adoption The opportunity and Digital today Our ambition growth drivers Revenue: The opportunity: 40 million active subscriptions R3,9 billion in 2018, growth impacted by VAS optimisation R25bn Build own services & Market growth drivers: customise for our markets
Slide 78: Digital life for advanced market user
Digital life for advanced market user S h a r e o f t im e s p e n t Other 10% Other 20% Gaming Gaming Browsing 20% 23% 5% Browsing 8% Sm Sm aratrpth pohn oeneQ2 30210616 SSmmaarrtp tphhoonneeQ2201 29019 Media consumption 22% Social Media consumption networking 9% Social 20% Instant networking Insta
Slide 79: Building our own OTT services
Building a digital ecosystem to capture the R25bn opportunity Media Messaging Mobile advertising Building our own OTT services • Over The Top Services • Over The Top Service • MTN’s Mobile Customer Base • Locally relevant content • Design to meet local needs • Expanding into OTT Services users • Mas
Slide 80: Media services focused on local content
Media services focused on local content Offering a best-in-class digital experience Music streaming service Highly curated locally relevant content Targeted value propositions Unique features to MTN GSM customers Made brighter by MTN 80 Notes:
Slide 81: Media services
Media services [music timer w/data [locally relevant highly [sachet pricing offering bundle for MTN mobile curated content] mass market value] customers] 81 Notes:
Slide 82: Instant messaging app is built for our markets
Instant messaging app is built for our markets Advanced communications app Localised for SSA & MENA consumer needs Under an independent “OTT brand” Unique features for MTN GSM customers 82 Notes:
Slide 83: Messaging services
Messaging services Contact 1 Contact 2 Contact 3 Contact 4 Contact 5 Contact 6 Request money Contact 7 MoMo Send money [customer-inspired [SMS support expanding [advanced messaging features including local community beyond features as well as MoMo language support] smartphone users] integration] 83
Slide 84: Advanced messaging evolution to Africa’s super app
Advanced messaging evolution to Africa’s super app Android Responsive iOS WEB Business Channels eCommerce Content Advertisement Data & SMS Messenger MoMo 2020 2021 2019 84 Notes:
Slide 85: The digital market evolution supports our digital strategy
The digital market evolution supports our digital strategy The world of messaging 2018 2021 Africa mobile broadband connections1 560m to 841m Smartphone adoption2 30% to 55% Average data users 2 7 to 14 WhatsApp Facebook Messenger Line days connected Facebook Viber We Chat Kakoo Talk Note: 1 GSMA In
Slide 86: Thank you
Thank you
Slide 87: Technology and Sourcing
Technology and Sourcing
Slide 88: Technology leadership - our 2018 achievements
Technology leadership - our 2018 achievements Best experience Lower drop call ratio #1 & #2 network NPS # 1 Network NPS leadership 95% of 4G mobile data sessions 0,31% dropped call rates in 9 OPCOS >3Mbps 99,99% recharge success 0,5 0,32 0,3 0,2 Uganda Nigeria South Iran Africa South Africa Nigeria
Slide 89: Lower capex despite exponential growth in traffic
Lower capex despite exponential growth in traffic Total capex (R bn)/ Total data traffic (PB) 3 800 36 3 600 R35 bn 34 3 400 32 3 200 R31 bn 30 3 000 R28 bn 2 800 R26 bn 2 600 +-70% +70% 2 200 +70% 986 PB Total capex (R bn) 4% 2 000 % 2G data 3 800 580 PB % 3G data 3 600 6% 68% % 4G data 344 PB 3 40
Slide 90: Network growth - more technologies on existing physical sites
Network growth- more technologies on existing physical sites Number of sites '000s Incremental sites from 2016 - 2019 (‘000) 34,1 4G +20 14,1 59,4 3G +20 38,6 52,5 62,9 2G +11 2016 2019 P h y s i ca l s i t e s 54,7 66,8 +12 90 Notes:
Slide 91: Population coverage - enabling data growth with more 3G and 4G coverage
Population coverage - enabling data growth with more 3G and 4G coverage Total population coverage (m) Incremental pop. covered over 5 years (‘000) 314,5 4G +217 247,3 97,7 534,4 461,0 3G +209 325,7 526,2 564,6 574,9 2G +49 2016 2019 2021 91 Notes:
Slide 92: 2019 capex envelope – doing more with less to increase capacity
2019 capex envelope – doing more with less to increase capacity Introduce new & advanced Increase Future-proof Optimise capacity technologies backbone the network New logical sites New U900 sites New 4G sites with 4x4 New active antennas Incremental NLD fibre rollout (#) 1 rollout (#) MIMO (#) rollo
Slide 93: Re-farming - rural coverage
Re-farming - rural coverage U900 Rural rollout Number of sites (m) $1.5m funding partnership 8,4 Expanding service providers 27,8 OPEN RAN partners 19,4 2017 2018 2021 ~Approx. 400 5 000 Innovative business models Efficient increase in 3G coverage revenue share and capex 2018 2020 93 Notes:
Slide 94: Spectrum - re-farming to lower costs
Spectrum - re-farming to lower costs Current spectrum usage 1 t o 3 y e ar s 3 t o 5 y e ar s Benefits of re-farming 900 2G 3G 4G 2G 3G 4G 2G 3G 4G MHz Cost efficiencies Increase capacity, data speeds and performance 1800 2G 4G 2G 4G 2G 4G MHz Improve in-building quality of service Avoid acquisition
Slide 95: Technology evolution - RAN architecture
Technology evolution - RAN architecture BTS site architecture Single RAN architecture Multi-standard RAN (starting 2018 with SA modernisation) 2G 2G 3G 2G 3G 4G 3G 4G 4G Separate 2G, 3G and 4G Single base station unit providing Single multi-purpose platform, RAN infrastructure LTE functionality, rep
Slide 96: OXyGEN Programme 2019 – 2023 - Enabling a digital operator
OXyGEN Programme 2019 – 2023 - Enabling a digital operator XyGEN agile digital enabling En t e r p r i s e a n d s e c o n d t o n o n e Op e r a t i o n s e Xp e r i e n c e Gr o w t h connected Ne t w o r k workplace 96 Notes:
Slide 97: Operations: Integrated and future proof
Integrated and future proof Digital Digital Products API Management Platform (Digital Enablement), FinTech & Services IT BOOST Digital Workplace Omni COP >> CAPEX and OPEX Optimisation Plan Channel Number 1 Enablement Tech Team: Enterprise Value Analytics BSS Highly Skilled, EBU Transformation Diver
Slide 98: Partnership for growth
Partnership for growth Techn ica l So urcing Integrated Leverage network and IT convergence to lower costs Transparent Allows for bundled sourcing at technology or geo/regional level Future proof Allows for long-term and sustainable cost efficiency drive Partner inclusive Allows for partner roadmap
Slide 99: New global sourcing & supply chain strategy: an 18-month journey
New global sourcing & supply chain strategy: an 18-month journey Actions taken to substantially reduce unitary costs and match best market practices Procurement Center-led New sourcing transformation organization programme Category management Analytics & IT Working capital expertise platforms refres
Slide 100: Key achievements - what have we delivered so far
Key achievements- what have we delivered so far Launch of new sourcing programme Working capital Days of inventory3 programme 20% Centrally addressed spend1 60% Total financial savings 35% # Hardware RAN Category mgmt. configurations Expertise Unit price2 33% >900 to 33 NOTE: Values excluding Iran O
Slide 101: Delivering on innovation - SA network modernisation & 5G readiness
Delivering on innovation- SA network modernisation & 5G readiness M T N S A c a p e x i n t e n s it y & s i t e s K e y v o l u m e d e l iv e r a b l e s Full 5G readiness across SA network New (deployment 2 140 of 5G nodes included) 28% sourcing 28% D oin g Refresh of 100% of the network & antenn
Slide 102: Network managed services - doing better with less!
Network managed services- doing better with less! We re-opened contracts in key markets before expiry Outlook – Managed services transformation planned network Achievements optimisation Baseline cost Stricter SLA1 to guarantee Standardized operating Tier 3 business service levels model reduction: ü
Slide 103: Vendor risk management pro-active steering of the vendor portfolio
Vendor risk management pro-active steering of the vendor portfolio R A N & T r a n s m is s io n CORE Group-wide vendor 63% 72% sp e n d b a se Others Chinese Others Chinese Balan ced s p li t of ven d or p rofi le Focus on W es tern ven d ors Others: Western, US, other Asian vendors + + + S pa r e
Slide 104: Thank you
Thank you
Slide 105: MTN South Africa
MTN South Africa
Slide 106: MTN South Africa at a glance - 2018
MTN South Africa at a glance - 2018 Population Inflation GDP growthÙ 58m 4,8% 2,2% 31,2 million +4,2% subscribers Service revenue 13,6 million +12,7% active data users Data revenue 2,4 million R15,7bn active RMS users EBITDA *Numbers at December 2018 excl. IoT ^ Source: Trading Economics - 2019 106
Slide 107: Strong and experienced management team
Strong and experienced management team Consumer Enterprise Wholesale Digital Fintech Mapula Bodibe Wanda Matandela Quintus De Beer Ernst Fonternel Felix Kamenga Chief Executive Officer Godfrey Motsa Transformation & Sales and Distribution Customer Service Finance Strategy Technology Philip Besimiire
Slide 108: Competitor landscape
Competitor landscape Market players Subscriber share (%) Value share (%) Key competitive positioning #1 47,0 49,3 • Market leader • Premium brand • The “Official Challenger” #2 30,5 32,1 • Best intersection of quality and price • #1 NPS • Number 1 Network • Customer champion - value for money #3 15,
Slide 109: Tracking against BRIGHT – Solid progress
Tracking against B R IG HT – Solid progress Focus areas Tracking Service revenue Postpaid growth Leadership #1 NPS Data pricing #1 Network NPS growth Prepaid stability Regulatory Digital services pressures Siyakhula (Billing Improving recovery - Data transformation) EBITDA margin EBU turnaround - Ne
Slide 110: Delivery of turnaround on track - 2018
Delivery of turnaround on track -2018 CBU postpaid successful Building a scalable Strong network turnaround wholesale business R8,7 billion service revenue YoY +1 134 3G sites 16,3% growth in service revenue +133% growth +2 821 4G sites in wholesale revenue 31% growth in data revenue + 90% 4G popula
Slide 111: Prepaid impacted by pricing transformation in the short term
Prepaid impacted by pricing transform ation in the short term Reduction in out of Bundle adoption: bundle data rates: • From 99 cents – R2 to 29 cents – 49 cents • Prepaid in bundle users - up 1 million from a year ago • From out of bundle as default to blocked out of bundle • ~ 4 million CVM 30 day
Slide 112: Enterprise turnaround plan progress
Enterprise turnaround plan progress New experienced Drive sales Further improve Optimise Focus on the leadership performance product portfolio core telco first business per segment team processes Enterprise revenue trend (%) H1 18 F Y 18 Q4 1 8 -9,6% -11,3% -14,0% 112 Notes:
Slide 113: Growth opportunities – 5 out of 6 curves are growing
Growth opportunities – 5 out of 6 curves are growing Data +1,2 million to 13,6 million active data users R12,9 billion data revenue Penetration potential Wholesale Enterprise Network scale – mobile and fixed -11% to R5,3 billion EBU revenue Double-digit revenue growth Under-indexed market share Stro
Slide 114: New growth area - fintech opportunity
New growth area - fintech opportunity # Better than cash Market size Technology • 17m people aged 16+ unbanked • Ericsson converged wallet platform • 3m+ migrant workers using cash (ECW) • 30m+ MTN customer size • Tried and tested across 14 markets Regulatory Optimised efficiencies • Bank led model
Slide 115: Medium-term guidance
Medium-term guidance Service EBITDA 2019 Capex Revenue margins Mid-single-digit Improving R8,9 billion growth EBITDA margins 115 Notes:
Slide 116: Thank you
Thank you
Slide 117: MTN Nigeria
R \ ! ere yougo >”
Slide 118: MTN Nigeria at a glance - 2018
MTN N igeria at a glance - 2018 Population Inflation rate1 GDP growth2 194m 11,4% 2,4% 58,2 million 3 +17,2%* subscribers Service revenue 18,7 million +40,1%* active data users Data revenue 0,7 million +32,3%* active RMS users Fintech revenue 1NBS (December 2018) 2NBS (Q4 2018) 3 Modernised definiti
Slide 119: Our management team
Our m anagem ent team Chief Finance Officer Executive: Human Resources Chief Operating Officer Adekunle Awobodu Esther Akinnukawe Mazen Mroue Randy Bikraj Chief Information Officer Adekunle Adebiyi Exec, Sales and Distribution Mohammed Rufai Chief Executive Officer Chief Technical Officer Ferdi Mool
Slide 120: Competitive landscape
Competitive landscape Subscriber Market players Key competitive positioning share (%) • Leading operator in voice and wholesale leased line • Largest physical distribution network #1 50,0 • Most expansive network coverage • Widest range of spectrum holdings (5G ready) • Cheap data #2 27,1 • Focus on
Slide 121: Tracking against BRIGHT
Tracking against B R IG HT Focus areas Tracking Double-digit Personalised Data pricing Listing by #1 network NPS #1 NPS service revenue offerings/CVM introduction growth Mobile Money Smart capex Service level at EBU launch* Resolution of 91% from lows of Improving CBN matter EBITDA margin transforma
Slide 122: Strong performance supported by voice and data growth
Strong performance supported by voice and data growth Subscribers Investment Growth drivers +5,9 million to 58,2 million R6,9 billion capex +18,7%* voice reven ue total subscribers +2 342 3G sites +40,1%* +4,5 million to 18,7 million d ata reven ue active data users +1 338 4G sites +56,3% d ata traf
Slide 123: Growth opportunities
G rowth opportunities Data • Low data penetration • 4G coverage is < 50% • Low smartphone penetration Voice • Youngest population in Africa Enterprise • Pricing flexibility • 20 million Nigerians live in places where MTN • Enterprise is mobile centric is the sole service provider • Unserved large SM
Slide 124: Fintech and digital present a key opportunity
Fintech and digital present a key opportunity Population High digital 1st in mobile-first Telco GDP 190m optimism access co ntribu tio n 10% (263m by 2030) No. 1 in the world (No 1 most mobilized in the world, (enabling possibilities across (ahead of India , UAE, Morocco in >90% traffic from mobile)
Slide 125: Key regulatory developments
Key regulatory developments Regulators Federal Ministry of National Consumer Protection Communications Environmental Council Standards & Regulations Enforcement Agency Issues resolved NCC approved: Spectrum • Usage of 700MHz spectrum acquired from NBC • MTN to optimise 1800MHz spectrum nationwide •
Slide 126: Medium-term guidance
Medium-term guidance Service EBITDA 2019 Capex Revenue margins Double-digit Improving R7,8 billion growth EBITDA margins 126 Notes:
Slide 127: Thank you
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Slide 128: Regions at a glance
Regions at a glance SEAGHA WECA MENA 43,7 million 30,6 million 24,1 million subscribers subscribers subscribers +20,4%* -5,0%* +20,4%* service revenue ser v ice r ev en u e ser v ice r ev en u e Numbers at December * Constant currency 128 Notes:
Slide 129: Thank you
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Slide 130: Leveraging our people assets
Leveraging our people assets
Slide 131: Employee Vitality
Our philosophy to drive productivity and business results On-demand recognition Strengths profiling Rewards Employee Vitality Learning & development Coaching Self discovery programme Sustainable Career engagement management Financial Medical Engagement- wellness benefits based Employee communication
Slide 132: Our philosophy has yielded improved attraction and retention
Our philosophy has yielded improved attraction and retention • People productivity above global telco Top telco employer of choice benchmarks across the continent1 • Revenue/FTE, subscriber/FTE, profit/FTE • Improved talent attraction and Highest employee engagement retention score since 20072 • Att
Slide 133: Moving towards a digital operator
Moving towards a digital operator Shifting talent Bespoke Agile, high Aligning demands for learning performance incentives growth academies model 133 Notes:
Slide 134: Key elements of our total rewards structure
Key elements of our total rewards structure 01 02 03 Fixed Short term Long term package incentive incentive 134 Notes:
Slide 135: Short term incentive aligns with financial and strategic performance
Short term incentive aligns with financial and strategic performance Company Team performance performance 02 Short term incentive Weightings: Weightings: Group CEO and CFO: 70% Group CEO and CFO: 30% Tier 1 CEOs and VPs: 60% Tier 1 CEOs and VPs: 40% Other group exco members: 50% Other group exco mem
Slide 136: Long term incentive drives long-term sustainability
Long term incentive drives long-term sustainability • Ensure that we also manage the business for the long term 03 • • Annual allocations are made based on a multiple of the fixed package Vest after 3 years • Performance would be adjudicated 3 years after the allocation Long term incentive 136 Notes
Slide 137: Elements of LTI
Elements of LTI Based on four equal elements Cumulative Total shareholder operating free retu rn cash flow Allocation based Return on av erage on tenure c a pi t a l empl o y ed 137 Notes:
Slide 138: Pay mix
Pay mix Group President & CEO Group CFO Fixed STI LTI Fixed STI LTI 200% 175% 175% 200% 200% 175% 50% 100% 44% 100% 50% 24% 44% 24% 100% 100% 100% 100% 100% 100% 100% 100% Below Threshold At Threshold At Target Above Target Below Threshold At Threshold At Target Above Target CEO Nigeria and South Af
Slide 139: Summary
Summary Strategic workforce Aligned incentives at planning to attract and Group and Opco to retain key talent for the enable execution of key core and growth areas strategic and financial of the business goals Philosophy aims to Aligned incentives with leverage our people shareholder returns assets
Slide 140: Thank you
Thank you
Slide 141: Closing remarks
Closing remarks
Slide 142: A compelling investment case
A compelling investment case Strong Exciting position in the right demographic markets opportunity • High growth MEA region • Fast growing youthful population • In 3 of 4 largest economies • Low data, fintech and digital adoption • Top two positions in all markets • Enterprise and wholesale opportun
Slide 143: Enhanced medium-term guidance
Enhanced medium-term guidance Service Group South Africa Nigeria revenue Double-digit growth Mid-single-digit growth Double-digit growth EBITDA margins Improving margins Group capex intensity Improving post implementation of IFRS 16 Holdco leverage 2,0x – 2,5x Asset realisation > R15bn excluding IHS
Slide 144: Key take-aways for the day
Key take-aways for the day 1 A compelling and attractive investment case 2 Uniquely positioned to capture growth in our markets Asset realisation programme to simplify portfolio and 3 support de-gearing of holdco debt 4 Enhanced risk and regulatory framework in place Strong and experienced managemen
Slide 145: Thank you
Thank you
Slide 146: Appendix
Appendix
Slide 147: Speaker biographies – executive committee
Speaker biographies – executive committee M ic h a e l F le is h e r G r o u p C hie f Le ga l C o u n s e l BA Procuration IS, Advanced Tax Certificate, Admitted as attorney of the High Court of South Africa S k ills, ex p ert ise a n d ex p erien ce Michael joined MTN in 2014 from Gold Fields Limi
Slide 148: Speakers biographies – executive committee
Speakers biographies – executive committee Is m a il J a r o u d i V ic e P r e s ide n t : M iddle E a s t a n d N o r th A fr ic a (M E N A ) BA, Executive Education Certificate S k ills, ex p ert ise a n d ex p erien ce Ismail was CEO of MTN Syria from 2006 until his appointment as Group Vice Pre
Slide 149: Speaker biographies – MTN group executives
Speaker biographies – MTN group executives Dav i d G i l ar r an z MT N G r o u p E x e c u t i v e : D i g i t a l S e r v i c e s Executive leadership programme with Stanford University Graduate School of Business, USA, and holds a Bachelor of Arts degree in Business Management from Universidad Me
Slide 150: Speaker biographies – external speakers
Speaker biographies – external speakers B o la ji B a lo g u n C h ie f E x e c u tive O f f ic e r a t C h a pe l H ill D e n h a m a n d C IO , N ig e r ia In f r a s tr u c tu r e D e b t F u n d BSc (Honours) Economics, London School of Economics and Political Science S k ills, ex p ert ise a n
Slide 151: Thank you
Thank you