Slide 1: MTN Group Limited Final audited results for year ended 31 December 2006
MTN Group Limited Final audited results for the year ended 31 December 2006
Slide 2: Agenda
Agenda Strategic & operational overview Phuthuma Nhleko Group President and CEO Financial overview Rob Nisbet Group Finance Director Looking ahead… Phuthuma Nhleko 2
Slide 3: Strategic and operational overview
Strategic and operational overview Phuthuma Nhleko Group President and CEO
Slide 4: MTN Vision
MTN Vision To be the leader in telecommunications in emerging markets
Slide 5: Key considerations for the period
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 manag
Slide 6: MTN an emerging market leader
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 Revenue 2006 Subscriber #’s 1998 - 2005 1993 - 1997 Successfully delivering on our vision 6
Slide 7: Group highlights
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 73% against 12 months against 12 months to 40.1 million to 31 December 2005* to 31 December 2005* EBITDA margin PAT increased to Adjusted headline
Slide 8: Subscriber growth
Subscriber growth... MTN Group Split of subscribers by region Comparative annual growth 40.1 40 35 12% No. of operations: 21 +110% 30 Population (m): 501 +83% 25 23.2 20 49% Subscribers (m): 40.1 +73% 27% 15 10 5 73% 39% 0 Dec-05 Dec-06 SEA WECA MENA Subscriber growth increasingly diversified 8
Slide 9: Relative ARPU performance
So uth Af r ic a $23 Ni ge Ca ria $18 me Cô ro o te n $15 d'I USD per month vo ire $18 Ug an da $12 Rw an Sw da $17 az il a nd $20 Za mb Co ia $19 ng oB Bo . $20 tsw an South African ARPU: ZAR164 (Dec 05 – ZAR167) a $20 Be n G. in $21 Bi s Relative ARPU performance G. sa u Co $12 na kr y $17 Lib eri
Slide 10: Relative EBITDA margins
Relative EBITDA margins 80% Group Region Key operations 54% 57% 53% 57% 60% 52% 53% 43% 42% 35% 35% 34% 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
Slide 11: Risk management
Risk management • Comprehensive risk management structures aligned to King II and Governance best practice structures • Ultimate board responsibility with dedicated group executive risk officer • Senior executive and board involvement on the ground • Not politically aligned Political / • Commitment
Slide 12: Risk management (cont.)
Risk management (cont.) • Expanded regions/ markets limit concentration exposure to any single region • Co-investment with local partners Emerging market risk • Experienced and committed local management teams limit execution risks • Detailed market analysis and robust business plan preparation cont
Slide 13: South & East Africa (SEA) region
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 + 6
Slide 14: SEA region – Overview
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 1164 615 103 37 1595 384 128 187
Slide 15: South Africa – Financial and operational highlights
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%
Slide 16: South Africa – Financial and operational highlights (cont.)
SEA region South Africa – Financial and operational highlights (cont.) ARPU ZAR per month • Increased prepaid ARPU’s due to lower denomination vouchers 596 576 541 487 • Prepaid pricing segmentation • Lower end packages boost postpaid 203 184 169 subscribers but negatively affect ARPU 164 – MyChoice
Slide 17: South Africa – Data highlights
SEA region South Africa – Data highlights Data revenue ZAR million • SMS approx 79% of total data revenue • 3G roll-out on track 1,938 – Expanded to 793 from 431 at June 2006 1159 – Approx 20% subscribers under coverage 1 082 905 403 – Approx 280k users at December 2006 670 502 384 679 779 – Good HS
Slide 18: South Africa – Regulatory changes
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
Slide 19: West & Central Africa (WECA) region
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% Be
Slide 20: WECA region - Overview
WECA region - Overview Nigeria, Ghana, Cameroon, Côte d’Ivoire, Benin, Congo B, G. Conakry, Liberia, G.Bissau Population : 224m 20m Subs Revenue ZAR21bn EBITDA ZAR11bn CAPEX ZAR5bn PAT ZAR7bn (45% Group) (49% Group) (41% Group) (50% Group) (52% Group) (61% Group) Revenue EBITDA Subscribers 397 280 1
Slide 21: Nigeria - Financial & Operational Highlights
WECA region Nigeria - Financial & Operational Highlights Launched Aug 2001 Market share 46% Population 138.9m Market sizing 45.6m (2011) Penetration 19% Shareholding 82% Dec 2006 Dec 2005* • Market share up from 45% to 46% Revenue ZAR14.9bn ZAR11.4bn • Strong EBITDA margin through cost savings EBITD
Slide 22: Nigeria – New product offering
WECA region Nigeria – New product offering Quarterly analysis of total MOU and • Launch of segmented value proposition net connections products on 22 September 2006 – On net calling preference 2500 2,500,000 – Growth from returning inactive MTN 2000 2,000,000 subscriber 1500 1,500,000 – Incremental
Slide 23: Nigeria – Network infrastructure & enhancements
WECA region Nigeria – Network infrastructure & enhancements Geographic and population coverage • Network infrastructure 73% – 2 518 base stations 64% – Continuing expansion of transmission 58% backbone (~3600km) 48% 43% • Acquisition of unified licence & VGC 38% (fixed wireless PTO) aimed at 31% cor
Slide 24: Ghana – Financial & operational highlights
WECA region Ghana – Financial & operational highlights Launched Nov 96 Market share 52% Population 22.4m Market sizing 9m (2011) Penetration 22% Shareholding 98% Dec 2006 Dec 2005* • Market share loss stabilised in early 2007 ZAR1.7bn (Jul-Dec) Revenue ZAR2.1bn ZAR3.0bn (12mths)** • Increasing compe
Slide 25: Middle East & North Africa (MENA)
Middle East & North Africa (MENA) Footprint opportunities significantly increased with greenfield areas Dec 06 Countries in region 6 Acquired Population (m) 178m Acquired Mobile penetration 16% Acquired Subscriber numbers (m) Sudan* 1,066 Acquired Iran 154 New Afghanistan 218 New Syria* 2,237 Acquir
Slide 26: MENA region – Overview
MENA region – Overview Afghanistan, Cyprus, Iran, Sudan, Syria, Yemen Population : 178m 5m Subs Revenue ZAR4bn EBITDA ZAR1bn CAPEX ZAR2bn PAT ZAR0.2bn (35%Group) (12% Group) (7% Group) (5% Group) (17% Group) (2% Group) Revenue EBITDA Subscribers 77 99 -58 294 154 580 99 1066 570 2237 2009 277 700 52
Slide 27: Iran – Highlights
MENA region Iran – Highlights Launched Oct 06 Market share 1% Population 69.5m Market sizing 46.3m (2011) Penetration 20% Shareholding 49% Dec 2006 • MTN’s market sizing increased to 46m Revenue ZAR 77m (2011) from 31m (2015) estimated in 2005 • Pioneer in privatisation EBITDA margin -75% • Low year
Slide 28: Iran – Infrastructure
MENA region Iran – Infrastructure 26% • Significant vendor finance secured Coverage statistics • Roll-out behind schedule due to 16% challenges – Local ownership requirements – High land costs <1% <1% – Environmental procedures Geographic coverage Population coverage – Access to intercity transmissi
Slide 29: Iran – License obligations and regulatory
MENA region Iran – License obligations and regulatory Within • Year 1 roll-out most onerous As at Dec05 prescribed Note period • Higher connection fee retained on Licence Term 15 years 15 years Year 1 postpaid – Effective ends 10 21 Nov 05 10 Jul 06 Date July 2007 • Competitive pressure reduced on p
Slide 30: Sudan
MENA region Sudan Launched [Sep05] Market share 25% Population 36m Market sizing 22m (2011) Penetration 12% Shareholding 85% Dec 2006 Dec 2005* • First full year of operation ZAR570m (Jul-Dec) Revenue ZAR130m(12mths) ZAR887m (12mths)** • Market share growth to 25% EBITDA margin 17% (Jul-Dec) • Regul
Slide 31: Financial overview
Financial overview Rob Nisbet Group Finance Director
Slide 32: Financial trends
Financial trends Group revenue Group EBITDA Adjusted HEPS* ZAR billion ZAR billion cents CAGR CAGR CAGR 03FY – 06FY 03FY – 06FY 03FY – 06FY 28% 38% 42% 306.2 31.4 13.8 193 119.8 15.3 9.8 6.4 3.8 12.6 4.7 129.7 10.7 278.5 20.2 3.5 8.6 218.4 17.2 7.2 82.4 170.1 11.3 13.7 5.6 123.4 8.7 4.3 2.7 60.9 200
Slide 33: Key accounting issues
Key accounting issues • Investcom – Consolidated from 1 July 2006 – Cash-flow hedging of purchase price resulted in gain of ZAR 2.5bn • Set off against investment • No tax provided on gain (ZAR 680m) – PPA amortisation – ZAR 587m (an additional ZAR 72m relates to Uganda) • Increased ownership – Nige
Slide 34: Earnings per share
Earnings per share 12 months 9 months ended ended % change cents Dec 2006 Dec 2005 Basic headline earnings per share 606,5 359,8 69 Impact of put option 15,3 (1,6) Reversal of deferred tax credit (37,10) (20,0) Adjusted headline earnings per share 584,7 338,2 73 -33 HEPS (584,7 cents) 3 • Adjusted h
Slide 35: Income statement
Income statement 12 months 9 months ZAR million ended ended Dec 2006 Dec 2005 Revenue 51 595 27 212 EBITDA 22 413 11 231 Depreciation (5 030) (2 497) Amortisation (1 289) (256) Profit from operations 16 094 8 478 Net finance costs (1 427) (373) Share of profits of associates 23 10 Profit before taxa
Slide 36: Exchange rates analysis
Exchange rates analysis Exchange rates Average Closing Dec Dec % Dec Dec % 2006 2005 var 2006 2005 var Rand per Dollar 7,04 6,47 (9) 7,05 6,32 (12) Nigerian Naira per Rand 18,70 20,23 8 18,23 20,42 11 Iranian Rials per Rand 1 365,28 1 420,80 4 1 308,73 1 436,49 9 Ghana Cedis per Rand 1 282,55 1 412
Slide 37: Revenue analysis
Revenue analysis Unaudited 12 months 9 months 12 months % change ended ended ended ZAR million Dec 2006 Dec 2005 Dec 2005 ZAR LC South & East Africa 26 586 16 293 21 065 26 South Africa* 24 578 15 507 20 101 22 22 Other operations 2 008 786 964 (Botswana,Uganda,Rwanda,Zambia,Swaziland) West & Centra
Slide 38: Revenue analysis (% of revenue)
Revenue analysis (% of Revenue) Nigeria Interconnect Dec 2006 ZAR million 2,500 2364 7.00% 100% = ZAR 51 595m 6% 1% 6.40% 6.00% 2,000 5.45% 5.40% 5.00% 20% Subscriber spend 1,500 1,365 4.00% 1,254 1,025 3.00% Interconnect 1,000 808 2.46% 805 596 2.01% 2.00% Equipment sales 500 349 222 1.00% 118 Conn
Slide 39: EBITDA analysis
EBITDA analysis 12 months Unaudited % Dec 2006 Dec 2005 ended 12 months ended change EBITDA EBITDA ZAR million Dec 2006 Dec 2005 ZAR margin % margin % South & East Africa 9 346 7 341 27 35,2 34,9 South Africa* 8 340 6 895 21 33,9 34,3 Other operations 1 006 446 126 West & Central Africa 11 355 7 051
Slide 40: EBITDA trends
EBITDA trends EBITDA (R22 413m) 1,117 595 • Strong contribution from WECA • Nigeria margins up to 57% from 52% on 9,346 strong cost control initiatives, especially staffing and fuel 11,355 • RSA margins lower compared to prior South & East Afrca twelve months on higher interconnect West & Central Af
Slide 41: Profit after tax
Profit after tax (excluding Nigeria deferred tax asset) 12 months 9 months % change ended ended ZAR million Dec 2006 ZAR LC Dec 2005 South & East Africa 5 119 3 021 69 South Africa* 4 797 2 877 67 67 Other operations 322 144 West & Central Africa 6 664 3 210 108 Nigeria** 5 739 2 866 100 73 Ghana 34
Slide 42: Tax considerations
Tax considerations 19.76 Effective tax rates 20 Tax – effective rate % 19.5 19 • Bulk of disallowed expenses relate to 18.5 unproductive interest on Investcom acquisition 18 17.4 17.64 debt • Prior year adjustment relates predominantly to 17.5 17 Cameroon 17 16.5 16 • Investcom effective tax rate ha
Slide 43: Balance sheet – Assets
Balance sheet Assets As at As at ZAR million Dec 2006 Dec 2005 Non-current assets 76 282 31 136 Property, plant and equipment 30 647 20 676 Goodwill 27 017 2 650 Intangible assets 13 088 4 057 Investment, loans and other non-current assets 2 925 2 367 Deferred taxation 2 605 1 386 Current assets 20
Slide 44: Balance sheet – Equities and liabilities
Balance sheet Equities and liabilities As at As at ZAR million Dec 2006 Dec 2005 Capital and reserves 42 729 23 096 Ordinary shareholders’ interest 38 696 19 716 Minority interest 4 033 3 380 Non-current liabilities 34 203 9 765 Long-term liabilities 28 587 7 505 Deferred taxation 2 778 853 Non-curr
Slide 45: Analysis of net debt position
Analysis of net debt position Interest As at 31 Dec 2006 Net (cash) Cash and cash bearing ZAR million debt equivalents liabilities* South & East Africa 4 882 7 326 2 444 South Africa ** 4 715 6 772 2 057 Other operations 167 554 387 West & Central Africa 770 4 884 4 114 Nigeria 1 165 3 552 2 387 Gha
Slide 46: Interest bearing liabilities split
Interest bearing liabilities split as at 31 December 2006 6% 1 879 • Undrawn facilities of over ZAR 10 billion, 19% mainly at MTN Holdings 6 203 • No FX exposure on SA debt 24 897 • Repayment of more than US$ 850m of 75% Investcom acquisition debt from subsidiary dividends Cross surety structure Rin
Slide 47: Cash flow statement
Cash flow statement 12 months 9 months ZAR million ended ended Dec 2006 Dec 2005 Net cash generated by operations 22 934 11 369 Net interest paid (143) (116) Taxation paid (4 086) (1 011) Dividends paid (1 083) (1 081) Cash inflows from operating activities 17 622 9 161 Cash outflows from investing
Slide 48: Capital expenditures (incl. software)
Capital expenditures (incl. software) Capex approved or 12 months Capex approved or ZAR million committed at ended committed at 31 Dec 2005 Dec 2006 31 Dec 2006 South & East Africa 4 308 3 120 5 014 South Africa* 3 641 2 391 4 360 Other operations 667 729 654 West & Central Africa 6 660 4 998 8 841
Slide 49: Capital expenditure analysis
Capital expenditure analysis CAPEX (R9 778m) 126 • 60% of capex due to Nigeria and RSA 1,636 invested in network coverage and capacity 3,018 South & East Africa • RSA focus on 3G coverage (close to 800 West & Central Africa sites rolled out to date) Middle East & North Africa Head Office Companies •
Slide 50: Looking forward..
Looking forward.. Phuthuma Nhleko
Slide 51: Looking forward…
Looking forward… • Drive regional synergies • Take advantage of opportunities within the value chain – Payment solutions to enable transfer of funds in under-serviced markets; – Data opportunities • Improve operational efficiency through our least-cost operator strategy • Aggressive roll-out and sub
Slide 52: Thank you Questions?
Thank you Questions? 52
Slide 53: Notice
Notice 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. Opinions and
Slide 54: Annexure I
Annexure |!
Slide 55: MTN – Data Sheet part 1
MTN – Data Sheet part 1 Group SEA WECA MENA RSA Nigeria Ghana Sudan Iran Market overview Population (m) 500.8 98.9 223.8 178.1 47.4 138.9 22.4 36.3 69.5 Mobile penetration 40% 19% 16% 74% 19% 22% 12% 20% Market position 2 1 1 2 3 No. of operators 61 14 30 17 3 4 4 4 3 Operational Data Subscribers (0
Slide 56: MTN – Data Sheet part 2 (SEA)
MTN – Data Sheet part 2 (SEA) SubTotal RSA Botswana Zambia Swaziland Uganda Rwanda Shareholding 100% 51% 100% 30% 97% 40% License Period (years) 15 15 15 10 20 10 Market overview Population (m) 98.9 47.4 1.8 11.5 1.1 28 9.1 Mobile penetration 40% 74% 60% 9% 24% 9% 4% Market position 2 1 2 1 1 1 No.
Slide 57: MTN – Data Sheet part 3 (WECA)
MTN – Data Sheet part 3 (WECA) SubTotal Nigeria Ghana Cameroon Côte d’Ivoire Congo B Benin G. Bissau G. Conakry Liberia Shareholding 82% 98% 70% 68% 100% 75% 100% 75% 60% License Period 15 15 15 20 15 10 10 18 15 Market overview Population (m) 223.9 138.9 22.4 17.1 20.2 3.4 7.7 1.5 9.5 3.2 Mobile pe
Slide 58: MTN – Data Sheet part 4 (MENA)
MTN – Data Sheet part 4 (MENA) SubTotal Sudan Iran Afghanistan Cyprus Syria Yemen Shareholding 85% 49% 100% 100% 75% 83% License Period 22 15 14 20 15 15 Market overview Population (m) 178.0 36.3 69.5 30.9 0.9 18.8 21.6 Mobile penetration 16% 12% 20% 6% 80% 26% 12% Market position 2 3 3 2 2 1 No. of
Slide 59: MTN – Regional Growth
MTN – Regional Growth Subscribers / ARPU SEA WECA MENA 19,622 15,517 4,912 12,281 46 45 10,908 9,148 15 6,996 5,259 28 22 5,255 37 22 1,468 2,547 25 18 28 21 Dec- 06 Mar-03 Mar-04 Mar-05 Dec-05 Dec-06 Mar-03 Mar-04 Mar-05 Dec-05 Dec-06 MTN Subscribers ('000) ARPU (USD) MTN Subscribers ('000) ARPU (U
Slide 60: Structure
Structure MTN Group 100% MTN Holdings 100% MTN South Africa MTN International 100% MTN Mauritius 100% Investcom LLC 100% 68% 82% 75% 75% Network Operations Côte d’Ivoire Nigeria Guinea Republic Benin 100% 100% 70% 75% 60% Service Providers Zambia Cameroon Syria Liberia 100% 51% 40% 98% 100% Network
Slide 61: Annexure II
Annexure I! MTN
Slide 62: Balance sheet – Asset analysis
Balance sheet Asset analysis As at 31 December 2006 HQ Total SEA WECA MENA ZAR Million Companies Non-current assets 76 282 14 121 23 613 6 954 31 594 Tangible assets 30 647 9 612 17 568 3 444 23 Intangible assets (incl. goodwill) 40 105 1 951 3 542 3 122 31 490 Other non-current assets 5 530 2 558 2
Slide 63: Balance sheet – Equity and liabilities analysis
Balance sheet Equity and liabilities analysis As at 31 December 2006 HQ Total SEA WECA MENA ZAR Million Companies Capital and Reserves 42 729 7 223 18 827 3 782 12 897 Non current liabilities 34 203 7 725 3 837 2 254 20 387 Long-term liabilities 28 587 6 024 3 674 2 231 16 658 Non-current liabilitie
Slide 64: Operating expenditure analysis
Operating expenditure analysis 12 months 9 months ended ended ZAR million % change Dec 2006 Dec 2005 South & East Africa 17 240 10 914 58 South Africa* 16 238 10 485 55 Other operations 1 002 429 West & Central Africa 9 853 5 277 87 Nigeria 6 371 4 316 48 Ghana 814 - Other operations 2 668 961 Middl
Slide 65: EBITDA analysis
EBITDA analysis 12 months 9 months % Dec 2006 Dec 2005 ended ended change EBITDA EBITDA ZAR million Dec 2006 Dec 2005 ZAR margin % margin % South & East Africa 9 346 5 367 74 35,2 32,9 South Africa* 8 340 5 009 67 33,9 32,3 Other operations 1 006 358 181 West & Central Africa 11 355 5 599 103 53,5 5
Slide 66: Depreciation analysis
Depreciation analysis 12 months 9 months ended ended ZAR million % change Dec 2006 Dec 2005 South & East Africa 1 334 842 58 South Africa* 1 065 744 43 Other operations 269 98 West & Central Africa 3 282 1 652 99 Nigeria 2 699 1 455 85 Ghana 124 - Other operations 459 197 Middle East & North Africa
Slide 67: Amortisation analysis
Amortisation analysis 12 months 9 months ended ended ZAR million % change Dec 2006 Dec 2005 South & East Africa 203 50 306 South Africa* 86 39 121 Other operations 117 11 West & Central Africa 801 206 289 Nigeria 191 116 65 Ghana 317 - Other operations 293 90 Middle East & North Africa 284 - Iran 19
Slide 68: Finance cost analysis
Finance cost analysis Net Finance Finance Forex Forex Finance ZAR million Cost Income Costs Losses Gains South & East Africa 571 (238) 640 173 (4) South Africa* 494 (223) 598 122 (3) Other operations 77 (15) 42 51 (1) West & Central Africa 49 (591) 557 115 (32) Nigeria (92) (558) 472 11 (17) Ghana (
Slide 69: Thank You
Thank You www.mtn.com investor_relations@mtn.co.za