Mtn Group Limited · JSE:MTN
Mtn — FY2012 Earnings Presentation
44 slides from Mtn's earnings presentation, March 2013
Slide 1: Welcome to the New World
Welcome to the New World MTN Group Limited Final results for the year ended 31 December 2012
Slide 2: Agenda
Agenda 01 Strategic and operational overview Sifiso Dabengwa Group President and CEO 02 Financial overview Nazir Patel Group Chief Financial Officer 03 Looking ahead Sifiso Dabengwa Group President and CEO
Slide 3: Strategic and operational overview
Strategic and operational overview
Slide 4: MTN vision and mission
MTN vision and mission Creating and managing stakeholder value Creating value for our shareholders, employees and communities in a sustainable way and in accordance with the values of MTN Our vision: To lead the delivery Creating a distinct Driving sustainable Transforming our of a bold, new custome
Slide 5: Strategic considerations: creating a distinct customer experience
Strategic considerations Creating a distinct customer experience Network quality Brand preference Efficient distribution Customer Experience Voice and Effective segmentation data and customer services analytics Experienced people 5
Slide 6: Strategic considerations: driving sustainable growth
Strategic considerations Driving sustainable growth Voice Data and related services ICT evolution − Billed traffic volumes increased − Growing data and related − Focus on ICT services for SME 24.6% YoY supported by ongoing services a key focus for the and corporate segments customer engagement Group
Slide 7: Strategic considerations: transforming our operating model
Strategic considerations Transforming our operating model Tower Company Transaction − Recent tower deals concluded in Cameroon, Ghana, Ivory Coast and Uganda − Ongoing evaluation of tower opportunities in other operations driven by market specific requirements Infrastructure sharing − Passive sharin
Slide 8: Group highlights
Group highlights 15.1% 10.9% 8.2% to 189.3 million to R135,112 million to R57,977 million Group subscribers *Revenue ** EBITDA 1.9% per share of R2,088 million to 1089.1 cents 503 cents completed HEPS Final dividend Share buy back * On a constant currency restated using 2011 average exchange rates r
Slide 9: 2012 in review
2012 in review A challenging year but well positioned for 2013 Organisational structure successfully implemented 180 0.14 160 – Realigned organisation 0.12 140 – Appropriate level of management focus & prioritisation 120 0.1 100 0.08 Step up in competitive landscape 80 0.06 60 – Good subscriber grow
Slide 10: South Africa: a growing data story
South Africa A growing data story Launched Jun 1994 Market share 37.7% Population 51.6m Market sizing 80m (2014) Penetration 131% Shareholding 100% Improved market share during 2012 Subscriber Prepaid − Market share increased to 37.7% with 3.4m net additions (‘000/ARPU (ZAR)) 122 134 Postpaid − Prep
Slide 11: South Africa: investing for growth
South Africa Investing for growth Operating costs well controlled Expenses H2 − Impacted by inclusion of MTN Business ZAR (million) 26 874 H1 23 634 25 006 − Normalised EBITDA margin 35.2% (see appendix) 13 224 14 039 Reduction in interconnect impacted margin 12 314 − On-net traffic increased from 6
Slide 12: Nigeria: positioned for improvement
Nigeria Positioned for improvement Launched Aug 2001 Market share 47.8% Population 161m Market sizing 141.9m(2014) Penetration 62% Shareholding 78.8%* Slow start to the year Subscriber MTN − Significant price premium from MTN (‘000/ARPU (ZAR)) Subscribers − Competition driven by promotions 8,7 10,6
Slide 13: Nigeria: acceleration in investment
Nigeria Acceleration in investment Strong cost focus given revenue pressure Expenses H2 − Expenses increased 8.3% YoY NGN (million) H1 313 904 289 908 − Site rental costs remain a challenge 255 971 153 019 159 862 − Fuel costs increased 0.3% YoY 128 340 − General inflation impacting staff costs >10%
Slide 14: Iran
Iran Good result in challenging environment Launched Oct 2006 Market share 46.9% Population 76m Market sizing 99.3m (2014) Penetration 113% Shareholding 49% Good result in challenging environment Revenue H2 − Added 5.8m subscribers IRR (billion) H1 − Total subscribers reached 40.5m, 46.9% market sha
Slide 15: Ghana
Ghana Winning despite competition Launched Nov 1996 Market share 50.5% Population 25.6m Market sizing 25.3m (2014) Penetration 91% Shareholding 98% Good performance despite competition Revenue H2 − Added 1.6m subscribers Cedi (million) H1 1 552 − Slight decline in market share to 50.5% 1 277 EBITDA
Slide 16: Cameroon
Cameroon Well placed for growth in 2013 Market sizing 17m (2014) Launched Feb 2000 Market share 55.7% Population 21.1m Penetration 62% Shareholding 70% Well placed for growth in 2013 Revenue H2 − Increased subs 26.0% YoY to 7.307m CFA (million) H1 − 2012 impacted by once-off costs, normalised base f
Slide 17: Ivory Coast
Ivory Coast Increased competition Launched April 1996 Market share 36.4% Population 22.9m Market sizing 13.0m (2014) Penetration 76.9% Shareholding 67.7% Increased competition Revenue H2 − Aggressive pricing from competitors CFA (million) 256 386 H1 − Net additions impacted by end of registration pe
Slide 18: Uganda
Uganda Strong result in a very competitive market Launched Oct1998 Market share 52.5% Population 36.1m Market sizing 27m (2014) Penetration 41% Shareholding 96% Strong result in competitive market Revenue H2 − 48k net disconnections impacted by registration process UGX (million) H1 − Subscriber regi
Slide 19: Syria
Syria Extremely challenging environment Launched Jun 2002 Market share 45% Population 23.1m Market sizing 16m (2014) Penetration 58.5% Shareholding 75% Challenging environment Revenue H2 − Unrest progressively worsened during H2 SYP (million) H1 − Added 312k subscribers in 2012 43 462 43 596 44 860
Slide 20: Sudan
Sudan Encouraging turnaround Launched Sep 2005 Market share 31.8% Population 34.4m Market sizing 28.5m (2014) Penetration 73% Shareholding 85% Encouraging turnaround Revenue H2 − Improvement in 2011 has continued 929 SDG (million) H1 − Improved distribution network and competitive offers 724 EBITDA
Slide 21: Financial overview
Financial overview
Slide 22: Financial highlights
Financial highlights Investing for sustained growth Reported revenues increased 11% YoY Group summary: 2010 - 2012 Reported Organic ZAR (million) ’11 - ’12 ’11 - ’12 - Nigeria negatively impacting performance +11% - Organic growth excluding Nigeria 12.3% +6% 135 112 Rev +11% +9% EBITDA growth limite
Slide 23: Revenue
Revenue Strong organic growth, data key driver Voice revenue growth up 7% YoY Revenue breakdown +9% ZAR (million) 2 838 135 112 - Strong subscriber growth up 15.1% YoY 1 980 (201) 132 274 +2% 6 129 - Competitive pricing impacts tariffs across most markets 2 753 (271) - Voice traffic up 24.6% 121 884
Slide 24: Revenue - data
Revenue - data Increased demand for data services Increased demand for data services Revenue - data 11% 11% - Data revenue up 58.5% to ZAR 14.6bn 8 000 ZAR (million) 1100.00% 7 526 - Contributes 10.8% of total revenue 7 048 - Data users increased 41% to 58.7m 7 000 900.00% - 65.9% growth in data tra
Slide 25: OPEX
OPEX Focus on cost control Direct network operating costs Opex Reported % share of ZAR (million) ’11 - ’12 opex - Increased number of sites +13% - Higher diesel and site rental costs 77 134 - Lease payments in Ghana - Iran maintenance, priced in Euro and USD 68 318 20 464 Direct network - Nigerian t
Slide 26: EBITDA margin
EBITDA margin Growing contribution from ‘other’ operations South Africa EBITDA margin reconciliation (%) - Margin decreased 0.2pp to 35.0% YoY (MTN Business) 43.9% (0.1pp) (1.0pp) 0.6pp (1.2pp) - Opportunity for margin improvement 0.2pp 42.9% 0.5pp Nigeria 42.4% - Margin decreased 3.4pp to 58.3% YoY
Slide 27: Interest
Interest Increase in forex and functional currency losses Increase in interest income in holding company Net finance cost 2012 2011 2010 Forex losses ZAR (million) Sudan Net interest paid 825 1 454 1 925 - Losses on vendor financing and working capital Net forex - Some restructuring of debt, limitin
Slide 28: Taxation
Taxation Group effective tax rate of 34.92% (2011: 36.80%) Tax ZAR (million) - STC impact 2.43% - Withholding tax 3.40% (mainly from Mauritius) - Forex loss 1.42% 16 000 37.00% Sudan and Syria dividend (R1 880m) 13 853 12 913 - Deferred tax credit movement of R506m 14 000 36.50% Mauritius unrealised
Slide 29: HEPS
HEPS ZAR (cents) 2012 2011 Variance % Attributable earnings per share 1 126.4 1 119.5 0.6 Profit on disposal of non-current assets (36.2) (48.6) (25.5) Reversal of impairment of PPE and non-current assets (1.1) (2.3) (52.2) Basic headline earnings per share 1 089.1 1 068.6 1.9 29
Slide 30: Shareholder returns
Shareholder returns Dividend Dividends and share buy-backs H1 2011 – 65% ZAR (million) H2 2011 – 70% +36%* H1 2012 – 72% 17 429 H2 2012 2 088 - Revised dividend policy to growth policy 15 015 - Final dividend of 503c 930 Share buy-backs 9 356 H2 2011 repurchased 6.8m shares R930m H1 2012 repurchased
Slide 31: Income statement
Income statement ZAR (million) 2012 2011 Variance % Revenue 135 112 121 884 11 Other income 894 1 458 (39) EBITDA 58 564 54 750 7 Depreciation, amortisation and impairment of goodwill (17 246) (15 490) (11) Profit from operations 41 318 39 260 5 Net finance cost (4 157) (1 582) (163) Share of result
Slide 32: Statement of financial position
Statement of financial position ZAR (million) 2012 2011 Property, plant and equipment 77 485 71 610 Goodwill and other intangible assets 33 935 34 540 Other non-current assets 9 677 7 637 Current assets 58 914 66 801 Non-current assets held for sale 1 373 820 Total assets 181 384 181 408 Total equit
Slide 33: Statement of cash flow
Statement of cash flow ZAR (million) 2012 2011* Variance % Cash generated by operations 57 856 50 277 15 Dividends paid to equity holders of the Company (14 919) (11 722) (27) Dividends paid to non-controlling interests (3 018) (2 647) (14) Net interest paid (693) (1 359) 49 Tax paid (14 303) (9 414
Slide 34: Income statement: equity accounting of joint ventures
Income statement Equity accounting of joint ventures 2012 2012 – equity Variance % ZAR (million) accounting Revenue 135 112 121 865 (10) Other income 894 894 - EBITDA 58 564 52 635 (10) Depreciation, amortisation and impairment of goodwill (17 246) (15 953) 7 Profit from operations 41 318 36 682 (11
Slide 35: Statement of financial position: equity accounting of joint ventures
Statement of financial position Equity accounting of joint ventures 2012 2012 – equity ZAR (million) accounting Property, plant and equipment 77 485 73 907 Goodwill and other intangible assets 35 634 33 996 Other non-current assets 9 677 10 838 Current assets 58 914 53 772 Non-current assets held fo
Slide 36: Looking Ahead
Looking Ahead
Slide 37: Looking Ahead
Looking Ahead Creating & managing stakeholder value • Change in dividend policy to absolute growth policy • Share buy-back strategy Creating a distinct customer experience • Focus on customer centricity • Improved network quality through ongoing investment Driving sustainable growth • Growing data a
Slide 38: Subscribers: Guidance 2013
Subscribers Guidance 2013 Net subscriber additions (‘000) South Africa 2 900 Nigeria 7 000 Large opco cluster 8 100 Iran 3 850 Ghana 800 Cameroon 1 000 Ivory Coast 300 Sudan 1 350 Syria - Uganda 800 Small opco cluster 3 000 Total 21 000 38
Slide 39: CAPEX: Guidance 2013
CAPEX Guidance 2013 Authorised Authorised budget Actual budget ZAR (million) 2012 2012 2013** South Africa 4 599 6 416 5 712 Nigeria 10 500 13 733 13 079 Large opco cluster 5 242 6 188 5 430 Iran 1 306 1 122 1 002 Ghana 1 128 1 091 1 024 Cameroon 432 724 697 Ivory Coast 393 903 690 Uganda 468 435 55
Slide 40: Appendix
Appendix
Slide 41: Net cash
Net cash Group in net cash position Cash and cash Interest bearing Intercompany Net debt/(cash) Net debt/(cash) ZAR (million) equivalents liabilities eliminations 2012 2011 South Africa (3 985) 16 470 (16 268) (3 783) (3 699) Nigeria (6 721) 12 613 - 5 892 (1 578) Large opco cluster (11 217) 7 775 (
Slide 42: South Africa: excl Business Solutions South Africa
South Africa Excl Business Solutions South Africa ZAR (million) H1-12 H2-12 YTD-12 South Africa Revenue 19 862 21 488* 41 350* EBITDA 7 026 7 450* 14 476* EBITDA margin 35.4% 34.7%* 35.0%* Business Solutions South Africa Revenue 639 432 1 071 EBITDA (11) (34) (45) EBITDA margin (1.7%) (7.9%) (4.2%)
Slide 43: FX trends: average rate
FX trends Average rate Variance % USD: Local currency H1-11 H2-11 YTD-11 H1-12 H2-12 YTD-12 YTD-11 to YTD-12 ZAR 6.80 7.51 7.17 7.89 8.47 8.16 14 Naira 154 158 156 159 159 159 2 Rial 10 474 10 739 10 614 11 970 15 862 13 701 29 Cedi 1.51 1.58 1.55 1.78 1.91 1.85 19 Cameroon XAF 465 476 470 502 513 5
Slide 44: FX trends: closing rate
FX trends Closing rate Variance % Variance % USD: Local currency 2012 2011 2010 ’11-’12 ’10-’11 ZAR 8.47 8.07 6.61 (5) (22) Naira 156 162 152 4 (7) Rial 24 596 11 120 10 356 (121) (7) Cedi 1.90 1.64 1.48 (16) (11) Cameroon XAF 497 506 491 (2) (3) Ivory Coast CFA 497 506 491 (2) (3) Uganda shilling 2