Mtn Group Limited · JSE:MTN
Mtn — H1 2019 Earnings Presentation
50 slides from Mtn's earnings presentation, August 2019
Slide 1: Interim results for the six months ended 30 June 2019
Interim results for the six months ended 30 June 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: Agenda
Agenda = [2] Operational and strategic review ry . . [2] Financial review ° , 4 / [3] Looking ahead rd a
Slide 4: Operational review
Slide 5: Highlights
® Highlights On track to meet our medium-term targets +9,7%* +19,8%* +30,7%* +10,2%* Service revenue Data revenue Fintech revenue EBITDA R67,9bn R16,1bn R4,7bn R31,2bn +0,1pp* 16,9%% of revenue Holdco #12,1%* 43,1% R12,2bn ro 2,3x 297 cenfs Adjusted ROE Asset realisation Interim dividend Adjusted HE
Slide 6: South Africa
® South Africa Ferm] #1 NPS driven by best network; focused on data bundle adoption; enterprise improving - aft = - a = = = = ~ Subscribers s ~ Investment s ~ Growth drivers 2 = 1,9 million to 29,2 million R3,4 billion* capex +5,6% total subscribers data revenue +0, 1 million Fo 5,9 million 99% 3G p
Slide 7: Nigeria
® Nigeria Ferm] Performance supported by strong subscriber, voice and data growth - aft = - a = - = = ~ Subscribers s ~ Investment s ~ Growth drivers 2 +3,3 million 61,5 million R3,2 billion* capex +#11,4%* total subscribers voice revenue +2,1 million to 20,7 million 73% 3G pop coverage +#31,8%* act
Slide 8: Regional operational review
™» Regional operational review porn Robust performance led by fintech, data and voice; WECA performance stabilising ~ SEAGHA - f& WECA - fh MENA +19,4%* to R12,5 billion +0,5%* to R10,5 billion +19,8%* to R4,1 billion service revenue service revenue service revenue #2,3 mitiontro46,0 mition #3,1 nit
Slide 9: Strategic review
Strategic review
Slide 10: For MTN, VOICE is a growing business
™ For MTN, VOICE is a growing business ... @ — 4 “™ ———-— Qg ~ H12019 result 4 ~ Key drivers s £4,5%* to R39,7 billion Base growth @ 7,7 million to . 240 million subscribers voice revenue MTN, Segmented offerings In 16 markets GO BE GREAT 6 oo Focus on CVM @ 2,5% contribution to revenue MOU per sub
Slide 11: DATA is our core medium-term growth driver
™ DATA is our core medium-term growth driver ... porn) — 4 “s —- q ™ ~ H12019 result 4 MS Key drivers y £19,38%* to R1G, 1 billion Data users growing @ 3,5 million to 82 million data revenue active data users Increasing coverage @ 3G: 24 million people g g 4G: 33 million people Sold 281k of MTN “sme
Slide 12: DIGITAL drives new revenues and data adoption
™® DIGITAL drives new revenues and data adoption ... — 4 “= — Q ™ A L I wm, 112019 resulk 2 ~ Key drivers s -4.2,5%* to R1,4 billion Progress on building foundation digital revenue MTN 4G Data makes movie streaming better #JustForYou Enhancing go-to-market plan u Launched in 3 markets 300k monthly a
Slide 13: FINTECH is a major driver of new value creation
™ FINTECH is a major driver of new value creation ... — aa = ne H1 2019 resulF 2 £30,7%* to R4,7 billion fintech revenue = momo PRODUCTS * Constant currency A I ~ Key drivers MoMo users growing Usage increasing @ Building a fintech ecosystem 2,4 million to 30 million active users $44,1 billion trans
Slide 14: ENTERPRISE grow market share in high growth segment
™® ENTERPRISE grow market share in high growth segment ... @ — 4 “s —- q ™ ~ H12019 result 4 MS Key drivers y +6,8%* to R6,5 billion Nigeria driving growth enterprise revenue South Africa steadily improving performance Continued development of SME channels Propositions available on Fintech platform
Slide 15: WHOLESALE build scale Pan-African infrastructure group
™® WHOLESALE build scale Pan-African infrastructure group ... @ tw, 112019 result wm Key drivers s +127,9%* to R2,6 billion Signed up additional key customers wholesale revenue Grew application-to-person messaging services through the YellowConnect platform MTN GlobalConnect now an operating entity
Slide 16: Asset realisation programme on track
® Asset realisation programme on track a_i Consolidated subsidiaries Telco associates & JVs E-commerce portfolio Tower companies —_ ~~ TOC 7 ~ * Progressing on Nigeria pref share redemption XN w, Ne disposal - US$300m SA & Nigeria Irancell Jumia IHS SEAGHA eSwatini MEIH ATC Uganda WECA Mascom IG ATC
Slide 17: Financial review
Slide 18: Material items impacting reported results | currency movements
® Material items impacting reported results | currency movements porn Average rates : Closing rates ZAR : Local currency H12019—-H1 2018 strengthening/tweciering) ZAR : Local currency H12019 —-H2 2018 strengthening/tweciering) Nigerian naira 25,49 2932 (13,1%) Nigerian naira 25,56 25,33 0,9% Iranian
Slide 19: Material items impacting reported results | IFRS adoption
® Material items impacting reported results | IFRS 16 adoption Results in a recognition of R45,1bn ROU asset and R45,8bn lease liability, reduces HEPS by 13,6% IAS 17 IFRS 16 Effect June 2019 Income statement Balance sheet Cash flow Capex/intensity* Holdco leverage** (net debt/EBITDA) Operating leas
Slide 20: Group income statement
'» Group income statement Par Service revenue growth above blended inflation, stable EBITDA margin % change H1 2019 H1 2019 H1 2018 % change constant (Rm) IFRS 16 IAS 17 IAS 17 reported currency* Revenue 72505 72505 62777 15,5 10,2 Service revenue? 67 875 67 875 58690 15,7 9,7 EBITDA before once-off
Slide 21: South Africa — IAS 17
® South Africa — IAS 17 Far Service revenue growth driven by wholesale; Cell C adjustments and OOB repricing impacting EBITDA (Rm) Service revenue Expenses EBITDA and Capex 18 061 + 17491 15,0% 18,5% | Capex intensity 14932 7G 13713 $ G02) Voice! -6,6% 7 462 7450 EBITDA 8271 8641 8176 Costofsales +5
Slide 22: South Africa
)® South Africa Consumer postpaid and wholesale supports growth; enterprise turnaround on track growth C3.3%) 1 1144 18061 -150 -28 17491 202 -598 H1 2018 Consumer prepaid Consumer postpaid Wholesale Enterprise Interconnect H1 2019 and other YON? | | -5,5% | +6,9% | | +134,0% | -7,8%* -3,0% 3,3% ion
Slide 23: Nigeria — IAS 17
® Nigeria — IAS 17 Par Voice and data drive strong service revenue growth; stable naira and operating leverage supports margin (Rm) constant currency Service revenue Expenses EBITDA and Capex 2.2 (BRE) SHE) cor70 morsin 19 279 Go,1%> 16,5% 13,5% Capex intensity 17184 10 696 9 806 16,1) 14325 8623 EB
Slide 24: Group service revenue
'» Group service revenue porn Voice, data and fintech continue to drive service revenue (Rm) +9,7% Y 4182 217 67875 53 57853 \ \ lL H1 2018 Voice Data* Digital* Fintech ‘SMS, ICT Wholesale** H1 2019 CR FX Hyperinflation H1 2019 & Other reported +4,5% +19,8% | -42,5% | +30,7% | | +1,7% | | +127,9% |
Slide 25: EBITDA
)» EBITDA Nigeria drives overall margin; SA margin impact driven by Cell C and change in OOB and ICASA regulation for prepaid EBITDA (Rm) +10,2% Y 4371 1223 31245 21714 R 1197 se woo 23939 1712 a =10 ~22 H1 2018 Nigeria SEAGHA WECA MENA Head office** H12019CR IFRS 16 Other* H1 2019 impact reported E
Slide 26: Finance costs
™» Finance costs porn Average cost of debt and holdco leverage stable (Rm) Leverage IFRS 16 IAS 17 Finance costs H1 2019 H1 2019 H1 2018 Group H1 2019 H1 2018 Net interest paid 3193 3193 2681 Cash and cash equivalents (19 412) (21455) Interest expense - IFRS 16 2640 - - Interest bearing liabilities
Slide 27: Share of results of associates and joint ventures after tax
'» Share of results of associates and joint ventures after tax Rial weakness; discontinuation of Jumia and reclassification of Mascom impact equity accounted earnings (Rm) H1 2019 H1 2018 Iran 430 995 Tower companies 59 7 E-commerce group (304) (532) Jumia (formerly AIH) (226) (387) MEIH - (63) IG (
Slide 28: Statement of financial position
)» Statement of financial position Nigeria debt drawdown; intention to redeem Nigeria preference shares (Rm) H1 2019 H2 2018 Change % Property, plant and equipment* 99570 100 581 (1,0) Right of use asset 45 137 - 100,0 Intangible assets and goodwill 37 560 40 331 (6,9) Other non-current assets 43 26
Slide 29: Capex — IAS 17
) Capex — IAS 17 Price book savings, smart capex and U900/L900 deployment driving capital efficiency Capex (Rm) 14556 12244 11461 18,3% 20 3%) 16,9% e— nd ~e H1 2018 H2 2018 H1 2019 —® Capex intensity {| capex H1 2019 capex allocation (%) c Other ore Capex network 394 3% IT systems 18% Transmission
Slide 30: Holdco net debt and dividend
™» Holdco net debt and dividend Mix of debt improving; leverage stable within target range R62,0bn R59,7bn USD / EUR 51,4% 48,2% ZAR 48,6% 51,8% H1 2018 H1 2019 Group leverage 1,6x 1,4x Holdco leverage 2,9x 2,3x Key actions to drive lower holdco debt and improve mix + Proceeds From ARP to reduce deb
Slide 31: Cash flow
)® Cash flow Ferm] FCF impacted by final Nigeria fine payment and CBN resolution, normalised operating FCF increased 129% YoY (Rm) 31245 4896 -2 288 -5 260 5552 -4 808 -13 587 _ 4351 492 ~636 ~6 696 EBITDA Working Taxpaid Dividends Net interest Acquisition Operating Once-off Dividend Financing —Othe
Slide 32: Adjusted HEPS
) Adjusted HEPS Ferm] Supported by service revenue and EBITDA growth, impacted by IFRS 16 adoption and JVs and associates IFRS 16 IAS 17 IAS 17 IAS 17 R (cents) H1 2019 H1 2019 H1 2018 Change % Attributable earnings / (loss) per share 247 286 244 17,2 Impairment of goodwill, PPE and associates 16 16
Slide 33: Improving returns
~ Improving refurns IAS 17 ROE improves. IFRS 16 reduces reported return by 1,7% +1,4 pp 68 2.0 1 2007 12,9 115% 11,2% -1,7 Dec 2018 EBITDA Depreciation Finance Cost Taxation JV and NCI and other Head office H1 2019 IFRS H1 2019 ROE - 1AS 17 and Associates operating ROE -1AS 17 adjustment ROE - IFRS
Slide 34: Looking ahead
Slide 35: BRIGHT growing towards 300, 200
™ BRIGHT growing towards 300, 200, 100 The evolving telco The digital player Ry Voice = : OC}... : Refresh segmented offers * Benefit from greater usage ahead CID] Digital : People penetration + Key focus on data bundle adoption o : Stable pricing : Enterprise Wholesale + Roll out Ayoba in more mark
Slide 36: Building a brighter sustainable MTN
® Building a brighter sustainable MTN porn Strong position in the right markets Exciting demographic 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 whol
Slide 37: Medium-term guidance
~ Medium-term guidance Ferm] Service . . revenue Group sm South Africa | ) Nigeria Double-digit growth “” Mid-single-digit growth Double-digit growth vy . EBITDA . . margins Improving margins Group capex . . . intensity Improving post implementation of IFRS 16 Holdco leverage Asset realisation Adjus
Slide 38: Spectrum
• • • Spectrum • • • Spectrum Spectrum
Slide 39: Thank you
Thank you
Slide 40: Appendices
Slide 41: Material items impacting reported results
™» Material items impacting reported results Implementation of IFRS 16 S South Africa EBITDA +R4,4 bn +0,7bn +R2,0bn EBITDA margin +16,3% +9,4% +20,5% HEPS -13,6% Capex +3,2bn +2,4bn +0,4bn Capex intensity No impact, defined to be based on capex excluding ROU asset additions Balance sheet ROU +45,1b
Slide 42: IranCell 100%
» IranCell 100% Results impacted by translation as a result of Sana rate being used since Aug 2018 2532 -273 -1584 2032 -549 11 1807 -320 -42 895 -912 H1 2018 Revenue Other Expenses Depreciation Finance Equity Income Tax H1 2019 CR FX H1 2019 income costs income H1 2019 CR at constant currency 42 Th
Slide 43: Net debt
™ Net debt Higher net debt balance as a result of Nigeria draw down of facilities and dividend payments Cash and cash Net interest-bearing Net debt/(cash) Net debt/(cash) (Rm) equivalents ° liabilities H1 2019 H2 2018 South Africa 1124 - (1124) (872) Nigeria 6 789 11548 4759 774 SEAGHA 1909 3488 157
Slide 44: Net debt composition
) Net debt composition Overall debt mix remains heavily denominated in US dollars Nigeria borrowings (%) Head office borrowings (%) 81% 49% H2 2018: (49%) Eneira H2 2018: (49%) [ zar 19% uso 51% usp H2 2018: (51%) H2 2018: (51%) Nigeria cash Head office cash (%) (%) 6% H2 2018: (7%) 85% H2 2018: (78
Slide 45: Capex - IAS 17
) Capex - IAS 17 (Rm) 3907 ——] 3366 3674 3256 2320 2218 2351 1622 1093 572 634 813 = 93771 SA Nigeria SEAGHA WECA MENA Iran* Other Group [x1 2018 | | H12019 {7} Capex intensity * Iran capex at 49% and is not part of the consolidated Group Capex
Slide 46: Capex - IFRS 16
) Capex - IFRS 16 Ferm] (Rm) 11461 5773 3.907 4050 3574 2351 2320 2218 oe 1622 646 861 2 oN co 93 221 SA Nigeria SEAGHA WECA MENA Iran* Other Group [x1 2018 | | H12019 {7} Capex intensity * Iran capex at 49% and is not part of the consolidated Group Capex 46
Slide 47: Statement of cash flows | IFRS 16
® Statement of cash Flows | IFRS SB Cash generated from operations, net interest paid and financing activities impacted by implementation of IFRS 16 Cash outflows increased following payments of the Nigeria fine and CBN resolution (Rm) H1 2019 H1 2018 Change % Cash generated from operations 20 906 1
Slide 48: Macro indicators | FX average rates
® Macro indicators | FX average rates Average rand to local currency weakness benefits group reported results (excluding Iran) Local currency appreci (YoY % change) 125 ion against ZAR ZAR: LC 120 ZAR: Local currency | 12019 H12018 —-H2. 2018 strengthening/(weakening) 115 111,7% Nigerian naira 25,49
Slide 49: Macro indicators | FX closing rates
® Macro indicators | FX closing rates ZAR : Local currency H12019 H1 2018 H2 2018 strengtheningitweciering) Nigerian naira 25,56 26,25 25,33} 0,9% Iranian rial 7:972,00 3 089,10 604373 # 31,9% Ghanaian cedi 0,38 0,37 034. # 11,8% Cameroon XAF 40,93 41,19 39,89} 2,6% Ugandan shilling 261,54 281,94 25
Slide 50: Taxation
» Taxation porn Group effective tax rate impacted by withholding tax and non-deductible Sudan expenses Reconciliation to corporate tax rate Statutory tax rate (Rm) H12019 H12018 % Change Normal tax 3268 3279 (0,3) Non-deductible Sudan expenses Deferred tax (517) (969) (46,6) Deferred tax asset not r