Mtn Nigeria Communications Plc · NSENG:MTNN
Mtn Nigeria Communications — Q3 2020 Earnings Presentation
38 slides from Mtn Nigeria Communications's earnings presentation, 2020
Slide 1: Q3 2020 Investor Presentation
Q3 2020 Investor Presentation Sensitivity ‘Internal
Slide 2: Agenda
» Agenda 1 Operational Review 2 | Strategic Review Ei Financial Update 4 Looking Ahead
Slide 3: Operational Review
hi SO a Operational Review
Slide 4: 4G and 3G population coverage, data and smartphone penetration
4G Population 3G population Data Smartphone coverage coverage penetration penetration
Slide 5: Strong Position in Attractive Market
» Strong Position in Attractive Market Par MTN Nigeria is the clear market leader Leader in the Nigerian Telecoms Market with a Strong Competitive Advantage across all Segments MTNN - Subscriber and ARPU leader Subscriber Market Share (Aug 2020A) ARPU wap (NGN, @3 2020A) os Grey ox aS 83.1 Total Sub
Slide 6: Exciting Market Opportunity
» Exciting Market Opportunity Young population & mobile penetration and data usage upside Mobile Subscribers (m, @3 2020A) [ Historical (154-204 CAGR) 1 [ Forecast (204-256 CAGR) increase in 5 years F 196 ED Penetration (Q3 2020A) 2.6% ams gm 198% - 2025E a3 2.2% & (South Africa) 102 98 a = TH = O S
Slide 7: Well-positioned for the Long-term
» Well-positioned for the Long-term Unmatched nationwide coverage and high quality network @ Best Coverage #1 in the country? Leading Mobile Network Coverage by Population @ 4G Coverage (53%) @ 3G Coverage (80%) @ 2G Coverage (88%) * Best network quality with highest NPS amongst peers Source: Compan
Slide 8: Leading Commercial Proposition
’» Leading Commercial Proposition Leading commercial proposition allows MTNN to attract customers across all segments and focus on high value segment Largest Physical Distribution Network in Nigeria aN +1m retail touchpoints a Enabler of subscriber acquisition strategy Fast Growing Digital Distribut
Slide 9: Balanced Structure with Versatile Team
» Balanced Structure with Versatile Team Chief Executive Officer) Ferdi Moolman Joined MTN: 2001 Years of telco experience: 19 Chief Finance Officer Modupe Kadri Joined MTN: 2007 Years of telco experience: 13 Company Secretary Uto Ukpanah Joined MTN: 2005 Years of telco experience: 15 Chief Risk and
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Slide 11: Recent Developments
» Recent Developments Covid-19 impact on global economies Dampened activity with Fear factor and lockdowns restricting mobility Demand and supply side shocks Downward pressure on oil price Implications for currencies & capital markets Impact on MTN Nigeria Volatility of oil prices placing pressure o
Slide 12: Operational Highlights
» Operational Highlights Strong performance supported by voice and data growth Subscribers 75.0m +21.2% YoY Total Subs 30.7m Active data users +37.7% YoY +31.9% YoY lomme) He 13.3% 9m’20 80.2% +4.2pp YoY 3G Coverage 52.9% | +17.5pp YoY 4G Coverage Notes: YoY is 9M 2020 vs. 9M 2019. (1) As at 30 Sept
Slide 13: Strategic Review
nl Pm Strategic Review
Slide 14: Building a Digital Operator
» Building a Digital Operator The evolving telco Enterprise Wholesale Outgoing calls and incoming calls Mobile access data Fixed data Mobile & fixed connectivity, devices, loT, Cloud Interconnect, inbound roaming and fixed wholesale Notes: (1) Total revenues from Voice, Data. Digital. Fintech, Enter
Slide 15: Unlocking Opportunities Across the Curves
™» Unlocking Opportunities Across the 6 Curves Far Six distinct growth opportunities (or ‘curves’) we are pursuing simultaneously across the consumer, enterprise and wholesale market segments ——_———— Consumer Oo Accelerating Positioning Rapid scale Broadening Stable Sustaining VOICE DATA as next DIG
Slide 16: Sustaining Voice Growth
)» Sustai ing VO'1CE Growth Voice Revenue +4.2% YoY N'bn Cron 20 QD 20.09 ED 736 ED 40%) 227.0 222.3 444.5 220.0 211.3 209.3 205,2 207.7 2 187.3| ql Q2 Q3 Q4 ©2018 2019 m2020 Notes: YoY is 9M 2020 vs. 9M 2019, QoQ is Q3 2020 vs Q2 2020. (1) Effective revenue per minute. e Subscriber base growth — ad
Slide 17: Accelerating Data as Next Wave of Growth
» Accelerating 541A as Next Wave of Growth Data Revenue +57.0% YoY N'bn Growth 23% GED 320% GD 410% GED caw 74.1 Revamped data pricing in line with market Revamped commission and discount structures Extended 4G coverage Following the unlocking of 800MHz Introduction of smart feature phones Upgrade o
Slide 18: Positioning Digital on a Sustainable Growth Path
» Positioning 9!G!TA. ona Sustainable Growth Path Digital Revenue igital subscriptions of about 1.5m unique paid users, providin: fo) * Digita p que p Pi iz +114.3% support for the uptake of our services YoY ¢ Improved customer journey and experience on value-added services ¢ Increasing data adoptio
Slide 19: Rapid Scale of Fintech on Expanding Agent Network
» Rapid Scale ©! 1 =CH on Expanding Agent Network Fintech Revenue Increased adoption of MTN Xtratime +28.3% YoY Synergies with growing digital services Synchronised products distribution and channels across the business Expanding agent network: Nb — 311k registered agents (+201k in 9M’20) n — Proces
Slide 20: Broadening Enterprise Ecosystem
» Broadening ENTERPRISE Ecosystem Par © Penetration across different markets © Deployment of vertical solutions across segments e¢ Expanding channel coverage for SMEs e Enhanced partner ecosystem especially with relevant ICT players © Cost efficiency drive focusing on core activities * End to end so
Slide 21: Stable Wholesale Business
)» Stable WHOLESALE Business COVID-19 lockdown impacted demand for wholesale services * Monetising existing infrastructure e¢ Huge capacity demand « Satellite to fibre migration e Fast growth in digital services * Increasing need to invest in infrastructure efficiently e Harnessing opportunities by
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Slide 23: Financial Highlights
» Financial Highlights Strong financial performance in 9M 2020 Service Revenue Voice +13.9% +4.2% YoY YoY EBITDA EBITDA Margin +9.1% -2.3pp YoY YoY Notes: Unless otherwise stated, all figures are based on IFRS 16. YoY is 9M 2020 vs. 9M 2019. Data +57.0% YoY Free Cash Flow +0.4% YoY (3.3%) YoY
Slide 24: 9M'20 Performance Summary
™» 9M’20 Performance Summary Despite COVID-19, data has driven strong revenue growth EBITDA Service revenue Capex (IFRS (NGN bn) (NGN bn) ; YoY Growth EBITDA Margin Capex Intensity? (15.6%) ED Capex Intensity?) 497.9 EBITDA 9M'19 9M'20 9M'19 9M'20 m= Voice mData mDigital mFintech mWholesale mOther (
Slide 25: Total Revenue
» Total Revenue Revenue growth on track (NGN bn) M'20 Update 1,169.8 a 49,7 1,039.1 48.2 12. ' ne 35.2 318 gas.4 7° 28.6 46 975.8 5.8 aus Other 856.5 36.8 324 = Wholesale: 9.2 ey mFintech ‘= Digital = Data Voice 2017 2018 2019 omM'19 9M'20 Voice 74.3% 75.3% 72.5% 73.4% 67.1% Data 12.1% 14.9% 18.8% 1
Slide 26: Cost Breakdown
)» Cost Breakdown Fern) Cost of sales (NGN bn) 9M'20 Update ¢ Increase in cost of sales slower than revenue cross “812% 16K sew Cais 179.2 ¢ Marginal improvement in gross margin by 0.4pp to 160.9 81.6% m= Other 8.4 ¢ Increased interconnect cost due to: m= Regulatory . 05 — Growth in subscriber base
Slide 27: Cost Breakdown: Operating Expenses
)» Cost Breakdown Fern) Operating expenses (Opex) Opex intensity ¢ Growth in operating expenses driven mainly by an | increase in lease rental costs Cpexts pill 356.1 408,50 321.1 239.2 298.8 (NGN bn) © Increase in lease rental costs due to an aggressive Other rollout of 4G sites in the last twelve
Slide 28: EBITDA Margin 9M'19 vs. 9M'20
» EBITDA Margin 9M’19 vs. 9M'20 (incl. IFRS 16) Revenue driving growth in EBITDA +9.0% ¥ Aggressive roll-out of EBITDA AG in the last 12 (NGNbn) months, exchange rates adjustments and the increase in VAT 53.3% — 0.5% O55 0.7% (2.3%) (0.4%) (0.3%) (0.3%) (0.3%) (0.2%) (0.2%) Adj.EBITDA Lease Rental P
Slide 29: Capital Expenditure Breakdown
»» Capital Expenditure Breakdown Par 4G network expansion driving investment in capital expenditure NGNbn 9M'20 225.3 208.3 133.5 184.2 6.2% rd 4 = Network mn Capex air 130.0 = Other —Capex Intensity 83.8% 2017 2018 2019 9M'19 9M'20 Capex Mix (%) 2018 2019 9M'20 Sites 3G 8295 5795 374 Network 91.5%
Slide 30: Cash flow
)® Cash flow Strong cashflow position & working capital efficiencies (2) Net Interest Paid NCC Fine Repayments (NGNbn) 9M'20 131. 37.4 55.9 Le EBITDA Capex‘? Change in Net Current Income Working Capital Tax Paid 9M’19 18.8 —— 62.0 EBITDA Capex” Change in Net Current Income Working Capital Tax Paid N
Slide 31: Capital Structure Overview
)» Capital Structure Overview (NGNbn) * MTNN has historically maintained moderate leverage; remains in a comfortable position Total 5099) > per ED C475 A> relative to covenants on current 9M’20 metrics: — Interest Coverage of c. 11.79‘? (excl. financial leases) 296 271 — Net Debt to EBITDA of c.0.49
Slide 32: Looking Ahead
Looking Ahead
Slide 33: Investing for Sustainable Growth
» Investing for Sustainable Growth Voice « Further targeted segment value propositions © Expand rural coverage * Focus on multi- product propositions & customer lifetime value Data Focus on 4G coverage Optimize of frequencies to Further enhance quality and coverage Scale up data education programme
Slide 34: Our Impact: Enabling Broader Economic & Social Development
Our Impact: Enabling Broader Economic & Social Development 2 Carrier of carriers to cane Enabling over 4.3 Each month, over Nigerianenen | MATES Jémillion scone aheilaia ‘ein , we . ' zg h MTN " with no airtime — Carriers & ICT places where h Is rapid & expedient connect with their R Il the sole pro
Slide 35: MTN Nigeria Investment Case
» MTN Nigeria Investment Case Strong position in the right market * Largest African economy * Largest telecoms market in Africa * Clear leader in mobile market Attractive return profile * Double digit revenue growth ° Efficiencies improve margins * Smart capex moderates investment * Strong cash flow
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Slide 37: Disclaimer
» Disclaimer This presentation has been prepared by MTN Group (‘MTN") and MTN Nigeria Communications Pic or a successor entity (the "Company", and together with its direct and indirect subsidiaries, the "Group") to provide an overview of the Group. “Presentation” means this document, its contents or
Slide 38: Disclaimer (continued)
» Disclaimer | continued The presentation includes market share and industry data obtained by MTN and the Company from industry publications and surveys and internal surveys. MTN and the Company may not have access fo the Facts and assumptions underlying the numerical data, market data and other inf
MTN Nigeria Communications — Q3 2020 Earnings Presentation on 6ix