Mtn Group Limited · JSE:MTN
Mtn — H1 2023 Earnings Presentation
48 slides from Mtn's earnings presentation, August 2023
Slide 1: MTN Group Results presentation
MTN Group Results presentation For the six-month period ended 30 June 2023
Slide 2: Disclaimer
Disclaimer The information contained in this document (“presentation”) 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 containe
Slide 3: Agenda
Agenda 01 Highlights 02 Operational & strategic review 03 Financial review 04 Looking ahead 3
Slide 4: Highlights
Highlights Ralph Mupita Group President and CEO 4
Slide 5: Our operating context
Our operating context Macro factors impacting our performance Inflation Forex volatility / cash Regulatory Energy / Sudan conflict availability Power / Towercos • Inflation remained • ZAR/$ depreciation | • SIM registrations • Oil prices • Fuel shortages and elevated in H1 >10% movement in H1 networ
Slide 6: Ambition 2025 execution in challenging trading conditions
Ambition 2025 execution in challenging trading conditions Steady progress Strong commercial Financial resilience Continued execution Creating performance in a maintained of strategic priorities shared value challenging macro • Subscribers +3.6% to 292m • ND/EBITDA of 0.4x | • Group fintech commercia
Slide 7: Highlights | financial
Highlights | financial Unique growth engine supports solid financial performance +15.1%* +23.6%* +21.7%* Service revenue Data revenue Fintech revenue R107.7bn R42.1bn R10.0bn +13.5%* -0.5pp* +24.8%* EBITDA EBITDA margin Adjusted HEPS R49.4bn 43.6% 749cents 15.2% (capex intensity) Net debt/EBITDA +16
Slide 8: Operational & strategic review
Operational & strategic review Ralph Mupita Group President and CEO 8
Slide 9: South Africa
South Africa Improving performance | Investment in resilience yielding results Market context Key activities Solid results • Avg inflation, 7%; prime lending rate • Price optimisation and increases • Subscribers +3.9% to 36.7m | Resilient 11.75% | ZAR weakness performance across business units • Pre
Slide 10: Nigeria
Nigeria Strong commercial momentum despite ST headwinds | Policy reforms underpin MT growth outlook Market context Key activities Solid results • Average inflation of 22.2% • Price optimisation and CVM • Subscribers +4.0% to 77.1m • Cash shortage in Q1 | FX devaluation • R6.3bn in capex | Accelerate
Slide 11: Markets
Markets Continued broad-based growth SEA WECA MENA +17.9%* +23.0%* +13.9%* +21.9%* +22.0%* +27.2%* service revenue data revenue service revenue data revenue service revenue data revenue • Subscribers +8.3% to 37.7m • Double-digit service revenue sustained • Active data subscribers, -1.1% • Double-di
Slide 12: Fintech ecosystem expansion
Fintech ecosystem expansion 8.3 billion TX volume (+37.3% YoY) | US$135.2bn TX value (+61.6%*) MoMo MAU (m) Agents (‘000) Merchants (‘000) 100 3 000 2 000 61 61 1 283 49 1 086 1 536 856 946 582 H1 21 H1 22 H1 23 2025 H1 21 H1 22 H1 23 2025 H1 21 H1 22 H1 23 2025 MAU impacted by cash shortage in Nige
Slide 13: Strategic partnership with Mastercard
Strategic partnership with Mastercard Commercial partnership overview Transaction MOU Commercial partnership supports growth and profitability of fintech • Mastercard has signed an MOU providing for minority investment across a number of verticals: into MTN Group Fintech ➢ Issuance: Mastercard state
Slide 14: Progress to date
Accelerate portfolio transformation IHS no longer anticipated to be source of ARP proceeds in the near to medium term E-commerce portfolio TowerCo investments Localisation & other Pan-African Portfolio Focus transformation Progress to date • IHS listed on NYSE • Nigeria IPO – R4.2bn • Conditional re
Slide 15: Progress against our medium-term guidance
Progress against our medium-term guidance H1 23 results broadly in line with our medium-term targets KPI Target Performance Group: at least mid-teens 15.1%* Service revenue growth South Africa: Mid-single-digit 1.9% Nigeria: at least 20% 21.6%* Accelerate fintech platform growth >20% service revenue
Slide 16: Financial review
Financial review Tsholofelo Molefe Group CFO 16
Slide 17: Group income statement
Group income statement Strong top-line growth | Bottom-line impacted by inflation and FX % change % change (Rm) H1 23 H1 22 reported constant currency Revenue 113 203 97 491 16.1 14.8 Service revenue 107 735 92 466 16.5 15.1 EBITDA before once-off items 49 407 44 129 12.0 13.5 Once-off items (539) (
Slide 18: Group service revenue
Group service revenue Robust performance underpinned by broad-based growth +15.1% (Rm) 448 107 735 1 012 615 107 287 1 782 8 002 130 2 560 93 186 H1 22 Voice Data Digital Fintech Wholesale SMS, ICT H1 23 Hyperinflation H1 23 CC and Other CC Reported +6.1% +23.6% +8.0% +21.7% +32.3% +13.4% H1 22 CC a
Slide 19: South Africa
South Africa Improving service revenue trend | Upward pressure on expenses from high inflation and network costs (Rm) constant currency Service revenue Expenses EBITDA and Capex +1.9% 39.7% 36.1% EBITDA margin^ 20 431 20 045 Capex intensity 13.0% 16.0% (ex-leases) +9.0% 5 651 Voice^^ -13.0% -6.8% 6
Slide 20: Nigeria
Nigeria Strong overall service revenue performance | Margin resilience (Rm) constant currency Service revenue Expenses EBITDA and Capex +21.6% 53.6% 53.1% EBITDA margin +23.2% 43 583 20 553 Capex intensity 21.6% 14.4% (ex-leases) +20.8% 35 853 16 676 7 138 Cost of sales +15.9% EBITDA 23 260 21 287 V
Slide 21: Fintech revenue breakdown
Fintech revenue breakdown +25% revenue growth in Q2 | Continued evolution towards more advanced services (Rm) constant currency Revenue Fintech revenue contribution by services +21.7% 9 992 Advanced services 18.3% 8 210 4 235 Withdrawal +17.2% H1 23 Airtime advance 25.5% 3 613 1 374 Transfer Service
Slide 22: Group expenses
Group expenses Cost growth driven by Nigeria site roll-out and CPI & FX impacts on BTS lease rentals (Rm) constant currency Expenses Expenses breakdown +15.9% 63 216 54 531 27 950 Cost of sales +12.2% 45.7% 44.2% Cost of sales 24 907 17.3% 19.3% Network, rent and utilities 9.4% 9.0% Maintenance 35 2
Slide 23: Efficiencies to support earnings and returns
Efficiencies to support earnings and returns Ongoing expense efficiencies: R0.7bn (of R1.5bn target in H1 23) | Group EBITDA margin of 43.6%* Expense efficiency programme Total costs to revenue contribution Savings realised by area Savings realised by region 54.9% 56.4% 54.7% General & administratio
Slide 24: Adjusted HEPS
Adjusted HEPS ~25% increase in adjusted HEPS underpinned by solid operational results Reported Reported (R’cents) H1 23 H1 22 change % Attributable EPS 511 445 14.8 Impairment of goodwill, PPE and associates 13 25 Impairment loss on remeasurement of disposal groups 21 52 Net gain (after tax) on disp
Slide 25: Capex (ex-leases)
Capex (ex-leases) Accelerated capex | IT spend on digital platforms (Rm) Capex (ex-leases) Capex segmentation across operations and regions 17 078 17 232 IT Systems 33.0% Nigeria 36.6% 11 568 Radio Access 41.0% SA 23.7% WECA 24.6% Core Network 2.0% SEA 9.9% 17.5% Site Infrastructure H/O 3.3% 13.3% 1
Slide 26: Statement of cashflows
Statement of cashflows OpFCF (before spectrum acquisitions) is up by 16.6% YoY on higher EBITDA and lower capex 48 868 1 478 Nigeria – R2.4bn Ghana – R687m -5 052 Sudan – R77m -5 981 +16.6% +59.2% 5 509 22 420 Mainly translation 18 947 impact on Nigeria -16 893 cash balances -3 473 -6 735 -3.3% 7 49
Slide 27: Holdco net debt and liquidity profile
Holdco net debt and liquidity profile Strong balance sheet | Continue to explore liability management opportunities Holdco Net Debt (R’bn) Maturity profile (R’bn) 43.3 48% 30.1 8.1 USD 8.5 23.1 36.9 7.9 7.4 41% 36% 37% 52% 4.8 ZAR 4.1 59% 64% 59% 64% 63% 1.9 1.8 0.4 1.0 2020 2021 2022 H1 23 2023 202
Slide 28: Looking ahead
Looking ahead Ralph Mupita Group President and CEO 28
Slide 29: Near-term outlook challenging, investment case intact over the medium-term
Near-term outlook challenging, investment case intact over the medium-term Outlook underpinned by commercial and strategic execution Geopolitical Inflation Exchange rates Tariffs Power | towerco agreements • Implications of • Elevated in some key • ZAR vs US$ • Ongoing engagements • Loadshedding in
Slide 30: Structurally higher demand for data & fintech
Structurally higher demand for data & fintech MTN’s investment case and medium-term growth outlook is underpinned by structural demand Data traffic Fintech transaction volume Lockdowns easing across our markets Lockdowns easing across our markets Start of COVID-19 +1001 Start of COVID-19 +3.2 +570 +
Slide 31: A compelling African growth story
A compelling African growth story Africa’s leading and scale connectivity & Exciting demographic opportunity infrastructure business Fintech ➢ #1 or #2 subscriber share in all our markets ➢ Fast-growing, youthful population ➢ ‘Second to none’ & well-invested ➢ Low data, fintech and digital adoption
Slide 32: Key takeaways
Key takeaways 01 Solid H1 23 with positive data and fintech momentum in Q2, despite near-term headwinds • Data revenue, +23.6%* • Fintech revenue, +21.7%* 02 Network resilience supports continued improvement in MTN SA key performance metrics • Improved network availability | Positive network NPS; tr
Slide 33: Medium-term guidance framework
Medium-term guidance framework Medium-term guidance maintained KPI Target Group: at least mid-teens Service revenue growth South Africa: Mid-single-digit Nigeria: at least 20% Accelerate fintech platform growth >20% service revenue contribution Holdco leverage < 1.5x, faster non-rand deleveraging As
Slide 34: Thank you Q&A
Thank you Q&A 34
Slide 35: Appendices
Appendices 35
Slide 36: Definitions and notes
Definitions and notes • All financial numbers are YoY unless otherwise stated • All subscriber numbers are compared to end-June 2022 unless otherwise stated • Service revenue excludes device and SIM card revenue • Data revenue is mobile and fixed access data and excludes roaming and wholesale • Fint
Slide 37: Macro indicators | average FX average
Macro indicators | average FX average ZAR: LC ZAR: Local currency H1 23 H1 22 strengthening/(weakening) Nigerian naira 26.42 26.97 (2.0%) Iranian rial 18 496.97 15 845.42 16.7% Ghanaian cedi 0.66 0.47 40.4% Cameroonian franc 33.14 38.69 (14.3%) Ugandan shilling 204.29 232.76 (12.2%) South
Slide 38: Macro indicators | Closing FX average
Macro indicators | Closing FX average ZAR: LC ZAR: Local currency H1 23 H1 22 strengthening/(weakening) Nigerian naira 40.21 27.05 48.7% Iranian rial 19 960.07 16 914.43 18.0% Ghanaian cedi 0.63 0.62 1.6% Cameroonian franc 31.94 35.93 (11.1%) Ugandan shilling 195.14 218.43 (10.7%) South Su
Slide 39: Finance costs
Finance costs Overall high finance costs predominantly due to increase in forex losses as result of significant Naira devaluation due to government’s decision to liberalise the forex market Finance costs (Rm) H1 23 H1 22 Group leverage Net interest paid 3 399 2 645 (Rm) H1 23 H1 22 Finance costs – l
Slide 40: Forex losses/(gains) breakdown
Forex losses/(gains) breakdown Forex losses / (gains) (Rm) H1 23 H1 22 Head offices (240) 1 804 South Africa 407 (186) Ghana 107 140 Nigeria 4 376 506 Zambia (142) (14) Other 113 127 Net forex losses/(gains) 4 621 2 377 40
Slide 41: Continued to invest in scaling fintech platform
Continued to invest in scaling fintech platform Total fintech transactions 8.3 billion tx volume +37.3% YoY US$135.2bn tx value +16.3%^ YoY ^61.6% constant currency Wallet Banktech 60.5m MoMo users 0.0% YoY US$1.0bn loan value +61.5%^ YoY 1.3m MoMo Active agents +18.1% YoY 2.7m unique loan users +41
Slide 42: Share of results of associates and joint ventures after tax
Share of results of associates and joint ventures after tax Increase in the results is driven by strong underlying performance from MTN Irancell (Rm) H1 23 H1 22 % change Telco joint ventures 935 1 155 (19.0) Iran 698 975 (28.4) Iran (excl. hyperinflation) 918 888 3.4 Iran (hyperinflation) (220) 87
Slide 43: Iran Income Statement
Iran Income Statement Increase in results mainly driven by operational performance (R’m) +20.2% 2 144 -4 -1 298 1 873 -279 1 558 -387 140 1 425 -1 -448 2022 CC Revenue Other Expenses Depreciation, Finance Equity Income 2023 CC Hyperinflation 2023 Net profit income Amortisation costs income Tax Net p
Slide 44: Statement of financial position
Statement of financial position (Rm) H1 23 Dec 22 % change Property, plant and equipment 105 375 108 776 (3.1) Intangible assets and goodwill 51 432 50 277 2.3 Right-of-use assets 55 257 50 625 9.1 Other non-current assets 52 474 44 026 19.2 Mobile Money deposits 44 123 39 273 12.3 Other current ass
Slide 45: Net debt
Net debt Net debt/(cash) Net debt/(cash) (Rm) Cash and cash equivalents Net interest-bearing liabilities H1 23 H2 22 South Africa 1 330 - (1 330) (2 270) Nigeria 20 688 21 265 577 4 624 SEA 2 302 4 432 2 130 1 943 Uganda 800 1 116 316 224 Zambia 111 1 908 1 797 1 487 Other 1 391 1 408 17 232 WECA 9
Slide 46: Net debt composition ZAR vs Non-ZAR/ Naira vs Non-Naira
Net debt composition ZAR vs Non-ZAR/ Naira vs Non-Naira Nigeria borrowings (%) Head office borrowings (%) 85% 63% H2 22 (91%) H2 22: (56%) (64%) Naira ZAR 15% Non-Naira Non-ZAR H2 22: (9%) 37% H2 22: (44%) (36%) Nigeria cash (%) Head office cash (%) 74% H2 22 (86%) 26% Naira 36% Non-ZAR H2 22: (14%)
Slide 47: Capex | ex-leases
Capex | ex-leases (Rm) 17.5% 15.2% 17 078 17 232 7 579 6 311 4 076 4 021 4 246 3 233 1 684 1 724 881 1 015 438 539 123 336 SA Nigeria SEA WECA MENA Iran^ Other Group H1 22 H1 23 Capex intensity 47 ^ Iran capex at 49% and is not part of the consolidated Group Capex
Slide 48: Statement of cash flows | IFRS
Statement of cash flows | IFRS (Rm) H1 23 H1 22 % change Cash generated from operations 45 294 41 541 9.0 Dividends received from associates and joint ventures 4 279 (1.0) Net interest (paid) / received (6 735) (5 207) (29.3) Tax paid (7 337) (7 324) (0.2) Cash generated by operating activities 31 2