Slide 1: MTN Group Limited – Final audited results for year ended December 2007
MTN Group Limited Final audited results for year ended 31 December 2007
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
DIVIDER: Strategic and operational overview Strategic and operational overview Phuthuma Nhleko Group President and CEO 3
Slide 4: MTN vision
MTN vision To be the leader in telecommunications in emerging markets National player African player Emerging market player 4
Slide 5: Key economic developments
Key economic developments South Africa Nigeria Ghana Iran Sudan Syria GDP Growth 5% 6.1% 6.2% 4.3% 12.8% 3.5% (2007 est) Inflation rates 9% 9% 11% 14% 8.5% 9% Dec 07 Market size 56 80 23 52 18 12 million (2012) GDP/Capita nominal US$ 6,239 938 649 4,252 1,262 1,516 (2007 est) High growth markets Sou
Slide 6: Erlang
Erlang Erlang: The Erlang is a unit of traffic density in a telecommunications system. One Erlang is the equivalent of one call in a specific channel for 3,600 seconds in an hour. 40% 50% 12% 24% 168% 32% 16% 36% 28% 42% 53% 3906% 14% 139% 702% 94% 2002 2003 2004 2005 2006 2007 2008 F South Africa N
Slide 7: Group highlights
Group highlights Group subscribers Revenue EBITDA Up 53% to 61,4 million Up 42% to Up 42% to ZAR 73,145 billion ZAR 31,845 billion EBITDA margin Adjusted headline EPS Dividend declaration Marginally up Up by 17% Up 51% to 136 c/share from 43.4% to 43.5% to 681.9 cents totalling R2,536 billion Net de
Slide 8: Key developments…
Key developments… • Continue seeking value accretive opportunities in existing and new territories Expansion • Broadened local shareholder base in Uganda, Nigeria and Côte d’Ivoire opportunities • Increased MTN shareholding in Rwanda and Botswana • Demand continues to outstrip supply in key markets
Slide 9: Subscriber contribution by region…
Subscriber contribution by region… MTN Group Total Proportionate* (subscriber million) (subscriber million) 61.4 50.4 48.3 23% 19% 40.8 40.1 17% 34.7 15% 12% 46% 11% 45% 49% 48% 46% 46% 39% 35% 31% 43% 39% 36% Dec-06 Jun-07 Dec-07 Dec-06 Jun-07 Dec-07 SEA WECA MENA * Based on % ownership Increased d
Slide 10: Relative quarter ARPU performance (USD)
Relative quarter ARPU performance (USD) 25 23 21 20 20 18 $19 (2006) 17 17 17 Avg ARPU 16 (group) $16 (2007) 15 14 12 10 10 9 5 0 South Africa Nigeria Ghana Sudan Syria Iran Dec 06 Dec 07 * All ARPUs YTD 10
Slide 11: EBITDA analysis
EBITDA analysis EBITDA Contribution % EBITDA Margin % * Difference in HQ companies 11
Slide 12: South & East Africa (SEA) region
South & East Africa (SEA) region Subs 19m (31% group) Revenue ZAR31bn (43% group) EBITDA ZAR11bn (36% group) PAT ZAR6bn (45% group) SEA Capex: 102 ZAR 3,707m 490 South Africa Botswana 213 Swaziland 27 Zambia 31 2,843 Uganda Rwanda Based on % ownership Subscribers (’000) % change Contribution Country
Slide 13: South Africa – operational highlights
South Africa – operational highlights Launched Jun 1994 Market share 36% Population 48m Market sizing 56m (2012) Penetration 86% Shareholding 100% Subscribers 14,799 • Strong recovery in post paid in H2 ZAR (’000) 12,655 – Channel strategy and value proposition Postpaid 10,380 – H1: net adds 238 000
Slide 14: South Africa – infrastructure and data highlights
South Africa – infrastructure and data highlights 2,843 2,391 Capex 2,256 • High demand required re-evaluation of ZAR million 1,745 590 1,549 network capacity 1,186 – Laying of own fibre cable as a key priority 1,045 H1 1,666 – 359 (2G) and 378 (3G) BTS’s rolled out 1,294 H2 703 1,205 • Increased 3G
Slide 15: South Africa – regulatory update
South Africa – regulatory update • Licence conversion required by the ECA by 19 July 2008 (possible Mobile six month extension) licences • MTN engaging with ICASA re: content and finalisation • ICASA issued draft regulations on 24 Dec 2007 Interconnect • Public hearings were held to solicit further
Slide 16: West & Central Africa (WECA) region
West & Central Africa (WECA) region Subs 28m (46% group) Revenue ZAR31bn (42% group) EBITDA ZAR17bn (52% group) PAT ZAR8bn (60% group) WECA Capex: 401 ZAR 7,915m 462 237 Nigeria Ghana 787 Cote d'Ivoire 4,789 Cameroon Congo B. 1,239 Other Based on % ownership Subscribers (’000) % change Contribution
Slide 17: Nigeria – operational highlights
Nigeria – operational highlights Launched Aug 2001 Market share 44% Population 141m Market sizing 80m (2012) Penetration 27% Shareholding 85% • Quality of service remains a priority – Lagos and Abuja • Demand driven growth (no promos) • Strong subscriber growth and market share maintained 16,511 – C
Slide 18: Nigeria – infrastructure
Nigeria – infrastructure 5,518 Capex 4,789 • Strong subscriber demand ZAR million 2,463 3,849 3,674 • Aggressive rollout in H2 1,665 2,979 – Momentum of H2 rollout to continue H1 2,121 • Niger-delta & Lagos metro fibre optic cabling H2 3,055 completed in H2 2,184 1,553 1,810 – 77 sites integrated wi
Slide 19: Ghana – operational highlights
Ghana – operational highlights Launched Nov 1996 Market share 52% Population 22.9m Market sizing 23m (2012) Penetration 33% Shareholding 98% • High growth market – Market share maintained at 52% – H1: 807 000 net adds H2: 624 000 net adds 4,016 – Total subscribers Feb 08: 4 245 000 Subscribers/ARPU
Slide 20: Ghana – infrastructure
Ghana – infrastructure Capex 1,239 • Significant investment required post acquisition ZAR million • Aggressive network rollout to meet demand 801 977 – 718 new BTS’s (Total 1660) H1 484 – 4 new switches (total 14) H2 • Coverage 317 262 – Geographic 27% (Dec 07) Dec-06 Dec-07 – Population 73% (Dec 07
Slide 21: Middle East & North Africa (MENA) region
Middle East & North Africa (MENA) region Subs 14m (23% group) Revenue ZAR11bn (14% group) EBITDA ZAR2.5bn (8% group) PAT ZAR0.7bn (5% group) MENA Capex: 185 ZAR 3,676m 418 400 Syria 150 Iran Sudan Yemen Afghanistan 1,559 964 Other Based on % ownership Subscribers (’000) % change Contribution Country
Slide 22: Iran – operational highlights
Iran – operational highlights Commercial Launch Dec 2006 Market share 23% Population 70.6m Market sizing 52m (2012) Penetration 37% Shareholding 49% • Strong start-up performance • Market share up from 12% (Jun 07) to 25% (Dec 07) • H1: net adds 1 829 000 H2: net adds 4 023 000 Subscribers/ARPU 6,00
Slide 23: Iran – infrastructure
Iran – infrastructure Capex 1,559 • Step change in network capacity ZAR million – Improved perception of service quality 49% ownership 845 due to network rollout H1 773 – 2003 live sites H2 675 – 1500km road coverage 714 – 339 cities covered 98 • Compliant with network rollout licence Dec-06 Dec-07
Slide 24: Sudan – operational highlights
Sudan – operational highlights Launched Sep 2005 Market share 28% Population 37m Market sizing 18.4m (2012) Penetration 21% Shareholding 85% • Strong subscriber growth despite technical challenges in Q1 and competition • Increased market share from 25% to 28% • ARPU impacted by – Low flat rate by CD
Slide 25: Sudan – infrastructure
Sudan – infrastructure Capex 964 • Q1 technical challenges resolved ZAR million • Difficulties in rolling out sites in south Sudan 624 472 • Rolled out >40 sites in Darfour H1 • 1200 km fibre network rollout from Khartoum 413 H2 to Port Sudan 492 211 • 2885km road coverage • Coverage Dec-06 Dec-07 –
Slide 26: Syria – operational highlights
Syria – operational highlights Launched Jun 2002 Market share 45% Population 19.1m Market sizing 11.1m (2012) Penetration 16% Shareholding 75% • Good subscriber growth – Increased sales focus – GSM services (targeted data product portfolios) • High churn Subscribers/ARPU 3,109 – Affordability – Shor
Slide 27: Syria – infrastructure
Syria – infrastructure 418 Capex • Enhanced quality network ZAR million 338 176 – Rolled out BTS 317 219 • Fibre – using regulator’s infrastructure H1 • Coverage H2 242 – Geographic 78% (Dec 07) 119 – Population 97.5% (Dec 07) Dec-06 Dec-07 • 3G trials Capex as • 200 3G sites planned for 2008 % of r
Slide 28: Expected 36% increase in subscriber growth
2008 Actual 2008 2007 net adds guidance South Africa 14,799 2,200 Nigeria 16,511 5,000 Ghana 4,016 1,300 Iran 6,006 7,000 Syria 3,109 680 Sudan 2,090 1,100 Rest 14,822 4,500 61,353 21,780 Expected 36% increased in subscriber growth 28
Slide 29: Financial overview
Financial overview Rob Nisbet Group Finance Director 29
Slide 30: Financial trends
Financial trends Group revenue Group EBITDA Adjusted HEPS* ZAR billion ZAR billion cents Organic growth 27.8% Organic growth 27.3% 41.8% 42.1% 16.6% 38.9 16.6 357.2 306.2 31.4 13.8 119.8 9.8 3.8 34.2 15.2 324.7 278.5 17.2 20.2 7.2 8.6 218.4 Dec-05 Dec-06 Dec-07 Dec-05 Dec-06 Dec-07 Dec-05 Dec-06 Dec
Slide 31: Key accounting considerations
Key accounting considerations • Total tax 7 791m (Normal tax 5 965m, deferred tax 1 361m, STC 209m and withholding taxes 256m) • 39.5% effective tax rate YTD Group tax • AHEPS effect (MTN share): – Deferred tax credit, ZAR 223m (total ZAR 264m) – Unwind of pioneer status deferred tax assets ZAR 1 66
Slide 32: Earnings per share
Earnings per share 12 months 12 months cents ended Dec 2007 ended Dec 2006 % change Basic headline earnings per share 584.8 606.5 (3.6) Reversal of put option in respect of subsidiaries 19.7 15.3 28.8 Reversal of the subsequent utilisation of deferred 89.4 – tax asset Reversal of deferred tax asset
Slide 33: Exchange rates analysis
Exchange rates analysis Average (PAT) Closing Dec Dec Dec Dec 2007 2006 % var 2007 2006 % var Rand per Dollar 7,04 7,04 – 6,78 7,05 4 Nigerian Naira per Dollar 125,98 128,49 2 118,40 128,41 8 Iranian Rials per Dollar 9 300,10 9 168,96 (1) 9 446,00 9 220,00 (2) Ghana Cedis per Rand 1 318,79 1 282,55
Slide 34: Income statement
Income statement 12 months 12 months % ended ended % change excl. ZAR million Dec 2007 Dec 2006* change Investcom Revenue 73 145 51 595 41.8 27.8 EBITDA 31 845 22 413 42.1 27.3 EBITDA MARGIN 43.5% 43.4% Depreciation (6 774) (5 030) 34.7 22.0 Amortisation (2 199) (1 289) 70.6 51.1 Profit from operati
Slide 35: Revenue analysis – reported
Revenue analysis – reported 12 months 12 months ended ended % ZAR million Dec 2007 Dec 2006 * change South & East Africa 31 453 26 586 18.3 South Africa 28 220 24 578 14.8 Other operations 3 233 2 008 61.0 West & Central Africa 30 843 21 208 45.4 Nigeria 20 250 14 900 35.9 Ghana 3 776 1 704 121.6 Ot
Slide 36: Revenue analysis – restated (12 months Investcom 2006)
Revenue analysis – restated (12 months Investcom 2006) 12 months 12 months ended ended % ZAR million Dec 2007 Dec 2006 * change ZAR South & East Africa 31 453 26 586 18.3 South Africa 28 220 24 578 14.8 Other operations 3 233 2 008 61.0 West & Central Africa 30 843 22 653 36.2 Nigeria 20 250 14 900
Slide 37: EBITDA analysis – reported
EBITDA analysis – reported 12 months 12 months % Dec 2007 Dec 2006 ended ended change EBITDA EBITDA ZAR million Dec 2007 Dec 2006 * ZAR margin % margin % South & East Africa 11 329 9 346 21.2 36,0 35,2 South Africa 9 814 8 340 17.7 34,8 33,9 Other operations 1 515 1 006 50.6 46,9 50,1 West & Central
Slide 38: EBITDA analysis – restated (12 months Investcom 2006)
EBITDA analysis – restated (12 months Investcom 2006) 12 months 12 months % ended ended change ZAR million Dec 2007 Dec 2006 * ZAR South & East Africa 11 329 9 346 21.2 South Africa 9 814 8 340 17.7 Other operations 1 515 1 006 50.6 West & Central Africa 16 601 12 153 36.6 Nigeria 11 605 8 529 36.1
Slide 39: Profit after tax
Profit after tax 12 months 12 months ended ended % ZAR million Dec 2007 Dec 2006 ** change South & East Africa 6 155 5 119 20.2 South Africa 5 532 4 797 15.3 Other operations 623 322 West & Central Africa 8 233 6 664 24.5 Nigeria* 5 959 5 739 5.0 Ghana 928 348 Other operations 1 346 577 Middle East
Slide 40: South Africa
South Africa Dec 2007 Dec 2006 Revenue up 15% over 2006 Revenue ZAR28bn ZAR25bn • Airtime revenue up 23% and strong growth in data revenue (Bundle offerings) EBITDA % 34.8% 33.9% • Strong prepaid revenue, up 28% year-on-year Excl. handsets 39.2% 38.6% driven by low denomination vouchers and new pric
Slide 41: Nigeria
Nigeria Dec 2007 Dec 2006 • Revenue in Naira up 30% in strong growth in active prepaid base Revenue ZAR20bn ZAR14.9bn • New pricing plans tailored to prepaid segments EBITDA margin 57.3% 57.2% and reduction of on-net tariffs in late 2006 increased usage • Interconnect revenue increased 11% from Cape
Slide 42: Intangibles and amortisation
Intangibles and amortisation • Investcom purchase price allocation now finalised Goodwill 27,109 • Fair value of assets (tangible and intangible) 27,017 25,744 Licences are amortised annually Subscriber base, • Customer bases amortised on a straight line Software and Other basis. Prepaid over 3 year
Slide 43: Tax considerations
Tax considerations Effective tax rates 45.00 Effective rate reconciliation (to 29%) % 40.00 39.53 • Nigeria – 6.41% 35.00 32.97 – Expiry of Pioneer Status in Nigeria – 30.00 application of commencement provision and 25.00 MTN Group 20.40 19.76 effect of investment allowance. 20.00 17.64 Investcom 12
Slide 44: Balance sheet
Balance sheet As at As at ZAR million Dec 2007 Dec 2006 Non-current assets 82 085 76 282 Property, plant and equipment 39 463 30 647 Goodwill and Intangible assets 38 797 40 105 Other non-current assets 3 825 5 530 Current assets 33 501 20 635 Bank balances 17 607 10 091 Other current assets 15 894
Slide 45: Analysis of net debt position
Analysis of net debt position Interest Cash and As at 31 Dec 2007 bearing cash ZAR million Net (cash) debt liabilities* equivalents South & East Africa 3 291 6 580 3 289 South Africa 2 987 5 787 2 800 Other operations 304 793 489 West & Central Africa 234 6 594 6 360 Nigeria 1 041 4 998 3 957 Ghana
Slide 46: Interest bearing liabilities split as at December 2007
Interest bearing liabilities split as at 31 December 2007 Repayment profile ZAR million 20,000 • Fundraising at operational level 17,222 18,000 2006 (ZAR 32,979) 16,972 – Nigeria approx US$2bn (80% LC) 16,000 2007 14,000 (ZAR 33,657) – Côte d’Ivoire approx US$100m (100% LC) 12,000 – Cameroon approx
Slide 47: Cash flow statement
Cash flow statement 12 months 12 months ended ended ZAR million Dec 2007 Dec 2006 Cash inflows from operating activities 25 850 17 622 Net cash generated by operations 34 334 22 934 Net interest paid (2 576) (143) Taxation paid (4 233) (4 086) Dividends paid (1 675) (1 083) Cash outflows from invest
Slide 48: Capital expenditures (incl. software)
Capital expenditures (incl. software) Approved Actual Approved ZAR million 2007 2007 2008 South & East Africa 5 014 3 707 8 281 South Africa 4 360 2 843 7 101 Other operations 654 864 1 180 West & Central Africa 8 841 7 915 17 463 Nigeria 5 558 4 789 13 092 Ghana 1 156 1 239 1 976 Other operations 2
Slide 49: Looking forward…
DIVIDER Looking forward… Phuthuma Nhleko 49
Slide 50: Looking forward…
Looking forward… Expansion • Continue to seek value accretive opportunities in emerging markets opportunities • Ensure appropriate levels of capacity and quality for new and Rollout existing subscribers Convergence • Data/corporate opportunities, new products and services Optimise • Operational effi
Slide 51: Subscriber guidance 2008
Subscriber guidance 2008 Actual 2008 2007 net adds guidance South Africa 14,799 2,200 Nigeria 16,511 5,000 Ghana 4,016 1,300 Iran 6,006 7,000 Syria 3,109 680 Sudan 2,090 1,100 Rest 14,822 4,500 61,353 21,780 Expected 36% increased in subscriber growth 51
Slide 52: Thank you – Questions?
DIVIDER: Thank you 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