Mtn Group Limited · JSE:MTN
Mtn — H1 2010 Earnings Presentation
56 slides from Mtn's earnings presentation, 2010
Slide 1: MTN Group Limited Reviewed interim results for six months ended 30 June 2010
MTN Group Limited Reviewed interim results f six for i months th ended d d 30 June J 2010
Slide 2: Agenda
Agenda Strategic and d operationall overview Phuthuma Nhleko Group President and CEO Financial overview Nazir Patel Group Finance Director Looking ahead Phuthuma Nhleko Group President and CEO 2
Slide 3: Strategic and operational overview
Strategic and operational overview Phuthuma Nhleko G Group President P id t and d CEO
Slide 4: MTN vision
MTN vision T be To b the th leader l d ini telecommunications t l i ti in i emerging i markets k t Convergence Leverage existing Consolidation & & operational footprint & diversification evolution intellectual capacity Increased competitiveness Hub and Procurement Skills Value Best practice Diversif
Slide 5: Operational framework
EXTERNAL Products and Value added services Quality service Customer experience ———— Experienced people * Efficient distribution Segmentation TWNAUAALNI
Slide 6: Group highlights
Group highlights Group subscribers EBITDA margin Up 11 11,4% 4% to Up 0 0,5% 5% points to 129,2 million 43,3% Adjusted headline EPS Maiden interim dividend Up 20 20,6% 6% to per share of 438,6 cents 151 cents Free cash flow up 164% to R6.8 billion 6
Slide 7: Subscriber contribution by region
Subscriber contribution by region MTN Group Total Proportionate* (subscriber million) (subscriber million) 129.2 97,7 116.0 88.5 70.4 90.7 32% 32% 29% 23% 26% 26% 44% 45% 46% 45% 47% 48% 27% 23% 22% 32% 27% 26% Dec-08 Dec-09 Jun-10 Dec-08 Dec-09 Jun-10 SEA WECA MENA *Based on shareholding Increased
Slide 8: Revenue and EBITDA by region
Revenue and EBITDA by region Contribution* Contribution* EBITDA margin% (Revenue) (EBITDA) 43.3% Group 42.8% 36.6% 29.2% 34.5% SEA SEA SEA 33.9% 25.7% 32.1% 44.2% 55.2% 54.5% WECA WECA WECA 46.7% 60.3% 55.5% 19.0% 13.7% 31.3% MENA MENA MENA 19.3% 12.0% 26.1% Jun-10 Jun-09 *Difference in Head Office
Slide 9: Nigeria - operational highlights
Nigeria - operational highlights Launched Aug 2001 Market share 51% Population 150m Market sizing 111m (2014) Penetration 45.8% Shareholding 76%* • Increased market share Subscribers (‘000) ( 000) /ARPU ($) 35,057 • Quality of service 30,827 • Segmental value propositions 23,077 16,511 • Effective d
Slide 10: Nigeria - infrastructure and data highlights
Nigeria - infrastructure and data highlights • Maintained quality and capacity on Capex ZAR (million) t k network 9,610 10 10,222 222 • 279 3G BTS’s rolled out 5,668 4,519 4,789 • Rollout to pick up in H2 2,979 2,532 5,703 3,942 • Transmission expansion H2 H1 1,810 2,532 Dec-07 Dec-08 Dec-09 Jun-10
Slide 11: South Africa - operational highlights
South Africa - operational highlights Launched Jun 1994 Market share 36% Population 49.4m Market sizing 58m (2014) Penetration 97% Shareholding 100% • Market share recovery to 36% Subscribers (’000) • Driven by prepaid segment & market 17,169 17,102 16,067 clean up post RICA implementation 14,799 •
Slide 12: South Africa - operational highlights
South Africa - operational highlights • Increased prepaid ARPU ARPU ZAR • Increase in data revenue 396 403 365 • Declining postpaid ARPU indicating 336 slowing consumer spend • Lower out of bundle usage 149 148 145 152 Postpaid p • Migration Mi i onto llower value l packages k Blended 100 109 92 97
Slide 13: South Africa - infrastructure and data highlights
South Africa - infrastructure and data highlights • 140 2G and 108 3G BTS’s added Capex 6,034 ZAR (million) 4,868 • 2G rural coverage 3,034 • Increased capacity on 3G 2,843 3,096 • 99% 2G and 48% 3G population coverage 1 549 1,549 3,000 1,014 H2 H1 • Rollout to pickup in H2 1,294 1,772 1,014 Dec-07
Slide 14: Ghana - operational highlights
Ghana - operational highlights Launched Nov 1996 Market share 56% Population 24m Market sizing 22.5m (2014) Penetration 65% Shareholding 98% • Increased subs 9% (Dec 09) Subscribers (‘000) ( 000) /ARPU ($) 8,723 • MTN Zone 8,001 6,428 • FIFA related promotions 4,016 • Quality of networks MTN Subscri
Slide 15: Ghana - infrastructure and data highlights
Ghana - infrastructure and data highlights • Mantained network quality 2,586 Capex ZAR (million) 1,854 • 133 3G BTS’s added 1,411 1,404 1,239 938 • Rollout slower than expected 977 1,404 1,175 840 • Challenges obtaining new sites, ban H2 H1 262 lifted since Dec-07 Dec-08 Dec-09 Jun-10 • Data usage g
Slide 16: Iran - operational highlights
Iran - operational highlights Launched Aug 2006 Population 72,5m Market sizing 75.8m (2014) Penetration 85% Shareholding 49% • Subscriber growth of 16% (Dec 09) Subscribers (‘000) ( 000) /ARPU ($) 26,967 23,260 • Appealing seasonal promo’s 16,039 • Attractive segmental value propositions MTN (WOW an
Slide 17: Iran - infrastructure and data highlights
Iran - infrastructure and data highlights • Continued rollout Capex (49%) 3,326 ZAR (million) 2,743 • 75% population coverage 2,282 1,559 • Site sharing agreements 2,142 845 896 • Launch of Wimax Dec 09 H2 H1 714 601 1,044 896 Dec-07 Dec 07 Dec-08 Dec 08 Dec-09 Dec 09 Jun-10 Jun 10 • Sites deployed
Slide 18: Syria - operational highlights
Syria - operational highlights Launched Jun 2002 Market share 45% Population 20.5m Market sizing 12.7m (2014) Penetration 47.9% Shareholding 75% • Maintained market share Subscribers (‘000) ( 000) /ARPU ($) 4,419 4,249 • Segmental product offerings (youth) 3,539 3,109 • Loyalty programs MTN 20 19 18
Slide 19: Syria - infrastructure and data highlights
Syria - infrastructure and data highlights • Enhanced quality and capacity of Capex 1,039 ZAR (million) t k networks 748 • Completed frequency plans to increase 730 362 capacity p y 418 171 180 • Reengineered radio transmission 247 309 386 180 H2 H1 • Limited Li it d 3G services i Dec-07 Dec-08 Dec-
Slide 20: Financial framework
Financial framework Continued Costt C Increased Capex spend efficiencies organic cash “peaked” growth generation Shareholder Opportunistic returns M&A 20
Slide 21: Financial overview
Financial overview Nazir Patel G Group Fi Finance Di Director t
Slide 22: Group summary
Group summary ZAR ‘m Key Points 6 months 6 months Variance ended ended % • ZAR strength impacted reported Jun 10 Jun 09 results Revenue 55 989 57 269 (2.2) • Higher EBITDA margin due to Iran and RSA EBITDA 24 249 24 512 (1.1) • Limited functional currency impact • Strong free cash flow generation as
Slide 23: Financial overview
Financial overview • Economic and trading conditions stabilised (but unpredictable) Trading d • Increased Inc eased competition in ke key markets, ma kets tariff ta iff pressure p ess e conditions • Subscriber growth at reduced marginal ARPU’s • Strong data growth, declining access pricing • ZAR rep
Slide 24: Key accounting considerations
Key accounting considerations Change in • Zambia shareholding reduced from 97.8% to 90.0% - Jun 10 ownership hi • Afghanistan shareholding reduced from 100% to 90.9% - Jun 10 • Put option net impact on AHEPS ZAR 118m (Jun 09: ZAR 963m credit, Dec 09: ZAR 906m credit) • Finance costs - ZAR 242m Put o
Slide 25: Average exchange rates
Average exchange rates USD: Local currency 9,830.06 , 9,871.69 10,102.95 9,174.87 9 476 70 9,476.70 1.38 1.42 1.43 Rial 1.06 0.99 Naira Cedi 9.06 8.32 ZAR 7.62 8.13 7.52 117.72 119.07 146.85 149.20 150.74 H1 - 08 YTD - 08 H1 - 09 YTD - 09 H1 - 10 ZAR: Local currency 20.04 17.83 16.13 15.45 14.54 Ria
Slide 26: Revenue trends
Revenue trends ZAR ‘m FX impact ZAR 8.7bn Key Points • Strong underlying organic growth in 12.9% 2,333 608 1,051 715 key markets 3,964 • Reported revenues adversely impacted by ZAR strength 64,660 57,269 55,989 • 2010 revenues at constant prior year FX rates would be 12.9% higher than prior year • R
Slide 27: Revenue trends (cont.)
Revenue trends (cont.) Data (excl. SMS) - ZAR ‘m • Group data revenue growth 46.0% 6 months 6 months ended ended f from prior i year Jun 10 Jun 09 • RSA contribution 78.9% of Group RSA 1 727 1 091 total Business Solutions 533 327 • RSA growth due to investment in transmission links and new prepaid 2
Slide 28: Revenue trends (cont.)
Revenue trends (cont.) MTR impact - ZAR ‘m • MTR changes in Nigeria and RSA 6 months 6 months Variance ended ended % Jun 10 Jun 09 • RSA: Peak rate dropped from ZAR1.25 to ZAR0.89 Interconnect 8 314 9 939 (16.3) • Nigeria: Peak rate dropped from 11.4 11 4 revenue Naira to 8.2 Naira • Interconnect re
Slide 29: EBITDA trends
EBITDA trends ZAR ‘m FX impact ZAR 4.3bn • Strong organic EBITDA growth in key 16.3% 177 918 14 05 41 30 markets 2,440 • 2010 EBITDA at constant prior year 28,503 24,512 24,249 FX rates would be 16.3% higher than prior year • Nigeria margins steady at 61.3% due to revenue growth and decrease in inte
Slide 30: EBITDA margin recon
EBITDA margin recon (%) • Iran EBITDA margin Jun 09 42.8 • Margin increased 6.5pts (from 34.7% to 41.2%) mainly due to 15% revenue growth and opex savings • RSA Iran 0.4 • Margin increased 2 2.5pts 5pts to 33.9% 33 9% due to higher net interconnect and handset margin RSA 0.5 • Nigeria • Nigeria marg
Slide 31: Interest and Tax
Interest and Tax ZAR ‘m Net finance 6 months 6 months Effective tax rate cost ended ended 36 8% 36.8% Jun 10 Jun 09 Net interest paid 1 085 982 Net forex losses 957 670 Functional 33.4% 33.0% currency (gains)/ (70) 2 823 losses Put option 226 (845) Jun 10 Dec 09 Jun 09 Total 2 198 3 630 • Functional
Slide 32: Earnings per share
Earnings per share cents 6 months 6 months ended ended Variance Jun 10 Jun 09 % Attributable earnings per share 439.7 409.7 7.3 (Profit) / loss on disposal of non-current assets (2.6) 5.8 - Reversal of impairment of PPE and non-current (5.0) - - assets Basic headline earnings per share 432.1 415.5 4
Slide 33: Income statement
Income statement ZAR ‘m 6 months 6 months Variance ended ended % Jun 10 Jun 09 Revenue 55 989 57 269 (2.2) EBITDA 24 249 24 512 (1.1) EBITDA Margin % 43.3% 42.8% 0.5pts Depreciation (6 273) (5 948) (5.5) Amortisation (1 070) (1 353) 20 9 20.9 Profit from operations 16 906 17 211 (1.8) Net finance co
Slide 34: Balance sheet
Balance sheet ZAR ‘m Jun 10 Dec 09 Non-current assets 112 356 110 213 Property, plant and equipment 68 711 67 541 Goodwill and other intangible assets 36 415 37 526 Other non-current assets 7 230 5 146 Current assets 47 204 46 024 Bank balances 30 149 23 999 Restricted cash 585 742 Other current ass
Slide 35: Analysis of net debt
Analysis of net debt as at Jun 10 Debt of ZAR 35.9bn • Net debt to EBITDA of 0.11x • Nigeria increased facilities and extended 14% ttenure, refinancing fi i b before f 30 Jun J 10 1% • MTN Holdings updated its DMTN programme in anticipation of MTN01 (ZAR 5bn), refinancing post 30 Jun 10 51% • I Inve
Slide 36: Cash flow statement
Cash flow statement ZAR ‘m 6 months 6 months ended ended J Jun 10 J Jun 09 Net cash generated by operations 24 075 25 129 Net interest paid (1 866) (692) Taxation paid (3 406) (4 156) Dividends paid (3 534) (3 382) Cash inflows from operating p g activities 15 269 16 899 Acquisitions of PPE (excludi
Slide 37: Capital expenditures
Capital expenditures ZAR ‘m • Actual spend ZAR 8.5bn positively Underspend ZAR 7.9bn impacted by FX 16,391 • Budget FX USD:ZAR average rate 8.07 8,496 • Low spend vs authorised due to: (1,907)) (2,348)) (1,440)) (746) (503) (735) (216) • Optimisation of spend vs traffic / network capacity demand • D
Slide 38: Capital expenditures (cont.)
Capital expenditures (cont.) ZAR ‘m (incl. software) Actual Actual 6 months 6 months ended ended Authorised Revised Jun 10 Jun 09 2010* 2010** South & East Africa 1 571 4 483 6 111 5 665 RSA 1 014 3 000 4 245 4 045 Other operations 557 1 483 1 866 1 620 West & Central Africa 5 282 8 741 10 414 10 02
Slide 39: Notice
Notice The information contained in this document has not been verified independently. p y No representation p 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 40: Thank you South Africa
Thank you South Africa see you in Brazil ! .\
Slide 41: RSA (excl. Business Solutions)
RSA (excl. Business Solutions) ZAR ‘m 6 months Revenue ended 9.1 Jun 10 2009 15 993 8.3 8.1 Airtime and subscription 696 7.6 7.5 Data 636 I t Interconnect t (308) USD Other 118 2010 17 135 H1 - 08 YTD - 08 H1 - 09 YTD - 09 H1 - 10 % Growth G th 7 1% 7.1% 6 months EBITDA ended Jun 10 • Higher Hi h d
Slide 42: Nigeria
Nigeria ZAR ‘m 6 months Revenue ended 151 Jun 10 149 147 2009 17 837 20 Airtime and subscription 3 015 Interconnect (563) 18 Accessories 32 16 119 16 Other 111 ZAR 118 15 USD FX (3 964) 2010 16 468 H1 - 08 YTD - 08 H1 - 09 YTD - 09 H1 - 10 % Growth (7.7)% 6 months EBITDA ended Jun 10 2009 10 923 • R
Slide 43: Ghana
Ghana ZAR ‘m 6 months 1.43 Revenue ended 1.42 Jun 10 1.38 2009 2 955 0 19 0.19 Airtime and subscription 554 0.17 Interconnect (30) 1.06 0.15 Accessories 16 0.13 Other 33 1.0 0.13 ZAR FX (715) USD 2010 2 813 08 08 09 09 10 H1 - 0 YTD - 0 H1 - 0 YTD - 0 H1 - 1 % Growth (4.8)% 6 months EBITDA ended Jun
Slide 44: Iran
Iran ZAR ‘m 10,103 6 months Revenue ended Jun 10 9,830 9,872 2009 3 897 1,343 Airtime and subscription 1 349 9,477 1,198 Interconnect 278 1,195 1 152 1,152 Other (5) 9,175 1,091 ZAR FX (1 051) USD 2010 4 468 H1 ‐ 08 YTD ‐ 08 H1 ‐ 09 YTD ‐ 09 H1 ‐ 10 % Growth 14.7% 6 months EBITDA ended Jun 10 2009 1
Slide 45: Syria
Syria ZAR ‘m 6 months Revenue ended Jun 10 6.1 5.7 6.2 2009 3 520 5.6 Airtime and subscription 384 5.3 ZAR USD Interconnect 41 Other 7 47.4 47.2 46.9 FX (608) 46.6 46.0 2010 3 344 H1 - 08 YTD - 08 H1 - 09 YTD - 09 H1 - 10 % Growth (5.0)% 6 months EBITDA ended Jun 10 2009 773 • Revenue R FX iimpactt
Slide 46: Revenue trends
Revenue trends ZAR ‘m 6 months 6 months • Airtime and subscription revenue ended ended J Jun 10 J Jun 09 contribution flat against prior year • Data contribution increase to 5.1% Airtime and 38 498 39 375 due to: subscription 68.8% 68.8% • RSA – data revenue up 58% 2 866 1 964 Data • SMS revenue con
Slide 47: Net debt
Net debt ZAR ‘m Net debt /(cash) Cash and Interest 6 months Net debt cash bearing Intercompany ended / (cash) equivalents liabilities* eliminations Jun 10 Dec 09 South & East Africa (5 011) 11 229 (8 388) (2 170) (783) RSA ( 364)) (4 8 344 ( 150)) (7 ( 170)) (3 ( 1 852)) Other operations (647) 2 885
Slide 48: Exchange rates analysis
Exchange rates analysis Average (EBITDA) Closing 6 months 6 months 6 months 6 months ended ended ended ended Jun 10 Jun 09 % var Dec 09 Jun 10 Jun 09 % var Dec 09 Rand per USD 7.52 9.06 (17) 8.32 7.67 7.72 (1) 7.39 Nigerian Naira per USD 150.74 146.85 3 148.34 150.00 148.35 1 149.97 Nigerian Naira p
Slide 49: MTN – data sheet part 1
MTN – data sheet part 1 Group SEA WECA MENA Nigeria RSA Ghana Syria Iran Market overview Population (m) 546 108.9 244.8 191.9 150.0 49.4 24.3 20.5 72.5 Mobile penetration (%) 46 97 65 48 85 Number of operators 78 20 40 18 5 3 6 2 3 Operational data Subscribers (‘000) 129 214 28 664 59 362 41 189 35
Slide 50: MTN – data sheet part 2 (SEA)
MTN – data sheet part 2 (SEA) Sub Total RSA Botswana Zambia Swaziland Uganda Rwanda Shareholding g ((%)) 100 53 90 30 95 55 Licence period (years) 20 15 15 10 20 13 Market overview Population (m) 108.9 49.4 1.9 13.3 1.0 33.1 10.2 Mobile penetration (%) 97 125 31 54 27 28 M k t position Market iti 2
Slide 51: MTN – data sheet part 3 (WECA)
MTN – data sheet part 3 (WECA) Cote Sub Total Nigeria Ghana Cameroon Congo B Benin G. Bissau G. Conakry Liberia d’Ivoire Shareholding (%) 76 98 70 100 75 100 75 60 65 Licence period (years) 15 15 15 15 10 10 18 15 20 Market overview Population (m) 244.8 150.0 24.3 19.6 4.0 8.9 1.6 10.7 4.0 21.7 Mobi
Slide 52: MTN – data sheet part 4 (MENA)
MTN – data sheet part 4 (MENA) Sub Total Sudan Iran Afghanistan Cyprus Syria Yemen Shareholding (%) 85 49 91 51 75 85 Licence period (years) 20 15 15 20 15(BOT) 15 Market overview Population (m) 191.9 39.5 72.5 34.8 0.8 20.5 23.8 Mobile penetration (%) 35 85 32 112 48 28 Market position 2 2 1 2 2 1
Slide 53: Looking forward
Looking forward Phuthuma Nhleko
Slide 54: Looking forward
Looking forward • Infrastructure sharing Optimising p g • Standardisation of systems and processes efficiencies • Rationalisation of suppliers • Cost management and optimisation • Monitoring infrastructure investments to ensure appropriate levels of capacity and quality of service and continued Roll
Slide 55: Subscriber guidance 2010
Subscriber guidance 2010 Old net additions Updated net additions guidance for 2010 guidance for 2010 ‘000 ‘000 South Africa 800 1 800 Nigeria 6 000 6 350 Ghana 800 600 Iran 5 000 5000 Syria 400 400 Rest 7 000 7 000 20 000 21 150 55
Slide 56: Thank you
Thank you ci> Questions — - everywhere you go” So’ 2 Y wee =a ”