Mtn Group Limited · JSE:MTN
Mtn — FY2020 Earnings Presentation
58 slides from Mtn's earnings presentation, March 2021
Slide 1: MTN Group Results presentation for year ended 31 December 2020
= MTN Group Results presentation For year ended 31 December 2020
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 GD Operational review @® Financial review €€P Strategy update @D Looking ahead
Slide 4: Operational review
Operational review Ralph Mupita | Group President and CEO Leading digital solutions for Africa’s progress
Slide 5: Highlights
Highlights Solid Financial performance despite challenging trading conditions +#11,9%* +31,0%* Service revenue Data revenue R170,1bn R48,7bn +13,4%* +0,9pp* EBITDA EBITDA margin R81,3bn 45,3% 16,0% ccaperinrensiy Net debt/EBITDA Capex Holdco Group R28,6bn 2,2X 0,8x ROE +4,0pp to 17,0% 2020 final div
Slide 6: Dividends and dividend policy update
Dividends and dividend policy update Committed to faster de-leveraging & de-risking of the Holdco balance sheet | Remain focused on capturing exciting growth opportunities Suspension of dividend policy 2021 dividend guidance Suspension of 2020 final dividend » Current dividend policy suspendedin lig
Slide 7: Progress against our medium-term guidance
Progress against our medium-term guidance Service revenue Oo LA! =a) Target Aly|| Performance s Group: Double-digit growth 11,9%* = South Africa: Mid-single-digit growth 1,6% | ] Nigeria: Double-digit growth 14,6%* EBITDA margins Improving margins +0,9pp* to 45,3% Group capex intensity Reducing inte
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Slide 9: H1 vs H2 performance
H1 vs H2 performance The Group delivered a strong H2 | Data growth eased in H2 as spending habits shifted Subscriber net adds Active data users net adds MoMo users net adds Strong recovery in H2 Accelerated shift to data “Cashless in Covid" — strong momentum 18,2m 12,4m 8,1m 10,6m__ 6.5m 3,7m H1 20
Slide 10: South Africa
South Africa Sustained momentum in underlying turnaround — resilient consumer business & double-digit EBU growth Market context ie Key activities =f Solid results wh * Weaker economy impacts consumer * Solid prepaid & postpaid execution | * All retail business segments delivered solid spending | All
Slide 11: Nigeria
Nigeria Strong operational and commercial performance | Data momentum sustained Market context Key activities =f Solid results wh * Macro pressures | Oil & FX volatility * Expanded customer acquisition + +12,2m subs | +7,3m active data users | COVID-19 effects touchpoints, rural telephony initiative
Slide 12: Regional operational review
Regional operational review All regions performed well | WECA turnaround completed | Business model resilient SEAGHA* +18,7%* +8,8%* +27,2%* service revenue service revenue service revenue Vy) ty) 9 +29,3%* +22,6%* +51,2%* data revenue data revenue data revenue * MTN Ghana solid results - double-dig
Slide 13: MTN asset realisation programme (ARP) & portfolio transformation
MTN asset realisation programme (ARP) & portfolio transformation ~R4,3bn delivered of R25bn plan r L E-commerce portato | [ Tower Co investments [ Localisation & other | [ Pan-African focus ] Uganda localisation Steady progress on ARP, slowed by market volatility > R25bn fargeted over the medium ter
Slide 14: Environment, Social and Governance
Environment, Social and Governance Good progress in ESG, but more to achieve | Commitment to net zero emissions by 2040 | Driving digital & financial inclusion Eco- ’ Sustainable oN Economic SP responsibility = Societies (ut) Governance fate value-added \F raemateno SPONSE cuore coor | 12 toanerox |
Slide 15: Financial review
Financial review ci> Sugen Perumal | Acting Group Chief Financial Officer Leading digital solutions for Africa’s progress 15
Slide 16: Economic landscape of our larger markets
Economic landscape of our larger markets & commodity price volatility Our markets were impacted by weaker global growth, international trade tensions 0,8% 2,1% 7,1% 3,5% 0,9% 3,0% 1,3% 2,0% 2,0% 73% 2,7% -8,7% SA -3,4% Nigeria -6,0% Iran Ghana 16 Uganda Cameroon Cote d'Ivoire 1 2019 coP% (12020 Gop.
Slide 17: Items impacting reported results
Items impacting reported results EZ . oH Currencies al Significant transactions Holdco leverage Increased volatility in exchange rates. Rand weaker than naira, Closed weaker against the dollar Weaker average rand exchange rate * Reported growth rates higher than constant currency rates © Depreciatio
Slide 18: Group income statement
Group income sfarfement Good operational results across most markets and improved operating leverage % change % change constant (Rm) 2020 2019 reported currency* Revenue 179 361 151460 18.4 10.9 Service revenue! EBITDA before once-off items Once-off items EBITDA Depreciation, amortisation and goodwi
Slide 19: MTN South Africa
MTN South Africa Strong data and digital growth | Telkom revenue impacts wholesale | Costs well controlled | Margin expansion Service revenue we 36 430 14852 | Voice? 5.6% 15726 12631 14565 > Data +15.3% 1045 1118 Digital +7.0% Fintech +3.0% Wholesale -16.4% Other -0.6% 2019 2020 Capex intensity = C
Slide 20: MTN South Africa service revenue
MTN South Africa service revenue Strong consumer performance & double-digit enterprise growth, revenue from Cell C up 10% YoY despite cash basis of accounting (Rm) +1,6% 565 340 612 “555 37 024 -368 36 430 2019 CBU prepaid CBU postpaid EBU Wholesale* Interconnect & 2020 other C 7 c > () l growth j |
Slide 21: MTN Nigeria
MTN Nigeria Data & digital drive strong service revenue | Margin impacted by accelerated 4G rollout & forex impacts on network costs (Rm) constant currency . ica soul Service revenue Ey Expenses a EBITDA & capex SB 53.9% 50.9% | EBITDA margin 22.3%) 20.5% 21.3% | Capex intensity 50 341 28.478 38 656
Slide 22: Group service revenue
Group service revenue Data, digital and Fintech drive growth. H2 recovery in voice and a drag from wholesale (Rm) +11.9% 1 11267 668 2619 a 167 158 2914 170072 rr ; " -597 7310. —— 14936000 SF 2019 Voice? Data? Digital? Fintech* Wholesale® SMS, ICT 2020 Hyperinflation 2020 cc and Other® cc Reported
Slide 23: Fintech revenue
Fintech revenue Fintech highlights (Rm) Fintech revenue contribution by services offered Remittances, Banktech & other 2019 2020 Payments Revenue | 10126 wE9 +23,9%* P2P transfers |18% Withdrawals EBITDA* +39,0%* EBITDA margin +5,0pp* Transaction value (US$ bn) and volume (bn) Capex = a 6 269 se 49,
Slide 24: EBITDA
EBITDA Focus on cost drives margin improvement EBITDA (Rm) +13.4% 1 5988 81311 1501 909 75 323 a 66447 770 2 343 3815 a cee ES [ T — ~ — -462 2019 SA Nigeria SEAGHA WECA MENA Head office 2020 Other* 2020 cc cc Reported EBITDA margin (%) { +0.9pp, 1 41.8% 0.4 0.9 0.4 0.1 0.3 427% 2h 45.3% “1200 2019
Slide 25: Finance costs
Finance costs Group leverage improving and Holdco leverage stable (Rm) Leverage Finance costs 2020 2019 Group (Rm) 2020 2019 Net interest paid 7149 6922 Cash and cash equivalents (46 567) (26 360) Finance costs - leases 6 547 5 709 Interest bearing liabilities 96 248 94 280 Interest unwind on Nigeri
Slide 26: Adjusted HEPS
Adjusted HEPS Rand depreciation, good operational performance and improved contribution of profits from associates & JVs Reported Reported (Rcents) 2020 2019 change % Attributable earnings / (loss) per share 946 506 87.0 Impairment of goodwill, PPE and associates 61 39 Impairment loss on remeasureme
Slide 27: Capex
Capex Focus on capacity & resilience | Acceleration in H2 as supply chains improved 2020 Capex allocation (%) Transmission IT systems Radio & infrastructure Core network Other capex Capex (Rm) 28 609 26018 26 281 19,3% — Hope 16,0% ~e- . 2018 2019 2020 Excludes ROU assets —®- Capex intensity | | Cap
Slide 28: Statement of cashflows
Statement of cashflows Operating FCF increases 117,1%, benefitting from positive operating leverage and liquidity management 81311 6 363 608 “8404 -12271 28333 -30 180 8555 a 35150 =... 9153 3332. *S EBITDA ATC Non-cash Working Taxpaid Dividends Net interest Acquisition Operating Dividends Other Oth
Slide 29: Holdco net debt
Holdco net debt Net debt reduced | Improved debt mix | Stable Holdco leverage — target medium-term mix at 60% in ZAR Facilities R59,6bn R59,7bn R55,3bn 52,3% USD / EUR | 48,2% R43,3bn 48,0% ZAR H1 2019 2019 H1 2020 2020 Group leverage 14x 1,2x 1x 0,8x Holdco leverage 2,3x 2,2x 2,7x 2,2x Upstreaming
Slide 30: Statement of financial position
Statement of financial position Improved cash position drives overall increase in other current assets, IHS valued at R27,2bn (Rm) 2020 2019 % change Right-of-use assets Other property, plant and equipment 100 576 Intangible assets and goodwill Other non-current assets Mobile Money deposits Other cu
Slide 31: Improving returns
Improving returns 4,0pp improvement in ROE, underpinned by solid operational performance +4,0pp, 13,1% -3,0% 0,0% 0,1% -2,6% 17,0% -2,2% 12,8% 0,2% 13,0% ROE December Hyperinflation ROE December Group EBITDA Depreciation FinanceCost Taxation JVs and Head office NCI & Other* ROE December 2019 incl. 2
Slide 32: Strategy update
Strategy update cD Ry uP Ralph Mupita_ Group President and CEO Leading digital solutions for Africa’s progress 32
Slide 33: The journey of progress over the last years
The journey of progress over the last 4 years A foundation of commercial and operational excellence ch Growing subscribers 233m Total 217m ae 95m 79m 46m Data subs 69m 35m 27m MoMo users | 22m 2017 2018 2019 2020 —] Financial 7 jancia iy performance 10,7% Service cara 134 594 margins 35,2%| 2017 201
Slide 34: Strategic repositioning
Strategic repositioning Opportunities: Challenges: » Reducing the Group's » Take advantage of the short window of opportunity to win in digital services as customers come risk profile online for the First time - US dollar debt level at Holdco » The global operating environment is shifting in the wak
Slide 35: Growth platforms, underpinned by Africa's largest connectivity network
5 growth platforms, underpinned by Africa's largest connectivity network Payments Lending Insurance Saving m-commerce Messaging Social media User generated content Advertising Unified Comms 10T Cloud SD-WAN CHENOSIS Open mobile Aggregate Fixed as a service Exchange Edge and DC Monetise Cloud communi
Slide 36: Ambition 2025 | Framing our strategic priorities
Ambition 2025 | Framing our strategic priorities Belief statement “Everybody deserves the benefits of a modern connected life” Strategic intent Ambition 2025: “Leading digital solutions for Africa’s progress” D (0) Build the Accelerate portfolio & most ae connectivity strategic operations Priorities
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Slide 38: Investment case - A compelling Africa growth story
Investment case - A compelling Africa growth story Va XN av: Africa's leading and scale connectivity and infrastructure business * #1or#2 subscriber share in all our markets » “Second to none” and well-invested networks - Enterprise, wholesale and infrastructure sharing opportunities J 7 Well-positi
Slide 39: Capital allocation framework
Capital allocation framework Organic growth Well-invested networks and platforms | Improving capex intensity | 2 | Stabilise leverage Rebalancing the mix to have rand debt making up at least 60% of Holdco net debt Ez Return cash fo shareholders through dividend Anticipate paying a minimum ordinary d
Slide 40: Enhanced medium-term guidance
Enhanced medium-term guidance & A previ KPI os) Previous target SS Enhanced target ES <a \Y Ss Group: Double-digit growth SB Group: Low to mid teens growth Service revenue M ica: Mid-si -digi SM ica: Mid-single-digi S South Africa: Mid-single-digit growth S South Africa: Mid-single-digit growth | ]
Slide 41: Looking ahead
Looking ahead Ralph Mupita | Group President and CEO Leading digital solutions for Africa’s progress
Slide 42: Macro context info 2021
Macro context info 2021 Economic outlook aa GDP SSA South Africa Nigeria 3% 3% 1,7% -3% -8% -4,3% 2020 2021 2020 2021 2020 2021 Source: IMF Currencies & commodities 2020 2021F * Average rand/US$: R16,46/$ R15,23/$ » Average naira/US$: N382,28/$ N445,55/$ * Brent crude oil US$: $41,3/bbl $50,0/bbI So
Slide 43: 2021 priorities
2021 priorities ... aS we continue fo manage COVID-19 uncertainties Accelerate SA & Nigeria growth Position infrastructure assets & fintech For accelerated growth and value unlock Progress with ARP, cash upstreaming and portfolio transformation Maintain “second to none” network position | R29,1bn ca
Slide 44: Conclusion
Conclusion Key take-aways | 2 | Very strong operational and financial results delivered in a challenging macro * 29m subscribers added in the year to reach a total of 280m + Adjusted HEPS up 52% | ROE up 4pp to 17% | Operating cashflow up 117% to R28,3bn Ea Business resilience under COVID-19 pandemi
Slide 45: Thank you
Thank you #GoodTogether ci> Leading digital solutions for Africa’s progress 45
Slide 46: Appendices
Appendices Leading digital solutions for Africa’s progress
Slide 47: Macro indicators | FX average rates
Macro indicators | FX average rates Rand strength against most local currencies drags reported revenue down Local currency appreciation against ZAR (YoY % change) 130 125 120 115 110 105 100 | Mar-20 — Nigerian naira: —= Iranian rial = Ghanaian cedi Cameroonian franc Jun-20 — Ugandan shilling = Suda
Slide 48: Macro indicators | FX closing rates
Macro indicators | FX closing rates ZAR: LC Strengthening/(weakening) ZAR: Local currency 2020 2019 2020 vs 2019 Nigerian naira 27.28 26.09 4.6% Iranian rial 1745888 812061 115.0% Ghanaian cedi 0.40 o41 (2.4%) Cameroonian franc 36.42 4178 (12.8%) Ugandan shilling 249.19 26214 (4.9%) Syrian pound 85.
Slide 49: Key group trends for the year through COVID-19
Key group trends for the year through COVID-19 Commercial trends were generally resilient through periods of volatility | Dec adds trends impacted by SIM reg in Nigeria Subscribers gross adds Active data users net adds MoMo users net adds Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar A
Slide 50: Igniting Hope across markets
Igniting Hope across 21 markets Playing our part in the COVID-19 response | #GoodTogether _ For staff Creating a safe & supportive working environment YY _ For customers Keeping people connected WY _ For governments Offering relief for PPE & mass communication WY _ For communities Providing emergenc
Slide 51: Share of results of associates and joint ventures after tax
Share of results of associates and joint ventures after tax Lower losses in digital group from discontinuation of equity accounting of Jumia, offset by disposal of tower companies (Rm) 2020 2019 % change Telco joint ventures 1074 920 16.7 Iran 538 441 22.0 eSwatini 99 78 26.9 Botswana 437 401 9.0 Di
Slide 52: Capex | IAS
Capex | IAS 17 (Rm) 10016 7562 7209 8 oll 4979 5052 2799 3255 1941 4573 7 4851773 9g9 1504 po sl SA Nigeria SEAGHA WECA MENA Iran* Other Group M2019 | | 2020 {7} Capex intensity * Iran capex at 49% and is not part of the consolidated Group Capex 52
Slide 53: Capex guidance
Capex guidance Estimated Estimated Capitalised Capitalised Capitalised Capitalised (IFRS 16) (IAS 17) (IFRS 16) (IAS 17) (IFRS 16) (IAS 17) (Rm) 2021 2021 2020 2020 2019 2019 South Africa 8283 7798 7542 7 209 11295 7 562 Nigeria 12154 8976 12 694 10016 9750 8011 SEAGHA 5677 4885 6063 5052 5554 7979
Slide 54: Net debt
Net debt Overall group net debt improvement driven by Nigeria and head offices. Lower translated USD debt in head offices has reduced overall net debt. Cash and cash Net interest-bearing Net debt / (cash) Net debt / (cash) (Rm) equivalents ° 2020 2019 South Africa 1901 - (1901) (1 310) Nigeria 17 23
Slide 55: Net debt composition
Net debt composition Nigeria borrowings Head office borrowings (%) 92% (%) 52% 2019: (92%) 2019: (509 [I naira 019: (50%) |) 2aR 8% Cusp 428% Cusp 2019: (8%) 2019: (50%) Nigeria cash Head office cash 4% 2019: (5%) (%) 93% (%) o 2019: (82%) ZAR 1 Naira [uso 7% Dusp 66% Coeur 2019: (18%) : 30% 2019: (
Slide 56: Holdco leverage scenarios
Holdco leverage scenarios 2,2 0.1 0.1 ee 1,8 1,7 Holdco Inclusion of Holdco leverage 20% weaker 20% weaker Cash upstreaming Holdco Net leverage 2020 Nigeria inflows 2020 (incl USD/ZAR closing USD/ZAR Average stress less 10% Debt Stress Nigeria inflows) 56
Slide 57: Debt maturity profile
Debt maturity profile (Rbn) 18,5 75 11,8 9,6 10,1 45 28 6.9 5,6 7.4 11.0 3.4 73 7.3 2.2 2.2 2021 2022 2023 2024 2025 2026 \ ZAR USD 57
Slide 58: Market share progression
Market share progression Steady improvement in the Group’s blended market share 46,1% 44,3% 43,4% 40,7% 2017 2018 2019 2020 58