Mtn Group Limited · JSE:MTN
Mtn — MTN Rwandacell — Investor Presentation (April 2021)
61 slides from Mtn's investor presentation, April 2021
Slide 1: MTN Rwanda Investor presentation
MTN Rwanda Investor presentation April 2021 Leading Digital solutions for Africa’s progress
Slide 2: Welcome & Introduction
Welcome & Introduction Teta Mpyisi | Facilitator
Slide 3: Today's speakers
Today’s speakers Mitwa Ng’ambi Mark Nkurunziza Yolanda Cuba Carine Umutoni MTN Rwandacell CEO MTN Rwandacell CFO MTN Group VP, SEA Region BK Capital CEO • Joined MTN Rwanda in 2019 • Joined MTN Rwanda in 2019 • Joined MTN Group in 2020 • Joined BK Group PLC in 2012 • Formerly CEO of Airtel-Tigo Ghan
Slide 4: Agenda
Agenda 1 MTN Group at a glance 2 MTN Rwanda at a glance 3 An overview of Rwanda 4 Corporate Governance & Regulatory Context 5 Evolution of MTN Rwanda 6 Strategy & Growth Opportunities 7 Conclusion 8 Listing Details 9 Q&A
Slide 5: MTN Group at a glance
MTN Group at a glance Yolanda Cuba | MTN Group Vice President, Southern & East Africa (SEA) Region Leading digital solutions for Africa’s progress
Slide 6: The journey of progress over the last 4 years
The journey of progress over the last 4 years A foundation of commercial and operational excellence Growing Expanding subscribers data coverage 251m 280m 233m 504m 217m 114m Total 481m 95m 46m 375m a 436m 79m #Largest Data users 69m 35m market share in 27m MoMo users 22m 13 countries 2017 2018 2019
Slide 7: MTN Group | Ambition 2025
MTN Group | Ambition 2025 Belief statement “Everybody deserves the benefits of a modern connected life” Strategic intent Ambition 2025: “Leading digital solutions for Africa’s progress” Build the 25 Drive largest Create Accelerate portfolio & most valuable industry-leading shared value transformatio
Slide 8: 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 Economic Governance responsibility Societies value-added 47% 32,9% 79%* >R50 billion average reduction in absolute average
Slide 9: MTN Rwanda at a glance
MTN Rwanda at a glance Mitwa Kaemba Ng’ambi | Chief Executive Officer Leading Digital solutions for Africa’s progress
Slide 10: MTN Rwanda | Leading mobile operator in Rwanda
MTN Rwanda | Leading mobile operator in Rwanda Growing Financial subscribers performance 152 6.1m 125 #Largest Total 4.5m 5.2m Customer Market 62% Total revenue (Frw bn) 103 share in Data users 0.9m 1.3m 1.6m EBITDA margins 29.2% 40.6% 49.0% MoMo users 2.1m 2.7m 3.2m Rwanda MTNR defines Data & MoMo
Slide 11: An overview of Rwanda
An overview of Rwanda Mitwa Kaemba Ng’ambi | Chief Executive Officer Leading Digital solutions for Africa’s progress
Slide 12: Rwanda | Economic overview
Rwanda | Economic overview Rwanda has demonstrated strong economic growth… …supported by stable macro-economics variables Real GDP Growth % Average inflation 10 9.4 15 Average USD/FRw depreciation 8 6.9 10 9.4 8.9 8.6 5.5 5.7 5.6 5.5 6.0 6 5.5 5 5.7 4.5 4.0 4.8 4 3.6 2.5 2.4 0 1.4 2 1.0 -3.4 -5 0 20
Slide 13: Rwanda | Impact of COVID-19
Rwanda | Impact of COVID-19 GDP growth # of Mobile Money Transactions 2019 – 2022 (Projected) 2019 – 2020 9.4% 9.4% 8.0% 8.0% 8.0% 701 6.8% 379 5.7% 2019 2020 Value of Mobile Money Transactions (Frw billion) 2019 Act. 2020 Act. 2021 Proj. 2022 Proj. 2019 – 2020 7 177 -3.4% 2 349 GDP growth GDP growt
Slide 14: Rwanda | National Strategy & Vision 2050
Rwanda | National Strategy & Vision 2050 Future growth drivers Commentary Highly • National Strategy for Transformation (NST1) seeks to implement an economic, Trade and developed social and transformational governance progress by 2024. regional human capital integration • The NST1 Government priorit
Slide 15: Rwanda | Industry overview
Rwanda | Industry overview Rwanda has a high mobile phone penetration rate… …with internet penetration rapidly growing Mobile phone subscription (millions) Internet subscriptions (millions) 9,7 9,6 10.6 7,9 10 8,9 8,8 8 7,4 8 6,2 6 5,3 6 4,1 4 4 2 2 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2
Slide 16: Rwanda | Market Landscape
Rwanda | Market Landscape Rwanda is a two-player mobile operator market. MTN has grown its market share by 16pp in the last 5 years. Market share by mobile subscribers(%) 46% 42% 48% 55% 62% 18% 19% 52% 45% 36% 39% 38% 2016 2017 2018 2019 2020 Competitor 1 Competitor 2 MTN Rwandacell Commentary • MT
Slide 17: Corporate Governance & Regulatory Context
Corporate Governance & Regulatory Context Mitwa Kaemba Ng’ambi | Chief Executive Officer Leading Digital solutions for Africa’s progress
Slide 18: Board | Diverse knowledge & experience
Board | Diverse knowledge & experience Board of Directors(1) Commentary Evelyn Rutagwenda • The Board has broad experience across Non –Executive Chairperson Since 2017 geographies and sectors, well-placed to provide guidance and oversight. − MTN Group representation affirms Nosipho Molope commitment
Slide 19: Stakeholders | Key government agencies & regulators
Stakeholders | Key government agencies & regulators Rwanda Utilities Regulatory National Bank of Rwanda Authority • Responsible for regulating telecommunications, information & communication • Responsible for Monetary Policy to create price stability, issue legal tender technology, and broadcasting.
Slide 20: MTN Rwanda | Licenses
MTN Rwanda | Licenses Licensed by both BNR and RURA, MTN Rwandacell PLC holds the following licenses Type Date of Issue Duration Expiry Date Option for Renewal Mobile Cellular Licence and Second • 8 November 2008 • 13 Years • 30 Jun 20213 • 15 Years Operator License (2G, 3G)1 Radio Frequency License
Slide 21: MTN Rwanda | Regulatory Matters
MTN Rwanda | Regulatory Matters MTN Rwanda has a strong professional working relationship with its’ Regulators which is maintained through regular and transparent engagement. Key Matter Description Regulatory Annual Fees MTN Rwanda pays to the Rwanda Utilities Regulatory Authority the following annu
Slide 22: Evolution of MTN Rwanda
Evolution of MTN Rwanda Mitwa Kaemba Ng’ambi | Chief Executive Officer Leading Digital solutions for Africa’s progress
Slide 23: MTN Rwanda | The journey from inception
MTN Rwanda | The journey from inception Key milestones in MTN Rwanda’s journey MTN Rwandacell receives approval to List by Introduction on the Rwanda Stock Exchange following CTL’s resolution to MTN Rwandacell launches a cease business and distribute its Tristar Investments Invited MTN campaign “Con
Slide 24: Investment Case | A compelling growth story
Investment Case | A compelling growth story Strong position in an attractive Exciting demographic opportunity market Platforms • 62% customer market share with 6.1m subscribers, 3.2m accelerating growth • A growing youthful population. mobile money users and 1.6m data users. • Low data, fintech and
Slide 25: Strong position in an attractive market | Consistent growth
Strong position in an attractive market | Consistent growth Subscribers (‘m) Active data users (‘m) MoMo users (‘m) Strong growth YoY Accelerated shift to data “Cashless” – strong momentum 6.1 5.2 3.2 4.5 1.6 2.7 1.3 2.1 0.9 2018 2019 2020 2018 2019 2020 2018 2019 2020 Voice ARPU (FRw) Data ARPU (FR
Slide 26: Exciting Demographic Opportunity | Young Population & Penetration Upside
Exciting Demographic Opportunity | Young Population & Penetration Upside Rapid population growth Internet Penetration Africa 3,58% 2,94% growth rate (2016- 2,58% Av. population 2,32% 2020) 1,14% world est. Uganda Rwanda Tanzania Kenya 42% 68% 60% 63% 59% % of population under 25 Relatively High Mobi
Slide 27: Exciting Demographic Opportunity | Socioeconomic development partner
Exciting Demographic Opportunity | Socioeconomic development partner The MTN Foundation, through 1% of MTN Rwanda’s profit, has over the last 10 years invested more than Frw1.5 billion in Community Projects Economic empowerment 1 Government Priorities 3 Children Nutrition: MTN supports the governmen
Slide 28: Socioeconomic development partner | COVID-19 Response
Exciting Demographic Opportunity | Socioeconomic development partner COVID-19 Response - Prioritising our people, customers & network Impacts Managing the crisis Future focus • Economic slowdown • Y'ello Hope • Agile working Social • Lockdowns • Work from home • Support to staff & communities (our p
Slide 29: Well positioned for the long term | Wide network coverage
Well positioned for the long term | Wide network coverage Wide Network Coverage Expanding Fibre Footprint Broad Spectrum Holding GSM coverage prediction: 95.1% Total Spectrum Frequency Band in MHz 900MHz 15.8 1800MHz 25 2100MHz 20 3500MHz 88 Leased MTN Owned Technology Site count Technology Size 2G
Slide 30: Well positioned for the long term | Leading commercial position
Well positioned for the long term | Leading commercial position Largest Distribution Nationwide Fully Digitized Distribution Channel 30,000 60,000 100% MoMo & Airtime MoMoPay Merchants of airtime is electronic Agents (with 50% via MoMo) Rwanda’s only “GSMA Mobile Money Certified” Operator Recognized
Slide 31: Well positioned for the long term | Strong management team
Well positioned for the long term | Strong management team Mitwa Ng’ambi Mark Nkurunziza Yaw Agyapong Chantal Kagame Cliff Muligande Sharon Mazimhaka Chief Executive Officer Chief Finance Officer Chief Consumer Officer Chief Business Officer Chief Information Officer GM, Legal & Regulatory • Joined
Slide 32: Well positioned for the long term | Strong management team
Well positioned for the long term | Strong management team Eugen Gakwerere Norman Munyampundu Enock Luyenzi George Kagabo Oscar Oboma Chief Technology Officer Chief S&D Officer GM, Human Resources GM, Internal Audit GM, Risk & Compliance • Joined in 1998 • Joined in 2017 • Joined in 2008 • Joined in
Slide 33: Attractive Return Profile
Attractive Return Profile Mark Nkurunziza | Chief Finance Officer Leading Digital solutions for Africa’s progress
Slide 34: Attractive Return Profile | Financial Snapshot
Attractive Return Profile | Financial Snapshot Revenue Expenses EBITDA & Capex (FRw bn) (FRw bn) CAGR +21.6% CAGR +2.8% 29.2% 40.6% 49.0% EBITDA margin 152 21.9% 21.7% Capex 14.9% 72 74 76 Intensity CAGR +57.4% 125 (FRw bn) EBITDA(1) 74 103 Opex 51 60 64 52 60 FCF(2) 24 30 8 27 Capex 23 23 13 14 12
Slide 35: Attractive Return Profile | Revenue mix
Attractive Return Profile | Revenue mix Revenue Split Evolution(1) Key Drivers 2015 Voice still a great proportion of MTN Rwanda’s revenue. Continued expansion of population coverage spurs growth as more of the Voice population gets connected. In 2020, mobile phone penetration in Rwanda was 83.8%.
Slide 36: Attractive Return Profile | Revenue growth profile
Attractive Return Profile | Revenue growth profile (FRw bn) CAGR Understanding Revenue Growth 2018-20 Voice Mobile Data MFS Other Revenue (Frw bn) 21.6% 152 22 2019 125 5.8% 125 21 31 103 37.2% Voice 11 20 23 27 37.5% 16 20 Mobile Data 7 14 73 62 MFS 8 53 17.4% Other Revenue 0 2018 2019 2020 Revenue
Slide 37: Attractive Return Profile | Cost base summary
Attractive Return Profile | Cost base summary 2020 Split Composition Key Drivers • Government and regulatory costs. • Regulatory fees comprise of 3% of turnover. • Costs of handsets and other accessories. • Handset cost of sales relates to the increase in 16% Cost of Sales device sales/revenues. • I
Slide 38: Attractive Return Profile | Cost of sales
Attractive Return Profile | Cost of sales Cost of Sales split Understanding Cost of Sales CAGR (FRw bn) 2018-20 14 12 • Government and regulatory costs rising in line 13 (3.5%) with revenue growth. This includes license fees which is 1% of turnover. There is also 2% of turnover which is channelled t
Slide 39: Attractive Return Profile | Opex
Attractive Return Profile | Opex CAGR Opex Split 2018-20 Understanding Opex (FRw bn) 64 4.1% 60 60 12 (24.8%) • Employee benefit expenses increased in line with the 11 inflation. 22 17 17 19.1% • Efficiencies in marketing costs as we leverage on digital channels. 12 • Other operating costs includes
Slide 40: Attractive Return Profile | EBITDA performance
Attractive Return Profile | EBITDA performance EBITDA (FRw bn) EBITDA Drivers EBITDA 29% 41% 49% Margin 74 • The EBITDA increase in FY2019 is partly attributed to CAGR: +57.4% the introduction of IFRS16 where lease costs were capitalized. 51 • The EBITDA margin for 2020 shows an increase of 30 8p.p
Slide 41: Attractive Return Profile | Capital Expenditure
Attractive Return Profile | Capital Expenditure Capital Expenditure Overview of Capex (FRw bn) • To continue driving mobile penetration and connectivity, MTNR’s Investment program is averaging CAGR Capital Expenditure 2018–20 capital expenditure of close to FRw20.0 bn annually to 21.9% 21.7% 14.8% %
Slide 42: Attractive Return Profile | Taxation
Attractive Return Profile | Taxation Income Tax Commentary (FRw bn) 46.6% 45.6% 38.0% Effective Income • MTN has been ranked among the top 2 best Tax rate (%) taxpayers in Rwanda over the last 5 years. 12.4 • In addition to corporation tax, MTN also pays the 6,8 5.7 following taxes: • Excise tax whi
Slide 43: Attractive Return Profile | Net Working Capital
Attractive Return Profile | Net Working Capital Change in Net Working Capital Commentary (FRw bn) 0 FY 2018 FY 2019 FY 2020 -2 • Increase in current assets in line with increased -4 sales – including Mobile Money. -6 -8 • Increase in intercompany payables as a result of -10 (8,5) delays in upstreami
Slide 44: Attractive Return Profile | Free cash-flow
Attractive Return Profile | Free cash-flow Strong EBITDA performance translated into healthy free cash flows for 2020 (FRw bn) 2018 2019 2020 EBITDA 30.1 50.9 74.5 Capex (22.5) (27.2) (22.5) FCF 7.6 23.7 52.0 Change in Net Working Capital (11.9) (8.5) (14.0) Net Interest Paid (0.4) (4.7) (4.4) Incom
Slide 45: Attractive Return Profile | Dividend Policy
Attractive Return Profile | Dividend Policy Historical Dividends Declared Dividends Outlook (FRw bn) • MTNR will target a minimum dividend pay-out 12,4 ratio of 50% of its distributable net income in the medium term. • Only exception is 2021 where a pay-out ratio of 6.9 at least 30% will be targeted
Slide 46: Attractive Return Profile | Capital Structure
Attractive Return Profile | Capital Structure Overview and Financing Strategy Debt Evolution Net Debt(1) (FRw bn) • MTNR has historically maintained moderate leverage; remains in a Total 40.04 34.96 29.02 comfortable position relative to covenants on current metrics: Debt(1) 10,60 − Net Debt to EBIT
Slide 47: Attractive Return Profile | Capital Structure
Attractive Return Profile | Capital Structure Current Facilities Debt Maturity Schedule (As at 31 December 2020) (FRw Millions, as at 31 December 2020) Borrowings Currency FRw bn Maturity Profile - FRw' Millions Non-current bank loans 40 000 35 000 Tranche A FRw 29.45 30 000 Current bank loans 25 00
Slide 48: Strategy & Growth Opportunities
Strategy & Growth Opportunities Mitwa Kaemba Ng’ambi | Chief Executive Officer Leading Digital solutions for Africa’s progress
Slide 49: MTN Rwanda | Ambition 2025
MTN Rwanda | Ambition 2025 Belief statement “Everybody deserves the benefits of a modern connected life” Strategic intent Ambition 2025: “Leading digital solutions for Rwanda’s progress” Build the 25 Drive largest Create Accelerate portfolio & most valuable industry-leading shared value transformati
Slide 50: MTN Rwanda | Ambition 2025 Targets
MTN Rwanda | Ambition 2025 Targets 2020 Actuals – Rwanda 2025 – Rwanda 2025 – MTN Group Priorities Build the • 0.24m ayoba users • 100m MoMo users • 4m ayoba users largest • 100m ayoba users • 3.2 MoMo users • 6m MoMo users & most valuable • #1 NaaS platform in Africa • 62K MoMoPay merchants • NaaS
Slide 51: Conclusion
Conclusion Mitwa Kaemba Ng’ambi | Chief Executive Officer Leading Digital solutions for Africa’s progress
Slide 52: Medium-term guidance
Medium-term guidance Continued commercial momentum, with an eye on efficiencies. KPI Target Subscriber growth Maintain min. avg growth rate of ~5% Service Revenue Low- to mid-teen growth Accelerate Fintech growth Double-digit growth in revenue EBITDA Margin Stable margins Dividend pay out Minimum 50
Slide 53: 2021 priorities
2021 priorities … as we continue to manage COVID-19 uncertainties Accelerate revenue growth and drive for efficiencies Position fintech for accelerated growth Coverage Expansion in Kigali and Upcountry Increase penetration in Home Segment Digital Transformation Solidify Customer Experience leadershi
Slide 54: Conclusion | Key take-aways
Conclusion Key take-aways Very strong operational and financial results solidified over the years 1 • 16% growth in mobile users and 20% growth in revenue in 2020 • EBITDA margin of 49% Solid market leadership position 2 • 62% customer market share • Strong brand, that serves the community 3 Busines
Slide 55: Listing Details
Listing Details Carine Umutoni | Chief Executive Officer, BK Capital Leading Digital solutions for Africa’s progress
Slide 56: Rationale for the listing
Rationale for the listing 1 Providing CTL Shareholders with direct ownership of MTN Rwandacell 2 Create access for broad based investors with a strong local ownership to participate in the growth of MTN Rwandacell Create a stable and supportive long-term shareholder base to ensure a healthy and liqu
Slide 57: Details of Listing
Details of Listing Company name • MTN Rwandacell PLC Industry • Telecommunications Sub-Industry • Mobile Telecommunications • Listing by Introduction of the issued and paid-up ordinary shares of MTN Rwandacell PLC on the Rwanda Stock Exchange. • CTL is currently a public company listed on main board
Slide 58: Q&A
Q&A
Slide 59: Thank You
Thank You
Slide 60: Disclaimer
Disclaimer This presentation has been prepared by MTN Group Limited (“MTN”) and MTN Rwandacell PLC (the “Company”), and MTN together with its direct and indirect subsidiaries, the “Group”) to provide an overview of the Group and MTN Rwandacell PLC specifically. “Presentation” means this document, it
Slide 61: 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 to the facts and assumptions underlying the numerical data, market data and other infor