mtn final results presentation 2012
TRANSCRIPT
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Welcome to
the New WorldMTN Group LimitedFinal results for the year ended 31 December 2012
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01
Strategic and operational overviewSifiso Dabengwa
Group President and CEO
02
Financial overview
Nazir PatelGroup Chief Financial Officer
03
Looking aheadSifiso Dabengwa
Group President and CEO
Agenda
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Strategic and operational overview
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Creating and managing stakeholder value
Creating value for our shareholders, employees and communities in a sustainable way and inaccordance with the values of MTN
Innovation and best practice
Operating under the principle of innovation in everything we do and looking for opportunities to shareand apply best practices
Creating a distinct
customer
experience
Driving sustainable
growth
Transforming our
operating model
A unique MTN brandeduser experience that isbased on understandingand segmenting ourcustomers
Driving growth in voice whiledeveloping new opportunities indata, enterprise and otheropportunistic sectors as our
markets mature
Allow our front office functionsto be more customer focusedthrough more responsive,supportive and efficient back
office functions
MTN vision and mission
4
Our vision:To lead the deliveryof a bold, new
Digital World toour customers
Our mission:To make our
customers lives awhole lot brighter
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Strategic considerationsCreating a distinct customer experience
Brandpreference
Networkquality
Efficientdistribution
Experiencedpeople
Voice and
CustomerExperience
5
Effective
segmentation
and customer
analytics
data
services
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Strategic considerations
Voice
Driving sustainable growth
6
Data and related services ICT evolution
Billed traffic volumes increased
24.6% YoY supported by ongoingcustomer engagement
Voice revenues grew 4.0%, on
constant currency basis impacted
by the high levels of price
competition
Low mobile penetration of just
over 50% to support further
growth
Addressing network capacity and
quality to meet traffic growth
challenges
Growing data and related
services a key focus for theGroup over the medium term
In 2012, total data traffic on MTN
network increased 65.9% YoY to
30,521TB
Data revenues increased 58.5%YoY while SMS revenues
increased 11.6%
Important revenue driver over the
medium term as voice
penetration slows and
competition increases Investment in 3G and
modernisation of networks
Focus on ICT services for SME
and corporate segments
Ongoing infrastructure
investment allows us to leverage
off key products and services
Integration of Enterprise
Business into MTN South Africa,provides a more holistic offering
to our clients
Group Enterprise Business Unit
to drive ICT products and
services across the Group
.
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Strategic considerationsTransforming our operating model
7
Tower Company Transaction
Recent tower deals concluded in Cameroon, Ghana, Ivory
Coast and Uganda Ongoing evaluation of tower opportunities in other operations
driven by market specific requirements
Infrastructure sharing
Passive sharing at commercial rates in all operations
Fibre and transmission infrastructure
Procurement transformation project
Capex procurement spend centralised
Single integrated supply chain across Group progressing well
Back office rationalisation
Focus on transactional activities
Positive impact on margins in medium term
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Group highlights
8
15.1%
to 189.3 million
Group subscribers
10.9%
to R135,112 million
*Revenue
8.2%
to R57,977 million
** EBITDA
1.9%
to 1089.1 cents
HEPS
per share of
503 cents
Final dividend
R2,088 million
completed
Share buy back
* On a constant currency restated using 2011 average exchange rates revenues increased 8.5% to R132,274m** Excluding the impact of the tower transaction R587 million
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2012 in reviewA challenging year but well positioned for 2013
9
Organisational structure successfully implemented
Realigned organisation
Appropriate level of management focus & prioritisation
Step up in competitive landscape
Good subscriber growth despite high level of competitive activity
Revenue growth impacted by Nigerian price reductions
Strong data growth supported by 3G rollout and device strategy
LTE launch in SA
Successful network rollout: South Africa, Nigeria
Significant issues
Hoffmann Commission concluded Turkcell court case
Iranian sanctions
Socio-political unrest in Syria
Review of dividend policy
Sudan, Iran and Syria currency depreciation against the US$
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
020
40
60
80
100
120
140
160
180
2009 2010 2011 2012
Group Rev Gen MinutesGroup Effective Tariff (USD)
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South AfricaA growing data story
10
Launched Jun 1994 Market share 37.7% Population 51.6m Market sizing 80m (2014) Penetration 131% Shareholding 100%
Improved market share during 2012
Market share increased to 37.7% with 3.4m net additions
Prepaid net additions 2.7m and 0.7m postpaid additions
Improved distribution channel supporting prepaid growth
MTN Zone appealing value proposition (PPM 0.91c)
ARPU impacted by subs mix and interconnect
Telemetry SIMs increased 21.8% to 1.4m
1 March 2013 peak MTRs to decrease by 28.6%
MOU improving on back of attractive pricing Total minutes on network increased 11.5% YoY
3 365 3 834 4 498
15 477 18 19920 923
0
5000
10 000
15 000
20 000
25 000
30 000
Dec-10 Dec-11 Dec-12
Prepaid
Postpaid
15.6bn 16.7bn 19.9bn Total MOU
17 135 18 143 19 860
18 687 20 45421 490
Dec-10 Dec-11 Dec-12
H2
H1
19.0 21.4 25.6 *Data %
A growing data story
Data revenues increased 33.0% YoY (excl MTN Business)
7.7m 3G devices on network including 5.5m smartphones
Data traffic increased 170.6% to 14,342 terabytes
Increased pressure on voice revenues
Effective tariff decreased 7.8% YoY to 107c
Interconnect revenues declined 16.9% to R4,926m
Enterprise business included from November
Contributed R214m in revenue (see appendix)
Subscriber(000/ARPU (ZAR))
RevenueZAR (million)
* (incl SMS as % of revenue (excl handsets))
18 842 22 033
25 421
35 82238 597 41 350
152134
122
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11 320 11 782 12 835
12 314 13 22414 039
Dec-10 Dec-11 Dec-12
H2
H1
South AfricaInvesting for growth
11
Operating costs well control led
Impacted by inclusion of MTN Business
Normalised EBITDA margin 35.2% (see appendix)
Reduction in interconnect impacted margin
On-net traffic increased from 61.9% to 67.1%
Net interconnect declined 34.9% YoY to R769k
Increased handset subsidy costs
Handset volumes flat YoY
Handset costs increased by 16.1% due to currency movements
Investing for growth
Capex increased 56.3% YoY
Impacted by fibre capitalisation and WIP
Added 300 2G and 1,087 3G sites
To date have a total of 8,815km of fibre in operation
Clarity on LTE spectrum remains an issue
281LTE sites by end of 2012
1300 total FTTS installations
ExpensesZAR (million)
CapexZAR (million)
1 014 1 292 1 936
2 894 2 813
4 480
Dec-10 Dec-11 Dec-12
H2
H1
34.1 35.2 35.0 EBITDA margin%
11.0 10.6 15.5Capex as % of
revenue
23 634 25 00626 874
3 908 4 105
6 416
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NigeriaPositioned for improvement
12
Launched Aug 2001 Market share 47.8% Population 161m Market sizing 141.9m(2014) Penetration 62% Shareholding 78.8%*
38 669 41 64147 441
Dec-10 Dec-11 Dec-12
MTNSubscribers
20.2bn 26.6bn 36.8bn Total MOU
330 104 373 453 389 892
361 682 384 525363 686
Dec-10 Dec-11 Dec-12
H2
H1
4.6 8.0 13.6 *Data %
* (incl SMS as % of revenue)
RevenueNGN (million)
Subscriber(000/ARPU (ZAR))
Positioned for improvement
Average PPM YoY in Dec declined 34% YoY
Significant increase in competition during Q3
MTN responded with aggressive new price plans
Encouraging revenue trend post September
Strong growth in MOU
Revenue growth under pressure
Margins negatively impacted in 2012
4.0m 3G devices on network to support data revenue
Slow start to the year
Significant price premium from MTN
Competition driven by promotions
Network capacity constraints
Focus on churn and dormancy management
Subscriber momentum improved in second half
Net additions of 4.3m in H2 vs 1.5m in H1, (total 5.8m)
Market share slightly declined to 47.8% from 50%
Mobile Number Portabil ity MNP to be introduced in March 2013, limited impact expected
691 786
757 978 753 578
10,6 9,7
8,7
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NigeriaAcceleration in investment
13
Strong cost focus given revenue pressure
Expenses increased 8.3% YoY
Site rental costs remain a challenge
Fuel costs increased 0.3% YoY
General inflation impacting staff costs >10%
Growing off-net traffic impacting margins
Off-net traffic volumes in H2 increased 29% sequentially
Off-net traffic 17.8% of total vs. 16.4% in 2011
127 631 136 889 154 042
128 340 153 019159 862
Dec-10 Dec-11 Dec-12
H2
H1
62.9 61.7 58.3 EBITDA margin%
2 532 2 0684 432
2 168 4 263
9 301
Dec-10 Dec-11 Dec-12
H2
H1
14.0 18.2 35.5Capex as % of
revenue
ExpensesNGN (million)
CapexZAR (million)
Acceleration in investment
Capex increased 117% YoY accelerating in H2
Added 1,414 2G & 1,175 3G sites in 2012
Q4 traffic on network increased 32% YoY
Network remains constrained
Quality improvements evident in Q4
10,450 km of backbone fibre in operation
Expected to meet NCC quality requirements by mid year
Increased focus on early build in 2013 2012 capex included R2.0bn increase in WIP
Weaker rand in H2 impacted capex by R789m
255 971289 908
313 904
4 7006 331
13 733
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IranGood result in challenging environment
14
Launched Oct 2006 Market share 46.9% Population 76m Market sizing 99.3m (2014) Penetration 113% Shareholding 49%
12 233 15 689 20 125
14 06117 563
21,855
Dec-10 Dec-11 Dec-12
H2
H1
19.7 25.3 28.8 *Data %
896 413 418
765
755 704
Dec-10 Dec-11 Dec-12
H2
H1
18.1 10.6 9.2Capex as % of
revenue
RevenueIRR (billion)
CapexZAR (million)
* (incl SMS as % of revenue)
Good result in challenging environment Added 5.8m subscribers
Total subscribers reached 40.5m, 46.9% market share
Ongoing sanctions placing pressure on economy
Strong revenue and margin performance Revenues increased 26.2% YoY in LC
EBITDA increased 31.2% in LC
EBITDA margin increased to 44.3% from 42.5% YoY
Data continues to grow
SMS up 30% YoY, contributing 21.3% of total revenue Data revenue (excl sms) increased 103% YoY
Sanctions impacting environment
Rollout impacted by delays in equipment delivery
Currency devaluation
Consumer disposable income under pressure
Difficult environment for network rollout
Added 604 2G sites vs 781 2G sites in 2011
Remain committed to compl iance with sanctions
No dividends or loans repatriated since last reporting period
EBITDA
Margin26 294 33 252
41 980
1 6611 168 1 122
* Capex based on MTNs 49% share
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GhanaWinning despite competition
15
Launched Nov 1996 Market share 50.5% Population 25.6m Market sizing 25.3m (2014) Penetration 91% Shareholding 98%
536 600 734
574677 818
Dec-10 Dec-11 Dec-12
H2
H1
7.0 5.5 8.1 *Data %
1 404137 273
1 688
714 818
Dec-10 Dec-11 Dec-12
H2
H1
54.8 14.2 15.9Capex as % of
revenue
RevenueCedi (million)
CapexZAR (million)
* (incl SMS as % of revenue)
Good performance despite competition
Added 1.6m subscribers
Slight decline in market share to 50.5%
Ban on SIM sales lifted on 22 January 2012
Strong revenue and margin performance
Compelling value proposition drives growth
Revenues increased 21.5% in LC
EBITDA increased 17.9% in LC
EBITDA margin decreased to 37.0% from 38.1% YoY
Data remains a key driver Data revenues increased 96.1% YoY, trend continues
Driven by improved handsets, lower data tariffs and bundles
Tower transaction progressing satisfactor ily
1856 towers transferred to tower company
Site rentals now priced in GHS
Leasing costs placing pressure on margins
3G network remains a key focus
Over 800 3G sites on the network
1.3m 3G devices on network
EBITDA
Margin1 1101 277
1 552
3 092
851 1 091
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CameroonWell placed for growth in 2013
16
Launched Feb 2000 Market share 55.7% Population 21.1mMarket sizing 17m (2014)
Penetration 62% Shareholding 70%
109 538 105 139 116 138
110 256 112,305 120 720
Dec-10 Dec-11 Dec-12
H2
H1
5.2 5.9 6.7 *Data %
37792
274
148
234
450
Dec-10 Dec-11 Dec-12
H2
H1
16.1 9.8 19.0Capex as % of
revenue
RevenueCFA (million)
CapexZAR (million)
* (incl SMS as % of revenue)
Well placed for growth in 2013
Increased subs 26.0% YoY to 7.307m
2012 impacted by once-off costs, normalised base for 2013
Strong underlying performance
Revenues increased 8.9% YoY in LC
EBITDA increased 14.0% YoY in LC
EBTIDA increased to 45.9% from 43.9% YoY
Data revenue continues to grow
Data revenues (excl SMS) increased 25.0% YoY
Increasing mobile money distribution footprint
Marked improvement in network rollout
Capex increased 122% YoY
Added 193 2G sites in 2012 compared to 69 sites in 2011
Network quality further improved
Completed swap and modernisation of 50% of network
EBITDA
Margin
219 794 217 444236 858
525
326
724
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Ivory CoastIncreased competition
17
Launched April 1996 Market share 36.4% Population 22.9m Market sizing 13.0m (2014) Penetration 76.9% Shareholding 67.7%
95 865 96 014 127 677
104 990 121,903128 709
Dec-10 Dec-11 Dec-12
H2
H1
3.1% 1.2% 5.7% *Data %
603102
273
121
305
630
Dec-10 Dec-11 Dec-12
H2
H1
24.4 12.1 21.9Capex as % of
revenue
RevenueCFA (million)
CapexZAR (million)
* (incl SMS as % of revenue)
Increased competition Aggressive pricing from competitors
Net additions impacted by end of registration period (-400k),
Reported net disconnections of 226k in 2012Revenues tracking strongly Revenues increased 17.7% YoY, EBITDA increased 14.6% YoY
Regulatory fees and competition impacted EBITDA margins
Margins decreasing to 40.3% from 41.6% YoY
Strong acceleration in data revenues Handset data revenues up 84% YoY
MTN Business up 33% and mobile money up 167%
Increase investment
Added 147 2G & 3G sites compared to 63 in 2011
Completed 1,124km fibre rollout
3G network to support growth in 2013
Launched 3G services in December
Key driver of data services over medium term
EBITDA
Margin
200 855217 917
256 386
724
407
903
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UgandaStrong result in a very competitive market
18
Launched Oct1998 Market share 52.5% Population 36.1m Market sizing 27m (2014) Penetration 41% Shareholding 96%
416 418 383 898 501 285
443 817 480,187506 101
Dec-10 Dec-11 Dec-12
H2
H1
7.0 13.4 17.7 *Data %
179 262 230
405389
205
Dec-10 Dec-11 Dec-12
H2
H1
20.1 26.2 13.2Capex as % of
revenue
RevenueUGX (million)
CapexZAR (million)
* (incl SMS as % of revenue)
Strong result in competitive market 48k net disconnections impacted by registration process
Subscriber registration process extended to 31 May 2013
7th
mobile network expected to enter market in 2013Margin improvement Revenues increased 16.6% YoY in LC
EBITDA increased 23.2% YoY in LC
EBITDA margin increased to 36.3% from 34.5% YoY
Mobile money progressing well Accounts for c.9% of total revenues
2 million transactions each month, added 150k subs in Jan
Tower transaction concluded
962 of sites handed over
Added 81 2G sites and 92 3G sites (co-located) in 2012
EBITDA
Margin860 235 864 085
1 007 386
584651
435
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SyriaExtremely challenging environment
19
Launched Jun 2002 Market share 45% Population 23.1m Market sizing 16m (2014) Penetration 58.5% Shareholding 75%
20 664 20 747 23 229
22 798 22 849 21 631
Dec-10 Dec-11 Dec-12
H2
H1
10.9 12.4 15.4 *Data %
18086
239
230 356
338
Dec-10 Dec-11 Dec-12
H2
H1
6.0 6.8 10.7Capex as % of
revenue
RevenueSYP (million)
CapexZAR (million)
* (incl SMS as % of revenue)
Challenging environment
Unrest progressively worsened during H2
Added 312k subscribers in 2012
Revenue pressure likely to increase
Revenues increased 2.9% YoY in LC, a satisfactory result
EBITDA decreased 9.4% YoY in LC
EBITDA margin decreased to 23.0% from 26.2% YoY
Data increased share of wallet
Data revenues up 47.3% YoY
Data (excl sms) contributes 7.3% of total revenues
Capex rollout impacted by ongoing unrest
Site rollout constrained by lack of access
Focus remains on 3G coverage to support data revenue
Network uptime remains signi ficant challenge
Transmission remains biggest concern
Power availability continues to deteriorate
Approximately 25% of sites are out of service
EBITDA
Margin
43 462 43 596 44 860
410 442
577
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SudanEncouraging turnaround
20
Launched Sep 2005 Market share 31.8% Population 34.4m Market sizing 28.5m (2014) Penetration 73% Shareholding 85%
254 329 414
265
395515
Dec-10 Dec-11 Dec-12
H2
H1
3.0 3.2 7.9 *Data %
172 272125
458
6801 211
Dec-10 Dec-11 Dec-12
H2
H1
40.7 48.9 61.9Capex as % of
revenue
RevenueSDG (million)
CapexZAR (million)
* (incl SMS as % of revenue)
Encouraging turnaround Improvement in 2011 has continued
Improved distribution network and competitive offers
Added 2.2m subscribers and increased market share to 30.9%
Strong revenue and margin performance Revenues increased 28.2% YoY in LC
EBITDA increased 60.2% YoY in LC
EBITDA margin increased to 27.7% from 22.1% YoY
Making progress with data services
Data revenues increased over 700% YoY from low base SMS revenues more than doubled
Good progress on network rollout
Rolled out 332 2G & 146 3G sites
Ongoing progress with BTS modernisation
Capex rollout to improve competitiveness
Operating environment tough
High inflationary environment
Ongoing unrest in Darfur and southern region
Currency devaluation
EBITDA
Margin519
724
929
630
952
1 336
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Financial overview
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Financial highlightsInvesting for sustained growth
22
Reported revenues increased 11% YoY
- Nigeria negatively impacting performance
- Organic growth excluding Nigeria 12.3%EBITDA growth limited to 8% YoY
- Group margin impacted by Nigeria
- R1.1bn increase in head office costs
Capex increased significantly YoY
- Significant pre-ordering for 2013- Investing for sustained growth
Joint ventures equity accounted from 2013
(IFRS11) (see appendix)- Iran
- Swaziland
- Botswana
31 045 35 849 27 877
19 46617 717 30 101
64 173 68 318
77 134
50 51153 566
57 978
2010 2011 2012
121 884
135 112
Group summary: 2010 - 2012ZAR (million)
AFCF**
Capex
EBITDA*
Opex
Rev
44.0% 43.9% 42.9% EBITDA margin
44.0% 44.9% 43.3% EBITDA margin (incl tower profit)
17.0% 14.5% 22.3% Capex / revenue
+11% +9%
-13% -12%
+8% +5%
+70% +62%
-22% -24%
Reported11 - 12
Organic11 - 12
* Excl tower profit Dec 12: ZAR 587m (Dec 11: ZAR 1 185m), excl Zakhele Dec 10: ZAR 2 973m
** EBITDA less capex (approximates free cash flow)
114 684
+6%
+11%
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RevenueStrong organic growth, data key driver
23
Voice revenue growth up 7% YoY
- Strong subscriber growth up 15.1% YoY
- Competitive pricing impacts tariffs across most markets- Voice traffic up 24.6%
- South Africa prepaid revenue performs well
- Nigeria voice revenue down 10% (LC)YoY
Data major contributor to revenue growth- Data revenue up 58.5% YoY and traffic up 65.9%
- Increased smartphones and data enabled phones
Interconnect revenue impacted by MTR reduction
- South Africa down 17% YOY- Interconnect will remain a drag on growth in 2013
Strong results from large opco cluster
- Contributing almost 59% of revenue growth
- Well positioned for 2013
2011 RSA NIG LOC SOC HOE 2012CR FX 2012
Revenue growth Organic Reported
South Africa 7% 7%
Nigeria -1% 11%
Iran 26% 10%
Ghana 21% 15%
Cameroon 9% 14%
Ivory Coast 17% 23%
Uganda 16% 33%
Syria 2% -17%
Sudan 28% 11%
Revenue breakdownZAR (million)
121 884
2 753 (271)
1 980 132 2742 838
(201)6 129
135 112
2012CR is at constant prior year FX rate LOC Large opco cluster
SOC Small opco cluster HOE Head office companies and eliminations
+9%
+2%
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Revenue - dataIncreased demand for data services
24
Increased demand for data services
- Data revenue up 58.5% to ZAR 14.6bn
- Contributes 10.8% of total revenue- Data users increased 41% to 58.7m
- 65.9% growth in data traffic
- Smartphones up 104% to 21.9m
- Active mobile money subs increased to 2.9m
- Renewed focus on mobile money
- Enterprise business to support data revenues
- Nigerian data revenues increased 139.8% YoY
- South Africa effective data tariff down 52% YoY
951 1 079 1 0861 712
1 999 1 989188350
725
1 024
1 8912 303
1 727
1 911
2 120
2 526
3 158
3 234
-100.00%
100.00%
300.00%
500.00%
700.00%
900.00%
1100.00%
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
H1-10 H2-10 H1-11* H2-11* H1-12* H2-12
OTH NIG RSA % Rev
2 866
3 340
3 931
5 262
7 048
7 526
Revenue - dataZAR (million)
5%
6%
7%
8%
11% 11%
*reallocation of data revenue
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6 422 8 013
14 80516 052
6 754
7 775
13 395
15 041
8 160
9 789
18 782
20 464
2011 2012
OPEXFocus on cost control
25
Direct network operating costs
- Increased number of sites
- Higher diesel and site rental costs- Lease payments in Ghana
- Iran maintenance, priced in Euro and USD
- Nigerian transmission cost up on higher traffic
- Revenue share and regulatory fees in Iran
Handset costs continue to increase- South Africa average post-paid handset cost up
7%, pre-paid handset costs up 15%
Marketing spend well controlled
- Marketing spend 2.8 % of revenue (2011: 3.1%)
Commission cost
- South Africa pre-paid commissions trending
down
- Post-paid handset subsidies lower
OpexZAR (million)
*Other operating
expenses
Selling, distribution
and marketing
expenses
Employee
benefits
Interconnect
and roaming
Costs of handsets
and other
accessories
*incl deferred gain Dec 12: ZAR 308m (2011:ZAR 273m)
-20% 13%
-12% 19%
-15% 10%
-8% 21%
-25% 10%
Reported11 - 12
% share ofopex
Direct network
operating costs-9% 27%
+13%
68 318
77 134
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EBITDA marginGrowing contribution from other operations
26
South Africa
- Margin decreased 0.2pp to 35.0% YoY (MTN Business)
- Opportunity for margin improvementNigeria
- Margin decreased 3.4pp to 58.3% YoY
- 39% YoY growth in interconnect cost
Iran
- Margin increased 1.8pp to 44.3%- Controlled marketing spend, optimised transmission
Cameroon
- Margin increased to 45.9% from 43.7%
Uganda
- Margin increased to 53.5% due to tower sale profit- Excluding tower sale profit, margin increase 2.4pp to
36.9%
Sudan
- Margin increased to 27.7% from 22.3%
- Benefit from improved revenue performance and bettercost control
2011 RSA NIG LOC SOC HOE 2012CR FX 2012
EBITDA growth Organic Reported
South Africa 7% 7%
Nigeria -6% 5%
Iran 31% 15%
Ghana 23% 17%
Cameroon 14% 20%
Ivory Coast 13% 19%
Uganda 24% 42%
Syria -10% -27%
Sudan 59% 38%
EBITDA margin reconciliation(%)
43.9% (0.1pp) (1.0pp)0.6pp
42.4%
0.5pp
(1.2pp)
0.2pp 42.9%
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InterestIncrease in forex and functional currency losses
27
Increase in interest income in holding company
Forex losses
Sudan- Losses on vendor financing and working capital
- Some restructuring of debt, limiting forex impact
Syria
- Losses related to dividend declared
- Outstanding dividend USD337m
Iran
- Iran dividends receivable R1 191m
- Iran garnishee R243m
- Working capital R567m
Net finance cost
ZAR (million)2012 2011 2010
Net interest paid 825 1 454 1 925
Net forex
losses/(gains)3 302 (34) 2 147
Put options 30 162 22
Total 4 157 1 582 4 094
Forex losses
ZAR (million) Balance
Forexlosses/(gains)
EPSimpact(cents)
Sudan 726 373 17.2
Syria 2 856 1 507 82.0
Iran 2 465 2 001 79.3
Other - (579) -
Total 6 047 3 302 178.5
34.92%
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Taxation
28
Group effective tax rate of 34.92% (2011: 36.80%)
- STC impact 2.43%
- Withholding tax 3.40% (mainly from Mauritius)
- Forex loss 1.42%Sudan and Syria dividend (R1 880m)
- Deferred tax credit movement of R506m
Mauritius unrealised forex loss from Iran
Release of tax provision due to settlement
7 834 10 184 11 265
1 984
1 089(506)
1 450
2 5802 154
34.00%
34.50%
35.00%
35.50%
36.00%
36.50%
37.00%
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2010 2011 2012
Normal tax Def tax STC & other WHT Eff rate
12 91313 853
11 268
TaxZAR (million)
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HEPS
ZAR (cents) 2012 2011 Variance %
At tr ibutable earnings per share 1 126.4 1 119.5 0.6
Profit on disposal of non-current assets (36.2) (48.6) (25.5)
Reversal of impairment of PPE and non-current assets (1.1) (2.3) (52.2)
Basic headline earnings per share 1 089.1 1 068.6 1.9
29
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2 779 5 145 5 979
6 577
8 940
9 362
930
2 088
2010 2011 2012
Share buy-back H2 H1
Shareholder returns
30
Dividend
H1 2011 65%
H2 2011 70%H1 2012 72%
H2 2012
- Revised dividend policy to growth policy
- Final dividend of 503c
Share buy-backs
H2 2011 repurchased 6.8m shares R930m
H1 2012 repurchased 15.6m shares R2.1bn
Total repurchase of 1.2% (since 2011)
Dividends and share buy-backsZAR (million)
9 356
17 429
15 015
+36%*
*CAGR
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Statement of financial position
ZAR (million) 2012 2011
Property, plant and equipment 77 485 71 610
Goodwill and other intangible assets 33 935 34 540
Other non-current assets 9 677 7 637
Current assets 58 914 66 801
Non-current assets held for sale 1 373 820
Total assets 181 384 181 408
Total equity 92 887 92 699
Interest bearing liabilities 32 532 34 016
Other liabilities 55 965 54 693
Total liabilities 88 497 88 709
Total equity and liabilities 181 384 181 408
Net cash* 5 519 11 817
Net cash / EBITDA** 0.09 0.22
32*Excl Iran and Syria (R3 214m) (2011: R3 112m)**Excl Iran and Syria (0.06) (2011: 0.06)
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Statement of cash flow
ZAR (million) 2012 2011* Variance %
Cash generated by operations 57 856 50 277 15
Dividends paid to equity holders of the Company (14 919) (11 722) (27)
Dividends paid to non-controlling interests (3 018) (2 647) (14)
Net interest paid (693) (1 359) 49
Tax paid (14 303) (9 414) (52)
Dividends received from associates 155 92 68
Cash generated by operating activities 25 078 25 227 (6)
Acquisition of property, plant and equipment (22 572) (14 103) (60)
Other investing activities (4 487) (6 513) 31
Cash used in investing activities (27 059) (20 616) (31)
Cash used in financing activities (5 759) (9 386) 39
Cash and cash equivalents at the beginning of the year 35 213 35 907 (2)
Effect of exchange rates on cash and equivalents (1 942) 4 081 (148)
Cash and cash equivalents at the end of the year 25 531 35 213 (27)
33*2011 amounts reclassified (dividends paid to non-controlling interests reclassified from financing to operating activities).
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Income statement
ZAR (million)2012 2012 equity
accountingVariance %
Revenue 135 112 121 865 (10)
Other income 894 894 -
EBITDA 58 564 52 635 (10)
Depreciation, amortisation and impairment of goodwill (17 246) (15 953) 7
Profit from operations 41 318 36 682 (11)
Net finance cost (4 157) (1 447) 65
Equity income (180) 668 NM
Profit before tax 36 981 35 903 (3)
Income tax expense (12 913) (11 835) 8
Profit after tax 24 068 24 068 -
Non-controlling interests (3 364) (3 364) -
At tr ibutable pro fi t 20 704 20 704 -
EBITDA margin 43.3% 43.2% (0.1pp)
Profit on sale of towers 587 587 -
EBITDA margin % excl tower profit 42.9% 42.7% (0.2pp)
Effective tax rate 34.9% 33.0% 1.9pp
Equity accounting of joint ventures
34
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Statement of financial position
ZAR (million)2012 2012 equity
accounting
Property, plant and equipment 77 485 73 907
Goodwill and other intangible assets 35 634 33 996
Other non-current assets 9 677 10 838
Current assets 58 914 53 772
Non-current assets held for sale 1 373 1 373
Total assets 181 384 173 886
Total equity 92 887 92 887
Interest bearing liabilities 32 532 30 639
Other liabilities 55 952 50 360
Total liabilities 88 497 80 999
Total equity and liabilities 181 384 173 886
Net cash 5 514 11 401
Net cash / EBITDA 0.09 0.22
Equity accounting of joint ventures
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Looking Ahead
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Looking Ahead
37
Change in dividend policy to absolute growth policy Share buy-back strategy
Creating & managing stakeholder value
Focus on customer centricity Improved network quality through ongoing investment
Creating a distinct customer experience
Cost management, project NEXT
Monetisation of passive infrastructure
Transforming our operating model
Growing data and ICT revenues Select M&A opportunities
Driving sustainable growth
Implementation of culture operating system Spectrum allocation policy
Migration to all IP networks
Innovation and best practice
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Subscribers
Net subscriber additions (000)
South Africa 2 900
Nigeria 7 000
Large opco cluster 8 100
Iran 3 850
Ghana 800
Cameroon 1 000
Ivory Coast 300
Sudan 1 350
Syria -
Uganda 800
Small opco cluster 3 000
Total 21 000
Guidance 2013
38
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CAPEX
ZAR (million)
Authorisedbudget2012
Actual2012
Authorisedbudget2013**
South Africa 4 599 6 416 5 712
Nigeria 10 500 13 733 13 079
Large opco cluster 5 242 6 188 5 430
Iran 1 306 1 122 1 002
Ghana 1 128 1 091 1 024
Cameroon 432 724 697
Ivory Coast 393 903 690
Uganda 468 435 555
Syria 869 577 688
Sudan 646 1 336 774
Small opco cluster 2 972 3 052 2 352
Head office companies 1 088 712 1 644
Total 24 401 30 101* 28 217
Guidance 2013
39*2012 capex at constant currency ZAR28.7bn
**USD:ZAR 8.27
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Appendix
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Net cash
ZAR (million)Cash and cash
equivalentsInterest bearing
liabilitiesIntercompanyeliminations
Net debt/(cash)2012
Net debt/(cash)2011
South Africa (3 985) 16 470 (16 268) (3 783) (3 699)
Nigeria (6 721) 12 613 - 5 892 (1 578)
Large opco cluster (11 217) 7 775 (4 559) (8 001) (6 429)
Iran (3 175) 1 695 (1 686) (3 166) (1 743)
Ghana (984) 51 - (933) (599)
Cameroon (1 514) 537 - (977) (314)
Ivory Coast (494) 637 - 143 760
Uganda (726) 409 - (317) 362
Syria (3 868) - - (3 868) (5 113)
Sudan (456) 4 446 (2 873) 1 117 218
Small opco cluster (3 716) 6 220 (2 097) 407 550
Head office companies (12 407) 13 983 (1 610) (34) (661)
Total (38 046) 57 061 (24 534) (5 519) (11 817)
Group in net cash position
41
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South Africa
ZAR (million) H1-12 H2-12 YTD-12
South Africa
Revenue 19 862 21 488* 41 350*
EBITDA 7 026 7 450* 14 476*
EBITDA margin 35.4% 34.7%* 35.0%*
Business Solutions South Africa
Revenue 639 432 1 071
EBITDA (11) (34) (45)
EBITDA margin (1.7%) (7.9%) (4.2%)
South Africa excl Business Solutions
Revenue 19 862 21 274 41 136
EBITDA 7 026 7 455 14 481
EBITDA margin 35.4% 35.0% 35.2%
Excl Business Solutions South Africa
42*Incl 2 months of MTN Business Solutions South Africa
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FX trendsAverage rate
43
USD: Local currency H1-11 H2-11 YTD-11 H1-12 H2-12 YTD-12Variance %
YTD-11 to YTD-12
ZAR 6.80 7.51 7.17 7.89 8.47 8.16 14
Naira 154 158 156 159 159 159 2
Rial 10 474 10 739 10 614 11 970 15 862 13 701 29
Cedi 1.51 1.58 1.55 1.78 1.91 1.85 19
Cameroon XAF 465 476 470 502 513 508 (8)
Ivory Coast CFA 467 474 472 504 514 509 (8)
Uganda shilling 2 357 2 648 2 507 2 457 2 558 2 490 (1)
Syrian pound 47.41 49.31 48.40 64.40 72.32 67.99 40
Sudanese pound 2.70 2.68 2.69 2.78 4.41 3.50 30
ZAR: Local currency H1-11 H2-11 YTD-11 H1-12 H2-12 YTD-12Variance %
YTD-11 to YTD-12
Naira 22.58 20.97 21.76 20.25 18.70 19.50 (10)
Rial 1 536 1 424 1 474 1 515 1 886 1 686 14
Cedi 0.22 0.21 0.22 0.23 0.23 0.23 5
Cameroon XAF 68.10 62.99 65.67 63.93 60.54 62.20 (5)
Ivory Coast CFA 68.27 62.61 64.81 63.89 60.70 62.31 (4)
Uganda shilling 345 349 347 304 302 303 (13)
Syrian pound 6.95 6.57 6.74 8.14 8.56 8.34 24
Sudanese pound 0.40 0.35 0.37 0.35 0.52 0.43 16
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FX trendsClosing rate
44
USD: Local currency 2012 2011 2010Variance %
11-12
Variance %
10-11
ZAR 8.47 8.07 6.61 (5) (22)
Naira 156 162 152 4 (7)
Rial 24 596 11 120 10 356 (121) (7)
Cedi 1.90 1.64 1.48 (16) (11)
Cameroon XAF 497 506 491 (2) (3)
Ivory Coast CFA 497 506 491 (2) (3)
Uganda shilling 2 644 2 475 2 302 (7) 8
Syrian pound 86.51 54.14 47.17 (60) (15)
Sudanese pound 4.41 2.68 2.65 (65) (1)
ZAR: Local currency 2012 2011 2010Variance %
11-12
Variance %
10-11
Naira 18.47 20.10 23.00 8 13
Rial 2 905 1 378 1 566 (111) 12
Cedi 0.22 0.20 0.22 (10) 9
Cameroon XAF 58.70 62.73 74.20 (6) (15)
Ivory Coast CFA 58.70 62.73 74.20 (6) (15)
Uganda shilling 312 307 348 (2) 12
Syrian pound 10.22 6.71 7.13 (52) 6