Final audited results f for year ended 31 December 2010 d d 31 D - PowerPoint PPT Presentation

MTN Group Limited Final audited results f for year ended 31 December 2010 d d 31 D b 2010

Agenda S Strategic and operational overview i d i l i Phuthuma Nhleko Group President and CEO Financial overview N Nazir Patel i P t l Group Finance Director Message from the MTN Group Chairman Cyril Ramaphosa Looking ahead Sifiso Dabengwa Group COO and CEO designate

Strategic and operational overview Phuthuma Nhleko Group President and CEO d d

MTN vision To be the leader in telecommunications in emerging markets Leverage existing Convergence & Consolidation & footprint & intellectual footprint & intellectual operational evolution diversification capacity Increased competitiveness Hub and H b Hub and H b d d Procurement P Procurement P t t Skills Skills Skill Skill Value Value V l V l Best practice Best practice Diversification Diversification Brand Brand cluster cluster synergies synergies optimisation optimisation proposition proposition Execution excellence Execution excellence Execution excellence Execution excellence

Medium term considerations - market opportunities market opportunities Attractiveness and challenges Africa seen as the last frontier of growth Africa seen as the last frontier of growth • • ME opportunities often focused on oil and property • Resources remain important, but Africa is slowly diversifying, with over 60% of growth • coming from non traditional sectors coming from non-traditional sectors – retail manufacturing financial services telecoms real retail, manufacturing, financial services, telecoms, real estate, tourism etc Geo-political risks (events in North Africa and the Middle East) • Doing business in emerging markets requires a long-term commitment and a steady hand as Doing business in emerging markets requires a long term commitment and a steady hand as • risks may appear overwhelming at times Interesting facts As most economies contracted during recession, Africa’s GDP expanded by 2% in 2009, while • GDP dropped 4% in the US, 2.8% in the EU and 1.5% in Latin America Emerging markets out paced the developed markets with GDP growth of at least 6% • compared to global GDP growth of about 2.5% excluding the “shadow economies” d t l b l GDP th f b t 2 5% l di th “ h d i ” Urbanisation: 40% of Africans live in the cities (67% or 1 billion by 2050, creating economies • of conglomeration. 52 cities in Africa have over 1 million people, and growing Africa entering a ‘take off’ phase due largely to a positive mix of socio political and economic Africa entering a ‘take-off’ phase, due largely to a positive mix of socio-political and economic • • forces (Democracy, fiscal discipline) FDI in Africa has increased from USD15 billion to USD 80 billion in 8 years •

Group highlights Group subscribers EBITDA margin Approximate FCF U 22 0% t Up 22,0% to Up 2,9% points to U 2 9% i t t Up 108% to U 108% t 141,6 million 44,0% ZAR 31,0 billion Adjusted HEPS Net cash Final dividend Up 20,5% to of per share of p 909,1 cents ZAR 905 million 349 cents Dividend payout ratio increased to 55%

Impact on financial framework Continued organic Capex spend Cost efficiencies Cost efficiencies Cost efficiencies growth “peaked” Final Final dividend dividend Shareholder per share of per share of 349 cents 349 cents 349 cents 349 cents returns t Opportunistic M&A M&A Increased cash generation

Revenue growth Revenue growth • Underpinned by subscriber growth 127.3 ZAR (billion) • Negatively impacted by strong rand Negatively impacted by strong rand • Regulation of termination rates in SA and Nigeria resulted in a decline in 114.7 revenue 111.9 • Significant increase in data revenue, albeit off a low base 14% Rev (constant currency 2,5% Rev (reported) Rev (reported) Dec-09 Dec-10 2009 2010 Proportionate subscribers Total subscribers (million) (million) 106.9 141.6 88.5 116.0 32% 22% 32% 26% 20,8% , 26% 26% 46% 45% 47% 47% 23% 23% 22% 22% 27% 27% Dec-09 Dec-10 Dec-09 Dec-10 MENA WECA SEA

Key revenue drivers Data and SMS revenue • Introduction of new commercial and ZAR (billion) innovation function to drive data products and 3 638 3 638 4 000 4 000 25% 25% services services 20% 3 500 20% • Distribution of data devices (smartphones and 3 000 2 490 19% other related products) 2 500 15% 11% 1 633 2 000 5% 5% 7% 10% • Data opportunity (other than SMS) still 1 500 1 009 immature outside of SA 1 000 538 447 5% 297 288 178 500 109 • 0 0% Investments and upgrades of network and IT South South Nigeria Nigeria Ghana Ghana Iran Iran Syria Syria i f infrastructure including 3G and WIMAX t t i l di 3G d WIMAX Africa (49%) Data ZAR '000 SMS ZAR '000 • Investments in undersea cables implemented Data (incl SMS) as % of rev – EASSY (Aug 10), EIG (partly, Feb 10) Mobile money customers Mobile money customers • Mobile money (‘000) 231 120 16 • 4,3 million customers (Dec 10) 691 • Launched in 11 countries to date 1 403 1 838 South Africa Uganda Ghana Cote d' Ivoire Rwanda Benin

EBITDA and key drivers EBITDA growth • Cost containment initiatives on opex and staff ZAR (billion) costs 56.7 60 50.5 • Decreased selling, distribution and marketing 46.1 50 costs 40 23% • Decrease in interconnect cost 30 30 • Supply chain management 9,7% EBITDA 20 (constant • Increased centralisation of procurement currency activities and rationalisation of suppliers 10 EBITDA (reported) (reported) • Infrastructure sharing 0 Dec-10 Dec-09 2009 2010 • Strategy pursue passive infrastructure sharing EBITDA margin considering circumstances of each market (% ) • MTN Ghana tower sharing joint venture with MTN Gh t h i j i t t ith 41.1% ATC established Group 44.0% • Structural framework for 32.0% SEA • Shared services and outsourcing • Shared services and outsourcing 34 2% 34.2% • Standardisation and optimisation of systems 53.5% WECA and processes 55.5% 26.9% MENA 33.6% Dec-09 Dec-10

Regulatory Market regulation Signed MOU in Syria for the conversion of the BOT to a freehold licence Si d MOU i S i f th i f th BOT t f h ld li • Discussions on terms ongoing • Infrastructure Expected terms : effective date Apr 11, 20 year GSM licence, upfront fee of ± SYP 25 bn and • sharing between 25% and 27% rev share Evidence of some regulatory preference for a tariff floor to ensure sustainability and long term Evidence of some regulatory preference for a tariff floor to ensure sustainability and long term • commercial success of the telecommunications sector Mobile termination rates Mobile termination rates South Africa • • Final regulation published 29 Oct 10, • First reduction Mar 10 and further cuts in Mar 11, Mar 12 and Mar 13 to 40c/ min Ni Nigeria i • • Implemented 31 Dec 09 SIM registration SIM registration South Africa • • 81% of prepaid and 71% of postpaid base RICA’d (Dec 10) • Deadline extended to 30 Jun 11 Ni Nigeria : 34% of base registered, regulator issued directive to sell partly active new SIMS i 34% f b i d l i d di i ll l i SIMS • from 14 Feb 11 Ghana : 70% of base registered, existing SIMS to be registered by Jun 11 •

Other key developments People/ sustainability MTN Academy MTN A d • Delivers focused learning services and solutions to meet key talent and critical • skills needs Reached over 25 000 employees over 3 years (classroom and e-learning) Reached over 25 000 employees over 3 years (classroom and e-learning) • • Effective talent retention strategies incl. job rotation and special assignment • projects Greening operations g p • Energy efficiency and environmentally-friendly energy investments to reduce • opex, carbon tax risk and greenhouse gas emissions, incl. e-waste management Carbon footprint initiatives to identify regulatory, physical and other risks and • opportunities posed to MTN by climate change and improve business efficiencies Social and economic development projects through MTN Foundations across ops • BEE – MTN Zakhele kh l Achieved MTN SA’s objectives in creating a broad-based empowerment transaction • Holds 4% of MTN Group • 80,900,000 MTN Zakhele shares offered to members of the Black public • Allocated shares to 120,349 individuals and 2,203 groups •

Operational framework I L Quality service N N A A Brand Efficient T N preference distribution E R Customer R E Experience pe e ce N T Products and value added Segmentation A A X X services services L E Experienced people people