MTN Group Limited Results presentation for the six month period - - PowerPoint PPT Presentation

MTN Group Limited

Results presentation for the six month period ended 30 June 2016

AGENDA

1 Strategic and

• perational update

2 Financial review 3 2016 Guidance 4 Key matters and

immediate priorities

Strategic and operational update

4

Performance reflects a confluence of material issues which created a ‘perfect storm’

Group financial results for the six months ended 30 June 16

• On 10 June MTN settled Nigerian regulatory fine with Federal Government of Nigeria
• MTN to pay 330 billion naira (USD 1.67 billion) over three years in full and final settlement, in addition

to complying with certain other regulatory conditions

• 50 billion naira (USD 250 million) paid on 24 February 2016 forms part of the monetary component of

the settlement

• June 2016, first schedule of 30 billion naira paid (USD 124 million)
• Accrued present value of remaining, 280 billion naira (USD 1.42 billion)
• Impact
• EBITDA: negative re-measurement impact of R10 499 million (provision R9 287m made in H2 15)
• Headline earnings: R8 632 million
• HEPS: 474 cents
• Cash flow: R 5 870 million

Nigeria fine settlement; significant negative impact on results

STRATEGIC AND OPERATIONAL UPDATE

5

A challenging operating environment

Source of GDP growth: IMF

Slowing reliant economies, regulatory pressure and tough competition

1.3 2.7 0.0 3.5 5.9 8.6 5.0 0.1

• 1.8

4.0 4.5 4.9 8.5 5.3 6.5 10.4 8.9 15.7 2.2 2.1 6.7

• 4

4 8 12 16 20 South Africa Nigeria Iran Ghana Cameroon Ivory Coast Uganda

The economic landscape in key MTN markets (%)

2015 GDP 2016 GDP f/c Inflation 2016 f/c

Key challenges impacted growth

• Depreciation in local currencies resulted in higher US dollar expenses
• Forex losses of R3 606 million
• Liquidity constraints impacting repatriation of funds from Nigeria
• Weak macro economic conditions in most markets resulted in lower consumer spending
• Negative GDP growth in South Africa and Nigeria expected in 2016, our two largest markets
• Regulatory pressure, notably withdrawal of regulatory services in Nigeria until May 2016
• 7.5 million disconnected of subscribers – registration requirements in Nigeria, Uganda and Cameroon

(approximately 18 million since October 15)

STRATEGIC AND OPERATIONAL UPDATE

6

Note: Results are presented based on operational performance (excluding hyperinflation, Nigerian regulatory fine and tower profits)

Despite challenges MTN declared an interim dividend of 250 cents for the period

Group financial results for the six months ended 30 June 16

STRATEGIC AND OPERATIONAL UPDATE

• 7.5 million subscriber disconnections in Nigeria, Uganda and Cameroon to ensure

regulatory compliance, approximately 18 million since October 2015

• Competition and economic pressure in South Africa, negatively impacted growth

232.6 million Group subscribers flat

 14.0%

to R78.9 billion Revenue

(Organic growth of 1.5%)

• 32.2 % increase in data revenue despite 46.9% decline in effective data tariff
• Effective voice tariff declined 12.2% (USD), negatively impacted by free minutes offered

in subscriber registration campaigns, approximately 1bn free minutes offered in Nigeria

• Nigeria: outgoing voice and data revenue impacted by withdrawal of regulatory services

in Nigeria until May 2016

• South Africa: revenue supported by strong device sales and increase in data revenue

7

Group financial results for the six months ended 30 June 16

Excluding once-off costs organic EBITDA declined 12.8% Excluding once-off costs headline earnings declined 11.7%

STRATEGIC AND OPERATIONAL UPDATE

 3.3%

to R29.3 billion EBITDA

(Organic decline of 25.9%)

271 cents Headline loss per share

(Adjusted HEPS declined 11.7%)

NIG fine Professional fees Operational Adjusted Reported Fx H1-16 CR South Sudan imp

18 882 10 499 108 29 737 6 839 22 434 2 632 1 324 26 390

NIG fine Digital Group losses Adjusted H1-16 Reported H1-16 TowerCo losses Fx losses Professional fees Hyperinflation

(271) 474 20 27 136 135 73 594

Hyp and TowerCo

8

To lead the delivery of a bold, new Digital World to our customers

Strategic update

Group Consumer

• Improving customer analytics is a key priority – forms part of strategic review
• Introduced Global Value Propositions to drive transition to data and enable global roaming
• Improved commission structure and retail experience
• Net promoter score improved from 24% to 27%

Group Digital Services

• Leveraging a strong brand, distribution, access to customer wallets and scale
• Largest distributor of digital music in Africa and recently launched ‘Games Club’
• Good progress made by e-commerce ventures AIH and MEIH
• AIH recorded 3 million customers and 2.5 million transactions – impacted by macro-economic slow

down in Nigeria

• MEIH recorded 600 000 customers and 3.3 million transactions
• IIG gained strong momentum benefiting from youthful population and high internet penetration
• MoMo customers increased 5.0% to 36.5 million, supported by Uganda, Ghana, Rwanda and Benin
• MoMo revenue up 40,8% to R1 289 million

Enterprise Business Unit

• Aligned operations to become ‘ICT Partner of Choice’ to corporates, public sector and SMEs
• The Group will embark on a process aimed to accelerate growth as part of the strategic group review
• Continued focus on MTN Business Cloud now providing independent software vendor solutions
• Expansion of MTN Global, multi protocol label switching (MPLS) bringing the footprint to 27 POPs
• Launched dedicated internet services to clients in 11 markets and Internet of Things platform to

Ghana and Cameroon

STRATEGIC AND OPERATIONAL UPDATE

9

Operational performance

• Performance compromised by the disconnection of subscribers and the suspension of regulatory

services until May 2016

• Increased market share to 46.2% despite 3.7% decline in subscriber base
• Revenue impacted by lower data revenue given regulatory restrictions on ‘out-of-bundle’ data tariffs;

multi-SIM’s and delays in competitive offerings and free minutes offered

• EBITDA impacted by
• Transfer of 2nd tranche passive infrastructure into TowerCo and USD expenses
• Increased marketing costs related to subscriber registration
• Nigeria fine professional fees
• Capex increased by 78.9%* to R 2 534 million; rollout remains a priority
• Disappointing performance impacted by network outages, competition and lower consumer spending
• Subscriber base down 2.6%, negatively impacted by competition in highly penetrated market
• Increased revenue by 5% supported by handset sales and data usage
• Embarked on a deliberate project to drive 3G and LTE quality and high-speed data in key locations
• EBITDA margin impacted by higher volumes of devices and network related costs
• Capex of R 4 773 million; added 369 3G and 284 LTE sites; 175 sites connected to fibre
• LTE spectrum critical for high-speed data connectivity – submitted application to ICASA
• Entered into sales agreement to dispose of 50.02% stake in Afrihost (Proprietary) Ltd

Nigeria

South Africa

STRATEGIC AND OPERATIONAL UPDATE

10

Sound performance in Iran and Ghana; Cameroon well managed subscriber registration campaigns and Ivory Coast impacted by competition

Operational performance

• Sound performance despite highly competitive environment and regulatory pressure on data tariffs
• Subscribers up 2.0% due to attractive offerings
• Revenue up 8.7%* supported by 65.3%* growth in data revenue contributing 40.6% to total revenue
• Smartphones increased 25,8% to 25,8 million with digital revenue contributing 32,6% to data revenue

Iran Ghana Cameroon Ivory Coast

• Strong subscriber growth of 8.1% due to uptake in value propositions
• Revenue increased by 18.9%* supported by strong growth in voice and data revenue
• Digital revenue underpinned by lifestyle and momentum gained in Mobile Financial Services
• Launch of LTE services
• Subscribers increased 5.0% supported by aggressive subscriber registration campaigns
• Revenue declined 8.7%* while data revenue increased 49.5%*
• Strong focus on 3G and LTE network quality and coverage and smartphone penetration
• Subscribers down 1.3% impacted by subscriber registration requirements and competition
• Revenue down 3.9%* impacted by lower outgoing voice revenue while data revenue up 13.4%*
• Digital revenue contributed 50.2% to data revenue, driven by increased digital services

STRATEGIC AND OPERATIONAL UPDATE

Constant currency ('organic') information

Financial review

12

Note: Results from slide 13 to 19 are presented based on operational performance (excluding hyperinflation, tower profits and Nigeria regulatory fine)

Group highlights

 14% to R79 115m  38% to R18 882m  20.4pp to 23.9%  141pp to (271) cents R237m R90m 0.1pp 20 cents R18m  14% to R78 878m  3% to R29 273m  6.6pp to 37.1%  63pp to 223 cents

Revenue EBITDA EBITDA margin HEPS

Reported Hyperinflation Tower profit impact Nigeria regulatory fine Operational

R10 499m 13.3pp 474 cents

Positive impact on reported results Negative impact on reported results

FINANCIAL REVIEW

13

* EBITDA less capex (approximates free cash flow)

Financial highlights

Organic revenue up 1%

• Negatively impacted by Nigeria due to regulatory

challenges

• Disappointing service revenue growth in RSA impacted by

network outage in February 2016

• Supported by healthy double digit data revenue growth
• Uganda and Cameroon also faced regulatory challenges

Organic EBITDA down 26%, impacted by

• South Sudan impairment on PPE – R2 632m
• Professional fees relating to fine settlement – R1 324m
• Higher costs in Nigeria and RSA

EBITDA margin declined 6.6pp to 37.1% Capex up 27%

• Aggressive rollout of 3G & LTE sites in Nigeria and RSA

Reported revenue and EBITDA performance positively impacted by exchange rates

24 464 19 422 15 501 9 199 10 852 13 772 39 096 38 936 49 605 72 759 69 210 78 878 33 663 30 274 29 273

H1-14 H1-15 H1-16

46.3% 43.7% 37.1% EBITDA margin 12.6% 15.7% 17.5% Capex/Revenue

Rev Opex EBITDA Capex AFCF*  14% 27%  3%  27%  20%  1%  23%  26%  15%  49% Reported 15 - 16 Organic 15 - 16 Group summary

ZAR (million)

FINANCIAL REVIEW

14

H1-16 CR is at constant prior year FX rate HOE – Head office companies and eliminations

Revenue

Impacted by a decline in outgoing voice revenue growth

Outgoing revenue up 8% (organic down 5%), negatively impacted by

• Muted subscriber growth to 232.6m – disconnections in

Nigeria, Cameroon and Uganda impacted by registration requirements

• Withdrawal of regulatory services in Nigeria until May
• Network outages and increased post-paid churn in RSA
• Effective tariff down 21.7% (organic down 12.2%),

impacted by competition

• Billable MOU up 8% – driven by free minutes

Data revenue up 32% (organic up 20%)

• Healthy double digit growth in majority of the markets
• Nigeria impacted by restrictions on out-of-bundle rates

Devices revenue up 34% (organic up 36%)

• RSA contributes 86%, handset revenue up 33%
• Number of prepaid handsets sold 3.2m (up 33%) post-paid

641k (up 41%)

Incoming voice revenue up 13% (organic down 3%)

• Decline in MTR
• Group incoming minutes remained flat

Revenue breakdown

ZAR (million) 69 210

FINANCIAL REVIEW

RSA H1-16 CR NIG FX H1-16 H1-15 Other WECA MENA HOE Other SEA

959 909 1 190 215 125 12 70 240 8 638 78 878

+13%

Revenue breakdown per category

(%)

Data 25% Incoming voice 10% Outgoing 57% SMS 2% Devices 5% Other 1%

15

H1-16 CR is at constant prior year FX rate HOE – Head office companies and eliminations

Revenue – data

Increased data revenue contribution at 25%

Data revenue up 32% (organic up 20%)

• Strong data revenue growth despite 59% decline in data

tariff (organic decline 47%)

• Continued improvements of 3G and LTE networks across
• perations (data traffic up 135%)
• Increased device penetration (no. of smartphones on

network up 26%)

• Increased contribution from digital service revenue

Nigeria data revenue

• Impacted by regulatory restrictions on “out of bundle” data

tariffs

Digital and MFS services revenue contributed 32% to data revenue

• Increased up-take in lifestyle content
• Continued growth in MFS

Data revenue

ZAR (million)

FINANCIAL REVIEW

15 013 1 089 469 125 1 071 465 12 17 970 1 879 19 849

RSA H1-16 CR NIG FX H1-16 H1-15 Other WECA MENA HOE Other SEA +12.5%

Access data 58% VAS 4% ICT 6% Digital 26% MFS 6%

Data breakdown per category

(%)

16

* Organic growth

Opex

Direct network and operating costs up 33%* impacted by

• USD denominated exposure associated with the tower

transaction and build-to-suit sites in Nigeria

• Increase in network costs related to the significant rollout
• f 3G and LTE sites in key markets

Cost of handset and other accessories up 34%*

• Mainly driven by SA, up 46% – aggressive smartphone

penetration drive, volumes 18% higher

Other operating expenses up 94%* impacted by

• Impairment of property, plant and equipment in South

Sudan

• Professional fees associated with the Nigeria regulatory

fine

• Costs associated with subscriber registration in Nigeria

Opex driven by rent and utilities, maintenance and professional fees

4 439 6 635 2 834 2 955 8 432 9 608 4 153 4 770 6 324 7 344 4 440 6 036 8 314 12 257 38 936 49 605

H1-15 H1-16

Direct network and technology operating costs Cost of handsets and

• ther accessories

Interconnect and roaming Staff costs Selling, distribution and marketing expenses Other operating expenses

+27%

Opex

ZAR (million)

Government and regulatory costs

FINANCIAL REVIEW

33% 34%  2%  8% 1%  5%  94% Organic 15 - 16 25% 12% 15% 10% 19% 6% 13% % share Reported

• pex

47% 36% 16% 15% 14%  4%  50% Reported 15 - 16

17

EBITDA margin

H1-16 CR is at constant prior year FX rate HOE – Head office companies and eliminations

Impacted by lower margins in South Africa and Nigeria

Organic EBITDA excluding South Sudan impairment of PPE and professional fees relating to the settlement of the Nigeria fine down 12.8% Underlying EBITDA negatively impacted by

• Higher device and network related costs in SA
• Foreign denominated expenses mainly in Nigeria and

Uganda

EBITDA was supported by

• Efficient cost control in Ghana, Cameroon and Sudan,

despite the depreciation of local currencies against the USD

• Lower revenue share in Syria from 50% to 30%

EBITDA margin declined 6.6 pp to 37.1%

• South Africa margin down 5.5 pp to 30.1%
• Nigeria margin down 7.5 pp to 49.8%

EBITDA

ZAR (million)

FINANCIAL REVIEW

RSA H1-16 CR NIG FX H1-16 H1-15 Other WECA MENA HOE Other SEA

30 274 745 3 305 2 388 312 38 1 128 22 434 6 839 29 273

EBITDA margin reconciliation

(%) 43.7 1.4 2.7 2.7 0.6 0.0 4.2 32.1 5.0 37.1

RSA H1-16 CR NIG FX H1-16 H1-15 Other WECA MENA HOE Other SEA

• 11.6pp

18

Finance cost

Net interest paid more than doubled to ZAR 1 855m

• Increase in net debt by 187%: ZAR 49.3bn (H1-15: ZAR

17.2bn)

Forex loss ZAR 3 606m impacted by fx movements

• Nigeria losses mainly due to USD denominated

intercompany loans and third party payables

• Mauritius forex losses mainly on Iran receivables
• South Sudan forex losses mainly on USD third party trade

payables

• Sudan forex losses on settlement of USD denominated

third party trade payables

• RSA forex losses on derivatives hedging foreign payables

Impacted by higher net interest paid and fx losses

H1-16 H1-15 H1-14 Net interest paid 1 855 839 932 Net forex losses 3 606 1 481 736 Total 5 461 2 320 1 668 H1-16 H1-15 H1-14 Nigeria 1 124 769 129 Mauritius 1 078 253 104 South Sudan 408

• 19

Sudan 395 (83) (4) RSA 178 77 54 Manco 141 (4) (3) Other 282 469 437 Total 3 606 1 481 736 Net finance cost

ZAR (million)

Net forex losses/(gains)

ZAR (million)

FINANCIAL REVIEW

19

Taxation

(461) (472) (1 573) 6 672 5 672 5 661 1 042 1 023 606

7 253 6 223 4 694 H1-14 H1-15 H1-16

Normalised Group effective tax rate of 49.2% (H1-15: 32.9%)

• Reported group effective tax rate impacted by the Nigeria

regulatory fine and hyperinflation

• Normalised group effective tax rate impacted by lower

PBT due to

• Decrease in equity income from joint ventures and

associates

• Nigeria professional fees
• South Sudan unrealised forex losses and PPE

impairment and

• Conakry goodwill impairment

Normalised withholding tax

• 6.3% (prior year 5.4%) – WHT is lower than prior year in

absolute terms due to lower dividends up-streamed

Current tax

• Current tax largely unchanged

Deferred tax – income statement

• Nigeria unrealised forex losses on USD denominated

intercompany loans and third party payables

• 14%
• 25%

Tax

ZAR (million)

Normal tax Def tax WHT

31.5% 32.9% 49.2% Eff tax rate %

FINANCIAL REVIEW

Share of results JVs and assoc Forex losses S Sdn Adj eff tax rate Eff Tax rate Goodwill impairment PPE impairment S Sdn Professional fees NIG

49.2 9.6 3.4 1.3 1.2 0.7 33.0

• 16.2pp

Group effective tax

ZAR (million)

20

ZAR (million) H1-16 H1-15 Change % Revenue 79 115 69 304 14 Other income 367 411 (11) COS and operating expenses 50 101 39 040 28 EBITDA before Nigeria regulatory fine 29 381 30 675 (4) Nigeria regulatory fine 10 499

• 100

EBITDA 18 882 30 675 (38) Depreciation, amortisation and impairment of goodwill 13 691 10 750 27 Profit from operations 5 191 19 925 (74) Net finance cost 5 945 2 319 156 Share of results from joint ventures and associates after tax (1 692) 2 027 (184) Net monetary gain 919 496 85 (Loss)/profit before tax (1 527) 20 129 (108) Income tax expense 4 726 6 249 (24) (Loss)/profit after tax (6 253) 13 880 (145) Non-controlling interests (764) 1 980 (139) Attributable (loss)/profit (5 489) 11 900 (146)

Income statement (IFRS)

Impacted by losses from JV’s and fx

FINANCIAL REVIEW

21

669 729 654 (271) 742 807 92 402 474 1 411 1 536 1 148 203

2013 2014 2015 H1-16

Headline (loss)/earnings per share

H1-16 H1-15 Change %

Reported attributable (loss)/earnings per share (301) 653 (146) Profit on disposal of non-current assets (including tower profits) (2)

• (100)

Profit of dilution of investment in joint venture (15)

• (100)

Impairment of goodwill, PPE and non- current assets 47 1 NM Reported basic headline (loss)/earnings per share (271) 654 (141) Nigerian regulatory fine 474

• 100

Basic headline (loss)/earnings per share excluding Nigerian regulatory fine 203 654 (69) Hyperinflation 20 (40) 150 Contingent consideration included in tower sale profits

• (15)

100 Operational basic headline earnings per share (excluding Nigerian regulatory fine, hyperinflation, tower profits) 223 599 (63)

Headline (loss)/earnings per share

ZAR (cents) ZAR (cents)

FINANCIAL REVIEW

Impact of Nigerian regulatory fine H1 H2

22

5 979 6 880 8 225 8 808 4 585 9 362 12 302 14 694 15 219 2 088 2 422 17 429 19 182 25 341 24 027 4 585

2012 2013 2014 2015 H1-16 H1 H2 Share buy back

Shareholder returns

Dividends

• Interim dividend 250cps, 48% decline

Share buy-backs

• H2-11 repurchased 6.8m shares (ZAR 930m)
• H1-12 repurchased 15.6m shares (ZAR 2.1bn)
• H2-14 repurchased 10.7m shares (ZAR 2.4bn)
• Total repurchase of 1.8% of issued shares since 2011

Dividends and share buy-backs

ZAR (million)

FINANCIAL REVIEW

23

ZAR (million) 2016 Dec 2015 Property, plant and equipment 93 462 106 702 Goodwill and other intangible assets 52 172 55 887 Other non-current assets 54 813 55 846 Cash 26 955 34 177 Current assets* 55 513 61 255 Total assets 282 915 313 867 Total equity 119 796 151 838 Interest-bearing liabilities 81 947 75 171 Other liabilities 81 172 86 858 Total liabilities 163 119 162 029 Total equity and liabilities 282 915 313 867 Net debt 49 257 31 635 Annualised net debt/EBITDA excluding Nigerian regulatory fine 0.83 0.46

ZAR strengthened against most other African currencies (Naira 50%, Cedi 4%, Uganda Shilling 7% and Syrian Pound 52%) since Dec 2015

*Includes foreign currency deposits of ZAR 1 123m (Dec 2015 ZAR 428m), treasury bills and commercial papers of ZAR 3 926m (Dec 2015 ZAR 7 196m) and bonds of ZAR 49m (Dec 2015 ZARnil)

Statement of financial position (IFRS)

Total assets impacted by FCTR

FINANCIAL REVIEW

24

ZAR (million) H1-16 H1-15 Change % Cash generated from operations^ 23 870 26 289 (9) Dividends paid to equity holders of the Company (15 212) (14 697) (4) Dividends paid to non-controlling interests (790) (3 042) 74 Dividends received from associates and joint ventures 426 285 49 Net interest paid (2 143) (934) (129) Tax paid (6 587) (6 469) (2) Cash (used in)/generated from operating activities (436) 1 432 (130) Acquisition of property, plant and equipment and intangible assets (14 024) (11 830) (19) Movement in investments and other investing activities (185) (2 641) 93 Cash used in investing activities (14 209) (14 471) 2 Cash generated by financing activities 13 608 1 558 NM Cash and cash equivalents at the beginning of the year 34 139 43 072 (21) Effect of exchange rates on cash and equivalents (6 272) (787) NM Net monetary gain on cash and cash equivalents 107 134 (20) Cash and cash equivalents at the end of the year* 26 937 30 938 (13)

^Cash generated from operations decreased by R2.4bn mainly as a result of Nigerian payments on regulatory fine (R5.9bn) * Includes bank overdraft of R18m (H1-15: R76m)

Statement of cash flows (IFRS)

Impacted by R5.9bn payment made on Nigerian regulatory fine

FINANCIAL REVIEW

2016 Guidance

26

(‘000) Guidance provided March 2016 Updated guidance June 2016 SEA 3 515 1 850 South Africa 1 100 1 100 Uganda 1 800 950 Other 615 (200) WECA 6 825 4 725 Nigeria 3 500 800 Ghana 1 100 1 800 Cameroon 1 000 1 000 Ivory Coast 400 475 Other 825 650 MENA 1 610 1 500 Iran 1 100 1 500 Syria

• (100)

Sudan 350 400 Other 160 (300) Total 11 950 8 075

Net additions guidance

Guidance 2016

2016 GUIDANCE

27

ZAR (million) Authorised 2016 Capitalised June 2016 Capitalised June 2015 SEA 13 548 5 626 5 896 South Africa 11 280 4 773 4 678 Uganda 807 364 556 Other 1 461 489 662 WECA 16 162 6 975 3 652 Nigeria 11 130 2 534 1 172 Ghana 1 258 1 646 355 Cameroon 1 157 1 121 943 Ivory Coast 815 842 422 Other 1 802 832 760 MENA 3 539 1 064 732 Syria# 1 543 191 56 Sudan# 1 280 549 337 Other 716 324 339 Head office companies and eliminations 1 865 107 572 Total 35 114 13 772 10 852 Hyperinflation

• 78

17 Total reported 35 114 13 850 10 869 Iran (49%)# 3 518 2 313 1 854

#Excluding hyperinflation

Capex guidance

2016 GUIDANCE

Key matters and immediate priorities

29

Appointment of the right CEO to take MTN forward into new growth phase

Key matters and immediate priorities

VP’s to strengthen management team, further changes to be completed by year-end More in-depth commercial, risk and governance skills and experience

KEY MATTERS AND IMMEDIATE PRIORITIES

New Group CEO

• Appointment of Rob Shuter, new Group president and CEO, as soon as practically possible in 2017

(no later than July 2017)

• Brings extensive experience in Africa and Europe – previously CEO Vodafone Europe cluster
• In the interim, Phuthuma to hand over more operational responsibility to key executives

High calibre Management team

• Stephen van Coller, VP for M&A and strategy
• Godfrey Motsa, VP for SEA region (excluding South Africa)
• Gunter Engling to act as CFO, following the resignation of Brett Goschen
• Babak Fouladi, Group CTIO and CTO of South Africa for 12 months
• Phuthuma Nhleko to revert to non-executive Chairman role as soon as Rob Shuter joins the Group

Refreshed composition

• f the board
• Stan Miller, Paul Hanratty and Nkululeko “Nkunku” Sowazi appointed to Group board
• Mike Harper, Mike Bosman, Lerato Phalatse and Trudi Makhaya appointed to MTN South Africa board

30

Deep and fundamental strategic review of operations and processes to ensure the Group is operating far more optimally

Prospects

• Advanced analytics will support network quality, high speed data connectivity, improved customer

service and segmented offerings

• Increased operating efficiencies and improving customer services focusing on improved service

channels productivity and MoMo as a distribution channel

• Creating value through leveraging its extensive infrastructure
• Embark on a process of housing new revenue streams, particularly digital services, outside the core

business enabling more agility and greater flexibility to accelerate growth

• New revenue streams expected to increase contribution in next 12-18 months

Areas to be addressed

KEY MATTERS AND IMMEDIATE PRIORITIES

Tower investments

• Investments in towers with IHS evidenced by substantial ownership interest in INT and direct

investments in IHS

• IHS is well positioned for future growth and build-out from 3G upgrades and move to LTE across its

key markets

• IHS is now the largest independent tower operator in EMEA by tower count and tenth largest

independent tower company in the world with 24 000 towers

• Recently led in-country consolidation through its acquisition of Helios Towers Nigeria

31

Prospects

KEY MATTERS AND IMMEDIATE PRIORITIES

• Expect improved operating conditions supported by permanent and refreshed management team
• Strong operational oversight ensuring regulatory compliance across operations

Operating conditions Nigeria South Africa Iran

• Aims to list MTN Nigeria on Nigeria Stock Exchange during 2017, subject to prevailing market

conditions and appropriate regulatory approval

• Expect improved competitiveness and performance following reinstatement of regulatory services
• Data performance to benefit from increased investment in 3G and LTE and recently acquired

spectrum

• Expect improved performance supported by strong focus on customer service and improving the

network quality, capacity and speed

• Data growth will benefit from significant investment and deliberate focus in 3G and LTE
• Significant opportunities to expand digital services supported by easing of sanctions
• Expect improvements in operating environment supported by a reduction in inflation and normalised

exchange rate

• Working towards remittance of approximately R15.4 billion

Questions

thank you

Appendices

35

South Africa

Revenue growth of 5.1%

Subscribers down 2.6% to 29.8 million

• Negatively impacted by network outages in some areas,

competition and economic pressure affecting consumer spending

• Pre-paid and post-paid segments declined by 2.7% to

24.7 million and 2.1% to 5.1 million respectively

Strong data revenue growth, supported by smartphones

• Strong data revenue growth, up 19.2%, contributing

34.1% to total revenue attributable to

• Smartphones up 18.4% to 9.3 million
• Improved 3G and LTE network quality
• Additional services being offered in digital, including

international content

• Device sales in the previous comparable period were

impacted by the industrial strike action and supply chain challenges 22 574 25 346 24 673 5 419 5 242 5 132 27 993 30 588 29 805

Dec 14 Dec 15 Jun 16

Total subscribers ‘000

Postpaid Prepaid

19 157 18 882 19 841 19 765 21 156 38 922 40 038 19 841

Dec 14 Dec 15 Jun 16

Revenue ZAR (million)

H2 H1 Launched Jun 1994 Market share 32.3% Population 55.7m Market size 2016 96m Penetration 162% Shareholding 100%

36

South Africa

Strong focus on network experience

EBITDA margin down 5.5 pp

• Mainly due to
• Increased device costs relating to higher volumes sold
• Impact of network related costs as a result of the rollout
• f 3G and LTE sites

Focus on improving network quality and capacity

• Capex of R4 773 million
• Rollout of 369 co-located 3G sites and 284 LTE sites
• 175 sites were connect to fibre
• 10 000 homes passed with fibre to the home, 40% rolled
• ut over the six month period
• Invitation to apply for high demand spectrum – 700MHz,

800MHz and 2.6GHz bands 12 775 12 158 13 862 13 638 14 510 26 413 26 668 13 862

Dec 14 Dec 15 Jun 16

Expenses ZAR (million)

H2 H1

2 000 4 678 4 773 3 676 6 270 5 676 10 948 4 773

Dec 14 Dec 15 Jun 16

Capex ZAR (million)

H2 H1 32.1% 33.4% 30.1% EBITDA margin

37

Nigeria

* Constant currency ('organic') information

Challenging operating environment

Subscriber decline of 3.7%

• Market share increased by 46.2% despite the decline in

subscriber base to 58.9 million (including 568 000 Visafone subscribers)

• Inability to offer competitive prices as a result of the

suspension of regulatory services until May 2016, when approval was received

Revenue declined 4.8%*

• Lower outgoing voice and data revenue impacted by

regulatory requirements, multi-SIMs and tough economic conditions

• Data revenue declined 2.7%*, contributing

19.3% to total revenue

• 11.2% increase in smartphones to 16 million
• Digital revenue continued to gain momentum – music

and lifestyle

• Diamond Yellow increased to 6.5 million registered

accounts 59 893 61 252 58 978

Dec 14 Dec 15 Jun 16

Total subscribers ‘000 413 611 408 999 389 345 411 195 398 450 824 806 807 449 389 345

Dec 14 Dec 15 Jun 16

Revenue NGN (million)

H2 H1 Launched Aug 2001 Market share 46.2% Population 174.3 m Market size 2016 133m Penetration 72% Shareholding 78.8%

38

Nigeria

* Constant currency ('organic') information ** In ZAR terms

Network quality and rollout of LTE remains a priority

EBITDA margin reduced 7.5 pp impacted by

• Transfer of 2nd tranche of passive infrastructure into

TowerCo

• USD denominated expenses associated with TowerCo

and build-to-suit suites

• Marketing costs relating to subscriber registration process
• Wide range of professional services in relation to the

settlement of the regulatory fine

Improving network quality and customer experience

• Capex increased 78.9%* to R2 534 million
• Delays in network re-planning and equipment purchases
• Rolled out 428 co-located 3G sites and 507 LTE sites
• Purchase of additional LTE spectrum

165 121 174 603 194 286 176 896 202 931 342 017 377 534 194 286

Dec 14 Dec 15 Jun 16

Expenses NGN (million)

H2 H1

3 189 1 172 2 534 5 186 3 821 8 375 4 993 2 534

Dec 14 Dec 15 Jun 16

Capex ZAR (million)

H2 H1 58.6%** 53.0%** 49.8%** EBITDA margin

39

Iran

*Constant currency ('organic') information **In ZAR terms ***Excluding hyperinflation

Revenue growth of 8.7%* supported by increased data revenue growth

Subscriber growth of 2.0% to 47.3 million

• Attractive segmented offerings, data bundles and

improved network experience

Strong data revenue

• Data revenue increased 65.3%*, contributing 40.6% to

total revenue despite regulatory pressure on data tariffs

• Smartphones increased 25.8% to 25.8 million
• Digital revenue contributed 32.6% to data revenue due to

strong growth in local lifestyle content based usage

• Outgoing voice revenue negatively impacted by the

continuous substitution of data services

EBITDA down 2.4 pp

• Mainly due to increased transmission costs associated

with the data network expansion, as well as marketing costs related to 3G and LTE campaigns

3G and LTE networks expansion

• Added 1 783 co-located 3G sites and 851 LTE sites

27 260 31 038 33 739 29 466 32 281 56 726 63 319 33 739

Dec 14*** Dec 15*** Jun 16***

Revenue IRR (billion)

(100%) H2 H1

891 1 854 2 313 2 221 2 326 3 112 4 180 2 313

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

(49%) H2 H1 42.8%** 41.5%** 37.7%** EBITDA margin Launched Oct 2006 Market share 46.4% Population 80.6m Market size 2016 101m Penetration 126% Shareholding 49%

40

Ghana

*Constant currency ('organic') information **In ZAR terms

Voice and data delivered a strong performance

Subscriber growth of 8.1% to 17.6 million

• Supported by the launch of LTE services and value

propositions

Revenue up 18.9%* supported by data and

• utgoing voice
• Data revenue up 68.0%* contributing 38.5% to total

revenue supported by data bundles, including 4G data bundles

• Smartphones increased by 21.7% to 3.6 million
• Digital revenue underpinned by attractive lifestyle content

bundles

• MoMo subscribers increased by 23.3% to 7.0 million

supported by international remittances

EBITDA margin declined 0.9 pp, attributable to

• Higher transmission costs
• Impact of foreign denominated expenses following the

depreciation of the cedi as well as high inflation

Superior data network quality

• Capex increased by more than 100% to R1 646 million
• Key focus on LTE rollout
• Added 110 co-located 3G sites and 435 LTE sites
• Capex includes the 4G licence acquired in H2 15

961 1 091 1 297 1 032 1 224 1 993 2 315 1 297

Dec 14 Dec 15 Jun 16

Revenue Cedi (million)

H2 H1

597 355 1 646 803 1 476 1 400 1 831 1 646

Dec 14 Dec 15 Jun 16

Capex ZAR (million)

H2 H1 37.4%** 40.5%** 38.8%** EBITDA margin Launched Nov 1996 Market share 53.8% Population 27.8m Market size 2016 31.8m Penetration 117% Shareholding 97.7%

41

Cameroon

*Constant currency ('organic') information **In ZAR terms

Aggressive subscriber registration campaigns

Subscribers up 5.0% to 9.6 million

• Market share growth attributable to improved network

quality, expansion of LTE footprint and increased smartphone penetration

Revenue declined 8.7%*

• Decline in outgoing voice revenue impacted by price

competition and free minutes used as part of subscriber registration process

• Data revenue increased 49.5%* and contributes 18.8% to

total revenue, supported by increased 3G device penetration and network rollout

• Smartphones increased by 34.1% to 2.6 million
• Mobile Money brand campaign increased activity

EBITDA margin up 0.2 pp

• Supported by strong cost optimisation
• Reduction in transmission costs due to WACS cable

Focus on 3G and LTE network rollout and quality

• 6.9%* increase in capex to R1 121 million
• 189 co-located 3G sites and 64 LTE sites rolled out

136 593 135 986 124 152 146 776 134 244 283 369 270 230 124 152

Dec 14 Dec 15 Jun 16

Revenue CFA (million)

H2 H1

373 943 1 121 489 968 862 1 911 1 121

Dec 14 Dec 15 Jun 16

Capex ZAR (million)

H2 H1 42.8%** 36.2%** 38.0%** EBITDA margin Launched Feb 2000 Market share 57.4% Population 23.6m Market size 2016 18.5m Penetration 71% Shareholding 70%

42

Ivory Coast

*Constant currency ('organic') information **In ZAR terms

Data growth supported by strong focus on 3G and LTE network rollout

Subscribers down 1.3% to 8.2 million

• Negatively impacted by the subscriber registration

requirements and aggressive competition

Revenue down 3.9%* mainly due to lower

• utgoing voice revenue
• Data revenue up 13.4%* and now contributes 17.1% to

total revenue

• Introduction of new segmented data bundles
• MoMo subscribers up 10.4% to 3.2 million

EBITDA margin decreased marginally by 0.6 pp

• Supported by cost optimisation

Capex increased 57.1%* to R842 million

• Added 151 co-located 3G sites and 343 LTE sites

144 830 152 856 146 905 148 801 146 828 293 631 299 684 146 905 Dec 14 Dec 15 Jun 16 Revenue CFA (million)

H2 H1

584 422 842 601 411 1 185 833 842 Dec 14 Dec 15 Jun 16 Capex ZAR (million)

H2 H1 38.6%** 34.2%** 36.0%** EBITDA margin Launched Apr 1996 Market share 32.8% Population 23.9m Market size 2016 20.6m Penetration 105% Shareholding 58.8%

43

Uganda

*Constant currency ('organic') information **In ZAR terms

Gaining momentum post subscriber registration process

Subscribers increased 10.8% to 9.9 million

• Supported by voice bundle propositions and continued

success of MTN Zone

• MoMo decreased registered subscribers by 24.4% to 7.2

million mainly due to H2 2015 disconnections during the subscriber registration process

Revenue decreased 2.3%*

• Voice revenue impacted by One Network Area, decline in

mobile termination rates and disconnections

• Data revenue up 22.7%*, contributing 32.8% to total

revenue – supported by data bundles

• Digital revenue contributed 70.5% to data revenue

supported by local content services including MTN Play.

EBITDA margin down 6.0 pp

• Higher network operating costs and associated USD

denominated expenses

• Higher transmission costs, marketing and distribution

costs following the launch of 3G and 4G services.

Capex spend down 42.1%* to R364 million

• Delay in supply chain process
• Added 195 co-located 3G sites and 100 LTE sites

618 467 633 861 619 434 649 118 668 830 1 267 585 1 302 691 619 434

Dec 14 Dec 15 Jun 16

Revenue UGX (million)

H2 H1

407 556 364 260 395 667 951 364

Dec 14 Dec 15 Jun 16

Capex ZAR (million)

H2 H1 39.2%** 34.5%** 30.0%** EBITDA margin Launched Oct 1998 Market share 52.7% Population 40.5m Market size 2016 20.3m Penetration 46% Shareholding 96%

44

Syria

*Constant currency ('organic') information **In ZAR terms ***Excluding hyperinflation

Operational growth despite a challenging environment

Subscribers decreased by 2.4% Revenue increased 10.5%*

• Supported by 16.9%* increase in data revenue,

contributing 28.8% to total revenue

EBITDA margin increased 12.3 pp

• Supported by the conversion of the BOT licence and cost
• ptimisation

Capex increased by 241.1% to R191 million

• Added 92 co-located 3G sites and 3 LTE sites

26 436 26 468 29 295 26 844 29 392 53 280 55 860 29 295

Dec 14*** Dec 15*** Jun 16***

Revenue SYP (million)

H2 H1

38 56 191 319 918 357 974 191

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

H2 H1 18.9%** 17.7%** 28.6%** EBITDA margin Launched Jun 2002 Market share 40.9% Population 17.0m Market size 2016 14.8m Penetration 84% Shareholding 75%

45

Sudan

*Constant currency ('organic') information **In ZAR terms ***Excluding hyperinflation

Progress in tough conditions

Subscribers increased 4.2% to 8.8 million

• Driven by targeted marketing campaigns

Revenue increased by 15.7%*

• Data revenue increased 78.3%* and contributes 27.7% to

total revenue as a result of increased data users

EBITDA margin down 1.9 pp Capex up 62.9% to R549 million

• Added 44 co-located 3G sites

692 811 938 738 830 1 430 1 641 938

Dec 14*** Dec 15*** Jun 16***

Revenue SDG (million)

H2 H1

481 337 549 911 482 1 392 819 549

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

H2 H1 33.8%** 35.0%** 35.4%** EBITDA margin Launched Sep 2005 Market share 33.8% Population 37.6m Market size 2016 30.3m Penetration 69% Shareholding 85%

46

ZAR (million)

Actual H1-16 Hyper- inflation Tower profit* Nigeria regulatory fine Actual 2016 adjusted Actual H1-15 Hyper- inflation Tower profit* Actual 2015 adjusted Adjusted change %

Revenue 79 115 237

• 78 878

69 304 94

• 69 210

14 Other income 367

• 18
• 349

411

• 352

59 492 EBITDA 18 882 90 18 (10 499) 29 273 30 675 49 352 30 274 (3) Depreciation, amortisation and impairment of goodwill 13 691 77

• 13 614

10 750 35

• 10 715

27 Profit from operations 5 191 13 18 (10 499) 15 659 19 925 14 352 19 559 (20) Net finance cost 5 945 32

• 452

5 461 2 319 (1)

• 2 320

135 Share of results of joint ventures & associates after tax (1 692) (1 039)

• (653)

2 027 362

• 1 665

(139) Net monetary gain 919 919

• 496

496

• NM

(Loss)/profit before tax (1 527) (139) 18 (10 951) 9 545 20 129 873 352 18 904 (50) Income tax expense 4 726 32

• 4 694

6 249 26

• 6 223

(25) (Loss)/profit after tax (6 253) (171) 18 (10 951) 4 851 13 880 847 352 12 681 (62) Non-controlling interests (764) 204

• (2 319)

1 351 1 980 105 75 1 800 (25) Attributable (loss)/profit (5 489) (375) 18 (8 632) 3 500 11 900 742 277 10 881 (68) EBITDA margin 23.9% 37.1% 44.3% 43.7% (6.6)pp Effective tax rate (309.6%) 49.2% 31.0% 32.9% 16.3pp

*Tower sale profits for the period relates to Ghana release of deferred profit of R18m (H1-15: The measurement of the contingent consideration receivable relating to Nigeria tower transaction tranche 1 of R339m and the Ghana release of deferred profit of R13m)

Income statement

Hyperinflation, Nigeria regulatory fine and tower sales impact

47

ZAR (million)

Cash and cash equivalents* Net interest-bearing liabilities Net debt/(cash) H1-16 Net debt/(cash) Dec 2015

South and East Africa

4 161 2 107 (2 054) (1 652)

South Africa

3 457

• (3 457)

(1 507)

Uganda

81 1 279 1 198 (86)

Other

623 828 205 (59)

West and Central Africa

18 548 24 587 6 039 3 956

Nigeria

14 785 16 922 2 137 1 695

Ghana

223 1 141 918 15

Cameroon

745 1 483 738 118

Ivory Coast

810 2 842 2 032 2 399

Other

1 985 2 199 214 (271)

Middle East and North Africa

2 981 3 188 207 (585)

Syria

736

• (736)

(1 525)

Sudan

323 2 131 1 808 1 889

Other

1 922 1 057 (865) (949)

Head office companies & eliminations

7 000 52 065 45 065 29 916

Total

32 690 81 947 49 257 31 635

* Includes restricted cash and current investments

Net debt

48

Net debt composition

Nigeria and Head office

Naira denominated USD denominated ZAR denominated Euro denominated Nigeria borrowings 11 331 5 591

• Nigeria cash

12 832 1 941

• 12

Head office borrowings

• 25 700

26 365

• Head office cash
• 3 996

2 284 720

Nigeria borrowings

(%)

USD 33%

(26%)

Naira 67%

(74%)

Head office borrowings

(%)

Nigeria cash

(%)

Head office cash

(%)

USD 49%

(57%)

ZAR 51%

(43%)

USD 13%

(6%)

ZAR 33%

(44%)

USD 57%

(45%)

Euro 10%

(11%)

Naira 87%

(94%)

Net debt composition

ZAR (million)

49

Revenue – data

South Africa and Nigeria

23 6 11 1 706 2 407 2 877 419 370 404 237 192 177 213 448 521 2 063 2 029 1 597 4 661 5 452 5 587

H1-15 H2-15 H1-16

279 391 288 715 745 914 469 466 509 4 214 5 430 5 055 5 677 7 032 6 766

H1-15 H2-15 H1-16

South Africa

ZAR (million)

Nigeria

ZAR (million)

ISP Digital Access data Afrihost Internet VAS Blackberry Leased line/ICT Mobile money Digital +24%

• 4%

+17% +2%

50

ZAR (million) H1-16 H1-15 Change % Telco joint ventures 2 198 1 935 14 Iran 1 975 1 737 14 Swaziland 50 48 4 Botswana 173 150 15 Tower companies (2 480) (64) NM Ghana (17) 22 (177) Uganda

• (149)

(100) Nigeria * (2 463) 63 NM BICS 123 118 4 Share of results of telco joint ventures and associates after tax excluding hyperinflation (159) 1 989 (108) Iran – Hyperinflation (H1-16: Mainly depreciation and amortisation

• f assets written up)

(1 039) 362 NM Share of results of telco joint ventures & associates after tax including hyperinflation (1 198) 2 351 (151) Digital Group (494) (324) (52) AIH (370) (249) (49) MEIH (69) (42) (64) IME (55) (33) (67) Share of results of joint ventures and associates after tax (1 692) 2 027 (183)

* Includes forex losses of R2 282m resulting from the devaluation of the Naira

Share of results of joint ventures and associates after tax (IFRS)

51

USD: Local currency H1-16 H2-15 H1-15 H2-15 - H1-16 LC strengthening/ (weakening) ZAR 14.67 15.47 12.14 5 Naira 283.50 199.20 199.30 (30) Rial 30 527 30 118 29 160 (1) Cedi 3.77 3.79 4.35 1 Cameroon XAF 593.53 603.51 588.14 2 Ivory Coast CFA 593.53 615.87 588.14 4 Uganda shilling 3 405.00 3 367.00 3 295.00 (1) Syrian pound 485.00 336.65 276.36 (31) Sudanese pound 6.09 6.09 5.97 ZAR: Local currency H1-16 H2-15 H1-15 H2-15 - H1-16 ZAR strengthening Naira 19.33 12.88 16.42 50 Rial 2 081.00 1 947.05 2 402.17 7 Cedi 0.26 0.25 0.36 4 Cameroon XAF 40.46 39.02 48.45 4 Ivory Coast CFA 40.46 39.81 48.45 2 Uganda shilling 232.12 217.67 271.44 7 Syrian pound 33.06 21.76 22.77 52 Sudanese pound 0.42 0.39 0.49 7

FX trends

Closing rate

52

USD: Local currency H1-16 H2-15 H1-15 H1-15 - H1-16 LC weakening ZAR 15.26 12.77 11.85 (22) Naira 205.83 199.34 196.49 (5) Rial 30 271 29 831 28 024 (7) Cedi 3.83 3.80 3.76 (2) Cameroon XAF 590.97 596.62 587.24 (1) Ivory Coast CFA 597.32 598.87 587.07 (2) Uganda shilling 3 371.57 3 508.93 2 956.18 (12) Syrian pound 418.97 312.76 237.91 (43) Sudanese pound 6.09 6.08 5.97 (2) ZAR: Local currency H1-16 H2-15 H1-15 H1-15 - H1-16 ZAR strengthening/ (weakening) Naira 13.52 14.62 16.59 (19) Rial 1 984.95 2 184.00 2 364.16 (16) Cedi 0.25 0.28 0.32 (22) Cameroon XAF 38.79 43.83 49.58 (22) Ivory Coast CFA 39.18 44.08 49.58 (21) Uganda shilling 220.40 257.64 249.48 (12) Syrian pound 27.41 23.02 20.07 37 Sudanese pound 0.40 0.45 0.50 (20)

FX trends

Average rate