MTN Group Limited• Intensive trade marketing • Private placement concluded • MTN IFRS interest...
Transcript of MTN Group Limited• Intensive trade marketing • Private placement concluded • MTN IFRS interest...
MTN Group LimitedReviewed interim results for thesix months ended 30 June 2008
© 2008 Mobile Telephone Networks. All rights reserved. 2
Agenda
Strategic & operational overviewPhuthuma NhlekoGroup President and CEO
Financial overviewRob NisbetGroup Finance Director
Looking aheadPhuthuma Nhleko
Strategic and operational overview
Phuthuma NhlekoGroup President and CEO
© 2008 Mobile Telephone Networks. All rights reserved. 4
MTN vision
To be the leader in telecommunications in emerging markets
Increased competitiveness
Execution excellence
Consolidation Leverage existing footprint Convergence
Best practice Procurement synergies
Value proposition
Hub and cluster Diversification Skills
optimisation Brand
© 2008 Mobile Telephone Networks. All rights reserved. 5
Group highlights
Group subscribersUp 53% to74.1 million
RevenueUp 35% to
ZAR 46,128 billion
EBITDAUp 29% to
ZAR 19,647 billion
PATUp 11%
to 6,964 billion
Adjusted headline EPSUp by 26%
to 408.5 cents
Market opportunity Market size
306m (2012)189m (current)
All comparatives to June 07
© 2008 Mobile Telephone Networks. All rights reserved. 6
Key developments…
• Mobile Money- Move toward money payment and transfers rather than banking- Rollout to extend beyond SAISP’s- SA Verizon (subject to CC approval)- Côte d’Ivoire AfnetMobile TV- JV with MultiChoice- Launched in Nigeria and Kenya
Convergence
• Execution to take advantage of far larger market potential • Capex rollout of ZAR10,311 billion, up 65% from H107Rollout
Competition
• Increasing competitive environment • New entrants expected to launch in various ops in the next 6 to 12 months including
Nigeria, Ghana, Iran, Syria and Uganda• Execution of replicated product offering (MTN Zone)• Capability in challenging markets
Inflation• Inflationary pressures experienced throughout emerging markets• No material negative impact on spending patterns to date• Decline in ARPU’s in line with lower income segment penetration
Expansion opportunities
• Continue seeking value enhancing opportunities in existing and new territories
© 2008 Mobile Telephone Networks. All rights reserved. 7
Key indicators
Subscribers(’000)Jun 08
% changeJun 07
ARPU(ZAR/US$)
Jun 08
ARPU(ZAR/US$)
Jun 07
South and East Africa 20 995 +22South Africa 15 590 +16 R145 R144Uganda 2 776 +49 $9 $11Botswana 885 +33 $13 $14Rwanda 834 +72 $11 $13Swaziland 457 +43 $15 $18Zambia 453 +124 $12 $11
West and Central Africa 32 506 +40Nigeria 18 565 +32 $16 $16Ghana 4 997 +47 $14 $16Côte d’Ivoire 3 030 +40 $11 $14Cameroon 3 106 +59 $12 $14Guinea Conakry 797 +103 $10 $15Benin 779 +37 $16 $15Congo Brazzaville 522 +86 $23 $18Liberia 407 +61 $16 $19Guinea Bissau 303 +115 $12 $18
Middle East and North Africa 20 557 +156Iran 11 593 +485 $9 $10Syria 3 375 +30 $19 $20Sudan 2 109 +38 $7 $15Yemen 1 725 +33 $8 $10Afghanistan 1 627 +209 $6 $11Cyprus 128 +29 $45 $39
Total MTN 74 058 +53 $14 $17
© 2008 Mobile Telephone Networks. All rights reserved. 8
Subscriber contribution by region
0
100
200
300
400
500
600
700
Dec-06 Jun-07 Dec-07 Jun-08
SEA WECA MENA
MTN Group
Total(subscriber million)
Proportionate*(subscriber million)
* Based on % ownership
Increased diversification
40.1
48.3
61.4
74.1
0
100
200
300
400
500
600
Dec-06 Jun-07 Dec-07 Jun-08
28%
23%
17%
12%
44%46%48%49%
28%31%35%39%
23%
19%
15%
11%43%
45%46%
46%
34%36%39%43%
34.7
40.8
50.4
58.2
© 2008 Mobile Telephone Networks. All rights reserved. 9
SouthAfrica
Nigeria Ghana Sudan Syria Iran
Jun-07 Jun-08
Relative ARPU performance
* All ARPUs YTD
Avg ARPU (group)
$17 (Jun 07)
R144 R145
$16 $16 $16$14 $15
$7
$20 $19
$10$9
$14 (Jun 08)
© 2008 Mobile Telephone Networks. All rights reserved. 10
EBITDA analysis
EBITDA Contribution % EBITDA Margin %
* Difference in HQ companies
SEA2007
2008
WECA2007
2008
MENA2007
2008
*MTN Group
2007
2008
100
100
8
11
54
34
57
30
44.4
42.6
25.4
54.2
35.5
29.5
52.9
33.5
© 2008 Mobile Telephone Networks. All rights reserved. 11
South & East Africa(SEA) region
Regulatory – SA
• Mobile licence conversion
•Awaiting final publication from ICASA
•Issues remain with proposed provisions
• Competition Commission (CST’s)
•Final submission from complainant awaited
•Expect hearing H109, subject to required process
• Interconnection and facilities leasing
•Further consultation with ICASA concluded
•Awaiting publication of final regulations
• RICA
•Further deliberations on subscriber registration in Parliament currently
•Anticipate publication end 2008
• Handset subsidies
•ICASA postponed implementation date from 18 August 2008 to 1 February 2009
•MTN will engage with ICASA re remaining issues
Subs 21m (28% group) Revenue ZAR17.6bn (38% group) EBITDA ZAR5.9bn (30% group) PAT ZAR3.2bn (45% group)
Population: 102,4m
Zambia6
Swaziland5
Rwanda4
Botswana3
Uganda2
South Africa1
© 2008 Mobile Telephone Networks. All rights reserved. 12
• Strong prepaid value-proposition• MTN Zone (4.5m subs)
• Increased customer value
• Lower denomination vouchers
• Postpaid subscriber growth• Low voice and hybrid plans migrating to
prepaid
• Continued unwinding of on-biller
• Distribution strategy execution• Acquisition of the remaining 51% of I-
Talk (subject to CC approval) and Cell Place
• Ranked as one of SA’s Top 10 Brands**
• Non-recurring investment in strategic initiatives, diluting EBITDA
South Africa– operational highlights
1,784 2,288 2,493 2,588
8,59610,368
12,306 13,002
Dec-05 Dec-06 Dec-07 Jun-08
PrepaidPostpaid
Net additions(’000)
Subscribers(’000)
10 380
12,655
14,79915,590
Launched Jun 1994 Market share 36% Population 48m Market sizing 56m (2012) Penetration 90% Shareholding 100%
213
946 791
2,379 2,062
1,198
Dec-05* Dec-06 Dec-07 Jun-08
H2H1
*9 months** Ipsos Markinor / Sunday Times Top Brands Results
© 2008 Mobile Telephone Networks. All rights reserved. 13
• Stable prepaid ARPU
• MTN zone stimulated revenue
• 30% of prepaid revenue
• Increased postpaid ARPU
• Impact of on-biller unwinding
• Acquisition of Verizon (subject to CC approval)
South Africa– operational highlights
ARPUZAR
Avg. total MOU comprises both incoming andoutgoing minutes
129 124 106 100
488441
396 405
163 159 149
92 95 92
145
92
Dec-05* Dec-06 Dec-07 Jun-08
Postpaid
Blended
Prepaid
* 9 months
Outgoing MOU 78 79 65 63
© 2008 Mobile Telephone Networks. All rights reserved. 14
• Improved capacity on networks• 2G - 9%
• 3G - 26%
• 79 (2G) and 89 (3G) new sites built
• Fibre optic metropolitan network• Trials completed in June
• 5000km national fibre network• Tender completed
• Build to start Q408
• Improved data value propositions• Reduced pricing on Blackberry
• MTN Xploaded
• Two new low-end data plans
South Africa– infrastructure and data highlights
1,6661,205 1,294
1,772
5901,186
1,549
Dec-05* Dec-06 Dec-07 Jun-08
H2H1
Data revenueZAR (million)
CapexZAR (million)
2,256 2,391
2,843
* 9 months
Capex as % of revenue 14.5 9.7 10.1 11.5
679 7791,221
1,696403
1,159
1,535
Dec-05* Dec-06 Dec-07 Jun-08
H2H1
1,083
1,938
2,756
As % of SA revenue(excluding handsets) 8.2 9.0 11.0 12.0
1,772
1,696
© 2008 Mobile Telephone Networks. All rights reserved.15
Population: 230,1m
West & Central Africa(WECA) region
Regulatory:Nigeria• New numbering plan approved (10m
more numbers)• Significant QoS improvements should
assist in resolving advertising ban still in place
• Paid N175 per subscriber over May and Jun 08
Ghana• Introduction of 6% CST on revenue
effective Jun 08• 3G bidding initiated – terms and
conditions almost finalisedLiberia• Ongoing negotiation following licence
standardisation process initiated by regulator
Subs 33m (44% group) Revenue ZAR21bn (46% group) EBITDA ZAR11bn (57% group) PAT ZAR4bn (57% group)
Bissau9
Liberia8
Congo B7
Benin6
Conakry5
Cameroon4
Côte d’Ivoire3
Ghana2
Nigeria1
© 2008 Mobile Telephone Networks. All rights reserved.16
8,370
12,281
16,51118,565
Dec-05* Dec-06 Dec-07 Jun-08
MTNSubscribers('000)
ARPU (USD)
• Increased competition
• 1 new entrant expected in Q408
• Aggressive competitor activity including PTO’s
• Voluntary reduction of SIM’s in channel to manage quality in Q208
• Stable MOU and tariffs
• Decentralised distribution
• Intensive trade marketing
• Private placement concluded
• MTN IFRS interest now 78%
Nigeria– operational highlights
Launched Aug 2001 Market share 43% Population 141m Market sizing 80m (2012) Penetration 31% Shareholding 76%**
*9 months
**Legal
Subscribers (‘000)/ARPU ($)
Outgoing MOU 74 53 52 52
22 18 17 16
Net additions(‘000)
1,2661,755 2,054
3,978
2,6452,475
Dec-05* Dec-06 Dec-07 Jun-08
H2H1
© 2008 Mobile Telephone Networks. All rights reserved.17
• Network quality remains a priority
• 1407 BTS’s rolled out in 12 months
• 768 BTS’s including 494 3G co-located on 2G sites
• Transmission expansion continued
• Availability of network still a challenge
• Data increasingly important:
• Data as % of revenue 3%
• Mobile TV (launched Apr 08)
• SMS 86% (from 99%) of total revenue
• Renewed focus on leveraging VGC and XS Broadband
Nigeria– infrastructure and data highlights
2,1841,553 1,810
3,942
1,6652,121
2,979
Dec-05* Dec-06 Dec-07 Jun-08
H2H1
BTS rollout
CapexZAR (million)
3,849 3,674
4,789
* 9 months
Capex as % of revenue 42.6 24.6 23.6 29.3
335189 146
758123209
639
Dec-05* Dec-06 Dec-07 Jun-08
H2H1
458398
785
3,942
758
© 2008 Mobile Telephone Networks. All rights reserved.18
2,585
4,0164,997
141417
Dec-06 Dec-07 Jun-08
MTNSubscribers('000)
ARPU (USD)
• Strong subscriber growth 47% (from Jun 07)
• Enhanced value propositions
• MTN zone launched in Jun 08 (2.5m subs)
• Increased MOU
• Usage based promos (MTN family)
• Increasing competition
• New entrants expected to launch in next 12 months
• Privatisation of parastatal to foreign operator
Ghana– operational highlights
Launched Nov 1996 Market share 52% Population 23.1m Market sizing 15m (2012) Penetration 42% Shareholding 98%
Outgoing MOU - 104 113
Net additions(’000)
807981
567
624
Dec-06 Dec-07 Jun-08
H2H1
Subscribers (‘000)/ARPU ($)
© 2008 Mobile Telephone Networks. All rights reserved.19
• Network rollout gaining momentum
• Significant improved network quality
• Dropped calls 32%
• Fibre rollout of 492km
• Data initiatives
• Launch of Blackberry
• Data products for higher value customers
• Extensive edge deployment
Ghana– infrastructure and data highlights
317 262
840484
977
Dec-06 Dec-07 Jun-08
H2H1
BTS rollout
CapexZAR (million)
801
1,239
* 9 months
Capex as % of revenue 28.5 32.8 29.5
328483
302
390
Dec-06 Dec-07 Jun-08
H2H1
302
718
483
840
© 2008 Mobile Telephone Networks. All rights reserved.20
Middle East & North Africa(MENA) region
Regulatory:Iran• Interconnect
• Agreement signed and payment received
• New interconnect rate negotiations
Sudan• Interconnect rate set by regulator
Syria• 3rd operator anticipated
Subs 21m (28% group) Revenue ZAR7.3bn (16% group) EBITDA ZAR2.1bn (11% group) PAT ZAR0.6bn (9% group)
Population: 184,4m
Cyprus6
Afghanistan5
Yemen4
Sudan3
Syria2
Iran1
© 2008 Mobile Telephone Networks. All rights reserved.21
6,006
11,593
1549109
Dec-06 Dec-07 Jun-08
MTNSubscribers('000)
ARPU (USD)
• High subscriber growth
• Promotional campaigns including bonus SIMS (BOGOF)
• Strong brand image
• Marginal decline in ARPU
• Increased penetration into lower income segments
• Reduced free minutes
• Enhanced products to reduce churn and dormancy
• Spring campaign (price plan promos)
• 3rd operator expected to be granted licence in Dec 08
Iran– operational highlights
Launched Dec 2006 Market share 32% Population 71.3m Market sizing 52m (2012) Penetration 50% Shareholding 49%
Outgoing MOU 85 92 70
Net additions(‘000)
1,829
5,587
4,023
154
Dec-06 Dec-07 Jun-08
H2H1
Subscribers (‘000)/ARPU ($)
© 2008 Mobile Telephone Networks. All rights reserved.22
• Slower than anticipated rollout
• Equipment shortages
• Bad weather conditions
• Norouz
• Expect to catch up in H2
• Data increasingly important
• 8% of total revenue
• SMS 93% of data revenue
• VAS launched
Iran– infrastructure and data highlights
98
714 601675
845
Dec-06 Dec-07 Jun-08
H2H1
BTS rollout
CapexZAR (million)49% ownership
773
1,559
Capex as % of revenue - 116.3 31.4
748 696361
894
Dec-06 Dec-07 Jun-08
H2H1
361
1,642
696
601
© 2008 Mobile Telephone Networks. All rights reserved.23
71216
Dec-06 Dec-07 Jun-08
MTNSubscribers('000)
ARPU (USD)
• Disappointing growth
• NTC’s (regulator) requirement to disconnect subscribers without personal info
• 1.1 million subs disconnected in Q208
• Market share loss to 25%
• Increased and aggressive competition to capture disconnected subscribers
• Reduced effective tariffs and connection fee to match competition
• Revitalised distribution and value proposition strategy to be implemented in H208
Sudan– operational highlights
Launched Sep 2005 Market share 25% Population 37m Market sizing 18.3m (2012) Penetration 22% Shareholding 85%
Outgoing MOU 93 75 58
Net additions(‘000)
457
19
475
567
Dec-06 Dec-07 Jun-08
H2H1
Subscribers (‘000)/ARPU ($)
1,066
2,090 2,109
© 2008 Mobile Telephone Networks. All rights reserved.24
• Deployment of 3G (core)
• IN platform change to facilitate deployment of products
• Rollout in South Sudan in H208
Sudan– infrastructure and data highlights
203
492 583421
472
Dec-06 Dec-07 Jun-08
H2H1
BTS rollout
CapexZAR (million)
624
964
* 9 months
Capex as % of revenue 74.0 58.0 73.1
158
313191
128
252
Dec-06 Dec-07 Jun-08
H2H1
256
575
583
191
© 2008 Mobile Telephone Networks. All rights reserved.25
2,237
3,1093,375
192022
Dec-06 Dec-07 Jun-08
MTNSubscribers('000)
ARPU (USD)
• Subscriber growth
• extended validity on selected products
• Enhanced promo products (discounts)
• Postpaid disconnections in H108 (bad debts)
• Stable market share
Syria– operational highlights
Launched Jun 2002 Market share 46% Population 19.5m Market sizing 11.7m (2012) Penetration 38% Shareholding 75%
Outgoing MOU 134 130 125
Net additions(‘000)
355 266494
517
Dec-06 Dec-07 Jun-08
H2H1
Subscribers (‘000)/ARPU ($)
© 2008 Mobile Telephone Networks. All rights reserved.26
• Network rollout in Q208 to improve service quality
• Increased radio network capacity
• Core network renovation
• 3G trials continued
• Enhanced data products
• Reduction in GPRS tariffs
• Flat rate SIM promos
Syria– infrastructure and data highlights
119242
309
219
242
Dec-06 Dec-07 Jun-08
H2H1
BTS rollout
CapexZAR (million)
338
418
Capex as % of revenue 9.8 9.0 10.8
69124 152
191
193
Dec-06 Dec-07 Jun-08
H2H1
191
317
309
152
Financial overview
Rob Nisbet, Group Finance Director
© 2008 Mobile Telephone Networks. All rights reserved.28
H1 CAGR39%
H1 CAGR21%
Financial trends
278.5 324.7408.5
306.2357.2
Dec-06 Dec-07 Jun-08
8.715.2
19.6
16.6
13.8
Dec-06 Dec-07 Jun-08
46.134.2
20.2
38.9
31.4
Dec-06 Dec-07 Jun-08
Group revenueZAR billion
Group EBITDAZAR billion
Adjusted HEPS*cents
H1 H2
* Basic headline earnings Jun 08 – 339.3 cents (Jun 07 – 304.2 cents)Adjustment to reverse the utilisation of previously raised deferred tax and the put option impact
34.9% 29.2% 25.8%
H1 CAGR39%
© 2008 Mobile Telephone Networks. All rights reserved.29
Key accounting considerations
• Syria, however immaterial, will be reviewed in DecemberIFRIC 12
(BOT)
Group tax
• Total tax ZAR5 472m (Normal tax ZAR3 554m, deferred tax ZAR1 534m, STC ZAR263m and withholding taxes ZAR121m)
• 44.0% effective tax rate YTD (2007: 33%)• AHEPS effect (MTN share):
–Unwind of pioneer status deferred tax assets ZAR425m (total ZAR542m)
PPA Amortisation
• PPA amortisation – ZAR756m (2007: ZAR688m) Investcom ZAR590m (2007: ZAR568m)• 2007 Profit after tax by operation has been adjusted to reflect PPA entries
Put option
• Impact of put option (MTN share ZAR865m) (Jun 07 – ZAR167m) –Finance cost – ZAR161m–Fair Value adj. – ZAR520m–Forex Loss – ZAR243m–Minority share of profits – (ZAR59m)
Change in ownership
• Reduced accounting interest in Nigeria from 84.57% to 78.61% - Feb 08 (Legal interest: 76.08%) (Proceeds from disposal – USD594m)
• Reduced stake in Cyprus from 99% subsidiary to 50% JV - subject to competition commission approval
• Acquisition of 100% of Verizon – subject to competition commission approval
FX• Forex gain (ZAR794m) in MTNI Mauritius (ZAR functional currency) after transfer to
reserves (IAS21) (Jun 07 – ZAR19m)• Net forex gain – ZAR288m excl Put ZAR597m (Jun 07 – Net forex loss – ZAR130m)
© 2008 Mobile Telephone Networks. All rights reserved.30
261.0
25.5(43.9)
165.9
Earnings per share
cents 6 monthsended Jun 08
6 monthsended Jun 07
% change
Basic headline earnings per share 339.3 304.2 11.5
Reversal of put option in respect of subsidiary 46.4 9.0 415.6
Reversal of the subsequent utilisation of deferredtax asset 22.8 23.5 (3.0)
Reversal of deferred tax asset - (12.0) (100.0)
Adjusted headline earnings per share 408.5 324.7 25.8
2008 2007
217.3
1.7(38.3)
144.0
South & East Africa
West & Central Africa
Middle East & North Africa
Head Office Companies
© 2008 Mobile Telephone Networks. All rights reserved.31
Technical analysis of the NigeriaPut Option
RationaleIn terms of IFRS, MTN has no control over the exercising of the put and therefore cannot avoid an outflow of cash, hence must provide for potential liability, regardless of the fact that in return for the cash outflow an asset will be acquired at fair market value
Inception Each reporting period
1) De-recognise the sale to minorities
2) Raise the liability at fair value
a) Fair value reassessed at each reporting period
b) Revalue the liability (USD ZAR)
c) Put only exercisable between 2008 – 2013 therefore present value the liability
d) Reverse out current period minority profit
© 2008 Mobile Telephone Networks. All rights reserved.32
Exchange rates analysis
Average (PAT) Closing
Jun 08 Jun 07 % var Jun 08 Jun 07 % var
Rand per Dollar 7,57 7,13 (6.2) 7,81 7,01 (11.4)
Nigerian Naira per Dollar 116,72 128,19 8.9 117,85 127,33 7.4
Nigerian Naira per Rand 15,41 17,86 13.7 15,09 18,16 16.9
Iranian Rials per Dollar 8 990,85 9 243,24 2.7 9 300,00 9 274,00 (0.3)
Iranian Rials per Rand 1 186,92 1 291,90 8.1 1 190,48 1 332,44 10.7
Ghana Cedis per Rand 0,13 0,13 - 0,13 0,13 -
Sudanese Dinars per Rand 0,27 0,28 3.6 0,26 0,29 10.3
Syrian Pounds per Rand 6,11 7,12 14.2 5,88 7,18 18.1
© 2008 Mobile Telephone Networks. All rights reserved.33
Income statement
ZAR million 6 monthsendedJun 08
6 monthsendedJun 07
%change
Revenue 46 128 34 206 34.9
EBITDA 19 647 15 201 29.2
EBITDA MARGIN 42.6% 44.4% (1.8 pts)
Depreciation (4 395) (3 210) 36.9
Amortisation (1 319) (1 099) 20.0
Profit from operations 13 933 10 892 27.9
Net finance costs (1 499) (1 491) 0.5
Share of profits of associates 2 5 (60.0)
Profit before taxation 12 436 9 406 32.2
Income tax expense (5 472) (3 101) 76.5
Profit after taxation 6 964 6 305 10.5
Minority interest (724) (750) (3.5)
Attributable profit 6 240 5 555 12.3
© 2008 Mobile Telephone Networks. All rights reserved.34
Revenue analysis
ZAR million 6 months ended Jun 08
6 months endedJun 07
%change
ZAR
%change
LC’s
South & East Africa 17 609 14 556 21.0
South Africa 15 419 13 093 17.8
Other operations 2 190 1 463 49.7 / 35.4
West & Central Africa 21 132 15 053 40.4
Nigeria 13 446 9 656 39.3 20.1
Ghana 2 844 2 021 40.7 40.9
Other operations 4 842 3 376 43.4
Middle East & North Africa 7 324 4 575 60.1
Iran 1 912 431 343.6 311.2
Syria 2 866 2 141 33.9 16.1
Sudan 797 864 (7.8) (13.4)
Other operations 1 749 1 139 53.6
Head Office Companies 63 22 186.4
Total 46 128 34 206 34.9
© 2008 Mobile Telephone Networks. All rights reserved.35
1,4
6,4
1,4
25,0
8,7
34,1
1,61,7
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Airtime &Subscription
Fees
Interconnect Cellulartelephones
andaccessories
Other
20072008
Revenue analysis
(ZAR34.2bn)
(ZAR46.1bn)
• Airtime revenue mainly on prepaid growth in subscriber base (Nigeria, Iran, Ghana)
• Interconnect revenue:
• Nigeria up 48% on high growth in traffic volumes
• Iran significantly higher due to high fixed line penetration and increased subscriber base
• RSA interconnect up 11% year-on-year with strong contribution from prepaid growth
• Handset sale:
• RSA handset revenue up 19% year–on–year
• Strong growth in low cost handset sales in other markets
36.4%
36.1%
25.9% 11.2%
© 2008 Mobile Telephone Networks. All rights reserved.36
EBITDA analysis
ZAR million 6 months ended Jun 08
6 months endedJun 07
%change
ZAR
%change
LC’s
South & East Africa 5 905 5 163 14.4
South Africa 4 955 4 492 10.3
Other operations 950 671 41.6 / 25.7
West & Central Africa 11 174 8 162 36.9
Nigeria 7 868 5 679 38.5 20.0
Ghana 1 316 1 045 25.9 32.4
Other operations 1 990 1 438 38.4
Middle East & North Africa 2 161 1 163 85.8
Iran 563 (181) 411.0 389.6
Syria 921 679 35.6 17.5
Sudan 219 320 (31.6) (40.4)
Other operations 458 345 32.8
Head Office Companies 407 713 (42.9)
Total 19 647 15 201 29.2
© 2008 Mobile Telephone Networks. All rights reserved.37
EBITDA margin analysis
44,4
-
30,3
37,0
31,7
(42,0)
25,4
42,6
51,7
58,8
54,2
45,9
34,3
35,5
Jun 07EBITDA
margin %
(1.8)
(4.1)
(9.5)
0.4
71.4
4.1
(1.5)
(5.4)
(0.3)
(1.3)
(2.5)
(2.2)
(1.9)
%change
pts
ZAR million Jun 08EBITDA
margin %
South & East Africa 33,5
South Africa 32,1
Other operations 43,4
West & Central Africa 52,9
Nigeria 58,5
Ghana 46,3
Other operations 41,1
Middle East & North Africa 29,5
Iran 29,4
Syria 32,1
Sudan 27,5
Other operations 26,2
Head Office Companies -
Total 42,6
© 2008 Mobile Telephone Networks. All rights reserved.38
Operating expenses analysis
• Direct network operating costs• 15% of the increase from Nigeria
• Rent and rates up 150%• Fuel and electricity up 101%
from Jun 07• Revenue share – Iran (79%) , Syria
(34%) from Jun 07
• Employee benefits• Nigeria monetisation of benefits and
long term incentive provision
• Selling, distribution and marketing• RSA connection incentives (higher
value phone upgrades)• AFCON• Increased marketing activity in
Nigeria
• Other• RSA and Group standardisation
professional consulting fees• Asset and inventory write-downs
2,4
3,9
4,7
1,6
2,1
4,7
3,4
6,4
2,2
6,2
5,9
2,0
Direct networkoperat ing
costs
Cost ofhandsets andaccessories
Interconnectand Roaming
Employeebenef its
Selling,dist ribut ion
and market ing
Other
20072008
(ZAR19.0bn)
(ZAR26.5bn)
49.8%
31.1% 36.8%
22.8%
38.9%
59.7%
© 2008 Mobile Telephone Networks. All rights reserved.39
Finance costs
ZAR million 6 months ended Jun 08
6 months endedJun 07
Year ended
Dec 07
Finance costs (3 550) (2 666) (4 953)
Interest paid (1 959) (1 666) (3 151)
Put option - finance costs (206) (139) (273)
- Revaluation of liability (Forex losses) (309) - -
- Fair value (663) (156) (310)
Forex losses (300) (450) (746)
Revaluation and settlement of FEC’s (Forex losses) (113) (255) (473)
Finance income 2 051 1 175 1 780
Interest received 1 041 601 1 336
Forex gains 216 402 245
Put option - revaluation of liability - 7 24
Functional currency gains (Forex gains) 794 19 29
Revaluation and settlement of FEC’s - 146 146
Net finance cost (1 499) (1 491) (3 173)
© 2008 Mobile Telephone Networks. All rights reserved.40
Profit after tax
ZAR million 6 months ended Jun 08
6 months endedJun 07
% change
ZAR
% change
LC’s
South & East Africa 3 162 2 684 17.8
South Africa 2 795 2 348 19.0
Other operations 367 336 9.2
West & Central Africa 3 985 4 264 (6.5)
Nigeria 2 489 2 998 (17.0) (28.0)
Ghana 600 393 52.7 31.4
Other operations 896 873 2.6
Middle East & North Africa 636 189 236.5
Iran 71 (344)
Syria 431 276 56.2 25.7
Sudan (93) 141 (166.0) (151.9)
Other operations 227 116 95.7Head Office Companies (819) (832) 1.6
Total 6 964 6 305 10.5
© 2008 Mobile Telephone Networks. All rights reserved.41
Tax considerations
Material reconciling items:• Effective rate reconciliation to 28.00%• Nigeria 10.32% • Non allowable interest on Investcom
acquisition 1.11% • STC and net withholding taxes suffered 2.87%• Nigeria Put Option effect 2.6%
Looking forward Dec 08• Group effective rate expected in higher 30’s based
on :• Nigerian tax• Effect of Nigeria Put Option• Disallowed expenses• Nigeria effective tax rate 53% this period,
expected to decline to lower 40’s
Nigerian tax 2008 (ZAR million)
Tax 2,871
Normal tax 1,349
Deferred tax 1,522
Effective tax rate 53%
20.40
32.97
39.53
13.64
44.0
17.6419.76
13.712.59
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
Jun-06 Dec-06 Jun-07 Dec-07 Jun-08
MTN Group
Investcom
Effective tax rates%
0
25
50
75
Dec-07 Dec-08 Dec-09 Dec-10
Accountingtax rate
Cash taxrate
Nigeria – expected trends in effective tax ratesIllustrative %
© 2008 Mobile Telephone Networks. All rights reserved.42
Balance sheet
ZAR million As atJun 08
As atJun 07
Non-current assets 98 963 79 330
Property, plant and equipment 50 125 33 954
Goodwill and other intangible assets 43 450 40 524
Other non-current assets 5 388 4 852
Current assets 46 585 26 574
Bank balances 27 582 13 366
Other current assets 19 003 13 208
Total assets 145 548 105 904
Capital and reserves 67 228 47 033
Non-current liabilities 34 075 28 661
Long term liabilities 29 313 24 531
Deferred taxation and other non-current liabilities 4 762 4 130
Current liabilities 44 245 30 210
Put Option 3 258 -
Non–interest bearing liabilities 29 737 20 287
Interest bearing liabilities 11 250 9 923
Total equity and liabilities 145 548 105 904
* Net debt 12 981 21 088
© 2008 Mobile Telephone Networks. All rights reserved.43
Analysis of net debt position
As at 30 Jun 08ZAR million
Net debt/ (Cash)
Interest bearing
liabilities*
Cash and cash equivalents
South & East Africa 4 041 7 501 3 460
South Africa 4 310 6 703 2 393
Other operations (269) 798 1 067
West & Central Africa 6 391 14 190 7 799
Nigeria 7 069 12 355 5 286
Ghana (1 746) - 1 746
Other operations 1 068 1 835 767
Middle East & North Africa 1 061 5 035 3 974
Iran 4 259 4 532 273
Sudan 254 311 57
Syria (2 987) 50 3 037
Other operations (465) 142 607
Head Office Companies 1 488 13 837 12 349
Total 12 981 40 563 27 582
* Including long-term borrowings, short-term borrowings and overdrafts
© 2008 Mobile Telephone Networks. All rights reserved.44
Interest bearing liabilitiesas at Jun 08
Interest bearing liabilities
Cash and cash equivalents
25%
35%
40%
ZARUSD/EURLocal currency
• Fundraising at operational level • Zambia approx. USD39m (100% LC)
• Intercompany funding from head office co’s currently totals ZAR12.2bn including allocations:• Iran ZAR3.6bn
• RSA ZAR5.2bn
• Unproductive interest reduced further to ZAR10.9bn (Jun 08) from ZAR13.5b (Feb 08)
• Cash accumulation• Holding Co’s – July repayment of capital on
term loans
• Syria, Ghana, Nigeria
• Net debt to EBITDA of 0.36x (Dec 07:0.5x)
• Fitch rating upgrade• National scale rating to AA-(zaf) from A+(zaf)
• Outlook remains stable
48%
23%
29%
ZARUSD/EURLocal currency
© 2008 Mobile Telephone Networks. All rights reserved.45
Cash flow statement
ZAR million 6 months ended Jun 08
6 months ended Jun 07
Net cash generated by operations 19 934 14 562
Net interest paid (1 004) (1 200)
Taxation paid (3 406) (2 280)
Dividends paid (2 536) (1 674)
Cash inflows from operating activities 12 988 9 408
Cash outflows from investing activities (7 444) (7 170)
Acquisitions of PP&E (excluding software) (9 882) (5 966)
Other investing activities 2 438 (1 204)
5 544 2 238
Cash inflows from financing activities 3 209 41
Net movement in cash and cash equivalents 8 753 2 279
© 2008 Mobile Telephone Networks. All rights reserved.46
Capital expenditures (incl. software)
24 502
240
13
5
3 553
3 811
1 743
1 888
8 980
12 611
1 877
6 203
8 080
Committed 2008
6 256
(5)
339
247
492
725
1 803
700
270
1 810
2 780
296
1 382
1 678
Actual2007
ZAR million Approved2008
Actual 2008
South & East Africa 8 281 2 405
South Africa 7 101 1 772
Other operations 1 180 633
West & Central Africa 17 463 5 842
Nigeria 13 092 3 942
Ghana 1 976 840
Other operations 2 395 1 060
Middle East & North Africa 4 837 1 980
Iran 2 089 601
Sudan 1 017 583
Syria 843 309
Other operations 888 487
Head Office Companies 84
Total 30 581* 10 311
* Balance sheet impact expected to be R25bn at Dec 2008
© 2008 Mobile Telephone Networks. All rights reserved.47
MTN Group- capital expenditure trends (USD’m)
• Increased investment in infrastructure to cater for increasing demand
• Significant network infrastructure spend in most operations drive year-on-year growth in capex spend and marginal capex / subscriber
• H1 spend represents 40% of ZAR25bn target for 2008 in line with 2007 H1 spend
• USD 3bn committed at Jun 08, including accelerated approvals for H1 2009 network capex
• 2006 marginal capex / subscriber impacted by Investcom acquisition
• 2008 capex spend in ZAR influenced by changes in fx rates (2008 target of ZAR25bn estimated at average fx rate of 7.22)
2619 21 22
227
180
138
83
160168
119
138
0
50
100
150
200
250
Dec-05* Dec-06 Dec-07 Jun-08
Capex / Revenue %
Cumulative Capex per subscriber US$
Marginal Capex / subscriber US$
5,2535,253
7,2127,212
9,7649,764
10,87710,877
Cumulative Capex
© 2008 Mobile Telephone Networks. All rights reserved.48
16
South Africa- capital expenditure trends (ZAR bn)
• Network quality improvement top priority, reflected by sharp increase in marginal capex / subscriber
• H1 spend ZAR2.2bn is 30% of full year target
• Significant spend expected in H2
• IS projects in progress include wholesale and retail billing systems, CRM tools (ZAR0.8bn)
111010
1.09
1.15
1.13
1.231.06
2.24
0
2
4
6
8
10
12
14
16
18
20
Dec-06 Dec-07 Jun-08
Capex / Revenue %
Cumulative Capex per subscriber (ZAR '000)
Marginal Capex / subscriber (ZAR '000)
14
18
Cumulative Capex
© 2008 Mobile Telephone Networks. All rights reserved.49
Nigeria- capital expenditure trends (USD’m)
• 45% of full year target capex spent H1 2008
• Significant investments in network capacity and coverage, transmission (fibre/microwave) (758 2G and 494 3G completed)
• Marginal capex trend reflects increased investment in network
• Total 2008 spend estimated at USD1.2bn
4325 24 29
292
243
213
133
243242
161
253
0
50
100
150
200
250
300
350
Dec-05* Dec-06 Dec-07 Jun-08
Capex / Revenue %
Cumulative Capex per subscriber US$
Marginal Capex / subscriber US$
2,4472,447
2,9912,991
3,9943,9944,5194,519
Cumulative Capex
Looking forward
Phuthuma Nhleko
© 2008 Mobile Telephone Networks. All rights reserved.51
Looking forward…
Expansion opportunities
• Actively seeking value-accretive opportunities in emerging markets
Rollout• Ongoing infrastructure investment to ensure appropriate levels of
capacity and quality of service for enlarged market potential
Convergence• Ensuring the Group is well positioned to benefit from a rapidly
converging technology market
Optimise operations
• Optimise efficiencies in maintaining and improving a competitiveposition
Regulations • Constructive engagement with regulatory authorities
© 2008 Mobile Telephone Networks. All rights reserved.52
Subscriber guidance 2008
Net additions guidance at Dec 07
Net additions guidance at Jun 08
South Africa 2,200 2,200
Nigeria 5,000 5,000
Ghana 1,300 1,300
Iran 7,000 8,500
Syria 680 680
Sudan 1,100 500
Rest 4,500 4,500
21,780 22,680
Thank you
Questions
© 2008 Mobile Telephone Networks. All rights reserved.54
Notice
The information contained in this document has not been verified independently. No representation or warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Opinions and forward looking statements expressed represent those of the Company at the time. Undue reliance should not be placed on such statements and opinions because by nature, they are subjective to known and unknown risk and uncertainties and can be affected by other factors that could cause actual results and Company plans and objectives to differ materially from those expressed or implied in the forward looking statements.
Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation and do not undertake to publicly update or revise any of its opinions or forward looking statements whether to reflect new information or future events or circumstances otherwise.
This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.