Mtn Group Limited · JSE:MTN
Mtn — Debt Investor Presentation (May 2010)
48 slides from Mtn's debt investor presentation, May 2010
Slide 1: MTN Group Limited: Review of results and funding outlook
MTN Group Limited Review of results and funding outlook Presented May 2010
Slide 2: Agenda
2 Agenda Update on financial and operational performance N i Patel Nazir P t l Group Finance Director Update d off treasury activities and d funding f d outlook l k Debbie Millar GE: Treasury, Funding and Investor Relations Looking forward and YTD update Nazir Patel Group Finance Director
Slide 3: Update on financial and operational performance
Update on financial and operational performance Nazir Patel Group Finance Director
Slide 4: MTN vision
4 MTN vision To be the leader in telecommunications in emerging markets Leverage existing Consolidation & Convergence & footprint & diversification operational evolution intellectual capacity Increased competitiveness Hub and Procurement Skills Value Best practice Diversification Brand cluster syner
Slide 5: Solid operational performance
5 Solid operational performance We delivered… delivered Network rollout Strong subs execution growth Aggressive competition Improved distribution Maintained or model Under Increased challenging improved through market regulatory market share conditions requirements Segmental value propositions Slowi
Slide 6: Group initiatives
6 Group initiatives • Centralised procurement • Standardisation of equipment Standardisation • Rationalisation of network suppliers • Best practice guidelines to ensure operational efficiencies and operational p • Site build, build network management, management radio access network deployment effic
Slide 7: Group initiatives
7 Group initiatives • Committed USD 191 m to date Submarine cables • Access to cable capacity on EASSy (H2:10), EIG (H2:10), SAT- 3/SAFE(operational), / ( p ), TEAMs ((operational p Nov09)) and WACS ((H2:11)) • MTN Academy • Talent management People • Y’ello stars • Knowledge share • Focus on money
Slide 8: Group summary
8 Group p summary y ZAR ‘m Key Points Dec Dec Variance 2009 2008 % • Strong ZAR and Naira weakness impact ZAR reported results Revenue 111 947 102 526 9.2 • EBITDA margin decline mainly due to RSA and Syria EBITDA 46 063 43 166 6.7 • Negative g functional currency y impact p EBITDA on AHEPS ZAR 124.
Slide 9: Average exchange rates
9 Average exchange rates USD: Local currency y 9 830 9 943 9 169 9 243 9 300 9 175 9 365 9 086 147 Rial 148 129 128 128 117 126 118 Naira ZAR 7.0 7.6 8.1 9.1 6.3 7.0 7.1 8.3 Cedis 0.9 0.9 0.9 0.9 1.0 1.1 1.4 1.4 H1-06 H2-06 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09 ZAR: Local currency 1 450 1 365 1 292 1
Slide 10: Revenue trends
10 Revenue trends ZAR ‘m FX impact ZAR 10.9bn Key Points • Strong underlying organic growth in 19.9% 1,738 7,548 1,653 key markets except RSA 886 47 102,526 6 111,94 122,8 • ZAR reported revenues adversely impacted by decline in Naira and Cedi vs US dollar • 2009 revenues at constant prior year Nige
Slide 11: Revenue trends (cont.)
11 Revenue trends ((cont.)) ZAR ‘m • Airtime and subscription revenue Dec Dec 2009 2008 contribution decreased due to fx impact, RSA flat YoY Airtime and 76 814 70 963 • Data contribution increase due to RSA subscription 68.6% 69.2% – GPRS up 39% 3 329 2 690 • SMS contribution increased due to Data
Slide 12: EBITDA trends
12 EBITDA trends ZAR ‘m FX impact ZAR 5.1bn • Strong organic EBITDA growth in key markets 18.4% 31 725 4,310 • Nigeria margins higher 1.4pts to 1,129 46,063 166 59.3% 59 3% on lower fuel costs, costs opex 43,1 51 control • RSA margins lower 1.5pts due to integration of iTalk, iTalk CellPlace, CellPl
Slide 13: EBITDA
13 EBITDA ZAR ‘m Dec Dec • Direct network cost increased due to 2009 2008 Syria revenue share and increase in Revenue 111 947 102 526 number of sites in Iran • Handsets and accessories costs Direct network operating costs 15 925 14 140 decreased due to RSA - distribution of 14.2% 13.8% cheaper prepa
Slide 14: EBITDA margin recon
14 EBITDA margin g recon (%) • Nigeria • Fixed cost control and opex savings EBITDA margin 2008 42.1 • Syria • Full year impact of revenue share Nigeria 0.7 increase • RSA • Interconnect margin lower Syria (0 6) (0.6) • Selling, distribution costs from acquisitions • IT outsourcing g costs RSA (0.5)
Slide 15: Interest and tax
15 Interest and tax ZAR ‘m Effective tax rate Dec Dec Net finance cost 2009 2008 39.5% 39.9% Net interest paid 2 201 1 851 Net forex losses 1 106 1 249 Functional currency 3 204 (2 442) losses /(gains) 33.4% Put option p ((701)) 1 259 Total 5 810 1 917 2007 2008 2009 • Functional F ti l currency los
Slide 16: South Africa - operational highlights
16 South Africa - operational highlights Launched Jun 1994 Market share 32% Population 49.4m Market sizing 64.3m (2014) Penetration 103% Shareholding 100% Subscribers • Marginal increase in postpaid (’000) 17,169 16,067 • Strong growth in hybrid packages 12,655 14,799 • Loyalty programs 14,415 13,04
Slide 17: South Africa - operational highlights
17 South Africa - operational highlights ARPU • Declining postpaid ARPU indicating ZAR slowing consumer spend 441 • Lower out of bundle usage 396 403 365 • Migration onto lower value packages • Increased prepaid ARPU • Impact of disconnections post RICA 159 149 148 145 Postpaid • Mobile termination
Slide 18: Nigeria - operational highlights
18 Nigeria - operational highlights Launched Aug 2001 Market share 50% Population 147m Market sizing 111m (2014) Penetration 42% Shareholding 76%* Subscribers (‘000) 30,827 • Strong subscriber growth /ARPU ($) • Continued improvements in network 23,077 quality and capacity 16 511 16,511 • Innovative
Slide 19: Ghana - operational highlights
19 Ghana - operational highlights Launched Nov 1996 Market share 55% Population 24m Market sizing 22.5m (2014) Penetration 61% Shareholding 98% Subscribers (‘000) • Maintained market share in extremely /ARPU ($) 8,001 competitive market 6,428 • Significant Si ifi iincrease iin subs b iin Q4 4,016 •
Slide 20: Iran - operational highlights
20 Iran - operational highlights Launched Aug 2006 Market share 40% Population 72,5m Market sizing 75.8m (2014) Penetration 80% Shareholding 49% 23,260 Subscribers (‘000) • Increased market share /ARPU ($) 16,039 • 52% share of net adds • Attractive acquisition promo’s (WOW, MTN 6,006 BOGOF, reducti
Slide 21: Syria - operational highlights
21 Syria - operational highlights Launched Jun 2002 Market share 45% Population 20,5m Market sizing 12.7m (2014) Penetration 46% Shareholding 75% Subscribers (‘000) 4,249 • Strong subscriber uptake in H2 /ARPU ($) 3,539 3,109 • Improved promos (MTN Gold and billing 2 237 2,237 per a second) MTN 22 2
Slide 22: Capex
22 Capex ZAR ‘m m Underspend ZAR 7.2bn Key countries i Actuall Dec 2009* ZAR’m 42,031 31,248 -3,382 South Africa 6 034 -1,607 -2,080 -3,560 -154 Nigeria 10 222 Ghana 2 586 FX dget Acttual Otther eria Ghana Iran Syria 456 Nige Bud I * USD:ZAR 8.30 • 09 peak p capex p year y for the Group p 27.6% 27.9
Slide 23: Update of treasury activities and funding update
Update of treasury activities and funding update Debbie Millar GE: Treasury, Funding and Investor Relations
Slide 24: Key stats
Key stats Market cap • R202 billion (USD27bn) – 30 Apr 10 Total assets • R156 billion (USD16bn) – 31 Dec 09 Net et debt /EBITDA • 0.26x 0 26 - 31 D Dec 09 Fitch • AA- (zaf) • Outlook remains stable Credit rating • A2.za Moodys • Positive outlook • Baa3
Slide 25: Team structure
25 Team structure GE: Treasury, Funding & Investor Relations Debbie Millar Group treasury Dubai treasury Administrator Sizakele Gumede Senior manager Group treasury Structured and project finance Lucky Ncobela Senior manager g Structured and project Treasury Senior manager finance administrator Duba
Slide 26: Funding strategy
26 Funding strategy • Non N recourse funding f di att Opco O l level l tto continue ti • Improves currency match to revenue stream • Unlocks local debt capacity and builds local market capacity • Improves efficiency of balance sheet for local partners • Central banks often prefer • Improved risk sha
Slide 27: Managing fx risk
27 Managing fx risk Translation • Diversified earnings risk not hedged • Key countries includes Nigeria, Ghana and Iran Local currency • Improves p currency y match to revenue stream funding f di maximised • Local currency debt also usually non-recourse • Fair value adjustments on foreign denominate
Slide 28: Managing fx risk (cont.)
28 Managing fx risk (cont.) (cont ) • Approx A 50% to 70% off capex is i fforeign i d denominated i d Capex • Hedged where possible through exposure managed • Denomination of contacts – SA • Cash back LC’s – Nigeria • Principally a SA issue Handset • Mainly USD denominated subsidies • Guided by Grou
Slide 29: Cash cycling
29 Cash cycling Dividends New investments H ld ’ Holdco’s Dividends & Dividends & Dividends & Guarantees Funding management management management fees fees fees Cash OpcoOCash Cash Cash positive negative positive negative Non recourse debt Recourse debt Head office funded Opco’s
Slide 30: Group structure
30 Group structure 2009 MTN Group 100% Management fees f and d dividends d d d received: d MTN Holdings • MTN South Africa 100% 100% ZAR3,2bn MTN South MTN International • Mauritius & Dubai Africa 100% ZAR10,2bn MTN Mauritius 100% MTN Dubai 100% 65% 76%* 75% 75% Network Operations Côte d’Ivoire Nige
Slide 31: Net debt at 31 Dec 09
31 Net debt at 31 Dec 09 • Net debt to EBITDA of 0.26x 0 26x Debt of ZAR 36,916bn 15% , • USD 462.5m of non recourse fundraising closed in 09 1% • Investcom unproductive reduced to ZAR 600m and eliminated after year 52% end • Intercompany loans (excl holding 32% companies co pa es and a d SA) S ) to
Slide 32: Net debt at 31 Dec 09 (cont.)
32 Net debt at 31 Dec 09 (cont.) ZAR ‘m Net debt / Interest Net debt / (cash) Cash and cash bearing Intercompany (cash) Dec equivalents liabilities* eliminations Dec 2009 2008 South & East Africa (4 209) 12 327 (8 901) (783) 248 S th Af South Africa i (3 390) 9 347 (7 809) ( 1 852) (100) Other opera
Slide 33: Opco funding achievements in 09
Opco funding achievements in 09 Country Funding amount Comments Cote d’Ivoire XOF76.1bn 5-year syndicated term facility. Largest locally raised (US$150m equivalent) local currency syndicated facility for a private corporate in the WAEMU Zone. Closed in 2009 Afghanistan US$65m US$65m secured from the
Slide 34: Opco funding priorities 10
Opco funding priorities 10 Country Comments Sudan USD355m required Raising about US$80m in a combination of local currency and hard Yemen currency Restructuring of existing local funding (NGN206bn) underway. USD450m Nigeria in additional debt secured between ECA backed funding and Buyers Credit Faci
Slide 35: Holding company facilities
35 Holding company facilities Undrawn Facility Utilisation facilities Company Source of facility Currency amount (m) in ZAR in ZAR Comments South General banking Committed GBF’s and ZAR3.3 ZAR 4 000 – 4 000 Africa facilities* additional facilities Term loan ZAR 1 000 1 000 _ Nedbank 5 y year –ECA ba
Slide 36: Holdco priorities in 10
36 Holdco priorities in 10 • Continue to utilise and improve use of the South African capital markets • Refresh R10bn DMTN programme • Use DMTN to refinance a portion of MTN01 bond maturing in Jul 10 B d Bond • Start tapping Money Market using MTN commercial paper markets • Draw down on committed he
Slide 37: Looking forward and YTD update
Looking forward and YTD update Nazir Patel
Slide 38: Looking forward
38 Looking forward • Actively seeking value value-accretive accretive opportunities in emerging Expansion markets to reduce concentration risk and leverage economies of opportunities scale • Monitoring infrastructure investments to ensure appropriate levels Rollout of capacity and quality of service
Slide 39: Subscriber guidance 2010
39 Subscriber guidance 2010 Net additions guidance for 2010 South Africa 800 Nigeria 6 000 Ghana 800 Iran 5 000 Syria 400 Rest 7 000 20 000
Slide 40: Capital expenditures
40 Capital expenditures ZAR ‘m (incl. software) Actual Authorised Actual Dec Dec 2009* 2010** 2008*** South & East Africa 8 645 6 111 7 350 South Africa 6 034 4 245 4 868 Other operations 2 611 1 866 2 482 West & Central Africa 16 518 10 414 15 024 Nigeria 10 222 6 424 9 610 Ghana 2 586 1 551 1 854
Slide 41: Regulatory update
Regulatory update Key developments Detail • Peak rate reduction to R0.89 cents implemented 1 Mar 10 • Interconnect reductions South Africa • Further cuts proposed by ICASA, under constrictive di discussion i • Soft launch to commenced 1 May 10 with a 3 month • SIM registration grace period to 1 Aug
Slide 42: Q1 update of key indicators
42 Q1 update of key indicators Subscribers ARPU ARPU % Change (’000) % change (ZAR/US$) (ZAR/US$) local 31- Mar- 10 Dec-09 31-Mar-10 31-Dec-09 currency South and East Africa 27,259 +4 South Africa 16,424 +2 R155 R145 +7 Uganda g 5,615 +8 $6 $6 -12 Botswana 1,215 +1 $10 $11 -14 Rwanda 2,050 +11 $6 $6
Slide 43: Thank you
Thank you Questions
Slide 44: Notice
44 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 a
Slide 45: Annexures
Annexures 2,2 ee —_ Ci Si:
Slide 46: Income statement
46 Income statement ZAR ‘m De Dec De Dec Variance V i e 2009 2008 % Revenue 111 947 102 526 9.2 EBITDA 46 063 43 166 67 6.7 EBITDA Margin % 41.1% 42.1% (1.0pts) Depreciation (11 807) (9 939) (18.8) Amortisation (2 668) (2 820) 5.4 Profit from operations 31 588 30 407 3.9 Net finance cost (5 810) (1
Slide 47: Balance sheet
47 Balance sheet ZAR ‘m Dec Dec 2009 2008 Non-current assets 110 213 115 319 Property, plant and equipment 67 541 64 193 Goodwill and other intangible 37 526 45 786 assets Other non-current assets 5 146 5 340 Current assets 46 024 54 787 Bank balances 23 999 26 961 Restricted cash 742 1 778 Other cu
Slide 48: Cash flow statement
48 Cash flow statement ZAR ‘m Dec Dec 2009 2008 Net cash generated by operations 49 634 44 836 Net interest paid (3 127) (1 283) Taxation paid (6 843) (6 781) Dividends paid (3 382) (2 536) Cash inflows from operating activities 36 282 34 236 Acquisitions of PPE (excluding software) (27 720) (26 896