Mtn Group Limited · JSE:MTN
Mtn — Debt Investor Presentation (May 2008)
43 slides from Mtn's debt investor presentation, May 27, 2008
Slide 1: MTN Group Limited: Review of results and funding outlook
MTN Group Limited Review of results and funding outlook Presented on 27 May 2008
Slide 2: Agenda
Agenda Financial review Rob Nisbet Group Finance Director Funding outlook Debbie Millar General Manager: Corporate Finance Looking forward Rob Nisbet Group Finance Director Questions… 2
Slide 3: Strategy and rationale for meeting
Strategy and rationale for meeting • Introduce MTN locally • Role of MTN Dubai • Activities of the Group 3
Slide 4: Financial review
Financial review Rob Nisbet Group Finance Director 4
Slide 5: MTN vision
MTN vision To be the leader in telecommunications in emerging markets National player African player Emerging market player 5
Slide 6: Key economic developments
Key economic developments South Africa Nigeria Ghana Iran Sudan Syria GDP Growth 5% 6.1% 6.2% 4.3% 12.8% 3.5% (2007 est) Inflation rates 9% 9% 11% 14% 8.5% 9% Dec 07 Market size 56 80 15 52 18 12 million (2012) GDP/Capita nominal US$ 6,239 938 649 4,252 1,262 1,516 (2007 est) High growth markets Sou
Slide 7: Key indicators
Key indicators Subscribers Subscribers ARPU ARPU (’000) (’000) % change (ZAR/US$) (ZAR/US$) Mar-08 31-Dec-07 Dec-07 31-Mar-08 31-Dec-07 South and East Africa 20 017 19 329 +4 South Africa 15 169 14 799 +3 R144 R149 Uganda 2 464 2 362 4 $9 $10 Botswana 880 874 +1 $13 $15 Rwanda 754 652 +16 $11 $12 Sw
Slide 8: Subscriber contribution by region
Subscriber contribution by region… MTN Group Total Proportionate* (subscriber million) (subscriber million) 68.2 61.4 54.1 26% 50.4 48.3 40.1 23% 21% 17% 40.8 19% 12% 34.7 45% 15% 49% 46% 44% 48% 11% 45% 46% 46% 39% 35% 31% 29% 36% 35% 43% 39% Dec-06 Jun-07 Dec-07 Mar-08 Dec-06 Jun-07 Dec-07 Mar-08
Slide 9: Key developments
Key developments… • Continue seeking value accretive opportunities in existing and new territories Expansion • Broadened local shareholder base in Uganda (↓2%), Nigeria (↓6.5%) and opportunities Côte d’Ivoire (↓8.6%) • Increased MTN shareholding in Rwanda (↑15%) and Botswana (↑2%) • Demand continues
Slide 10: EBITDA analysis
EBITDA analysis EBITDA Contribution % EBITDA Margin % * Difference in HQ companies 10
Slide 11: Earnings per share
Earnings per share 12 months 12 months US$ cents ended Dec 2007 ended Dec 2006 % change Basic headline earnings per share 83.1 86.2 (3.6) Reversal of put option in respect of subsidiaries 2.8 2.2 27.3 Reversal of the subsequent utilisation of deferred 12.7 – tax asset Reversal of deferred tax asset
Slide 12: Group highlights to Dec 2007
Group highlights to Dec 2007 Group subscribers Revenue EBITDA Up 53% to 61,4 million Up 42% to ZAR 73,145 billion Up 42% to ZAR 31,845 billion (US$10.390 billion) (US$4.523 billion) EBITDA margin Adjusted headline EPS Dividend declaration Marginally up Up by 17% to 681.9 cents Up 51% to 136 c/share
Slide 13: Exchange rates analysis
Exchange rates analysis Average (PAT) Closing Dec Dec Dec Dec 2007 2006 % var 2007 2006 % var Rand per Dollar 7,04 7,04 – 6,78 7,05 4 Nigerian Naira per Dollar 125,98 128,49 2 118,40 128,41 8 Iranian Rials per Dollar 9 300,10 9 168,96 (1) 9 446,00 9 220,00 (2) Ghana Cedis per Rand 1 318,79 1 282,55
Slide 14: Income statement
Income statement 12 months 12 months % ended ended % change excl. US$ million Dec 2007 Dec 2006* change Investcom Revenue 10 390 7 329 41.8 27.8 EBITDA 4 523 3 184 42.1 27.3 EBITDA MARGIN 43.5% 43.4% Depreciation (962) (714) 34.7 22.0 Amortisation (312) (183) 70.6 51.1 Profit from operations 3 249 2
Slide 15: Revenue analysis – restated
Revenue analysis – restated (12 months Investcom 2006) 12 months 12 months ended ended % US$ million Dec 2007 Dec 2006 * change South & East Africa 4 468 3 776 18.3 South Africa 4 009 3 491 14.8 Other operations 459 285 61.0 West & Central Africa 4 419 3 217 37.4 Nigeria 2 876 2 116 35.9 Ghana 575 3
Slide 16: EBITDA analysis – restated
EBITDA analysis – restated (12 months Investcom 2006) 12 months 12 months % Dec 2007 **Dec 2006 ended ended change EBITDA EBITDA US$ million Dec 2007 Dec 2006 * ZAR margin % Margin % South & East Africa 1 609 1 328 21.2 36,0 35,2 South Africa 1 394 1 185 17.7 34,8 33,9 Other operations 215 143 50.6
Slide 17: Profit after tax
Profit after tax 12 months 12 months ended ended % US$ million Dec 2007 Dec 2006 ** change South & East Africa 874 727 20.2 South Africa 786 681 15.3 Other operations 88 46 West & Central Africa 1 169 946 24.5 Nigeria* 846 815 5.0 Ghana 132 49 Other operations 191 82 Middle East & North Africa 104 2
Slide 18: Tax considerations
Tax considerations Effective tax rates 45.00 Effective rate reconciliation (to 29%) % 40.00 39.53 • Nigeria – 6.41% 35.00 32.97 – Expiry of Pioneer Status in Nigeria – 30.00 application of commencement provision and 25.00 MTN Group 20.40 19.76 effect of investment allowance. 20.00 17.64 Investcom 15
Slide 19: Cash flow statement
Cash flow statement 12 months 12 months ended ended US$ million Dec 2007 Dec 2006 *Cash inflows from operating activities 3 672 2 504 *Net cash generated by operations 4 877 3 258 *Net interest paid (366) (20) *Taxation paid (601) (580) *Dividends paid (238) (154) *Cash outflows from investing activ
Slide 20: Erlang
Erlang Erlang: The Erlang is a unit of traffic density in a telecommunications system. One Erlang is the equivalent of one call in a specific channel for an hour. 40% 50% 12% 24% 168% 32% 16% 36% 28% 42% 53% 3906% 14% 139% 702% 94% 2002 2003 2004 2005 2006 2007 2008 F South Africa Nigeria Iran 20
Slide 21: Capital expenditures (incl. software)
Capital expenditures (incl. software) Approved Actual Approved US$ million 2007 2007 2008 South & East Africa 667 543 1 147 South Africa 580 419 984 Other operations 87 127 163 West & Central Africa 1 176 1 167 2 419 Nigeria 739 706 1 813 Ghana 154 183 274 Other operations 283 278 332 Middle East &
Slide 22: South Africa – operational highlights
South Africa – operational highlights Launched Jun 1994 Market share 36% Population 48m Market sizing 56m (2012) Penetration 86% Shareholding 100% Subscribers 14,799 • Strong recovery in post paid in H2 ZAR (’000) 12,655 – Channel strategy and value proposition Postpaid 10,380 – H1: net adds 238 000
Slide 23: Nigeria – operational highlights
Nigeria – operational highlights Launched Aug 2001 Market share 44% Population 141m Market sizing 80m (2012) Penetration 27% Shareholding 85% • Quality of service remains a priority – Lagos and Abuja • Demand driven growth (no promos) • Strong subscriber growth and market share maintained 16,511 – C
Slide 24: Iran – operational highlights
Iran – operational highlights Commercial Launch Dec 2006 Market share 23% Population 70.6m Market sizing 52m (2012) Penetration 37% Shareholding 49% Subscribers/ARPU 6,006 • Strong start-up performance MTN Subscribers • Market share up from 12% (Jun 07) to (’000) 23% (Dec 07) ARPU (USD) • Increasing
Slide 25: Balance sheet
Balance sheet As at As at US$ million Dec 2007 Dec 2006 Non-current assets 12 107 10 820 Property, plant and equipment 5 821 4 347 Goodwill and Intangible assets 5 722 5 689 Other non-current assets 564 784 Current assets 4 941 2 927 Bank balances 2 597 1 431 Other current assets 2 344 1 496 Total a
Slide 26: Funding outlook
DIVIDER: Strategic and operational overview Funding outlook Debbie Millar General Manager: Corporate Finance 26
Slide 27: Structure of debt
Structure of debt MTN Group 100% Offshore Full recourse full recourse funding MTN Holdings funding guarantees guarantees US$4.9 billion US$247 million 100% 100% 100% MTN Service MTN (Pty) Ltd MTN International Provider 100% MTN Mauritius* 100% * Intercompany unproductive debt of US$1.5bn MTN Dubai C
Slide 28: Rationale for debt structure
Rationale for debt structure… • Non recourse debt is still key – Improves currency match to revenue stream • Unlocks local debt capacity and builds local market capacity – Improves efficiency of balance sheet for local partners – Central banks often prefer – Improved risk sharing • Holding company d
Slide 29: Offshore cash flow strength
Offshore cash flow strength MTN Group 2007 100% Management fees and dividends MTN Holdings received of ZAR8.5bn 100% MTN South Africa MTN International 100% MTN Mauritius 100% MTN Dubai 100% 60% 76% 75% 75% Network Operations Côte d’Ivoire Nigeria Guinea Republic Benin 100% 100% 70% 75% 60% Service
Slide 30: Structure and team
Structure and team GM: Corporate finance Debbie Millar Administrator Group treasury Dubai treasury [Jacky Mtswisha] Structured and project finance Senior manager Senior manager Senior manager Dubai treasury Structured and project Group treasury Samer Jano finance Deepen Jhina Lucky Ncobela (1 July 0
Slide 31: Analysis of net debt position
Analysis of net debt position Interest Cash and As at 31 Dec 2007 bearing cash US$ million Net (cash) debt liabilities* equivalents South & East Africa 485 971 485 South Africa 441 854 413 Other operations 45 117 72 West & Central Africa 35 973 938 Nigeria 154 737 584 Ghana (200) 14 214 Other operat
Slide 32: Interest bearing liabilities split
Interest bearing liabilities split as at 31 December 2007 Currency analysis (liabilities) • Fundraising at operational level – Nigeria approx US$2bn (80% LC) 17% – Côte d’Ivoire approx US$100m (100% LC) – Cameroon approx US$80m (100% LC) • Cash accumulation 12% ZAR – Syria USD/EUR – Ghana – Nigeria
Slide 33: Group covenants and repayment profile
Group covenants and repayment profile 2.5 Net debt / EBITDA EBITDA / Capex 2 • Syndication – financial ratios – Leverage – Consolidated total net 1.5 borrowings / Adjusted consolidated EBITDA. Grid levels of >1.5x, >1.0x, <1.0x 1 – Interest cover – Consolidated EBITDA / Consolidated net finance cost
Slide 34: South African facilities
South African facilities Facility Undrawn Utilisation facilities Company Source of facility Currency Amount (m) in US$ in US$ Comments South Africa General banking ZAR 6 617 567 249 Have US$400m additional facilities* uncommitted facilities Structured finance ZAR 712 88 – Building lease Bond* (DMTN)
Slide 35: Non South African facilities
Non South African facilities Facility Undrawn Utilisation facilities Company Source of facility Currency Amount (m) in US$ in US$ Comments Nigeria* International debt USD 400 400 – US$2bn non recourse facility concluded in October 2007 Local debt NGN 206 00 1 210 550 Uganda* Total UGX 112 047 66 – S
Slide 36: 2008 priorities
2008 priorities… • Reduce unproductive interest • Fully functional Dubai treasury • Formalise treasury policy in the operations • Evaluate opportunities for ECA funding • Cash up streaming across the group – Syria, Nigeria, Ghana • Project finance of “start up” operations – Afghanistan – Sudan – Ira
Slide 37: Looking forward
DIVIDER Looking forward… Rob Nisbet 37
Slide 38: Looking forward
Looking forward… Expansion • Continue to seek value accretive opportunities in emerging markets opportunities • Ensure appropriate levels of capacity and quality for new and Rollout existing subscribers Convergence • Data/corporate opportunities, new products and services Optimise • Operational effi
Slide 39: Subscriber guidance 2008
Subscriber guidance 2008 Actual 2008 2007 net adds guidance South Africa 14,799 2,200 Nigeria 16,511 5,000 Ghana 4,016 1,300 Iran 6,006 7,000 Syria 3,109 680 Sudan 2,090 1,100 Rest 14,822 4,500 61,353 21,780 Expected 36% increased in subscriber growth 39
Slide 40: Key Credit Strengths
Key Credit Strengths Credit Strengths Rationale MTN benefits from z #2 operator with 35% market share and a robust track record in subscriber / good fundamentals in Strong position in revenue growth its established markets domestic SA market underpinned by a z Stable three-player market with strong
Slide 41: Potential Challenges
Potential Challenges Potential Challenges Mitigating Factors z Portfolio of selected markets MTN has already a Exposure to strong track record and z Experienced local management teams limit execution risks high risk markets an experienced z Local partners management team to address potential challen
Slide 42: Thank you
DIVIDER: Thank you Thank you Questions? 42
Slide 43: Notice
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