Mtn Group Limited · JSE:MTN
Mtn — FY2009 Earnings Presentation
57 slides from Mtn's earnings presentation, March 2010
Slide 1: MTN Group Limited final audited results 2009
MTN Group Limited Final audited results for the year ended 31 December 2009
Slide 2: Agenda
2 Agenda Strategic and operational overview Ph th Phuthuma Nhl k Nhleko Group President and CEO Financial overview Nazir Patel Group Finance Director Looking g ahead Phuthuma Nhleko Group President and CEO
Slide 3: Strategic and operational overview
Strategic and operational overview Phuthuma Nhleko Group President and CEO
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 highlights
6 Group highlights Group subscribers Revenue EBITDA Up 28,0% to Up 9,2% to Up 6,7% to 116,0 million ZAR 111,9 billion ZAR 46,1 billion Adjusted headline EPS Dividend Capex execution (excluding the impact of functional per share of Up by 10,6% to currency losses) 192 cents ZAR 31,2 billion Up p 8,5%
Slide 7: Group initiatives
7 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 8: Group initiatives
8 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 9: Subscriber contribution by region
9 Subscriber contribution by region Total MTN Group Proportionate* p (subscriber million) (subscriber million) 88.5 116.0 70.4 90.7 32% 50.4 23% 26% 61.4 29% 19% 23% 45% 44% 46% 45% 47% 45% 27% 23% 36% 32% 27% 31% Dec-07 Dec-08 Dec-09 Dec-07 Dec-08 Dec-09 SEA WECA MENA Increased diversification
Slide 10: Revenue and EBITDA by region
10 Revenue and EBITDA by region Contribution* Contribution* EBITDA margin% (Revenue) (EBITDA) 41 1% 41.1% 35.4% 27.6% Group 42.1% SEA SEA 36.6% 29.8% 32.0% 32 0% SEA 34.4% 45.2% 58.7% WECA WECA 46.5% 58.7% 53 5% 53.5% WECA 53.1% 19.2% 12.6% MENA MENA 26 9% 26.9% 16.8% 10.8% MENA 27.0% 2009 2008 *Dif
Slide 11: South Africa - operational highlights
11 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 12: South Africa - operational highlights
12 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 13: South Africa - infrastructure and data highlights
13 South Africa - infrastructure and data highlights Capex • Capacity increased by 12% (2G) and ZAR (million) 6 034 6,034 22% (3G) 4,868 • 496 (2G) and 659 (3G) BTS’s 3,034 integrated g 2,391 , 2,843 3,096 • Improved 3G population coverage 1,186 1,549 3,000 from 35% to 48% H2 H1 1,205 1,294 1,772 •
Slide 14: Nigeria - operational highlights
14 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 ($) 23,077 • Continued improvements in network quality and capacity 16 511 16,511 • Innovative
Slide 15: Nigeria - infrastructure and data highlights
15 Nigeria - infrastructure and data highlights 10,222 Capex 9,610 • Significantly improved quality and ZAR (million) capacity on network 4,519 5,668 • Completed phase 2 of 3G rollout 4,789 3,674 • 561 3G sites rolled out 2,121 2,979 5,703 3,942 • Phase 3 underway H2 H1 1,553 1,810 • Transmission ex
Slide 16: Ghana - operational highlights
16 Ghana - operational highlights Launched Nov 1996 Market share 55% Population 24m Market sizing 22.5m (2014) Penetration 61% Shareholding 98% Subscribers (‘000) • Maintained market share in extremely /ARPU ($) 8,001 competitive market 6,428 • Significant increase in subs in Q4 4,016 • Improvements
Slide 17: Ghana - infrastructure and data highlights
17 Ghana - infrastructure and data highlights Capex 2,586 • Significantly improved network ZAR (million) quality 1,854 1,411 • Completed major fibre rings 1,239 938 801 • Enhanced data offerings 977 484 1,175 840 • Increase in data usage – 10% H2 H1 317 262 increase in H2 Dec-06 Dec-07 Dec-08 Dec-09
Slide 18: Iran - operational highlights
18 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 ($) 16,039 • 52% share of net adds • Attractive acquisition promo’s (WOW, MTN 6,006 BOGOF, reducti
Slide 19: Iran - infrastructure and data highlights
19 Iran - infrastructure and data highlights Capex (49%) 3,326 • Continued aggressive rollout ZAR (million) 2,743 • 1 429 towns and cities now covered 2,282 • 4 996km additional road coverage (10 1,559 2,142 928k in 928km i total) t t l) 845 773 • Network quality remains a priority in H2 H1 675 714
Slide 20: Syria - operational highlights
20 Syria - operational highlights Launched Jun 2002 Market share 45% Population 20,5m Market sizing 12.7m (2014) Penetration 46% Shareholding 75% Subscribers (‘000) 4,249 • Strong subscriber uptake in H2 /ARPU ($) 3,539 3,109 • Improved promos (MTN Gold and billing 2 237 2,237 per a second) MTN 22 2
Slide 21: Syria - infrastructure and data highlights
21 Syria - infrastructure and data highlights Capex 1,039 • Continued but limited expansion and ZAR (million) upgrades on network due to BOT 748 uncertainty 730 418 362 • Outsourced maintenance of sites 338 171 • Implementation of new network 219 309 386 247 management system H2 H1 119 Dec-06 Dec-07
Slide 22: In summary
22 In summary • Total subs increased 28% from Dec08 • Iran -45% • Syria – 20% Strong subs • Nigeria – 34% growth • Ghana Gh – 24% • Rest – 38% • SA is the exception Maintained or • Improved market share in Nigeria and Iran improved • Maintained market share in Ghana and Syria (from Jun09) market sha
Slide 23: Financial overview
Financial overview Nazir Patel Group Finance Director
Slide 24: Group summary
24 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 25: 2009 Financial Overview
25 2009 Financial Overview Trading • Difficult economic and trading conditions conditions • Stagnant g and declining g GDP’s impact p customer spending p g behaviour • ZAR reported results negatively impacted by weakening of key Foreign currencies vs US dollar Exchange • 09 Functional currencyy loss
Slide 26: Key accounting considerations
26 Key accounting considerations • Acquisition of 100% of Verizon SA (Feb09), (Feb09) 59% of iTalk (Jan09) • Swapped ICS assets for 20% stake in Belgacom International Change in Carrier Services ownership • Uganda step step-up up from 95% to 97% • Zambia shareholding reduced from 100% to 97.8% • Dis
Slide 27: Average exchange rates
27 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 28: Revenue trends
28 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 29: Revenue trends (cont.)
29 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 30: EBITDA trends
30 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 31: EBITDA
31 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 32: EBITDA margin recon
32 EBITDA margin g recon (%) • Nigeria EBITDA margin 2008 42.1 • Fixed cost control and opex savings • Syria Nigeria 0.7 • Full year impact of revenue share increase • RSA Syria (0 6) (0.6) • Interconnect margin lower • Selling, distribution costs from RSA (0.5) acquisitions • IT outsourcing costs O
Slide 33: Interest and tax
33 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 34: Earnings per share
34 Earnings g per share cents Dec Dec Variance 2009 2008 % Attributable earnings per share 791.4 821.0 (3.6) Loss on disposal of non non-current current assets 3.8 6.0 (36.7) Impairment of PPE / Investments 8.0 9.5 (15.8) Basic headline earnings g pper share 803.2 836.5 ((4.0)) Reversal of the subse
Slide 35: Income statement
35 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 36: Balance sheet
36 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 37: Analysis of net debt
37 Analysis of net debt • 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 ) tot
Slide 38: Cash flow statement
38 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
Slide 39: Capex (cont)
39 Capex p (cont) ( ) ZAR ‘m • 09 peak capex year for the Group Underspend ZAR 7.2bn • Higher spend vs competition in key 42,031 31,248 -3,382 -1,607 -2,080 -3,560 markets justified by strong subscriber -154 / revenue growth • Actual spend of ZAR 31.2bn positively impacted by fx – ZAR 3.5bn FX dget
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: Looking forward
Looking forward Phuthuma Nhleko
Slide 42: Looking forward
42 Looking forward Expansion • Actively l seeking k value-accretive l opportunities in emerging markets to reduce concentration risk and leverage economies of opportunities scale • Monitoring infrastructure investments to ensure appropriate Rollout levels of capacity and quality of service continued
Slide 43: Subscriber guidance 2010
43 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 44: Thank you
Thank you Questions
Slide 45: Notice
45 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 46: Annexures
Annexures 2,2 + —_ Ci Si:
Slide 47: South Africa (excl. NS and BS)
47 South Africa (excl. NS and BS) ZAR ‘m Revenue 0 320 5 905 9.1 28 8.3 32,148 8.1 33,149 7.6 7.0 71 7.1 7.0 (252) ZAR:USD 6.3 H1 - 06 H2 - 06 H1 - 07 H2 - 07 H1 - 08 H2 - 08 H1 - 09 H2 - 09 6 6 7 7 8 8 9 9 Interco 2008 2009 Airt & Subs s o Access Otherr 8 9 s EBITDA • Handset H d t volumes l up YoY
Slide 48: Nigeria
2 2008 18,248 20 008 31,558 EBITDA Reve enue 9,316 Revenue Airt & Su ubs g 8,966 Sell & distr (1,,053) ZAR ‘m Interco 638 Nigeria Interco & Roam R (537) ess Acce 20 2 Dir net o oper (6 604) Hand dsets (3 361) Oth her 8) (308 O Other (9 953) Rev @ PY FX 40,874 EBITDA @ PY Y FX 24,056 FX 48) (7,54 FX
Slide 49: Ghana
49 Ghana ZAR ‘m 1.42 Revenue 1 37 1.37 330 0.17 28 66 7,405 934 6,047 5,667 0.14 738) 1.04 1.06 (1,7 0.13 0 0.13 13 0 0.15 15 ZAR 0.13 Dollar 0.13 0.13 0.92 0.92 0.93 0.93 Access 2008 2009 Airt & Subs nterco Rev @ PY FX Other FX O In A H1 - 06 H2 - 06 H1 - 07 H2 - 07 H1 - 08 H2 - 08 H1 - 09 H2 - 09
Slide 50: Iran
50 Iran ZAR ‘m 1,450.0 9, 924.7 Revenue 1,365.3 1 291 9 1,320.4 1,291.9 , 9,830.1 1,197.8 1,151.9 7,832 1,195.0 7,625 534 9,168.9 1,090.6 4,935 2,373 ZAR 9,365.0 (207) (10) 9,300.1 Dollar 9,243.2 9,174.9 9,085.5 FX 008 009 ubs erco Other Y FX Airt & Su 20 20 Inte Rev @ PY H1 - 06 H2 - 06 H1 - 07 H2
Slide 51: Syria
2008 2 1,829 200 08 6,508 EBITDA Revenue Airt & Sub bs 251 Reve enue 382 Syria ZAR ‘m Interc co 34 o Dir net oper (669) Acces ss 8 Other ((233) Othe er 89 EBITDA @ PY Y FX 1,309 P Rev @ PY 6,890 Rates FX 64 F FX 97 2 2009 1,373 200 09 6,987 H1 - 06 6 7.3 51.2 H2 - 06 6 7.1 51.5 H1 - 07 7.1 51.1 49.9
Slide 52: Net debt
52 Net debt 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 operations (819) 2 980 (1
Slide 53: Exchange rates analysis
53 Exchange rates analysis Average (EBITDA) Closing Dec 09 Dec 08 % var Dec 09 Dec 08 % var Rand per Dollar 8.32 8.13 (2) 7.39 9.35 21 Ni Nigerian i N Naira i per Dollar D ll 148 34 148.34 118 22 118.22 (25) 149 97 149.97 141 00 141.00 (6) Nigerian Naira per Rand 17.83 14.54 (23) 20.29 15.07 (35) Ir
Slide 54: MTN – data sheet part 1
MTN – data sheet part 1 Group SEA WECA MENA RSA Nigeria Ghana Syria Iran Market overview Population (m) 519.9 107.8 222.0 190.1 49.4 146.6 24.0 20.5 72.5 Mobile penetration 103 42 61 46 80 (%) Number of operators 78 20 40 18 3 5 6 2 3 Operational data Subscribers ((‘000) 000) 116 025 26 152 52 859 3
Slide 55: MTN – data sheet part 2 (SEA)
MTN – data sheet part 2 (SEA) Sub Total RSA Botswana Zambia Swaziland Uganda Rwanda Shareholding (%) 100 53 98 30 97 55 Licence period (years) 20 15 15 10 20 13 M k overview Market i Population (m) 107.8 49.4 1.9 13.1 1.0 32.4 10.0 Mobile penetration (%) 103 120 28 54 25 19 Market position 2 1 2 1 1
Slide 56: MTN – data sheet part 3 (WECA)
MTN – data sheet part 3 (WECA) Sub Total Nigeria Ghana Cameroon Congo B Benin G Bissau G. G Conakry G. Liberia Cote d d’Ivoire Ivoire Shareholding (%) 76 98 70 100 75 100 75 60 65 Licence period 15 15 15 15 10 10 18 15 20 (years) Market overview Population (m) 222.0 146.6 24.0 18.1 4.1 8.8 1.5 10.5
Slide 57: MTN – data sheet part 4 (MENA)
MTN – data sheet part 4 (MENA) Sub Total Sudan Iran Afghanistan Cyprus Syria Yemen Shareholding (%) 85 49 100 51 75 85 Licence period (years) 20 15 15 20 15(BOT) 15 Market overview Population (m) 190.1 39.1 72.5 33.5 0.8 20.5 23.4 Mobile penetration (%) 34 80 30 106 46 25 Market position 2 2 1 2 2 1