Mtn Group Limited · JSE:MTN
Mtn — FY2007 Earnings Presentation
42 slides from Mtn's earnings presentation, Apr 17, 2008
Slide 1: MTN Group Limited: Review of results and funding outlook
MTN Group Limited Review of results and funding outlook Presented on 17 April 2008
Slide 2: Agenda
Agenda Introduction Debbie Millar General Manager: Corporate Finance Financial overview Rob Nisbet Group Finance Director Questions.. 2
Slide 3: Strategic and operational overview
DIVIDER: Strategic and operational overview Introduction Debbie Millar General Manager: Corporate Finance 3
Slide 4: Strategy and rationale for meeting
Strategy and rationale for meeting • Update of treasury activities – FX hedging – Deal in name of Holdings and Mauritius – Basel II – Interest rate – Dubai • Funding initiatives • Risk management • Credit rating 4
Slide 5: 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 Group treasury Dubai treasury Structured and project Lucky Ncobela [vacant] finance [vacant] Treasury Treasu
Slide 6: Structure of debt
Structure of debt MTN Group 100% Offshore Full recourse full recourse funding MTN Holdings funding guarantees guarantees R40 billion R2 billion 100% 100% 100% MTN Service MTN (Pty) Ltd MTN International* Provider 100% MTN Mauritius 100% * Intercompany unproductive debt of R12.1bn MTN Dubai As at 31
Slide 7: Offshore cashflow strength
Offshore cashflow 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 P
Slide 8: Analysis of net debt position
Analysis of net debt position Interest Cash and As at 31 Dec 2007 bearing cash ZAR million Net (cash) debt liabilities* equivalents South & East Africa 3 291 6 580 3 289 South Africa 2 987 5 787 2 800 Other operations 304 793 489 West & Central Africa 234 6 594 6 360 Nigeria 1 041 4 998 3 957 Ghana
Slide 9: Interest bearing liabilities split as at 31 December 2007
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) • Unproductive interest reduced further to 12% ZAR ZAR14.9bn (
Slide 10: 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 11: South African facilities
South African facilities Undrawn Facility Utilisation facilities Company Source of facility Currency amount (m) in ZAR in ZAR Comments South Africa General banking ZAR 6 617 4 597 2 020 Have R3.3 additional facilities* uncommitted facilities Structured finance ZAR 712 712 – Building lease Bond* (DMT
Slide 12: Non South African facilities
Non South African facilities Undrawn Facility Utilisation facilities Company Source of facility Currency amount (m) in ZAR in ZAR Comments Nigeria* International debt USD 400 3 242 – US$2bn non recourse facility concluded in October 2007 Local debt NGN 206 00 9 808 4 458 Uganda* Total UGX 112 047 53
Slide 13: Rationale for debt structure
Rationale for debt structure… • Non recourse debt is still key – Improves currency match to revenue stream • Unlocks local debt capacity and builds local market capacity – Improves efficiency of balance sheet for local partners – Central banks often prefer – Improved risk sharing • Holding company d
Slide 14: 2008 priorities
2008 priorities… • Reduce unproductive interest • Fully functional Dubai treasury • Formalise treasury policy in the operations • Evaluate opportunities for ECA funding • Cash up streaming across the group – Syria, Nigeria, Ghana • Project finance of “start up” operations – Afghanistan – Sudan – Ira
Slide 15: Financial review
Financial review Rob Nisbet Group Finance Director 15
Slide 16: MTN vision
MTN vision To be the leader in telecommunications in emerging markets National player African player Emerging market player 16
Slide 17: Key economic developments
Key economic developments South Africa Nigeria Ghana Iran Sudan Syria GDP Growth 5% 6.1% 6.2% 4.3% 12.8% 3.5% (2007 est) Inflation rates 9% 9% 11% 14% 8.5% 9% Dec 07 Market size 56 80 15 52 18 12 million (2012) GDP/Capita nominal US$ 6,239 938 649 4,252 1,262 1,516 (2007 est) High growth markets Sou
Slide 18: Group highlights
Group highlights Group subscribers Revenue EBITDA Up 53% to 61,4 million Up 42% to Up 42% to ZAR 73,145 billion ZAR 31,845 billion EBITDA margin Adjusted headline EPS Dividend declaration Marginally up Up by 17% Up 51% to 136 c/share from 43.4% to 43.5% to 681.9 cents totalling R2,536 billion Net de
Slide 19: Key developments
Key developments… • Continue seeking value accretive opportunities in existing and new territories Expansion • Broadened local shareholder base in Uganda, Nigeria and Côte d’Ivoire opportunities • Increased MTN shareholding in Rwanda and Botswana • Demand continues to outstrip supply in key markets
Slide 20: Key accounting considerations
Key accounting considerations • Total tax 7 791m (Normal tax 5 965m, deferred tax 1 361m, STC 209m and withholding taxes 256m) • 39.5% effective tax rate YTD Group tax • AHEPS effect (MTN share): – Deferred tax credit, ZAR 223m (total ZAR 264m) – Unwind of pioneer status deferred tax assets ZAR 1 66
Slide 21: Key indicators
Key indicators Subscribers ARPU ARPU (’000) % change (ZAR/US$) (ZAR/US$) 31-Dec-07 Dec-06 31-Dec-07 31-Dec-06 South and East Africa 19 329 +24 South Africa 14 799 +17 R149 R159 Uganda 2 362 +48 $10 $12 Botswana 874 +46 $15 $20 Rwanda 652 +70 $12 $17 Swaziland 380 +42 $18 $20 Zambia 262 +40 $10 $19 W
Slide 22: Subscriber contribution by region
Subscriber contribution by region… MTN Group Total Proportionate* (subscriber million) (subscriber million) 61.4 50.4 48.3 23% 19% 40.8 40.1 17% 34.7 15% 12% 46% 11% 45% 49% 48% 46% 46% 39% 35% 31% 43% 39% 36% Dec-06 Jun-07 Dec-07 Dec-06 Jun-07 Dec-07 SEA WECA MENA * Based on % ownership Increased d
Slide 23: EBITDA analysis
EBITDA analysis EBITDA Contribution % EBITDA Margin % * Difference in HQ companies 23
Slide 24: Earnings per share
Earnings per share 12 months 12 months cents ended Dec 2007 ended Dec 2006 % change Basic headline earnings per share 584.8 606.5 (3.6) Reversal of put option in respect of subsidiaries 19.7 15.3 28.8 Reversal of the subsequent utilisation of deferred 89.4 – tax asset Reversal of deferred tax asset
Slide 25: 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 26: Income statement
Income statement 12 months 12 months % ended ended % change excl. ZAR million Dec 2007 Dec 2006* change Investcom Revenue 73 145 51 595 41.8 27.8 EBITDA 31 845 22 413 42.1 27.3 EBITDA MARGIN 43.5% 43.4% Depreciation (6 774) (5 030) 34.7 22.0 Amortisation (2 199) (1 289) 70.6 51.1 Profit from operati
Slide 27: Revenue analysis – restated
Revenue analysis – restated (12 months Investcom 2006) 12 months 12 months ended ended % ZAR million Dec 2007 Dec 2006 * change South & East Africa 31 453 26 586 18.3 South Africa 28 220 24 578 14.8 Other operations 3 233 2 008 61.0 West & Central Africa 31 115 22 653 37.4 Nigeria 20 250 14 900 35.9
Slide 28: EBITDA analysis – restated
EBITDA analysis – restated (12 months Investcom 2006) 12 months 12 months % Dec 2007 Dec 2006 ended ended change EBITDA EBITDA ZAR million Dec 2007 Dec 2006 * ZAR margin % Margin % South & East Africa 11 329 9 346 21.2 36,0 35,2 South Africa 9 814 8 340 17.7 34,8 33,9 Other operations 1 515 1 006 50
Slide 29: Profit after tax
Profit after tax 12 months 12 months ended ended % ZAR million Dec 2007 Dec 2006 ** change South & East Africa 6 155 5 119 20.2 South Africa 5 532 4 797 15.3 Other operations 623 322 West & Central Africa 8 233 6 664 24.5 Nigeria* 5 959 5 739 5.0 Ghana 928 348 Other operations 1 346 577 Middle East
Slide 30: 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 31: Cash flow statement
Cash flow statement 12 months 12 months ended ended ZAR million Dec 2007 Dec 2006 Cash inflows from operating activities 25 850 17 622 Net cash generated by operations 34 334 22 934 Net interest paid (2 576) (143) Taxation paid (4 233) (4 086) Dividends paid (1 675) (1 083) Cash outflows from invest
Slide 32: 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 32
Slide 33: Capital expenditures (incl. software)
Capital expenditures (incl. software) Approved Actual Approved ZAR million 2007 2007 2008 South & East Africa 5 014 3 707 8 281 South Africa 4 360 2 843 7 101 Other operations 654 864 1 180 West & Central Africa 8 841 7 915 17 463 Nigeria 5 558 4 789 13 092 Ghana 1 156 1 239 1 976 Other operations 2
Slide 34: 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) • Total subs
Slide 35: Balance sheet
Balance sheet As at As at ZAR million Dec 2007 Dec 2006 Non-current assets 82 085 76 282 Property, plant and equipment 39 463 30 647 Goodwill and Intangible assets 38 797 40 105 Other non-current assets 3 825 5 530 Current assets 33 501 20 635 Bank balances 17 607 10 091 Other current assets 15 894
Slide 36: 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 37: 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 38: Looking forward
DIVIDER Looking forward… Rob Nisbet 38
Slide 39: 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 40: 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 40
Slide 41: Thank you
DIVIDER: Thank you Thank you Questions? 41
Slide 42: 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