Mtn Group Limited · JSE:MTN
Mtn — FY2022 Earnings Presentation
45 slides from Mtn's earnings presentation, March 2023
Slide 1: MTN Group Results presentation for the year ended 31 December 2022
MTN Group Results presentation for the year ended 31 December 2022
Slide 2: Disclaimer
Disclaimer The information contained in this document (presentation) 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
Slide 3: Agenda
Agenda 01 FY 22 Highlights 02 Operational & strategic review 03 Financial review 04 Looking ahead 3
Slide 4: FY 22 Highlights
FY 22 Highlights Ralph Mupita Group President and CEO 4
Slide 5: Ambition 2025
Ambition 2025 Solid operational performance | Continued progress on Ambition 2025 Solid commercial Financial resilience of Continued execution Creating performance in a the business maintained of strategic priorities shared value challenging macro • Solid subscriber growth • Expense efficiency • Pro
Slide 6: Continued structurally higher demand
Continued structurally higher demand MTN remains well positioned for sustained growth over the medium-term Data traffic Fintech transaction volume Lockdowns easing across our markets Lockdowns easing across our markets 580 326 Start of COVID-19 Start of COVID-19 520 +935 297 +2.9 460 267 400 238 340
Slide 7: Highlights
Highlights Solid operational performance underpinned by execution excellence Subscribers Active data users Active MoMo users Solid growth Accelerated adoption Strong momentum 289m 137m 69m 272m 122m 57m +6.1% +12.3% +21.4% 2021 2022 2021 2022 2021 2022 Data coverage Data traffic Fintech TX volume Ex
Slide 8: Highlights: unique growth engine supports healthy financial performance
Highlights Unique growth engine supports healthy financial performance +15.3%* +32.2%* +14.3%* Service revenue Data revenue Fintech revenue R196.5bn Macroeconomic R73.7bn R17.3bn +14.3%* -0.2pp* +18.3%* EBITDA EBITDA margin Adjusted HEPS R90.8bn 43.9% 1 313 cents +18.5% (capex intensity) Net debt/EB
Slide 9: Operational & strategic review
Operational & strategic review Ralph Mupita Group President and CEO 9
Slide 10: Challenging operating context | Loadshedding in South Africa
2022 Challenging operating context | Loadshedding in South Africa Macroeconomic Supply chain Regulatory Energy/power • Rising inflation • Delays in shipping • SIM registration • Rising costs and interest rates of radios and regulations across networks other equipment • Local FX volatility / • Challe
Slide 11: How we navigated our operating context
How we navigated our operating context Proactive initiatives to manage and mitigate risks in our trading environment Commercial Supply chain Network Financial resilience • CVM | Price • Advanced purchase • Well-structured • Accelerated optimisation orders for capacity towerco expense efficiencies an
Slide 12: South Africa
South Solid performance in difficult conditions | Broad-based growth across all major business units Market context Key activities Solid results • Tough conditions | Rise in inflation • R8.8bn capex | +190 4G and • Subscribers +4.4% to 36.5m & interest rates +598 5G sites • Data traffic +33.2% | Act
Slide 13: South Africa – loadshedding impact
South Africa – Loadshedding impacted MTN SA service revenue by R640m and EBITDA by R695m in FY 22 Context Impact Resilience • 208 days of loadshedding • Network availability • Accelerated network in 2022 resilience plan • 62 loadshedding days in • Impact on revenue • Additional batteries, H1 | 146 d
Slide 14: Nigeria
Nigeria Accelerated 4G network rollout | Acquired 5G spectrum, launched network | MoMo PSB commercial launch Market context Key activities Solid results • Challenging macro | Average inflation • Ramped up SIM registration & • Subscribers +7.2m to 75.6m of 18.8% NIN enrolment • Pressured FX environme
Slide 15: Markets: SEA, WECA, MENA
Markets Strong growth in data and fintech recovery in Q4 SEA WECA MENA +11.8%* +23.0%* +12.8%* +27.4%* +67.9%* +111.6%* service revenue data revenue service revenue data revenue service revenue data revenue • Growth acceleration in H2 • Double-digit service revenue sustained • Robust growth in chall
Slide 16: Fintech
Fintech 13.4 billion TX volume (+33.9% YoY) | US$221.3bn TX value (+15.8%*) MoMo MAU (m) Agents (‘000) Merchants (‘000) 100 3 000 2 000 69 57 1 268 46 1461 974 801 785 440 2020 2021 2022 2025 2020 2021 2022 2025 2020 2021 2022 2025 Fintech structural separation: inter-company agreements largely comp
Slide 17: Accelerate: progress to date
Accelerate Material progress in ARP delivery | Gross proceeds of R18.8bn^ since March 2020 E-commerce portfolio TowerCo investments Localisation & other Pan-African Pan-AfricanFocus focus Progress to date • IHS listed on NYSE • Nigeria IPO – R4.2bn • SPA signed for sale of MTN ~R12.0bn Macroeconomic
Slide 18: Creating shared value
Creating Significant economic value added across our markets of ~R149bn Eco- • Reduce GHG emissions ~12.3%^ ~47% average Economic responsibility reduction in absolute emissions (tCO2e) value-added • Improve energy efficiency for scope 1, 2 and 3 by 2030 and net zero “We are committed to protecting o
Slide 19: Progress against our medium-term targets
Progress against our FY 22 results largely inline with our medium-term targets KPI Target Performance Group: at least mid teens 15.3%* Service revenue growth South Africa: Mid-single-digit 3.6% Nigeria: at least 20% 21.5%* Accelerate fintech platform growth >20% service revenue contribution 8.9% Hol
Slide 20: Financial review
Financial review Tsholofelo Molefe Group CFO 20
Slide 21: Significant items
Significant items Macro Other items 1. FX volatility 1. Impairment of goodwill and investments • Stronger average rand exchange rate vs Opco’s • MTN Afghanistan – R1.3bn • Negative impact on reported growth rates vs constant • Other markets – R593m currency growth rates • Weaker closing rand vs USD
Slide 22: Group
Group Healthy topline and earnings growth % change % change (Rm) 2022 2021 reported constant currency Revenue 207 003 181 646 14.0 14.8 Service revenue 196 493 171 821 14.4 15.3 EBITDA before once-off items 90 815 80 771 12.4 14.3 Once-off items (977) (5 163) Depreciation, amortisation and goodwill
Slide 23: Group service revenue
Group Strong performance underpinned by data revenue growth (Rm) +15.3% 1 558 194 022 2 471 196 493 17 639 176 2 164 793 3 440 168 252 2021 Voice Data Digital Fintech Wholesale SMS, ICT 2022 Hyperinflation 2022 CC and Other CC Reported +4.2% +32.2% +5.6% +14.3% +12.8% +20.5% 23 2021 CC and 2022 CC a
Slide 24: South Africa
South Africa Solid data growth | Loadshedding impacted service revenue growth by -1.6pp, EBITDA margin by -0.9pp (Rm) Service revenue Expenses EBITDA and Capex +3.6% 38.9% 38.5% EBITDA margin^ 39 445 40 848 Capex intensity 18.8% 17.4% +4.5% (IAS 17) 12 831 Voice^^ -8.8% 31 162 14 075 29 817 +2.8% 18
Slide 25: MTN South Africa
MTN South Africa Resilient consumer performance | Strong growth in data and EBU service revenue (Rm) +3.6% 275 40 848 859 -28 229 39 445 68 Dec 2021 Prepaid CBU Postpaid EBU Wholesale Other^ Dec 2022 +0.3% +3.2% +17.5% +5.3% -22.5% +3.6% YoY growth 25 ^ Other includes other ancillary revenues
Slide 26: Nigeria
Nigeria Strong, broad-based service revenue growth | Margin expansion (Rm) constant currency Service revenue Expenses EBITDA and Capex +21.5% 53.0% 53.2% EBITDA margin 77 023 EBITDA and Capex Capex intensity 63 369 18.4% 17.7% +21.2% (IAS 17) 39 761 Voice +6.9% 36 172 37 209 +22.1% EBITDA 29 837 13
Slide 27: Fintech
Fintech Continued evolution towards more advanced services (Rm) constant currency Revenue Fintech revenue contribution by services offered +14.3% Advanced services 15.2% 17 269 15 105 2022 Airtime advance 29.4% 7 358 Withdrawal +7.5% 6 846 Basic services 55.4% 2 208 Transfer Services +7.1% 2 061 1 8
Slide 28: Group expenses
Group expenses Increase in network cost is driven by Nigeria site rollout, forex and CPI impact on BTS lease rentals Expenses Expenses breakdown (Rm) constant currency +14.1% 114 588 100 420 51 253 Cost of sales +13.1% 45.1% 44.7% Cost of sales 45 312 16.7% 17.7% Network leases & utilities 8.9% 8.9%
Slide 29: Measures that delivered expense efficiency
Measures that Delivered on expense efficiency programme | Savings of R2.7bn in FY 22 (R6.4bn since 2020) Expense efficiency programme Total costs to revenue contribution Savings realised by area Savings realised by region 57.3% 56.1% 55.6% MENA General & administration functions WECA SA 26.2% 25.2%
Slide 30: Group EBITDA
Group EBITDA Solid growth in revenue resulting in strong EBITDA growth EBITDA (Rm) +14.3% 1 055 2 800 1 284 15 89 964 851 90 815 7 441 78 700 524 -1 855 2021 SA Nigeria SEA WECA MENA GlobalConnect Head office 2022 Other^ 2022 CC and CC Reported eliminations EBITDA margin (%) -0.2pp 44.2% 0.1 0.1 0.3
Slide 31: Adjusted headline earnings
Adjusted Good operational results underpinned 18.3% increase in adjusted headline earnings. Reported Reported (Rcents) 2022 2021 change % Attributable earnings per share 1 071 763 40.4 Impairment of goodwill, PPE and associates 44 64 Loss on deconsolidation of subsidiary - 262 Impairment loss on rem
Slide 32: Capex
Capex Accelerated capex | IT spend on digital platforms Capex (ex-leases) Capex segmentation across operations and regions (Rm) 38 240 IT Systems 23.4% 32 688 Nigeria 36.2% 28 600 37.1% Radio Access SA 23.3% Core Network 2.8% WECA 21.1% Other Capex SEA 8.6% 0.5% 18.0% 18.5% 16.0% H/O 7.0% Site 25.1%
Slide 33: Statement of cash flows
Statement of OpFCF impacted by working capital, accelerated capex and acquisition of spectrum & licences 5 271 90 349 -1 373 371 -13 953 -12 544 -20.7% -30.5% 30 354 -33.8% -37 753 22 309 -8 059 -8 316 2 376 -546 6 720 -2 105 4 615 -9 103 EBITDA Non-cash Working Tax paid Dividends Net interest Acqui
Slide 34: Holdco net debt and maturity profile
Holdco net debt and Reduced net debt and leverage | Continue to explore liability management opportunities Holdco Net Debt Maturity profile R55.3bn R43.3bn USD 17 500 50% 48% R30.2bn R23.1bn 15 000 12 500 7 671 41% 36% 10 000 52% 8 135 ZAR 50% 7 500 59% 64% 5 000 7 874 7 411 2 500 3 772 - 2 890 3 14
Slide 35: Improving ROE
Improving ROE up 3.8pp, underpinned by strong operational performance | Offset by increase in tax & finance costs +3.8pp 10.4% 0.1% -1.5% 0.7% 23.4% -4.0% -1.5% -0.4% 19.6% Reported Group EBITDA Depreciation and Finance Cost Taxation JV and Associates Non controlling Other^ Reported December 2021 Am
Slide 36: Looking ahead
Looking ahead Ralph Mupita Group President and CEO 36
Slide 37: Macro context
Macro context Economic outlook - GDP Inflation rates 2022 2023F SSA South Africa Nigeria • SSA 14.4% 11.9% 3.7% 2.1% 3.2% 3.0% 3.6% • South Africa 6.8% 5.1% 1.1% • Nigeria 18.8% 17.3% 2022 2023F 2022 2023F 2022 2023F Currencies & commodities Loadshedding in South Africa 2022 2023F • Loadshedding ant
Slide 38: SA loadshedding
SA loadshedding Daily Mean Stage (2022.01.01 – 2023.02.28) SA’s Rolling Blackouts | Daily Mean Stage 1 January 2022 to 28 February 2023 8 6 4 2 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb • Anticipate difficult H1 2023 on service revenue & • Medium-term guidance for service revenue mai
Slide 39: Navigating our operating context
Navigating our operating context Continue to implement initiatives to manage and mitigate risks in our trading environment Commercial Supply chain Network Financial resilience • CVM | Price • Advanced purchase • Well-structured • Accelerate optimisation orders for capacity towerco expense & working
Slide 40: Strategic priorities | Driving growth & value unlock
Strategic priorities | Driving growth & value unlock Continue to execute on our strategic priorities Priorities Ambition 2025 100m MoMo users Build the largest 100m ayoba users & most valuable platforms #1 NaaS platform in Africa 200m active data users Drive Industry-leading +10m home broadband user
Slide 41: A compelling investment case
A compelling Africa’s leading and scale connectivity & Exciting demographic opportunity infrastructure business ➢ #1 or #2 subscriber share in all our markets ➢ Fast-growing, youthful population ➢ ‘Second to none’ & well-invested ➢ Low data, fintech and digital adoption networks/platforms ➢ Partner
Slide 42: Investment case underpinned by connectivity and platforms
Investment case underpinned by a MTN is leveraging the key value pools that present sizeable opportunities to capture growth Connectivity Platforms Voice Fintech Data Digital Home BB | Fibre/FWA Enterprise FibreCo NaaS API marketplace 42
Slide 43: Disciplined capital allocation
Disciplined capital allocation 1 Organic growth Well-invested networks and platforms | Improving capex intensity 2 Faster deleveraging of Holdco leverage Rebalancing the mix to have rand debt making up at least 60% of Holdco net debt 3 Return cash to shareholders through dividends Anticipate paying
Slide 44: Medium-term guidance
Medium-term Confirming our medium-term guidance KPI Target Group: at least mid teens Service revenue growth South Africa: Mid-single-digit Nigeria: at least 20% Accelerate fintech platform growth >20% service revenue contribution Holdco leverage < 1.5x, faster non-ZAR deleveraging Asset realisation
Slide 45: Thank you Q&A
Thank you Q&A 45