Mtn Group Limited · JSE:MTN
Mtn — H1 2015 Earnings Presentation
49 slides from Mtn's earnings presentation, August 2015
Slide 1: MTN Group Limited results presentation for the period ended 30 June 2015
MTN Group Limited Results presentation for the period ended 30 June 2015
Slide 2: Agenda
Agenda 01 Strategic and operational review Sifiso Dabengwa Group President and CEO 02 Group financial review Brett Goschen Group CFO 03 Looking ahead Sifiso Dabengwa Group President and CEO
Slide 3: Strategic and operational review
Strategic and operational review
Slide 4: Group financial results
Group financial results Impacted by a challenging operating environment 3.4% 4.9% 21.3% to 231.0 million to R69.2 billion to R15.4 billion Group subscribers Revenue Data revenue 2.6 pp 10.3% 7.9% to 43.7% to 654 cents to 480 cents EBITDA margin HEPS* Interim dividend Note: Results are presented base
Slide 5: Operating context
Operating context Focus on addressing operational challenges Ongoing price competition (voice and data) in most markets A rapidly Encouraging data traffic growth evolving Increasing internet penetration and adoption of 3G devices, affordability key operating environment Outsourcing of non-co
Slide 6: H1-15 Strategic update
H1-15 Strategic update Satisfactory progress on strategic priorities Shareholders Maintained dividend pay-out in line with policy Driving growth New executive roles for Consumer and Digital areas Drive growth in existing and new business areas Maintaining and growing market share Voice and d
Slide 7: H1-15 Strategic update
H1-15 Strategic update Increased focus on customer experience and operational efficiencies Network quality, capacity and customer experience Investments to improve network quality capacity and 3G/LTE expansion – up 18% Added 1 335 2G sites, 5 048 largely co-located 3G sites and 2 475 LTE sites
Slide 8: MTN South Africa
MTN South Africa Better positioned for improved performance 1.8% 1.4% 2.3 pp 133.9% Subscribers Revenue EBITDA margin Capex Driving Good subscriber growth in prepaid segment supported by competitive voice offerings – up 2.7% sustainable Consolidation of Afrihost supported data revenue growth – u
Slide 9: MTN Nigeria
MTN Nigeria Challenging revenue growth performance 4.9% 1.1%* 2.8 pp 63.2% Subscribers Revenue EBITDA margin Capex Market share stable at 49% Driving sustainable Satisfactory subscriber growth growth 12% and 64% reduction in effective voice and data tariffs respectively Limited elasticity, 6
Slide 10: Irancell
Irancell Sound performance 0.5% 13.9%* 4.3 pp 108% Subscribers Revenue EBITDA margin Capex Driving Delay in number range and registration requirements resulted in lower subscriber growth sustainable Increase in 3G enabled devices (up 59.4%) supported data revenue – up 84.7%* growth Improved gr
Slide 11: Large opco and small opco cluster
Large opco and small opco cluster 4.4% 3.4%* 1.7 pp 13.9% Subscribers Revenue EBITDA margin Capex Encouraging growth in Ghana despite weak macro economic conditions – revenue up 13.4%* Driving sustainable Strong competition in Cameroon impacting voice revenue – down 7.7%* growth Subdued result
Slide 12: Group financial review
Group financial review
Slide 13: Group highlights
Group highlights EBITDA Effective Revenue EBITDA margin tax rate Reported 5% 9% 2.1pp 0.7pp to R69 304m to R30 675m to 44.3% to 31.0% Hyperinflation impact R94m R49m - 1.3pp Tower profit impact R352m 0.6pp 0.6pp Operational 5% 10% 2.6pp 1.4pp to R69 210m to R30 274m to 43.7% to 32.9%
Slide 14: Financial highlights
Financial highlights Revenue and EBITDA performance negatively impacted by currency Group summary Revenue negatively impacted by exchange ZAR (million) Reported Organic ’14 - ’15 ’14 - ’15 rates and declining tariffs − Currency movements decreased revenue by 6% 72 759 69 210 Rev 5% 1% − RSA reve
Slide 15: Revenue
Revenue Supported by data growth Outgoing revenue down 10% (organic down 4%) Revenue breakdown ZAR (million) − Nigeria impacted by weaker economy and operational +1% execution challenges 970 90 63 73 300 4 090 − RSA flat, 102% increase in billable minutes offset by lower 72 759 275 307 on-net tariff
Slide 16: Revenue – data
Revenue – data Strong data growth across operations Data revenue Data revenue up 21% (organic up 28%) ZAR (million) 22% − Contributes 22% to total revenue, (25% incl SMS) 18% 20% 16% − SMS volumes continue to decline as a result of OTT 14% 14 609 15 412 apps, SMS revenue down 12% 12 708 11 357 4 781
Slide 17: Opex
Opex Effective cost control contains opex growth Direct network operating cost up 1% Opex Reported % share ZAR (million) ’14 - ’15 of opex (organic up 10%) − 2G & 3G sites increased 7% and 56% respectively 0% − Higher diesel and electricity cost 39 096 38 936 − Nigeria tower transaction − Currency w
Slide 18: EBITDA margin
EBITDA margin EBITDA margin reconciliation (%) EBITDA margin down 2.6pp to 43.7% YoY South Africa − Margin up 2.3pp to 35.6% − Lower handset sales and lower staff costs Nigeria -2.3pp − Margin down 2.8pp to 57.3%, impacted by: 0.6 1.0 • Lower revenue growth, tower deal and foreign denominated 46.3 e
Slide 19: Finance cost
Finance cost Net interest paid ZAR 839m Net finance cost ZAR (million) H1-15 H1-14 H1-13 Net forex loss ZAR 1 481m Net interest paid 839 932 1 102 − Mauritius losses as a result of USD denominated borrowings and foreign denominated intercompany Net forex losses/(gains) 1 481 736 (1 014) receivables
Slide 20: Taxation
Taxation Group effective tax rate of 32.9% Tax ZAR (million) (1H-14: 31.5%) − Reported effective tax rate of 31.0% (1H-14: 31.7%) +12% -14% impacted by tower profit and hyperinflation 7 253 − Lower PBT (excluding hyperinflation) due to decrease in equity income from joint ventures and associates 1 0
Slide 21: Headline earnings per share
Headline earnings per share Headline earnings per share ZAR (cents) ZAR (cents) H1-15 H1-14 Change % Attributable earnings per 1 536 653 731 (11) share 1 411 Profit on disposal of non- - (14) NM current assets 807 Impairment of PPE and non- 1 12 (92) 742 current assets Basic headline earnings 654 72
Slide 22: Shareholder returns
Shareholder returns Dividends Dividends and share buy-backs ZAR (million) − Interim dividend 480cps, 7.9% growth Share buy-backs 25 341 − H2-2011 repurchased 6.8m shares (ZAR 930m) 2 422 − H1-2012 repurchased 15.6m shares (ZAR 2.1bn) − H2-2014 repurchased 10.7m shares (ZAR 2.4bn) 19 182 − Total repu
Slide 23: Income statement (IFRS)
Income statement (IFRS) ZAR (million) H1-15 H1-14 Change % Revenue 69 304 72 759 (5) Other income 411 303 36 EBITDA 30 675 33 762 (9) Depreciation and amortisation 10 750 10 886 1 Profit from operations 19 925 22 876 (13) Net finance cost 2 319 1 668 (39) Share of results from joint ventures and ass
Slide 24: Statement of financial position (IFRS)
Statement of financial position (IFRS) ZAR (million) Jun 2015 Dec 2014 Property, plant and equipment 85 501 87 546 Intangible assets and goodwill 37 484 36 618 Other non-current assets 38 234 39 054 Cash 31 014 43 098 Other current assets* 50 296 43 521 Non-current assets held for sale 3 959 3 848 T
Slide 25: Statement of cash flows (IFRS)
Statement of cash flows (IFRS) ZAR (million) H1-15 H1-14 Change % Cash generated by operations 26 289 30 078 (13) Dividends paid to equity holders of the Company (14 697) (12 284) (20) Dividends paid to non-controlling interests (3 042) (2 644) (15) Dividends received from associates and joint ventu
Slide 26: Looking ahead
| M4 * s oe Looking ahead
Slide 27: Looking ahead: delivering on our strategy
Looking ahead Delivering on our strategy Maintain absolute dividend growth of between 5% - 15% Stakeholder Continue with opportunistic share buy-backs value Continue to seek value accretive opportunities Continue to invest in our networks to support data growth through 3G and LTE Customer
Slide 28: Net subscriber additions
Net subscriber additions Guidance 2015 Mar 15 Jun 15 (‘000) (‘000) South Africa 2 400 1 800 Nigeria 4 750 5 000 Iran 1 750 1 600 Large opco cluster 5 100 4 850 Ghana 1 100 1 500 Cameroon 1 500 1 150 Ivory Coast 800 800 Sudan 500 - Syria - - Uganda 1 200 1 400 Small opco cluster 3 380 3 380 Other JV’
Slide 29: Capex
Capex Authorised ZAR (million) 2015 Jun 2015 Jun 2014 South Africa 10 000 4 678 2 000 Nigeria 8 784 1 172 3 189 Large opco cluster 5 320 2 669 2 480 Ghana 1 254 355 597 Cameroon 1 239 943 373 Ivory Coast 979 422 584 Uganda 959 556 407 Syria* 442 56 38 Sudan* 447 337 481 Small opco cluster 3 734 1 76
Slide 30: Appendix
Appendix
Slide 31: South Africa
South Africa Performance underpinned by data Launched Jun 1994 Market share 32.8% Population 54.0m Market size 2016 96m Penetration 154% Shareholding 100% Subscriber growth Total subscribers ‘000 27 993 28 504 − Subscribers up 1.8% to 28.5m for H1-15 25 700 − Data subscribers up 18.1% to 17.3m 5 419
Slide 32: South Africa
South Africa Aggressive rollout of 3G and LTE Expenses ZAR (million) Lower costs boost margin − Lower handset and commission costs due to strike 26 415 26 413 action, these are expected to increase in H2-15 − Reduced roaming costs 13 640 13 638 − Reduction in staff 12 158 Focus on network quality an
Slide 33: Nigeria
Nigeria Operating environment constraints Launched Aug 2001 Market share 49.4% Population 170.3 m Market size 2016 133m Penetration 75% Shareholding 78.8% Total subscribers ‘000 Subscriber growth − Subscribers up 4.9% and market share maintained 62 813 − Growth underpinned by improved segmented 59 8
Slide 34: Nigeria
Nigeria Focus on cost containment and network flexibility Expenses NGN (million) Margin impacted by higher costs − Despite good cost management across the board, 342 017 margins impacted by 312 473 • Increased commission costs due to competition • Higher lease costs from tower sales 176 896 181 033
Slide 35: Iran
Iran Data driving performance Launched Oct 2006 Market share 45.9% Population 79.5m Market size 2016 101m Penetration 121% Shareholding 49% Revenue IRR (billion) Subscriber growth of 0.5% (100%) 56 726 − Impacted by delay in obtaining new number range and 49 544 aggressive competition Revenue suppor
Slide 36: Ghana
Ghana Data supports performance Launched Nov 1996 Market share 50.6% Population 27.1m Market size 2016 31.8m Penetration 108% Shareholding 97.7% Revenue Cedi (million) Subscriber growth of 7.5% − Expanded distribution network and strong churn management 1 993 1 753 Revenue underpinned by data 1 032
Slide 37: Cameroon
Cameroon Aggressive competition Launched Feb 2000 Market share 59.3% Population 22.5m Market size 2016 18.5m Penetration 78% Shareholding 70% Revenue CFA (million) Performance impacted by 3rd mobile operator 283 369 exclusivity on 3G, ended on 31 Mar 264 764 Subscribers up 7.3% and market share 146
Slide 38: Ivory Coast
Ivory Coast Data underpins performance Launched Apr 1996 Market share 38.6% Population 24.6m Market size 2016 20.6m Penetration 89% Shareholding 66.8% Revenue CFA (million) Subscribers up 5.9% − Supported by retention programmes and penetration 293 631 to lower segments 279 520 Revenue underpinned b
Slide 39: Uganda
Uganda Leading the MTN financial services offering Launched Oct 1998 Market share 57.6% Population 39.1m Market size 2016 20.3m Penetration 49% Shareholding 96% Revenue UGX (million) Subscribers up 7.2% − Market share up 0.8 pp to 57.6% despite tough 1 267 585 1 186 143 competition − MoMo registered
Slide 40: Syria
Syria Extremely challenging environment Launched Jun 2002 Market share 42.1% Population 16.5m Market size 2016 14.8m Penetration 83% Shareholding 75% Revenue SYP (million) Subscribers decreased by 1.6% in extremely challenging conditions 53 280 43 113 Revenue marginally up − Supported by 23.9%* incr
Slide 41: Sudan
Sudan Encouraging progress in tough conditions Launched Sep 2005 Market share 33.9% Population 36.7m Market size 2016 30.3m Penetration 70% Shareholding 85% Revenue SDG (million) Subscribers declined 2.2% − Impacted by weak economy and subscriber registration 1 430 1 233 Revenue growth supported by
Slide 42: Income statement
Income statement Hyperinflation and tower sales impact Actual H1-15 Actual H1-14 excl hyper- excl hyper- Actual Hyper- Tower inflation and Actual Hyper- Tower inflation and Adjusted ZAR (million) H1-15 inflation profit* tower profit H1-14 inflation profit* tower profit change % Revenue 69 304 94 - 6
Slide 43: Net debt
Net debt Cash and Interest- Net interest- Net Net cash bearing Intercompany bearing debt/(cash) debt/(cash) ZAR (million) equivalents* liabilities eliminations liabilities Jun 2015 Dec 2014 South Africa 1 350 22 402 (22 402) - (1 350) (1 828) Nigeria 18 698 23 230 - 23 230 4 532 6 820 Large opco clu
Slide 44: Net debt composition
Net debt composition Nigeria and Head office Nigeria borrowings Head office borrowings (%) (%) USD ZAR 26% 43% USD Naira 57% 74% Nigeria cash Head office cash (%) (%) USD 6% ZAR 44% USD 45% Naira 94% Euro 11% Net debt composition Naira USD ZAR Euro ZAR (million) denominated denominated denominated d
Slide 45: Revenue – data
Revenue – data South Africa and Nigeria South Africa Nigeria ZAR (million) ZAR (million) +27% +12% 5 677 +31% +14% 5 060 4 533 4 483 3 942 3 832 3 472 2 919 2 319 2 767 2 122 2 238 584 595 742 1 423 1 679 604 481 586 462 228 404 452 505 416 129 244 272 12 349 334 127 110 202 9 5 16 H1-13 H1-14 H1-15
Slide 46: Share of results of joint ventures and associates after tax (IFRS)
Share of results of joint ventures and associates after tax (IFRS) ZAR (million) H1-15 H1-14 Change % Iran 2 099 1 547 36 − Operational 1 737 1 744 - − Hyperinflation adjustment 362 (197) NM Swaziland 48 39 23 Botswana 150 107 40 Digital Group (324) - NM Tower companies (64) (92) (30) − Ghana 22 (3)
Slide 47: FX trends
FX trends Closing rate USD: Local currency H1-15 H2-14 H1-14 Change % YoY ZAR 12.14 11.55 10.63 (14) Naira 199.30 184.00 163.00 (22) Rial 29 160 27 043 25 609 (14) Cedi 4.35 3.19 3.33 (31) Cameroon XAF 588.14 542.07 479.12 (23) Ivory Coast CFA 588.14 542.07 479.12 (23) Uganda shilling 3 295.00 2 760
Slide 48: FX trends
FX trends Average rate USD: Local currency H1-15 H2-14 H1-14 Change % YoY ZAR 11.85 11.04 10.67 (11) Naira 196.49 167.17 162.89 (21) Rial 28 024 26 109 25 609 (9) Cedi 3.76 3.27 2.73 (38) Cameroon XAF 587.24 512.52 478.14 (23) Ivory Coast CFA 587.07 514.44 478.11 (23) Uganda shilling 2 956.18 2 676.
Slide 49: Thank you
thank you