mtn group limited · 2019-02-15 · strong growth in data revenue –cameroon, ghana and ivory...
TRANSCRIPT
Results presentation for the period ended 30 June 2015
MTN Group Limited
Agenda
01 Strategic and operational reviewSifiso DabengwaGroup President and CEO
02 Group financial reviewBrett GoschenGroup CFO
03 Looking aheadSifiso DabengwaGroup President and CEO
Strategic and
operational review
4
Impacted by a challenging operating environment
Group financial results
* Reported (including hyperinflation and/or tower profits)
3.4%
to 231.0 million
Group subscribers
21.3%
to R15.4 billion
Data revenue
4.9%
to R69.2 billion
Revenue
7.9%
to 480 cents
Interim dividend
10.3%
to 654 cents
HEPS*
2.6 pp
to 43.7%
EBITDA margin
Note: Results are presented based on operational performance (excluding hyperinflation and tower profits)
5
Ongoing price competition (voice and data) in most markets
Encouraging data traffic growth
Increasing internet penetration and adoption of 3G devices, affordability key
Outsourcing of non-core business activities
Continued focus on operating efficiencies
Dominance declaration in Nigeria
Declining termination rates impacting revenues
Securing additional spectrum in Nigeria and South Africa
Good progress on licence renewals
Relatively weak local currencies negatively impacted results
Weak macro economic conditions in most markets
Industrial action in South Africa impacted performance
Positive outlook for removal of sanctions in Iran
Continued security challenges in Syria, Sudan, Yemen and Afghanistan
Focus on addressing operational challenges
Operating context
A rapidly
evolving
operating
environment
Regulatory
considerations
Economic
and social
landscape
6
The digital journey
Central organisation established
Increased MoMo registered subscribers by 45.8% to 32.4m
Continued engagement with content partners across our markets
Good progress on e-commerce venture with 128 operations across 30 markets
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
Enterprise Business Unit
Significant strides made to build capability in servicing the Enterprise segment
Launched “Internet of Things” platform
IP MPLS network: 44 POPs in 29 countries to support corporate clients
Developing strategic partnerships to launch ICT services
Participation in ACE undersea cable extension to South Africa
Voice and data evolution
Higher 3G device penetration supported data growth – up 36.4%
Lower voice and data tariffs – down 25.3% and 62.5% respectively (USD terms)
Increased voice and data traffic – up 11.2% and 87.0% respectively
Satisfactory progress on strategic priorities
H1-15 Strategic update
7
Cost optimisation
Efficiencies from headcount rationalisation
Optimisation through outsourcing non-core functions
Disciplined cost control
Continued centralisation of procurement
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
Rolled out 722km of long distance fibre
Continuous monitoring of NPS
Asset optimisation
Completed Nigeria tower transaction with tranche 2 concluded on 1 Jul 2015
Network managed services
Implemented across 11 operations
Back office transformation – Project Next!
Implemented in Ghana
Completion of Cameroon expected in Sep 2015 and Benin by year end
SSC implemented in South Africa
Increased focus on customer experience and operational efficiencies
H1-15 Strategic update
8
Better positioned for improved performance
MTN South Africa
1.8%
Subscribers
1.4%
Revenue
133.9%
Capex
2.3 pp
EBITDA margin
Good subscriber growth in prepaid segment supported by competitive voice offerings – up 2.7%
Consolidation of Afrihost supported data revenue growth – up 26.6%
Lower handset sales impacted data subscribers – up 18.1%
Increased focus on internet services, including Music+ 9.3m users
Launched IoT to drive M2M
Staff rationalisation complete and good cost control
Call centre performance challenged due to industrial action
Greater focus on self service portals, retail experience and call centre performance
Improved network quality in Western Cape, focus now on Gauteng
Added 267 2G, 1 939 largely co-located 3G and 1 891 LTE sites
Spectrum re-farming 80% complete – maximised spectral efficiency
Capex rollout on track to provide best in class data services
Driving
sustainable
growth
Creating a
distinct
customer
experience
9
Challenging revenue growth performance
MTN Nigeria
* Constant currency (“organic”) information
4.9%
Subscribers
1.1%*
Revenue
63.2%
Capex
2.8 pp
EBITDA margin
Market share stable at 49%
Satisfactory subscriber growth
12% and 64% reduction in effective voice and data tariffs respectively
Limited elasticity, 6.7% increase in billable minutes
Increased 3G device penetration (up 84.6%) supported data revenue – up 21.3%*
Gained traction on Diamond Yellow with 3 500 merchants and 4.3m registered accounts
Aggressive rollout of EBU offerings, 600 000 SME’s added to MTN yellow directory
Continued uptake of digital offering supported by MTN Music+ and lifestyle services
Strong focus on improving NPS
Improved customer analytics enables segmented offerings
Lower capex spend due to sufficient headroom on network and use of existing inventory
Added 286 2G and 744 largely co-located 3G sites
Addressing consistency of data speeds
Driving
sustainable
growth
Creating a
distinct
customer
experience
10
Delay in number range and registration requirements resulted in lower subscriber growth
Increase in 3G enabled devices (up 59.4%) supported data revenue – up 84.7%*
Improved growth in data users – up 22.3%
Gained traction in digital services supported by introducing innovative content
EBITDA margin impacted by regulatory fees, content providers and transmission costs
Implemented customer service “must win battles”, achieved NPS improvement of 8pp
Increased capex with focus on data
Rolled out 1 401 largely co-located 3G and 117 LTE sites
Driving
sustainable
growth
Creating a
distinct
customer
experience
Sound performance
Irancell
* Constant currency (“organic”) information
0.5%
Subscribers
13.9%*
Revenue
108%
Capex
4.3 pp
EBITDA margin
11
Large opco and small opco cluster
* Constant currency (“organic”) information
4.4%
Subscribers
3.4%*
Revenue
13.9%
Capex
1.7 pp
EBITDA margin
Encouraging growth in Ghana despite weak macro economic conditions – revenue up 13.4%*
Strong competition in Cameroon impacting voice revenue – down 7.7%*
Subdued results in Liberia and Guinea Conakry impacted by Ebola, Liberia now recovering
MoMo and 3G penetration supported data revenue – up 26.8%*
Strong growth in data revenue – Cameroon, Ghana and Ivory Coast key contributors
Limited 3G device penetration in SOC resulted in low growth in data revenue – up 29.2%*
Adopted partnership model driving 3G penetration
Registered 24 303k MoMo accounts – up 17.6%
Good NPS in Ghana (up 3pp) and Uganda (up 14pp)
Continued focus on network quality and coverage
Rolled out 610 2G and 964 largely co-located 3G sites
Licence renewal in Cameroon finalised in Mar 2015
Driving
sustainable
growth
Creating a
distinct
customer
experience
Group financial
review
13
Group highlights
5%
to R69 304m
9%
to R30 675m
2.1pp
to 44.3%
0.7pp
to 31.0%
R94m R49m - 1.3pp
R352m 0.6pp 0.6pp
5%
to R69 210m
10%
to R30 274m
2.6pp
to 43.7%
1.4pp
to 32.9%
Revenue EBITDAEBITDA
margin
Effective
tax rate
Positive impact on reported results
Note: Results from slide 14 to 20 are presented based on operational performance (excluding hyperinflation and tower profits)
Reported
Hyperinflation
impact
Tower profit
impact
Operational
14
Revenue and EBITDA performance negatively impacted by currency
Financial highlights
15 34524 464 19 422
12 792
9 19910 852
28 137
33 66330 274
36 789
39 096
38 936
64 926
72 75969 210
H1-13 H1-14 H1-15
* Excl tower profit Jun 15: ZAR 352m (Jun 14: ZAR 99m, Jun 13: ZAR 856m)
** EBITDA less capex (approximates free cash flow)
43.3% 46.3% 43.7% EBITDA margin
44.7% 46.4% 44.3% EBITDA margin (incl tower profit)
19.7% 12.6% 15.7% Capex / revenue
Revenue negatively impacted by exchange
rates and declining tariffs
− Currency movements decreased revenue by 6%
− RSA revenue affected by handset disruption
− Nigeria organic revenue down 1%
Organic opex increase mainly driven by:
− Maintenance, rent and utilities
− Increased marketing spend
EBITDA down 10%, exchange rate impact of
6%
− RSA margin up 2.3pp
− Nigeria margin down 2.8pp
Capex up 18%
− RSA capex up 134%, rollout of 3G sites
Rev
Opex
EBITDA*
Capex
AFCF**
5%
0%
10%
18%
21%
1%
5%
4%
21%
14%
Reported’14 - ’15
Organic’14 - ’15
Group summary ZAR (million)
15
Supported by data growth
Revenue
Outgoing revenue down 10% (organic down 4%)
− Nigeria impacted by weaker economy and operational
execution challenges
− RSA flat, 102% increase in billable minutes offset by lower
on-net tariffs
− Outgoing minutes for Group up 11%
Incoming voice revenue down 8% (organic
down 2%)
− MTR glide path in key markets
− YoY incoming minutes up 4%
Data revenue up 21%, (organic up 28%)
− Data subs up 4% to 105.2m from Dec 2014 and 19% YoY
− Data traffic increased 87% YoY,114% increase in Nigeria
− 3G devices increased by 36%
Devices revenue down 22% (organic down 22%)
− RSA contributes 87%, handset revenue down 28% YoY,
distribution channel challenges and strike affected supply
chain
− 2.4m prepaid handsets sold, postpaid 454k
Revenue growth Organic % Reported %
South Africa (1) (1)
Nigeria (1) (9)
Ghana 13 (8)
Cameroon - (10)
Ivory Coast 6 (5)
Uganda 3 (3)
Syria - (26)
Sudan 17 24
SOC 1 1
Iran 14 14
H1-15CR is at constant prior year FX rate
LOC – Large opco cluster
SOC – Small opco cluster
HOE – Head office companies and eliminations
FXHOE H1-15H1-15CRSOCLOCNIGRSAH1-14
Revenue breakdown ZAR (million)
69 210
4 09073 3006390970
30727572 759
+1%
-6%
16
Strong data growth across operations
Revenue – data
Data revenue up 21% (organic up 28%)
− Contributes 22% to total revenue, (25% incl SMS)
− SMS volumes continue to decline as a result of OTT
apps, SMS revenue down 12%
− RSA and Nigeria contribute 70% to total data revenue
− Total usage up 87% to 85.9 Petabyte YoY
− Strong organic growth in LOC and SOC, 44% and
29% respectively 1 733 2 830 3 692 4 314 4 6753 472
3 8134 533
5 514 5 0603 9424 714
4 4834 781 5 677
9 14711 357
12 70814 609 15 41214%
16%18%
20%22%
H1-13 H2-13 H1-14 H2-14 H1-15
Data revenue ZAR (million)
Data growth Organic % Reported %
South Africa 27 27
Nigeria 21 12
Ghana 76 44
Cameroon 46 32Ivory Coast 59 43
Uganda 9 2
Syria 24 (9)
Sudan 76 87
SOC 29 29
Iran 85 85
OtherNigeriaRSA % of Rev
17
4 535 4 740
7 179 7 341
4 289 4 153
6 734 6 324
5 667 5 531
10 692 10 847
39 096 38 936
H1-14 H1-15
OpexZAR (million)
Effective cost control contains opex growth
Opex
Direct network operating cost up 1% (organic up 10%)
− 2G & 3G sites increased 7% and 56% respectively
− Higher diesel and electricity cost
− Nigeria tower transaction
− Currency weakness impacting USD-denominated contracts
Cost of handset and other accessories down 2%
− Mainly driven by RSA
− RSA down 6%, lower volume due to distribution channel challenges and strike action
Interconnect and roaming down 6%
− Lower MTR’s and forex impact
Selling, distribution and marketing expenses up 2%
− Nigeria up 6% YoY on increased marketing activity and commissions
Other operating expenses up 5%
− Increase in provision for doubtful debt in RSA (postpaid) and Nigeria (interconnect)
Direct network operating costs
Cost of handsets and other accessories
Interconnect and roaming
Staff costs
Selling, distribution and marketing expenses
1%
2%
6%
3%
2%
28%
14%
16%
11%
19%
Other operating expenses
5% 12%
0%
Reported’14 - ’15
% share of opex
18
EBITDA margin
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
− Margin down 2.8pp to 57.3%, impacted by:
• Lower revenue growth, tower deal and foreign denominated expenses
• Increased commissions, digital services revenue share, marketing expenses and interconnect charges
LOC
− Ghana margin up 1.0pp – no management fee in 2015
− Cameroon margin down 4.6pp – increase in competition and network expansion
− Ivory Coast margin down 1.0pp – largely maintenance costs
− Uganda margin down 0.9pp – one-network effect
SOC
− Margin improvement in Congo B, Rwanda, Zambia, Bissau and S Sudan
− Yemen margin down 9.8pp – civil war
HOE
− Increase professional fees for Next!
− BICS deferred gain fully amortised in 2014
H1-15FXH1-15CRHOESOCLOCNIGRSAH1-14
EBITDA margin reconciliation (%)
46.3
0.6-2.3pp
1.0
0.30.4
1.2
44.0 0.343.7
19
Net finance cost ZAR (million) H1-15 H1-14 H1-13
Net interest paid 839 932 1 102
Net forex losses/(gains) 1 481 736 (1 014)
Total 2 320 1 668 88
Net forex losses/(gains) ZAR (million) H1-15 H1-14 H1-13
Mauritius 253 104 (1 497)
Nigeria 769 129 52
Ghana 81 158 11
Zambia 93 27 23
RSA 77 54 2
Other 208 264 395
Total 1 481 736 (1 014)
Finance cost
Net interest paid ZAR 839m
Net forex loss ZAR 1 481m
− Mauritius losses as a result of USD denominated
borrowings and foreign denominated intercompany
receivables
− Nigeria USD borrowings and trade payables,
devaluation of Naira (8% depreciation from Dec 2014)
− Forex losses due to depreciation of Ghanaian Cedi by
36% and Zambian Kwacha by 18% from Dec to June
− Other primarily relates to forex exposures in tower
companies
20
4 320
-461 -472
1 569
6 672
5 672
592
1 042
1 023
6 481
7 253
6 223
H1-13 H1-14 H1-15
Tax ZAR (million)
Taxation
Group effective tax rate of 32.9%
(1H-14: 31.5%)
− Reported effective tax rate of 31.0% (1H-14: 31.7%)
impacted by tower profit and hyperinflation
− Lower PBT (excluding hyperinflation) due to decrease
in equity income from joint ventures and associates
− Sudan tax holiday ended
Withholding tax
− 5.41% (prior year 4.53%) – Higher WHT % due to
lower PBT base
Deferred tax – income statement
− MTN Nigeria – Reversal of deferred tax liability on
fixed assets: ZAR339m
− MTN RSA – Deferred tax asset due to revenue
deferred on postpaid contracts: ZAR224m
− Cameroon – deferred tax asset reduced following a
change in tax rate
Normal taxDef taxWHT
+12% -14%
31.2% 31.5% 32.9% Eff tax rate%
21
669 729
654
742
807
1 411
1 536
2013 2014 H1-15
Headline earnings per shareZAR (cents)
H1 H2
Headline earnings per share
ZAR (cents) H1-15 H1-14 Change %
Attributable earnings per
share653 731 (11)
Profit on disposal of non-
current assets- (14) NM
Impairment of PPE and non-
current assets1 12 (92)
Basic headline earnings
per share654 729 (10)
22
5 145 5 979 6 8808 225
8 8088 9409 362
12 302
14 694930
2 088
2 422
15 015
17 429
19 182
25 341
2011 2012 2013 2014 H1-15
Dividends and share buy-backsZAR (million)
H1 H2 Share buy back
Shareholder returns
Dividends
− Interim dividend 480cps, 7.9% growth
Share buy-backs
− H2-2011 repurchased 6.8m shares (ZAR 930m)
− H1-2012 repurchased 15.6m shares (ZAR 2.1bn)
− H2-2014 repurchased 10.7m shares (ZAR 2.4bn)
− Total repurchase of 1.8% of issued shares since 2011
23
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 associates after tax 2 027 1 691 20
Net monetary gain 496 - NM
Profit before tax 20 129 22 899 (12)
Income tax expense 6 249 7 261 14
Profit after tax 13 880 15 638 (11)
Non-controlling interests 1 980 2 248 12
Attributable profit 11 900 13 390 (11)
EBITDA margin 44.3% 46.4% (2.1pp)
Profit on sale of towers 352 99 NM
EBITDA margin % excl tower profit 43.8% 46.3% (2.5pp)
Effective tax rate 31.0% 31.7% (0.7pp)
Income statement (IFRS)
24
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
Total assets 246 488 253 685
Total equity 127 420 133 442
Interest-bearing liabilities 56 059 53 279
Other liabilities 63 009 66 964
Total liabilities 119 068 120 243
Total equity and liabilities 246 488 253 685
Net debt 17 161 4 543
Net debt / annualised EBITDA 0.28 0.06
*Includes foreign currency deposits of ZAR 642m (Dec 2014: ZAR 1 276m) and treasury bills of ZAR 6 241m (Dec 2014: ZAR 3 469m)
Statement of financial position (IFRS)
25
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 ventures 285 349 (18)
Net interest paid (934) (957) 2
Tax paid (6 469) (8 308) 22
Cash generated from operating activities 1 432 6 234 (77)
Acquisition of property, plant and equipment and intangible
assets (11 830) (10 172) (16)
Movement in investments and other investing activities (2 641) 1 565 NM
Cash used in investing activities (14 471) (8 607) (68)
Cash generated from financing activities 1 558 1 439 8
Cash and cash equivalents at the beginning of the year 43 072 39 577 9
Effect of exchange rates on cash and equivalents (787) (1 071) 27
Net monetary gain on cash and cash equivalents 134 - NM
Net cash and cash equivalents at the end of the year* 30 938 37 572 (18)
Statement of cash flows (IFRS)
*Includes bank overdraft of R76m
03 Looking ahead
27
Delivering on our strategy
Looking ahead
Maintain absolute dividend growth of between 5% - 15%
Continue with opportunistic share buy-backs
Continue to seek value accretive opportunities
Continue to invest in our networks to support data growth through 3G and LTE
Ensure customer experience improvements through NPS measure
Improve value and segmentation of offers through customer analytics
Maintain momentum on improving processes and organisation effectiveness
Further commercialisation of tower infrastructure
Rollout of Project Next! in Cameroon, Benin and management companies
Grow data revenues by driving uptake, smartphone penetration and new pricing strategies
Grow the MoMo and Financial Services eco-systems
Rollout of e-commerce offering supported by Rocket partnership
Accelerate development of EBU prioritising SME and MNC
Drive innovation in existing and new business areas
Ensure agility and sharing best practice to leverage new business opportunities
Stakeholder
value
Customer
experience
Operating
model
Sustainable
growth
Innovation &
best practice
28
Mar 15 (‘000)
Jun 15(‘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’s 120 120
Total 17 500 16 750
Net subscriber additions
Guidance 2015
29
ZAR (million)Authorised
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 1 761 1 408
Head office companies 1 855 572 122
Total 29 693 10 852 9 199
Hyperinflation - 17 -
Total reported 29 693 10 869 9 199
Iran (49%)* 3 991 1 854 891
* Excluding hyperinflation
Capex
Appendix
31
Performance underpinned by data
South Africa
Subscriber growth
− Subscribers up 1.8% to 28.5m for H1-15
− Data subscribers up 18.1% to 17.3m
Revenue
− Revenue decline of 1.4% impacted by 27.5% reduction
in handset revenue
− ERM declined 47.7% to 46 cents
− Data revenue increased 26.6% supported by Afrihost
consolidation
− Data revenue contributes 30.1% of total revenue
20 695 22 574 23 176
5 0055 419 5 328
25 70027 993 28 504
Dec 13 Dec 14 Jun 15
Total subscribers ‘000
Postpaid
Prepaid
* Not adjusted for BTS recovery
19 157 19 157
21 325 19 765
40 482 38 922
18 882
Dec 13* Dec 14 Jun 15
Revenue ZAR (million)
H2
H1
Launched Jun 1994 Market share 32.8% Population 54.0m Market size 2016 96m Penetration 154% Shareholding 100%
32
Aggressive rollout of 3G and LTE
South Africa
Lower costs boost margin
− Lower handset and commission costs due to strike
action, these are expected to increase in H2-15
− Reduced roaming costs
− Reduction in staff
Focus on network quality and roll out of 3G
and LTE
− Data traffic up 20.8% YoY, voice traffic up 102% YoY
− 267 2G, 1 939 largely co-located 3G and 1 891 LTE
sites added
− Significant increase of capex in 2015 focused on
expanding 3G and LTE coverage in key cities
12 775 12 775
13 640 13 638
26 415 26 413
12 158
Dec 13* Dec 14 Jun 15
Expenses ZAR (million)
H2
H1
* Not adjusted for BTS recovery
2 151 2 000
3 684 3 676
5 835 5 676
4 678
Dec 13 Dec 14 Jun 15
Capex ZAR (million)
H2
H1
34.7% 32.1% 35.6% EBITDA margin
33
Operating environment constraints
Nigeria
Subscriber growth
− Subscribers up 4.9% and market share maintained
− Growth underpinned by improved segmented
offerings, churn management and attractive
promotions
− Performance impacted by weak economy
Revenue
− Revenue declined 1.1%*, impacted by
• Lower voice tariffs
• Pressure on consumer spending and multiple SIMs (50%
of the subscriber base)
− Data revenue increased 21.3%*, contributing
20.5% to total revenues
− Momentum from MoMo with 4.3m accounts
− EBU products such as MTN Biz Life gained traction
with 600 000 SME’s added to MTN yellow directory
56 766
59 893
62 813
Dec 13 Dec 14 Jun 15
Total subscribers ‘000
* Constant currency (“organic”) information
383 057 413 611
410 557 411 195
793 614 824 806
408 999
Dec 13 Dec 14 Jun 15
Revenue NGN (million)
H2
H1
Launched Aug 2001 Market share 49.4% Population 170.3 m Market size 2016 133m Penetration 75% Shareholding 78.8%
34
Focus on cost containment and network flexibility
Nigeria
Margin impacted by higher costs
− Despite good cost management across the board,
margins impacted by
• Increased commission costs due to competition
• Higher lease costs from tower sales
• Naira depreciation
Focus on network quality
− 63.2% decline in capex due to sufficient inventory
− Continued network roll out: 286 2G and
744 largely co-located 3G sites
− Network remains flexible to rollout as required
131 440 165 121
181 033176 896
312 473342 017
174 603
Dec 13 Dec 14 Jun 15
Expenses NGN (million)
H2
H1
* Normalised EBITDA assumes no management fee recognised
6 5713 189
7 727
5 186
14 298
8 375
1 172
Dec 13 Dec 14 Jun 15
Capex ZAR (million)
H2
H1
58.2%* 58.5% 57.3% EBITDA margin
35
Data driving performance
Iran
Subscriber growth of 0.5%
− Impacted by delay in obtaining new number range and
aggressive competition
Revenue supported by data and 3G adoption
− Data revenue increased 84.7%* and contributes
26.7% to revenue
− Data users increased 22.3% to 15.5m
− 3G devices grew 59.4% to 21.4m
Margin impacted by network rollout and
regulatory fees
Investment in network to support data
− 1 401 largely co-located 3G and 117 LTE sites rolled
out
23 945 27 260
25 59929 466
49 544
56 726
31 038
Dec 13** Dec 14** Jun 15**
Revenue IRR (billion)
(100%)
H2
H1
*Constant currency (“organic”) information
**Excluding hyperinflation
445891
1 313
2 2211 758
3 112
3 783
Dec 13* Dec 14* Jun 15*
Capex ZAR (million)
(49%)
H2
H1
42.9% 42.8% 40.1% EBITDA margin
Launched Oct 2006 Market share 45.9% Population 79.5m Market size 2016 101m Penetration 121% Shareholding 49%
36
Data supports performance
Ghana
Subscriber growth of 7.5%
− Expanded distribution network and strong churn
management
Revenue underpinned by data
− Data revenue up 75.9%* contributing 27.2% to total
revenue
− Data growth underpinned by 3G network expansion
Strong MoMo performance (4.6m accounts) supported
by awareness campaigns and expanded agent
network
Cost optimisation mitigated impact of weaker
currency
− EBITDA margin supported by the expiration of the
management fee agreement on 31 March 2014
Network roll out impacted by implementation
of managed services
− Added 136 largely co-located 3G and 18 2G sites
− Capex to accelerate in H2-15
845 961
9081 032
1 7531 993
1 091
Dec 13 Dec 14 Jun 15
Revenue Cedi (million)
H2
H1
*Constant currency (“organic”) information
685 597
1 005803
1 690
1 400
355
Dec 13 Dec 14 Jun 15
Capex ZAR (million)
H2
H1
37.5% 36.7% 40.2% EBITDA margin
Launched Nov 1996 Market share 50.6% Population 27.1m Market size 2016 31.8m Penetration 108% Shareholding 97.7%
37
Aggressive competition
Cameroon
Performance impacted by 3rd mobile operator
exclusivity on 3G, ended on 31 Mar
Subscribers up 7.3% and market share
maintained
Revenue declined 0.5%*
− 15.7% decrease in effective tariff
− 7.7%* decrease in outgoing voice revenue
− Data revenue up 45.8%* supported by finalisation of
3G licence on 15 Mar
Margin impacted by significant 3G rollout
Investment in network to support data
− 153% increase in capex
− 95 2G and 282 largely co-located 3G sites rolled out
125 025 136 593
139 739146 776
264 764283 369
135 986
Dec 13 Dec 14 Jun 15
Revenue CFA (million)
H2
H1
528373
240 489
768862
943
Dec 13 Dec 14 Jun 15
Capex ZAR (million)
H2
H1
42.7% 42.8% 37.8% EBITDA margin
Launched Feb 2000 Market share 59.3% Population 22.5m Market size 2016 18.5m Penetration 78% Shareholding 70%
*Constant currency (“organic”) information
38
Data underpins performance
Ivory Coast
Subscribers up 5.9%
− Supported by retention programmes and penetration
to lower segments
Revenue underpinned by data and outgoing
revenue
− Data revenue up 58.7%* due to 3G network expansion
and MoMo
− 2.8m MoMo accounts supported by remittances
between Ivory Coast and Burkina Faso
Costs impacted by 3G rollout and international
transmission costs
Investment in 3G and fibre network
− Added 75 new 2G sites and 211 largely co-located 3G
sites
137 806 144 830
141 714 148 801
279 520 293 631
152 856
Dec 13 Dec 14 Jun 15
Revenue CFA (million)
H2
H1
546 584
284
601830
1 185
422
Dec 13 Dec 14 Jun 15
Capex ZAR (million)
H2
H1
40.7% 38.6% 36.5% EBITDA margin
Launched Apr 1996 Market share 38.6% Population 24.6m Market size 2016 20.6m Penetration 89% Shareholding 66.8%
*Constant currency (“organic”) information
39
Leading the MTN financial services offering
Uganda
Subscribers up 7.2%
− Market share up 0.8 pp to 57.6% despite tough
competition
− MoMo registered accounts up 12.8% to 8.2m
Revenue up 2.6%*
− Data revenue up 8.5%*
• Low 3G handset penetration
• Cancellation of 3rd party content providers
− Incoming voice revenue declined 12.8%* due to
reduced roaming
EBITDA margin impacted by commission
costs and US dollar expenses
Improved quality and capacity on network
− Added 110 2G sites and 57 largely co-located 3G sites
577 807 618 467
608 336 649 118
1 186 1431 267 585
633 861
Dec 13 Dec 14 Jun 15
Revenue UGX (million)
H2
H1
*Constant currency (“organic”) information
253407
300
260
553
667
556
Dec 13 Dec 14 Jun 15
Capex ZAR (million)
H2
H1
35.8% 39.5% 36.0% EBITDA margin
Launched Oct 1998 Market share 57.6% Population 39.1m Market size 2016 20.3m Penetration 49% Shareholding 96%
40
Extremely challenging environment
Syria
Subscribers decreased by 1.6% in extremely
challenging conditions
Revenue marginally up
− Supported by 23.9%* increase in data revenue
EBITDA margin declined 2.6 pp to 16.2%
− High inflation
− High costs to maintain network 19 54626 436
23 567
26 844
43 113
53 280
26 468
Dec 13 Dec 14** Jun 15**
Revenue SYP (million)
H2
H1
*Constant currency (“organic”) information
**Excluding hyperinflation
29538
597
319
892
357
56
Dec 13 Dec 14 Jun 15*
Capex ZAR (million)
H2
H1
17.7% 18.9% 16.2% EBITDA margin
Launched Jun 2002 Market share 42.1% Population 16.5m Market size 2016 14.8m Penetration 83% Shareholding 75%
41
Encouraging progress in tough conditions
Sudan
Subscribers declined 2.2%
− Impacted by weak economy and subscriber
registration
Revenue growth supported by data
− Data revenue increased 76.1%*, contributes 18% of
revenue
EBITDA declined slightly despite inflation
Capex of R337m to support data
589 692
644738
1 2331 430
811
Dec 13 Dec 14** Jun 15**
Revenue SDG (million)
H2
H1
434 481
638
911
1 072
1 392
337
Dec 13 Dec 14* Jun 15*
Capex ZAR (million)
H2
H1
32.0% 33.8% 33.4% EBITDA margin
Launched Sep 2005 Market share 33.9% Population 36.7m Market size 2016 30.3m Penetration 70% Shareholding 85%
*Constant currency (“organic”) information
**Excluding hyperinflation
42
ZAR (million)Actual
H1-15
Hyper-
inflation
Tower
profit*
Actual H1-15
excl hyper-
inflation and
tower profit
Actual
H1-14
Hyper-
inflation
Tower
profit*
Actual H1-14
excl hyper-
inflation and
tower profit
Adjusted
change %
Revenue 69 304 94 - 69 210 72 759 - - 72 759 (5)
Other income 411 - 352 59 303 - 99 204 (71)
EBITDA 30 675 49 352 30 274 33 762 - 99 33 663 (10)
Depreciation and amortisation 10 750 35 - 10 715 10 886 - - 10 886 2
Profit from operations 19 925 14 352 19 559 22 876 - 99 22 777 (14)
Net finance cost 2 319 (1) - 2 320 1 668 - - 1 668 (39)
Share of results of joint ventures and associatesafter tax
2 027 362 - 1 665 1 691 (197) - 1 888 (12)
Net monetary gain 496 496 - - - - - - NM
Profit before tax 20 129 873 352 18 904 22 899 (197) 99 22 997 (18)
Income tax expense 6 249 26 - 6 223 7 261 - 8 7 253 14
Profit after tax 13 880 847 352 12 681 15 638 (197) 91 15 744 (19)
Non-controlling interests 1 980 105 75 1 800 2 248 - 1 2 247 20
Attributable profit 11 900 742 277 10 881 13 390 (197) 90 13 497 (19)
EBITDA margin 44.3% 43.7% 46.4% 46.3% (2.6pp)
Effective tax rate 31.0% 32.9% 31.7% 31.5% 1.4pp
*Tower sale profits for the period include: The re-measurement of the contingent consideration receivable relating to Nigeria tower transaction tranche 1 of
R339m and the Ghana release of deferred profit R13m (H1-14: Zambia R60m, Rwanda R5m, Ghana R19m and Ghana release of deferred profit R15m)
Income statement
Hyperinflation and tower sales impact
43
ZAR (million)
Cash and
cash
equivalents*
Interest-
bearing
liabilities
Intercompany
eliminations
Net interest-
bearing
liabilities
Net
debt/(cash)
Jun 2015
Net
debt/(cash)
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 cluster 4 177 4 779 (1 528) 3 251 (926) (4 842)
Ghana 508 684 - 684 176 (230)
Cameroon 911 - - - (911) (2 877)
Ivory Coast 749 722 - 722 (27) 308
Uganda 230 - - - (230) (576)
Syria 1 554 1 528 (1 528) - (1 554) (3 149)
Sudan 225 1 845 - 1 845 1 620 1 682
Small opco cluster 4 708 7 703 (4 737) 2 966 (1 742) (1 962)
Head office companies 9 965 50 322 (23 710) 26 612 16 647 6 355
Total 38 898 108 436 (52 377) 56 059 17 161 4 543
Iran (49%) 7 613 2 650 - 2 650 (4 963) (4 316)
* Includes restricted cash and current investments
Net debt
44
Net debt composition
ZAR (million)Naira
denominatedUSD
denominatedZAR
denominatedEuro
denominated
Nigeria borrowings 17 163 6 067 - -
Nigeria cash 17 515 1 131 - 52
Head office borrowings - 15 195 11 417 -
Head office cash - 4 532 4 387 1 046
Nigeria and Head office
Net debt composition
Nigeria borrowings(%)
Nigeria cash(%)
Head office borrowings(%)
Head office cash(%)
USD26%
Euro11%
ZAR44% USD
45%
USD57%
ZAR43%
Naira74%
USD6%
Naira94%
45
349 334 202
404 452 244
481
1 423 1 679
2 238
2 3192 919
3 472
4 533
5 060
H1-13 H1-14 H1-15
Nigeria ZAR (million)
272 127 110 129 505 416 228
604 586 462
584 595 742
2 1222 767
3 832
3 942
4 483
5 677
H1-13 H1-14 H1-15
South Africa ZAR (million)
South Africa and Nigeria
Revenue – data
VAS ISP
Afrihost*
InternetBlackberry Other Mobile Money
Internet VAS BlackberryLeased line/Wimax Mobile Money
+14%
+27%
+31%
+12%
* Acquired in November 2014. Revenue from Afrihost previously included in ISP
912
5 16
46
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) NM
− Uganda (149) (89) 67
− Nigeria 63 - NM
BICS 118 90 31
Share of results of joint ventures and associates after tax 2 027 1 691 20
Share of results of joint ventures and associates after tax (IFRS)
47
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 2 760.00 2 595.00 (27)
Syrian pound 276.36 197.98 164.15 (68)
Sudanese pound 5.97 5.97 5.69 (5)
ZAR: Local currency
Naira 16.42 15.93 15.34 (7)
Rial 2 402 2 342 2 410 -
Cedi 0.36 0.28 0.31 (16)
Cameroon XAF 48.45 46.94 45.09 (7)
Ivory Coast CFA 48.45 46.94 45.09 (7)
Uganda shilling 271.44 239.02 244.22 (11)
Syrian pound 22.77 17.15 15.45 (47)
Sudanese pound 0.49 0.52 0.54 9
FX trends
Closing rate
48
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 2 676.54 2 514.59 (18)
Syrian pound 237.91 186.42 156.25 (52)
Sudanese pound 5.97 5.80 5.69 (5)
ZAR: Local currency
Naira 16.59 15.27 15.26 (9)
Rial 2 364 2 367 2 410 2
Cedi 0.32 0.30 0.26 (23)
Cameroon XAF 49.58 46.68 44.81 (11)
Ivory Coast CFA 49.58 46.77 44.81 (11)
Uganda shilling 249.48 243.96 235.70 (6)
Syrian pound 20.07 16.27 14.66 (37)
Sudanese pound 0.50 0.53 0.53 6
FX trends
Average rate
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