MTN SA: SMMEs Portfolio

Committee Briefing

15 August 2018

2

Store Breakdown

# %

Number of dealers 42

Number of 100% BO dealers 10 24%

Number of stores 289

Number of 100% BO stores 56 19%

MTN Branded Stores

No. of B-BBEE Distributors 119 No. of B-BBEE Distributors 149

Airtime Sales value R2.1bn Airtime Sales value R2.2bn

YoY Sales Growth% 8%

Incremental B-BBEE Distributors (2016 vs. 2017) 30

2016 2017

Airtime / Distribution

MTN Transformation Strategy Drivers

Reduce number of stores owned and operated by MTN by 70%

Establish ESD Programme to support Black Owners to invest in Store

Ownership

New store ownership reserved for Black Owners

Opportunity to assist current white dealers transform their businesses to be

BBBEE compliant

OPPORTUNITY

Upto 70% of MTN Owned Stores in next 3 years

Up to 100% of all new stores

Enabler for Black Owned Store Ownership as per above/below

Remaining white owned stores to improve empowerment/transformation

4

TOTAL MEASURED PROCUREMENT SPEND (ZAR) YoY

2015 2016 2017 2017/ 2015

Increase

PREFERENTIAL PROCUREMENT SPEND SPEND#

VENDORSSPEND

# VENDORS

SPEND#

VENDORSSPEND

Black Owned Vendors (BO) > 51% R 2.0bn 94 R 3.0bn 109 R 4.2bn 158110% *2.1

Black Women Owned Vendors (BWO) > 30% R 3.5bn 44 R 8.1bn 57 R 9.8bn 170180%*2.8

Exempted Micro Enterprises (EME) < R10m R 148m 42 R 286m 51 R 213m 9744%

*1.44

Qualifying Small Enterprises (QSE) < R 50m R 1.0bn 120 R 1.0bn 102 R 1.6bn 15260%*1.6

Designated Groups R 0.00 R 0.00 R 52.7m

Improvement over the past three Years

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PROCUREMENT PASS THROUGH SPEND 2017 (ZAR)

2017

PASS THROUGH SPEND Spend # No of Suppliers

Black Women Owned Vendors (BWO) > 30%

670m 120

Black Owned Vendors (BO) > 51% 1,0bn 167

Exempted Micro Enterprises (EME) < R10m

231m 103

Qualifying Small Enterprises (QSE) < R 50m

400m 92

Further Transformation Spend through FTK/MS to

Empowered Partners

On Full Turnkey / Managed Services, aminimum SMME participation is agreedwith the awarded bidder.

E.g. Single Vendor Managed Service(SVMS) during contract term (on a tieredbasis) up to• 30% of the SVMS Tender to be

subcontracted to >51% Black OwnedEME’s, QSE’s and Designated groups

• 30% of such subcontractors are atleast >30% black women owned

• 40% of such subcontractors are atleast >51% black owned

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Improvement over the past three Years

• Up to 30% for certain Technology Spend categories set side for EME’s and QSE’s (directly contracted)

• Drive inclusion of EME, QSE, BO enterprises into the MTN SA supply chain by actively engaging the

industry & onboard them. Aim to aggressively increase the % of spend with BO/SMME

FUNCTIONAL AREA ACTIVITIES

IT Infrastructure Services Hardware, Storage Management

IT Services Applications, Architecture, PMO

Network Deployment Data Centre Management, HVAC, Network Build, Energy Management, Project Management

Technology Enterprise Services Fibre Rollout, Field Services, DCIM

Transmission Microwave, RAN, CORE

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Tender Evaluation Criteria

EVALUATION CRITERIA

Evaluation Criteria Initial Weighting

Revised Weighting

Foundation

Technical 35 30 40

Financial Due Diligence 5 5 -

B-BBEE 20 30 30

Safety Health & Environment (SHE) 5 5 -

Quality Management 5 5 -

Total Cost of Ownership 25 20 25

Standard Terms & Conditions 5 5 5

Total 100 100 100

Evaluation Criteria• We aim to revise the B-BBEE

weighting on the Tender Evaluationcriteria from 20% to 30%.

• A minimum B-BBEE entry requirementto be set at level 4 Contributor status

• Further the B-BBEE evaluation criteriais set-up so as to benefit SMMEs,Black Owned, Black Women Ownedand Designated Groups entities.

• 80% of the overall B-BBEE scoring isdirectly related to promote BlackOwned, Black Women Owned,Designated Groups and SMMEparticipation within both value andsupply chains.

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Our Capacity Building Approach

Black Owned Black Women Owned EME / QSE Designated Groups

Supplier Development

Skills Development

Job Creation LocalisationPillars

Focus Groups

Evaluation

ESD Programmes

MTN’s B-BBEE evaluation criteria is set-up so as to benefit SMMEs, Black Owned and Black Women Owned entities (80% of the overall B-BBEE scoring is directly related to this).

Virtual

&

Physical Incubation

Mentoring and Coaching

MTN Foundation

ESD Initiatives

Y.E.S Pledge a 1000

Entrepreneurial opportunities

for Youth

MTN Zoner’s(Micro-

Entrepreneurship)

Early Payment for

SMMEs within 15 days avg

Black SMME Upfront

PaymentsSMME Fund

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Entrepreneurship Programmes Supported in the past 5 Years

Entrepreneurship in Schools▪ Student for the Advancement of Global Entrepreneurs (SAGE) programme:

o 60 high schools learners from the FS completed the programme▪ PrimeStars Media “Step Up to Start Up” entrepreneurship project:

o Some 60 000 learners from 108 public schools participated in the project nationally

R7,918,800

Entrepreneurship in Universities in partnership with Enactus▪ 28 Universities participated in the Each Year ▪ University of Venda won the national competition and participated in the ENACTUS 2017

World Cup finals hosted in London (UK) in 2016 University of Johannesburg represented –Toronto Canada

R10,067,610

Entrepreneurship skills development for SMMES ▪ The programme offers a 12-month business development and mentoring to SMME's in

Gauteng and Free State from disadvantaged communities. ▪ 212 entrepreneurs completed and graduated from the programme

R19,281,200

TOTAL EXPENDITURE OVER THE PAST 5 YEARS R37,267,610

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SMMEs Support as Implementing partners of the Foundation Projects

School Connectivity related Projects using SMMEs (see below sample suppliers) in regions and national to connect ICT in Schools. The SMMEs assisted in the roll-out of the school connectivity projects which entails preparation of the classroom and installation of the multimedia centres, maintenance and support, and the teacher training programme that seeks to ensure optimal utilization of the multimedia centre:

> Themolo Business Enterprise > Una Technologies> Digiton Intergrated Systems > Brainet Technologies

R125,264,630

Event Management related Services where SMMEs (see below sample suppliers) where empowered to host and manage the event, these SMMEs are based in regions where community interventions are implemented:

> MOD Events > Intsika Business Consultants> Big Buoys Media Consultants > Lumore Supply and Projects> Ivy Functions and Projects > Xingwili Trading> Vinyl Entertainment > Merle Falken Inclusive

R25,361,363

Total SMMEs Expenditure Incurred in Project Implementation R150,625,993

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Connectivity Programmes

2015- 2017

Thank you