Transcript Document

MTN Group Limited
Final audited results for the year ended
31 December 2006
Agenda
Strategic & operational overview
Phuthuma Nhleko
Group President and CEO
Financial overview
Rob Nisbet
Group Finance Director
Looking ahead…
Phuthuma Nhleko
2
Strategic and operational overview
Phuthuma Nhleko
Group President and CEO
MTN Vision
To be the leader in telecommunications in emerging markets
Key considerations for the period…
• Investcom acquisition
– Integration almost complete
– Synergy benefits included in 2007 budgets, including rebranding
– Asset base increased
• Significant interest in emerging markets, operations more competitive
• Increased regulatory intervention
• Margin management key
• Changes in ownership levels
– Increased shareholding in Côte d’Ivoire, Uganda, Botswana and Nigeria
Significantly different Group going forward
5
MTN an emerging market leader…
National Player
African Player
Emerging Market Player
1993 - 1997
1998 - 2005
2006
Operations
1
11
21
Population
41m
274m
501m
2006
Revenue
Subscriber #’s
1998 - 2005
1993 - 1997
Successfully delivering on our vision
6
Group highlights
for the 12 months ending 31 December 2006
Group
subscribers up
73%
to 40.1 million
Revenue 49% higher
EBITDA margin
increased to 43.4%
from 42.4% against
PAT increased to
ZAR 12,1 billion from
to ZAR 51,6 billion
against 12 months
to 31 December 2005*
12 months
to 31 December 2005*
* Unaudited
ZAR 6,7 billion against
9 months to
31 December 2005
EBITDA up 53% to
ZAR 22,4 billion
against 12 months
to 31 December 2005*
Adjusted headline
EPS increased by
73% to 584.7 cents
Dividend of 90 cents per share declared
against 9 months
to 31 December 2005
7
Subscriber growth...
MTN Group
Comparative annual growth
Split of subscribers by region
40.1
40
12%
35
30
23.2
25
20
49%
27%
15
No. of operations:
21
+110%
Population (m):
501
+83%
Subscribers (m):
40.1
+73%
10
73%
5
39%
0
SEA
Dec-05
WECA
Dec-06
MENA
Subscriber growth increasingly diversified
8
$23
$18
$18
$20
$15
$17
$12
$19
$20
$20
$17
$18
Ira
Af
n
gh
an
ist
an
Cy
pr
us
Sy
r ia
Ye
me
n
Gh
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a
Af
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Ni
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Ca ria
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Cô roo
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te
d'I
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ire
Ug
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Rw
an
Sw da
az
ila
nd
Za
mb
Co ia
ng
oB
.
Bo
tsw
an
a
Be
n
G. in
Bi
s
G. sau
Co
na
kry
Lib
eri
a
Su
da
n
So
uth
Relative ARPU performance
USD per month
South African ARPU: ZAR164 (Dec 05 – ZAR167)
$35
$21
$16
$17
$12
$9
$17
$14
$10
9
Relative EBITDA margins
80%
Group
Region
Key operations
57%
54%
60%
53%
52%
43% 42%
40%
35% 35%
53% 57%
34% 34%
30%
19%
20%
0%
Iran
Sudan
Ghana
Nigeria
South Africa
MENA
-20%
WECA
SEA
MTN
0%
-40%
-60%
-55%
'Dec-06
'Dec-05
-80%
New Operations: Iran – 21 October
-75%
* 12-month comparison
Group EBITDA margin expansion
10
Risk management
Governance
structures
• Comprehensive risk management structures aligned to King II and
best practice
• Ultimate board responsibility with dedicated group executive risk
officer
• Senior executive and board involvement on the ground
• Not politically aligned
Political /
regulatory
regimes
• Commitment to local and regional regulatory forums
• Constructive engagement
• Extensive pre-investment research – deep understanding
• Strong corporate responsibility –social investment, governance, tax etc
• Positive contribution through broadbased infrastructure roll-out
Committed and involved
11
Risk management (cont.)
• Expanded regions/ markets limit concentration exposure to any single
region
Emerging market
risk
• Co-investment with local partners
• Experienced and committed local management teams limit execution
risks
• Detailed market analysis and robust business plan preparation
contributes to informed risk decisions
• Local currency funding maximised to limit revenue / liability mismatch
FX risk
• Operations hedge foreign currency obligations where possible
• Translation risk not hedged - income statement impact
• Diversification of assets and earnings reduces risk profile
12
South & East Africa (SEA) region
Deeper mobile penetration over last 12 months
Dec 06
Growth %
6
+ 0%
98.9m
+ 2%
40%
+6% pts
12,483
+ 22%
Swaziland
268
+ 26%
Botswana
600
+ 25%
Zambia
187
+ 93%
Uganda
1,595
+ 63%
Rwanda
384
+ 40%
15,517
+ 26%
Countries in region
Population (m)
Mobile penetration
Subscriber numbers (m)
South Africa
Total SEA
% to Group
26% increase in subscribers
39%
13
SEA region – Overview
Botswana, South Africa, Swaziland, Zambia, Uganda, Rwanda
Population : 98.9m
16m Subs
Revenue ZAR27bn
EBITDA ZAR9bn
CAPEX ZAR3bn
PAT ZAR5bn
(20%Group)
(39% Group)
(52% Group)
(42% Group)
(31% Group)
(42% Group)
Revenue
195
1164
EBITDA
178
37
128
615
Subscribers
103
187
77
1595
384
268
343
174
600
24578
8340
12483
South Africa
Botswana
Swaziland
Zambia
Uganda
Rwanda
• No contribution from Investcom, inclusion of Uganda and Rwanda, previously in MENA
• Appointment of key roles in progress
• South Africa key driver of growth and profitability
• Strong performance from Uganda, subscribers up 63%
• Zambia negatively affected by slow start to roll-out
South & East Africa EBITDA margin 35.2%
14
SEA region
South Africa – Financial and operational highlights
Launched Jun 1994
Market share 36%
Population 47m
Dec 2006
Dec 2005*
Revenue
ZAR25bn
ZAR20bn
EBITDA margin
34%
34%
Capex/ Revenue
9%
13%
*Unaudited 12-month period
Subscribers/ARPU
million
12,483
Market sizing 48m (2011)
Penetration 68%
Shareholding 100%
• Market share improvements ~ 36% up 1%
• Highly competitive market
• Expanded distribution channels
• Customer centricity through improved
service initiatives
10,235
206
4,723
203
6,270
• Impact of regulatory changes still unclear
8,001
184
169
164
• Margins still healthy due to effective cost
management
• Continued focus on data revenue growth
Mar-03
Mar-04
Mar-05
MTN Subscribers ('000)
Dec-05
Dec-06
ARPU - Blended (ZAR)
MTN well positioned for change
15
SEA region
South Africa – Financial and operational highlights (cont.)
ARPU
ZAR per month
596
203
104
Mar-04
Postpaid
Avg. MOU
per sub
155
• Increased prepaid ARPU’s due to lower
denomination vouchers
576
184
541
169
487
164
• Prepaid pricing segmentation
• Lower end packages boost postpaid
subscribers but negatively affect ARPU
– MyChoice TopUp: 582k from 281k
97
93
94
Mar-05
Dec-05
Dec-06
Prepaid
Blended
140
129
– MyCall 100: 806k from 761k
• MOU decline slowing due to larger
subscriber base
124
ARPU pressure
16
SEA region
South Africa – Data highlights
Data revenue
• SMS approx 79% of total data revenue
ZAR million
• 3G roll-out on track
1,938
– Expanded to 793 from 431 at June 2006
1159
– Approx 20% subscribers under coverage
1 082
905
670
– Approx 280k users at December 2006
403
502
384
286
Mar-04
403
Mar-05
First Half
As % of
MTN SA
revenue*
5,0%
5,9%
779
679
Dec-05
Dec-06
Second Half
8,2%
8.0%
– Good HSDPA uptake
• Mobile money transfer system showing
good over past six month – 203% increase
in registered users
• Data tariffs reduced to improve competitive
position and stimulate traffic
* Includes data revenue from subscriptions from Dec 05
Competitive tariffs
17
SEA region
South Africa – Regulatory changes
• Electronic Communications Act (ECA) Promulgated on 19 July 2006
– Licence conversion process still pending
– Existing rights and obligations “protected” - new terms still unclear
• Interconnect Ongoing dialogue
– COA/CAM submitted to ICASA in March 2007, awaiting approval
– Market definitions as prescribed in ECA now proposed
• Re alignment of ICT BEE charter in process New DTI codes announced in December 2006
• Other
– Court rules Cell C CST roll-out irregular – interconnect settlement pending
– MNP operational from 10 Nov 2006 – limited impact, 40k subscribers to end Feb 2007
– RICA, MTN ready but final implementation still outstanding
Constructive engagement
18
West & Central Africa (WECA) region
Footprint opportunities significantly increased
Dec 06
Growth %
9
+ 125
Population (m)
224m
+ 25%
Mobile penetration
19%
+6% pts
Nigeria
12,281
+ 47%
Ghana*
2,585
Acquired
Cameroon
1,783
+ 43%
Côte d’Ivoire
1,625
+ 50%
Benin*
476
Acquired
Congo B.
280
+ 33%
G. Conakry*
276
New
Liberia*
218
Acquired
G. Bissau*
98
Acquired
Total WECA
19,622
+ 80%
% to Group
+ 49%
Countries in region
Subscriber numbers (m)
G. Conakry: Launch 18 April
* Acquired as part of Investcom LLC acquisition
80% increase in subscribers
19
WECA region - Overview
Nigeria, Ghana, Cameroon, Côte d’Ivoire, Benin, Congo B, G. Conakry, Liberia, G.Bissau
Population : 224m
20m Subs
Revenue ZAR21bn
EBITDA ZAR11bn
CAPEX ZAR5bn
PAT ZAR7bn
(45% Group)
(49% Group)
(41% Group)
(50% Group)
(52% Group)
(61% Group)
Revenue
397
EBITDA
271
289
150
Subscribers
280
131
122
562
476
592
1625
890
1725
1704
2585
971
1922
12281
8529
14900
1783
Nigeria
Benin
Cameroon
CongoB
Ghana
Other
Ivory Coast
• Low regional penetration at 19% offers opportunity for growth
• Investcom merger contributing ~ 42% of net movement in subscribers
• Increasingly competition and regulatory activities
• Strong performance from Cameroon, subscribers up 43%
• Integration of Investcom operations well advanced with focus on branding and products
Strong contribution to the Group, region dominated by Nigeria
20
WECA region
Nigeria - Financial & Operational Highlights
Launched Aug 2001
Market share 46%
Population 138.9m
Market sizing 45.6m (2011)
Penetration 19%
Shareholding 82%
Dec 2006
Dec 2005*
• Market share up from 45% to 46%
Revenue
ZAR14.9bn
ZAR11.4bn
EBITDA margin
57%
53%
• Strong EBITDA margin through cost
savings
Capex/ Revenue
24%
45%
*Unaudited 12-month period
Subscribers/ARPU
12,281
8,370
Pre Dec 05, subscribers
and ARPU based on 30 day
activity window
51
1,966
– Award of 5th GSM operator
4,392
• Broadening shareholder base still a
priority
40
Mar-05
– Expanding GSM license with unified
licence and 3G license (awarded in
last week of March 2007 for $150m)
– New interconnect rates effective from
22 September 2006
22
Mar-04
• Regulator activities:
Dec-05
MT N Subscribers ('000)
18
Dec-06
ARPU (USD)
• Tax holiday ending 1 April 2007
• Uncertain outcome of 2007 elections
Increasingly competitive
21
WECA region
Nigeria – New product offering
Quarterly analysis of total MOU and
net connections
• Launch of segmented value proposition
products on 22 September 2006
– On net calling preference
2500
2,500,000
2000
2,000,000
1500
1,500,000
1000
1,000,000
– Growth from returning inactive MTN
subscriber
– Incremental minute of use from both
existing and returning inactives
• Brand preference at 54% from 49%
500
500,000
0
0
Q1-2006
Q2-2006
MoU ('000)
Q3-2006
Q4-2006
Net connections ('000)
• Customer satisfaction at 80% from 69%
• Churn at 30% from 35% last year
• Pressure on network quality currently
being addressed
MTN successfully repositioned
22
WECA region
Nigeria – Network infrastructure & enhancements
Geographic and population coverage
• Network infrastructure
73%
64%
58%
48%
– 2 518 base stations
– Continuing expansion of transmission
backbone (~3600km)
• Acquisition of unified licence & VGC
(fixed wireless PTO) aimed at
corporate market
43%
38%
31%
• Capacity of ~13.5m subscribers in
core network
18%
Geographic coverage
Mar-04
Mar-05
Population coverage
Dec-05
Dec-06
• Pressure on network: focus shifted to
radio expansion to accommodate
higher subscriber numbers and
expansion into new areas
Most competitive coverage and backbone
23
WECA region
Ghana – Financial & operational highlights
Launched Nov 96
Market share 52%
Population 22.4m
Dec 2006
Dec 2005*
Revenue
ZAR1.7bn (Jul-Dec)
ZAR3.0bn (12mths)**
ZAR2.1bn
EBITDA margin
52% (Jul-Dec)
53% (12mths)**
58%
Capex/ Revenue
26% (12mths)**
16%
**Unaudited 12-month period
Penetration 22%
Shareholding 98%
• Market share loss stabilised in early 2007
• Increasing competition
– Market penetration at 22% from 12.76%,
fuelled by decrease in entry barriers
(handset / SIM)
2,585
Subscribers/ARPU
Dec 06: 6 month
ARPU figure
Market sizing 9m (2011)
– Privatisation of 2 licenses
1,820*
• Aggressive roll-out to improve network
quality well underway by December 2006
955 *
– Approx 100 BTS’s/month (Sep-Dec)
19 *
18*
17
2004
2005
2006
MT N Subscribers ('000)
ARPU (USD)
* Investcom LLC 12 month disclosure
Successfully integrated
24
Middle East & North Africa (MENA)
Footprint opportunities significantly increased with greenfield areas
Dec 06
Countries in region
6
Acquired
Population (m)
178m
Acquired
Mobile penetration
16%
Acquired
1,066
Acquired
Iran
154
New
Afghanistan
218
New
Syria*
2,237
Acquired
Yemen*
1,161
Acquired
Cyprus*
76
Acquired
Total MENA
4,912
N/A
% to Group
12 %
Subscriber numbers (m)
Sudan*
* Acquired as part of Investcom LLC acquisition
New subscribers acquired over period
New – Launched in 2006
25
MENA region – Overview
Afghanistan, Cyprus, Iran, Sudan, Syria, Yemen
Population : 178m
5m Subs
Revenue ZAR4bn
EBITDA ZAR1bn
CAPEX ZAR2bn
PAT ZAR0.2bn
(35%Group)
(12% Group)
(7% Group)
(5% Group)
(17% Group)
(2% Group)
Revenue
580
EBITDA
77
99
99
Subscribers
-58
294
154
1066
570
2237
2009
277
700
520
Iran
Syria
Yemen
Sudan
Other
1161
• Under-penetrated region with high growth potential
• Aggressive roll-out in Sudan, Iran and Afghanistan contributing to low EBITDA
• High revenue share in Syria and Iran
• Strong growth in Syrian subscribers to 2.2m from 1.5m
Regional consolidation concluded
26
MENA region
Iran – Highlights
Launched Oct 06
Market share 1%
Population 69.5m
Dec 2006
Revenue
ZAR 77m
EBITDA margin
-75%
Capex/ Revenue
942%
Market sizing 46.3m (2011)
Penetration 20%
Shareholding 49%
• MTN’s market sizing increased to 46m
(2011) from 31m (2015) estimated in 2005
• Pioneer in privatisation
• Low year end subscriber numbers due to
• Late launch
• Slow regulatory approval processes
Subscribers/ARPU
• Limited coverage
• Competitive pressure
154
1,080
Dec-06
Mar-07
8.5
MTN Subscribers ('000)
ARPU (USD)
• Current daily run rate now > 15 000
• Efficient subscriber centric activation
process - registration within 15 minute
• Strong brand awareness within 3 months
• Costs well contained
Slow start challenges identified and rectified
27
MENA region
Iran – Infrastructure
26%
Coverage statistics
• Significant vendor finance secured
• Roll-out behind schedule due to
challenges
16%
– Local ownership requirements
– High land costs
<1%
– Environmental procedures
<1%
Geographic coverage
Dec-06
Population coverage
Mar-07
Cities & BTS’s roll-out
– Access to intercity transmission
• Roll-out progressing well
• 4 switches deployed with a core capacity in
excess of 1m subscribers
588
• Risk of sanctions mitigated by:
361
– Diverse suppliers and contractual
commitments
8
Number of BTS
Dec-06
49
Number of cities
Mar-07
– Outsourcing (network and IT)
– Front end supply
28
MENA region
Iran – License obligations and regulatory
As at Dec05
Licence Term
– Effective
Date
Commercial
Launch
1 year
15 years
21 Nov 05
6-9 mths
~ 50%
population;
248 towns;
1,600km of
road covered
Within
prescribed
period
Note
15 years
10 Jul 06
Year 1
ends 10
July 2007
Oct 06
Within
period from
new
effective
date
• Lower connection fee negatively impacts
business targets
Road
coverage
challenging
• Low tariffs not offset by higher usage
50% population,
248 towns,
~1,000km of
road covered
• Year 1 roll-out most onerous
• Higher connection fee retained on
postpaid
• Competitive pressure reduced on prepaid
– Peak funding of $1.9m in 2009 whereas
previously targeted at $1.5m in 2007/8
• Interconnect terms contained in Irancell
licence, agreements to be finalised in
2007
29
MENA region
Sudan
Launched [Sep05]
Market share 25%
Population 36m
Dec 2006
Dec 2005*
Revenue
ZAR570m (Jul-Dec)
ZAR887m (12mths)**
ZAR130m(12mths)
EBITDA margin
17% (Jul-Dec)
19% (12mths)**
-55% (12mths)
70% (12mths)**
256% (12mths)
Capex/ Revenue
**Unaudited 12-month period
Market sizing 22m (2011)
Penetration 12%
Shareholding 85%
• First full year of operation
• Market share growth to 25%
• Regulatory & logistical challenges
• Despite roll-out challenges
– 36% of population covered
– 3G and GPRS launched
Subscribers/ARPU
1066
Dec 06: 6 month
ARPU figure
19 *
16 *
– 662 BTS’s and 3 MSC’s
• Introduction of aggressive CDMA
competitor
• ARPU dilution limited, low tariffs
269*
Dec-05
Dec-06
MTN subscribers ('000)
ARPU (USD)
• Dinar appreciation of 15% vs USD in
2006, positive contribution to margin
* Investcom LLC 12 month disclosure
High growth market, 800k net adds for the year
30
Financial overview
Rob Nisbet
Group Finance Director
Financial trends
Group revenue
Group EBITDA
Adjusted HEPS*
ZAR billion
ZAR billion
cents
CAGR
03FY – 06FY
38%
CAGR
03FY – 06FY
28%
10.7
*
12.6
306.2
13.8
31.4
15.3
CAGR
03FY – 06FY
42%
9.8
6.4
193
3.8
129.7
4.7
8.7
11.3
13.7
2003
2004
2005
17.2
20.2
3.5
2.7
Dec-05 Dec-06
2003
119.8
4.3
5.6
2004
2005
Basic headline earnings Dec 2006 – 606.5 cents (December 2005 – 359.8 cents)
Adjustment made to eliminate deferred tax asset raised by MTN Nigeria and put option impact
7.2
8.6
82.4
60.9
Dec-05 Dec-06
2003
123.4
2004
170.1
2005
218.4
Dec-05
278.5
Dec-06
32
Key accounting issues
• Investcom
– Consolidated from 1 July 2006
– Cash-flow hedging of purchase price resulted in gain of ZAR 2.5bn
• Set off against investment
• No tax provided on gain (ZAR 680m)
– PPA amortisation – ZAR 587m (an additional ZAR 72m relates to Uganda)
• Increased ownership
– Nigeria: 6.9%, ZAR 2,7bn from 75% to 82% (77% to 84% incl. put option impact)
– Cote d’Ivoire: 17.34%, ZAR 363m from 51% to 68.34%
– Botswana: 7%, ZAR 146m from 44% to 51% (remained as a JV)
– Uganda: 45%, ZAR1,577m from 52% to 97% (fully consolidated from 1 July)
• MTNI (Mauritius)
– Forex gain (ZAR 452m) in MTNI Mauritius (ZAR functional currency), after transfer to
reserves below
– Early adoption of IAS21 – ZAR 242m gain taken to reserves instead of Income statement
(Dec 05 – loss of ZAR 79m – restated numbers)
– Deferred tax credit (ZAR 145m) on timing differences
33
Earnings per share
cents
Basic headline earnings per share
Impact of put option
Reversal of deferred tax credit
Adjusted headline earnings per share
HEPS (584,7 cents)
3
12 months
ended
Dec 2006
9 months
ended
Dec 2005
% change
606,5
359,8
69
15,3
(1,6)
(37,10)
(20,0)
584,7
338,2
73
-33
• Adjusted headline earnings items:
290
326
South & East Africa
West & Central Africa
Middle East & North Africa
Head Office Companies
– Deferred tax credit ZAR 825m
(MTN share ZAR 650m)
– Impact of put option (MTN share ZAR 268m)
(Finance costs – ZAR 212m, Fair value adj. –
ZAR 120m, Forex loss – ZAR 89m, Minority
share profits – ZAR 153m)
34
Income statement
12 months
ended
Dec 2006
9 months
ended
Dec 2005
Revenue
51 595
27 212
EBITDA
22 413
11 231
Depreciation
(5 030)
(2 497)
Amortisation
(1 289)
(256)
Profit from operations
16 094
8 478
Net finance costs
(1 427)
(373)
23
10
Profit before taxation
14 690
8 115
Income tax expense
(2 591)
(1 411)
Profit after taxation
12 099
6 704
Minority interest
(1 489)
(838)
10 610
5 866
ZAR million
Share of profits of associates
Net profit
Net profit excluding Investcom
11 241
35
Exchange rates analysis
Exchange rates
Average
Closing
Dec
2006
Dec
2005
%
var
Dec
2006
Dec
2005
%
var
7,04
6,47
(9)
7,05
6,32
(12)
18,70
20,23
8
18,23
20,42
11
Iranian Rials per Rand
1 365,28
1 420,80
4
1 308,73
1 436,49
9
Ghana Cedis per Rand
1 282,55
1 412
9
1 312.99
1 449
9
32,54
37.63
14
28,82
36.55
21
128,49
131,44
2
128,41
129
0,5
9 168,96
9 192,58
0,3
9 220,00
9 078,62
(2)
Rand per Dollar
Nigerian Naira per Rand
Sudanese Dinars per Rand
Nigerian Naira per Dollar
Iranian Rial per Dollar
If Dec 2005 rates are applied to Dec 2006 PAT there is an impact of -11%
36
Revenue analysis
12 months
ended
Dec 2006
26 586
24 578
9 months
ended
Dec 2005
16 293
15 507
Unaudited
12 months
ended
Dec 2005
21 065
20 101
2 008
786
964
21 208
14 900
1 704
10 868
9 034
-
13 533
11 377
-
4 604
1 834
2 156
3 756
77
570
-
-
3 109
-
-
45
51
70
(36)
TOTAL
51 595
27 212
34 668
49
Revenue excl. Investcom
45 608
27 212
34 668
32
ZAR million
South & East Africa
South Africa*
Other operations
(Botswana,Uganda,Rwanda,Zambia,Swaziland)
West & Central Africa
Nigeria
Ghana
Other operations (Côte d’Ivoire, Cameroon, Congo
Brazzaville, Liberia, Benin, Bissau, Conakry)
Middle East & North Africa
Iran
Sudan
Other operations (Cyprus, Syria, Afghanistan, Yemen,
MedNet)
Head Office Companies
* Including MTN Network Solutions
% change
ZAR
26
22
57
31
LC
22
19
37
Revenue analysis
(% of Revenue)
Nigeria Interconnect
ZAR million
2364
2,500
6.40%
Dec 2006
100% = ZAR 51 595m
7.00%
6% 1%
6.00%
5.45%
2,000
5.40%
5.00%
1,500
1,365
1,254
1,025
1,000
808
596
20%
Interconnect
3.00%
805
2.46%
Equipment sales
2.00%
2.01%
500
349
118
1.00%
222
0
73%
0.00%
Mar-05
Sep-05
Dec-05*
Jun-06
Dec-06
6,000
Net Interconnect
Net Interconnect %
10.19%
10.51%
5,000
12.00%
5600
10.90%
10.00%
4,427
8.59%
3,784
4,000
3,000
7.97% 8.00%
6.00%
2,637
2,456
1952
1,852
1,572
1,063
4.00%
970
1,000
2.00%
0
0.00%
Mar-05
* 9 months
Sep-05
Dec-05*
Jun-06
Connection fees
Interconnect Revenue
South Africa Interconnect
ZAR million
2,000
Subscriber spend
4.00%
Dec-06
• Strong South Africa interconnect revenue growth offset by
higher interconnect cost growth due to “All net”
proposition
• Regulatory focus on interconnect rates
• New Nigerian interconnect tariffs effective 22nd Sep
reducing mobile to mobile tariffs significantly and
increasing mobile to fixed and fixed to fixed. Negative
impact offset over last quarter by value proposition
• Equipment sales contribute less due to SA impact being
diluted
• Interconnect revenue unchanged from 2005 at 20%
38
EBITDA analysis
ZAR million
12 months
ended
Dec 2006
Unaudited
%
12 months ended change
Dec 2005
ZAR
Dec 2006
EBITDA
margin %
Dec 2005
EBITDA
margin %
South & East Africa
9 346
7 341
27
35,2
34,9
South Africa*
8 340
6 895
21
33,9
34,3
Other operations
1 006
446
126
11 355
7 051
61
53,5
52,1
Nigeria
8 529
6 051
41
57,2
53,2
Ghana
890
-
-
52,2
Other operations
1 936
1 000
94
Middle East & North Africa
1 117
(3)
-
(58)
(3)
-
99
-
-
1 076
-
-
595
296
TOTAL
22 413
14 685
53
43,4
42,4
EBITDA excl. Investcom
20 100
14 685
37
44,1
42,4
West & Central Africa
Iran
Sudan
Other operations
Head Office Companies
* Including MTN Network Solutions
29,7
17,4
39
EBITDA trends
EBITDA (R22 413m)
1,117
• Strong contribution from WECA
595
• Nigeria margins up to 57% from 52% on
strong cost control initiatives, especially
staffing and fuel
9,346
11,355
• RSA margins lower compared to prior
twelve months on higher interconnect
costs
South & East Afrca
West & Central Africa
Middle East & North Africa
Head Office Companies
57
56
60
52
52
52
43.4
44
43.5
50
42.9
40
34
37
30
33
37
32
36
34
38
39
34
42.5
42
41.7
41.4
43
41.3
41.5
20
41
10
40.5
0
• Accretive EBITDA contribution from full
consolidation of Uganda
• Impact of lower margins from start – up
operations i.e Iran and Sudan
• Dilution impact of revenue share
arrangements in Iran and Syria
40
Mar-05
SA EBITDA
* 9 months
Sep-05
Dec-05*
SA EBITDA (excl. handsets)
Jun-06
Nigeria
06-Dec
MTN Group
40
Profit after tax
(excluding Nigeria deferred tax asset)
12 months
ended
Dec 2006
9 months
ended
Dec 2005
South & East Africa
5 119
3 021
69
South Africa*
Other operations
4 797
322
6 664
2 877
144
3 210
67
108
5 739
2 866
100
348
577
182
(144)
(3)
329
(691)
344
(15)
(15)
61
TOTAL
11 274
6 277
80
Profit after tax excl. Investcom
11 758
6 277
87
ZAR million
West & Central Africa
Nigeria**
Ghana
Other operations
Middle East & North Africa
Iran
Sudan
Other operations
Head Office Companies
* Including Network Solutions
** Excluded deferred tax asset: 2006 – R825 million (Dec 2005 – R427 million)
% change
ZAR
LC
67
73
41
Tax considerations
19.76
Effective tax rates
%
20
19.5
19
18.5
17.64
18
17.5
17.4
17
17
16.5
16
15.5
Mar-05
Dec-05
MTN Group
Dec-06
Investcom
Nigeria - expected trends in effective tax rates
75%
Illustrative
50%
25%
0%
Tax – effective rate
• Bulk of disallowed expenses relate to
unproductive interest on Investcom acquisition
debt
• Prior year adjustment relates predominantly to
Cameroon
• Investcom effective tax rate has limited impact
at this stage
Looking forward
• Pioneer status in Nigeria expires on 31 March
2007
– Forecast rate for 2007 previously reported at
47%, now reported 52% is due to the deferred
tax effect revised depreciation charge in MTN
Nigeria
– Corporate tax rate is 30% plus the impact of a
~2% education levy
• Group effective rate expected to increase
based on
Dec-07
Dec-08
Accounting tax rate
Dec-09
Cash tax rate
Dec-10
– Nigerian tax
– Non deductible interest
Currently deferred tax asset reversed for adjusted headline earnings
42
Balance sheet
Assets
As at
Dec 2006
As at
Dec 2005
76 282
31 136
Property, plant and equipment
30 647
20 676
Goodwill
27 017
2 650
Intangible assets
13 088
4 057
Investment, loans and other non-current assets
2 925
2 367
Deferred taxation
2 605
1 386
20 635
13 676
Bank balances
9 961
7 222
Restricted cash
130
338
10 544
6 116
96 917
44 812
ZAR million
Non-current assets
Current assets
Other current assets
Total assets
43
Balance sheet
Equities and liabilities
As at
Dec 2006
As at
Dec 2005
42 729
23 096
38 696
19 716
Minority interest
4 033
3 380
Non-current liabilities
34 203
9 765
Long-term liabilities
28 587
7 505
Deferred taxation
2 778
853
Non-current liabilities
2 838
1 407
19 985
11 951
15 593
10 851
4 392
1 100
96 917
44 812
ZAR million
Capital and reserves
Ordinary shareholders’ interest
Current liabilities
Non-interest bearing liabilities
Interest bearing liabilities
Total equity and liabilities
44
Analysis of net debt position
Net (cash)
debt
Interest
bearing
liabilities*
Cash and cash
equivalents
South & East Africa
4 882
7 326
2 444
South Africa **
Other operations
4 715
167
6 772
554
2 057
387
770
4 884
4 114
Nigeria
1 165
3 552
2 387
Ghana
(565)
250
815
Other operations
170
1 082
912
Middle East & North Africa
891
2 644
1 753
1 760
1 879#
119
248
348
100
Other operations
(1 117)
417
1 534
Head Office Companies
18 208
19 988
1 780
Eliminations
TOTAL
(1 863)
22 888
(1 863)
32 979
10 091
As at 31 Dec 2006
ZAR million
West & Central Africa
Iran
Sudan
* Including long-term borrowings, short-term borrowings and overdrafts
** Including MTN Network Solutions
# Includes debt from MTNI Mauritius
45
Interest bearing liabilities split
as at 31 December 2006
6%
• Undrawn facilities of over ZAR 10 billion,
mainly at MTN Holdings
1 879
19%
6 203
• No FX exposure on SA debt
24 897
• Repayment of more than US$ 850m of
Investcom acquisition debt from subsidiary
dividends
75%
Cross surety structure
Ring-fenced to local operation
Other
• De-leveraging results in Net debt to
EBITDA of 1.02
6%
8%
24%
• Funding of underlying operations
continued focus for 2007 to ensure
70% of USD hedged
– Local balance sheet efficiency
– Better utilization of cash across the Group
USD
ZAR*
62%
Naira
Other
46
Cash flow statement
12 months
ended
Dec 2006
9 months
ended
Dec 2005
22 934
11 369
(143)
(116)
Taxation paid
(4 086)
(1 011)
Dividends paid
(1 083)
(1 081)
Cash inflows from operating activities
17 622
9 161
Cash outflows from investing activities
(38 606)
(12 922)
Acquisitions of PP&E (excluding software)
( 9 379)
(6 438)
Other investing activities
(29 227)
(6 484)
(20 984)
(3 761)
Cash (out) inflows from financing activities
18 993
5 357
Net movement in cash and cash equivalents
(1 991)
1 596
ZAR million
Net cash generated by operations
Net interest paid
47
Capital expenditures (incl. software)
Capex approved or
committed at
31 Dec 2005
12 months
ended
Dec 2006
Capex approved or
committed at
31 Dec 2006
South & East Africa
4 308
3 120
5 014
South Africa*
Other operations
3 641
667
2 391
729
4 360
654
West & Central Africa
6 660
4 998
8 841
Nigeria
Ghana
Other operations
5 321
3 674
5 558
595
744
484
840
1 156
2 127
Middle East & North Africa
3 710
1 656
4 675
Iran
Sudan
Other operations
2 764
773
2 863
413
421
839
533
462
973
14 678
4
9 778
14
18 544
ZAR million
Head Office Companies
TOTAL
*
Including MTN Network Solutions
48
Capital expenditure analysis
CAPEX (R9 778m)
1,636
• 60% of capex due to Nigeria and RSA
invested in network coverage and capacity
126
3,018
South & East Africa
West & Central Africa
• RSA focus on 3G coverage (close to 800
sites rolled out to date)
Middle East & North Africa
Head Office Companies
• Nigeria $100 million investment in fibre
network
4,998
• Roll – outs in Iran and Sudan accelerating
in last quarter
CAPEX as a % of revenue
30
26
25
25
19
20
16
15
10
5
0
Mar-05
Dec-05
Jun-06
Dec-06
49
Looking forward..
Phuthuma Nhleko
Looking forward…
• Drive regional synergies
• Take advantage of opportunities within the value chain
– Payment solutions to enable transfer of funds in under-serviced markets;
– Data opportunities
• Improve operational efficiency through our least-cost operator strategy
• Aggressive roll-out and subscriber acquisition strategy for Iran
• Pursue appropriate expansion opportunities to diversify earnings and
consolidate position in emerging markets;
• De-leverage core debt and gear up operations
51
Thank you
Questions?
52
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 forward looking statements expressed represent those of the Company at
the time. Undue reliance should not be placed on such statements and opinions because by
nature, they are subjective to known and unknown risk and uncertainties and can be affected by
other factors that could cause actual results and Company plans and objectives to differ
materially from those expressed or implied in the forward looking statements.
Neither the Company nor any of its respective affiliates, advisors or representatives shall have
any liability whatsoever (based on negligence or otherwise) for any loss howsoever arising from
any use of this presentation or its contents or otherwise arising in connection with this
presentation and do not undertake to publicly update or revise any of its opinions or forward
looking statements whether to reflect new information or future events or circumstances
otherwise.
This presentation does not constitute an offer or invitation to purchase or subscribe for any
securities and no part of it shall form the basis of or be relied upon in connection with any contract
or commitment whatsoever.
53
Annexure I
MTN – Data Sheet part 1
Group
SEA
WECA
MENA
RSA Nigeria
Ghana
Sudan
Iran
98.9
223.8
178.1
47.4
138.9
22.4
36.3
69.5
40%
19%
16%
74%
19%
22%
12%
20%
2
1
1
2
3
Market overview
Population (m)
500.8
Mobile penetration
Market position
No. of operators
61
14
30
17
3
4
4
4
3
40 051
15 517
19 622
4 912
12 483
12 281
2 585
1 066
154
21
18
15
23
18
17
16
9
36%
46%
52%
25%
1%
Operational Data
Subscribers (000s)
ARPU (USD)
Market share
Key Financials (Rm)
Revenue
51 595
26 586
21 208
3 756
24 578
14 900
1 704
570
77
EBITDA
22 413
9 346
11 355
1 117
8 340
8 529
890
99
-58
43%
35%
54%
30%
34%
57%
52%
17%
-75%
12 098
5 119
7 384
182
4 797
6 564
243
-3
-144
EBITDA margin
PAT*
55
MTN – Data Sheet part 2 (SEA)
SubTotal
Shareholding
License Period (years)
RSA
Botswana
Zambia
Swaziland
Uganda
Rwanda
100%
51%
100%
30%
97%
40%
15
15
15
10
20
10
Market overview
Population (m)
98.9
47.4
1.8
11.5
1.1
28
9.1
Mobile penetration
40%
74%
60%
9%
24%
9%
4%
2
1
2
1
1
1
14
3
2
3
1
3
2
62.9
48.2
1.6
2.6
0.8
8
1.7
15 517
12 483*
600
187
268
1 595
384
21
23
20
19
20
12
17
36%
60%
19%
100%
66%
95%
Market position
No. of operators
Market Size (2011) - million
Operational Data
Subscribers (000s)
ARPU (USD)
Market share
*
2.1 million postpaid
56
MTN – Data Sheet part 3 (WECA)
SubTotal
Cameroon Côte d’Ivoire Congo B
Nigeria
Ghana
82%
98%
70%
68%
100%
75%
100%
75%
60%
15
15
15
20
15
10
10
18
15
223.9
138.9
22.4
17.1
20.2
3.4
7.7
1.5
9.5
3.2
19%
19%
22%
18%
20%
27%
15%
10%
6%
14%
1
1
1
2
2
1
1
1
1
30
4
4
3
3
2
4
2
4
4
74.4
45.6
9.0
5.8
7.7
1.4
2.0
0.3
1.8
0.8
19 622
12 281
2 585
1 783
1 625
280
476
98
276
218
18
18
17
15
18
20
21
12
17
18
46%
52%
58%
41%
31%
40%
66%
48%
51%
Shareholding
License Period
Benin
G. Bissau
G. Conakry Liberia
Market overview
Population (m)
Mobile penetration
Market position
No. of operators
Market Size (2011) - million
Operational Data
Subscribers (000s)
ARPU (USD)
Market share
57
MTN – Data Sheet part 4 (MENA)
SubTotal
Shareholding
Sudan
Iran
Afghanistan
Cyprus
Syria
Yemen
85%
49%
100%
100%
75%
83%
22
15
14
20
15
15
178.0
36.3
69.5
30.9
0.9
18.8
21.6
16%
12%
20%
6%
80%
26%
12%
2
3
3
2
2
1
17
4
3
3
2
2
3
79.8
12.5
46.3
5.0
1.0
8.6
6.4
4 912
1 066
154
218
76
2 237
1 161
15
16
9
14
35
17
10
25%
1%
12%
10%
46%
44%
License Period
Market overview
Population (m)
Mobile penetration
Market position
No. of operators
Market Size (2011) - million
Operational Data
Subscribers (000s)
ARPU (USD)
Market share
58
MTN – Regional Growth
Subscribers / ARPU
SEA
WECA
MENA
19,622
15,517
4,912
12,281
5,259
6,996
46
9,148
15
28
5,255
22
28
Mar-03
Mar-04
10,908
45
Mar-05
MTN Subscribers ('000)
22
25
Dec-05
1,468
2,547
37
18
21
Dec-06
ARPU (USD)
Mar-03
Mar-04
Mar-05
MTN Subscribers ('000)
Dec-05
Dec-06
Dec- 06
MTN Subscribers ('000)
ARPU (USD)
ARPU (USD)
Pre Dec 05, subscribers and ARPU
based on 30 day activity window
Pre Dec 06, subscribers exclude
Investcom operations
59
Structure
MTN Group
100%
MTN Holdings
100%
MTN South Africa
MTN International
100%
MTN Mauritius
100%
Investcom LLC
100%
Network Operations
68%
Côte d’Ivoire
82%
Nigeria
75%
Guinea Republic
75%
Benin
100%
Service Providers
100%
Zambia
70%
Cameroon
75%
Syria
60%
Liberia
100%
Network Solutions
51%
Botswana
40%
Rwanda
98%
Ghana
100%
Guinea Bissau
100%
Congo-B
97%
Uganda
83%
Yemen
100%
Cyprus
85%
Sudan
100%
Afghanistan
49%
Iran
30%
MTN Swaziland
All shareholdings rounded
100%
Mednet
60
Annexure II
Balance sheet
Asset analysis
As at 31 December 2006
ZAR Million
Total
SEA
WECA
MENA
HQ
Companies
Non-current assets
76 282
14 121
23 613
6 954
31 594
Tangible assets
30 647
9 612
17 568
3 444
23
Intangible assets (incl. goodwill)
40 105
1 951
3 542
3 122
31 490
5 530
2 558
2 503
388
81
20 635
8 807
6 181
3 293
2 354
10 091
2 444
4 114
1 753
1 780
10 544
6 363
2 067
1 540
574
96 917
22 928
29 794
10 247
33 948
Other non-current assets
Current assets
Bank balances (incl. securitised
deposits)
Other current assets
Total assets
62
Balance sheet
Equity and liabilities analysis
As at 31 December 2006
ZAR Million
Total
SEA
WECA
MENA
HQ
Companies
Capital and Reserves
42 729
7 223
18 827
3 782
12 897
Non current liabilities
34 203
7 725
3 837
2 254
20 387
Long-term liabilities
28 587
6 024
3 674
2 231
16 658
Non-current liabilities
2 838
412
2
23
2 401
Deferred taxation
2 778
1 289
161
-
1 328
19 985
7 980
7 130
4 211
664
15 593
6 678
5 920
3 798
(803)
Interest bearing liabilities
4 392
1 302
1 210
413
1 467
Total equity and liabilities
96 917
22 928
29 794
10 247
33 948
Current liabilities
Non-interest bearing liabilities
63
Operating expenditure analysis
ZAR million
12 months
ended
Dec 2006
9 months
ended
% change
Dec 2005
South & East Africa
17 240
10 914
58
South Africa*
16 238
10 485
55
Other operations
1 002
429
West & Central Africa
9 853
5 277
87
Nigeria
6 371
4 316
48
Ghana
814
-
Other operations
2 668
961
Middle East & North Africa
2 639
-
Iran
135
-
Sudan
471
-
Other Operations
2 033
-
Head Office Companies
(550)
(210)
29 182
15 981
TOTAL
* Including Network Solutions
83
64
EBITDA analysis
ZAR million
12 months
ended
Dec 2006
9 months
%
ended change
Dec 2005
ZAR
Dec 2006
EBITDA
margin %
Dec 2005
EBITDA
margin %
South & East Africa
9 346
5 367
74
35,2
32,9
South Africa*
8 340
5 009
67
33,9
32,3
Other operations
1 006
358
181
11 355
5 599
103
53,5
51,5
Nigeria
Ghana
Other operations
8 529
890
1 936
4 727
872
80
122
57,2
52,2
52,3
Middle East & North Africa
1 117
(6)
-
29,7
(58)
99
(6)
-
(867)
-
17,4
1 076
-
-
595
271
120
TOTAL
22 413
11 231
100
43,4
41,3
EBITDA excl. Investcom
20 100
11 231
79
44,1
41,3
West & Central Africa
Iran
Sudan
Other operations
Head Office Companies
* Including MTN Network Solutions
65
Depreciation analysis
12 months
ended
Dec 2006
9 months
ended
Dec 2005
South & East Africa
1 334
842
58
South Africa*
1 065
744
43
269
98
West & Central Africa
3 282
1 652
99
Nigeria
2 699
1 455
85
Ghana
124
-
Other operations
459
197
Middle East & North Africa
414
-
Iran
15
-
Sudan
52
-
347
-
-
3
5 030
2 497
ZAR million
Other operations
Other Operations
Head Office Companies
TOTAL
* Including MTN Network Solutions
% change
101
66
Amortisation analysis
ZAR million
12 months
ended
Dec 2006
9 months
ended
% change
Dec 2005
203
50
306
86
39
121
Other operations
117
11
West & Central Africa
801
206
289
Nigeria
191
116
65
Ghana
317
-
Other operations
293
90
Middle East & North Africa
284
-
Iran
19
-
Sudan
65
-
200
-
1
-
1 289
256
South & East Africa
South Africa*
Other Operations
Head Office Companies
TOTAL
* Including MTN Network Solutions
404
67
Finance cost analysis
Net
Finance
Cost
Finance
Income
Finance
Costs
Forex
Losses
Forex
Gains
South & East Africa
571
(238)
640
173
(4)
South Africa*
494
(223)
598
122
(3)
Other operations
77
(15)
42
51
(1)
West & Central Africa
49
(591)
557
115
(32)
Nigeria
(92)
(558)
472
11
(17)
Ghana
(15)
(27)
10
9
(7)
Other operations
156
(6)
75
95
(8)
Middle East & North Africa
(90)
(74)
31
42
(89)
Iran
(43)
(44)
1
-
-
Sudan
(33)
-
4
26
(63)
Other Operations
(14)
(30)
26
16
(26)
Head Office Companies
897
(295)
1 379
370
(557)
1 427
(1 198)
2 607
700
(682)
ZAR million
TOTAL
* Including Network Solutions
68
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