MTN GROUP LIMITED - MTN Quarterly update for the period ended 31 March 2020

MTN Quarterly update for the period ended 31 March 2020

MTN Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584/06)
(Share code MTN)
(ISIN: ZAE000042164)
(“MTN” or “the group”)

Quarterly update for the period ended 31 March 2020

MTN is an emerging market mobile operator with a clear vision to lead the delivery of a bold, new
digital world to our 257 million customers across 21 operations. We are inspired by our belief that
everyone deserves the benefits of a modern connected life.

Salient features
•    Subscribers increased by 6,6 million to 257,3 million
•    Active data subscribers increased by 2,9 million to 98,3 million
•    Active MTN Mobile Money (MoMo) customers increased by 0,4 million to 35,1 million
•    Group service revenue increased by 11,1%
•    Group earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 43,2% (from
     41,1%)
•    MTN South Africa service revenue decreased by 6,2%, with an EBITDA margin of 36,6% (from
     38,8%)
•    MTN Nigeria service revenue increased by 16,7%, with an EBITDA margin of 52,7% (from
     53,3%)

Unless otherwise stated, financial growth rates are presented on a constant currency basis and are year-on-year (YoY, 1Q20 vs 1Q19).
Non-financial growth rates are presented quarter-on-quarter (QoQ, 1Q20 vs 4Q19).

Service revenue excludes device and SIM card revenue. Data revenue is mobile and fixed access data and excludes roaming and wholesale.
Fintech includes Mobile Money (MoMo), insurance, airtime lending and e-commerce. Active data users include all subscribers at a point in
time who are part of the RGS90 subscriber base who, in the 30 days prior to that point in time had data usage greater than or equal to five
megabytes. Excluding telemetry (machine to machine) subscribers based on tariff. MoMo users are 30-day active users.

                                                                                                                                        
Group president and CEO, Rob Shuter comments:

“The effects of the COVID-19 pandemic on the global economy have brought about unprecedented
uncertainty, volatility and challenges which are impacting our markets at both the socio-economic and
macroeconomic levels. The impact of the pandemic on our quarter one performance was not
significant as lockdown restrictions for our consolidated subsidiaries were only implemented from the
last week of March 2020.

For the first quarter, MTN delivered a solid performance by increasing service revenue by 11,1% and
EBITDA by 15,6% with the EBITDA margin improving by 2,1pp to 43,2%, in line with our medium-term
targets.

MTN Nigeria and MTN Ghana generated strong double-digit service revenue growth and improving
EBITDA margins, contributing to the solid group performance.

MTN South Africa’s (MTN SA) performance was negatively impacted by the wholesale business, as we
continue to account for Cell C roaming revenue on a cash basis, as well as the loss of revenue from the
Telkom roaming agreement which came to an end in June 2019. We are encouraged by the
stabilisation of the consumer prepaid business which was affected by the implementation of the new
out-of-bundle data usage rules. Also pleasing was the continued progress in the enterprise business,
which recorded 8,2% service revenue growth.

The group recorded voice, data and fintech revenue growth of 6,3%, 26,4% and 26,0% respectively as
we continued to execute on our strategic objectives and progress toward becoming a digital operator.
Digital revenue has returned to growth, increasing by 15,6%.

We continued to build commercial momentum, adding 6,6 million subscribers in the quarter, with
active data users increasing by 2,9 million and MoMo subscribers by 0,4 million. We continued to scale
our Ayoba platform, recording 2,6 million monthly active users. We accelerated our MoMo agency
network in Nigeria under our super-agent licence, adding 70 000 agents in the first quarter and
bringing the total number of registered agents to 178 000.

In these difficult times we continue to focus on our key priorities: looking after our people, our
customers and our networks while we focus on efficiencies. For our people, the immediate priority is
their health and safety, where the work-from-home programmes across our markets empower our
staff to work remotely while ensuring continuity in our operations. For our customers, we have ramped
up our digital channels as a service alternative to enable them to continue purchasing airtime and
accessing our products and services seamlessly as well as launching Y’ello Hope Packages in most of
our markets. Our various initiatives support governments across our markets with communication
systems and connectivity as we do our part to help minimise the economic and social impact.

The COVID-19 situation is an evolving one and will undoubtedly affect the year ahead. Given the
uncertainties associated with the duration and economic impact of the pandemic, it is difficult to
reliably quantify the direct and indirect financial effects on the business at this early stage. The group
will continue to focus on business continuity and efficiency, and we have implemented strict measures
to preserve resources and strengthen our resilience.

We maintain our medium-term guidance and will update the market in the future of any changes in
that regard. The group remains committed to delivering on its strategy including delivering on our
asset realisation programme, which aims to simplify our portfolio, reduce risk, improve returns and
realise capital of at least a further R25 billion over the medium-term.”


                                                                                                        
The group’s results are presented in line with the group’s operational structure. This is South Africa, Nigeria, the Southern
and East Africa and Ghana (SEAGHA) region, the West and Central Africa (WECA) region and the Middle East and North Africa
(MENA) region and their respective underlying operations.

The SEAGHA region includes Ghana, Uganda, Zambia, Rwanda, South Sudan, Botswana (joint venture-equity accounted),
eSwatini (joint venture-equity accounted) and Business Group. The WECA region includes Cameroon, Ivory Coast, Benin,
Congo-Brazzaville, Liberia, Guinea Conakry and Guinea Bissau. The MENA region includes Iran (joint venture-equity
accounted), Syria, Sudan, Yemen, and Afghanistan.

MTN South Africa
MTN SA has seen its prepaid business starting to recover, following the impact of regulation changes,
while the postpaid customer base saw an increase in net additions in challenging macro and
competitive environment. The revival in the enterprise business continued, with growth for a second
consecutive quarter. This progress validates the investment made in MTN SA’s leading network, which
once again won the Best in Test Award for the third successive year.

MTN SA recorded a slight increase in total subscribers (by 75 000 QoQ) to end the quarter with a
base of 29,0 million. Service revenue declined by 6,2% owing largely to a sharp reduction in
wholesale revenue resulting from the effects of a change to cash accounting for Cell C roaming
revenue and the loss of the Telkom roaming agreement. If we adjust the numbers by removing
national roaming (both Cell C and Telkom), then overall Q1 service revenue for MTN SA would have
been flat, highlighting the progress made in the underlying business. The momentum in overall data
revenue in MTN SA has also been pleasing and grew by 7.1%, supported by a 53% YoY increase in
traffic.

The overall first quarter performance was impacted by a challenging trading environment brought
about by weak macroeconomic conditions compounded by the global outbreak of the COVID-19
pandemic, currency depreciation and loadshedding.

The consumer prepaid business continued on its improving trajectory, with service revenue coming
in flat YoY, compared to a decline of 4,1% in 2019. The performance of the business remained affected
by the base effects of ICASA’s end-user subscriber regulations, with out-of-bundle (OOB) data revenue
still included in the first two months of the prior period before the new regulations took effect from 1
March 2019. There was encouraging momentum in prepaid data revenue, which increased by 3,3%
YoY. This was driven by a 31,0% increase in prepaid data traffic following a slight decline of 0,7% in
2019.

MTN SA made further progress in lowering churn and stabilising the quality of the prepaid base. In
2019, these interventions included the discontinuation of the loss-generating 1GB acquisition
promotion along with similar incentives in prepaid, which helped to drive distribution cost efficiencies.
The trajectory in net additions has stabilised and started to show a steady recovery over the past few
quarters, with a 0,1 million QoQ reduction in prepaid subscribers in Q1, to a closing base of around
22,7 million. MTN SA continues to focus on making data more affordable for its customers, which is
evident in the 21,0% YoY reduction in the effective prepaid data tariff.

The consumer postpaid business service revenue was flat YoY in a competitive market. The postpaid
subscriber base was also flat, reflective of the tight competitive environment and pressure on                                                                                                                        3
consumers due to tough economic conditions. The slower acquisition volumes were also a result of
stricter vetting rules aimed at reducing credit risk.

Wholesale revenue declined by 44,0% YoY. This resulted from our roaming agreement with Telkom
having concluded at the end of June 2019 as well as lower revenue recognised from Cell C due to the
ongoing cash basis of accounting.

For Cell C specifically, roaming revenue continued to be accounted for on a cash basis in line with
IFRS 15 and MTN SA recognised approximately R292 million in revenue during the quarter. At 31
March 2020, R450 million in Cell C revenue remained unrecognised. MTN SA commenced phase two
of the roaming agreement with Cell C, effective 1 May 2020.

The progress made in the enterprise business continued in Q1 2020, where growth was achieved for
the second consecutive quarter with service revenue up 8,2% YoY. The business continued to benefit
from interventions aimed at stabilising churn, adding new corporate customers and driving growth in
our ICT offering.

MTN SA’s EBITDA margin was 36,6%, a decrease of 2,2pp due to the factors mentioned above,
including the reduction in OOB data and national roaming revenue.

As part of the group-wide response to the COVID-19 pandemic detailed later in this report, MTN SA
has implemented several initiatives to assist in reducing cash circulation and containing the spread of
COVID-19. The MTN MoMo app allows free person-to-person cash payments under R200, while a
number of electronic transfer and payment channels on our platforms will also be zero-rated. To
further ease the burden on consumers, MTN SA has also launched discounted social bundle prices to
MoMo users and waived in-app cash service fees.

For our communities, MTN has eased the COVID-19 disruption with digital innovations, including zero-
rated channels for the benefit of businesses, schoolchildren and families across South Africa. MTN SA
has also zero-rated USSD lines and other COVID-19 channels, including Ayoba, to report infections and
other critical information.

In aid of the Department of Basic Education academic recovery plan, MTN SA is supporting learners
by providing access to a number of e-learning platforms, which are zero-rated for all MTN customers.
The MTN Foundation has also contributed R3 million to sponsor students to have full access to a broad
range of learning materials.

The assistance in combating COVID-19 in South Africa extends to the Department of Health through
the supply of personal protective equipment including the delivery of more than 30 000 face masks
and 18 000 bottles of hand sanitisers to provincial health departments to date.


MTN Nigeria
MTN Nigeria followed the encouraging momentum achieved in Q4 2019 with another solid
performance in Q1 2020, where double-digit service revenue growth accelerated to 16,7% YoY,
supported by voice and data growth.

                                                                                                     
Voice revenue growth remained healthy at 7,4%, supported by subscriber growth. MTN Nigeria
continued to gain market share and added 4,2 million subscribers to its network to end the quarter at
68,5 million. This was underpinned by the deployment of additional subscriber registration devices,
while the continued implementation of various customer value management (CVM) initiatives also
helped to increased voice traffic.

Data revenue continued to accelerate with growth of 59,2% YoY. This was achieved through a higher
number of active data subscribers, which increased by 1,7 million to 26,8 million, as well as improved
4G penetration, which supported traffic growth of 130,4% YoY. Some 1,6 million new smartphones
joined the network, bringing smartphone penetration to 42,6% of the base.

The digital business returned to growth, with revenue increasing 63,7% supported by an improved
uptake of products within our portfolio of digital offerings and improvements in the customer journey
experience. During the quarter, we added 1,7 million new users, bringing the active base for digital
subscriptions to 3,8 million users.

Fintech revenue grew by 36,3% in Q1 2020, driven by an increase in the adoption of MTN Xtratime,
an airtime lending service. MTN Nigeria added 70 000 MoMo agents in the quarter, bringing the total
number of registered agents to 178 000 nationwide. As part of the Y’ello Hope Package, transaction
fees were suspended for all money transfers using the MoMo agent network for an initial period of
one month starting 23 March 2020.

The enterprise business segment continued to improve, with revenue growth of 12,7%.

EBITDA rose by 15,3% YoY, while the EBITDA margin moderated by 0,7pp to 52,7% due to the increase
in costs relating mainly to higher lease rentals following an aggressive 4G roll site rollout, as well as
once-off costs relating to litigation and value added tax (VAT) that was implemented during the period.

In terms of the agreements MTN Nigeria has with tower companies, a component of the payments
are quantified in foreign currency. The recent reset by the Central Bank of Nigeria (CBN) to a naira/US
dollar exchange rate of N360, from N305, will apply to the relevant contracts with effect from
1 April 2020 and will have an impact on MTN Nigeria margins going forward. MTN Nigeria is in
continued discussions with tower providers to optimise the terms of these long-term contracts.


Southern and East Africa and Ghana (SEAGHA)
The SEAGHA region recorded solid service revenue growth of 21,2%, with all operations achieving
growth in Q1 2020. The region recorded a 1,5 million increase in subscribers to 50 million.

MTN Ghana was once again a key contributor to the region’s strong performance, with service
revenue up 20,6%, supported by voice and data growing in double digits as well as continued strong
growth in fintech revenue (up 31,6%). The EBITDA margin expansion achieved of 5,3pp, to 53,3%, was
supported by various cost efficiency initiatives including enhanced penetration of electronic
distribution channels, realigning the device strategy and optimising network costs.

                                                                                                       
MTN Uganda also delivered a solid performance with service revenue up 13,4%, driven by accelerated
growth in voice (up 9,5%), data (up 29,1%) and fintech revenue (up 15,2%). The EBITDA margin
declined 1,2pp to 48,5% because of higher provisions.

Overall, the SEAGHA portfolio excluding MTN Ghana delivered pleasing service revenue growth of
21,9% in the quarter.


West and Central Africa (WECA)
The WECA region delivered a solid performance. Service revenue grew by 9,8% YoY, significantly
above the blended average inflation of approximately 3,5% across the region. This performance was
enabled by improvements in fintech and data revenue and continued customer growth across the
markets of 0,4 million QoQ to 36,6 million.

MTN Ivory Coast delivered a 6,7% increase in service revenue, supported by growth in data (up 18,9%)
and fintech (up 11,6%). The EBITDA margin expanded by 4,9pp to 25,7%.

MTN Cameroon recorded service revenue growth of 8,7%, supported by double-digit growth in data
(up 22,6%) and fintech (up 50,4%), notwithstanding the continued challenging environment marked
by conflict in the Northwest/Southwest regions. The EBITDA margin for MTN Cameroon widened by
3,0pp to 32,8%.

Excluding MTN Cameroon and MTN Ivory Coast, the WECA markets grew their service revenue by an
aggregate of 12,9%, driven by double-digit service revenue growth in MTN Benin, MTN Conakry and
MTN Liberia.

Middle East and North Africa (MENA)
In a challenging operating environment, the MENA region achieved a pleasing performance in the
quarter, with service revenue up 24,0%, supported by solid growth in data revenue. Subscribers
(excluding MTN Irancell) were stable at 26,1 million.

MTN Syria grew service revenue by 20,7%, driven by growth in voice (up 8,3%) and data (up 19,8%).
The EBITDA margin improved by 6,5pp to 42,1%. MTN Sudan grew service revenue by 62,7%,
underpinned by growth in voice (up 47,6%) and data (up 92,3%) on the back of higher usage. The
EBITDA margin expanded by 3,8pp to 36,5%. MTN Afghanistan and MTN Yemen also delivered
growth, with service revenue up by 16,2% and 7,3% respectively.

MTN Irancell, our equity-accounted joint venture, delivered a solid performance despite its
challenging operating environment, the depreciation of the currency and the high rate of inflation.
MTN Irancell was the only operation to be significantly affected by COVID-19 during Q1, as Iran was
one of the countries experiencing the pandemic early on. Against this backdrop, service revenue grew
by 29,8%, with data revenue up by 43,5%, and the EBITDA margin improving by 1,8pp to 37,9%.

                                                                                                  
Regulatory and legal considerations

MTN Afghanistan anti-terrorism complaint
On 27 December 2019 a complaint for violation of the Anti-Terrorism Act was filed in the United States
District Court for the District of Columbia (the Complaint). The Complaint was filed on behalf of
American service members and civilians who were killed or wounded in Afghanistan between 2009
and 2017, and on behalf of their families. The Complaint alleges that several Western businesses
supported the Taliban by, inter alia, making payments to ensure the protection of their infrastructure.
The defendants named in the Complaint are six different groups of affiliated companies, one of which
is MTN and certain of its subsidiary companies, including MTN Afghanistan.

In late April 2020, MTN filed a “motion to dismiss” that asks the U.S. court to end the lawsuit and grant
a judgment in MTN’s favour for two independent reasons: because the court lacks jurisdiction over
MTN, which does not operate in the United States, and because the complaint does not allege any
conduct by MTN that would have violated the Anti-Terrorism Act.

MTN remains of the view that it conducts its business in a responsible and compliant manner in all its
territories and will defend its position where necessary.

MTN South Africa Competition Commission inquiry
In March 2020 MTN SA announced the outcomes from its engagement with the Competition
Commission (CompCom) and its response to the Data Service Market Inquiry. The announcement set
out a range of voluntary solutions to deepen our ongoing drive to reduce the cost to communicate.
These focused on the affordability of monthly prepaid data bundles, the provision of lifeline data
access utilising the Ayoba app and the zero-rating of data for public benefit service websites.

In late April 2020, MTN SA concluded its consent agreement with the CompCom to regulate these
arrangements and the agreement has been submitted to the Competition Tribunal.

Spectrum temporary allocation and auction in South Africa
On 17 April 2020, ICASA released free emergency spectrum for use by operators during the national
state of disaster. The allocation of spectrum to MTN SA was: 40 MHz from the 700-800 MHz band, 50
MHz from the 2,6 GHz band and 50 MHz from the 3,5 GHz band. The temporary allocation is subject
to certain minimum obligations. MTN SA will be ready to make use of the additional spectrum
allocation within six weeks of it being issued, and we expect it to significantly ease the congestion in
hotspots across the country where data traffic has surged. The temporary spectrum will be available
for use until November 2020.

Uganda licence renewal
We have agreed with the authorities in Uganda to extend our licence in that market to June 2032, for
a consideration of US$100 million. We made an initial payment of US$50 million in March 2020 and
the final payment will be made on settlement of the detailed terms and conditions of the licence.


COVID-19 pandemic impact on the business

For MTN, the main considerations arising from the COVID-19 impact revolve around four areas                                                                                                       7
namely: social (our people and communities), commercial (including our customers), network and
supply chain as well as funding and liquidity. Our operating companies (opcos) have customised their
respective responses within this framework.

Social
Our immediate priority has been the health and safety of our people and playing our part in slowing
down the transmission of the virus. We initiated work-from-home programmes across our markets,
enabling our staff to work remotely while ensuring the continuity in our operations. Our daily health
monitor survey allows us to ascertain the wellbeing of our staff and their families and we have
increased our health and safety measures including the compulsory wearing of masks, as well as the
use of alcohol-based hand sanitisers and other personal protective equipment (PPE) across our offices,
branches and experience centres for use by customers and employees.

More broadly, in addition to our employees, our social response also focuses on our customers,
vulnerable groups, support of government efforts and participating in industry interventions. To this
end MTN Group has announced a R250 million relief package to be deployed in four areas. Firstly, we
established the MTN Global Staff Emergency Fund for employees impacted by the pandemic. The
relief fund has been launched in part through the contributions of MTN Group directors, executives
and staff. This includes a pledge from the chairman, group CEO, group CFO and a number of directors
to contribute 30% of their board fees and salaries for the second quarter.

Secondly, we have invested in Y’ello Hope Packages for customers. This includes free SMS services,
the waiving of fees for certain Mobile Money transactions, discounted calling during off-peak periods,
zero-rating of certain health, social services and educational sites and payment concessions to our
business customers.

Thirdly, the group will contribute towards the MTN Foundations across our markets, which have been
mobilised to reach those most vulnerable through contributions towards tackling health emergencies
to minimise the spread of COVID-19 (disease commodity packages and ICT services needed for health
ministries and health professionals) and enabling students to remain productive by accessing vital
school and university content. Finally, MTN will contribute R70 million to the government’s Solidarity
Fund in South Africa, the market of its birth.

Many of these initiatives are also being amplified at an opco level in our various markets.

Commercial
From March 2020, countries within our footprint implemented a series of restrictions on people’s
movements and business operations to varying timelines and degrees ranging from full lockdowns,
partial lockdowns to “business as usual”. We have observed varying impacts on our commercial
performance, including a slowdown in subscriber additions and recharges.

There has been some counterbalance to this from reduced churn and increased electronic recharges
as we have ramped up our digital channels as a service alternative, to ensure that customers are able
to continue purchasing airtime and accessing our products and services seamlessly. This has also
provided some mitigation for distribution costs. From a revenue viewpoint, the trends have indicated                                                                                               8
some shift in mix, with data revenue increasing, roaming declining and voice revenue coming under
pressure. Fintech revenue has also come under pressure due to the restriction of movement and as
our opcos have discounted many of their fintech services in support of COVID-19 initiatives.

The increase in demand for our data and digital services has driven a surge in usage and traffic on our
networks. In addition to the effects of increased teleworking and home data usage, the increase in
data traffic has also been driven by some of the relief packages and additional value we have put into
the market in support of customers and stakeholders during this time.

Data traffic on our networks has, on aggregate, accelerated by more than 30% when comparing traffic
levels at the end of April 2020 against February 2020, which is before COVID-19-related behaviour
such as work-from-home began in earnest. In our three largest markets on this basis, data traffic in
MTN Nigeria was up 32% (and 156% YoY), in MTN SA was up 56% (and 85% YoY) and in MTN Ghana
was up 39% (181% YoY).

The picture for voice revenue has thus far been mixed across our opcos. The disruption of COVID-19
has resulted in a slowdown in voice usage due to lower economic activity, which has been
compounded by the abovementioned migration to digital connectivity arising from increased
teleworking. For voice traffic, we have observed aggregate declines averaging in the mid- to upper-
single-digits in most markets when comparing 2020 traffic levels for end-April against end-February.
On the same basis, voice traffic in MTN Nigeria was down 9% (and 9% YoY), in MTN SA was down 3%
(and 10% YoY) while in MTN Ghana it was up 10% (and 31% YoY).

How these dynamics will settle remains uncertain at this relatively early stage, and we expect this to
become clearer in the coming quarters depending on how national responses and the economic
impact thereof unfold. The initial trends from April indicate pressure on voice revenue because of
lockdowns, particularly in those of our markets with lower penetration of electronic recharges.
However, we are encouraged that in markets where some lifting of restrictions has started to happen,
such as Nigeria and Ghana, we have already noted signs of recovery in subscriber additions, recharges
and voice traffic while data traffic appears to be holding up at current elevated levels.

Network and supply chain
Our core connectivity services have become more critical over this period and we have prioritised
network continuity, focusing on the availability of spares and equipment as well as the upgrading of
capacity. We note that in some markets like South Africa, the regulator has provided free additional
spectrum on a temporary basis which will help alleviate the pressure on network from increased traffic
in these markets. Our biggest focus for the remainder of the year is ensuring the resilience and
capacity of our networks.

To date, there has been moderate disruption to our supply chain. We have put measures in place to
ensure resilience of our networks and mitigate supply chain risk and are working closely with our
suppliers and partners in implementing increased visibility and control processes. We have built up
inventory and have procured critical spares for at least 12 months. MTN SA, our principal device
market, is experiencing some challenges with the availability of top-end handsets and there are also
some impacts on procurement of SIM cards. We continue to closely monitor our inventory to minimise
significant interruptions.

Funding and liquidity
We have worked to ensure balance sheet strength and resilience over the past few years, which
positions us relatively well to weather the prevailing volatility. Our holdco net debt stood at R55,4
billion at March 2020, which is slightly lower than the December 2019 level. As at the end of
March 2020, our holdco leverage was at 2,5x, primarily affected by the 21,5% weakening of the rand
against the US dollar as at the end of the period.


We are comfortably within our debt covenants, which are gauged on a group consolidated basis. Our
group net-debt/EBITDA ratio stood at 1,1x as at 31 March 2020 (31 December 2019: 1,3x) against our
covenant of 2,5x and our interest cover ratio at 31 March 2020 was 9,4x (31 December 2020: 6,6x)
compared to the covenant of 5,0x. Our group cash balance at the end of March 2020 stood at
R42,1 billion.

We continue to actively manage our maturity profile and have made good progress on our 2020/2021
refinancing priorities, with approximately R15 billion (R12,5 billion in term and revolving credit
facilities, plus R2,5 billion in a domestic medium-term note (DMTN) programme) in debt maturing over
the next 10 months that we are refinancing this year. Of the total refinancing, we have already
concluded R1 billion in local capital markets (under DMTN). This transaction was successfully closed
amid volatile and uncertain local market conditions. We are at an advanced stage in securing
R11 billion of the R12,5 billion of bank funding by the end of June 2020.

We continue to be prudent in our approach around liquidity management and note that, as at
31 March 2020, our holding company liquidity headroom stood at approximately R45,2 billion –
comprising R19,3 billion in cash and R25,8 billion in committed, undrawn credit facilities. The final
dividend payment of approximately R6,7 billion was paid after the quarter-end. Our debt maturity
profile for 2020 and 2021 is R6,5 billion and R12,2 billion respectively.

In terms of dividend upstreaming from our two larger markets, MTN Ghana declared an interim
dividend in April of which approximately US$61 million is attributable to the group, and MTN Nigeria
declared its final 2019 dividend in February of which approximately US$131 million is attributable to
the group subject to shareholder approval at its AGM on 15 May 2020.

Our medium-term priorities remain to reduce our exposure to US dollar debt and improve the funding
mix at the holdco level. Amid the nearer-term risks and uncertainties of the impact of COVID-19 on
markets, we remain focused on preservation of cash and maintaining a healthy liquidity position.


                                                                                                  
Outlook
Looking ahead, the current environment is marked by significant uncertainties. It is still too early to
assess the economic impact of the pandemic on our customers and reliably quantify the direct or
indirect financial effects on our business. The remainder of the year will be shaped by the ramifications
of the pandemic, and we will continue to update shareholders as the effects become clearer.

The effects of COVID-19, and other macro developments, have increased risks such as exchange rate
volatility, economic growth and capital flows in our markets. We have seen the sovereign credit ratings
of our two largest markets, South Africa and Nigeria, downgraded by credit ratings agencies in the
past few months. This will have an impact on economic prospects of the markets as well as MTN at a
group and opco levels. We monitor these developments very closely to assess their implications, and
manage our responses, in order to mitigate these risks. In the meantime, we believe that our extensive
interventions already being implemented will safeguard the sustainability of the business, its people
and its customers in the prevailing challenging environment.

In addition to the work we have done around further strengthening our operational and financial
position, we have implemented cost control measures, focusing on mission critical expenses and
enhanced oversight of expenditure.

Our capital expenditure (capex) focus will be on ensuring the resilience and capacity of our networks.
We anticipate that disruptions in the supply chain and challenges in rolling out coverage under
lockdown rules combined with our emphasis on liquidity will impact on our capex programme for the
year. Our updated capex guidance for 2020 is between R21 billion and R22,0 billion, from R28,3 billion
guided at the 2019 results.

We are not only focused on managing the risks brought about by COVID-19, but also on the
opportunities it creates in the accelerated digitalisation it has brought about. We are well positioned
as a company to benefit from this evolution, especially given our focus on growth in our data, digital
and financial services businesses. The group remains focused on the execution of our BRIGHT strategy
to deliver sustainable growth in our operations.

While the current financial year will be challenging, at this stage we are maintaining our medium-term
framework. We are progressing with the expense efficiency initiatives across our markets that will
support margin management and liquidity across the business. Over the next three to five years we
remain committed to growing service revenue, improving efficiencies, executing on our asset
realisation programme and reducing our holdco leverage ratio. The board will continue to monitor the
environment in the context of our clearly defined capital allocation framework and provide any update
in this regard with our interim results in August 2020.

The financial information on which this quarterly update is based, including constant currency information, has
not been reviewed and reported on by MTN’s external auditors. Constant currency information has been
presented to illustrate the impact of changes in currency rates on the group's results. In determining the change
in constant currency terms, the prior financial reporting period’s results have been adjusted to the current period
average exchange rates determined as the weighted average of the monthly exchange rates. The measurement
has been performed for each of the group's currencies, materially being that of the US dollar and Nigerian naira.
The constant currency growth percentage has been calculated based on the prior year constant currency results
compared to the current year results. In addition, in respect of MTN Irancell, MTN Sudan, MTN South Sudan and
MTN Syria, the constant currency information has been prepared excluding the impact of hyperinflation. The
economies of Sudan, South Sudan and Syria were assessed to be hyperinflationary for the period under review
and hyperinflation accounting was applied.

The full financial results are available on the company’s website at:
https://www.mtn.com/investors/financial-reporting/quarterly-trading-update/


Fairland
14 May 2020

Lead sponsor
Tamela Holdings Proprietary Limited

Joint sponsor
JP Morgan Equities South Africa Proprietary Limited




                                                                                                          

Date: 14-05-2020 07:33:00
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