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20th Annual General Meeting - Business Update
MTN Group Limited
(Incorporated in the Republic of South Africa)
Registration number 1994/009584/06
Share code MTN
ISIN ZAE000042164
(“MTN”, “the Group” or “MTN Group”)
20TH ANNUAL GENERAL MEETING – BUSINESS UPDATE
1. BUSINESS UPDATE
At the Annual General Meeting to be held later today, MTN Group President and Chief
Executive Officer, Sifiso Dabengwa will make the following comments regarding the Group’s
performance for the first four months of 2015 in comparison with the same period for 2014:
As at 30 April 2015, the Group had increased its subscriber base to 229.2 million, a year-on-
year (YoY) increase of approximately 8%. This increase was supported by MTN Nigeria with
approximately 1.5 million net additions. In South Africa, the business recorded 133,000 net
additions and was impacted by challenges experienced in the prepaid distribution channel.
However, in the month of April 2015, MTN South Africa recorded net additions of 168,000.
The large opco cluster continues with its positive momentum adding 2.5 million subscribers,
while the small opco cluster recorded subscriber additions of 1.8 million.
Across the Group, total minutes on the network increased by 14% YoY. Total minutes on the
South African network are up 137% YoY following the reduction in tariffs over the past 18
months. The operation remains focused on the network rollout to ensure the network is
adequately positioned to sustain the growth in both voice and data traffic. Although
Nigerian minutes were down 2% Year-to-date (YTD), the recently revised promotions are
expected to drive incremental traffic volumes over the balance of the year.
While the Group’s YTD organic revenue increased marginally, reported revenue declined
YoY with the weaker exchange rates being a drag of some 6%. This was predominately
driven by the Naira which has weakened by 9.0% against the rand over the same period in
the prior year.
While Nigeria has continued to see quarterly sequential improvements in local currency
revenue, the revenue for the four months to 30 April 2015 is down approximately 1% YoY.
Service revenues in the South African operation continue to show positive momentum and
was 3.3% higher YoY. The challenges experienced with handset distribution have, however,
resulted in a 21% YoY decline in handset sales and negatively impacted total revenue
growth.
Iran, Ghana, Uganda and Sudan recorded healthy revenue growth for the period, while
revenue in Cameroon was negatively impacted by the recent introduction of a new
competitor. Data revenue across the Group continued to deliver satisfactory growth in most
of our markets, increasing by 18% YoY and now contributes 21% to total revenue compared
to 17% for the same period last year. This remains a key focus area for the business.
The Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) has
declined when compared to the same period last year, largely due to weakness in the Naira
relative to the Rand. Despite lower than anticipated revenues, the Group continues to
execute well on cost optimisation initiatives across the majority of our operations.
In Nigeria, the EBITDA margin was negatively impacted by both the tower transaction as
well as increased dollar denominated costs related to the weaker exchange rate. The
EBITDA margin in South Africa continues to benefit from the cost initiatives implemented in
the second half of 2014. EBITDA margins in Ghana and Cameroon in particular have been
negatively affected by the weakness in currencies and the by dollar denominated expenses.
Total Capital expenditure (capex) is flat YoY and, while currently below budget, we expect
full year capex of R30bn. Importantly, we expect a total capex investment of R10bn for MTN
South Africa in the year.
2. PROSPECTS
While the operating environment remains challenging across all of our markets, with
persistent price competition and regulatory challenges, we do anticipating some stability in
operating trends over the balance of the year. In Nigeria in particular, but also in a number
of other countries, there are concerns given the weak macro-economic situation and the
impact this could have on customers through the balance of the year.
As traditional voice revenue remains under pressure, data, digital services and Mobile
Money remain key areas of focus for the Group. In addition, improving customer experience
in all of our operations, cost optimisation and the execution of our infrastructure sharing
strategy remain central to our strategy.
The financial information on which this business update is based has not been reviewed and
reported on by MTN’s external auditors.
Fairland
27 May 2015
Sponsor
Deutsche Securities (SA) Proprietary Limited
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