Wrap Text
Audited consolidated financial results for the year ended 31 December 2017
MTN Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584/06)
(Share code MTN)
(ISIN: ZAE000042164)
("MTN" or "the group")
Audited consolidated financial results for the year ended 31 December 2017
Salient features
- Group revenue increased by 6,8%* (decreased by 10,2%** to R132 815 million**)
- Group service revenue increased by 7,2%* (decreased by 10,8%** to R124 409 million**)
- Data revenue increased by 34,2%* (19,4%** to R28 212 million**)
- Digital revenue increased by 14,2%* (decreased by 6,9%** to R13 048 million**)
- Total subscribers# at 217,2 million with active data users of 69,1 million
- Active MTN Mobile Money customers increased by 5,7 million to 21,8 million
- EBITDA increased by 2,5%* (increased 15,2%** to R46 955 million**)
- EBITDA margin decreased by 1,4 percentage points to 34,0%*
- Capex increased by 2,0%* (decreased by 10,8%** to R31 461 million**)
- Positive HEPS of 182 cents**
- Adjusted free cash flow increased by 3,7%* (increased 182,6%** to R15 494 million**)
- Final dividend of 450 cents per share declared
* Constant currency information after taking into account the impact of the pro forma adjustments as defined
** Reported
# Based on our new modernised definitions
† Organic revenue adjusts for prior year acquisitions, disposals and alignment of post-paid carry over rules
Service revenue excludes device and sim card revenue
Adjusted free cash flow = EBITDA less capex
Certain financial information presented in these consolidated annual financial results constitutes pro forma
financial information. The pro forma financial information is the responsibility of the group's board of
directors and is presented for illustrative purposes only. Because of its nature, the pro forma financial
information may not fairly present MTN's financial position, changes in equity, and results of operations or
cash flows. The forward looking financial information incorporated in these consolidated financial results;
has not been audited or reviewed or otherwise reported on by our external joint auditors. An assurance report
has however been prepared and issued by our joint auditors PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc.
in respect of the pro forma financial information included in this announcement that is available for inspection
at the registered office of the company.
1. The financial information presented in these consolidated financial results has been prepared excluding the impact
of hyperinflation and the relating goodwill and asset impairments, tower profits (including the profit realised on
the exercise of the IHS exchange right whereby the group's interest in the Nigeria tower company was exchanged for
additional shareholding in IHS Holding Limited), the loss on derecognition of the long-term loan receivable from IHS,
the Nigerian regulatory fine (consisting of the re-measurement impact when the settlement was entered into and the
finance costs recognised as a result of the unwind of the initial discounting of the liability) and IFRS 2
share-based payment expense related to Zakhele Futhi ("the pro forma adjustments") and constitutes pro forma
financial information to the extent that it is not extracted from the segment disclosure included in the audited
consolidated financial statements for the year ended 31 December 2017. This pro forma financial information
has been presented to eliminate the impact of the pro forma adjustments from the consolidated financial results
in order to achieve a comparable analysis year on year. The pro forma adjustments have been calculated in terms
of the group accounting policies disclosed in the consolidated financial statements for the year ended
31 December 2017.
2. 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 current financial reporting period's
results have been adjusted to the prior period average exchange rates determined as the 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
current year constant currency results compared to the prior 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. Hyperinflation accounting was discontinued for MTN Irancell and
MTN Sudan on 1 July 2015 and 1 July 2016 respectively. The economy of South Sudan was assessed to be
hyperinflationary effective 1 January 2016, and hyperinflation accounting was applied from December
2016 onwards.
The group's results are presented in line with the group's operational structure. This is South Africa, Nigeria,
Southern and East Africa and Ghana (SEAGHA), West and Central Africa (WECA) and Middle East and North Africa (MENA)
and their respective underlying operations.
The SEAGHA region includes Ghana, Uganda, Zambia, Rwanda, South Sudan, Botswana (joint venture-equity accounted),
Swaziland (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, Afghanistan and Cyprus.
Although Iran, Botswana and Swaziland form part of their respective regions geographically and operationally,
they are excluded from their respective regional results because they are equity accounted for by the group.
Group president and CEO, Rob Shuter comments:
"MTN delivered a solid overall performance for the year, with progress on many fronts, despite difficult economic
conditions as well as operational and regulatory challenges in certain markets. MTN Nigeria showed strong constant
currency revenue growth and MTN South Africa's postpaid business displayed encouraging improvements. The group's
top-line growth was driven by robust growth in data revenue (on a constant currency basis), supported by the
combination of improving customer service and more stable and competitive networks. MTN Mobile Money and rich-media
services supported growth in digital revenue, however, this slowed in the second half as we optimised our value-added
services (VAS) subscription business. Encouragingly, on a constant currency basis, outgoing voice revenue was flat
relative to the prior year. Over the year, we further strengthened our management structures and specialist skill
capabilities to drive operational execution and to support our risk management processes."
"We are confident that the foundation is in place for MTN to deliver strong growth over the medium term. Through the
continued execution of our BRIGHT strategy we anticipate improved top-line and EBITDA growth supporting an acceleration
in cash flows and improving returns over the medium term."
Overview
MTN reported improved results for the 12 months ended 31 December 2017, delivering on guidance communicated in March
2017 and returning to profitability in headline earnings. Macro-economic conditions were challenging across a number
of our markets. Nigeria experienced a markedly weaker naira as well as hard currency liquidity challenges earlier in the
year, but this showed signs of improvement as the year progressed. Although South Africa entered a technical recession
in the first quarter of 2017, growth resumed in the second quarter and the rand strengthened considerably against the
US dollar during the latter part of the year. Many of the currencies in our other markets weakened. In Iran, economic
growth slowed somewhat and the rial weakened. Despite these macro challenges, the group continued to deliver on its
operational targets.
Following a thorough review of group strategy in the first half of the year, MTN operationalised its BRIGHT
strategy. This is arranged under six pillars comprising: Best customer experience; Returns and efficiency focus;
Ignite commercial performance; Growth through data and digital; Hearts and minds; and Technology excellence.
Group service revenue in constant currency grew by 7,2%*, underpinned by 11,2%* growth
in service revenue in Nigeria and a 3,9%† (on an organic basis) growth in service revenue in South Africa.
MTN Uganda, MTN Ghana and MTN Ivory Coast also contributed positively to the group's top-line growth on a
constant currency basis.
MTN Cameroon experienced a particularly challenging year, negatively impacted by the data network shutdown in
some parts of the country in the first quarter, as well as regulatory and operational challenges.
The improvement in group revenue was mostly attributable to strong growth in data and digital revenue, supported by
stable outgoing voice revenue. Data revenue increased by 34,2%*, supported by the improved quality
and capacity of our data networks in key markets. Digital revenue increased by 14,2%*, driven mainly by mobile financial
services (MFS). The group added 5,7 million active MTN Mobile Money (MoMo) customers during the year. Outgoing voice
revenue was stable, increasing 0,1%* in the year.
The group's margin on reported earnings before interest, tax, depreciation and amortisation, impairment of goodwill,
the loss on derecognition of the long-term loan receivable, net monetary gains and share of results of joint ventures
and associates after tax (EBITDA) was 35,4%**. This was positively impacted by the once-off profit (R6 017 million**)
realised on exercising the right to exchange the group's interest in Nigeria Tower InterCo B.V. (INT) for a higher
shareholding in IHS Holding Limited (IHS). This was partly offset by fixed and intangible asset impairments (excluding
goodwill) for MTN Sudan (R1 690 million**) and MTN Syria (R1 348 million**) relating to the carrying value previously
written up for the impact of hyperinflation.
On a constant currency basis, the group's EBITDA margin declined by 1,4 percentage points (pp) to 34,0%*. MTN Nigeria's
EBITDA margin (excluding the impact of the regulatory fine) declined by 7,5 pp* to 38,9%*. This was largely a result
of higher foreign-currency-denominated expenses in Nigeria because of the depreciation of the naira against the US
dollar. The EBITDA margin in South Africa improved by 2,0 pp* to 34,6%*. It was supported by lower handset subsidies
and volumes, as well as the benefit of a stronger rand on the cost of handsets in the period. MTN Irancell's EBITDA
margin declined by 3,4 pp* to 35,6%* because of higher transmission costs. MTN Uganda's margin increased by 4,9 pp*
to 34,5%* and MTN Ivory Coast's margin remained flat, while the margin for MTN Cameroon declined mainly as a result
of lower revenue growth.
Reported headline earnings per share (HEPS) were 182 cents** compared to a 77 cents** headline loss per share in 2016
when performance had been impacted by the Nigerian regulatory fine of 500 cents** (455 cents** of the Nigerian fine
fully expensed and 45 cents** of interest). In 2017, the Nigerian regulatory fine interest reduced HEPS by 46 cents**.
HEPS were impacted by a number of once-off and non-cash post-tax items totalling 483 cents in the financial year ended
31 December 2017. The adjustments include costs related to the Nigerian regulatory fine of 46 cents, hyperinflation
adjustments excluding impairments of 96 cents, net foreign exchange losses of 159 cents, MTN Zakhele Futhi share-based
payment expense of 24 cents and a loss on the derecognition of a loan to an IHS tower subsidiary of 158 cents,
respectively.
At 31 December 2017, the group had 217 million# subscribers, based on the new modernised definitions. We will
provide comparisons for full year 2018 using the new base. In 2017, subscriber numbers in Cameroon in particular
were further affected by the disconnection of approximately three million subscribers to ensure adherence with
regulatory requirements on subscriber registration. We also saw regulatory related disconnections in Uganda
where we disconnected 750 000 subscribers.
The group continued to invest in the rolling out of network and information technology across its markets. We spent
R31 461 million** in capital expenditure (capex), rolling out a total of 8 583 3G and 8 611 4G co-located sites.
This investment has resulted in a marked improvement in network quality and capacity across a number of our markets.
Regulatory and legal considerations
The Turkcell lawsuit currently before the South Gauteng High Court in South Africa is not a new action and was
initiated by Turkcell Iletisim Hizmetleri A.S ("Turkcell") and East Asian Consortium ("EAC") in 2013. It relates
to Turkcell's alleged grievances arising from its unsuccessful bid to obtain a mobile licence in Iran, and the
awarding of that licence to MTN Irancell in 2005. MTN continues to believe that there is no legal merit to
Turkcell's claim and will oppose it accordingly.
With reference to our Stock Exchange News Service of the JSE Limited (SENS) announcement on 24 October 2017 related
to the sanction from the Telecommunications Regulatory Board in Cameroon, MTN Cameroon continues to engage with the
relevant authorities to find an amicable solution to the matter.
With reference to our SENS announcement on 9 November 2017 related to the dispute with regulatory authorities in
Benin on frequency fees, MTN Benin continues to engage with the relevant authorities in Benin to find an amicable
solution to the matter.
Prospects and guidance
MTN Group well positioned to capture growth
Africa and the Middle East are forecast to remain among the world's key growth regions over the medium to long term.
We are confident that MTN is well placed to benefit from this opportunity. We will continue to leverage our scale and
enhance our competitive position, benefiting from favourable demographic growth, low data penetration in our markets
and the unique opportunity we have to provide our customers with a range of digital services.
In the second half of 2017, we established clearly defined initiatives and key performance indicators (KPIs) for each
of the six areas of BRIGHT. We expect these initiatives to support improved top-line growth, EBITDA margins and cash
flow over the medium term.
Over the next few years we expect to deliver upper-single-digit constant currency service revenue growth for the
group, driven by mid-single-digit growth from South Africa and double-digit growth from Nigeria. Over the same
period we expect to see an expansion in group EBITDA margins.
Our extensive capex investments across our operations in 2017 allowed us to show a credible improvement in our
networks across a number of our markets. This will be important in ensuring the business is able to provide a
superior customer experience and competitive data networks which will support the growing demand for data and
digital services. Over the next few years we expect group capex intensity (which measures our efficiency in
deploying assets) to moderate within a range of 20% to 15%.
Portfolio review
We continue to review the markets in which we operate to ensure an appropriate strategic and operational fit taking
into account demographics, regional synergies and business and regulatory environments. At the same time, we continue
to evaluate opportunities across the Middle East and Africa. This ongoing review could, over the medium term, result
in some shifts in the current portfolio.
Additionally, MTN Group operates in a number of conflict markets. While the performance of operations in these markets
has resulted in a drag on overall group performance, this has been a result largely of the prevailing geopolitical
conditions rather than poor operational execution. We continue to track in particular the cash flow performance of
these operations, with a focus on ensuring that they remain self-funded. We are closely monitoring those operations
that are not cash flow positive and will take appropriate action as required.
Capital management
We are confident the foundation is now in place for MTN to deliver strong growth in the medium term. Through
the continued execution of our strategy, we anticipate improved service revenue and EBITDA growth as well as
accelerating free cash flows over this period. Going forward, we will manage our holding company gearing at
levels that are appropriate for a business with our corporate structure and risk profile and will adopt a
rebased progressive dividend policy.
At the discretion of the board and taking into consideration market conditions, the board anticipates declaring a
total dividend of 500 cents per share for 2018, growing at 10% to 20% over the medium term. The rebasing
of the dividend follows the marked changes in currency exchange rates across a number of our markets.
This will allow us to ensure that the dividend is funded from operational cash flows over the medium term.
Listings
MTN Nigeria continues to make good progress with the preparations for its listing on the Nigerian Stock Exchange
(NSE). Extensive local marketing to target Nigerian investors is planned as part of a retail offer and institutional
bookbuild, which may also involve selected international institutions.
The operation anticipates that the listing will take place during 2018 subject to appropriate market conditions and
requisite regulatory approval. MTN Nigeria has engaged with Nigeria's Securities and Exchange Commission and the NSE
extensively on the structure and parameters of the listing. The operation has also obtained its shareholders' approval
in principle to prepare for the listing, including amendments to its corporate structure. It is expected that the
application to the NSE will commence in due course and management has already initiated its Corporate Governance
Rating Scoring with the NSE with a view to listing on the NSE's Premium Board. Any reduction in ownership by
MTN Group in MTN Nigeria is expected to be limited.
MTN Ghana is also moving forward with its localisation and we expect this process to be completed in the first
half of 2018. Under the terms of its 4G licence, MTN Ghana is required to introduce Ghanaian investors as
shareholders. As a result, the MTN Group board has approved a public offer through a listing on the Ghana
Stock Exchange (GSE), subject to final approval by the GSE and the Securities and Exchange Commission in
Ghana. A key objective of the listing is to target a broad base of Ghanaian investors to share in the risks
and rewards of ownership of MTN Ghana.
Dividends
The board has declared a final dividend of 450 cents per share. This is in line with the 2017 guidance
of a total dividend of 700 cents per share communicated in March 2017.
Capex guidance 2018
Estimated Capitalised Capitalised
ZAR (million) 2018 2017 2016+
South Africa 9 600 11 470 10 982
Nigeria 6 917 8 953 8 701
SEAGHA 3 651 3 794 4 246
Ghana 1 947 2 196 2 435
Uganda 902 909 758
Other 802 689 1 053
WECA 4 002 3 696 6 189
Cameroon 1 037 976 2 166
Cote d'Ivoire 1 596 1 203 1 721
Other 1 369 1 517 2 302
MENA 2 499 2 294 3 310
Syria# 809 951 1 049
Sudan# 573 545 1 549
Other 1 117 798 712
Head office 748 1 173 1 492
Global Connect 330 - -
Total 27 747 31 380 34 920
Hyperinflation - 81 348
Total reported 27 747 31 461 35 268
Iran (49%)# 4 620 9 274 5 138
# Excluding hyperinflation.
+ Realigned to reflect the segments reallocated.
FINANCIAL REVIEW
Nigeria
Hyper- regula- MTN Pro
infla- Tower tory Zakhele IHS forma
ZAR (million) 2017 tion(1) profit(2) fine(3) Futhi(4) loan(5) 2017
Revenue 132 815 504 - - - - 132 311
Other income 6 591 - 6 044 - - - 547
EBITDA 46 955 (2 948) 6 044 - (434) - 44 293
Depreciation, amortisation
and impairment of goodwill# 26 398 1 175 - - - - 25 223
Profit from operations 20 557 (4 123) 6 044 - (434) - 19 070
Net finance cost 9 267 (3) - 1 047 - - 8 223
Loss on derecognition of loan 2 840 - - - - 2 840 -
Hyperinflationary monetary gain 264 264 - - - - -
Share of results of joint
ventures and associates
after tax 841 (1 328) - - - - 2 169
Profit before tax 9 555 (5 184) 6 044 (1 047) (434) (2 840) 13 016
Income tax expense 5 014 (259) - - - - 5 273
Profit after tax 4 541 (4 925) 6 044 (1 047) (434) (2 840) 7 743
Non-controlling interests 127 (696) - 222 - - 601
Attributable profit 4 414 (4 229) 6 044 (1 269) (434) (2 840) 7 142
EBITDA margin 35.4% 33.5%
Effective tax rate 52.5% 40.5%
Nigeria
Hyper- regula- MTN Pro Adjusted
infla- Tower tory Zakhele forma change
ZAR (million) 2016 tion(1) profit(2) fine(3) Futhi(4) 2016 %
Revenue 147 920 1 026 - - - 146 894 (9.9)
Other income 335 - 31 - - 304 79.9
EBITDA 40 751 246 31 (10 499) (1 008) 51 981 (14.8)
Depreciation, amortisation
and impairment of goodwill# 26 609 791 - - - 25 818 (2.3)
Profit from operations 14 142 (545) 31 (10 499) (1 008) 26 163 (27.1)
Net finance cost 10 495 (228) - 1 044 - 9 679 (15.0)
Loss on derecognition of loan - - - - - - -
Hyperinflationary monetary gain 1 723 1 723 - - - - -
Share of results of joint
ventures and associates
after tax (127) (1 851) - - - 1 724 25.8
Profit before tax 5 243 (445) 31 (11 543) (1 008) 18 208 (28.5)
Income tax expense 8 346 35 - - 593 7 718 (31.7)
Profit after tax (3 103) (480) 31 (11 543) (1 601) 10 490 (26.2)
Non-controlling interests (489) 195 - (2 444) - 1 760 (65.9)
Attributable profit (2 614) (675) 31 (9 099) (1 601) 8 730 (18.2)
EBITDA margin 27.5% 35.4% (1.9) pp
Effective tax rate 159.2% 42.4% (1.9) pp
Reconciliation of pro forma financial information
(1) Represents the exclusion of the impact of hyperinflation and related goodwill and fixed asset impairments
for certain of the group's subsidiaries (MTN Syria, MTN South Sudan and MTN Sudan) being accounted for on a
hyperinflationary basis in accordance with International Financial Reporting Standards (IFRS) on the
respective financial statement line items affected. The economies of Iran and Sudan were assessed to no
longer be hyperinflationary effective 1 July 2015 and 1 July 2016 respectively and hyperinflation accounting
was discontinued from these dates onwards. The economy of South Sudan was assessed to be hyperinflationary
effective 1 January 2016 and hyperinflation accounting was applied from this date onwards. Included in
EBITDA is fixed and intangible asset impairments (excluding goodwill) for MTN Sudan (R1 690 million) and
MTN Syria (R1 348 million) relating to the carrying value previously written up for the impact of
hyperinflation.
# R192 million of the goodwill impairment on MTN Sudan relates to the carrying value previously written up
for the impact of hyperinflation.
(2) Represents the exclusion of the financial impact relating to the sale of tower assets during the financial
year on the respective financial line items impacted, which includes:
- Tower profits, including R6 017 million relating to the profit realised on the exercise of the exchange
right where the interest in the Nigeria tower company was exchanged for an increased shareholding in
IHS Holding.
- Release of Ghana deferred gain of R27 million (2016: R31 million).
(3) Represents the impact of the Nigerian regulatory fine subsequent to conclusion of the settlement agreement
during 2016 on the respective financial line items impacted, which includes:
- 2016: The remeasurement impact when the settlement agreement was entered into on 10 June 2016, constituting
the difference between the balance of the provision recorded on this date (after taking into account the
finance cost accrued from the beginning of the financial year up to 9 June 2016) and the present value of
the financial liability arising on this date in accordance with IFRS (included in the EBITDA line);
- 2016 and 2017: The finance cost impact recognised as a result of the unwind of the discounting of the
provision (for the period from 1 January to 9 June 2016) and the financial liability (for the period
from 10 June 2016 to 31 December 2016 and from 1 January 2017 to reporting date).
(4) Represents the IFRS 2 Share-based payment impact of MTN Zakhele Futhi. MTN made an offer of ordinary shares
to qualifying BEE investors during the prior financial year. During 2017, the group issued a portion of the
shares previously underwritten resulting in the recognition of a IFRS 2 Share-based payment expense of
R434 million (2016 - R1 008 million).
(5) Represents the impact of the loss on the derecognition of the long-term loan receivable from IHS amounting
to R2 840 million.
Exchange rates
The stronger rand and the significant year-on-year (YoY) depreciation of the naira against the US dollar had a
negative translation impact on rand-reported results for the period. The average naira depreciated by 25,8%
against the US dollar in the year, and the closing rate was down 13,1% YoY. The average rand strengthened by
9,6% against the US dollar YoY and the rand closed 10,7% stronger. In light of recent developments in
South Africa we expect the rand to remain robust throughout 2018.
Revenue
Group total revenue increased by 6,8%*, supported by encouraging revenue growth in
MTN Nigeria (up 11,4%*), MTN Uganda (up 10,0%*), MTN Ghana (up 23,3%*) and MTN Ivory Coast (up 11,0%*).
This was mainly a result of strong data and digital revenue growth in these markets. MTN South Africa
grew total revenue by 3,0%** while MTN Cameroon reported a 6,6%* decline in revenue.
Outgoing voice revenue remained largely flat. This is a positive re-enforcement of our work to stem the
decline in the contribution of voice to the business, particularly in Nigeria where outgoing voice
revenue increased by 7,5%*.
Data revenue increased by 34,2%*, benefiting from significantly improved data network quality and capacity
across our key markets and a continued increase in active data users to 69,1 million. Data revenue increased
in South Africa (up 25,8%†), Nigeria (up 86,6%*), Uganda (up 41,4%*), Ghana (up 50,6%*), Cameroon (up 21,1%*)
and Ivory Coast (up 87,5%*).
Digital revenue increased by 14,2%*, underpinned by solid growth in MFS. This was partly offset by slower
growth in VAS revenue, impacted by the optimisation of the VAS business across our markets, in particular
Nigeria. Our e-commerce JVs, while being equity accounted as opposed to consolidated within the results,
remain an important element of our digital strategy. We will work to further enhance synergies between
our existing platform and our e-commerce businesses.
Costs
Total costs increased by 9,5%*, negatively impacted by foreign-denominated expenses in Nigeria and costs
associated with the rollout of network sites in the year. In South Africa, lower handset cost subsidies
and volumes, as well as a strong rand, led to a lower total cost of handsets.
EBITDA
Group EBITDA increased by some 2,5%*, held back by a 6,6%* decrease in MTN Nigeria's EBITDA as a result
of higher foreign-denominated expenses following the depreciation of the naira against the US dollar.
This was, however, offset by a 9,5%* increase in MTN South Africa's EBITDA. MTN Uganda (up 27,8%*),
MTN Ghana (up 19,4%*) and MTN Ivory Coast (up 9,1%*) contributed positively to group EBITDA while
MTN Cameroon recorded a 30,1%* decline in EBITDA. Head office costs were lower than those in 2016
mainly as a result of a number of once-off costs incurred in the prior year. Consequently, the
group EBITDA margin decreased by 1,4 percentage points* to 34,0%*.
Depreciation, amortisation and impairment of goodwill
The group depreciation charge increased by 6,2%* as a result of higher organic capex
over the past 24 months. The growth in depreciation was to some extent mitigated by the stronger rand.
Amortisation costs increased by 9,5%*, mainly because of higher spend on software
in the previous period. Non-hyperinflation-related goodwill impairments consisted of impairments in
MTN Sudan (R983 million**), MTN Afghanistan (R841 million**) and MTN Yemen (R807 million**).
Net finance costs
Net finance costs decreased by 11,7%**. This was mainly due to a 26,2%** reduction in
net foreign exchange (forex) losses for the year. The decline in forex losses was
largely a result of lower foreign-denominated receivables in Mauritius following the repatriation of
funds from MTN Irancell in 2016. The group's net interest charge increased by 6,9%**, supported by
the stronger rand against the US dollar, resulting in lower finance costs paid on US dollar bonds as
well as the translation of the Nigeria finance charge relating to the weaker naira against the rand.
South Africa and Dubai reported forex gains in the year.
Net forex losses mainly included:
- Forex losses in head office of R1 822 million because of the Iran dividend repatriation and the short-term
loan to MTN Irancell;
- Forex losses in Nigeria of R1 731 million incurred on US dollar-denominated third-party payables; and
- Forex losses of R363 million in Sudan on foreign-denominated third-party funding and payables.
Share of results of joint ventures and associates after tax
We reported a profit of R841 million** from joint ventures and associates, compared to a loss of R127 million**
in 2016. This was mainly because we exercised a right to exchange 51% of our shares in Nigeria Tower InterCo B.V.
for an increased equity stake in IHS. Following this transaction (which was effective February 2017), we no longer
own and equity account for a share of the results of INT.
MTN Irancell's earnings declined largely impacted by lower net interest income following the repatriation of R6,5 billion
of MTN Group cash from MTN Irancell. The reported share of associate income was further impacted by the depreciation
of the rial against the rand.
The digital business continued to incur losses in line with budget. Jumia benefited from Black Friday promotions
in November and December 2017. MEIH is becoming the leading e-commerce and marketplace platform in the Middle East.
Within IIG, Snapp continues to see strong growth and customers are at an all-time high with daily rides peaking at 850 000
and 1,2 million food orders in Q4 2017. We continue to focus on growing these businesses in line with the long-term
strategy for our e-commerce ventures.
Taxation
The reported effective tax rate was 52,5%**, impacted by lower profit before tax (PBT) and the effects of
tax-efficient tower profits, the turnover-based tax system in Sudan, the Sudanese impairments, as well as
withholding taxes on upstreamed dividends and other fees. The group's reported taxation charge decreased
by 39,9%** to R5 014 million** for 2017, after reporting higher taxable income in 2016.
Earnings
We reported headline earnings per share (HEPS) of 182 cents** compared to a 77 cents** headline loss per share
a year earlier.
Cash flow
Cash inflows from operations decreased to R38 484 million**. This was mainly a result of lower attributable
profits in Nigeria. The repatriation of cash from MTN Irancell of R6 509 million** supported cash inflows
for the year. Key cash outflows included cash capex of R26 661 million** and dividends paid of R13 521 million**.
Capital expenditure
Capex increased by 2%* (decreased by 10,8%** to R31 461 million**) for the year, in line with guidance given
at the interim period. We saw a marked increase in capitalisation during the second half, particularly in both
South Africa and Nigeria.
Financial position
Net debt increased to R57 145 million** from R51 902 million** for 2016. The increase was mainly a result of
lower cash generated from operations offset by cash repatriated from Iran amounting to R6 509 million** and
an increase in head office net debt.
OPERATIONAL REVIEW OF KEY MARKETS
MTN South Africa
- Subscribers# at 29,5 million
- Revenue increased by 3,0%*
- Service revenue increased by 3,9%*†
- Data revenue increased by 25,8%*†
- Digital revenue increased by 22,3%*
- EBITDA margin increased by 2,0 pp* to 34,6%*
- Capex increased by 4,4%* to R11 470 million**
† On an organic basis, organic revenue adjusts for prior year acquisitions, disposals and alignment of
postpaid carry over rules.
MTN South Africa reported improved profitability with EBITDA up 9,5%* YoY, a strong result. However at 3,9%*†,
the growth in service revenue was lower than management expectations. While the lead indicators for the postpaid
business are encouraging, it is taking longer for the postpaid revenue improvement to impact the reported numbers.
Total revenue increased by 3,0%*. Service revenue increased by 3,9%*†, supported by strong growth in data revenue
and digital revenue, up 25,8%*† and 22,3%* respectively. Prepaid service revenue increased by 7,7%*†, while
postpaid service revenue declined by 0,6%*†, largely because of the underperformance of the enterprise segment.
The increased investment in the network resulted in MTN South Africa having the leading data network in the
country, according to MyBroadband and P3, and co-best according to Ookla.
MTN Nigeria
- Subscribers# at 52,3 million
- Revenue increased by 11,4%*
- Data revenue increased by 86,6%*
- Digital revenue decreased by 3,5%*
- EBITDA margin declined by 7,5 pp* to 38,9%* (excluding the impact of the regulatory fine)
- Capex increased by 38,2%* to R8 953 million**
MTN Nigeria maintained positive momentum during the year, with the overall macro-economic environment
stabilising and the increased oil price and production offering some relief. During the year the operation
focused on operational performance, network quality, customer experience and churn management. The subscriber
base at year end was 52,3 million, following both the definition review as well as lower gross connections as
a result of new regulations that require all subscriber connections to take place in permanent structures.
During the last quarter of 2017 the Nigerian business recorded net additions of 1 965 518, a strong result.
Total revenue increased by 11,4%*, driven by strong data revenue growth. Data revenue increased 86,6%*,
benefiting from customised data offerings and improved network quality driving data usage. Digital revenue
decreased by 3,5%* because of the optimisation of our VAS business and despite a 27,2% increase in the
number of active MoMo customers to 2,0 million.
Southern and East Africa and Ghana (SEAGHA)
- Subscribers# at 38,7 million
- Revenue increased by 17,3%*
- Data revenue increased by 38,1%*
- Digital revenue increased by 29,7%*
MTN Ghana continued to benefit from a positive macro-economic environment, and closed the year with a subscriber
base of 15,7 million following the internal review of subscriber definitions. Focused value propositions and
improving NPS supported the good subscriber growth. Strong growth in revenue, up by 23,3%*, was underpinned
by data and digital revenue growth. Data revenue increased by 50,6%*, supported by re-pricing that was
implemented in the second half. The business reported active data subscribers of 6,5 million. Digital
revenue grew by 37,7%*, with the number of active MoMo subscribers expanding by 25,7% to 7,1 million.
In the year, MoMo made up 13,6% of revenue.
MTN Uganda's subscriber base closed the year at 10,7 million, driven by attractive personalised bundled products
introduced at the end of 2016, improved network quality and effective distribution. Total revenue increased by
10,0%*, supported by the strong growth in data and digital revenues. Data revenue increased by 41,4%*, underpinned
by an increase in data traffic and good growth in data bundle adoption. Active data subscribers closed the year
at 1,5 million. Digital revenue increased by 16,1%*, supported mainly by MFS (+21,9%*). In the year MFS revenue
contributed 23% of total revenue. The number of active MoMo customers increased by 27,6% to 5,2 million.
West and Central Africa (WECA)
- Subscribers# at 29,1 million
- Revenue decreased by 2,8%*
- Data revenue increased by 32,1%*
- Digital revenue increased by 32,5%*
MTN Cameroon continued to experience a challenging operating environment, following the data shutdown and a
slowdown in economic activity which had a material impact on subscriber and revenue growth in the year.
The business also experienced a number of operational challenges. The subscriber base closed the year at
7,1 million, after the disconnection of approximately 3,0 million subscribers in early October to ensure
the business remained aligned with regulatory requirements on subscriber registration. Total revenue
decreased by 6,6%*, impacted by the lower subscriber base and offset by solid growth in data (+21,1%*)
and digital revenue (+27,4%*). Active MoMo customers increased 194,2% to 1,1 million, with revenue up
767%* YoY.
MTN Ivory Coast reported solid full-year results notwithstanding a more challenging second half. The business
saw benefits from significant network investments, with its closing subscriber base at 10,9 million. Total
revenue increased by 11,0%*, underpinned by good growth in outgoing voice and data revenue, up by 5,5%* and
87,5%* respectively. Digital revenue accelerated by 32,8%*, with active MoMo customers increasing by 75,1%
to 2,2 million.
Middle East and North Africa (MENA)
- Subscribers# at 67,6 million
- Revenue increased by 7,5%* (excluding Iran)
- Data revenue increased by 33,8%*(excluding Iran)
- Digital revenue increased by 21,3%* (excluding Iran)
MTN Irancell (joint venture, equity accounted, 49%)
- Subscribers# at 43,3 million
- Revenue increased by 17,8%*
- Data revenue increased by 66,3%*
- Digital revenue increased by 13,6%*
- EBITDA margin declined by 3,4pp* to 35,6%*
- Capex increased 113,0%* to R9 274 million**
MTN Irancell delivered a solid result after rolling out a record number of sites in the year. The business reported
year-end subscribers of 43,3 million following the review of subscriber definitions. During the year the postpaid
base increased by 164% while prepaid subscriber numbers benefited from lower churn. MTN Irancell reported YoY
growth in revenue of 17,8%* with data revenue increasing 66,3%* and now contributing 42% of total revenue.
Data traffic volumes increased more than 2,5x YoY with the data revenue benefiting from the marked increase
in network rollout during the year. The business brought 7 352 sites on air versus the 5 398 in the prior year
and closed the year with the number one network NPS.
Board changes
Alan van Biljon retired on 31 December 2017 after many years of dedicated contribution to MTN, in which he served
in various roles including chairing the audit committee and as lead independent director. The board thanks him
and wishes him all the best and a well-deserved rest in his retirement. Alan Harper was appointed as the new
lead independent director of the board with effect from 25 May 2017.
Phuthuma Nhleko reverted to his role as non-executive chairman on 12 March 2017 with Rob Shuter assuming the
group president and CEO position and becoming an executive director on 13 March 2017.
Ralph Mupita was appointed as group CFO and an executive director of the board with effect from 3 April 2017.
Declaration of final ordinary dividend
Notice is hereby given that a gross final dividend of 450 cents per share for the period to
31 December 2017 has been declared. The number of ordinary shares in issue at the date of this declaration
is 1 884 296 758 (including 9 983 286 treasury shares held by MTN Holdings and 76 835 378 shares held by
MTN Zakhele Futhi).
The dividend will be subject to a maximum local dividend tax rate of 20% which will result in a net dividend
of 360 cents per share to those shareholders who bear the maximum rate of dividend withholding tax of
90 cents per share. The net dividend per share for the respective categories of shareholders for the
different dividend tax rates is as follows:
0% 450,00 cents per share
5% 427,50 cents per share
7,5% 416,25 cents per share
10% 405,00 cents per share
12,5% 393,75 cents per share
15% 382,50 cents per share
These different dividend tax rates are a result of the application of tax rates in various double-taxation
agreements as well as exemptions from dividend tax.
MTN Group Limited's tax reference number is 9692/942/71/8. In compliance with the requirements of Strate, the
electronic settlement and custody system used by the JSE Limited, the salient dates relating to the payment
of the dividend are as follows:
Declaration date Thursday, 8 March 2018
Last day to trade cum dividend on the JSE Monday, 26 March 2018
First trading day ex dividend on the JSE Tuesday, 27 March 2018
Record date Thursday, 29 March 2018
Payment date Tuesday, 3 April 2018
No share certificates may be dematerialised or re-materialised between 27 March 2018 and 29 March 2018, both
days inclusive.
On Tuesday, 3 April 2018, the dividend will be transferred electronically to the bank accounts of certificated
shareholders who make use of this facility.
In respect of those who do not use this facility, cheques dated Tuesday, 3 April 2018 will be posted on or about
this date. Shareholders who hold dematerialised shares will have their accounts held by the Central
Securities Depository Participant or broker credited on Tuesday, 3 April 2018.
For and on behalf of the board,
PF Nhleko RA Shuter
Group Chairman Group President and CEO
7 March 2018
Fairland
‡+
Results overview
Financial results for the year ended 31 December 2017
Audited summary consolidated financial statements for the year ended 31 December 2017
The group's audited summary consolidated financial statements have been independently audited by the group's external
auditors. The group's audited summary consolidated financial statements have been prepared by the MTN finance staff
under the guidance of the group finance operations executive, N Rajmohamed CA(SA) and was supervised by the group
chief financial officer, RT Mupita, BScEng (Hons), MBA, GMP.
The results were made available on 8 March 2018.
Independent auditors' report on summary consolidated financial statements
To the shareholders of MTN Group Limited
Opinion
The summary consolidated financial statements of MTN Group Limited, set out on pages 23 to 46 of the MTN Group Limited
Financial results for the year ended 31 December 2017, which comprise the summary consolidated statement of financial
position as at 31 December 2017, the summary consolidated income statement and the summary consolidated statements of
comprehensive income, changes in equity and cash flows for the year then ended, and related notes, are derived from
the audited consolidated financial statements of MTN Group Limited for the year ended 31 December 2017.
In our opinion, the accompanying summary consolidated financial statements are consistent, in all material respects,
with the audited consolidated financial statements, in accordance with the JSE Limited's (JSE) requirements for summary
financial statements, as set out in note 3 to the summary consolidated financial statements, and the requirements of
the Companies Act of South Africa as applicable to summary financial statements.
Summary consolidated financial statements
The summary consolidated financial statements do not contain all the disclosures required by International Financial
Reporting Standards and the requirements of the Companies Act of South Africa as applicable to annual financial
statements. Reading the summary consolidated financial statements and the auditors' report thereon, therefore, is
not a substitute for reading the audited consolidated financial statements and the auditors' report thereon.
The audited consolidated financial statements and our report thereon
We expressed an unmodified audit opinion on the audited consolidated financial statements in our report dated
7 March 2018. That report also includes communication of key audit matters. Key audit matters are those matters that,
in our professional judgement, were of most significance in our audit of the consolidated financial statements of
the current period.
Directors' responsibility for the summary consolidated financial statements
The directors are responsible for the preparation of the summary consolidated financial statements in accordance with
the JSE's requirements for summary financial statements, set out in note 3 to the summary consolidated financial
statements, and the requirements of the Companies Act of South Africa as applicable to summary financial statements.
Auditors' responsibility
Our responsibility is to express an opinion on whether the summary consolidated financial statements are consistent,
in all material respects, with the audited consolidated financial statements based on our procedures, which were
conducted in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on
Summary Financial Statements.
PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc.
Director: JR van Huyssteen Director: DH Manana
Registered Auditor Registered Auditor
Johannesburg Johannesburg
7 March 2018 7 March 2018
Summary consolidated income statement
for the year ended 31 December
2017 2016
Note Rm Rm
Revenue 132 815 147 920
Other income 7 6 591 335
Direct network and technology operating costs (25 077) (23 520)
Costs of handsets and other accessories (10 764) (12 304)
Interconnect and roaming costs (10 974) (13 393)
Staff costs (9 082) (9 152)
Selling, distribution and marketing expenses (17 276) (19 172)
Government and regulatory costs (5 150) (5 191)
Other operating expenses (14 128) (14 273)
EBITDA before Nigeria regulatory fine 46 955 51 250
Nigeria regulatory fine 8 - (10 499)
EBITDA 46 955 40 751
Depreciation of property, plant and equipment (19 277) (20 988)
Amortisation of intangible assets (4 490) (4 748)
Impairment of goodwill 9 (2 631) (873)
Operating profit 20 557 14 142
Net finance costs 10 (9 267) (10 495)
Loss on derecognition of long-term loan receivable 11 (2 840) -
Net monetary gain 264 1 723
Share of results of associates and joint ventures after tax 12 841 (127)
Profit before tax 9 555 5 243
Income tax expense (5 014) (8 346)
Profit/(loss) after tax 4 541 (3 103)
Attributable to:
Equity holders of the Company 4 414 (2 614)
Non-controlling interests 127 (489)
4 541 (3 103)
Basic earnings/(loss) per share (cents) 13 246 (144)
Diluted earnings/(loss) per share (cents) 13 241 (144)
Summary consolidated statement of comprehensive income
for the year ended 31 December
2017 2016
Note Rm Rm
Profit/(loss) after tax 4 541 (3 103)
Other comprehensive income after tax
Items that may be reclassified to profit or loss
Net investment hedges 19 1 421 (1 887)
Foreign exchange movement on hedging instruments 1 963 (2 684)
Deferred and current tax (542) 797
Available-for-sale financial assets1, 2 4 439 2 672
Gains arising during the year 14 4 439 2 672
Exchange differences on translating foreign
operations including the effect of hyperinflation1 (12 376) (22 907)
Losses arising during the year 19 (12 376) (22 907)
Items that have been reclassified to profit or loss
Reclassification of foreign currency differences
on loss of significant influence1,3 19 3 298 -
Other comprehensive income for the year (3 218) (22 122)
Attributable to equity holders of the Company (2 664) (21 077)
Attributable to non-controlling interests (554) (1 045)
Total comprehensive income for the year 1 323 (25 225)
Attributable to:
Equity holders of the Company 1 750 (23 691)
Non-controlling interests (427) (1 534)
1 323 (25 225)
1 This component of other comprehensive income does not attract any tax.
2 The available-for-sale investment relates mainly to the group's investment in IHS Holding Limited
(IHS) (note 14).
3 The reclassification to profit or loss relates to the exercise of the exchange right of IHS (note 7).
Summary consolidated statement of financial position
as at 31 December
2017 2016
Note Rm Rm
Non-current assets 182 515 189 089
Property, plant and equipment 91 786 95 633
Goodwill and intangible assets 38 330 46 473
Investments 7, 14 27 686 11 841
Investment in associates and joint ventures 7, 12 19 610 26 669
Deferred tax and other non-current assets 5 103 8 473
Current assets 59 900 79 611
Other current assets 11 493 13 853
Trade and other receivables 30 022 37 363
Restricted cash 2 376 1 020
Cash and cash equivalents 16 009 27 375
Total assets 242 415 268 700
Total equity 94 267 105 231
Attributable to equity holders of the Company 92 773 102 380
Non-controlling interests 1 494 2 851
Non-current liabilities 83 032 85 743
Interest-bearing liabilities 16, 17 70 567 67 319
Deferred tax and other non-current liabilities 12 465 18 424
Current liabilities 65 116 77 726
Interest-bearing liabilities 16, 17 9 153 19 635
Trade and other payables 45 718 45 142
Other current and tax liabilities 10 245 12 949
Total equity and liabilities 242 415 268 700
Summary consolidated statement of changes in equity
for the year ended 31 December
2017 2016
Note Rm Rm
Opening balance at 1 January 102 380 146 369
Opening reserve adjustment for impact of hyperinflation 5 - (123)
Restated balance at 1 January 102 380 146 246
Total comprehensive income 1 750 (23 691)
Profit/(loss) after tax 4 414 (2 614)
Other comprehensive income after tax (2 664) (21 077)
Transactions with owners of the Company
Shares issued - ^
Shares cancelled - (^)
Share-based payment transactions - other 237 1
Shares repurchased from MTN Zakhele - (3 462)
Share-based payment transaction - MTN Zakhele Futhi 21 921 2 919
Dividends declared (12 572) (19 816)
Other movements 57 183
Attributable to equity holders of the Company 92 773 102 380
Non-controlling interests 1 494 2 851
Closing balance at 31 December 94 267 105 231
Dividends declared during the year (cents per share) 700 1 080
Dividends declared after the year (cents per share) 450 450
^ Amount less than R1 million.
Summary consolidated statement of cash flows
for the year ended 31 December
2017 2016
Note Rm Rm
Net cash generated from operating activities 23 694 20 716
Cash generated from operations 38 484 55 681
Dividends paid to equity holders of the Company (12 565) (19 792)
Dividends paid to non-controlling interests (956) (1 178)
Dividends received from associates and joint ventures 12 7 129 692
Income tax paid (7 596) (11 704)
Other operating activities (802) (2 983)
Net cash used in investing activities (27 585) (40 408)
Acquisition of property, plant and equipment (23 861) (29 899)
Acquisition of intangible assets (2 800) (5 348)
Increase in non-current investments (820) (2 199)
Realisation/(purchase) of bonds, treasury bills
and foreign deposits 1 849 (2 704)
(Increase)/decrease in restricted cash (1 727) 309
Movement in other investing activities (226) (567)
Net cash (used in)/from financing activities (4 919) 20 951
Proceeds from borrowings 17 23 287 59 647
Repayment of borrowings and interest 17 (28 434) (37 211)
Buy-back of shares from MTN Zakhele - (2 645)
Premium received on option issued to MTN Zakhele Futhi 192 1 185
Other financing activities 36 (25)
Net (decrease)/increase in cash and cash equivalents (8 810) 1 259
Net cash and cash equivalents at beginning of the year 27 375 34 139
Exchange losses on cash and cash equivalents (2 664) (8 192)
Net monetary gain on cash and cash equivalents 36 169
Net cash and cash equivalents at end of the year 15 937 27 375
Notes to the summary consolidated financial statements continued
for the year ended 31 December 2017
1. INDEPENDENT AUDIT
The summary consolidated financial statements have been derived from the audited consolidated financial
statements. The directors of the Company take full responsibility for the preparation of the summary
consolidated financial statements and that the financial information has been correctly derived and are
consistent in all material respects with the underlying audited consolidated financial statements.
The summary consolidated financial statements for the year ended 31 December 2017 contained in the
preliminary report have been audited by have been audited by our joint auditors PricewaterhouseCoopers Inc.
and SizweNtsalubaGobodo Inc., who expressed an unmodified opinion thereon. The auditor also expressed an
unmodified opinion on the annual financial statements from which the summary consolidated financial
statements were derived.
A copy of the auditor’s report on the summary consolidated financial statements and of the auditor’s report
on the annual consolidated financial statements are available for inspection at the company’s registered office,
together with the financial statements identified in the respective auditor’s reports."
2. GENERAL INFORMATION
MTN Group Limited (the Company) carries on the business of investing in the telecommunications industry
through its subsidiary companies, joint ventures, associates and related investments.
3. BASIS OF PREPARATION
The summary consolidated financial statements contained in the preliminary report are prepared in accordance with
the requirements of the JSE Limited Listings Requirements for preliminary reports, and the requirements of the
Companies Act applicable to summary financial statements. The Listings Requirements require preliminary reports to
be prepared in accordance with the framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation
of the consolidated financial statements from which the summary consolidated financial statements were derived are in terms
of International Financial Reporting Standards and are consistent with those accounting policies applied in the preparation
of the previous consolidated annual financial statements." The summary consolidated financial statements should be read
in conjunction with the consolidated financial statements for the year ended 31 December 2017, which have been prepared
in accordance with IFRS. A copy of the full set of the audited consolidated annual financial statements is available for
inspection from the Company secretary at the registered office of the Company.
4. PRINCIPAL ACCOUNTING POLICIES
The group has adopted all the new, revised or amended accounting pronouncements as issued by the International
Accounting Standards Board (IASB) which were effective for the group from 1 January 2017, none of which had a
material impact on the group.
5. HYPERINFLATION
The financial statements of the group entities whose functional currencies are the currencies of
hyperinflationary economies are adjusted in terms of the measuring unit current at the end of the year.
The economy of Sudan was assessed to no longer be hyperinflationary, effective 1 July 2016, and
hyperinflation accounting was discontinued from this date onwards. As at 31 December 2017 the historical
increase in the asset value as a result of hyperinflation accounting has been fully impaired, which resulted
in a R1 690 million decrease in EBITDA during the year.
The economy of South Sudan was assessed to be hyperinflationary, effective 1 January 2016, and hyperinflation
accounting was applied for the year ended 31 December 2016. Upon first application of hyperinflation, prior
period losses of R123 million arising from the net monetary position have been recognised directly in equity.
As at 31 December 2016 and 31 December 2017, the property, plant and equipment of South Sudan was fully impaired,
resulting in no hyperinflation adjustment on capital expenditure (capex) for the respective year.
In 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was
discontinued effective 1 July 2015. The group's results from Iran includes expenses resulting from the
discontinuation of hyperinflation accounting mainly relating to the subsequent depreciation of assets that
were historically written up under hyperinflation accounting. The additional income statement charge reduced
equity accounted earnings from Iran by R1 328 million for the year ended 31 December 2017 (December 2016:
R1 853 million).
The economy of Syria was assessed to be hyperinflationary, effective 1 January 2014, and hyperinflation
accounting has been applied since. As at 31 December 2017, R1 348 million of assets previously written
up for hyperinflation has been impaired with the impact being included in EBITDA during the year
under review.
The impact of hyperinflation on the segment analysis is as follows:
2017
Rm
Revenue EBITDA Capex
Syria 384 (1 227) 81
Sudan - (1 690) -
South Sudan (included in other SEAGHA) 120 (31) -
504 (2 948) 81
Iran - major joint venture - 69 -
2016
Rm
Revenue EBITDA Capex
Syria 484 164 310
Sudan 122 41 38
South Sudan (included in other SEAGHA) 420 41 -
1 026 246 348
Iran - major joint venture - (294) 326
6. SEGMENT ANALYSIS
The group has identified reportable segments that are used by the group executive committee (chief
operating decision maker (CODM)) to make key operating decisions, allocate resources and assess
performance. The reportable segments are largely grouped according to their geographic locations and
reporting lines to the CODM. The group's underlying operations are now clustered as follows:
- South Africa
- Nigeria
- South and East Africa and Ghana (SEAGHA)
- West and Central Africa (WECA)
- Middle East and North Africa (MENA).
The following changes to the group's segment presentation were made during 2017:
- The results for MTN South Africa and MTN Nigeria are reported separately. These results were previously
reported in the SEA (now SEAGHA) and WECA regions respectively. The group appointed regional vice-presidents
in 2017 to manage the rest of the operations in the three regions as part of its strategy to bolster
leadership in each region
- The group reallocated its operations in Ghana, which was previously included in the West and Central Africa
region (WECA), to the South and East Africa (SEA) region and subsequently renamed this regional grouping
(SEAGHA). The reallocation was performed to balance the operational requirements of each region under
each vice- president to further optimise the oversight responsibilities of the regional vice- presidents
- In addition, during 2017, management changed the way it presents segment results for South Africa.
Previously, the South African operating segment included the results of the MTN South Africa sub-group
of companies. In 2017, the segment results presented for South Africa only include the results of the
MTN South Africa operating company.
Comparative numbers for the segments have been restated accordingly.
Operating results are reported and reviewed regularly by the CODM and include items directly attributable to
a segment as well as those that are attributed on a reasonable basis, whether from external transactions or
from transactions with other group segments.
The measure of reporting profit for each segment, that also represents the basis on which the CODM reviews
segment results, is EBITDA. EBITDA is defined as earnings before interest (which includes gains and losses
on foreign exchange transactions), tax, depreciation and amortisation, and is also presented before
recognising the following items:
- Impairment of goodwill
- Loss on derecognition of a long-term loan receivable
- Net monetary gain resulting from the application of hyperinflation
- Share of results of associates and joint ventures after tax.
For the purposes of the review of segment results by the CODM, EBITDA also excludes the following items:
- Hyperinflation (note 5)
- Tower sale profits
- Nigeria regulatory fine (note 8)
- MTN Zakhele Futhi share-based payment expense (note 21)
- Exchange right profit on IHS investment (note 7).
These exclusions have remained unchanged from the prior year apart from the exchange right profit on the
IHS investment that occurred during the year.
Irancell Telecommunication Company Services (PJSC) (Iran) proportionate results are included in the segment
analysis as reviewed by the CODM and excluded from IFRS reported results for revenue, EBITDA and CAPEX due
to equity accounting for joint ventures. The results of Iran in the segment analysis exclude the impact of
hyperinflation accounting.
2017 20161
Rm Rm
REVENUE
South Africa 42 542 41 303
Nigeria 36 005 47 122
SEAGHA 20 133 20 511
Ghana 10 382 10 291
Uganda 5 193 5 465
Other SEAGHA 4 558 4 755
WECA 20 951 23 242
Cameroon 5 373 6 189
Ivory Coast 7 421 7 176
Other WECA 8 157 9 877
MENA 12 716 14 288
Syria 2 007 2 123
Sudan 4 540 4 585
Other MENA 6 169 7 580
Major joint venture - Iran 16 503 16 536
Head office companies and eliminations (36) 428
Hyperinflation impact 504 1 026
Iran revenue exclusion (16 503) (16 536)
132 815 147 920
1 Restated to reflect the segments reallocated.
2017 20161
Rm Rm
EBITDA
South Africa2 14 728 13 451
Nigeria 14 041 21 854
SEAGHA 6 835 6 741
Ghana 4 116 4 184
Uganda 1 794 1 620
Other SEAGHA 925 937
WECA 5 336 7 007
Cameroon 1 304 2 065
Ivory Coast 2 347 2 333
Other WECA 1 685 2 609
MENA 3 802 4 657
Syria 601 689
Sudan 1 592 1 471
Other MENA 1 609 2 497
Major joint venture - Iran 5 881 6 455
Head office companies and eliminations (449) (1 729)
Hyperinflation impact (2 948) 246
Nigeria regulatory fine - (10 499)
Tower sale profits 27 31
Profit on exercise of exchange right of IHS 6 017 -
MTN Zakhele Futhi share-based payment expense (434) (1 008)
Iran EBITDA exclusion (5 881) (6 455)
EBITDA 46 955 40 751
Depreciation, amortisation and impairment of goodwill (26 398) (26 609)
Net finance cost (9 267) (10 495)
Loss on derecognition of long-term loan receivable (2 840) -
Net monetary gain 264 1 723
Share of results of associates and joint ventures after tax 841 (127)
Profit before tax 9 555 5 243
1 Restated to reflect the segments reallocated.
2 Excluding MTN Zakhele Futhi expense of R434 million (2016: R1 008 million).
2017 20161
Rm Rm
CAPITAL EXPENDITURE INCURRED
South Africa 11 470 10 982
Nigeria 8 953 8 701
SEAGHA 3 794 4 246
Ghana 2 196 2 435
Uganda 909 758
Other SEAGHA 689 1 053
WECA 3 696 6 189
Cameroon 976 2 166
Ivory Coast 1 203 1 721
Other WECA 1 517 2 302
MENA 2 294 3 310
Syria 951 1 049
Sudan 545 1 549
Other MENA 798 712
Major joint venture - Iran 9 274 5 138
Head office companies and eliminations 1 173 1 492
Hyperinflation impact 81 348
Iran capex exclusion (9 274) (5 138)
31 461 35 268
1 Restated to reflect the segments reallocated.
7. INVESTMENT IN IHS
In January 2017, the group exchanged its 51% interest in Nigeria Tower InterCo B.V., the parent company of
INT Towers Limited (INT), the Nigerian telecom tower operator, for an additional shareholding in IHS Holding
Limited (IHS Group) (the transaction). As a result of the transaction, the group's economic interest in the
IHS Group increased from approximately 15% class B non-voting shares to an economic interest of approximately
29% comprising class A voting shares and class B non-voting shares. The original IHS Group shareholders'
agreement remains in place and there are no changes to IHS Group's independence as an operator. Neither the
interest prior to, nor the interest obtained subsequent to the transaction will allow the group to appoint
a board member. In addition, IHS Group has the right to decide what strategic, financial and operational
information is shared with the group. As a result of these restrictions, the group's vote is limited to
matters which relate to fundamental changes in the business or which apply in exceptional circumstances
and are considered to be protective in nature. The group's rights do not constitute significant influence
to participate in the financial and operating policy decisions of IHS Group. Consequently, the group
continues to account for its investment in IHS Group as an available-for-sale financial instrument.
The exchange, which closed on 23 February 2017, has been accounted for as a disposal of the group's equity
accounted interest in INT and an acquisition of an additional investment in the IHS Group. The net impact
on profit before tax is R6 017 million, which was determined as the difference between the fair value of
the new interest obtained and the carrying value of the equity accounted interest in INT and after recycling
the applicable amount included in the foreign currency translation reserve (FCTR) (note 19) to the income
statement. This resulted in a decrease of R4 452 million in investments in associates and an increase of
R13 767 million in available-for-sale investments.
The decision to exchange the shares was made following a thorough review of the commercial benefits of
the exchange and an agreement on the number of shares that the group will qualify for in IHS Group.
Consensus on these matters and board approval for the transaction was obtained in January 2017. As a
result, the investment in INT was not accounted for as held for sale in accordance with the requirements
of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations at 31 December 2016.
The transaction had no tax impact.
8. NIGERIA REGULATORY FINE
On 10 June 2016, MTN Nigeria Communications Limited (MTN Nigeria) resolved the matter relating to the
previously imposed regulatory fine with the Federal Government of Nigeria (FGN) after the completion of
an extensive negotiation process.
In terms of the settlement agreement reached on 10 June 2016, MTN Nigeria agreed to pay a total cash
amount of N330 billion over three years (the equivalent of R25,1 billion1) to the FGN as full and
final settlement of the matter.
The regulatory fine was fully expensed in the prior years with an additional expense recognised in the
income statement amounting to R10,5 billion for the year ended 31 December 2016. A discount unwind of
R1,0 billion (31 December 2016: R1,0 billion) was recognised in finance costs during the current year
relating to the outstanding liability. The balance of the liability at 31 December 2017 amounts to
R6,6 billion (31 December 2016: R8,7 billion) after taking into account the payment of N30 billion
(R1,3 billion2) on 24 March 2017 and the unwinding of the interest.
1 Amount translated at the 10 June 2016 rate R1 = N13,15
2 Amount translated at the March 2017 average rate R1 = N23,68
9. IMPAIRMENT OF GOODWILL AND PROPERTY, PLANT AND EQUIPMENT
Current year
In a number of the group's operations in the MENA region the socio-political instability experienced in
these markets resulted in suppressed revenue growth and lower operating margins being experienced resulting
in decreased forecasted cash flows at 30 June 2017. This necessitated impairment reviews being performed on
the group's operations in Guinea-Bissau, Guinea-Conakry, Liberia, Ghana, Afghanistan, Sudan, Yemen and Syria
where the carrying amounts of these cash generating units were compared to their respective recoverable
amounts. The recoverable amounts were determined through value-in-use calculations where future cash flows
were estimated and discounted at the weighted average cost of capital discount rates. The discount rates
and the perpetuity growth rates used in the value-in-use calculations of the operations impacted by
impairment are as follows:
December 2017 June 2017 December 2016
Growth Discount Growth Discount Growth Discount
rate rate rate rate rate rate
% % % % % %
MTN Afghanistan 6,0 17,6 6,0 18,8 7,0 20,2
MTN Sudan 14,0 39,0 14,0 33,0 13,7 32,9
MTN Yemen 9,0 31,7 5,0 24,8 9,0 23,9
MTN Syria (JSC) 15,0 41,9 15,0 35,2 15,0 35,5
The following impairment losses were recognised in the income statement in the goodwill impairment and
other operating expenses lines, respectively in 2017:
Impairment
of property,
plant and
equipment
and
Goodwill intangible Recoverable
impairment assets1 amount2
Rm Rm Rm
MTN Afghanistan 841 - 2 317
MTN Sudan 983 1 690 2 963
MTN Yemen 807 - 1 769
MTN Syria (JSC) - 1 348 2 888
2 631 3 038 9 937
1 The net impairment of property, plant and equipment, and intangible assets of R3 045 million as per
note 13 includes net impairments amounting to R7 million recognised by other entities within the group.
2 This includes any minority portion of the recoverable amount of the cash generating unit.
MTN Sudan was operating in a hyperinflationary economy up to 30 June 2016 while MTN Syria (JSC) continues
to operate in a hyperinflationary economy. Hyperinflation accounting resulted in the write up of non-monetary
assets and a resulting increase in the carrying value of these operations. The total impairment of property,
plant and equipment, and intangible assets amounting to R3 038 million and R192 million of the MTN Sudan
goodwill impairment for the current year relates to the carrying value previously written up to account for
the impact of hyperinflation, exceeding the calculated value in use.
The goodwill of MTN Sudan and MTN Syria was fully impaired as at 30 June 2017. The impairment amount recognised
at 30 June 2017 relating to property, plant and equipment and intangible assets of MTN Syria has been adjusted
as required for the impact of hyperinflation accounting at 31 December 2017. The remaining goodwill in
MTN Afghanistan and MTN Yemen amount to R490 million and R1,2 billion at 31 December 2017, respectively.
The group performed impairment assessments on all goodwill balances at 31 December 2017 and have not identified
any further impairments at that date. The goodwill impaired at 30 June 2017 can not be reversed in subsequent
periods. The impairments of property, plant and equipment, and intangible assets can be reversed in subsequent
periods to the depreciated carrying values at that point in time if the outlook in these markets changed
sufficiently to confirm that the discounted future cash flows, or fair values less costs of disposal,
exceed the carrying values of these cash generating units.
Prior year
Areeba Guinea S.A.
Areeba Guinea S.A. (Conakry) experienced a decline in EBITDA and Guinea-Conakry experienced poor economic
performance countrywide. Consequently, a review of the recoverable amount of Conakry was undertaken during 2016
subsequent to which an impairment loss amounting to R402 million was recognised. As at 31 December 2016, the
goodwill balance relating to Conakry was fully impaired. No further impairments were deemed necessary as at
31 December 2017.
Afrihost
Based on an agreement concluded by the group to sell its 50,02% investment in Afrihost Proprietary Limited
(Afrihost) for R325 million, a goodwill impairment loss of R202 million was recognised at 30 June 2016 on the
remeasurement of the assets to fair value less cost to sell in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations. The investment was disposed of during the second half of 2016.
10. NET FINANCE COSTS
2017 2016
Rm Rm
Interest income on loans and receivables 2 109 2 462
Interest income on bank deposits 1 379 1 962
Finance income 3 488 4 424
Interest expense on financial liabilities measured
at amortised cost (8 400) (9 020)
Net foreign exchange losses (4 355) (5 899)
Finance costs (12 755) (14 919)
Net finance costs recognised in profit or loss (9 267) (10 495)
11. LOSS ON DERECOGNITION OF LONG-TERM LOAN RECEIVABLE
With effect from 27 December 2017 MTN Nigeria Towers SPV B.V. assigned its shareholder loan of R2 840 million
to IHS Group. The shareholder loan arose as part of MTN Nigeria's tower transactions whereby MTN Nigeria
sold a portfolio of towers to INT in 2014 and 2015 which, through Nigeria Tower InterCo B.V., was 51% owned
by MTN Nigeria Towers SPV B.V. and 49% by IHS. When forming INT, MTN Group (through MTN Nigeria Towers SPV B.V.)
as well as IHS Group, provided proportionate shareholder loans to INT. These loans were subordinated and due for
repayment in 2024 and 2025 with interest capitalised until two years prior to repayment. In return for the
assignment of the loan, IHS has facilitated certain network volume commitments and provided more attractive
terms for MTN Nigeria's future network rollout, applicable from 2018 onwards.
The cash flow benefits to be realised from the improved commercial terms of the future rollout have not been
capitalised as a prepayment, and will be accounted for as and when they are realised. This is due to MTN
contractually not controlling the realisation of the future economic benefits referred to above. However,
the group believes it will obtain economic benefits through IHS being incentivised economically to transact
with MTN under the current master services agreement.
12. SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES AFTER TAX
2017 2016
Rm Rm
841 (127)
Irancell Telecommunication Company Services (PJSC) 931 2 073
Nigeria Tower InterCo B.V. (note 7) (8) (2 227)
Others (82) 27
For the year ended 31 December 2017, outstanding dividends of R6 509 million (December 2016: a loan repayment
of R6 308 million) was received from Irancell.
13. EARNINGS PER ORDINARY SHARE
2017 2016
Number of ordinary shares in issue
At end of the year (excluding MTN Zakhele Futhi
and treasury shares) 1 797 451 094 1 797 228 125
Weighted average number of shares
Shares for earnings/(loss) per share 1 797 414 442 1 819 974 274
Add: Dilutive shares
- Share options - MTN Zakhele Futhi 28 535 814 42 508 806
- Share schemes 3 064 710 1 042 243
Shares for dilutive earnings per share 1 829 014 966 1 863 525 323
Treasury shares
Treasury shares of 9 983 286 (December 2016: 10 206 255) are held by the group and 76 835 378
(December 2016: 76 835 378) are held by MTN Zakhele Futhi (RF) Limited (MTN Zakhele Futhi).
Dilutive shares
The share options and share rights issued in terms of the group's share schemes, performance share
plan and MTN Zakhele Futhi did not have a dilutive effect on the loss per share for the year ended
31 December 2016, and have therefore not been treated as dilutive.
MTN Zakhele and MTN Zakhele Futhi
The MTN Zakhele broad-based black economic empowerment (BBBEE) transaction unwound during 2016 and all
options outstanding were exercised. The group implemented a new BBBEE transaction, structured through
MTN Zakhele Futhi. The shares held by MTN Zakhele Futhi, although legally issued, are not deemed to be
issued in terms of IFRS as the MTN Zakhele Futhi transaction has the substance of an option.
Headline earnings/(loss) is calculated in accordance with the circular titled Headline Earnings as issued
by the South African Institute of Chartered Accountants as amended from time to time and as required by
the JSE Limited.
2017 2016
Rm Rm
Basic headline earnings/(loss) per share
Reconciliation between profit/(loss) attributable
to the equity holders of the Company and headline
earnings/(loss)
Profit/(loss) after tax 4 414 (2 614)
Net profit on disposal of property, plant and equipment (11) (1)
- Subsidiaries (IAS 16) (8) 4
- Joint ventures (IAS 28) (3) (5)
Net profit on disposal of intangible assets - (47)
- Subsidiaries (IAS 38) - (47)
Profit on disposal of subsidiary (IFRS 10) - (130)
Net (profit)/loss on dilution of investment in joint
venture (IAS 28) (28) 349
Net impairment loss on property, plant and equipment,
and intangible assets (IAS 36) 3 045 205
Impairment of goodwill (IAS 36) 2 631 873
Realisation of deferred gain on disposal of
non-current assets held for sale (IFRS 5) (27) (31)
Profit on derecognition of equity-accounted investment (IAS 28) (6 017) -
Total tax effects of adjustments (189) (10)
Total non-controlling interest effect of adjustments (541) (3)
Basic headline earnings/(loss) 3 277 (1 409)
Earnings/(loss) per share (cents)
- Basic 246 (144)
- Basic headline 182 (77)
Diluted earnings/(loss) per share (cents)
- Diluted 241 (144)
- Diluted headline 179 (77)
14. FINANCIAL INSTRUMENTS
Financial instruments at amortised cost
The group has not disclosed the fair values of financial instruments measured at amortised cost as their
carrying amounts closely approximate their fair values, except for the borrowings set out below.
Listed long-term borrowings
The group has listed long-term fixed interest rate senior unsecured notes in issue which were issued
in prior years, with a carrying amount of R21 765 million at 31 December 2017 (December 2016: R24 059 million)
and a fair value of R22 434 million (December 2016: R23 179 million). The fair values of these instruments
are determined by reference to quoted prices on the Irish bond market. The market for these bonds is not
considered to be liquid and consequently the fair value measurement is categorised within level 2 of the
fair value hierarchy.
Financial instruments measured at fair value
The fair values of financial instruments measured at fair value are determined as follows:
Treasury bills
The fair value of these investments is determined by reference to published price quotations in an active
market. The group has classified treasury bills with a carrying amount of R343 million (December 2016:
R282 million) as available for sale and with a carrying amount of R307 million (December 2016: R669 million)
as at fair value through profit or loss. The fair value of these investments is categorised within level 1
of the fair value hierarchy.
Fair value measurement of investment in IHS
Included in investments in the consolidated statement of financial position is an equity investment in
IHS Group at fair value of R27 045 million at 31 December 2017. As stated in note 7, the group increased its
interest in IHS Group during the year under review following an exchange of its 51% interest in Nigeria Tower
InterCo B.V. Prior to the increase, the group reported a fair value of R11 240 million at 31 December 2016 for
the investment classified as available for sale. The fair value at 31 December 2016 was determined with reference
to recent transactions between market participants, consequently the investment was previously categorised within
level 2 of the fair value hierarchy. At 31 December 2017, the absence of transactions between market participants
resulted in the fair value being determined using models considered to be appropriate by management. The fair
value was calculated using an earnings multiple technique and was based on unobservable market inputs including
tower industry earnings multiples of between 13x to 17x applied to MTN management's estimates of earnings,
less estimated net debt.
Given the confidentiality restrictions in the shareholders' agreement with IHS Group, MTN does not have access
to the IHS Group business plans or 2017 actual financial information. Any estimated earnings used to derive the
existing fair value are therefore solely based on MTN management assumptions and market estimates on financial
growth, currency movements, costs and performance. The investment has therefore been transferred from level 2
to level 3 of the fair value hierarchy for the current reporting period. An increase of one in the low and high
end of the multiple range, keeping other inputs constant, would have resulted in an increase in the fair value
of R2 148 million and a decrease of one in the low and high end of the multiple range, keeping other inputs
constant, would have resulted in a decrease in the fair value by R2 148 million as at 31 December 2017. An
increase of 10% in the estimated earnings used, keeping other inputs constant, would have resulted in an
increase in the fair value of R3 201 million and a decrease of 10% in the estimated earnings used, keeping
other inputs constant, would have resulted in a decrease in the fair value of R3 201 million as at
31 December 2017. An increase of R4 249 million (December 2016: R 2 672 million) has been recognised for
the year under review in other comprehensive income resulting from the change in fair value.
Reconciliation of level 3 financial assets
The table below sets out the reconciliation of financial assets that are measured at fair value based
on inputs that are not based on observable market data (level 3):
Rm
Balance at 1 January 2016 9 707
Transfers to level 2 (IHS) (9 250)
Acquisitions 61
Foreign exchange differences (138)
Balance at 1 January 2017 380
Transfers from level 2 (IHS) 11 240
Acquisitions 132
Exchange right exercised (IHS) 13 767
Gain on available-for-sale investment 4 439
Foreign exchange differences (2 272)
Balance at 31 December 2017 27 686
15. AUTHORISED COMMITMENTS FOR THE ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT AND SOFTWARE
2017 2016
Rm Rm
27 747 34 753
- Contracted 6 958 11 458
- Not contracted 20 789 23 295
16. INTEREST-BEARING LIABILITIES
Bank overdrafts 72 -
Current borrowings 9 081 19 635
Current liabilities 9 153 19 635
Non-current borrowings 70 567 67 319
79 720 86 954
17. ISSUE AND REPAYMENT OF DEBT AND EQUITY SECURITIES
During the year under review the following entities raised and repaid significant debt instruments:
MTN Holdings raised R5,1 billion (December 2016: R18,1 billion) additional debt through loan facilities,
R5,6 billion (December 2016: R2 billion) on general banking facilities and R5,3 billion (December 2016:
R2,1 billion) through the Domestic Medium Term Programme.
MTN Holdings repaid R7,2 billion (December 2016: R7,4 billion) of the loan facility, R6,8 billion
(December 2016: R2,9 billion) of general banking facilities and R2,9 billion (December 2016: R154 million)
of the Domestic Medium Term Programme.
MTN International (Mauritius) Limited (MTN Mauritius) raised R1,4 billion (December 2016: R11,2 billion)
and repaid R1,4 billion (December 2016: R12,9 billion) on a revolving credit facility.
MTN Nigeria Communications Limited raised R2,2 billion (December 2016: Rnil) in long-term borrowings and
repaid R4,3 billion (December 2016: R5,4 billion).
Other borrowings raised and repaid across the group amounted to R3,7 billion (December 2016: R12 billion)
and R5,8 billion (December 2016: R8,4 billion), respectively.
During the second half of 2016 MTN (Mauritius) Investments Limited raised R14,2 billion debt through
long-term fixed interest rate unsecured notes. These notes are listed on the Irish Stock Exchange.
18. CONTINGENT LIABILITIES
2017 2016
Rm Rm
Uncertain tax exposures 8 667 7 611
Legal and regulatory matters 1 180 516
9 847 8 127
Uncertain tax exposures
The group operates in numerous tax jurisdictions and the group's interpretation and application of the
various tax rules applied in direct and indirect tax filings may result in disputes between the group
and the relevant tax authority. The outcome of such disputes may not be favourable to the group. At
year-end there were a number of tax disputes ongoing in various of the group's operating entities, the
most significant of which relates to a transfer pricing dispute which the group is contesting.
The group has applied its judgement and has recognised liabilities based on whether additional amounts
will be payable and has included contingent liabilities where economic outflows are considered possible
but not probable.
Legal and regulatory matters
The group is involved in various legal and regulatory matters, the outcome of which may not be favourable
to the group and none of which are considered individually material. The group has applied its
judgement and has recognised liabilities based on whether additional amounts will be payable and has
included contingent liabilities where economic outflows are considered possible but not probable.
19. EXCHANGE RATES
Closing rates Average rates
2017 2016 2017 2016
United States dollar USD 0,08 0,07 0,07 0,07
Nigerian naira NGN 29,05 22,81 24,61 18,28
Iranian rial IRR 2 893,16 2 355,36 2 493,01 2 119,83
Ghanaian cedi GHS 0,36 0,31 0,33 0,27
Cameroon Communaute Financiere
Africaine franc XAF 44,44 45,34 44,06 40,23
Cote d'Ivoire Communaute
Financiere Africaine franc CFA 45,50 45,56 43,92 40,55
Ugandan shilling UGX 293,68 261,73 270,09 232,52
Syrian pound SYP 35,18 37,71 37,76 32,41
Sudanese pound SDG 1,61 0,48 0,55 0,43
The group's functional and presentation currency is rand. The strengthening of the closing rate of the rand
against the functional currencies of the group's largest operations contributed to the decrease in consolidated
assets and liabilities and the resulting foreign currency translation reserve reduction of R12 376 million
(December 2016: R22 907 million) for the year. Following the exercise of the exchange rights in INT (note 7),
a foreign currency translation loss of R3 298 million was released to the consolidated income statement.
Nigeria and Sudan exchange rates
Following a review of the liquidity and sustainability of quoted exchange rates introduced in Nigeria and
Sudan, the group changed the rates applicable to the relevant transactions and balances as well as the
translation of the results, cash flows and financial position of these operations in the last quarter of
2017. The new quoted rates applied are considered to represent more appropriately the rate at which the
future cash flows on the relevant foreign denominated transactions or balances could have been settled
if those cash flows had occurred at the measurement date or the rate at which dividends can be remitted
in respect of the translation of foreign entities. For MTN Nigeria, the group changed its reference rate
from the Interbank rate to the Nigerian Autonomous Foreign Exchange (NAFEX) rate and in MTN Sudan the
group changed from the Central Bank rate to the Margin Resource Incentive Rate.
Net investment hedges
During 2016 and for the year ended 31 December 2017, the group hedged a designated portion of its dollar
net assets in MTN (Dubai) Limited (MTN Dubai) for forex exposure arising between the USD and ZAR as part
of the group's risk management objectives. The group designated external borrowings (Eurobonds) denominated
in USD held by MTN (Mauritius) Investments Limited with a value of R22,4 billion (December 2016: R23,2 billion)
and external borrowings denominated in USD held by MTN Nigeria Communications Limited with a value of
R2,6 billion (December 2016: R4,5 billion) as hedging instruments. For the period of the hedge relationship,
foreign exchange movements on these hedging instruments are recognised in other comprehensive income as part
of the foreign currency translation reserve (FCTR), offsetting the exchange differences recognised in other
comprehensive income, arising on translation of the designated dollar net assets of MTN Dubai to ZAR. The
cumulative forex movement recognised in other comprehensive income will only be reclassified to profit or
loss upon loss of control over MTN Dubai. There was no hedge ineffectiveness recognised in profit or loss
during the current or prior year.
20. RELATED PARTY TRANSACTIONS
Transactions between members of the group
Scancom Limited (MTN Ghana) entered into operating lease agreements with Ghana Tower InterCo B.V in prior years.
The operating lease commitments amount was R8 446 million at 31 December 2017 (2016: R6 795 million). The
expense recorded amounted to R627 million for the 2017 financial year (2016: R532 million). The rental
amounts escalate every year by inflation and the initial term is 10 years, followed by four times
five-year renewal periods.
MTN Uganda Limited entered into operating lease agreements with Uganda Tower InterCo B.V in prior years.
The operating lease commitments amount was R1 636 million at 31 December 2017 (2016: R2 187 million).
The expense recorded amounted to R558 million for the 2017 financial year (2016: R432 million). The
rental amounts escalate every year by inflation and the initial term is 10 years, followed by four times
five-year renewal periods.
MTN Nigeria Communications Limited entered into operating lease agreements with INT in prior years, a wholly owned
subsidiary of Nigeria Tower InterCo B.V. INT is no longer part of MTN Group from 31 January 2017,
refer to note 7. The operating lease commitments amounted to R85 810 million as at 31 December 2016.
The expense recorded amounted to R464 million for the 2017 financial year (2016: R4 254 million)
representing one month's lease costs to January 2017. The initial term is 10 years (extended to 15 years
in 2016), followed by four times five-year renewal periods.
Transaction with an entity associated with a director
On 28 December 2017, 14 750 000 MTN Zakhele Futhi shares, acquired by the group in terms of the 2016
MTN Zakhele Futhi underwrite option, were sold for a total consideration of R295 million. The shares
were purchased by Main Street 1561 Proprietary Limited, a wholly owned company of PF Nhleko,
non-executive chairman of MTN Group.
21. ZAKHELE FUTHI
During the 2017 year, an additional 24 388 294 MTN Zakhele Futhi shares were sold to external parties (including the
14 750 000 shares referred to in note 20), that were previously acquired by the Company in terms of the
underwrite option during the allotment of MTN Zakhele Futhi shares in 2016. The shares were sold in four
tranches on different grant dates for a total consideration of R487 million. The total increase in equity resulting
from these share-based payment transactions amounted to R921 million (December 2016: R2 919 million) of which
R434 million (December 2016: R1 008 million) relates to the share-based payment expense and R487 million
(December 20 16: R1 911 million) relates to the option premium for the shares sold.
22. EVENTS AFTER REPORTING PERIOD
Dividends declared
Dividends declared at the board meeting held on 7 March 2018 amounted to 450 cents per share.
Administration 2018
Registration number: 1994/009584/06
ISIN: ZAE000042164
Share code: MTN
Board of directors
PF Nhleko2
RA Shuter#1
RT Mupita1
PB Hanratty$3
A Harper#3
KP Kalyan3
S Kheradpir††3
NP Mageza3
MLD Marole3
AT Mikati†2
SP Miller^3
KC Ramon3
NL Sowazi3
J van Rooyen3
†† American
† Lebanese
# British
$ Irish
^ Belgian
1 Executive
2 Non-executive
3 Independent non-executive director
Group secretary
SB Mtshali
Private Bag X9955, Cresta, 2118
Registered office
216 – 14th Avenue, Fairland, 2195
American depository receipt (ADR) programme
Cusip No. 62474M108 ADR to ordinary Share
1:1
Depository
The Bank of New York
101 Barclay Street, New York NY. 10286, USA
MTN Group sharecare line
Toll free: 0800 202 360 or +27 11 870 8206
if phoning from outside South Africa
Office of the transfer secretaries
Computershare Investor Services
Proprietary Limited
Registration number 2004/003647/07
Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196
PO Box 61051, Marshalltown, 2107
Joint auditors
PricewaterhouseCoopers Inc.
4 Lisbon Lane,
Waterfall City
Jukskei View
2090
SizweNtsalubaGobodo Inc.
20 Morris Street East
Woodmead, 2157
PO Box 2939, Saxonwold, 2132
Sponsor
Deutsche Securities (SA) Proprietary Limited
3 Exchange Square, 87 Maude Street,
Sandton, 2196
Attorneys
Webber Wentzel
90 Rivonia Road, Sandton, 2196
PO Box 61771, Marshalltown, 2107
Contact details
Telephone: National 083 912 3000 and
083 869 3000
International +27 83 912 3000
Facsimile: National (011) 912 4093
International +27 11 912 4093
E-mail: investor_relations@mtn.co.za
Website: http://www.mtn.com
Fairland
8 March 2018
Date: 08/03/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
