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Investor PresentationMarch 2020
Sensitivity: Internal
Agenda
4 Looking Ahead
3 Financial Update
1 Operational Review
2
2 Strategic Review
Operational Review
Leading mobile operator in Nigeria
Strong managementwith mix of local & international expertise
Source: Company data when not explicitly stated, GlobalData.Notes: Numbers as at 31 December 2019. (1) Company data. (2) Markey share by revenues based on GlobalData, while market share by subs based on NCC.
4
25.2 million
Activedata users
Source: WCIS
49%Market
share by revenue(2)
Largest distribution network
Strong partner ecosystem
MTNN benefits from strong supportand unmatched expertise
of MTN Group, complemented by highly
experienced Board of Directors
64.3millionsubscribers
Exciting data, digital and fintech opportunity
NPS
Wide range of spectrum holding
Largest fibre network coverage
>29,000km
Largest Mobile Operator
44%4G Population
coverage
39%Data
penetration
42%Smartphone
penetration
78%3G population
coverage
#1
68.8
51.7 50.2
13.6
37%
28%
27%
8%
MTN Nigeria is the clear market leader
46%
24%
MTN #2 Player
43%
27%
MTN #2 Player
Strong Position in Attractive Market
Notes: (1) Based on USD / NGN exchange rate of 360. (2) GSM Internet subscribers.
Leader in the Nigerian Telecoms Market with a Strong Competitive Advantage across all Segments
Undisputed Market Leader
MTNN - Subscriber and ARPU leader Subscriber Market Share in 2019A
Data Revenue Share in 2019A Share of Data Users in 2019A(2)
ARPU (NGN)Q4 2019
Total Subsin 2019A
22PP 16PP
5
Source: WCIS , NCC and Company Source: NCC.
Source: WCIS. Source: NCC.
#2 Player #3 Player #4 Player#2 Player
#3 Player
#4 Player
1,519
49%
24%
MTNN #2
1,0071,000 1,000
Revenue Market Share in 2019A
Source: WCIS.
26PP
2.1%2.3%
1.4%
0.4%
2.5%
2.2%
1.2%
0.3%
181
10893
53 48
Young population & mobile penetration and data usage upside
Exciting Market Opportunity
Largest Telecoms Market in Africa
c.20 million population increase in 5 years19 20 28 41
Median Age
SA
WE
Nigeria Kenya Nigeria Kenya
(1)
SANigeria SA Egypt Kenya Tanzania
90% 191% 94% 103% 79%
90%
96%
Nigeria Mobile Penetration
Mobile subscribers in millions, 2019A Penetration Historical (15A-20A CAGR) Forecast (20A-25E CAGR)
WE(1)
213% - 2019A(South Africa)111% - 2019A(Egypt)
2019A
2024E
Notes: (1) Countries include Belgium, France, Ireland, Luxemburg, Monaco, Netherlands, United Kingdom (as opposed to full Western Europe). (2) Data subs with usage > 5 Megabytes per month.
6
100% - 2019A(Kenya)
Source: WCIS. Source: CIA Factbook (median age) and Worldmeters (population growth). Source: WCIS.
1,263
1,737
2018A 2019A
Total Data Users (m) Data Usage (MB per user per month)
ActiveUsers(2)
Incidental /DormantUsers25 29
19
25
44
54
2018A 2019A
Source: Company data.
31%
57%
67%
Revenue
Data Revenue Contribution 2019A
WE
South AfricaNigeria
Source: WCIS.
(1)
Frequency
3,500MHz 1x30 2x30
2,600MHz 2x30
2,100MHz 2x10 2x10 2x10 2x10
1,800MHz 2x15 2x15 2x15 2x15 2x15
900MHz 2x5 2x5 2x5 2x15 2x5
800MHz 2x10 2x10 2x10
700MHz 2x10 2x10
Unmatched nationwide coverage and high quality network
Well-positioned for the Long-term
Leading Mobile Network
The Largest Fibre Network in Nigeria
Wide Range of Spectrum Holdings
Most expansive network coverage amongst peers
Best network quality with highest NPS amongst peers
Coverage by Population4G Coverage (44%)
3G Coverage (78%)
2G Coverage (88%)Best Coveragein the country(1)
21
3
Source: Company data
Abuja
Kano
Lagos
Port Harcourt
Clear 4G spectrum advantage over peers
– Only MNO with 2,600MHz spectrum
– Only MNO with 3,500MHz spectrum with nationwide coverage
– Unlocked 800MHz spectrum
– 4G+ rolled out in Lagos, Abuja and Port Harcourt
– Best positioned to provide 5G services having successfully done a pilot
Extensive own fibre backbone supports 4G and MBB(2) growth
Span across Nigeria
Over 29,000 km of fibre network, nearly 3x that of closest competitor
Further complemented with 3rd party partnerships
On-land Fibre in km vs. Competition(3)
Source: Company data, NCC, Ookla Speed Test.Notes: (1) Benchmarking vs. peers can be found on MTN Nigeria GSM/3G/LTE Network Coverage page. (2) Mobile broadband. fibre network based on company data, while #2 player based on broker research report as of May 2019. 7
>29,000
10,869
#2 Player
#1Network NPS
Leading commercial proposition allows MTNN to attract customers across all segments and focus on high value segment
Leading Commercial Proposition
Optimised Proposition for Retail and B2B Clients
Relevant, value for money proposition
Unique end-to-end customer journey
Digitised, personalised customer experience Differentiated digital offering
Largest Physical DistributionNetwork in Nigeria
Fast GrowingDigital Distribution
Enabler of subscriber acquisition strategy
PoSterminals
ATMsMTNN
App
Focus on efficiency & customer convenience
Aspirational brand supporting premium positioning
High impact media visibility
Social responsibility
Most Valuable Multinational
Brand in Nigeria (2019) and Most
Valuable Telecoms in
Nigeria (2019)
Top 50 Brands Nigeria
Telco Partner of the Year (2019)
Central Bank of Nigeria (CBN)
Comprehensive Customer Care
Social Media, MyMTN(mobile app), MTNlive
MTN InteractiveVoice Response
MTN USSD & MyMTN App Call Centre
+6.6msocial media
followersUSSD
Best Innovation for Enterprise Service (2019)
and Social Impact Award
(2019)
Nigeria Tech Innovation and
Telecom Awards (NTITA)
Personalized experience
Leading Brand in Africa Multichannel Customer ServiceLargest Distribution Network Nationwide
Source: Company data.
8
Super-agent Network
108kagents
Retail Stores
#123#
3.8mvisits
+950m MTN USSD
7.9mApp transactions
+1m retail touchpoints
Governance Focus
Introduced to focus on governance, effective stakeholder management and operational execution in times of crises
Chief Finance OfficerModupe KadriJoined MTN: 2007Years of telco experience: 12
Balanced Structure with Versatile Team
9
Chief Executive OfficerFerdi MoolmanJoined MTN: 2001Years of telco experience: 18
Chief Operating OfficerMazen MroueJoined MTN: 1998Years of telco experience: 21
Chief Risk and Compliance Cyril IIokJoined MTN: 2002Years of telco experience: 17
Executive Corporate RelationsTobechukwu OkigboJoined MTN: 2017Years of telco experience: 13
Company SecretaryUto UkpanahJoined MTN: 2005Years of telco experience: 14
Executive: Human Resources Esther AkinnukaweJoined MTN: 2012Years of telco experience: 7
Head, Internal Audit
Ibe EteaJoined MTN: 2019Years of experience: 17
Randy Bikraj
Chief Information Officer
16 years at MTN
Adekunle Adebiyi
Exec, Sales and Distribution
7 years at MTNN
Mohammed Rufai
Chief Technical Officer
16 years at MTN
Kolawole Oyeyemi
General GM, Customer Experience
17 years at MTN
Lynda Saint-Nwafor
Chief Enterprise Business Officer
17 years at MTN
Rahul De
Chief Marketing Officer
8 years at MTN
Ugonwa Nwoye
Executive, Customer Services
16 years at MTN
Olubayo Adekanmbi
Executive, Transformation Office
8 years at MTN
Usoro Usoro
GM, Mobile Financial Services
7 years with MTN
Srinivas Rao
Chief Digital Officer
14 years at MTN
Emerging Future Business Focus
Experienced team with focus on emerging and future business, namely Fintech and Digital
Deep local expertise and
experience of about 170
years, combined with a
geographically diverse track
record across the Africa and
Middle East telecom industry
Seasoned team with
successful track record,
having driven robust
turnaround at MTNN over the
last two years
Refreshed organisation
allows to drive strategy and
run operations in a more
efficient way
Significant improvements in
corporate governance
coupled with highly
experienced Board of
Directors
Combined telco experience of
over 200 years
▲ Launched very affordable smart feature phones to drive data usage
▲ Obtained investment grade credit ratings - Agusto & Co (AA+) and GCR (AA)
▲ Obtained approval to utilize 800MHz spectrum
▲ Rolled out 4G+ services in Lagos, Abuja and Port Harcourt
▲ Revamped our data prices resulting in accelerated usage
▲ Listed on the Premium Board of the NSE
▲ Secured N200bn 7-year medium term loan facility
▼ Made final payment for the 2015 fine
▼ Migrated subscribers from high tariff legacy plan to lower tariff plan
▲ Paid first dividend as a public company
▲ Included in MSCI1 frontier index
▲ Obtained platinum accreditation from Investor in People (IiP)
▲ Deployed additional devices for subscriber registration
▲ Obtained Super-Agent license
▼ Embarked on a SIM re-registration exercise
▼ Rise in xenophobic attacks and impact on operations
▲ Conducted trial of 5G technology
▲ Launched MusicTime
▲ Redeemed preference shares
Key Milestones
10
Notes: (1) MSCI - Morgan Stanley Capital International
Q1 Q2 Q3 Q4
Key Highlights & Challenges in 2019
Strong performance supported by voice and data growth
Operational Highlights
Investment Growth driversSubscribers
+8.2pp to 78.2%3G pop coverage
N208.3 billion capex,
up 13.1%
+85.8%data traffic
+6.1 million to 64.3 million
total subscribers, up 10.5%
+7.6%voice traffic
+6.5 million to 25.2 million
active data users, up 34.9%
+26.6pp to 43.8% 4G coverage in 132 cities
+37.6%mb per active user
+5.3 million to 26.9 million
Smart phones, up 24.5%
17.8% capex intensity
11
Regulatory Update
The AGF withdrew the alleged US$2bn revenue indebtedness and transferred the matterto the relevant tax and customs authorities. We have therefore discontinued the legalaction against the AGF and look forward to a final resolution. We have always fulfilledour tax obligations.
Following the directive from the Hon. Minister of Communication and Digital Economy onthe review of SIM registration to integrate NIN, the regulator (NCC) has notifiedoperators of its intention to introduce a direction mandating the use of NIN for SIMactivation in line with its rulemaking process. An opportunity was provided for commentsand we are engaging the NCC accordingly.
While we continue to engage with CBN with the hope of receiving a PSB license, we are fully engaged in building our agent network under the super-agent license - over 108,000 registered as at December 2019, over N4bn in airtime sold and about a million people serviced on the channel.
Attorney General of the Federation (AGF) matter on the adequacy of taxes and duties paid
Payment Service Bank license application with the CBN
Policy on SIM card registration and usage(Use of national identity number for SIM registration)
12
Recent Developments
13
Shorter-term commercial impact
Mitigating supply chain risk for network devices and SIMs
Implementing increased visibility and control process with supply chain partners
Creating a buffer for our SIM cards and devices
Building inventories of our most critical spares
Anticipating a limited impact on the network
Reducing exposure to foreign exchange
Covid-19 impact on Chinese economy with drag on world economy
Dampens activity with fear factor restricting mobility
Demand and supply side shocks
Russia vs Saudi Arabia oil feud over market share
Downward pressure on oil price
Reducing accretion to sovereign reserves of FGN
Implications for currencies & capital markets
Covid-19 and fall in Oil Price Impact on MTN Nigeria
Strategic Review
Building a Digital Operator
15
The evolving telco The digital player
WholesaleVoice Data Enterprise
Transfers, airtime /data sales, cash deposit and
withdrawal, airtime lending, bill payment,
e-commerce
Digital
Rich media, content VAS & mobile advertising, MusicTime and Ayoba
One networkOne distributionOne registration
The fintech player
Fintech
MTN NigeriaThe Digital Operator
Outgoing calls and incoming calls
Mobile access dataFixed data
Mobile & fixed connectivity, devices, IoT,
Cloud
Interconnect, inbound roaming and fixed
wholesale
424.5%
63.4%
27.4%16.8% 14.1%
4.0%
Digital Data Fintech Wholesale Enterprise Voice
Digital, Data and Fintech Outpacing Voice and Other Segments(Q4 2019 YoY Segment Revenue Growth)
Reduction of Voice Share of Total Revenue(1)
7PP
(Q4 2018) (Q4 2019)
Notes: (1) Total revenues from Voice, Data. Digital. Fintech, Enterprise and Wholesale.
Voice,
77.0%
Rest,
23.0%
Voice,
70.2%
Rest,
29.8%
Unlocking Opportunities Across the 6 Curves
16
the consumer, enterprise and wholesale market segments
Curve 1
Curve 2
Curve 3
Curve 4
Curve 5
Curve 6
Sustaining VOICE growth
Accelerating DATA as next
wave of growth
Positioning DIGITAL on a sustainable growth path
Rapid scale FINTECH on
expanding agent network
Broadening ENTERPRISE
ecosystem
Accelerating WHOLESALE
business
Consumer
Revenue contribution
Growth rate
84.7%
10.5%
11.3%
20.3%
3.9%
45.2%
Sustaining VOICE Growth
2019 Voice Revenue Key Drivers
Wide network coverage and availability
Easier access to recharge
Low penetration supports subscriber growth about 31million Nigerian excluded from telecoms services
Subscriber growth driving voice revenue
30%-50% of subscriber additions are first time users
Floor price on voice providing support for ERM1
Rural site roll-out
Targeted segment offerings using our CVM toolkit
Wide distribution footprint
+8.4% to N848.3bn
12.8% 10.0% 7.5% 4.0%YoY Growth
187.3190.3
193.2
211.5211.3209.3 207.7
220
Q1 Q2 Q3 Q4
2018 2019
17
SIM re-registration exercise resulting in disconnection of about 900k subscribers
Migration of subscribers from a higher tariff legacy plan to a lower tariff plan
Factors impacting Voice
1Effective revenue per minute
Accelerating DATA as Next Wave of Growth
2019 Data RevenueKey Drivers
Data price revamp at end of Q2 2019
Extended 4G coverage following the unlocking of 800MHz
Introduction of smart feature phones
Consumer education, seamless access and experience
Service bundling
Fast adoption of data by youths
USIM upgrade from 3G to 4G average of about 25,000 upgrades daily
Low data penetration 47% of our data subscribers use more than 5mb a month, providing room for conversion of incidental data users
+42.4% to N219.9bn
YoY Growth
35.538.8 39.8 40.4
46.651.2
56.1
66
Q1 Q2 Q3 Q4
2018 2019
31.3% 32.1% 41.0% 63.4%
18
Positioning DIGITAL on a Sustainable Growth Path
2019 Digital Revenue Key Drivers
Improved customer journey and experience on value-added services following the completion of VAS optimization exercise in Q3 2018
Increasing data adoption
Increasing awareness of digital services
Rich portfolio of digital services including MusicTime and Ayoba
Re-introduction of auto-renewal
Growing active base of over 2.1 million users
-77.1% to N4.6bn1
-87.9% -86.5% -70.7% 424.5%YoY Growth
8.3
7.4
4.1
0.31.0 1.0 1.2
1.5
Q1 Q2 Q3 Q4
2018 2019
1. Excludes A2P and bulk SMS.
19
Rapid Scale FINTECH on Expanding Agent Network
2019 Fintech Revenue Key Drivers
Low level of banking penetration
Limited traditional banks footprint in rural areas
Large cash economy
Synergies with growing digital services
Synchronised products distribution and channels across the business
Expanding agent network
Registered 108k agents as of December 2019
Served c.1m unique subscribers
Sold over NGN4bn worth of airtime through the channel
Transaction volume in excess of 22 million in 2019
Expanding service offerings to include cash deposit and withdrawal, bill payment and e-commerce
• MTN Xtratime (our airtime lending service) accounted for 95% of fintech revenue, while MoMo accounted for 5%
23.3% to N35.2bn
YoY Growth
6.67.0 7.1
7.98.2 8.38.8
10
Q1 Q2 Q3 Q4
2018 2019
22.9% 19.5% 22.6% 27.4%
20
Broadening ENTERPRISE Ecosystem
Key Drivers
Enterprise is mobile centric
Unserved large SME market
Low level of ICT adoption
Increasing focus on core activities
Fragmented service providers
Enhanced partner ecosystem
20.3% to N132.8bn1
2019 Enterprise Revenue
1. Enterprise business includes revenue from mobile and fixed connectivity, cloud and ICT solutions, and devices. It cuts across voice, data and digital services for SMEs, public sector and large enterprise customers.
21
YoY Growth
28.2% 20.8% 20.1% 14.1%
24.1
27.4 28.430.430.9
33.1 34.1 34.7
Q1 Q2 Q3 Q4
2018 2019
Accelerating WHOLESALE Business
Key Drivers
Huge capacity demand
Satellite to fibre migration
Managed MPLS needs
Fast growth in digital services
Increasing need to invest in infrastructure efficiently
45.2% to N46.0bn1
YoY Growth
2019 Wholesale Revenue
68.1% 66.7% 39.3% 16.8%
6.9 6.9
8.49.5
11.6 11.5 11.711.1
Q1 Q2 Q3 Q4
2018 2019
1. Wholesale business includes interconnect, inbound roaming and fixed wholesale.
22
Financial Update
Double-digit service revenue growth on track with our medium-term target
Financial Highlights
24
Service Revenue
+ 12.6%
N1,167.5bn
Voice+ 8.4%
N848.3bn
Data+ 42.4%
N219.9bn
Opex- 21.4%- 4.4%(1)
N321.1bnN426.6bn(1)
EBITDA Margin+ 12.1pp+3.0pp(1)
53.9%44.8%(1)
EBITDA+ 45.2%
+20.9%(1)
N629.9bnN524.4(1)
Free Cash Flow+51.4%
+26.6%(1)
N378.0bnN316.1bn(1)
EPS+ 38.9%+47.9%
N9.9kN10.6k(1)
Final dividend of N4.97k (total dividend of N7.92k, up 120.8%)
Notes: Unless otherwise stated, all figures are based on IFRS 16. (1) On an IAS 17 basis .
Voice and data drive strong revenue growth, margin expansion with operational leverage
Performance Summary
25
Service revenue Expenses EBITDA and Capex
12.6% 6.3%(NGN bn)
EBITDA Margin
Capex Intensity
(NGN bn)(NGN bn)
41.8% 53.9%
AFCF
Capex
EBITDA
17.7% 21.5%
223.3
316.1
378.0
210.7
208.3
251.9
434.0
524.4
629.9
2018 2019 (IAS 17) 2019 (IFRS 16)
44.8%
17.8%
782.3848.3
154.4
219.9
20
4.6
28.6
35.2
5.5
12.1
46.1
47.4
2018 2019
Voice Data Digital Fintech Wholesale Other
1,036.9
1,167.5
198.9 218.8
408.5
426.6
2018 2019
Cost of Sales Opex
607.4
645.4
Double-digit revenue growth in line with our medium term guidance
Total Revenue
Total Revenue Split
(NGN bn)
Voice 74.3% 75.3% 72.5%
Data 12.1% 14.9% 18.8%
Digital 6.8% 1.9% 0.4%
Fintech 2.4% 2.8% 3.0%
Wholesale1 0.5% 0.5% 1.0%
Other2 3.8% 4.6% 4.2%
Commentary
Improved network coverage and availability countrywide
Segmented customer value management activities
Strong uptake of new plans with efficient customer targeting
4G and 3G network expansion, smart phone adoption campaigns and data price revamp; driving data subs and revenue growth
Fintech revenue driven by Xtratime product offering
Easier access to recharge post launch of MTN On Demand, improved electronic voucher distribution channels and direct to retail initiative
Notes: (1) Other revenue includes SMS, ICT & infrastructure, devices, leased line and non-service revenue; (2) Wholesale revenue line excludes interconnect revenue.
26
657.6782.3 848.3
107.3
154.4219.9
60.4
20.04.6
21.5
28.635.2
4.6
5.512.1
34.0
48.249.7
885.4
1,039.1
1,169.8
2017 2018 2019
Voice Data Digital Fintech Wholesale Other
Understanding Revenue Growth
1039.1
1169.9
66
65.5
(15.4)
6.6
6.6
1.5
2018 Revenue
Voice
Data
Digital
Fintech
Wholesale
Other
2019 Revenue
17.4% 12.6%11.6%YoY Growth
Understanding Cost of Sales
Gross margin remains relatively flat, at 81.3% in 2019
Increased interconnect cost due to:
– Growth in subscriber base
– Increased uptake of customer value propositions
Increase in commissions slower than revenue growth; while commission-to-sales ratio moderated marginally to 4.8%
Reduction in digital costs in 2019 due to optimisation process
Increased regulatory fees in line with revenue growth
Cost of sales
Cost Breakdown
Cost of Sales Split
(NGN bn)
79.2%Gross margin
81.1%
Note: Other includes Recharge voucher, Handset & Accessories, SIM cards & Packs, Roaming, ICT & SIM services.
27
81.3%
84.2 95.6 105.2
44.951.3
56.620.87.3
1.96.4 8.3
10.119.323.1
26.28.413.3
18.7184
198.9
218.8
2017 2018 2019
Interconnect Commissions Digital Fintech Regulatory Other
Interconnect 45.8% 48.1% 48.1%
Commissions 24.4% 25.8% 25.9%
Digital 11.3% 3.7% 0.9%
Fintech 3.5% 4.2% 4.6%
Regulatory 10.5% 11.6% 12.0%
Other 4.6% 6.7% 8.5%
Operating expenses (Opex)
Cost Breakdown
27.5%40.2%Opex intensity 39.3%
Opex Split(NGN bn)
356.1 408.5(1) 321.1(2)
Understanding Opex
Lower opex due to the adoption of IFRS 16 (change in accounting treatment of lease rental), representing a decline of 21.4%
On IAS 17 basis, opex was N426.6 billion, representing a 4.4% growth, 9.6% excluding the notional reversal fee (2018)
This reflects progress with cost management initiatives and reduction of non-recurring expenses
YoY increase in maintenance cost due to increase in computer software maintenance and one-off cost of data centre upgrade
Reduction in lease rental and utilities due to IFRS 16 implementation
Other also includes travel & entertainment, transmission, provisions for doubtful debts, general expenses and MTN foundation
28
1. Includes an IAS 17 basis. opex increased by 4.4% to NGN426.6bn between 2018 and 2019 .
213.5244.7
176.2
23.8
27.8
31.6
42.7
45.5
48.9
30.0
30.0
20.5
15.8
16.5
20.3
30.2
44.2
23.6
2017 2018 2019
Lease Rentals, Utilities & Fuel Staff Cost Maintenance Professional Fees Marketing Other
Lease Rentals 60.0% 59.9% 54.9%
Staff Cost 6.7% 6.8% 9.8%
Maintenance 12.0% 11.1% 15.2%
Prof. Fees 8.4% 7.3% 6.4%
Regulatory 4.5% 4.0% 6.3%
Other 8.5% 10.8% 7.4%
Revenue driving growth
EBITDA
29
+45.2%
433.89
524.42
629.9
3.75 6.57 9.62 36.35
16.20
130.62
105.50
EBITDA FY18
Actual IAS 17
Salaries &
Staff Costs
SIM Cards &
Device Cost
Interconnect
COS
Lease Rental Others Revenue EBITDA FY'19
Actual IAS 17
IFRS 16
Ajustment
EBITDA FY19
Actual IFRS 16
(N'b)
Reducing intensity while maintaining investment in capital expenditure
Capital Expenditure Breakdown
Capex Mix (%)
Network 91.5% 88.9% 84.1% 69.6%
IT 3.2% 3.9% 2.2% 1.8%
Right of Use Assets
17.3%
Other 5.3% 7.2% 13.7% 11.3%
FY19 Capex Allocation (%)
Note: Unless otherwise stated, numbers are based on IAS 17.
30
NGN bn
2018 2019
Sites rolled out 3G 8 295 5 795
4G 7 257 10 895
Population coverage 3G 68% 77%
4G 33% 46%
84%
2%
14%
Network IT Other
70%
2%
17%
11%
Network IT
Right of Use Assets Other
Per IAS 17 Per IFRS 16
225.3
184.2 208.3
251.9
25.4%
17.7% 17.8%
21.5%
2017 2018 2019 2019 (IFRS 16)
Capex Capex Intensity
Cash flow
31
(NGN bn)
629.9
120.3
Income Tax PaidChange in Net
Working Capital
NCC Fine
Repayment
EBITDA FY19
Actual IFRS 16
Capex1 Lease liability
Interest Paid2
Net Interest Paid3 Levered FCF
(68.1)
(206.3)
(26.0)
(62.1)
(110.0)
(37.1)
Strong cashflow position & working capital efficiencies
Notes: (1) Excludes non-cash items. (2) Interest paid adjustment applicable to IFRS 16. (3) Excludes interest paid relating to lease liabilities in 2019 of NGN68.1bn.
Capital Structure Overview
(NGN bn)
32
Notes: (1) Excludes FY19 financial leases of NGN516.5bn (2) Calculated using FY19 EBITDA of NGN629.9bn and FY19 Net finance costs is NGN105.2bn per IFRS 16 (3) FY19 Net finance cost excluding fxrevaluation (4) Net debt to EBITDA based on IFRS 16. FY19 Net Debt including financial leases is NGN812.8bn.
Overview and Financing Strategy Debt Evolution
TotalDebt
9.8x
Interest Coverage
(IAS 17)
166 122
296
2017 2018 2019
10.6x 15.1x
35
41
35
2017 2018 2019
NetDebt
Net Finance Cost (3)
(IAS 17)
255 413(1)175
6.0x(2)
48.7%
91.8%
51.3%
8.2%
2018 2019
Borrowing by Currency
LCY FCY
MTNN has historically maintained moderate leverage; remains in a comfortable position
relative to covenants on current FY19 metrics:
– Interest Coverage of 15.1x (excl. financial leases) and 6.0x (incl. financial leases)(2)
– Net Debt to EBITDA of 0.56x (excl. financial leases) and 1.3x (incl. financial leases)(4)
Relied largely on local funding in 2019 in order to reduce FX exposure and mitigate the impact
of exchange rate volatility
FY19 local currency funding accounts for 91.8% of total borrowing, while foreign currency
accounts for 8.2%
Plan to diversify funding sources and optimise funding costs
1.3x(4)
Net Debt / EBITDA(IAS 17)
0.48x0.28x
0.56x
2017 2018 2019
Looking Ahead
Investing for Sustainable Growth
Further targeted segment value propositions
Expand rural coverage with over 1000 ruraltelephone sites
Focus on multi-product propositions & customer lifetime value
Focus on LTE coverage
Optimize of frequencies to further enhance quality and coverage
Scale up data education programme
Service bundling to drive uptake
Improve customer journey and experience
Build a sustainable active user base
Launch Ayoba and drive MusicTime! uptake
Local content aggregation & Partnerships
Scale our agent network
Expand super-agents service offerings
Grow active user base
Pursue PSB licence
Deepen enterprise penetration across different markets
Deploy vertical solutions across segments
Expand channel coverage for SME and partnerships with relevant ICT players
Monetize existing infrastructure
Localize Global Connect capabilities
Leverage Yellow connect platform
Voice Data Digital Fintech Enterprise Wholesale
34
Enabling Broader Economic & Social Development
35
Enabling over 1 Billion
rapid & expedient transactions via
USSD
Supporting financial infrastructure
50,000+ATM & POS for
electronic payments
Over 4,000corporate branches
and offices across FSI, FMCG and O&G
Services connected
Carrier of carriers to
100+ ISPs,
Carriers & ICT Resellers
29,000 km of fibre optics backbone.
Connecting 850+ Large Corporates,
100+ Public Sector &
800,000+Small businesses
with greater reach & efficiency
Over 12,000Vehicles (~3.5k
Corporate and ~8.5k SMEs) subscribed to
fleet & vehicle tracking services
Over 100Universities,
Polytechnic and Colleges (Private &
Public) accessing high capacity Internet
20 Million Nigerians live in
places where MTN is the sole provider of
communication
Each month, over
16million people
with no airtime connect with their friends and families using MTN Borrow Me Credit
Invested over
N21 billion in
over 860 projects,
supporting 18.6 million people
#GoodTogether
Medium-term Guidance
EBITDAmargins Improving margins
Capex intensity Reducing intensity
Service revenue Double-digit growth
36
Dividend At least 80% of distributable net income
MTN Nigeria Investment Case
Strongposition in the right market
Excitingdemographic opportunity
Attractive return profile
Well positionedfor the
long term
Clear strategy
37
• Largest African economy
• Largest telecoms market in Africa
• Clear leader in mobile market
• Fast growing youthful population
• Low data, fintech and digital adoption
• Large unbanked segment
• Double digit revenue growth
• Efficiencies improve margins
• Smart capex moderates investment
• Strong cash flow generation
• Leading Nigerian mobile and fibre network
• Wide range of spectrum holdings
• Leading brand and commercial proposition
• Moderate leverage
Appendix
Impact of IFRS 16 adoption
IAS 17 IFRS 16 Effect on December 2019
Income statement Operating lease on straight line basis in EBITDA
No operating leases costs in EBITDA
Depreciation on right of use asset
Interest expense on lease liability
Impact on EPS
N105.5 bn
N56.8 bn
N68.1 bn
-6.54%
Balance sheet Lease smoothingreceivable/payable
Recognise right of use asset (ROU)
Recognise lease liability
N500 bn
N516.5 bn
Cash flow Lease payment in operating activities
Lease payment in operating activities reclassified to lease payment in financing activities
Reclassification, no impact on free cash flow
Capex/intensity1 Operating lease payment in EBITDA
N208 bn (capex less ROU additions of N43.6 bn)
No impact on capex intensity guidance
1. Defined based on capex excluding ROU asset additions.
39
Driving growth and profitability
Attractive Return Profile
40
Growth (%)
17.4%
885 1,039 1,170
79.2% 81.1% 81.3%
2017 2018 2019
Revenue Gross Margin
12.6% 25.4% 45.2%
346 434 630
39.0% 41.8% 53.9%
2017 2018 2019EBITDA % Margin
225 184 208
25.4%17.7% 17.8%
2017 2018 2019Capex
(9.5)
5.9 6.1
2017 2018 2019
Monthly Churn (%)
2.2% 2.1% 2.3%
% of Revenues
20.8% 18.9% 18.7%
40.2% 39.3% 27.5%
50 39 133
Dividends Paid
81146
202 9.1%
14.0% 17.3%
2017 2018 2019
Net Income % Margin
356 409 321
184 199
219
2017 2018 2019
Opex Cost of sales
(NGN bn) (NGN bn) (NGN bn)
(NGN bn) (NGN bn) (NGN bn)
Drop was due to change in definition
of active subscribers(1)
Notes: (1) New definition of active subscribers was more conservative, excluding incoming SMS, incoming ONNET calls and airtime refills from Revenue Generating U
Service Revenue Growth EBITDA Margin Expansion Strong Capex Investment
Increasing Net Adds and One of the Lowest Churn in Africa
Strong Cost Management Attractive Net Income and DividendsStrong Cost Management
11.6% -9.2%
Highlights of Income Statement
Growth 2019 2018
Note(s) % N 'mn% of Gross Revenue N 'mn
% of Gross Revenue
Revenue 12.6% 1,169,735 100.0% 1,039,118 99.8%
Other income -95.6% 97 0.0% 2,225 0.2%
Gross revenue 12.3% 1,169,832 100.0% 1,041,343 100.0%
Direct network operating costs -20.8% -242,012 20.7% -305,519 29.3%
Value added services -26.6% -12,216 1.0% -16,644 1.6%
Cost of handsets and accessories 106.2% -12,766 1.1% -6,192 0.6%
Interconnect costs 10.1% -105,250 9.0% -95,630 9.2%
Roaming costs -3.2% -4,038 0.3% -4,173 0.4%
Transmission costs 0.8% -5,553 0.5% -5,509 0.5%
Discounts and commissions 10.3% -56,586 4.8% -51,287 4.9%
Advertisements, sponsorships and sales promotions 22.0% -19,848 1.7% -16,274 1.6%
Employee costs 13.1% -30,706 2.6% -27,152 2.6%
Depreciation of property, plant and equipment 45.0% -204,625 17.5% -141,162 13.6%
Amortisation of intangible assets 12.3% -29,997 2.6% -26,700 2.6%
Notional reversal difference payment to CBN - -19,192
Other operating expenses -14.8% -50,937 4.4% -59,794 5.7%
Operating profit 48.5% 395,297 33.8% 266,114 25.6%
Net finance cost 135.0% -105,193 9.0% -44,771 4.3%
Profit before taxation 31.1% 290,104 24.8% 221,343 21.3%
Taxation 16.3% -87,993 7.5% -75,657 7.3%
Profit for the year 38.7% 202,111 17.3% 145,686 14.0%
41
Highlights of Financial Position
Growth2019
N '0002018
N '000
Assets % N 'mn% of Total
AssetsN 'mn
% of Total Assets
Non-current assets 69.3% 1,263,107,084 82.8% 745,884,700 79.2%
Current assets 34.0% 262,463,460 17.2% 195,854,920 20.8%
Total Assets 62.0% 1,525,570,544 100.0% 941,739,620 100.0%
Non-current liabilities 595.1% 983,190,312 64.4% 141,439,245 15.0%
Current liabilities -31.5% 397,694,673 26.1% 580,948,060 61.7%
Total liabilities 91.2% 1,380,884,985 90.5% 722,387,305 76.7%
- Borrowings 135.3% 412,541,824 27.0% 175,314,238 18.6%
- Lease liabilities nm 516,534,156 33.9% N / A N / A
- Other liabilities -21.5% 451,809,005 29.6% 575,367,577 61.1%
Equity -34.0% 144,685,559 9.5% 219,352,315 23.3%
Total equity and liabilities 62.0% 1,525,570,544 100.0% 941,739,620 100.0%
42
Thank You
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