mena overview - mtn group · 2019-02-15 · 3 mena overview • subscriber growth of 2.7% across...

MENA Overview

Ismail Jaroudi – VP MENA

AGENDA

1 Overview

2 MTN Syria

3 MTN Sudan

4 MTN Yemen

5 MTN Afghanistan

6 MTN Cyprus

7 Looking ahead

3

MENA overview

• Subscriber growth of 2.7% across the region(Q3 16 vs. Q3 15)

• Improved economic outlook expected for Yemen in 2018

• Good EBITDA growth in Syria, Sudan and Cyprus

• Afghanistan and Yemen EBITDA affected by the drop in revenue

performance

• Yemen EBITDA further affected by the licence provision

• PAT affected by exchange losses as well as lower EBITDA

performance in Afghanistan and Yemen

65%

8%

10%

7%9% 1%

53%

7%

15%

12%

8%5%

57%

6%

15%

12%

5% 5%

Subscribers September 2016(% contribution)

Revenue June 2016 (% contribution)

EBITDA June 2016 (% contribution)

Iran* Syria Sudan Yemen Afghanistan Cyprus* Iran added back to revenue and EBITDA for purpose of this presentation. Equity accounted on an IFRS basis.

MTN Syria

5

Syria – country overview

Population 17.0m Market share 40.9% Penetration 84%

Economics

GDP per capita $1 000 (2016 forecast)

Inflation 48%

Exchange rate US$ = 540 SYP

Demographics

Language Arabic

Religion 90% Muslim, 10% Christian

6

Syria – country overview

The state of unrest still dominates the country

0

5

10

15

20

25

30

35

2011 2012 2013 2014 2015

• Impact of unrest resulted in:

- Decreased population by 40% from 2011 to 2015

- Exterminated poverty index increased to 25% in 2016

vs.11.2% in 2010

- Depreciation of currency against USD

- Hyperinflation

• Geographical spread and level of violence have

dramatically increased, especially in Aleppo province

• MTN continues to operate mainly in safe zone, including

coastal areas and Capital Damascus

Gross domestic product (GDP)(US$bn)

Exchange rate SYP vs US$

0

50

100

150

200

250

300

2010 2011 2012 2013 2014 2015

7

0%

20%

40%

60%

80%

100%

Dec 2014 Dec 2015 Jun 2016

Market share Penetration

Syria – market overview

• Number of people displacement by end of 2016 will reach

4.3 million

• Regulator has the right to grant a 3rd entrant a mobile

license

• Competition is investing aggressively on their network

mainly on Mobile Broadband (MBB) and hybrid solutions

• Brand re-position

• Focused and segmented market approach through below-

the-line (BTL) campaigns (Regional, Youth).

• Enhanced traffic consumption is underpinned by better

network availability due to continuous investment in the

network infrastructure

• Capex authorised for 2016 is R1 543 million

Market share vs Penetration

8

MTN SyritelSyrian Telecom

(fixed line)

Launch date 2001

(BOT effective Jun 02)

2001 1975

Subscribers 5.9m (Sep 16) 8.6m (Sep 16) 3.5m (Apr 16)

Coverage 75% geographical

98% population

N/A N/A

Shareholders MTN 75%

Teleinvest 25%

Drex Technologies Syrian government

Syria – market players

9

Syria – management structure

CEO

ZiadSabah

GM: Bus. Risk

MaherBairakdar

GM: Cust. Care

SamerKaddouh

CO:HR

AhmadRamadan

CO:Operating

AbdallahHomsi

CO:Finance

KamalSantina

SM:Consumer

GhiathBazerbashi

GM:Sales & Dist.

TarekNoureddine

GM:Capital Proj.

MohamadMassoud

CO:Technical

Bashar El Naboulsi

Acting CO:IT

MazenFarah

10

Syria – licence

Commenced in 1 January 2015 (conversion of BOT)

20 years Licence from commencement order date (6/1/2015), on a revenue share basis, renewable

with new conditions

Period

Fees

Spectrum/

technologies

Coverage

Year 1 – 50 % of total revenues

Year 2 & 3 – 30 % of total revenues

Year 4 to 20 – 20 % of total revenues

6.4 MHz on 897-900, 942-954, 906-909.4, 951-954.4 band

12 MHz on 1830-1842, 1735-1747 band

10 MHZ on 1930-1940, 2120-2130 band

76% of population

11

Syria – operational performance

*Constant currency ('organic') information**In ZAR terms***Excluding hyperinflation

Satisfactory performance despite a challenging environment

Subscribers increased by 1.1% QoQ

Revenue increased 10.5%*

• Supported by 16.9%* increase in data revenue,

contributing 28.8% to total revenue

EBITDA margin increased 12.3pp

• Supported by the conversion of the BOT licence and cost

optimisation

Capex increased by 241.1% to R191 million

• Added 92 co-located 3G sites and 3 LTE sites

26 436 26 468 29 295

26 844 29 392

53 280 55 860

29 295

Dec 14*** Dec 15*** Jun 16***

Revenue SYP (million)

H2

H1

38 56 191319

918357

974

191

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

H2

H1

18.9%** 17.7%** 28.6%** EBITDA margin

Launched Jun 2002 Market share 40.9% Population 17.0m Market size 2016 14.8m Penetration 84% Shareholding 75%

12

Syria – coverage

June 2016June 2016

% land 63%

% population 76%

Total number of sites2 915 (37% out of service

sites)

3G population coverage 65%

13

Prolongation of crisis

High inflation and currency depreciation

Sanctions

In-country skill shortage

Syria – looking forward

20 year licence

3G and growth of data

Expected country rebuild

Educated population

Opportunities Challenges

MTN Sudan

15

Sudan – country overview


Economics

GDP per capita $1 850

Inflation 19%

Exchange rate US$ = 8.73 SDG

Demographics

Language Arabic

Religion Islam, Christian

16

67

63

66

74

84

60

65

70

75

80

85

2011 2012 2013 2014 2015

Sudan – country overview

The country still suffers tension with South Sudan – disputed borders and oil revenue


- Degradation of economic climate – consumer

consumption behaviour changes

- Increased poverty and unemployment

- Depreciation of currency against USD

- High inflation

• Hope for the ongoing national dialogue, movements to

end conflict, bring about political stability and socio-

economic development

Gross domestic product (GDP) (US$bn)

17

0%10%20%30%40%50%60%70%80%

Dec 2014 Dec 2015 Jun 2016


Sudan – market overview

• Negotiating LTE licence with regulator

• Mobile Money regulations are being redrafted – launch

expected in December 2016

• Competition is investing aggressively on new

technologies (e.g. LTE) and coverage areas

• Competitors offering extremely discounted tariffs on data

bundles

• Capex authorised for 2016 is R1 280 million


18

MTNZain

(previously Mobitel)Sudani(CDMA)

Sudatel(fixed line)

Canar(Limited mobility)

Launch date 2005 1997 2006 1993 2006

Subscribers 7.7m (Sep 16) 9.5m (Sep 16) 4.6m (Sep 16) 0.23m (Sep 16) 0.014m (Sep 16)

Coverage 54.74% N/A N/A N/A N/A

Shareholders MTN (85%)

Larrycom

Company Ltd

(15%)

MTC Sudatel (26%)

Private (74%)

Government

(26%)

Private (74%)

Etisalat (40%)

Private (60%)

Sudan – market players

19

Sudan – management structure

CEO

MalikMelamu

CFOAli

Amir

GM:HR

NasreldinBabiker

CTO

NabilBaalbaki

CIO

Ahmed MukhtarMustafa

GM: CS

Abdalla ElfadiAli Fayet

GM: CEX

WardiMohammod

Wardi

GM: BRM

DanielUdochi

CMO

Acting

GM: S&D

Open

20

Sudan – licence

Granted in October 2004

Effective commercial launching date 4 April 2005

20 years renewable thereafter from commercial launching date

Period

Fees

Spectrum /

technologies

Coverage

150 million Euro

900MHz band 9.6 MHz

1800MHz band 10 MHz

2100MHz band 15 MHz

60% of population of applicable town

21

Sudan – operational performance


Progress in tough conditions

Subscribers decreased 13.0% to 7.7 million

Revenue increased by 15.7%*

• Data revenue increased 78.3%* and contributes 27.7% to

total revenue as a result of increased data users

EBITDA margin down 1.9 pp

Capex up 62.9% to R549 million

• Added 44 co-located 3G sites

692 811 938

738830

1 4301 641

938

Dec 14*** Dec 15*** Jun 16***

Revenue SDG (million)

H2

H1

481 337549

911

482

1 392

819

549

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

H2

H1

33.8%** 35.0%** 35.4%** EBITDA margin

Launched Sep 2005 Market share 33.8% Population 37.6m Market size 2016 30.3m Penetration 69% Shareholding 85%

22

Sudan – coverage

June 2016

% land 16.6%

% population 54.7%

Total number of sites 2 038

3G population coverage 33.6%

23

Customer experience

Regulatory demands

Aggressive competition

OTT’s

Exchange rates and availability of hard currency

Sudan – looking forward

Mobile Money and EBU

Data and smartphone penetration

Youth brand and affordability perception


MTN Yemen

25

Yemen – country overview


Economics


Inflation 30%

Exchange rate US$ = 320 YER

Demographics

Language Arabic, English

Religion Islam

26

31 32 35

37

15

20

25

30

35

40

2010 2011 2012 2013 2014

* Due to the current security situation in the country 2015 & 2016 figures were not reported by the World Bank

Yemen – country overview

Fully fledged military conflict since 2015

• Unrest has resulted in:

- Yemen’s GDP contraction of 28% in 2015

- Lack of skilled specialised resources

- Destruction of country’s infrastructure

• Recovery for the country and economy anticipated in

medium term

Gross domestic product (GDP)* (US$bn)

27

41%

42%

43%

44%

45%

46%

47%

Dec 2014 Dec 2015 Jun 2016


Yemen – market overview

• Coalition countries (Gulf states) committed to financing

the rebuilding of the country.

• MBB licence expected to be granted end 2017/beginning

2018

• Yemen Mobile enjoying monopoly over MBB service –

providing fast data service at low rates

• Price war with Sabafon – impacting ARPU and effective

tariff

• Operating licence renewed until December 2017


28

MTN Sabafon Yemen Mobile Hits Unitel “Y”Public Tele-

communication Corporation

Launch date July 2000 February 2001

(15yr GSM

licence)

November 2004 December 2007

(expected)

1982

Fixed line license

Subscribers 5.3m (Sep 16) 2.4 m 4 m 0.8 m 1.2 m

Coverage Geographical –

73%

Population – 88%

*Geographical –

57%

Population – 71%

*Geographical –

54%

Population – 74%

*Geographical –

36%

Population – 59%

*Geographical –

62%

Population – 78%

Shareholders MTN 83% All-Ahmar Group, Batelco, HayelSaeed Group, Ifan Foreign Investment

Company, CCC

Government and

public shares

Saudi/Kuwaiti/

Syrian/Local

investors

Government

owned

* Estimate

Yemen – market players

29

Yemen – management structure

CEO

RaedAhmad

Deputy CEO / Corp Affairs

Ali Abdul WarethHashem

BRM SM

AhmedAbdulkader

CFOAbdullahMadari

CMOMalek

El Koussa

GM HR

MohammadNasher

GM S,D & CRD

Houssam

Saad

CTO

TamerAbdul

Dayem

CIO

MahmoudKhorbotly

30

Yemen – licence

29 months extension to the current license to Dec 2017 by which time a renewal of the original license

for another 15 years will be negotiated Period

Fees

Spectrum /

technologies

Coverage

US$36.4m was paid for the extension

The full 15 year license renewal amount has still to be negotiated

900 MHZ

1800 MHZ

71% of population

31

Yemen – operational performance


A challenging environment impacted growth

Subscribers flat at 5.3m

Revenue decreased 3.7%*

• Offset by 10.9%* increase in data revenue, contributing

16.6% to total revenue

EBITDA margin decreased 0.9 pp

Capex at R77 million

1 844 1 633 1 905

1 8471 738

3 6913 371

1 905

Dec 14*** Dec 15*** Jun 16***

Revenue ZAR (million)

H2

H1

15687 77

158

47

314

134

77

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

H2

H1

52.0%** 39.3%** 35.4%** EBITDA margin

Launched Jul 2000 Market share 42.8% Population 27.1m Market size 2016 12.5m Penetration 46% Shareholding 83%

32

Yemen – coverage

June 2016

% land 57.1%

% population 70.7%



33

Civil war impact on operations

Lack of independent regulatory body

Delayed MBB license

Possibility of loss of revenue from Southern cities -

license renewed with Northern government

Possibility of launch of fourth GSM operator in the North

and one in the South

Yemen – looking forward

Fast growing MBB business

MFS – digital, Mobile Money

Coverage superiority, especially in rural and untapped

areas


MTN Afghanistan

35

Afghanistan – country overview


Economics

GDP per capita $624

Inflation 6%

Exchange rate US$ = 65.95 AFN

Demographics

Language Pashtu, Dari

Religion Islam

36

17.9

20.5 20.3 20.119.2

16

18

20

22

2011 2012 2013 2014 2015

Afghanistan – country overview

Challenging operating environment


- Migration of high- and middle-class

- Loss of skilled resources

- High poverty and unemployment rate

- Negative output gap

- Currency depreciation

• Increased levels of site downtime due to halted/burnt sites

• 2016 growth to remain sluggish

Gross domestic product (GDP)(US$bn)

37

0%

10%

20%

30%

40%

50%

60%

Dec 2014 Dec 2015 Jun 2016


Afghanistan – market overview

• New telecom tax – 10%

• Fifth operator commenced its operations destroying value

in the market

• Irrational competitor behaviour

• Improved network availability


38

MTN Roshan AWWC SALAM Etisalat

Launch date 2006 2003 2002 2013 2007

Subscribers 6.5m (Sep 16) 5.9m 3.2m 1.0m 5.7m

Coverage 78% 69% 58% 27% 65%

Shareholders MTN AKFED (major)

MTI

MCT

20% Ministry of

Communications

Ehsan bayat

Afgan Telecom

(Government)

Etisalat UAE

Afghanistan – market players

39

Afghanistan – management structure

CEO

Hassan Ibrahim Jaber

ChiefInfo System

FareedTayar

GM: HR

AlexD’Souza

Chief Mkt. Officer

Raul Ernesto Velasco

Chief Tech Officer

RaadKannan

GM: Sales & Distribution

MohamamdKamil Alizad

GM: Cust Relations

Mohammad Aamir Masood

CFO

MariusVan Wyk

GM: CorpServices

HidayatullahZahid

GM: EBU & MM

Tarek Soliman

Senior Manager

BRM

Vacant

40

Afghanistan – licence

The 3G licence obtained on Jun 20, 2012 for a term of (15) years against a one time non refundable

fee of US$ 25 million

The GSM licence acquired on October 15, 2005 for a one-time non-refundable fee of US$ 40.1 million

for the period of 15 years

The licence will be renewable subject to compliance with the applicable law and regulation

Period

Fees

Spectrum fee payable for (900, 1800 and 2100MHz) US$ 536,000 annually

Annual Admin Fee is 15 million Afs Revenue sharing fee 2% spectrum and 2.5% TDF contribution

paying to the government quarterly

One time registration of BTS 900(332100 US$) and BTS 1800 (96150 US$)

Extending of MW link (2943399 Afs) and annual freq fee (42291321 Afs) for MW licenses; extending

Vsat licenses (42434 afs) Annual Freq Fee for VSAT (181860 afs)

Spectrum /

technologies

Coverage

6.8 Mhz GSM 900

10 Mhz GSM 1800

10 Mhz 3G

78% of population

41

Afghanistan – operational performance


Performance impacted by challenging environment

Subscribers flat at 6.5m

Revenue decreased 17.9%*

• Offset by 66.7%* increase in data revenue, contributing

7.6% to total revenue

EBITDA margin decreased 9.9 pp

Capex of R187 million

• 120 co-located 3G sites added

1 311 1 340 1 204

1 383 1 484

2 694 2 824

1 204

Dec 14*** Dec 15*** Jun 16***


H2

H1

112298 187

163

170275

468

187

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

H2

H1

30.5%** 32.3%** 22.4%** EBITDA margin

Launched Jul 2006 Market share 37.8% Population 33.2m Market size 2016 17.6m Penetration 52% Shareholding 100%

42

Afghanistan – coverage

June 2016

% land 42.8%

% population 78.0%



43

General security

Lack of skilled resources

Irrational competitor behaviour

Increase in government taxes

Impact of OTT

Afghanistan – looking forward

Drive data revenue – data devices and data bundling

MFS – Mobile Money & Digital

Expanding 3G coverage and enhancing 3G service

(quality and speed)


MTN Cyprus

45

Cyprus – country overview


Economics


Inflation -0.7%

Exchange rate US$ = 0.92 EURO

Demographics

Language Greek, English, Turkish

Religion Christian Orthodox, Islam, Maronite

46

19 776 19 504

18 119 17 614 17 660

16 000

17 000

18 000

19 000

20 000

2011 2012 2013 2014 2015

Cyprus – country overview

Cyprus, a member of the EU, is in recovery mode

• Impact of financial crisis resulted in:

- Negative GDP growth for 3 years

- Increasing unemployment

- First bail measures in Europe

• Ongoing discussions between Greek Cypriot and Turkish

Cypriot on reunification of the island

Gross domestic product (GDP) (EURm)

47

0%

20%

40%

60%

80%

100%

120%

Dec 2014 Dec 2015 Jun 2016


Cyprus – market overview

• Recent spectrum auction for three blocks of 800/2600

MHz – MTN and CYTA acquired; one block still

unallocated

• Telecoms under pressure – regulators, OTT’s, saturation

• CYTA aggressive network investment plan

• Cablenet – MVNO with CYTA

• Primetel looking for investors – expected to continue

aggressive tactics in the market


48

MTNCytamobile – Vodafone,

PrimeTelCyTA, PrimeTel, Cablenet

(fixed line)

Launch date 2004 Cyta: 1988

PrimeTel: 2011

CyTa: 1961

PrimeTel: 2003

Cablenet: 2003

Subscribers 407k (Sep 16) 563k (Sep 16) 252k (Dec 15)

Coverage Almost 100% Almost 100% Almost 100%

Shareholders MTN 100% Cyta: Vodafone

Government

PrimeTel: 36.7% Manglis

(Holdings), 31.1%

Celltech

CyTa: State-owned

PrimeTel: 36.7% Manglis

(Holdings), 31.1%

Celltech

Cablenet: 51% Go Malta,

49% C.N. Shiacolas

Cyprus – market players

49

Cyprus – management structure

CEO

Philip van Dalsen

CFO

StoyankaStylianaki

CCO

ThanosChronopoulos

CTIO

CosmasAdam

Bus. SalesDirector

AndreasNeocleous

Commercial & Legal SM

EvridikiPapadopolou

Bus. Risk & Audit SM

Ariana Pantazi

Head of HR

Maria Sergiou

50

900MHz, 1800MHz and 2100MHz

Cyprus – licence

2003

20 years, renewablePeriod

Fees

Spectrum /

technologies

Coverage

22.9 million Euros

900MHz, 1800MHz and 2100MHz

GSM UMTS 4G

Technological neutrality applies

GSM

- 50% 01.12.2005

- 75% 01.12.2007

UMTS

- 60% 01.12.2013

- 70% 31.10.2015

51

800MHz and 2600MHz

Cyprus – licence

05 September 2016 – 05 September 2028 Period

Fees

Spectrum /

technologies

Coverage

6 million Euros

LTE

50% 31.12.2018

75% 31.12.2020

52

Cyprus – operational performance


Operational growth despite a challenging environment

Subscribers increased by 5.5%

Revenue increased 4.6%*

• Supported by 109.5%* increase in data revenue,

contributing 32.5% to total revenue

EBITDA margin increased 4.4 pp

Capex of R60 million685 657

880

824 837

1 509 1 494

880

Dec 14*** Dec 15*** Jun 16***


H2

H1

72 80 60

190108

262

188

60

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

H2

H1

28.0%** 27.5%** 31.9%** EBITDA margin

Launched Jun 2003 Market share 38.9% Population 0.8m Market size 2016 1m Penetration 109% Shareholding 100%

53

2G

Cyprus – coverage

June 2016

% land 97.8%

% population 99.4%

Total number of 2G sites 579

54

3G

Cyprus – coverage

June 2016

% land 72.3%

% population 90.0%


55

4G

Cyprus – coverage

June 2016

% land 17.2%

% population 59.3%


56

MTR European regulatory pressures

Roaming rates to be abolished in 2017

Competition is expected to intensify in 2017 – CYTA,

PrimeTel and Cablenet

Cyprus – looking forward

Increase broadband base via cross selling:

Fixed broadband

Mobile home broadband

TV offering launch

EBU/ICT


Looking ahead

58

1. Regional synergies

2. Business development

3. Organic growth

4. Cash upstreaming

5. Business continuity (including recovery of halted sites in Afghanistan)

6. High-value customers

7. Network experience

8. Data revenue growth and smartphone penetration

9. Digital revenue growth: Middle East Internet Holdings (MEIH) and Iran Internet Group (IIG)

VP priorities for the region

Questions

thank you

61

Disclaimer

The information contained in this document has not been verified independently. No representation or

warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy,

completeness or correctness of the information or opinions contained herein. Opinions and forward looking

statements expressed represent those of the Company at the time. Undue reliance should not be placed on

such statements and opinions because by nature, they are subjective to known and unknown risk and

uncertainties and can be affected by other factors that could cause actual results and Company plans and

objectives to differ materially from those expressed or implied in the forward looking statements.

Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability

whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this

presentation or its contents or otherwise arising in connection with this presentation and do not undertake

to publicly update or revise any of its opinions or forward looking statements whether to reflect new

information or future events or circumstances otherwise.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and

no part of it shall form the basis of or be relied upon in connection with any contract or commitment

whatsoever.

MENA Investor Day

MTN Irancell COO presentation

AGENDA

1 Overview

2 MTN Irancell

3 Licences and coverage

4 Looking ahead

64

Country overview – macroeconomic indicators

Area 1 648 195 km2

Capital Tehran

No. of provinces 31

Languages Persian (Farsi)

Literacy rate 93%

Population 80.6 million

Major cities

Tehran 8.846 m

Mashhad 2.749 m

Isfahan 1.945 m

Tabriz 1.549 m

Shiraz 1.461 m

Median age 28 years

GDP (PPP): Per capita $12 833

GDP (nominal): Per capita $5 306

GDP annual growth rate 0.6%

Exchange rate 1 US$ = 30 527 IRR

Inflation rate 8%

Mobile penetration 127%

65

Geopolitical overview

Political environment

• International economic sanctions lifted in early 2016

• Presidential Elections to be held in early 2017

• Political stability and security

• Multicultural country comprising several ethnic and

linguistic groups

Regulatory environment

• 3G/4G Licences issued in 2014, TD-LTE in 2015

• MVNO Regulations Issued

• Mobile number portability commercially launched in

2016 Q3

• National Roaming in place

Economic environment

• Tehran is the country's capital and largest city as well as

its leading economic center

• Inflation rate decreased to 8.3% in September (11.6% last

year)

• LC as per market rate depreciated by 3.1% against USD

and depreciated 3.2% against Euro

• Rapid technology changing in telecommunication industry

• Growth projection in line with the lifting of sanctions and

return to global markets

• Diversified economy, increase level of international

agreements and foreign investments

• Improvements in the level of social responsibility of the

private sector and more care and respect for the

environmental challenges

• Fourth biggest reserves of oil in the world, Iran is a

potential bonanza for oil companies, 2.9 million barrels a

day in 2015

• The second largest proved gas reserves in the world and

the third in natural gas production

66

MTN Irancell MCI Rightel

Shareholding MTN 49%

IEDC 51%

TCI Holding 90%

Stock Exchange 10%

Social Security

Organization 100%

Launch date Oct 2006 1993 2010

Subscribers 48 m 52 m 3 m

Suppliers Huawei

Ericsson

Nokia

Nokia

Huawei

Ericsson

Huawei

Coverage (mobile) 86% 96% N/A

Market share 46.42% 50.35% 3.23%

Market overview

67

• Second-largest country in the Middle East and the 18th-largest in the world.

• The world's 17th-most-populous country, population is projected to stabilize above 105 million by 2050

• The only country with both a Caspian Sea and an Indian Ocean coastline

• Over five million tourists visited Iran in the fiscal year of 2014–2015

• Large youthful population – Median age 28 years.

• Highly fragmented businesses

• Mobile broadband license for 3G, LTE and TD-LTE

• Mobile SIM penetration over 127%

• High smartphones and devices penetration

• Good education system and availability of skills

• Shift to data with drop of traditional voice and SMS business

• High usage of OTTs platforms

• Newly licensed FCPs will aim to provide triple / quad play services in 2017

• Limited FTTx services

• IPTV licenses approved, services to be launched next year

• Removal of sanctions – an opportunity to expand existing business and explore new investments

Market dynamics

68

Operational performance – 30 June 2016

*Constant currency ('organic') information **In ZAR terms***Excluding hyperinflation

Revenue growth of 8.7%* supported by increased data revenue growth

Subscriber growth of 2.0% to 47.3 million

• Attractive segmented offerings, data bundles and

improved network experience

Strong data revenue

• Data revenue increased 65.3%*, contributing 40.6% to

total revenue despite regulatory pressure on data tariffs

• Smartphones increased 25.8% to 25.8 million

• Digital revenue contributed 32.6% to data revenue due to

strong growth in local lifestyle content based usage

• Outgoing voice revenue negatively impacted by the

continuous substitution of data services

EBITDA down 2.4pp

• Mainly due to increased transmission costs associated

with the data network expansion, as well as marketing

costs related to 3G and LTE campaigns

3G and LTE networks expansion

• Added 1,783 co-located 3G sites and 851 LTE sites

27 260 31 038 33 739

29 46632 281

56 72663 319

33 739

Dec 14*** Dec 15*** Jun 16***

Revenue IRR (billion)

(100%)

H2

H1

8911 854 2 313

2 221

2 326

3 112

4 180

2 313

Dec 14*** Dec 15*** Jun 16***

Capex ZAR (million)

(49%)

H2

H1

42.8%** 41.5%** 37.7%** EBITDA margin *

Launched Oct 2006 Market share 46.4% Population 80.6m Market size 2016 101m Penetration 126% Shareholding 49%

* Including revenue share of 28.1%

69

Licence conditions

Granted Nov 2005

Effective July 2006

15 years

Renewable 2 periods of 5 years

Protection period: not to issue any new license for 2 years from the effective date

Period

GSM license Initial fee €300m

Each contractual year 28.1% of revenue (min of 80% of B.P revenue)

Universal service fee – 3% of revenue

Regulation fee – 0.25% revenue

Numbering fees

3G & 4G license initial fee $113m

TDLTE license initial fee $13m

Fees

900 MHz | 3500 – 3600 MHz | 2100 MHz | 2600 MHz | 1800 MHzSpectrum

Voice & SMS: Prepaid tariffs can be +20% premium to the base tariffs that are determined by the CRA

Data: Tariffs cap is determined and announced by CRA to all operators.Tariffs

Year 1 – 50% of population Year 10 – 79.5% of population Year 15 – 84.7% of population

– 248 towns – all provincial cities

– 1 589km of road – 9 089 km of roadCoverage

70

Spectrum update

• On 24 August 2014, mobile broadband license for 3G and

higher was awarded to MTN Irancell.

• On 23 August 2015, TD-LTE license was awarded to

MTN Irancell which allowed the company to convert its

existing WiMAX to TD-LTE technology

Spectrum allocated to MTN Irancell

Type of operating licence

Frequency band

(MHz)

GSM 900 - 1800

TD-LTE 3 500 – 3 600

3G / LTE licence 2 100 – 2 600

WIMAX 3 500 – 3 600

71

Coverage

2G

3G

4G

Population coverage: 86%

Rollout: 1 199 cities

Road coverage: 33 718 Km


Rollout: 568 cities including capitals of all provinces


Rollout: 228 cities including capitals of all provinces

72

Dependency on government organisations for national

and international bandwidth

Coverage gap vs. competition including indoor

Access to new site locations specially in big cities

Good margins getting affected by the cost increase

OTT impact

Highly fragmented telecom licenses

Talent war

Commercial analysis

Looking ahead

Leading mobile data service provider

Anticipated GDP growth next years

Leverage MNP to attract HVCs

MVNO to target special segments

FTTx to bundle digital services

Fast data growth in line with smartphone penetration

Established distribution channels

Business opportunities in adjacent sector

(E-Commerce IoT, NFC,…)

MTN Group footprint and International experience

Established business to be able to leverage the removal

of sanctions

Change in life style getting momentum

Overall culture diversity

Low cost operational structure

Local shareholders support

Improved customer experience

Opportunities Threats

Questions

MENA Investor Day

MTN Irancell CFO presentation

AGENDA

1 Key performance matrix

2 Revenue

3 Expenditure

4 Income Statement

5 Balance Sheet

76* Including revenue share of 28.1%

Key performance matrix (IRR b)

27 26131 038 33 739

June 2014 June 2015 June 2016

Revenue

15 39518 581

21 023


Expenditure

12 117

12 45812 717


EBITDA

4 400

8 295

13 710


Data and Digital revenue

16%

28%

41%


Data & Digital as % to revenue

44%

40%

38%


EBITDA margin

13.9% 8.7%

2.8%2.1%

11.6%

12.9%

20.7% 13.1%

88.5%

65.3%

-4.0%

-2.4%

77

Revenue analysis

Data & Digital revenue up 65.3% due to

• Up 65.3% due to aggressive 3G and LTE roll out and an

increase in smartphones and data users

Airtime revenue

• Decline in MOU as a result of increase usage of voice

over OTT applications and highly competitive pricing in

the market

Interconnect revenue

• Interconnect revenue declined by 17.9% due to reduction

in incoming minutes

SMS revenue

• Decreased by 28% due to increased usage of OTT

applications

8 295

13 620

4 753

3 835

534

13 710

12 986

3 901

2 749

394

Data & Digital Airtime Interconnect SMS Other

June 2015 June 2016

78

8 815

3 455

2 022

777

9 509

2 908

2 2902 034

Revenue share Interconnect Network Transmission

June 2015 June 2016

Expenditure

Revenue share and regulatory fees

• Increased 8% in line with revenue growth

Interconnect

• Decreased by 16% due to an increase in on-net traffic

Network costs

• Increased by 13% due to an increase in the new sites and

technology changes

Transmission cost

• Increased by 162% as a result of capacity needed to

support data growth

79

948657

426 466

1 0151 048862

687 599

1 087

Commisions& discounts

VAS & Digital Marketing Staff costs Other

June 2015 June 2016

Expenditure

Commission and discounts

• Increased by 11% aligned to commission related revenue

increases and an increase in device sales

Digital costs

• Increased by 31% aligned to the increase in digital

revenue, taking into account the change in the nature of

the content

• Content costs are mainly revenue sharing agreements

with content providers

Marketing

• Increased by 61%, driven by price increase as well as

increased media advertising to promote 3G/LTE and

maintain our market presence

Staff Costs

• Increased by 28% due to increases in salaries as well as

number of staff

• Minimum salary increases are prescribed by law and

implemented in April each year

80

IRR bn H1 2016 H1 2015 Var H1 2014 FY 2015 FY 2014

Revenue 33 739 31 038 8.7% 27 261 63 319 56 727

EBITDA 12 717 12 458 2.1% 12 117 26 200 24 298

EBITDA margin % 37.7% 40.1% (2.4%) 44.4% 41.4% 42.8%

EBITDA margin % excl RS & RF 65.9% 68.5% (2.6%) 70.8% 69.3% 69.7%

Depreciation 4 068 2 997 35.8% 2 158 6 565 4 850

Amortisation 896 787 13.8% 545 1 669 1 120

Profit from operations 7 753 8 674 (10.6%) 9 415 17 965 18 328

Finance cost (2 044) (2 007) 1.9% (1 459) (3 186) (3 733)

Profit before tax 9 797 10 680 (8.3%) 10 873 21 151 22 060

Income tax expense 1 800 2 298 (21.6%) 2 392 4 121 4 580

Profit after tax 7 997 8 383 (4.6%) 8 481 17 030 17 480

PAT% 23.7% 27.0% (3.3%) 31.1% 26.9% 30.8%

Capex as a % of revenue 27.6% 28.1% (0.5%) 13.5% 30.5% 30.7%

Income statement

81

IRR bn H1 2016 H1 2015 H1 2014

Non-current assets 55 821 44 370 33 199

PPE 46 534 35 780 23 499

Intangible assets 6 173 6 288 3 155

Other 3 115 2 301 6 545

Current assets 64 795 55 865 44 764

Bank & restricted cash 48 225 37 322 30 491

Other 16 570 18 543 14 273

Total assets 120 617 100 234 77 962

Capital and reserves 35 812 19 168 13 786

Liabilities 84 805 81 067 64 176

Borrowings 14 214 12 994 11 113

Taxation 4 907 5 905 5 499

Other 65 684 62 168 47 564

Equity and liabilities 120 617 100 234 77 962

Balance sheet

Questions

MENA Investor Day

MTN Irancell CMO presentation

AGENDA

1 Competitive landscape

2 Market share

3 Digital

4 Data

5 Distribution

6 Commissions

85* Exchange rate; 3,500 IRR/USD

Competitive landscape

Q1 2016 Q2 2016 Q3 2016

• 800 MB free internet for new subs

• Handset on Installment

• Free SMS on recharge

• Go to My.mci.ir and get your gift

• Handset on installment

• Free SIM campaign (One SIM for every Iranian)

• Use 5 min voice, get 55 min free in same call during Ramadan

• Increase credit limit for post-paid customers

• Hamrahi’ lucky draw ~$300k monthly prize money

• Voice subscription offers – ERM ~$0.004 vs. $0.02 headline

• Student special (free combo bundle on recharge)

• Price competition on roaming in 30 countries

• Free voice, SMS, and 1GB data for new subs

• 18 years old offer: free SIM + free SMS / Voice / Data

• Infinity offer

• Deka offer

• Price competition on data: lower price per GB (6Gb for $5.6) new off peak data bundles

• Free voice, SMS, and 1GB data for new Subs

• Deka offer

• Infinity monthly offers: price ranges from $17 to $74 (~ 97% discount on headline )

• Initial voice package for new prepaid users (on-net+off-net)

• Special offer for insured users

• Special combo (1K mins, SMS, MB data) for primary and double for gift SIM: $3.3

• Find your amazing offer on *4444#

• Targeted STC (Talk x Get y)

• Loyalty points program

• Refill >$1.4, get 1GB data valid for 7 days

• Invite non-MTN Irancell subs to join MTN Irancell and get 500MB free data

• Segmented refill campaigns on select days of the week

• New long term data bundles

• Tiered bundle for new customers 1K mins, SMS and MB of data for Ramadan and 0.5Koffer after Ramadan

• Special combo (1K mins, SMS, MB data) for postpaid: (~96% discount on headline)

• 500Mb + 500Mb off peak bundle for new subs

• Refill > $1.4, get 1GB free off peak data bundle

• New structure for WOW recharge

• Dynamic Combo bundle (~ 75% discount on headline)

86Source: MTNIrancell Interconnect data

Market share

45.92% 46.31% 46.65% 46.42%

51.37% 50.66% 50.34% 50.35%

2.39% 2.72% 2.72% 2.94%0.32% 0.31% 0.30% 0.30%

Q2 2015 Q3 2015 Q4 2015 Q2 2016

Irancell MCI RighTel Taliya & others

• MTN Irancell gained market share in Q4 2015 through

aggressive voice offers (the Amazing Offers campaign)

• RighTel market share growth in Q2 2016 driven by

aggressive price offers across voice, SMS and data

- Anticipating higher churn for RighTel in coming months

• Increase in MCI market share in Q2 2016 on the back of

their $300k monthly prize draw

• MTN Irancell remains focused on value management;

retention of valuable customers is priority as SIM

penetration approaches 130%

• 42% value share and NPS at 23%, up 18 points since

December 2015

• MNP expected to boost MTN Irancell mid to high value

customer share once awareness improves and processes

simplified

Market share

Value share

42.0% 41.9% 41.7% 42.2%

58.0% 58.1% 58.3% 57.8%

Q2 2015 Q3 2015 Q4 2015 Q2 2016

MTNIrancell MCI

87* Digital subscribers are RGS30

Digital

19.5

20.7 20.7 20.7

18.5

19.0

19.5

20.0

20.5

21.0

Q2 2015 Q4 2015 Q2 2016 Q3 2016

• Digital subscriber is almost flat in Q3 2016 vs. Q2

• RBT, Vitrin (MTN Play), and SDP services remain key

drivers

• Revenues up 43% in H1 2016 vs. same period last year

• Anticipating stable performance in the remainder of the

year

• New opportunities being pursued: DoB, API charging and

Platform as a Service, and IPTV/ VoD

• Strong adoption of App based selfcare (>1.2m users).

This doubles as a sales channel and customer contact

interface

Subscribers (million)*

Digital Revenue (m, LC)

2 000 000

3 000 000

4 000 000

5 000 000

Q1-Q2 2015 Q3-Q4 2015 Q1-Q2 2016

88ARPU [data users] per technology for Q2 2016 was calculated based on Jun 2016 report

Data – data users, MB/user and smartphones

24 (92%)

18 (69%)

~3 (10%)

2G 3G LTE

Strong growth driven by

• Smart coverage; rollout and modernisation

• Adoption of smartphones; including 4G handsets and

devices – over 50% penetration

• Provision of 4G devices by MTN Irancell and in

partnership with OEMs

• Increasing awareness of mobile broadband with activation

campaigns focused on phone set up and bundle

recommendation

• Analytics that improves segmentation, targeting, and

selection of communication channels

• Variety of bundles to suit different segments

• Bundle personalisation service (Boom/ Boom+)

4G / 3G conversion remain key opportunities

• 3G usage is ~9 times more than 2G; and ARPU ~2 times

more

• 4G usage is ~3 times more than 3G usage and ARPU

about ~1.5 times more

Data users (Q3 2016- 26 million unique customers)

Smartphone vs non-smartphone data ARPU (USD)*

Smartphone Non smartphone

3.3

6.8

8.8

2G 3G LTE

Smartphone Non smartphone

89

Smartphone strategy

On the supply side…

• Dealing with OEMs to bring in 4G capable devices –

a la Samsung, Huawei

• Importing MTN branded phones – first 5k brought in to

test the market

• Working with device resellers (dealers) to offer MTN

Irancell SIMs with their smartphones

• Importation of 4G devices

On the demand side…

• Instalment models and potential partners to finance deals

• Multiple sales channels being used to improve proposition

discovery

• Targeting customers within 3G/ 4G coverage with legacy

devices using appropriate messages to stimulate

conversion to smartphones/ 3G / 4G devices

Smartphone Penetration – 2016

50.4%

52.2%

56.4%

Q1 Q2 Q3

90

Point of sales Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

Distributor 25 25 26 28 28 30 30

Dealers 14 520 14 732 15 248 15 382 15 721 14 299 14 511

Bank 26 27 27 28 28 30 30

ATMs in bank sites 35 900 36 352 36 702 38 100 40 156 41 325 42 732

POS device 2 896 935 3 306 303 3 668 965 4 000 500 4 207 135 4 626 825 4 673 503

MTNI store (Irancell) 10 10 11 11 11 11 12

MTNI store (distributor) 34 35 35 35 42 42 41

MTNI Connect - - 154 173 173 187

Total 2 947 450 3 357 484 3 721 014 4 054 238 4 263 294 4 682 735 4 731 046

Distribution channel

One of the key sales strategies is development digital sales channel including

• USSD sales

• E-Shop sales

• Tele sales

• Mobile app sales

• IVR sales

91

Sales channels, commissions & discounts

Commissions & discounts 2015 2016

Effective discount rate on voucher

& Echarge3.2% 3.3%

Commission & discount on SIM (LC’ IRR) 15 888 19 189

Discount rate on device 9.4% 10.0%

20

30

40

50

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

Physical Echarge Logical

Airtime sales channel (%)

Questions

MENA Investor Day

MTN Irancell CTO presentation

AGENDA

1 Overview

2 Network performance

3 Coverage

4 Managed services

95

Building a superior data network

Overview - operating environment

Highlights

Key priorities

Challenges

10 362 On-air 2G Sites in 3 242Cities

7 102 On-air 3G-2100 Sites in 1 336 Cities

4 014 On-air LTE-1800 Sites in 314 Cities

1 605 On-air LTE-TDD Sites in 70 Cities

Data usage 1100 TB per day

Continuous improvement in customer experience

New sites rollout

Improve indoor coverage

Fibre Deployment

Migration of data traffic from 2G to 3G and 4G

Transmission quality, capacity and cost

Sites acquisition

Limited fibre footprint and challenges in getting ROW

96

2015 and 2016 capex spend

9%

65%

13%

3%

10%

Core & IP Modernisation 2G, 3G, LTE New site TDD Fibre

CPU / program

2016 budget

(US$m)

NWG 577

BSS – Radio 439

NSS – Core 34

Support 13

Transmission (IP, fibre,…) 91

ITS 111

Other 21

Total capex 709

2016 rollout

• 2G roll out – YTD new sites 344 added

(Total sites 10 351)

• 3G roll out – YTD new sites 2120 added

(Total sites 6 714)

• LTE roll out – YTD new sites 1 467 added

(Total sites 3 354)

• WiMAX roll out – 943 sites rolled out

• TDD-LTE roll out – 1 406 sites rolled out

Network investment(2015 and H 2016)

97

Quality indicators (availability, quality, coverage)

Throughput 145 Gbps – peak hour

-26%

-14% -17%

15%19% 22%

15% 15%

7%

23%

-26%

-17%-22%

2%

10% 10%5%

13%

17%

23%

Q22103

Q42013

Q22014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

User data speed & traffic distribution

• 2G

- 109 Kbps

- Taking 6 % of mobile data traffic

• 3G

- 1.9 Mbps

- Taking 60% of mobile data traffic

• LTE

- FD: 9.7Mbps

- TD: 19.1 Mbps

- Taking 34% of mobile data traffic

NPS

MTN advantage / disadvantage vs. best competitor with user share > 5%

Data throughput graph

0% -4% -5% -13% -8% -12% -10% -2% +9% 0%

0

20

40

60

80

100

120

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

Jan2016

Feb2016

Mar2016

Apr2016

May2016

Jun2016

Jul2016

Aug2016

Sept2016

Oct2016

3G_DL_THR 4G_DL_THR 2G_DL_THR

98

Network performance – quality indicators

Network availability graph

Dropped call rate

Plan progress

2G Planned # 11 162 93%

On-air # 10 362

3G Planned # 9 855 72%

On-air # 7 102

4G Planned # 5 911 68%

On-air # 4 014

TDD Panned # 2 865 56%

On-air # 1 605

97

98

99

100

Jan2016

Feb2016

Mar2016

Apr2016

May2016

Jun2016

Jul2016

Aug2016

Sept2016

Oct2016

3G_CELL_AVAIL 4G_CELL_AVAIL 2G_TCHA

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Jan2016

Feb2016

Mar2016

Apr2016

May2016

Jun2016

Jul2016

Aug2016

Sept2016

Oct2016

3G_DCR 4G_DCR 2G_DCR

99

MPR score

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MTN Irancell MCI/TCI RighTel

Network quality Price and special offersBranding and advertising Value added servicesGetting service & help BillingAccessibility Feeling valued & wowedDevices / handsets Commnunication

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MTN Irancell MCI/TCI RighTel

Network quality Price and special offersBranding and advertising Value added servicesGetting service & help BillingAccessibility Feeling valued & wowedDevices / handsets Commnunication

Promoters Detractors and passives

Increased

promotion

for MTN

Irancell

Network

this

quarter

100

2G coverage map

No. of sites 10 362

No. of cities / villages 3 242

101

3G coverage map

No. of sites 7 102

No. of cities / villages 1 336

102

4G coverage map

No. of sites 4 014

No. of cities / villages 314

103

Managed services

MTN Irancell SVMS process supervision

• Hourly follow up of down cells/sites and network

availability

• Weekly analysis on the root cause of availability

degradation

• Deep investigation on quality of actions performed by MS

on field

• Thorough audit & stabilisation of critical sites by on site

investigation on problematic sites with low performance

• Scheduling and checking regularly preventive

maintenance performed by MS

• Pre and post check health check of planned changes

done on the network

• Accurate TT follow up

• Quarterly SLA and penalty calculation and immediate

deduction from their monthly payment

• In-house strong processes and close follow up

• Competent team handling the daily follow up and full

visibility on main KPI

• Close management follow up and regular evaluation of

performance through different forums

(War room, MS performance)

MTN Irancell Operation Management (Regional and Central)

Network Performance Back Office

Field Manintenance

Change Management

Vendor VendorInfrastructure

Upgrade

* Core* Ran (2,3,4G)* TD-LTE* TX* IPBB* WiMax*M2M

*Billing and chargingSystem* RAN (2,3,4G)* NetworkOptimization* VAS

* RAN (2G,3G,4G)* Networkoptimization

* RAN (2G,3G,4G)* TX

* Link upgrade* MW expansion* Point to Multipoint

Front Office SLA Supervision

Vendor Vendor

Questions

thank you

106

Disclaimer

The information contained in this document has not been verified independently. No representation or

warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy,

completeness or correctness of the information or opinions contained herein. Opinions and forward looking

statements expressed represent those of the Company at the time. Undue reliance should not be placed on

such statements and opinions because by nature, they are subjective to known and unknown risk and

uncertainties and can be affected by other factors that could cause actual results and Company plans and

objectives to differ materially from those expressed or implied in the forward looking statements.

Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability

whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this

presentation or its contents or otherwise arising in connection with this presentation and do not undertake

to publicly update or revise any of its opinions or forward looking statements whether to reflect new

information or future events or circumstances otherwise.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and

no part of it shall form the basis of or be relied upon in connection with any contract or commitment

whatsoever.

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