SENS Note - 27 May 2015

MTN -- Business Update

At the Annual General Meeting held on 27 May 2015, MTN Group President and Chief Executive Officer, Sifiso Dabengwa made the following comments regarding the Group’s performance for the first four months of 2015 in comparison with the same period for 2014: As at 30 April 2015, the Group had increased its subscriber base to 229.2 million, a year-on- year (YoY) increase of approximately 8%. This increase was supported by MTN Nigeria with approximately 1.5 million net additions. In South Africa, the business recorded 133,000 net additions and was impacted by challenges experienced in the prepaid distribution channel. However, in the month of April 2015, MTN South Africa recorded net additions of 168,000. The large opco cluster continues with its positive momentum adding 2.5 million subscribers, while the small opco cluster recorded subscriber additions of 1.8 million. Across MTN, total minutes on the network increased by 14% YoY. Total minutes on the South African network are up 137% YoY following the reduction in tariffs over the past 18 months. The operation remains focused on the network rollout to ensure the network is adequately positioned to sustain the growth in both voice and data traffic. Although Nigerian minutes were down 2% Year-to-date (YTD), the recently revised promotions are expected to drive incremental traffic volumes over the balance of the year. While MTN ’s YTD organic revenue increased marginally, reported revenue declined YoY with the weaker exchange rates being a drag of some 6%. This was predominately driven by the Naira which has weakened by 9.0% against the rand over the same period in the prior year. While Nigeria has continued to see quarterly sequential improvements in local currency revenue, the revenue for the four months to 30 April 2015 is down approximately 1% YoY. Service revenues in the South African operation continue to show positive momentum and was 3.3% higher YoY. The challenges experienced with handset distribution have, however, resulted in a 21% YoY decline in handset sales and negatively impacted total revenue growth. Iran, Ghana, Uganda and Sudan recorded healthy revenue growth for the period, while revenue in Cameroon was negatively impacted by the recent introduction of a new competitor. Data revenue across the Group continued to deliver satisfactory growth in most of our markets, increasing by 18% YoY and now contributes 21% to total revenue compared to 17% for the same period last year. This remains a key focus area for the business. MTN’s earnings before interest, tax, depreciation and amortisation (EBITDA) has declined when compared to the same period last year, largely due to weakness in the Naira relative to the Rand. Despite lower than anticipated revenues, the Group continues to execute well on cost optimisation initiatives across the majority of our operations. In Nigeria, the EBITDA margin was negatively impacted by both the tower transaction as well as increased dollar denominated costs related to the weaker exchange rate. The EBITDA margin in South Africa continues to benefit from the cost initiatives implemented in the second half of 2014. EBITDA margins in Ghana and Cameroon in particular have been negatively affected by the weakness in currencies and the by dollar denominated expenses. Total Capital expenditure (capex) is flat YoY and, while currently below budget, we expect full year capex of R30 billion. Importantly, we expect a total capex investment of R10 billion for MTN South Africa in the year. Prospects While the operating environment remains challenging across all of our markets, with persistent price competition and regulatory challenges, we do anticipating some stability in operating trends over the balance of the year. In Nigeria in particular, but also in a number of other countries, there are concerns given the weak macro-economic situation and the impact this could have on customers through the balance of the year. As traditional voice revenue remains under pressure, data, digital services and Mobile Money remain key areas of focus for MTN. In addition, improving customer experience in all of our operations, cost optimisation and the execution of our infrastructure sharing strategy remain central to our strategy. The financial information on which this business update is based has not been reviewed and reported on by MTN’s external auditors.

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