SENS Note - 03 March 2016

MTN final results 31 December 2015

Revenue for the year increased slightly to R147.1 billion (2014: R146.9 billion). Operating profit decreased to R35.3 billion (2014: R49.6 billion), profit attributable to equity holders of the Company lowered to R20.2 billion (2014: R32.1 billion), while headline earnings per share fell to 746 cents per share (2014: 1 536 cents per share). Dividends The Group has declared a second half dividend of 830 cents, which will bring the total dividend for FY2015 to 1 310 cents. This represents a YoY growth of 5,2%. During FY2016 the Company anticipates declaring a minimum dividend of 700 cents which takes into consideration the uncertainty regarding the regulatory fine imposed by the NCC and the dollar liquidity situation in Nigeria. We have adopted a cautious approach to the dividend outlook for FY2016, taking into account the interests of shareholders and lenders and the importance of maintaining an investment grade credit rating. This minimum dividends remain subject to the outcome of the regulatory fine imposed by the NCC and is at the discretion of the Board. Should the operating conditions improve, we will look to declare a higher dividend than advised. Prospects MTN Group continues to work towards achieving its vision of “leading the delivery of a bold, New Digital World to our customers.” While 2015 was a difficult year for the Group, impacted as it was by challenges in our two key markets, we are hopeful that we will see improvements in operating conditions during 2016. The new operating structure, together with our strong platform, positions us well to take advantage of the next phase of evolution in the mobile telecoms sector. We are confident that our operations will continue to benefit from strong growth in data together with our investment in AIH and MEIH and related activities in the digital space. This will be underpinned by organic growth, partnerships and acquisitions and will position the Company to become the leading digital player across our markets over the next few years. In the near term, we anticipate the resolution of the ongoing suspension of regulatory services which continues to restrict new tariff plans and promotions for MTN Nigeria. Following the resumption of regulatory services we would anticipate an improved operational performance in 2016. However, net additions in Q1 2016 are expected to be impacted by the disconnection of 4,5 million subscribers at the end of February 2016 related to the ongoing subscriber registration process. MTN Nigeria is working to complete the registration process with these disconnected subscribers and is also actively engaging the high value subscribers. These disconnections follow a process that was initiated with the NCC during the last quarter of 2015. The current economic challenges in Nigeria have resulted in increased pressure on US dollar liquidity and we expect this situation to remain a challenge in the short to medium term. We are, however, establishing contingency plans to ensure we can continue with the planned network rollout. We expect the South African operation to continue the positive trend shown during H2 2015, improving its operational performance with the support of strong leadership, leveraging an enhanced 3G/LTE device strategy, as well as increased focus on customer services. The extensive 3G and LTE network rollout in 2015 will also benefit the operation in 2016. The continued easing of sanctions in Iran and its related economic uplift offers significant opportunities to expand services, particularly in the digital space where we command a strong market position. We also expect acceleration in economic growth together with a reduction in inflation and some normalisation in the exchange rate. Although this is a complex process, MTN is working towards remitting some of its cash of R15 860 million from MTN Irancell during the first half of 2016. Improving network quality and capacity in key markets remains a priority. We will continue to close and improve coverage of 3G, LTE and LTE advanced in Nigeria, South Africa, Ghana and Cameroon. In addition, improved quality and throughput in homes and fixed locations through the rollout of fibre-to-the-home (FTTH) in South Africa, Nigeria, Ghana and Iran will be a focus in 2016. While the Group operates across 22 countries the earnings remain highly concentrated in a few markets with the associated volatility and risks as evident over the past few years. To this end management will continue to explore opportunities to address this over the medium term. Fine imposed by the NCC on MTN Nigeria On 26 October 2015, MTN announced that the NCC had imposed a N1,040 trillion fine, subsequently reduced to N780 billion (equivalent to approximately US$3,9 billion using the exchange rate prevailing at the time) on MTN Nigeria. This was related to the late disconnection of approximately 5,1 million subscribers whose registration documents were considered incomplete. On 17 December 2015, MTN Nigeria proceeded with legal action in the Federal High Court in Lagos challenging the fine. On 22 January 2016, the matter was adjourned by the judge to allow parties to find an amicable solution. On 24 February 2016, MTN Nigeria made a without prejudice good faith payment of N50 billion (equivalent to approximately US$250 million) to the Federal Government of Nigeria, on the basis that this will be applied towards a settlement, when one is eventually hopefully arrived at. In an effort to achieve an amicable settlement, MTN Nigeria, without prejudice, agreed to withdraw the matter from the Federal High Court. MTN Nigeria recorded a R9 287 million provision for the fine at the end of the reporting period, negatively impacting reported EBITDA by 13,6%** and HEPS by 402 cents. Management has applied its judgement in determining the provision in accordance with IFRS. MTN Nigeria continues engaging with the Nigerian authorities in an attempt to ensure an amicable resolution in the interest of MTN Nigeria, its stakeholders and the Nigerian authorities. The fine imposed on MTN Nigeria and the related process continues to receive extensive attention from the Group Board of Directors (the board) and management and the Group will continue to update shareholders on any material developments. Until the matter is resolved, MTN shareholders are advised to exercise caution when trading in MTN securities.

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