SENS Note - 21 April 2016

MTN - quarterly update

MTN released a quarterly update for the period ending 31 March 2016. Highlights - Group subscribers decreased by 1,4% quarter-on-quarter (QoQ) impacted by the disconnections of subscribers in Nigeria related to the substantial subscriber registration process and compliance exercise - MTN South Africa subscribers decreased by 1,7% QoQ impacted by seasonality and the alignment of the subscriber base recently acquired from Autopage - MTN Nigeria subscribers decreased by 6,9% QoQ impacted by the disconnection of 4,5 million subscribers in February 2016 related to the registration compliance process - Significant network improvement across the Group with the focused rollout of 3G and 4G sites with capital expenditure year-to-date more than doubling YoY to R6 974 million - Group revenue for the quarter was boosted by the significant YoY depreciation in the rand against a number of the operational currencies - Constant currency (organic) data revenue increased by 20,1% YoY, now contributing 24,2% to total revenue - Voice and data traffic increased by 12,1% and 123,3% respectively YoY YoY refers to: three months to March 2016 versus three months to March 2015. QoQ refers to: Q1 2016 versus Q4 2015. SEA MTN South Africa reported a marginal decline in subscribers of 1,7% QoQ to 30,1 million. The prepaid subscriber base declined by 1,8% QoQ to 24,9 million, largely impacted by seasonal trends following strong promotions in Q4 15. The postpaid base decline of 0,8% to 5,2 million was impacted by the alignment of the Autopage subscriber base to MTN’s, the disconnection of telemetry SIMs and the expiration of legacy low-cost packages. In addition to seasonality, quarterly average revenue per user (ARPU) was impacted by the exceptionally unfortunate 48-hour network outage experienced in February 2016. This had a negative impact of approximately 3% on revenue for the month while billable minutes for the quarter declined by 11,3% YoY. In March we saw an encouraging 10,3% month-on-month (MoM) increase in revenue. Data revenue continued to show strong growth increasing by 22,9% YoY and contributed 32,8% to total revenue. This was supported by a 12% QoQ increase in the value of data bundles sold as well as an increase in smartphones to 9,2 million. Improved 3G and LTE coverage supported a 29% increase in ARPU for those customers who moved from 2G to 3G and an increase of 19% for those customers who moved from 3G to LTE. Data usage increased by 58,5% YoY. ARPU declined by 9,2% QoQ. Other SEA - across the rest of the region subscribers increased by 2,0% to 22,7 million in Q1 16. This was mainly driven by strong growth in Uganda. MTN Uganda increased its subscriber base by 7,8% QoQ to 9,6 million supported by MTN Zone and attractive bundled offers. In Uganda constant currency data revenue increased by 23,8% YoY and contributed 32,1% to total revenue. This was supported by the roll out of 62 3G and 35 LTE sites during the quarter. Local currency ARPU increased by 15,0% QoQ. MTN Mobile Money subscribers declined by 27% to 6,9 million primarily due to the disconnections in Q4 15 related to the subscriber registration process. WECA MTN Nigeria reported a 6,9% QoQ decrease in its subscriber base to 57,0 million. This was a result of the disconnection of 4,5 million subscribers at the end of February 2016 related to the ongoing subscriber registration process. We believe we have now dealt with all the subscribers who were considered to be non-compliant. The operation continues to focus on reconnecting subscribers through proactive engagement and winback offers. Following the re-instatement of regulatory services in March 2016, MTN Nigeria continued to engage the regulatory authorities and we hope to receive approval from the regulator for approval of promotional products and services during the current month. Constant currency data revenue declined by 9,6% and contributed 19,0% to total revenue mainly due to a change in regulatory requirements obliging operators to seek permission from customers to charge out-of-bundle rates upon the depletion of a data bundle. During the quarter the operation continued to improve its data network in key cities and rolled out 73 2G and 149 3G sites. These network coverage and quality improvements were reflected in the net promoter score with an increase of 3% for the quarter. Local currency ARPU increased by 11,9% QoQ. The operation’s competitiveness was impacted by regulatory restrictions in the quarter. Other WECA - the remainder of the region increased its subscriber base by 1,3% to 45,9 million driven by solid growth in MTN Ghana and MTN Cameroon. MTN Ghana delivered a sound performance and grew its subscriber base by 4,6% to 17,0 million. This was supported by competitive value propositions as well as churn and loyalty management initiatives. Billable minutes increased by 26,0% YoY, while constant currency data revenue increased by 111,0% and contributed 36,3% to total revenue. This was supported by strong growth in digital and mobile financial services as well as improved data network quality. The operation added 65 3G and 143 LTE sites in the quarter. Local currency ARPU increased by 4,0% QoQ. MTN Mobile Money customers increased by 10,8% QoQ to 6,3 million. MTN Cameroon increased its subscriber base by 3,1% to 9,5 million supported by improved 3G network quality and the launch of 4G at the end of Q4 15. Constant currency data revenue increased by 78,9% and contributed 18,5% to total revenue supported by a 7,5% increase in MTN Mobile Money subscribers to 2,1 million. MENA MTN Irancell increased its subscriber base by 1,0% QoQ to 46,6 million in a highly penetrated market. Constant currency data revenue increased by 70,9% QoQ and contributed 39,3% to total revenue. This was largely supported by continued network modernisation as well as the rollout of 1 368 3G and 743 LTE sites during the quarter. Local currency ARPU decreased by 1,4% QoQ. Other MENA - the remainder of the region increased its subscriber base by 0,2% to 27,0 million. MTN Sudan increased its subscriber base by 4,0% to 8,8 million driven by competitive pricing and below-the-line and targeted campaigns. Total billable minutes increased by 12,5% YoY. Constant currency data revenue increased by 74,0% driven by digital content and contributed 26,2% to total revenue. Local currency ARPU increased by 8,4% QoQ. MTN Syria, MTN Yemen and MTN Afghanistan remain profitable, however, they continue to operate in highly challenging environments impacting the region’s subscriber growth.

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