SENS Note - 03 May 2017

MTN Group - quarterly update

MTN Group released a quarterly update for the period ended 31 March 2017. Highlights - In March 2017, we completed the evolution of the core senior management team. The new Group president and chief executive officer (CEO), chief financial officer and chief operating officer are now in place and have settled in, swiftly adjusting to their respective roles while beginning a review of the business to see where further improvements can be made; - Group total revenue increased by 7,1% with data revenues up 29,4% year-on-year YoY). Data revenue contributed 20% to total revenue; - MTN South Africa reported a solid performance with a 4,1% increase in service revenue; - MTN Nigeria delivered continued positive operational momentum and reported an 11,6% increase in total revenue; - MTN Irancell increased total revenue by 19,3% benefiting from encouraging data revenue trends; - On balance across the majority of our Tier 2 operations we have seen encouraging revenue trends; - Voice traffic (billable minutes) increased by 2% and total data traffic by 145%; - Group subscribers decreased by 1,5% quarter-on-quarter (QoQ) largely as a result of restatements to subscriber numbers in Ghana, Rwanda and Zambia; and - Network improvement continued across the Group, particularly in the Nigerian, South African and Iranian operations supported by year-to-date capital expenditure at R4 619 million. South Africa MTN South Africa recorded a solid performance in the first quarter with service revenue up 4,1%. This was supported by data and digital revenue which increased by 17,8% and 20,3% respectively, while outgoing voice revenue declined 5,4% YoY as billable minutes declined by 7,5%. The priorities for the South Africa business remain driving network quality, offering attractive value propositions and improving the customer experience. In the period we continued our network expansion with 515 LTE sites and 53 3G sites going live. We now have very strong network performance in three of the four large metro areas (Cape Town, Pretoria and Durban) and expect this to support a continued improvement in our net promoter score (NPS). While subscribers declined in the quarter as a result of traditional seasonality, we remain committed to our net additions guidance of 630 000. We are encouraged by the progress made in our relationship with our franchise channel and this, together with the ongoing systems and process improvements should drive continued improvement in the customer experience. Uganda Following a challenging 2016, MTN Uganda experienced a positive first quarter with encouraging revenue trends. Mobile Money revenue increased 34,0% and now contributes 22% of total revenue. The introduction of personalised voice bundles supported an 11,5% increase in on-net voice revenue. MTN Uganda reported net additions for the quarter of 312 000. We expect subscriber growth to moderate as a result of the change in subscriber registration regulations which now require national identity (ID) numbers to be linked to individual subscribers. We have also commenced the process of retrospectively linking the historic subscriber base to the national ID system. SEA excluding South Africa - across the rest of the region the subscriber base remained flat. Uganda, Rwanda and Swaziland contributed positively, however growth was offset by a decline in subscribers in Zambia, South Sudan and Botswana. Nigeria MTN Nigeria had a strong start to the year with an 11,6% increase in total revenue supported by a 71,3% increase in data revenue. Whilst the momentum is encouraging the ongoing review of value added services (VAS) subscribers, will put pressure on digital revenue for the balance of the year. MTN Nigeria’s subscriber base declined by 2,3% in the quarter. This was impacted by new regulations that require all subscriber connections to take place in permanent brick and mortar structures. This led to a marked reduction in gross connections across the industry. MTN Nigeria has also continued with the process of excluding subscribers whose only activity is receiving incoming SMS. Despite the challenging economic conditions MTN Nigeria continued to execute on its network rollout plans with a particular focus on the data network. This remains a key element in the Group’s medium-term growth strategy. Ghana MTN Ghana continued to benefit from the improving macro environment with solid revenue growth benefiting from a 55,2% increase in data revenue. Mobile money was a stand-out performer and now accounts for 13% of MTN Ghana’s total revenue. MTN Ghana reported a decline in subscribers in the quarter of 2,5 million. This was impacted by the review of subscriber definitions resulting in the disconnection of 3,4 million subscribers. After adjusting for these net additions in the quarter were 893 000. Ivory Coast After a tough 2016 in which revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) margins came under pressure, MTN Ivory Coast saw a marked improvement in the quarter, reporting 9,4% revenue growth. Data revenue increased 84,1% while mobile money revenue increased by 32,5%. A significant improvement in NPS supported the good progress made in gaining high value subscribers. The regulator recently introduced rules disallowing differential pricing for on-net and off-net tariffs and furthermore imposed a significant reduction in leased line prices. This is expected to impact our performance in the rest of the year. Cameroon MTN Cameroon experienced a particularly challenging period with the data network shutdown in select areas impacting all operators in the country. Data revenue growth was constrained to 9,8% as the data network shutdown affected in excess of 20% of our subscriber base. Encouragingly, the business was able to restore data services in these regions effective 21 March 2017 which should result in some improvement for the rest of the year. Mobile money revenue in Cameroon increased 390%. MTN’s investment in the network over the past few years has delivered positively and MTN Cameroon is today the leading operator in terms of network NPS. WECA excluding Nigeria - across the rest of the region subscribers declined by 3,6% mainly as a result of the disconnection of subscribers in Ghana. Ivory Coast, Benin and Guinea Bissau contributed positively to the region’s subscriber base. Iran MTN Irancell saw continued strong revenue momentum in the period with data revenue increasing by 76,7% YoY. NPS improved significantly with an improvement in network NPS a key driver. Other MENA - across the rest of the region subscribers decreased by 1,4% driven by a decline in Syria, Yemen and Afghanistan. Sudan and Cyprus contributed positively to the region’s subscriber base.

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