SENS Note - 03 May 2018

MTN - quarterly update

MTN released a quarterly update for the period ended 31 March 2018. Highlights - Group subscribers increased by 1,9% quarter-on-quarter (QoQ), with net additions of 4,1 million - Active MTN Mobile Money customers increased by 3,9% QoQ to 22,7 million - Voice traffic (billable minutes) increased by 24,2% and total data traffic increased by 56,7% - Group service revenue increased by 9,1% - Group data revenue increased by 26,9% - MTN South Africa increased service revenue by 2,5% while the EBITDA margin increased by 150bp year-on-year (YoY) to 35,0% - MTN Nigeria increased service revenue by 14,4% while the EBITDA margin increased 340bp to 41,8% - MTN Irancell increased service revenue by 15,2% MTN South Africa MTN South Africa recorded first quarter YoY service revenue growth of 2,5%. While lower than our full-year expectations, this improving QoQ performance follows the more muted performance in the prior quarter (4Q17). The growth was supported by data and digital revenue, which increased by 12,1% and 17,7% respectively, while outgoing voice revenue decreased by 9,2%. Data traffic increased by 49%, supported by a 14% increase in active data users. MTN South Africa's EBITDA margin expanded to 35% YoY, supported by continued cost efficiencies and the increase in service revenue. Our customer value management (CVM) platform is now in place with a focus on managing the core voice business while driving overall customer spend and offerings. Following the marked improvement in our network in 2017, we invested R1,7 billion in capex in the first quarter of 2018, maintaining our leading network position. The South African postpaid business continued to focus on customer acquisition, CVM, improving channel footprint and reducing churn. To this end, we reported 132 000 postpaid net additions on the back of a continued improvement in the consumer segment. While our enterprise business remains challenged, we now have the leadership team in place, and are executing on a turnaround plan focused on improving customer retention and acquisition. Prepaid net additions in the quarter came in at 536 000. On 30 April 2018 the regulator published the End User and Subscriber Service Charter Amendment Regulations which included amended rules around the roll over of unused data. We are currently reviewing these regulations to assess their impact. MTN NIGERIA MTN Nigeria continued with the positive momentum of 2017, increasing service revenue by 14,4% YoY, led by a 73,2% increase in data revenue and 15,2% growth in voice revenue. While the increase in voice revenue was encouraging, it was supported by the lower customer spend on VAS. As growth in our digital services is expected to resume in the latter part of the year, this may impact growth rates in voice revenue. MTN Nigeria reported net additions in the quarter of 2,3 million following on from the 2,0 million adds in 4Q17 as the business benefited from the increase in our SIM registration footprint. Focused on retaining network leadership, we rolled out 298 3G and 174 4G sites in the quarter. The 4G rollout remains centred on the top 10 cities across the country. MTN Nigeria's stronger-than-expected growth in revenue allowed the business to benefit from increased scale. With expenses well controlled, and the naira stable, the EBITDA margin expanded in the quarter to 41,8%. SEAGHA region MTN Ghana MTN Ghana benefited from the improving macroeconomic environment and stable competitive environment. The operation reported strong service revenue growth of 29,3% YoY, led by a 51,5% increase in data revenue. MoMo was a stand-out performer, accounting for 15% of MTN Ghana's total revenue. The EBITDA margin increased further in the period to 42,0%. The recently agreed technical services arrangement will reduce the margin by 5% from May 2018. MTN Ghana reported good growth in subscribers in the quarter, with net additions of 484 000 to reach a total of 16,2 million subscribers. Active MoMo subscribers increased to 7,4 million and there were 6,6 million active data subscribers. MTN Uganda Following a slower prior quarter (4Q17), MTN Uganda experienced a positive first quarter with service revenue growth of 8,0%. MoMo revenue increased by 21,8% to contribute 25% of total revenue. Voice revenue growth in the period was more muted, with growth of 3,4% despite a 33,6% increase in billable minutes. Tariffs declined by 32,6% YoY. MTN Uganda reported net additions for the quarter of 149 000. Other SEAGHA Across the balance of the SEAGHA region the subscriber base increased by 3,6% QoQ, with Rwanda, Zambia, Swaziland and South Sudan all contributing positively to subscriber growth. WECA region MTN Ivory Coast After a challenging second half period in 2017, MTN Ivory Coast service revenue remained under pressure, declining by 2,6% YoY. This was largely on the back of a 11,4% decline in voice revenue. Data and digital revenue increased by 13,0% and 34,2% respectively. Total subscribers increased in the period with net additions of 49 000. The business recorded continued growth in MoMo subscribers to 2,3 million and an increase in active data users to 2,7 million. Regulatory rules disallowing differential pricing for on-net and off-net tariffs and the significant reduction in leased line prices at the end of 1Q17 are now behind us and we should see improving trends for the balance of the year. MTN Cameroon As noted at our full-year results, MTN Cameroon remains a challenged market which recorded a worsening operating performance throughout 2017. Service revenue in the current period declined by 6,8% YoY with the associated pressure on YoY margins. Notwithstanding the weaker start to the year, we remain confident of the business returning to positive growth in the second half of the year. Voice revenue declined by 16,6% YoY while data and digital revenue grew by an encouraging 15,7% and 106,0% respectively. MoMo revenue increased by 700% to account for 4,1% of service revenue. Other WECA Across the balance of the WECA region the subscriber base declined by 2,3% QoQ, driven by a decline in subscribers in Congo-Brazzaville. Guinea-Conakry, Liberia and Guinea-Bissau all contributed positively in the period. MENA region MTN Irancell MTN Irancell reported service revenue growth of 15,2%, supported by data and digital growth of 50,7% and 21,3% respectively. The data growth was affected by the restriction of select internet services during January as well as increased competitive activities in the period. Voice revenue remain under pressure and declined by 12,9% YoY. At the beginning of April 2018 the Iranian government announced that there would be a single currency rate going forward, effectively merging the official central bank rate and the open market rate at 42 000 rials to the US dollar. This was an effective 11,4% decline in the central bank rate. MTN Irancell repatriated approximately €30 million in the quarter. Other MENA Across the balance of the MENA region the subscriber base declined by 1,3% QoQ, led by a decline in subscribers in Yemen and Afghanistan. Sudan and Cyprus contributed positively to the region's subscriber base.

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