SENS Note - 01 December 2003

MTN results for the 6 months ended Sep 03

MTN posted a strong performance for the first half of the 2004 financial year. Consolidated revenue rose to R11272m, a 30% increase over the comparable period last year. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) increased by 61% to R4334m, resulting in Profit after Taxation (PAT) of R2133m, a 168% increase over the same period last year. The group produced interim headline earnings per share (EPS) of 127.1 cents (Sep 2002: 60.9 cents), adjusted to 123.3 cents due to the exclusion of deferred tax credit of R63m raised by MTN Nigeria. This compares to adjusted headline earnings of 60.9 cents to Sep 2002, and 142.8 cents for the year to Mar 2003. An amount of 7.9m capable subscribers were recorded in the group's managed operations, up 39% since Sep 2002. While the South African operations showed satisfactory revenue growth of 26% to R7105m, the group's international operations increased revenue by 39% from R2969m to R4117m, despite the impact of the strong rand on consolidation of their results. The international operations contributed 37% to group revenue during the review period. The overall EBITDA margin for the group increased to 38.4%, from 30.9% for the comparable half year. Both MTN Nigeria and MTN Uganda recorded EBITDA margins of over 50% for the period, whilst the other international operations achieved EBITDA margins of well over 40%. MTN South Africa's EBITDA margin showed improvement to 28.5% from 26.4% for the 6 month period to Mar 2003. This was primarily due to operational cost containment in South Africa, coupled with higher overall cost to revenue efficiencies. Net finance costs for the group declined by 3% to R271m against the comparable half year. This resulted from lower debt levels due to strong operating cash-flow generation and slower than anticipated network expansion in MTN Nigeria. Foreign exchange losses were also lower than expected, given the relative strength of the rand. The unrealised losses incurred on the international sinking fund policy taken out as an indirect US dollar hedge increased by R43m during the half year. The group has achieved a comfortable level of EBITDA-to-net interest cover of 16 times. Consolidated PAT increased to R2133m from R796m, representing 18.9% of revenue, compared with 9.2% in the previous half year. Attributable earnings for the group increased by 157% to R1 813m. Adjusted headline EPS increased by 102% to 123.3 cents. South African wireless operations contributed 57.0 cents per share, a 25% increase compared to the same period last year. International operations performed above expectations, contributing 66.5 cents per share. As at 30 Sep 2003, the group had cash on hand of R2755m as well as securitised cash deposits of R776m against Letters of Credit in Nigeria. Taking both cash balances into account, net debt for the group has further reduced to R728m at 30 Sep 2003, from R2707m at 31 Mar 2003. Consequently, the debt/equity ratio for the group (excluding goodwill) decreased to 8% from 35% at 31 Mar 2003. The group's international growth strategy continues to gain momentum and consequently, the results are continuously affected by exchange rate fluctuations. During the review period, the rand appreciated by 12% against the USD and by between 7% and 15% against the functional currencies of the group's major international operations. On translation into rand, this had the effect of reducing the assets and liabilities of international operations reflected in the consolidated balance sheet, as well as their revenues and earnings. Foreign currency translation reserves were reduced by R436m during the period. Prospects Assuming current market conditions prevail, the board is confident that the South African operation will continue its strong free cash flow generation while international operations are expected to maintain positive subscriber growth, underpinned by significant ongoing capital investment in network roll-out, particularly in MTN Nigeria. The group now derives an increasing proportion of earnings from outside South Africa and, as a result, is becoming more susceptible to foreign exchange rate movements. In line with the vision of being the leading communications provider on the continent, the group continues to explore value-enhancing investment opportunities. Cautionary announcement Shareholders are advised that the company has entered into negotiations which, if successfully concluded, may have an effect on the price of the company's securities. Accordingly, shareholders are advised to exercise caution when dealing in the company's securities until a further announcement is made.

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