MTN - MTN Group - Reviewed interim results for the27 Aug 2009
MTN
MTN                                                                             
MTN - MTN Group - Reviewed interim results for the six months ended 30 June 2009
MTN GROUP LIMITED                                                               
(Incorporated in the Republic of South Africa)                                  
(Registration number 1994/009584/06)                                            
Share code: MTN                                                                 
ISIN ZAE000042164                                                               
("MTN" or "the Group" or "the company")                                         
Reviewed interim results for the six months ended 30 June 2009                  
Highlights                                                                      
Group subscribers up 14% to 103,2 million from December 2008                    
Revenue up 24,2% to R57,3 billion from June 2008                                
EBITDA up 24,8% to R24,5 billion from June 2008                                 
Headline EPS up 22,5% to 415,5c from June 2008                                  
Adjusted Headline EPS down 10,9% to 363,8c from June 2008                       
Review of results                                                               
MTN Group`s performance for the six months ended 30 June 2009 was satisfactory  
considering the economic downturn which affected markets worldwide. Reported    
revenue and EBITDA results, when compared to the prior six month period ended 30
June, were not materially impacted by movements in currencies in the majority of
countries in which we operate against the ZAR. However growth in earnings were  
negatively impacted by functional currency losses of R2,8 billion (June 2008:   
R0,9 million gain) on shareholder loans, receivables and cash.                  
Although competition increased in most markets following the entry of new       
competitors, execution of the operational strategy has generally proved         
successful. MTN`s network expansion and capacity investment strategy initiated  
in 2008 has also supported the strong performance of the Group`s subsidiaries,  
particularly where competitors have elected to scale back on investments.       
Enhanced distribution channels and attractive value propositions also           
contributed to the positive performance.                                        
The Group`s mobile subscriber base passed the 100 million milestone during the  
reported period to reach 103,2 million subscribers at 30 June 2009. This is a   
14% increase since 31 December 2008. Subscribers have increased by 39% since 30 
June 2008.                                                                      
The Group reports its performance by region, namely South and East Africa (SEA),
West and Central Africa (WECA) and the Middle East and North Africa (MENA). MTN 
consolidates 49% of MTN Irancell`s financials.                                  
Income statement analysis                                                       
MTN Group revenues increased by 24,2% to R57,3 billion (30 June 2008: R46,1     
billion), largely driven by the strong growth in subscribers since 30 June 2008.
The WECA region remains the largest contributor to Group revenue, contributing  
47% of total revenue, up 1 percentage point compared with the six-month period  
to 30 June 2008. The SEA and MENA regions contributed 34% and 19% respectively  
of the Group`s total revenues.                                                  
US dollar-reported average revenue per user (ARPU) declined considerably from   
the 30 June 2008 comparative in most operations due to increased penetration and
the depreciation of local currencies against the US dollar. ARPU`s are also     
lower than in December 2008 but in line with the ARPU for the first quarter.    
Slowing GDP growth, increased penetration into lower-use segments of the market 
and aggressive competition also had a negative impact on local-currency ARPU`s. 
In line with the strong growth in revenue, MTN`s earnings before interest, tax, 
depreciation and amortisation (EBITDA) increased by 24,8% to R24,5 billion for  
the six-month period ended 30 June 2009 (June 2008: R19,6 billion). Cost        
optimisation and other efficiencies, although partially offset by higher network
operating costs and inflationary increases on staffing, drove margins slightly  
higher.                                                                         
The WECA region recorded 33% EBITDA growth to R14,8 billion (June 2008: R11,2   
billion), contributing 61% to the Group`s total EBITDA. The SEA region`s        
contribution of 25% based on a 6% growth to R6,2 billion (June 2008: R5,9       
billion), was affected by increased operating expenditure partly due to the     
integration of newly acquired businesses in MTN South Africa and pricing        
pressure from new competition in Rwanda. The MENA region grew EBITDA by 34% to  
R2,9 billion (June 2008: R2,2 billion) and contributed 12% to Group EBITDA,     
increasing its contribution by 1 percentage point compared with the prior year. 
The Group`s EBITDA margin remained relatively stable at 42,8%, compared with    
42,6% for the six months to 30 June 2008.                                       
The Group incurred capital expenditure (capex) of R15,5 billion for the half    
year, a 50% increase over June 2008. We anticipate that while a substantial     
portion of the approved capex has been committed as part of our expansion       
strategy, some investments are only likely to be capitalised in the first half  
of 2010.                                                                        
The Group`s depreciation charge increased by R1,6 billion to R5,9 billion (June 
2008: R4,4 billion) following the substantial increase in network capital       
expansion projects initiated in 2008. Nigeria, Iran and South Africa were the   
main contributors to the increase in depreciation, adding R0,5 billion, R0,3    
billion and R0,2 billion respectively.  The Group amortisation charge was in    
line with the prior comparative period.                                         
Net finance costs increased by 143% to R3,6 billion compared to the same period 
last year. The large increase is due to the R2,8 billion (June 2008: R0,8       
billion gain) functional currency loss in Mauritius which arises on the         
translation of US dollar-denominated loans, receivables and cash balances. The  
Nigeria put option charge to income was a credit of R1 billion (June 2008: R0.9 
billion debit) mostly due to the devaluation of the Naira versus the ZAR.       
The Group taxation charge decreased by 18% (R1,0 billion) to R4,5 billion (June 
2008: R5,5 billion). The decrease is mainly attributable to the full effect of  
the Nigerian commencement provisions having been absorbed in the reporting      
period ended 30 June 2008, which decrease is partially offset by additional     
withholding tax on dividends from Nigeria that are sourced from post Pioneer    
profits.                                                                        
The Group`s effective tax rate reduced from 44% in June 2008 to 33% in June     
2009. The period-to-period decrease in the effective rate is also in part       
attributable to the Nigerian put option effect on the profit before tax.        
Group basic earnings per share (EPS) increased by 22,4% to 409,7 cents per share
compared to 30 June 2008. Adjusted headline EPS decreased to 363,8 cents, 10.9% 
lower than at 30 June 2008. The various contributory factors, both positive and 
negative, that resulted in the net decrease in adjusted headline EPS are the    
impact of the reversal of the put option, the impact of functional currency     
profits in the prior comparative period versus functional currency losses in the
current period as well as the lower effective tax rate.                         
The Group continues to report adjusted headline EPS in addition to basic        
headline EPS. The adjustment is in respect of the IFRS requirement that the     
Group accounts for a written put option held by a minority shareholder of one of
the Group subsidiaries, which provides the minority shareholder the right to    
require the subsidiary or its holding company to acquire this shareholding at   
fair value. Although the Group has complied with the requirements the board of  
directors (the board) has reservations about the appropriateness of this        
treatment and hence the adjustment. The net impact is that adjusted headline    
reflect the decrease of EPS of 51,7 cents (June 2008: 69,2 cents, including the 
impact of the reversal of the deferred tax asset).                              
Balance sheet and cash flow analysis                                            
MTN Group`s assets decreased by 14% to R146 billion compared with R170 billion  
at 31 December 2008. This was largely as a result of the depreciation of the    
closing rate of the respective local currencies against the ZAR.                
Asset classes affected by this include property, plant and equipment which      
decreased by 5% from R64,2 billion to R61,0 billion notwithstanding additions of
R15,0 billion; goodwill and intangible assets which decreased by 18% (R8.1      
billion) to R37,6 billion compared to December 2008; and current assets which   
decreased by 24% (R13,3 billion) to R41,4 billion from December 2008.           
Cash generated from operating activities improved from R13,0 billion for the 6  
months to 30 June 2008 to R17,0 billion reflecting the strong operational       
performance after paying  a dividend of R3,4 billion (June 2008: R2,5 billion). 
Cash outflows from investing activities utilised R16,9 billion of cash as a     
result of the significant capital expenditure programme. The foreign currency   
translation losses of R3,9 billion contributed to the net debt increasing to    
R15,2 billion from R12,9 billion.                                               
Other                                                                           
Acquisitions in the six-month period ended 30 June 2009 included 100% of Verizon
South Africa (Pty) Ltd (Verizon) in February 2009 and 59% of i-Talk Cellular    
(Pty) Ltd (iTalk) in January 2009. The acquisition of Verizon is expected to    
improve MTN South Africa`s competitive position in the rapidly converging       
mobile/ISP sector, particularly in the corporate segment. Verizon is currently  
being integrated within MTN Business, including the previously acquired Network 
Solutions, to allow for a comprehensive and integrated offer to our customer    
base. Verizon has been reported under "other" in the SEA region for the review  
period.                                                                         
Changes to shareholding for the six months ended 30 June 2009 include a 2,2%    
sale of equity interest in MTN Zambia to Zambian financial institutions by way  
of a private placement as part of MTN`s undertaking to broaden its local        
shareholder base and fulfil its licence commitment.                             
MTN purchased the entire issued ordinary share capital of Newshelf 664 (Pty) Ltd
(Newshelf) in May 2009. The Newshelf acquisition was effected by way of a       
specific issue of 213.9 million MTN shares to the PIC and the specific          
repurchase by MTN of 243,5 million MTN shares. MTN acquired the Newshelf shares 
at an effective discount to market value and intends to apply a significant     
portion of this effective discount to facilitate a new Black Economic           
Empowerment (BEE) transaction. The board remains fully committed to implementing
a BEE transaction as soon as conditions become conducive.                       
Operational review                                                              
South Africa                                                                    
MTN South Africa`s subscriber base grew by 62 000 during the review period to   
17,2 million. The disappointing increase in subscribers was due to a combination
of factors including challenges on the network and supporting systems, slowing  
GDP growth, pressure on consumer spend, and competitor activity in the first    
half of the year.                                                               
Postpaid subscribers grew by 4% to 2,9 million for the six-month period. The    
postpaid market has had a challenging six months with economic pressure         
affecting growth in the market and generally putting a squeeze on credit. Growth
was mainly attributable to MTN Anytime, which currently makes up 39% of the     
postpaid base.                                                                  
The prepaid subscriber base declined by 52 000 during the period. ARPU in the   
prepaid and postpaid market segments declined by 5% to R92 and 10% to R362      
respectively.                                                                   
The proposed Musica transaction has been terminated as certain legal conditions 
precedent, beyond the control of the parties, could not be met. The iTalk       
acquisition was finalised in January 2009. The branded channel incorporates     
eight stores that will ultimately be integrated under the MTN Brand. MTN South  
Africa will maintain its focus on distribution.                                 
MTN South Africa also continues to invest in its network (radio, core and       
transmission). The Gauteng southern fibre network ring to interconnect the main 
switching and data centers has been completed. Further trenching is under way to
complete the Gauteng northern ring which incorporates Pretoria. The 5 000km     
national fibre optic network tri-build agreement has been finalised. The        
trenching route between Gauteng and the Durban route has begun. The operation   
has rolled out 234 second-generation (2G) and 307 third-generation (3G) base    
transceiver stations (BTS`s) since the beginning of 2009, enabling it to        
increase circuit switch data capacity by 8.5% and packet switch data by 80%     
respectively. The 3G population coverage increased from 35% in December 2008 to 
44% at the half year.                                                           
Nigeria                                                                         
MTN Nigeria subscribers grew by 19% over the six months to 27.3 million at June 
2009. MTN Nigeria recorded strong growth in the first half and improved market  
share to 48%. Significant investment in network capacity and improved quality of
service strategies adopted in 2008 and 2009 gave MTN Nigeria an advantage over  
its competitors for the period. The operation successfully restructured its     
sales and distribution strategy to improve the focus of the dealer channel and  
drive acquisitions.                                                             
APRU declined by USD4 from December 2008 to USD12. Although the USD ARPU shows a
considerable decline following the depreciation of the Naira against the US     
dollar, local-currency ARPU declined at a slower rate and in line with increased
penetration in lower-use segments.                                              
Aggressive network rollout continued in the first half of 2009, as MTN Nigeria  
rolled out 426 2G and 236 3G BTS`s. The 3G rollout is gaining momentum with 787 
3G BTS`s now live and the completion of phase 2 of the 3G rollout underway.  A  
further 1 548km of transmission expansion to improve the network is in progress 
(66.42% complete).                                                              
Ghana                                                                           
MTN Ghana increased subscribers by 12% over the six months to 7.2 million at 30 
June 2009. Market share only reduced slightly from 55% to 54% over the period   
despite fierce competition from new market entrants. The launch of a loyalty    
programme, Rally Around the Flag, and the continued success of MTN Zone assisted
with subscriber retention.                                                      
ARPU decreased by 33% from USD12 to USD8 mostly due to the devaluation of the   
Cedi against the US dollar. Local-currency ARPU decreased by 15% after          
aggressive price offers by new competitors and deeper penetration into the      
market.                                                                         
MTN Ghana rolled out 289 BTS`s for the six-month period.                        
Irancell                                                                        
MTN Irancell increased its subscriber base by 20% over the six month period to  
19,2 million at June 2009 through continued promotional campaigns. An enhanced  
distribution channel that included efficient subscriber registration has also   
contributed to subscriber growth.                                               
ARPU dropped USD1 to USD8 mainly due to increased penetration into lower-use    
market segments.                                                                
MTN Irancell added 793 BTSs for the period, improving quality and capacity on   
the network. During the six months, 368 more cities and an additional 1 434km of
road have been covered. Network coverage of the population increased from 62% at
the beginning of the year to 67% at June 2009. WiMax rollout is successfully on 
track with pilot sites identified, call centres set up and dealers selected.    
Syria                                                                           
MTN Syria added 11 000 subscribers to its base in the six month period.  The low
growth in subscriber numbers was, however, in line with lower demand in the     
telecoms sector in the country with no loss of market share. Segmental product  
offerings and churn management initiatives have been put in place to drive new  
acquisitions.                                                                   
Subscriber ARPU declined marginally from USD19 in December 2008 to USD18 in June
2009.                                                                           
The implementation of planned network expansions and upgrades has decreased     
congestion and improved radio capacity. MTN Syria has added 74 BTS`s during the 
period. Limited 3G service was commercially launched in January 2009, offering  
attractive data bundles.                                                        
Proposed transaction with Bharti                                                
On 25 May 2009, MTN Group and Bharti Airtel Limited (Bharti) announced they were
exploring a potential transaction in which MTN and its shareholders would       
acquire, pursuant to a scheme of arrangement, an approximate 36% economic       
interest in Bharti, of which 25% would be held by MTN with the remainder held   
directly by MTN shareholders, and Bharti would acquire an approximate 49%       
shareholding in MTN.                                                            
The potential transaction between Bharti and MTN would create a leading         
telecommunication service provider group, aligning Bharti`s market-leading      
Indian business with MTN`s market-leading African and Middle Eastern operations.
The potential transaction is consistent with MTN`s stated vision, addresses     
growth objectives and would also represent a significant development in south-  
south cooperation between India and South Africa.                               
The rationale for the transaction is compelling and includes diversification and
synergistic benefits as well as addressing the objective of becoming one of the 
pre-eminent emerging-market telecommunications companies.                       
The exclusivity period has been extended to 30 September 2009. No decision or   
agreement to acquire any shares or Global Depository Receipts or implement the  
potential transaction outlined above has yet been made by the boards of either  
MTN or Bharti. Shareholders will be advised of any further developments.        
Prospects                                                                       
There are some indications that global economic conditions may be starting a    
slow recovery although many of our markets remain relatively vulnerable at      
present. Competition across MTN`s footprint is likely to continue to increase.  
Shorter term prospects in South Africa remain challenging, compounded by the    
impact of new subscriber registration requirements from 1 August 2009. MTN      
remains focused on:                                                             
actively seeking value-accretive expansion opportunities in emerging markets;   
tightly monitoring infrastructure investments to ensure appropriate levels of   
capacity and quality of service for an enlarged market;                         
optimising efficiencies in maintaining and improving our competitive position   
while ensuring the Group is able to benefit from a rapidly converging technology
market, and continued investment in sub-marine cables for efficient access;     
continuing engagement with regulatory authorities in the development and        
refinement of the telecommunication sector; and                                 
the implementation of MTN`s proposed BEE deal at the appropriate time.          
Revised subscriber net addition guidance                                        
NET ADDITIONS FOR DECEMBER 2009                                                 
South Africa                          500                                       
Nigeria                               7 400                                     
Ghana                                 1 400                                     
Iran                                  6 000                                     
Syria                                 400                                       
Rest                                  6 900                                     
Total MTN                             22 600                                    
For and on behalf of the Board                                                  
M C Ramaphosa        P F Nhleko                   Fairland                      
(Chairman)          (Group President and CEO)     27 August 2009                
Certain statements in this announcement that are neither reported financial     
results nor other historical information are forward-looking statements,        
relating to matters such as future earnings, savings, synergies, events, trends,
plans or objectives.                                                            
Undue reliance should not be placed on such statements because they are         
inherently subject to known and unknown risks and uncertainties and can be      
affected by other factors that could cause actual results and company plans and 
objectives to differ materially from those expressed or implied in the forward- 
looking statements (or from past results).                                      
Unfortunately, the company cannot undertake to publicly update or revise any of 
these forward-looking statements, whether to reflect new information of future  
events or circumstances or otherwise.                                           
OPERATIONAL DATA (SUBSCRIBERS (`000) AT 30 JUNE 2009)                           
South and East Africa                 25 460                                    
Middle East and North Africa          47 052                                    
West and Central Africa               30 675                                    
MTN Group                             103 187                                   
CONDENSED CONSOLIDATED INCOME STATEMENTS                                        
Six months   Six months             Financial         
                                                              year              
                          ended        ended                  ended             
                          30 June      30 June                31 December       
2009         2008                   2008              
                          Reviewed     Reviewed     Change    Audited           
                          Rm           Rm           %         Rm                
Revenue                     57 269       46 128       24,2      102 526         
Direct network operating   (8 059)      (5 891)       36,8     (14 140)         
costs                                                                           
Cost of handsets and       (3 292)      (2 447)       34,5     (5 985)          
other accessories                                                               
Interconnect and roaming    (7 602)     (6 225)       22,1      (13 217)        
Employee benefits           (2 839)      (2 167)      31,0      (4 776)         
Selling, distribution       (7 261)      (6 368)      14,0      (13 274)        
and marketing expenses                                                          
Other expenses             (3 704)      (3 383)       9,5      (7 968)          
Depreciation and           (7 301)      (5 714)       27,8     (12 759)         
amortisation                                                                    
Net finance costs          (3 630)      (1 497)       142,5    (1 917)          
Profit before income tax   13 581       12 436        9,2      28 490           
Income tax expense         (4 488)      (5 472)       (18,0)   (11 355)         
Profit after tax           9 093        6 964         30,6     17 135           
Attributable to:           9 093        6 964         30,6     17 135           
Equity holders of the      7 630        6 240         22,3     15 315           
company                                                                         
Minority interests         1 463        724           102,1    1 820            
Earnings per ordinary                                                           
share (cents)                                                                   
attributable to equity                                                          
holders of the company                                                          
- basic                     409,7       334,6        22,4      821,0            
- diluted                   399,4       326,6        22,3      806,1            
Dividends per share         181,0       136,0        33,1      136,0            
(cents)                                                                         
CONDENSED CONSOLIDATED BALANCE SHEETS                                           
30 June     30 June                31 December       
                           2009        2008                   2008              
                           Reviewed    Reviewed     Change    Audited           
                           Rm          Rm           %         Rm                
ASSETS                                                                          
NON-CURRENT ASSETS           104 579     98 963       5,7       115 319         
Property, plant and          61 007      50 125       21,7      64 193          
equipment                                                                       
Goodwill and other           37 637      43 450       (13,4)    45 786          
intangible assets                                                               
Investments in associates    27          52           (48,1)    60              
Deferred tax assets          1 281       945          35,5      657             
Loans and other non-         4 627       4 391        5,4       4 623           
current receivables                                                             
CURRENT ASSETS               41 439      46 585       (11,0)    54 787          
Cash and cash equivalents    19 503      27 058       (27,9)    26 961          
Restricted cash              994         524          89,7      1 778           
Other current assets         20 942      19 003       10,2      26 048          
                                                                                
Total assets                 146 018     145 548     0,3        170 106         
EQUITY AND LIABILITIES                                                          
Shareholders` equity         67 450      67 228       0,3       80 542          
Share capital and reserves   64 507      63 112       2,2       76 386          
Minority interests          2 943        4 116       (28,5)     4 156           
Non-current liabilities      31 236      34 075       (8,3)     34 973          
Borrowings                   25 537      29 313       (12,9)    29 100          
Deferred tax liabilities     5 182       3 812        35,9      4 989           
Other non-current            517         950          (45,6)    884             
liabilities                                                                     
Current liabilities          47 332      44 245       7,0       54 591          
Non interest-bearing         37 194      32 995       12,7      42 101          
liabilities                                                                     
Interest-bearing             10 138      11 250       (9,9)     12 490          
liabilities                                                                     
Total equity and             146 018     145 548      0,3       170 106         
liabilities                                                                     
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY                          
                                   Six months  Six months     Financial         
                                                              year              
                                   ended       ended          ended             
30 June     30 June        31 December       
                                   2009        2008           2008              
                                   Reviewed    Reviewed       Audited           
                                   Rm          Rm             Rm                
Opening balance                      80 542      51 502         51 502          
Total comprehensive (loss)/income    (6 703)     14 924         29 517          
for the period                                                                  
Dividends paid                       (4 818)     (5 165)        (6 514)         
Shares issued during the period      20 380      8              41              
Transactions with minorities        1 785        4 076          4 020           
Disposal of non-controlling         -            907            909             
interest                                                                        
Purchase of non-controlling          -           -              (85)            
interest                                                                        
Shareholders revaluation reserve     (236)       153            44              
Share-based payment reserve          6           6              75              
Newshelf share buyback               (21 226)    -              -               
Other movements on minorities        (2 385)     505            505             
Other reserves                       105         258           474              
Cancellation of MTN Cote d`Ivoire   -            54             54              
put option                                                                      
Closing balance                      67 450      67 228         80 542          
SEGMENTAL ANALYSIS                                                              
                                    Six months   Six months   Financial         
year              
                                    ended        ended        ended             
                                    30 June      30 June      31 December       
                                    2009         2008         2008              
Reviewed     Reviewed     Audited           
                                    Rm           Rm           Rm                
REVENUE                                                                         
South and East Africa                 19 399       17 609       37 483          
West and Central Africa               26 757       21 132       47 682          
Middle East and  North Africa         11 062       7 324        17 215          
Head office companies                 51           63           146             
                                     57 269       46 128       102 526          
EBITDA                                                                          
South and East Africa                 6 233        5 905        12 878          
West and Central Africa               14 849       11 174       25 318          
Middle East and  North Africa         2 886        2 161        4 654           
Head office companies                 544          407          316             
                                     24 512       19 647       43 166           
PAT                                                                             
South and East Africa                 3 339        3 162        7 322           
West and Central Africa               6 706        3 985        9 943           
Middle East and  North Africa         1 091        636          1 549           
Head office companies                 (2 043)      (819)        (1 679)         
                                     9 093        6 964        17 135           
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS                                     
                                     Six months  Six months   Financial         
                                                              year              
                                     ended       ended        ended             
30 June     30 June      31 December       
                                     2009        2008         2008              
                                     Reviewed    Reviewed     Audited           
                                     Rm          Rm           Rm                
Cash inflows from operating            16 899      12 988       34 236          
activities                                                                      
Cash outflows from investing           (16 942)    (7 444)      (27 177)        
activities                                                                      
Cash (out)/inflows from financing      (2 771)     3 209        292             
activities                                                                      
Net movement in cash and cash          (2 814)     8 753        7 351           
equivalents                                                                     
Cash and cash equivalents at           25 596      15 546       15 546          
beginning of period                                                             
Effect of exchange rate changes        (3 866)     1 705        2 699           
Cash and cash equivalents at end of    18 916      26 004       25 596          
period                                                                          
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                       
                                    Six months   Six months   Financial         
                                                              year              
ended        ended        ended             
                                    30 June      30 June      31 December       
                                    2009         2008         2008              
                                    Reviewed     Reviewed     Audited           
Rm           Rm           Rm                
Profit for the year                   9 093        6 964        17 135          
Other comprehensive income:                                                     
Exchange differences on translating   (15 796)     7 968        12 244          
foreign operations                                                              
Cash flow hedges                      -            (8)          138             
Total comprehensive (loss)/income     (6 703)      14 924       29 517          
for the period                                                                  
Attributable to:                                                                
Equity holders of the company         (7 467)      14 063       27 337          
Minority interests                    764          861          2 180           
                                     (6 703)      14 924       29 517           
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                        
1. INDEPENDENT REVIEW BY THE AUDITORS                                           
These condensed consolidated results have been reviewed by our joint auditors   
PricewaterhouseCoopers Inc. and SizweNtsaluba vsp, who have performed their     
review in accordance with the International Standard on Review Engagements 2410.
A copy of their unqualified review report is available for inspection at the    
registered office of the company.                                               
2. GENERAL INFORMATION                                                          
MTN carries on the business of investing in the telecommunications industry     
through its subsidiary companies, joint ventures and associate companies        
3. BASIS OF PREPARATION                                                         
The condensed consolidated interim financial information (interim financial     
information) announcement was prepared in accordance with International         
Financial Reporting Standards (IFRS`s) IAS 34 - Interim Financial Reporting and 
in compliance with the Listings Requirements of the JSE Limited and the South   
African Companies Act (1973), on a consistent basis with that of the prior      
period.                                                                         
4. ACCOUNTING POLICIES                                                          
The accounting policies adopted are consistent with those of the annual         
financial statements for the year ended 31 December 2008, as described in the   
annual financial statements.                                                    
During the period under review, the Group adopted all the IFRS and              
interpretations being effective and deemed applicable to the Group. None of     
these had a material impact apart from IAS 1 (Revised) which resulted in a      
separate condensed consolidated statement of comprehensive income being included
as part of the primary financial statements of the Group. The necessary changes 
were also made to the condensed consolidated statement of changes in equity as a
result.                                                                         
5. HEADLINE EARNINGS PER ORDINARY SHARE                                         
The calculations of basic and adjusted headline earnings per ordinary share are 
based on basic headline earnings of R7 739 million (2008: R6 328 million) and   
adjusted headline earnings of R6 776 million (2008: R7 618 million)             
respectively, and a weighted average number of ordinary shares in issue of 1 862
519 (2008: 1 864 911).                                                          
Reconciliation between net profit attributable to the equity holders of the     
company and headline earnings                                                   
Six months  Six months    Financial          
                                                             year               
                                   ended       ended         ended              
                                   30 June     30 June       31 December        
2009        2008          2008               
                                   Reviewed    Reviewed      Audited            
                                   Rm          Rm            Rm                 
Net profit attributable to           7 630       6 240         15 315           
company`s equity holders                                                        
Adjusted for:                                                                   
Loss on disposal of non-current      109        88            288               
assets                                                                          
Basic headline earnings              7 739       6 328         15 603           
Adjustment:                                                                     
Reversal of the subsequent          -            425           441              
utilisation of deferred tax asset                                               
Reversal of put option in respect                                               
of subsidiary                                                                   
- Fair value adjustment              (553)       520           74               
- Finance Costs                      (292)       404           914              
- Minority share of profits          (118)       (59)          (162)            
Adjusted headline earnings           6 776       7 618         16 870           
Reconciliation of headline                                                      
earnings per ordinary share                                                     
(cents)                                                                         
Attributable earnings per share      409,7       334,6         821,0            
(cents)                                                                         
Adjusted for:                                                                   
Loss on disposal of non-current     5,8         4,7           15,5              
assets                                                                          
Basic headline earnings per share    415,5       339,3         836,5            
(cents)                                                                         
Reversal of the subsequent           -           22,8          23,6             
utilisation of deferred tax asset                                               
Reversal of put option in respect    (51,7)      46,4          44,3             
of subsidiary                                                                   
Adjusted headline earnings per       363,8       408,5         904,4            
share (cents)                                                                   
Contribution to adjusted headline                                               
earnings per                                                                    
ordinary share (cents)                                                          
South and East Africa                177,3       180,7         385,7            
West and Central Africa              291,1       229,9         517,6            
Middle East and North Africa         56,5        36,8          77,0             
Head office companies                (161,1)    (38,9)         (75,9)           
                                    363,8       408,5         904,4             
Number of ordinary shares in                                                    
issue:                                                                          
- Weighted average (`000)            1 862 519   1 864 911     1 865 299        
- At period end (`000)               1 839 868   1 865 354     1 868 010        
                                                                                
ADJUSTED HEADLINE EARNINGS ADJUSTMENTS                                          
DEFERRED TAX ASSET                                                              
The Group`s subsidiary in Nigeria had been granted a five-year tax holiday under
"pioneer status" legislation. On 31 March 2007 MTN Nigeria exited "pioneer      
status", and from 1 April 2007 became subject to income tax in Nigeria. A       
deferred tax asset of R2,5 billion was created during "pioneer status" in       
respect of capital allowances on capital assets that are only claimable after   
the company comes out of "pioneer status". The above resulted in the            
commencement of the reversal of the deferred tax asset shown as an adjustment of
Rnil (2008: R542 million) Rnil excluding minorities (2008: R425 million) to the 
adjusted headline earnings figure.                                              
As previously disclosed, although the Group has complied with the requirements  
of IAS 12 in this regard, the board has reservations about the appropriateness  
of this treatment in light of the fact that no cognisance may be taken (in      
determining the value of such deferred tax assets) of uncertainties arising out 
of the effects of the time value of money or future foreign exchange movements. 
The board therefore resolved to report adjusted headline earnings (negating the 
effect of the deferred tax asset) in addition to basic headline earnings, to    
reflect more fully the Group`s results for the period.                          
PUT OPTION IN RESPECT OF SUBSIDIARY                                             
IFRS requires the Group to account for a written put option held by a minority  
shareholder of one of the Group subsidiaries, which provides them with the right
to require the subsidiary to acquire their shareholdings at fair value.  Prior  
to the implementation of IFRS the shareholding was treated as a minority        
shareholder in the subsidiary as all risks and rewards associated  with these   
shares, including dividends, accrue to the minority shareholders.               
IAS 32 requires - that in the circumstances described above:                    
(a) the present value of the future redemption amount  be reclassified from     
   equity to financial liabilities and that the financial liability so          
reclassified subsequently be remeasured in accordance with IAS 39;           
(b) in accordance with IAS 39, all subsequent changes  in the fair value of the 
   liability together with the related interest charges arising from present-   
   valuing the future liability are to be recognised in the income statement;   
and                                                                          
(c) the minority  shareholder holding the put option no longer be regarded as a 
   minority shareholder but rather as a creditor from the date of receiving the 
   put option.                                                                  
Although the Group has complied with the requirements of IAS 32 and IAS 39 as   
outlined above, the board has reservations about the appropriateness of this    
treatment in light of the fact that:                                            
(a) the recording of a liability for the present value of the future strike     
price of the written put option results in the recording of a liability that 
   is inconsistent with the framework, as there is no present obligation for    
   the future strike price;                                                     
(b) the shares considered to be subject to the contracts are issued and fully   
paid up, have the same rights as any other issued and fully paid up shares   
   and should be treated as such; and                                           
(c) the written put option meets the definition of a derivative and should      
   therefore be accounted for as a  derivative. In which case the liability and 
the related fair value adjustments recorded through the income statement     
   would not be required.                                                       
                                Six months     Six months    Financial          
                                                             year               
ended          ended         ended              
                                30 June        30 June       31 December        
                                2009           2008          2008               
                                Reviewed       Reviewed      Audited            
Rm             Rm            Rm                 
6. CAPITAL EXPENDITURE INCURRED   15 504         10 311        28 263           
7. CONTINGENT LIABILITIES AND                                                   
COMMITMENTS                                                                     
Contingent liabilities -          250            1 013         504              
upgrade incentives                                                              
Operating leases                  756            917           801              
Finance leases                    520            1 393         554              
Other                            633             84            541              
8. COMMITMENTS FOR PROPERTY,                                                    
PLANT AND EQUIPMENT AND                                                         
INTANGIBLE ASSETS                                                               

- Contracted for                  23 260         12 686        11 410           
- Authorised but not contracted   3 625          11 816        26 257           
for                                                                             
9. CASH AND CASH EQUIVALENTS                                                    
Bank balances, deposits and       19 503         27 058        26 961           
cash                                                                            
Call borrowings                   (587)          (1 054)       (1 365)          
18 916         26 004        25 596            
10. INTEREST-BEARING                                                            
LIABILITIES                                                                     
Call borrowings                   587            1 054         1 365            
Short-term borrowings             9 551          10 196        11 125           
Current liabilities               10 138         11 250        12 490           
Long-term liabilities             25 537         29 313        29 100           
                                 35 675         40 563        41 590            
11.  OTHER NON-CURRENT LIABILITY                                                
The put option in respect of the subsidiary arises from an arrangement whereby  
the minority shareholders of the Group`s subsidiary have the right to put their 
remaining shareholding in the subsidiary to Group companies.                    
On initial recognition, the put option was fair valued using effective interest 
rates as deemed appropriate by management. To the extent that the put option is 
not exercisable at a fixed strike price the fair value will be determined on an 
annual basis with movements in fair value being recorded in the income          
statement.                                                                      
12.  BUSINESS COMBINATIONS                                                      
ACQUISITIONS                                                                    
During the period under review, certain subsidiaries of the Group acquired the  
following entities:                                                             
(a) An additional 59% in iTalk, a cellular service provider, was acquired in    
January 2009                                                                    
(b) 100% of Verizon, an internet service provider, was acquired in February 2009
The accounting for the acquisition of Verizon has been determined on a          
provisional basis as elected under IFRS 3 - to finalise asset and liability fair
values and therefore allocated goodwill, within 12 months subsequent to the     
acquisition date.                                                               
Carrying                              
                                          amount on                             
                                          acquisition     Total                 
                                          date            fair value            
Rm              Rm                    
The assets and liabilities arising from                                         
the acquisitions are as follows:                                                
Property, plant and equipment               106             106                 
Other non-current assets                    95              95                  
Investments                                 1               1                   
Cash and cash equivalents                   95              95                  
Net working capital                         42              42                  
Long-term borrowings                        (118)           (118)               
Taxation                                    7               7                   
Other liabilities                           (56)            (56)                
Net asset value                             172             172                 
Purchase consideration                      2 107                               
Fair value of net assets acquired           172                                 
Goodwill                                    1 935                               
13.  THE ACQUISITION OF 100% OF NEWSHELF                                        
MTN purchased the entire issued ordinary share capital of Newshelf from the PIC.
The Newshelf acquisition was affected by way of a specific issue of shares to   
the PIC and the specific repurchase by MTN of 243,5 million MTN shares held by  
Newshelf. The transaction was concluded in May 2009.  MTN acquired the Newshelf 
shares at an effective discount to market value and intends to apply a          
significant portion of this effective discount to future participants in a BEE  
transaction as an incentive to invest in that transaction. The board remains    
fully committed to implement a BEE transaction as soon as conditions become     
conducive.                                                                      
14. POST BALANCE SHEET EVENTS                                                   
The board is not aware of any matter or circumstance arising since the end of   
the reporting period, not otherwise dealt with herein, which significantly      
affects the financial position of the Group or the results of its operations or 
cash flows for the period ended.                                                
Directorate                                                                     
MC Ramaphosa (Chairman), PF Nhleko* (Group President and CEO), DDB Band, RS     
Dabengwa*, KP Kalyan,                                                           
AT Mikati, RD Nisbet*, MJN Njeke, JHN Strydom, AF van Biljon, J van Rooyen      
*Executive                                                                      
Group Secretary                                                                 
S B Mtshali, 216  14th Avenue,                                                  
Fairland, 2195                                                                  
Private Bag 9955                                                                
Cresta, 2118, RSA                                                               
Registered office                                                               
216-14th Avenue, Fairland, 2195                                                 
American Depository Receipt (ADR) programme                                     
Cusip No. 62474M108 ADR to ordinary share 1:1                                   
Depository: The Bank of New York,                                               
101 Barclay Street,                                                             
New York NY 10286, USA                                                          
Office of the South African registrars                                          
Computershare Investor Services (Proprietary) Limited                           
(Registration number: 2004/003647/07)                                           
70 Marshall Street, Marshalltown, Johannesburg, 2001                            
PO Box 61051, Marshalltown, 2107                                                
Joint auditors                                                                  
PricewaterhouseCoopers Inc., 2 Eglin Road, Sunninghill, 2157                    
Private Bag X36, Sunninghill, 2157 and SizweNtsaluba VSP 20 Morris Street East, 
Woodmead, 2146 PO Box 2939, Saxonwold, 2132                                     
E-mail                                                                          
investor_relations@mtn.co.za                                                    
www.mtn.com                                                                     
Fairland                                                                        
27 August 2009                                                                  
Sponsor                                                                         
Deutsche Securities (SA) (Proprietary) Limited                                  
Date: 27/08/2009 08:35:03 Produced by the JSE SENS Department.                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.