MTN - MTN Group - Reviewed interim results for the19 Aug 2010
MTN
MTN                                                                             
MTN - MTN Group - Reviewed interim results for the six months ended 30 June 2010
MTN Group Limited                                                               
(Incorporated in the Republic of South Africa)                                  
(Registration number 1994/009584/06)                                            
Share code: MTN                                                                 
ISIN ZAE000042164                                                               
("MTN")                                                                         
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010                  
Highlights                                                                      
Group subscribers up 11,4% since 31 December 2009 to 129,2 million              
EBITDA margin up 0,5 percentage points to 43,3%                                 
Free cash flow up 164% to R6,8 billion                                          
Adjusted HEPS up 20,6% to 438.6 cents                                           
Maiden interim dividend of 151 cents per share                                  
Overview                                                                        
The MTN Group Limited  delivered a sound operational performance for the six    
months ended 30 June 2010, increasing subscribers by 11,4% to 129, 2 million.   
This was the result of a solid performance in all aspects of the business, aided
by high quality networks, robust and competitive distribution channels,         
attractive segmented product offerings and an increased focus on value added    
services.                                                                       
Group revenue decreased by 2,2% to R56,0 billion while earnings before interest,
tax, depreciation and amortization ("EBITDA") decreased by 1,1% to R24,2 billion
for the current period compared to the prior comparative period.                
The average exchange rate of the rand to the USD strengthened from R9.06 in the 
first half of 2009 to R7.52 in the period under review. This together with the  
rand`s strength against the basket of currencies in which the group operates has
had a dampening effect on the rand reported results.                            
On a constant currency basis (which restates the current period income statement
at the same average exchange rates as were applicable for the first half of     
2009) total revenue would have been R8,7 billion higher than reported, a 12,9%  
increase on the prior reported period. Similarly, EBITDA would have shown growth
of 16,3% from the prior comparative period based on a R4,3 billion increase on  
the reported number. These positive growth rates are more reflective of the     
underlying organic performance of the company for the period.                   
MTN`s EBITDA margin increased 0, 5 percentage points to 43,3% compared to the   
prior comparative period and by 3,9 percentage points compared to the six months
to 31 December 2009. This was mainly attributable to improved margins in MTN    
South Africa, MTN Irancell and sustained margins in MTN Nigeria.                
Adjusted headline earnings per share ("HEPS") increased by 20,6% to 438,6 cents 
for the period.                                                                 
Various Group initiatives gained momentum and assisted the various operations in
maintaining or improving market share, increasing brand awareness and leveraging
product offerings in competitive environments. These key projects included:     
Continued investment in mobile data solutions, accessibility of 3G handsets and 
aggressive 3G rollout have enabled the Group to increase data revenues by 46% to
R2, 9 billion compared with the same period last year;                          
The formal launch of Mobile Money in Uganda, Ghana, Cote d`Ivoire, Rwanda, Benin
and Guinea Bissau. Other countries are in the process of obtaining regulatory   
approval. At 30 June 2010 there were 2,2 million mobile money subscribers,      
Uganda accounting for more than 43% of the total;                               
The 2010 FIFA World Cup provided significant opportunity for Africa to showcase 
its ability to host an event of this scale. The positive communications         
campaign, leading up to and during the 2010 FIFA World Cup, created a meaningful
increase in brand awareness for the company;                                    
Segmentation analysis across MTN`s markets has been undertaken. This has        
facilitated improved product offerings.                                         
Group financial review                                                          
Income statement                                                                
Revenue growth in local currency remained relatively robust in key markets      
driven largely by subscriber growth. However, with the strengthening rand, this 
translated into a decrease in rand reported revenue of 2,2% to R56,0 billion    
compared to the prior comparable period.                                        
Rand strength also negatively impacted reported EBITDA which decreased by 1,1%  
to R24,2 billion despite strong EBITDA growth in local currency in key markets  
including South Africa (15,9%), Nigeria (15,1%) and Iran (67,3%). The Group     
EBITDA margin increased by 0, 5 percentage points to 43,3% primarily  due to the
improved margin in the South African and Iranian operations.                    
Net finance costs decreased by 39.4% to R2,2 billion, mainly due to a functional
currency gain of R70 million (June 2009: R2,8 billion loss). The movement in the
current period was mainly due to the significant reduction in functional        
currency exposure through capital restructuring. However, foreign currency      
losses of R957 million were incurred partly as a result of the translation of   
various Euro-denominated inter-company loans and bank account balances.         
MTN Group`s depreciation charge increased by 5,5% or R0,3 billion to R6,3       
billion compared with June 2009 as a result of higher levels of investment in   
network infrastructure in prior years.                                          
The Group reported an effective tax rate of 36,8% for the period compared to    
33,0% in June 2009. The higher effective tax rate was mainly due to Secondary   
Tax on Companies ("STC") on the dividend paid in April 2010, foreign withholding
taxes and the impact of the increase in the value of the put option in Nigeria. 
Nigeria and South Africa reported a higher deferred tax charge as a result of   
the significant capital expenditure in prior reporting periods.                 
The Group`s basic HEPS increased by 4% to 432,1 cents compared to 30 June 2009. 
Adjusted HEPS (which eliminates the impact of the put option) increased by 20,6%
to 438,6 cents primarily due to the functional currency gain compared to the    
functional currency loss in the prior period.                                   
The Group continues to report adjusted HEPS in addition to the attributable     
HEPS. The adjustment is in respect of the International Financial Reporting     
Standards ("IFRS") requirement that the Group accounts for a written put option 
held by a minority shareholder of one of the Group`s subsidiaries, which        
provides the minority shareholder with the right to require the subsidiary or   
its holding company to acquire this shareholding at fair value.                 
Minority or non-controlling interests were 15% down on the previous period      
mainly due to decreased rand earnings in the Group`s non South African          
operations.                                                                     
Balance sheet and cash flow analysis                                            
Capital expenditure for the period of R8,5 billion was R7,0 billion lower than  
the comparative period. The Group`s capital expenditure peaked in 2009 due to an
extensive network expansion and investment strategy undertaken in the previous  
years. The reduced spend in the current period reflects a trend as markets      
mature and growth rates are at a lower level, although a pick up is anticipated 
in the second half of the year. The strength of the rand also had a marginally  
positive impact on capital spending of R0,2 billion.                            
Net debt levels continued to reduce, ending at R5,2 billion for the period and  
lowering the Group`s net debt/EBITDA ratio to 0,11 times. The reduction in net  
debt was mainly due to higher cash balances across the Group, particularly in   
Nigeria and Iran, and to a lesser extent in MTN`s holding companies. Gross debt 
remained fairly stable during the period. A focus during the first six months of
the year was the refinancing of maturing debt at the holding company and        
Nigerian levels. This was successfully concluded.                               
Strong operating cash flows at local operations were sustained for the period   
and cash available after investing activities improved as expenditure on        
property plant and equipment (excluding software) decreased by more than R5,4   
billion compared to the prior period. This resulted in R6,8 billion of free cash
flow and a R10,2 billion positive movement in cash and cash equivalents for the 
period. Free cash flow is calculated using cash flow from operating activities  
less capital expenditure and intangibles.                                       
Nigeria                                                                         
The sustained quality and capacity of the network together with improved        
segmented product offerings enabled MTN Nigeria to increase its subscriber base 
by 14% to 35, 1 million subscribers. Although MTN continued to increase its     
market share, the overall market has slowed as penetration increased to beyond  
45%.  MTN ended the period with a market share of over 51%.                     
Local currency revenue increased by 14, 7% for the period,  although this       
translated into a disappointing 7,7% decline in rand terms to R16,5 billion, due
to the continued strengthening of the rand and compounded by the relative       
weakness of the naira when compared to the prior period. Local currency revenue 
growth was mainly attributable to an increase in airtime and subscription       
revenue. These increases were partly offset by a reduction in interconnect      
revenue following the decrease in interconnect tariffs effective 31 December    
2009. Local currency average revenue per user ("ARPU") declined by 10% compared 
to December 2009, in line with penetration into lower usage segments, with      
reported ARPU for the period of USD11.                                          
The EBITDA margin was maintained mainly due to the benefit of economies of      
scale.                                                                          
Network investments for the first half of the year were significantly lower than
the prior period and slightly behind the rollout target. MTN Nigeria completed  
the rollout of 373 2G and 279 3G Base Transceiver Stations ("BTS`s").           
Maintenance of network quality remains a priority to ensure appropriate levels  
of quality to the customer. In addition, approximately 694km of backbone and    
45km of metro fibre were deployed. The backbone project is 81% completed to     
date.                                                                           
South Africa                                                                    
MTN South Africa performed well for the period under review, increasing its     
subscribers by 6,4% to 17,1 million. Market share improved to 36% mainly due to 
growth in the prepaid segment and a market clean up post Regulation of          
Interception of Communications and Provision of Communication-Related           
Information Act ("RICA"). The introduction and refinement of various value      
propositions, including MTN Zone 100% Mahala and One rate calls, resulted in a  
6,5% increase in prepaid subscribers to 13,9 million. The network and billing   
systems were stable during the period and distribution capacity and efficiency  
improved, decreasing churn rates and contributing to the success of the six     
month period.                                                                   
The postpaid subscriber base increased by 6,1%, mainly due to an increase in    
hybrid packages.                                                                
During the 2010 FIFA World Cup, MTN displayed its ability to meet the high      
demands, carrying one terabyte of traffic in locations such as stadia, airports 
and fan parks. In addition, MTN customers accounted for approximately 590       
million SMS`s and 10 million MMS`s in South Africa during the tournament.       
The negative impact of RICA on the prepaid subscriber base has now stabilised,  
with gross additions increasing by 19,7% compared to the second six month period
of 2009.                                                                        
MTN South Africa`s revenue increased by 7,1% to R17, 1 billion compared to the  
previous period. This was mainly a result of an increase in data revenue.       
Segmented data offerings for the prepaid consumer boosted data revenues by 42%. 
Prepaid ARPU increased by R9 to R109. Postpaid ARPU decreased by R29, mainly due
to the continued lower out-of-bundle usage and migrations to lower-value        
packages which are both indicative of the slow pace of the recovery of the local
economy and a stricter credit policy.                                           
EBITDA growth was much stronger at 15,9% as the EBITDA margin increased by a    
healthy 2,6 percentage points to 33,9% at 30 June 2010. This was mainly due to  
lower handset costs, partly as a result of foreign exchange gains on handsets.  
MTN South Africa`s spend on infrastructure over the six months was mainly on    
increased 2G rural coverage, improved coverage and capacity of 3G networks and  
the continued rollout of fibre. During the period 140 2G and 108 3G BTS`s were  
integrated into the network. The deployment of 220km of fibre on the Southern   
and Northern rings in the Gauteng area have been completed and this is now      
carrying all traffic between the core nodes in the Gauteng region. The National 
Long Distance Fibre deployment has experienced some difficulties that resulted  
in an extension of the completion date for the project and continued            
transmission spending. To date, 440km on the Gauteng- Durban route has been     
trenched. As part of the 2010 FIFA World Cup preparations, MTN activated high   
capacity solutions within the 10 stadia and fan parks.                          
Ghana                                                                           
MTN Ghana delivered a solid operational performance for the period under review,
despite the number of competitors in the market.  The large capital investment  
in infrastructure, initiated in 2008, to improve quality and capacity, together 
with innovative product offerings, enabled MTN Ghana to increase its subscriber 
base by 9% to 8, 7 million for the period and so increased its market share to  
56%. Other contributory factors included the improved distribution footprint and
2010 FIFA World Cup promotions.                                                 
Revenue in local currency increased by 19,2% for the period. This translated    
into a 4,8% decrease in rand terms due to the stronger rand. Revenue growth in  
local currency was mainly due to an increase in airtime and subscription        
revenue. SMS revenue, following the 2010 FIFA World Cup based SMS promotions,   
also contributed to revenue growth. Local currency ARPU decreased by 8%, in line
with deeper penetration into lower usage segments, while reported ARPU declined 
by USD1 to USD7.                                                                
The EBITDA margin decrease of 2,9 percentage points to 42% was mainly due to an 
increase in network operating costs, an increase in interconnect and roaming    
costs due to an  increase in off-net calls and investment in value added        
products.                                                                       
MTN Ghana added 104 2G and 133 3G BTS`s for the period, improving network       
quality and capacity. Rollout was slower than expected following a ban on new   
sites by the regulator. The ban has since been lifted and site rollout is       
expected to continue on track for the year. Data usage continues to gain        
momentum with data traffic increasing by 45% for the period.                    
Iran                                                                            
MTN Irancell recorded strong subscriber growth of 16% to 27,0 million for the   
period under review. This was due to appealing seasonal and segmented           
acquisition and usage promotions including WOW and GPRS bolt-on`s. A wider      
electronic distribution channel also contributed to subscriber growth.          
Revenue in local currency increased by 42%, although this translated into a     
14,7% increase to R9,1 billion in rand terms. MTN`s 49% share of MTN Irancell`s 
revenue was R4,5 billion for the six month period, with revenue growth mainly   
due to  higher airtime and subscription revenue. Local currency ARPU increased  
marginally as a result of increased usage while reported ARPU remained stable at
USD8.                                                                           
The EBITDA margin increased by 6,5 percentage points to 41% as a result of      
savings on general operational expenditure, local production of SIM`s and the   
launch of multi-pin vouchers. Economies of scale benefits and single vendor     
maintenance also contributed to the margin improvement.                         
During the six months under review, MTN Irancell added 728 2G BTS`s improving   
network quality and capacity, especially in key cities such as Tehran.          
Population coverage also increased to 75%. WIMAX rollout in Tehran and Esfahan  
remains a priority following its launch last year.                              
Syria                                                                           
MTN Syria increased its subscriber base by 4% to 4,4 million. The increase was  
due to the launch of numerous segmented value propositions and loyalty          
programmes aimed at the youth and strong a focus on churn management.           
Revenue in local currency increased by 12%, although this performance was lower 
in rand terms, and translated into a 5,0% decrease in rand terms. Revenue growth
was partly due to the increase in data uptake. Local currency ARPU decreased by 
9% while reported ARPU decreased by USD2 to USD16.                              
The EBITDA margin declined marginally to 21,6%.                                 
MTN Syria enhanced quality and capacity on its network adding 215 2G BTS`s for  
the six months. In addition, a complete frequency plan was implemented in all   
main cities allowing for an increase in capacity without adding new sites. Re-  
engineering of the radio transmission network was completed to ensure additional
capacity and availability.                                                      
Negotiations are in progress to convert the current build-operate-transfer      
licence to a normalized licence.                                                
Prospects                                                                       
As set out in the announcement of 15 July 2010, the board will continue to      
evaluate and consider value accretive opportunities going forward. However, due 
to the limited number of such opportunities, the board is confident that growth 
aspirations can be accommodated within the imperative of improved short term    
returns to shareholders and by increasing its focus on the following:           
Optimising efficiencies including infrastructure sharing, standardisation of    
systems and processes, rationalisation of suppliers, cost management and cash   
optimisation;                                                                   
Monitoring infrastructure investments to ensure appropriate levels of capacity  
and quality of service, incorporating continued investment in fibre and cable   
requirements to service evolving voice and data requirements;                   
Continued engagement with regulatory authorities in the development and         
refinement of the telecommunications sector in its markets;                     
Evaluating options to further improve cash returns to shareholders in addition  
to an increased payout ratio; and                                               
Conclusion of our BEE transaction announced on the 15 July 2010.                
MTN is well positioned in its markets to compete within a changing competitive  
and regulatory landscape with a focus on cost management as pressure on the     
revenue line increases. MTN continues to monitor the economic development of its
markets with cautious optimism.                                                 
Updated net additions guidance to December 2010 is as follows:                  
                      New (`000)             Old(`000)                          
South Africa           1 800                  800                               
Nigeria                6 350                  6 000                             
Ghana                  600                    800                               
Iran                   5 000                  5 000                             
Syria                  400                    400                               
Rest                   7 000                  7 000                             
Total                  21 150                 20 000                            
Interim dividend                                                                
Shareholders are advised that the MTN board has approved a policy of interim    
dividend payments. Accordingly, an interim dividend of 151 cents per ordinary   
share in respect of the period to 30 June 2010, has been declared and is payable
to shareholders recorded in the register of MTN at the close of business on     
Friday, 17 September 2010.                                                      
It is MTN`s intention to increase its total annual dividend payout ratio to 40% 
of the full year`s adjusted HEPS (after accounting for STC). The maiden interim 
dividend has been calculated using a 40% payout ratio on 50% of the adjusted    
HEPS (after accounting for STC) reported for the 2009 financial year.           
In compliance with the requirements of Strate, the electronic settlement and    
custody system used by the JSE Limited, the MTN Group has determined the        
following salient dates for the payment of the dividend:                        
Last day to trade cum dividend     Friday, 10 September 2010                    
Shares commence trading ex         Monday, 13 September 2010                    
dividend                                                                        
Record date                        Friday, 17 September 2010                    
Payment of dividend                Monday, 20 September 2010                    
Share certificates may not be dematerialised or rematerialised between Monday,  
13 September 2010 and Friday, 17 September 2010.                                
On Monday, 20 September 2010, the dividend will be electronically transferred to
the bank accounts of certificated shareholders who make use of this facility. In
respect of those who do not use this facility, cheques dated Monday, 20         
September 2010 will be posted on or about that date. Shareholders who hold      
dematerialised shares will have their accounts held by the Central Securities   
Depository Participant or broker credited on Monday, 20 September 2010.         
Condensed consolidated income statements                                        
                       Six        Six                 Financial                 
                       months     months                                        
                       ended      ended               year ended                
30 June    30 June             31                        
                                                      December                  
                       2010       2009                2009                      
                       Reviewed   Reviewed   Variance Audited                   
Rm         Rm         %        Rm                        
Revenue                  55 989     57 269    (2,2)     111 947                 
Direct network           (8 320)    (8 059)   (3,2)     (15 925)                
operating costs                                                                 
Cost of handsets and     (2 992)    (3 292)    9,1      (6 297)                 
other accessories                                                               
Interconnect and         (6 191)    (7 602)    18,6     (15 166)                
roaming costs                                                                   
Employee benefits        (2 793)    (2 839)    1,6      (5 843)                 
Selling, distribution   (7 748)     (7 261)   (6,7)     (14 649)                
and marketing expenses                                                          
Other operating          (3 696)    (3 704)   0,2       (8 004)                 
expenses                                                                        
Depreciation of          (6 273)    (5 948)    (5,5)    (11 807)                
property, plant and                                                             
equipment                                                                       
Amortisation of          (1 070)    (1 353)    20,9     (2 668)                 
intangible assets                                                               
Net finance costs        (2 198)    (3 630)   39,4      (5 810)                 
Share of results of      59        -          -         (5)                     
associates                                                                      
Profit before income     14 767     13 581     8,7      25 773                  
tax                                                                             
Income tax expense       (5 430)    (4 488)   (21,0)    (8 612)                 
Profit after tax         9 337      9 093      2,7      17 161                  
Attributable to:         9 337      9 093      2,7      17 161                  
Equity holders of the    8 094      7 630      6,1      14 650                  
company                                                                         
Non-controlling          1 243      1 463      15,0     2 511                   
interest                                                                        
Earnings per ordinary                                                           
share (cents)                                                                   
attributable to equity                                                          
holders of the company                                                          
- basic                  439,7     409,7      7,3      791,4                    
- diluted                433,5     399,4      8,5      781,5                    
Dividends per share      192,0     181,0      6,1      181,0                    
(cents)                                                                         
Condensed consolidated statements of comprehensive income                       
                       Six        Six                 Financial                 
months     months              year                      
                       ended      ended               ended                     
                       30 June    30 June             31                        
                                                      December                  
2010       2009                2009                      
                       Reviewed   Reviewed   Variance Audited                   
                       Rm         Rm         %        Rm                        
Profit for the year      9 337      9 093      0,0      17 161                  
Other comprehensive                                                             
income:                                                                         
Exchange differences     (468)      (16 032)  (1,0)     (17 700)                
on translating foreign                                                          
operations                                                                      
Cash flow hedges         77         (191)     -         (191)                   
Total comprehensive      8 946      (7 130)   (2,3)     (730)                   
income/(loss) for the                                                           
period                                                                          
Attributable to:                                                                
Equity holders of the    7 791      (7 894)   (2,0)     (2 509)                 
company                                                                         
Non-controlling          1 155      764        0,5      1 779                   
interest                                                                        
                        8 946      (7 130)   (2,3)     (730)                    
Condensed consolidated balance sheets                                           
30 June    30 June             31                        
                                                      December                  
                       2010       2009                2009                      
                       Reviewed   Reviewed   Variance Audited                   
Rm         Rm         %        Rm                        
Non-current assets       112 356    104 579   7,4       110 213                 
Property, plant and      68 711     61 007    12,6      67 541                  
equipment                                                                       
Goodwill, intangible     36 415     37 637    (3,2)     37 526                  
assets and investment                                                           
in associates                                                                   
Other non-current        7 230      5 935     21,8      5 146                   
assets                                                                          
Current assets           47 204     41 439    13,9      46 024                  
Bank and cash            30 149     19 503    54,6      23 999                  
Restricted cash          585        994       (41,2)    742                     
Other current assets     16 470     20 942    21,4      21 283                  
Assets                   159 560    146 018   9,3       156 237                 
Total equity             76 975     67 450    14,1      72 866                  
Non-current              32 590     31 236    4,3       28 426                  
liabilities                                                                     
Non-current borrowings   23 536     25 537    (7,8)     21 066                  
Deferred tax and other   9 054      5 699     58,9      7 360                   
non-current                                                                     
liabilities                                                                     
Current liabilities      49 995     47 332    5,6       54 945                  
Non-interest bearing     37 561     37 194    1,0       39 094                  
liabilities                                                                     
Interest bearing        12 434     10 138     22,6     15 851                   
liabilities                                                                     
Total equity and        159 560     146 018   9,3       156 237                 
liabilities                                                                     
Condensed consolidated statements of changes in equity                          
                                Six        Six months Financial                 
                                months                year                      
                                ended      ended      ended                     
30 June    30 June    31                        
                                                      December                  
                                2010       2009       2009                      
                                Reviewed   Reviewed   Audited                   
Rm         Rm         Rm                        
Opening balance                   72 866     80 542     80 542                  
Total comprehensive               8 946      (7 130)    (730)                   
income/(loss) for the period                                                    
Dividends paid                    (4 689)    (4 818)    (6 122)                 
Shares issued during the year     2          20 380     20 392                  
Transactions with non-           -          (600)       (43)                    
controlling interest                                                            
Newshelf share buy-back          -           (21 226)   (21 226)                
Other reserves                    (150)      302        53                      
Closing balance                   76 975     67 450     72 866                  
Condensed consolidated cash                                                     
flow statements                                                                 
                                Six        Six months Financial                 
                                months                year                      
                                ended      ended      ended                     
30 June    30 June    31                        
                                                      December                  
                                2010       2009       2009                      
                                Reviewed   Reviewed   Audited                   
Rm         Rm         Rm                        
Cash inflows from operating       15 269     16 899     36 282                  
activities                                                                      
Cash outflows from investing      (7 206)    (16 942)   (33 192)                
activities                                                                      
Cash outflows from financing     (1 801)     (2 771)    (926)                   
activities                                                                      
Net movement in cash and cash     6 262      (2 814)    2 164                   
equivalents                                                                     
Cash and cash equivalents at      22 646     25 596     25 596                  
beginning of period                                                             
Effect of exchange rate changes   174        (3 866)    (5 114)                 
Cash and cash equivalents at     29 082      18 916     22 646                  
end of period                                                                   
Segmental analysis                                                              
                                Six        Six months Financial                 
months                year                      
                                ended      ended      ended                     
                                30 June    30 June    31 December               
                                2010       2009       2009                      
Reviewed   Reviewed   Audited                   
                                Rm         Rm         Rm                        
REVENUE                                                                         
South and East Africa             20 563     19 399     39 669                  
West and Central Africa           24 721     26 757     50 543                  
Middle East and  North Africa     10 660     11 062     21 525                  
Head office companies            45          51         210                     
                                 55 989     57 269     111 947                  
EBITDA                                                                          
South and East Africa             7 070      6 233      12 701                  
West and Central Africa           13 375     14 849     27 029                  
Middle East and  North Africa     3 323      2 886      5 782                   
Head office companies             481        544        551                     
                                 24 249     24 512     46 063                   
Profit after tax                                                                
South and East Africa             3 773      3 339      6 875                   
West and Central Africa           5 773      6 706      12 026                  
Middle East and North Africa      1 605      1 091      2 099                   
Head office companies             (1 814)    (2 043)    (3 839)                 
                                 9 337      9 093      17 161                   
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 Group Limited (the "Group") 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") was prepared in accordance                 
   with International Financial Reporting Standards ("IFRS") 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               
   2009, 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 standards and interpretations had a                 
   material impact on the results.                                              
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 953                
   million (2009: R7 739 million) and adjusted headline earnings                
of R8 072 million (2009: R6 776 million) respectively, and a                 
   weighted average number of ordinary shares in issue of 1 840                 
   551 (2009: 1 862 519).                                                       
   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              
                                2010        2009       2009                     
                                Reviewed    Reviewed   Audited                  
                                Rm          Rm         Rm                       
Net profit attributable to    8 094       7 630      14 650                  
   company`s equity holders                                                     
   Adjusted for:                                                                
   (Profit)/loss on disposal     (48)        109        71                      
of non-current assets                                                        
   Reversal of impairment of     (92)       -           148                     
   property, plant and                                                          
   equipment and non-current                                                    
assets                                                                       
   Basic headline earnings       7 954       7 739      14 869                  
   Adjustment:                                                                  
   Reversal of put option in                                                    
respect of subsidiary:                                                       
   - Fair value adjustment       (114)       (553)      (537)                   
   - Finance costs               242         (585)      537                     
   - Foreign exchange            98          293        (701)                   
loss/(gain)                                                                  
   - Non-controlling             (108)       (118)      (205)                   
   shareholders share of                                                        
   profit                                                                       
Adjusted headline earnings    8 072       6 776      13 963                  
   Reconciliation of headline                                                   
   earnings per ordinary share                                                  
   (cents)                                                                      
Attributable earnings per     439,7       409,7      791,4                   
   share (cents)                                                                
   Adjusted for:                                                                
   (Profit)/loss on disposal     (2,6)      0,3         3,8                     
of non-current assets                                                        
   (Reversal of                  (5,0)      5,5         8,0                     
   impairment)/impairment of                                                    
   property, plant and                                                          
equipment and non-current                                                    
   assets                                                                       
   Basic headline earnings per   432,1       415,5      803,2                   
   share (cents)                                                                
Reversal of put option in     6,5         (51,7)     (48,9)                  
   respect of subsidiary                                                        
   Adjusted headline earnings    438,6       363,8      754,3                   
   per share (cents)                                                            
Number of ordinary shares                                                    
   in issue:                                                                    
   - Weighted average (`000)    1 840 551   1 862 519  1 851 260                
   - At period end (`000)       1 840 616   1 839 868  1 840 536                
Adjusted headline earnings adjustments                                       
   Put option in respect of subsidiary                                          
   IFRS requires the Group to account for a written put option                  
   held by a non-controlling shareholder of one of the Group                    
subsidiaries, which provides them with the right to require the              
   subsidiary to acquire its shareholdings at fair value.  Prior                
   to the implementation of IFRS the shareholding was treated as a              
   non-controlling shareholder in the subsidiary as all risks and               
rewards associated with these shares, including dividends,                   
   currently accrue to the non-controlling shareholders.                        
   IAS 32 requires  that in the circumstances described in the                  
   previous paragraph:                                                          
(a)  the present value of the future redemption amount be                    
   reclassified from equity to financial liabilities and that                   
   financial liability so reclassified subsequently be measured 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 be                 
   recognised in profit or loss;                                                
(c)  the non-controlling  shareholder holding the put option no              
   longer be regarded as a non-controlling 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 of directors has                     
   reservations about the appropriateness of this treatment in                  
   view 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 that                
   are outstanding, have the same rights as any other shares, and               
   should therefore, be accounted for as a derivative rather than               
   creating an exception to the accounting required under IAS 39.               
Six months  Six months Financial               
                                                        year                    
                                 ended       ended      ended                   
                                 30 June     30 June    31                      
December                
                                 2010        2009       2009                    
                                 Reviewed    Reviewed   Audited                 
                                 Rm          Rm         Rm                      
6.  Capital expenditure incurred   8 496       15 504     31 248                
7.  Contingent liabilities and                                                  
   commitments                                                                  
   Contingent liabilities -       930         250        1 209                  
upgrade incentives                                                           
   Operating leases - non-        579         756        832                    
   cancellable                                                                  
   Finance leases                 328         520        348                    
Other                          664         633        749                    
8.  Commitments for property,                                                   
   plant and equipment and                                                      
   intangible assets                                                            
- Contracted for               6 124       23 260     6 780                  
   - Authorised but not           8 979       3 625      16 819                 
   contracted for                                                               
9.  Cash and cash equivalents                                                   
Bank balances deposits and     30 149      19 503     23 999                 
   cash                                                                         
   Call borrowings                (1 067)     (587)      (1 353)                
                                  29 082      18 916     22 646                 
10  Interest-bearing liabilities                                                
.                                                                               
   Call borrowings                1 067       587        1 353                  
   Short-term borrowings         11 367       9 551      14 498                 
Current liabilities           12 434       10 138     15 851                 
   Long-term liabilities          23 536      25 537     21 066                 
                                 35 970       35 675     36 917                 
11  Other non-current liability                                                 
.                                                                               
   The put option in respect of the subsidiary arises from an                   
   arrangement whereby the non-controlling 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 profit and              
   loss.                                                                        
12  Post balance sheet events                                                   
.                                                                               
   The directors are 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.                                                  
Administration                                                                  
Directorate:  MC Ramaphosa (Chairman), PF Nhleko* (Group President and CEO), RS 
Dabengwa*, N Patel*, KP Kalyan, AT Mikati, MJN Njeke, JHN Strydom, AF van       
Biljon, J van Rooyen, DDB Band, D Marole, P Mageza, A Harper?*Executive         
Group secretary:  SB Mtshali, 216 - 14th Avenue, Fairland, 2195  
 Private Bag  
9955, Cresta, 2118                                                              
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 andSizweNtsaluba VSP , 20 Morris Street East,
Woodmead, 2191  
 PO Box 2939, Saxonwold, 2132                                  
E-mail: investor_relations@mtn.com                                              
Fairland                                                                        
19 August 2010                                                                  
Sponsor: Deutsche Securities (SA) (Proprietary) Limited                         
Date: 19/08/2010 08:30:01 Produced by the JSE SENS Department.                  
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