MTN 201308140004A
Summary consolidated reviewed financial results for the six months ended 30 June 2013
MTN Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1994/009584/06
Share code: MTN
ISIN code: ZAE 000042164
(MTN)
Summary consolidated reviewed financial results
for the six months ended 30 June 2013
MTN is a leading emerging markets mobile operator, connecting more than 200 million people in
22 countries across Africa and the Middle East. We are at the forefront of global technological
changes, delivering a bold, new Digital World to our customers.
Highlights
Group subscribers increased 6,5% to 201,5 million
Data revenue increased 36,9% to R9 054 million
EBITDA margin stable at 42,5%**
HEPS increased 22,0% to 654 cents
Revenue increased 9,8% to R65 248 million
EBITDA increased 6,4% to R27 743 million**
Capex increased 32,7% to R12 792 million
Interim dividend per share increased 15,3% to 370 cents
Review of results
Overview
We are pleased to report MTNs results for the six-month period to 30 June 2013. The results
reflect a challenging operating environment given the sustained global economic slowdown, highly
competitive mobile markets and regulatory pressures, which have seen average voice tariffs across
our markets fall 29,5% year-on-year (YoY) in US dollar terms. Despite these challenges, our
substantial investment in network infrastructure and robust subscriber growth position us well for
improved organic growth.
Over the first six months of 2013, Group subscribers increased 6,5%, to 201,5 million, supported
by competitive offerings and increased network capacity. At the end of July, the Group recorded a
total of 200 million subscribers after adjusting for the 3,2 million disconnections in Nigeria
related to the mandatory subscriber registration programme which closed on 30 June 2013.
Reported revenue for the six months increased 9,8% (*organic revenue up 1,9%), despite being
negatively impacted by the tariff cuts in both Nigeria and South Africa. The Large OpCo Cluster
and the Small OpCo Cluster reported a solid 9,7% and 24,7% YoY growth in revenue respectively.
The reported financial results were positively affected by the 16,3% decline in the average rand
versus US dollar rate.
MTN Nigeria continued to show consistent month-on-month improvements in its operational metrics.
Revenue performance, however, was impacted by the 40% reduction in mobile termination rates
effective 1 April as well as by the temporary network disconnections in three northern states. In
South Africa, the weak consumer environment and aggressive competition had a dampening effect on
revenue.
Group EBITDA increased by 6,4% to R27 743 million, with the EBITDA margin remaining stable at
42,5% excluding the profit from the tower sales in Ivory Coast and Cameroon. We expect improved
organic growth in EBITDA in the second half of this year.
During the period we invested R12 792 million in our network, bringing 2 130 2G and 1 800 3G sites
on air. This is in line with our strategy to improve the quality of our service offering to more
customers and remains a key element in securing continued growth over the medium term.
During the period under review, the Group reclassified its intergroup loan to MTN Syria as a net
investment in the foreign operation in accordance with the principles of IAS 21, The Effect of
Changes in Foreign Exchange Rates. This has resulted in foreign exchange movements of R962 million
in respect of the loan being accounted for in equity from 1 January 2013. This has positively
impacted headline earnings per share (HEPS) with HEPS increasing 22,0% to 654 cents for the period.
* Constant currency information disclosed in these results is the responsibility of the Groups
directors. The constant currency information has been presented to illustrate the impact of changes
in currency rates on the Groups results and hence may not fairly present the Groups results of
operations. In determining the change in constant currency terms, the current financial reporting
periods results have been adjusted to the prior periods average exchange rates determined as the
average of the monthly exchange rates. The measurement has been performed for each of the groups
currencies, materially that of the USD, Nigerian Naira and Iranian Rial. The constant currency
information has not been reviewed and reported on by the Groups external auditors.
** Excluding tower profits
Prospects
For the remainder of the year, we expect to deliver improved YoY organic growth in both revenue
and EBITDA. Although operating conditions in South Africa are expected to remain difficult, we will
continue to focus on competitive, value-added propositions and on improving cost efficiencies. The
recovery in our Nigerian operation is expected to continue over the second half, supported by a
strong capital expenditure programme. We expect the Group to add a total of 21,1 million subscribers
for the full 2013 year.
Any forward looking information contained in this announcement has not been reviewed or reported
on by the Companys external auditors.
In the medium term there remain a number of opportunities for MTN, which include providing more
services to our customers by moving decisively into the digital space and taking advantage of
growth in data traffic and ICT solutions. We will also continue to leverage MTNs inherent
strength in adjacent industries and explore value accretive M&A activities.
Amid greater competition, which in turn pressures revenue and margins, we will remain competitive
by providing an excellent customer experience, improving network quality and capacity, lowering
the cost base of our business and improving operational efficiency.
SANCTIONS
MTN continues to work closely with all relevant authorities in managing US and EU sanctions
against Iran and Syria. MTN continues to retain international legal advisors to assist the
Group in remaining compliant with all applicable sanctions.
CHANGES TO THE BOARD OF DIRECTORS
During the year to date, the following changes to the board became effective:
MC Ramaphosa tendered his resignation as chairman of the board, effective 28 May 2013;
PF Nhleko was appointed to replace him as chairman of the board, effective 29 May 2013;
NI Patel tendered his resignation as executive director and Group chief financial officer,
effective 21 July 2013; and
BD Goschen was appointed as executive director and Group chief financial officer, effective
22 July 2013.
Leading the delivery of a bold new digital world
We continue to enhance our traditional voice offering and actively develop new products and
services in support of our data and ICT growth strategies. This will see data continue to be a
key driver of the business over the medium term.
VOICE
Over the first six months of 2013, traffic volumes increased 26,2% YoY and voice revenue grew
7,9%. Voice revenue now accounts for 63,7% of total revenue, down from 64,8% in 2012. On a YoY
basis, the average price per minute (APPM) declined by 29,5% in US dollar terms. We remain
focused on improving network quality and customer service as well as providing value-added
products and services to our customers, such as MTN Zone and Me2U.
DATA AND RELATED SERVICES
During the period, data services were the key driver of MTNs revenue growth. Our operations in
South Africa and Nigeria were the biggest contributors to data revenue growth, whilst those in
Ghana, Cameroon, Ivory Coast and Benin also delivered a strong performance.
Data subscriber numbers increased by 29,5% to 65,4 million and data traffic grew by 55,7%. This
was achieved through extending our 3G coverage as well as through the increased number of
data-enabled devices, which have reached 122,2 million. Our network has 31,6 million smartphones
in use and increasing smartphone penetration remains an important objective. We also continue to
support innovation with products such as Magic Voice, MTN Play, MTN Opera Mini and MTN Afrinolly.
The MTN Mobile Money and financial services offering continues to gain traction in existing and
new markets and had almost 12,1 million users at the end of June 2013, a YoY increase of 64,5%.
MTN Mobile Money revenue reached R289 million, with Uganda the leading market for this service. We
have now launched MTN Mobile Money services in 15 markets and a key focus is to establish a solid
base and improve returns from this product.
ICT SERVICES
The integration of the South African Enterprise Business has allowed for a more holistic offering
as businesses seek simplified solutions that enable converged voice, video and data communications.
We are well positioned to leverage our integrated ICT business and the ongoing infrastructure
investment to provide key products and services to our corporate and SME customers across all our
markets.
These include cloud computing, infrastructure, networking and managed services for end-to-end data
routing.
Financial review
REVENUE
Group revenue increased by 9,8% (1,9%*) to R65 248 million for the six-month period, despite a
marginal contraction in the revenue growth in the South African (-1,4%) and Nigerian (-1,6%*)
operations, which were negatively affected by tariff reductions in these highly competitive markets.
The strong organic growth achieved in Ghana (15,3%*), Uganda (15,4%*) and Sudan (42,5%*) supported
the overall results. We expect improved YoY trends in revenue for the second half of this year as
the investment in capex underpins continued growth in our network coverage and quality.
Outgoing voice revenue increased by 7,9% compared to the prior year and contributed 63,7% to total
revenue. Group data revenue increased by 36,9% as the number of data subscribers reached 65,4
million, an increase of 29,5% on the prior year. Datas contribution to total revenue was 13,9%
(18,0% including SMS) and the upward trend is expected to continue. The weakness in the rand
exchange rate in the period contributed to the improvement in reported revenue.
Group earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 7,4%
to R28 599 million, which includes R856 million related to the profit on tower sales. Excluding the
profit on tower sales, EBITDA increased by 6,4% to R27 743 million, with a margin of 42,5%. The
tower sales resulted in a R244 million YoY increase in lease costs negatively impacting margins for the
period.
EBITDA was supported by solid growth from Ghana (19,3%*), Uganda (11,4%*), Sudan (54,0%*) and
Cameroon (4,8%*). Although normalised Nigerian EBITDA (excluding the reversal of management fees)
decreased 7,5%* YoY, there has been an encouraging sequential trend and we expect a stable performance
in the second half of the year. MTN South Africa, Ivory Coast and Syria recorded declines in EBITDA of
7,4%*, 2,7%* and 40,2%* respectively.
DEPRECIATION AND AMORTISATION
Group depreciation increased by 19,0% YoY as the Group accelerated its capex rollout in South
Africa and Nigeria. Amortisation costs rose by 32,5% driven by increased spend on software.
NET FINANCE COSTS
Net finance costs of R88 million reflect a decrease of R1 596 million from the previous year. This
is largely due to a functional currency gain of R1 497 million as well as foreign exchange losses
of R962 million incurred on the Syrian pound intergroup loan receivable, previously recorded in
profit or loss and is now being reported in equity in accordance with IAS 21. The Iranian rial and
Sudanese pound remained relatively stable against the US dollar over the six-month period, reducing
the YoY reported forex losses.
TAXATION
The Groups taxation charge decreased by 5,4% to R6 620 million and the effective tax rate
declined 5,1 percentage points to 31,3%. The lower tax charge and effective tax rate were mainly the
result of the secondary tax on companies (STC) in South Africa being discontinued and a reduction in
withholding taxes.
EARNINGS
Headline earnings per share (HEPS) increased 22,0% to 654 cents and attributable earnings per
share (EPS) increased 19,0% to 684 cents.
CASH FLOW
Cash inflows from operating activities declined by 18,8% to R4 854 million mainly due to a 2,7%
decline in cash generated from operations and an 8,2% increase in dividends paid. Expenditure on
property, plant and equipment (excluding software) increased by 20,7% to R10 156 million, which
contributed significantly to the cash outflow on investing activities. Cash inflows on financing
activities were mainly the result of an increase in borrowings in Nigeria of R5 608 million and
MTN Holdings of R1 740 million.
CAPITAL EXPENDITURE
Capex increased by 32,7% to R12 792 million, of which R1 255 million related to the depreciation
in the rand. On a constant-currency basis, capex was R11 537 million. Capex already committed for the
second half of the year stands at R8 119 million.
CASH BALANCE
The Group reported net debt of R3 968 million as net cash balances declined by R6 825 million
driven by the increased investment to support our capex programme and the associated interest-bearing
liabilities. The net debt excludes R4 800 million (49%) of net cash in MTN Irancell now accounted for
on an equity basis.
CHANGES IN OWNERSHIP
During the period under review, the following changes in shareholding occurred:
The Group concluded the acquisition of the remaining 50% equity interest in MTN Cyprus from its
local partner, Amaracos Holdings. All conditions precedent to the acquisition were fulfilled on
26 March 2013 and MTN Cyprus is now a wholly owned subsidiary of MTN Dubai;
The Group decreased its shareholding in MTN Ivory Coast SA from 67,67% to 66,83%; and
The Group increased its shareholding in Mauritian internet service provider Satalite Data
Networks Mauritius Proprietary Limited, from 60% to 100%.
Operational review
SOUTH AFRICA
EBITDA margin declined by 2,1 percentage points
Data revenue increased by 14,7%
Capex increased 8,6%
MTN South Africa felt the effects of weaker consumer demand and was slow to respond to aggressive
price competition in both voice and data offerings. The total subscriber base declined marginally
to 25,0 million from 25,4 million at 31 December 2012.
After a difficult start to 2013, which saw decreased subscriber net connections, the pre-paid
segment managed to regain some market share in the second quarter due to improved dormancy
management and as customers responded positively to lower tariffs and increased promotional
activity.
The post-paid subscriber base performed well, increasing by 5,8% during the six-month period to
4,8 million. This was driven by competitive data offerings and the success of hybrid and classic
packages. Despite a difficult operating environment, MTN South Africa maintained its relative
value share among post-paid subscribers.
Total revenue declined by 1,4% to R20 146 million from R20 430 million in the previous year
(including MTN Business). Airtime and subscription revenue declined by 4,4% to R9 443 million
largely due to lower outgoing voice revenue.
Data revenue, including MTN Business, increased by 14,7% to R4 016 million from R3 502 million in
the prior year and contributed 19,9% to total revenue. Data pricing remained under pressure as the
average effective price per megabyte decreased by 25,0% from 31 December 2012.
Data revenue growth was supported by an increase in the number of mobile data users to 13,5
million from 11,9 million, attracted by a compelling value proposition and the efficient distribution
of products. Data revenue also benefited from the integration of MTN Business into the South African
operation. Handsets and accessories revenue grew by 16,0% to R3 023 million. During the six-month
period, MTN South Africa sold 2,4 million pre-paid phones and 699 000 post-paid handsets.
Blended ARPU declined by 13,3% to R105,40 from R121,52 in June 2012. Pre-paid ARPU of R78,64 was
13,9% lower than the same period last year (R91,33). Post-paid ARPU decreased by 15,5% to R220,90
compared with R261,33 in the previous year.
EBITDA decreased by 7,4% to R6 503 million. The EBITDA margin declined by 2,1 percentage points
largely as a result of lower revenue growth. Operating costs were well contained and increased
marginally by 1,2% despite the depreciation of the rand against the US dollar as well as higher
handset volumes, resulted in an 8,4% increase in handsets and other accessories costs. Given
the more challenging revenue growth environment, there will be an increased focus on cost controls.
Capex for the period amounted to R2 151 million with a focus on 2G and 3G coverage, quality and
capacity. The 3G population coverage is now 67,7%. During the period, limited long-term evolution
(LTE) coverage was implemented in main centres, partly due to a delay in the planned auction of
2.6GHz and 3.5GHz spectrum and the final frequency and spectrum allocations that are still to be
determined.
We continue to engage with the various regulatory bodies in this regard.
NIGERIA
Net subscriber additions of 7,8 million
Normalised EBITDA margin of 56,5%
Capex increased by 25,7%*
1 083 2G and 499 3G co-located sites delivered
MTN Nigeria continued to improve its performance, adding 3,8 million subscribers in Q1 and a
further 3,9 million subscribers in Q2, bringing total subscribers at the end of June 2013 to 55,238
million. However, in July, MTN Nigeria disconnected a number of subscribers related to the
regulator-driven subscriber registration process. At the end of July, 3,2 million mandatory net
disconnections impacted reported subscriber numbers and brought total subscriber numbers to
52,7 million.
MTN Nigeria showed a promising upward trend in revenue growth in the period, supported by strong
growth in subscriber numbers and in minutes of use (MOU). However, the reduction in mobile
termination rates, the promotions ban until April and the suspension of services in three states
in the north of the country from mid-May constrained performance and resulted in a 1,6%* decline
in revenue compared with same period in 2012.
In July, post the mandatory subscriber registration process and the lifting of the service
suspension in two of the three northern states, it was encouraging that revenues increased 6,5% on
a month-on-month basis.
Reported EBITDA increased by 26,8% mainly due to the reversal of the management fee provision. The
cumulative prior period reversal amounts to R1 778 million and the current period reversal amounts
to R379 million. Excluding the reversal of this provision, EBITDA decreased by 8,0%* compared to
the prior year with the normalised EBITDA margin of 56,5%. The operation continues to focus on
improving cost efficiencies within managed services and procurement.
The higher interconnect charges were largely the result of an increase in off-net traffic
following tariff adjustments across the market. This was despite the almost 40% reduction in
termination rates introduced during the period.
The 35,9% YoY organic growth in data revenue (excluding SMS) supports our strategy to increase
the contribution of data to total revenue. This was achieved through the provision of value-added
products such as MTN Afrinolly, MTN Play and MTN Caller Tunez, free SIM cards and data bundle
offers as well as by our more device-oriented service centres. During the period, a total of
5,3 million smartphones and approximately 230 000 dongles were active on our network.
MTN Nigerias capital expenditure rollout progressed well and despite increased traffic, the
operation achieved a corresponding improvement in network quality. During the first half of 2013,
R6 571 million was capitalised and MTN Nigeria rolled out 1 083 2G sites and 499 3G co-located
sites.
MTN Nigeria continues to constructively engage with the regulator, the Nigerian Communications
Commission, regarding its recent determination that MTN Nigeria is a dominant operator in that
country.
OTHER KEY OPERATIONS (including MTN Irancell)
Organic revenue growth of 11,1%
EBITDA margin (excluding tower sales) of 31,9%*
Data revenues increased 96,3%*
MTN Irancell grew total revenue by 19,0%* compared to the prior year, with a 17,9%* increase in
airtime and subscription revenue and a 20,7%* increase in SMS revenue. The 3,8% growth in
subscribers to 42 million as well as the 32,5% YoY growth in the WiMAX subscriber base to
approximately 307 000, contributed to revenue performance. Local currency ARPU increased by
5,8% YoY despite challenging economic conditions.
Data revenue (excluding SMS) increased by 52,7%* compared to the prior year, mainly because of
improved network quality and coverage and numerous promotions supported by affordable handsets,
and appealing bundle packages.
MTN Irancells EBITDA margin remained stable at 44,3%, supported by solid revenue growth and
efficiencies. These efficiencies counteracted the effect of high inflation and the depreciation
of the Iranian rial, which caused a substantial increase in the cost of imported equipment and
material. MTN Irancell continued to invest in its network, spending R907 million for the six-month
period. It is expected to meet its capex rollout programme requirements for the full year.
MTN Ghana performed strongly, increasing subscribers by 7,3% to 12,6 million compared to 11,7
million at the end of December 2012 and increasing revenue by 15,3%*. This performance was driven
by a targeted subscriber acquisition campaign, which included segmented customer offerings, improved
regional distribution structures and numerous promotions. There was also good uptake of products
like MTN Protect and MTN Play. The operation maintained its market share at 50,5%.
Data revenue (excluding SMS) increased by 56,3%*, supported by attractive data bundle offerings,
affordable handsets and an improved contribution from MTN Mobile Money. MTN Business continued to
gain traction with products such as cloud services. EBITDA rose by 19,3%* and the EBITDA margin
expanded by 1,3 percentage points to 39,0%, supported by cost savings across all areas of the
business.
Network modernisation and expansion remain a key focus given increasing traffic volumes.
MTN Cameroon grew its subscriber base by 4,3% to 7,6 million compared to 7,3 million at the end
of December 2012. Despite sluggish economic growth, strong competition and high churn levels,
the operation grew revenue by 7,7%* and maintained its market share at around 57%.
Sustained pressure on tariffs was partially offset by a 103% increase in MOU as the investment
in network modernisation accelerated. At the end of the six month period, two-thirds of the
capex budget had been capitalised.
Data services performed well with data revenue increasing by 44,4%*, helped by promotions and
improved coverage. The 3G rollout programme will commence once existing exclusivity arrangements
expire in December 2014 and this is expected to support data revenue growth. EBITDA increased
by 44,4%* mainly due to the profit from the tower sales. Excluding the profit on the tower sales,
EBITDA increased by 4,8%*.
MTN Ivory Coast grew revenue by 8,0%* and recorded net connections of 493 000, which increased
its subscriber base to 6,6 million after disconnecting 400 000 subscribers who failed to register
their personal details by the end of 2012. This improved performance was supported by an effective
MTN value proposition and an efficient registration system. Following the launch of 3G services in
December 2012, data and SMS revenue increased by 40,6%* and 64,7%* respectively, supported by an
increased uptake of both 2G and 3G services and increased data usage for browsing and games.
EBITDA increased by 43,3%*, benefiting from the profit from the tower sales. Excluding the
effects of the tower sales, EBITDA decreased by 2,7%* due to the tower rental expense and
revenue-sharing commissions. The capex programme to rollout more fibre in Abidjan and upgrade the
intelligent network platform remains on track.
MTN Uganda increased its subscriber base by 4,4% to 8,0 million from 7,7 million at the end of
December 2012, driven by strong promotional activity, a reduction in churn and the continued
success of the MTN Zone offering.
Revenue increased by 15,4%*, supported by strong data revenue growth. SMS revenue declined 14,6%*
as customers opted for newer data-driven social media platforms to communicate and as internet
browsing increased. This positively impacted mobile data revenue, which increased 57,4%, supported
by a simplified data bundles offering, upgraded internet speeds, regional data exhibitions and a
strong performance from MTN Mobile Money. MTN Mobile Money recorded a 51% increase in subscribers
and more than 25 million transactions per month.
EBITDA declined 41,0%* due to the tower sales in the prior period. Excluding the tower sales,
EBITDA grew 11,4%*.
MTN Syria reported commendable results amid extremely challenging conditions, with the subscriber
base decreasing by 8,6% to 5,5 million from 6,0 million at the end of December 2012. Despite a
16,0%* decline in overall revenue, data revenue increased by 28,4%* due to the MTN proposition,
which includes promotions and reliable systems. The operations performance will remain under
pressure until the crisis in the country is resolved.
MTN Sudan recorded a good performance, increasing its subscriber base by 7,2% to 8,4 million
compared to 7,9 million in the prior period and maintaining its market share at approximately 31,5%.
Revenue and EBITDA increased by 42,5%* and 54,0%* respectively. While off a low base, data revenue
increased by 260,0%* and remains a strong focus for the business.
Revised SUBSCRIBER NET ADDITION GUIDANCE FOR 2013
Old New
000 000
South Africa 2 900 800
Nigeria 7 000 9 000
Large OpCo cluster
Iran 3 850 3 600
Ghana 800 1 450
Cameroon 1 000 850
Ivory Coast 300 850
Sudan 1 350 1 350
Syria - (750)
Uganda 800 800
Small OpCo cluster 3 000 3 150
Total 21 000 21 100
Declaration of interim ordinary dividend
Notice is hereby given that a gross interim dividend of 370 cents per share for the six months
ended 30 June 2013 has been declared payable to shareholders of MTNs shares. The dividend has
been declared out of income reserves. The number of ordinary shares in issue at the date of this
declaration is 1 881 924 634 (including 22 337 752 treasury shares). The dividend will be subject
to a maximum local dividend tax rate of 15% which will result in a net dividend to those shareholders
that bear the maximum rate of dividend withholding tax of 314,50 cents per share after dividend
withholding tax of 55,50 cents per share. No Secondary Tax on Companies (STC) credits were utilised.
The net dividend per share for the respective categories of shareholders for the different dividend
tax rates are as follows:
0% 370,0000 cents per share
5% 351,5000 cents per share
7,5% 342,2500 cents per share
10% 333,0000 cents per share
12,5% 323,7500 cents per share
15% 314,5000 cents per share
The different dividends tax rates above result from the application of the tax rates in various
double taxation agreements as well as exemptions from dividend tax.
MTN Group Limiteds tax reference number is 9692/942/71/8.
In compliance with the requirements of STRATE, the electronic settlement and custody system used
by the JSE Limited, the salient dates relating to the payment of the dividend are as follows:
Last day to trade cum dividend on the JSE Friday, 30 August 2013
First trading day ex dividend on the JSE Monday, 2 September 2013
Record date Friday, 6 September 2013
Payment date Monday, 9 September 2013
No share certificates may be dematerialised or re-materialised between Monday, 2 September 2013
and Friday, 6 September 2013, both days inclusive.
Dividends in respect of certificated shareholders will be transferred electronically to
shareholders bank accounts on Monday, 9 September 2013. In the absence of specific mandates,
dividend cheques will be posted to shareholders on or about Monday, 9 September 2013. Shareholders
who hold dematerialised shares will have their accounts at their Central Securities Depository
Participant (CSDP) or broker credited on Monday, 9 September 2013.
The MTN board confirms that the Group will satisfy the solvency and liquidity test immediately
after completion of the dividend distribution.
For and on behalf of the Board
PF Nhleko RS Dabengwa
Chairman Group President and CEO
Fairland
14 August 2013
For further information on the MTN interim results please refer to the Groups website:
www.mtn.com
Condensed reviewed consolidated interim financial information in accordance with International
Financial Reporting Standards (IFRS)
The Groups condensed reviewed consolidated interim financial information for the six months ended
30 June 2013 have been independently reviewed by the Groups external auditors. The preparation of
the Groups condensed reviewed consolidated interim financial information was supervised by the
Group chief financial officer, BD Goschen, BCom, BCompt (Hons), CA(SA).
These results were made available on 14 August 2013.
Condensed consolidated income statement
Note Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012* 2012*
Reviewed Reviewed Audited
Rm Rm Rm
Revenue 65 248 59 418 121 867
Other income 1 027 711 894
Direct network operating costs (8 412) (8 125) (16 188)
Costs of handsets and other accessories (4 883) (4 574) (9 590)
Interconnect and roaming (6 714) (6 241) (13 254)
Employee benefits (4 272) (3 496) (7 534)
Selling, distribution and marketing expenses (8 601) (7 467) (15 631)
Other operating expenses (4 794) (3 591) (7 927)
EBITDA 28 599 26 635 52 637
Depreciation of property, plant and equipment (7 683) (6 455) (13 791)
Amortisation of intangible assets (1 320) (996) (2 161)
Operating profit 19 596 19 184 36 685
Net finance costs (88) (1 684) (3 790)
Share of results of joint ventures and associates after tax 9 1 658 1 720 3 008
Profit before tax 21 166 19 220 35 903
Income tax expense (6 620) (6 999) (11 835)
Profit after tax 14 546 12 221 24 068
Attributable to:
Equity holders of the Company 12 537 10 594 20 704
Non-controlling interests 2 009 1 627 3 364
14 546 12 221 24 068
Basic earnings per share (cents) 8 684 575 1 126
Diluted earnings per share (cents) 8 680 570 1 119
* 2012 amounts restated, refer to note 18.
Condensed consolidated statement of comprehensive income
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012 2012
Reviewed Reviewed Audited
Rm Rm Rm
Profit after tax 14 546 12 221 24 068
Other comprehensive income:
Exchange differences on translating foreign operations: # 8 280 (4 908) (3 507)
Equity holders of the Company 7 942 (4 728) (3 498)
Non-controlling interests 338 (180) (9)
Total comprehensive income for the period 22 826 7 313 20 561
Attributable to:
Equity holders of the Company 20 479 5 866 17 206
Non-controlling interests 2 347 1 447 3 355
22 826 7 313 20 561
# This component of other comprehensive income does not attract any tax and may subsequently be reclassified to profit and loss.
Condensed consolidated statement of financial position
Note 30 June 30 June 31 December
2013 2012* 2012*
Reviewed Reviewed Audited
Rm Rm Rm
Non-current assets 132 636 107 722 120 199
Property, plant and equipment 83 866 64 825 73 905
Intangible assets and goodwill 36 482 29 576 32 594
Investments in joint ventures and associates 6 929 7 094 4 645
Deferred tax and other non-current assets 5 359 6 227 9 055
Current assets 65 020 57 114 55 875
Non-current assets held for sale 15 190 - 1 373
64 830 57 114 54 502
Other current assets 36 589 32 151 26 522
Restricted cash 2 825 1 714 5 272
Cash and cash equivalents 25 416 23 249 22 708
Total assets 197 656 164 836 176 074
Total equity 103 664 87 165 92 887
Attributable to equity holders of the Company 99 533 83 545 89 006
Non-controlling interests 4 131 3 620 3 881
Non-current liabilities 43 950 34 367 32 713
Interest-bearing liabilities 13 31 964 25 192 21 322
Deferred tax and other non-current liabilities 11 986 9 175 11 391
Current liabilities 50 042 43 304 50 474
Interest-bearing liabilities 13 10 184 9 545 10 762
Other current liabilities 39 858 33 759 39 712
Total equity and liabilities 197 656 164 836 176 074
*2012 amounts restated, refer to note 18.
Condensed consolidated statement of changes in equity
Note Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012 2012
Reviewed Reviewed Audited
Rm Rm Rm
Opening balance 89 006 88 897 88 897
Share buy-back# - (2 088) (2 088)
Shares issued during the period ^ 2 3
Shares cancelled ^ - ^
Transactions with non-controlling interests 17 (495) (122) (122)
Share-based payment reserve 88 23 147
Total comprehensive income 20 479 5 866 17 206
Profit after tax 12 537 10 594 20 704
Other comprehensive income after tax 7 942 (4 728) (3 498)
Dividends paid (9 362) (8 940) (14 919)
Other movements (183) (93) (118)
Attributable to equity holders of the Company 99 533 83 545 89 006
Non-controlling interests 4 131 3 620 3 881
Closing balance 103 664 87 165 92 887
Dividends per share (cents) 370 476 797
^ Amount less than R1 million.
# During 2012 MTN Holdings Proprietary Limited bought 15 573 340 shares in the company to the value of R2,1 billion.
Condensed consolidated statement of cash flows
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012* 2012*
Reviewed Reviewed Audited
Rm Rm Rm
Net cash inflow from operating activities 4 854 5 975 20 062
Net cash outflow from investing activities (9 104) (12 968) (24 212)
Net cash inflow/(outflow) from financing activities 5 495 (2 145) (5 280)
Increase/(decrease) in cash and cash equivalents 1 245 (9 138) (9 430)
Cash and cash equivalents at beginning of period 22 539 33 074 33 074
Exchange gains/(losses) on cash and cash equivalents 1 529 (1 199) (1 105)
Cash and cash equivalents at end of period 25 313 22 737 22 539
* 2012 amounts restated, refer to note 18.
Notes to the condensed consolidated financial information
1. INDEPENDENT REVIEW
The condensed consolidated financial information has been reviewed by our joint auditors, PricewaterhouseCoopers Inc.
and SizweNtsalubaGobodo Inc., who have performed their review in accordance with International Standard on Review
Engagements 2410. A copy of their unmodified review report is available for inspection at the registered office of
the Company. Constant currency disclosure has not been reviewed by our joint external auditors.
2. GENERAL INFORMATION
MTN Group Limited (the Company) carries on the business of investing in the telecommunications industry through
its subsidiary companies, joint ventures and associate companies.
3. BASIS OF PREPARATION
These condensed consolidated interim results have been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB), the preparation and disclosure requirements of IAS 34 Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, the Listings Requirements of the JSE Limited and in
the manner required by the South African Companies Act No 71, 2008.
4. PRINCIPAL ACCOUNTING POLICIES
The Group has adopted all the new, revised or amended accounting pronouncements as issued by the IASB which were
effective for the Group from 1 January 2013.
The principal accounting policies and methods of computation applied are consistent in all material respects with
those applied in the previous financial year except as set out below.
5. CHANGES IN ACCOUNTING POLICIES
IFRS 10 Consolidated Financial Statements
The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial
statements when an entity controls one or more other entities.
The Group has revised its accounting policies on the consolidation of subsidiaries and concluded that the adoption
of IFRS 10 did not result in any material change in the consolidation of the Group.
IFRS 11 Joint Arrangements
IFRS 11 requires equity accounting for joint ventures and eliminates the proportionate consolidation option of
accounting.
Previously, the Group proportionately consolidated all joint ventures which entailed that it included its share of
the assets, liabilities, income and expenses of jointly controlled entities on a line-by-line basis in its
financial statements.
Under the equity method, the investments in joint ventures are initially recognised at cost and the carrying amounts
are increased or decreased to recognise the Groups share of the profit or loss and movements in other comprehensive
income of joint ventures after the date of acquisition. The Groups share of the profit or loss of joint ventures is
recognised as a single line item in profit or loss under the equity method.
The Group has applied the new policy for investments in joint ventures in accordance with the transitional provisions
of IFRS 11. The change in accounting policy has been applied from 1 January 2012. The Group recognised its investment
in joint ventures at the beginning of the earliest period presented (1 January 2012), as the net of the carrying amounts
of the assets and liabilities previously proportionately consolidated by the Group. This is the deemed cost of the Groups
investments in its joint ventures for purposes of applying equity accounting.
The change from proportionate consolidation to equity accounting resulted in a change in individual asset, liability,
income, expense and cash flow line items with no impact on equity or profit attributable to equity holders. The impact
of the application of IFRS 11 on the Groups financial results is disclosed in note 18.
IFRS 13 Fair Value Measurement
IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single
source of fair value measurement and disclosure requirements for use across IFRS. IFRS 13 was adopted and applied
prospectively and it was assessed that the adoption did not result in any material impact on the financial results
of the Group.
6. FINANCIAL INSTRUMENTS
The carrying amount of all financial instruments measured at amortised cost closely approximate fair value.
7. SEGMENT ANALYSIS
The Group has four reportable segments that are used by the Group executive committee, which is deemed to be the
Chief Operating Decision Maker (CODM) of the Group, to make key operating decisions, allocate resources and assess
performance. The reportable segments have been defined based on quantitative thresholds which have resulted in the
identification of the following business segments, South Africa, Nigeria, Large OpCo Cluster and Small OpCo Cluster.
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012* 2012*
Reviewed Reviewed Audited
Rm Rm Rm
Revenue#
South Africa 20 146 19 860 41 338
Nigeria 22 303 19 262 38 697
Large OpCo Cluster 18 321 19 196 37 818
Iran 4 402 6 506 12 175
Ghana 4 002 3 242 6 862
Syria 1 780 2 846 5 391
Cameroon 2 309 1 817 3 812
Ivory Coast 2 543 1 998 4 124
Uganda 2 051 1 619 3 296
Sudan 1 234 1 168 2 158
Small OpCo Cluster 9 080 7 854 16 695
Head office companies and eliminations (200) (248) (506)
Iran revenue exclusion° (4 402) (6 506) (12 175)
65 248 59 418 121 867
# Irancell Telecommunication Company Services (PJSC) proportionate revenue is included in the segment analysis
as reviewed by the CODM and excluded from reported revenue due to equity accounting for joint ventures.
* 2012 amounts restated, refer to note 18.
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012* 2012*
Reviewed Reviewed Audited
Rm Rm Rm
7. SEGMENT ANALYSIS (continued)
EBITDA#
South Africa 6 503 7 034 14 478
Nigeria 14 762 11 645 22 544
Large OpCo Cluster 7 782 7 969 14 935
Iran 1 948 2 908 5 388
Ghana 1 560 1 222 2 537
Syria 291 657 1 238
Cameroon 1 447 854 1 750
Ivory Coast 1 409 842 1 662
Uganda 756 1 162 1 762
Sudan 371 324 598
Small OpCo Cluster 3 163 2 650 5 597
Head office companies and eliminations (1 663) 245 471
Iran EBITDA exclusion# (1 948) (2 908) (5 388)
28 599 26 635 52 637
Depreciation and amortisation (9 003) (7 451) (15 952)
Net finance cost (88) (1 684) (3 790)
Share of results of joint ventures
and associates after tax 1 658 1 720 3 008
Profit before tax 21 166 19 220 35 903
# Irancell Telecommunication Company Services (PJSC) proportionate EBITDA is included in the segment
analysis and as reviewed by the CODM and excluded from reported EBITDA due to equity accounting for
joint ventures.
* 2012 amounts restated, refer to note 18.
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012* 2012*
Reviewed Reviewed Audited
8. EARNINGS PER ORDINARY SHARE
Number of ordinary shares in issue
At end of the period (excluding MTN
Zakhele) 1 881 924 634 1 854 973 597 1 855 010 397
Weighted average
Balance at beginning of period
(excluding MTN Zakhele) 1 855 010 397 1 854 816 617 1 854 816 617
Share options excercised 1 209 59 113 116 768
Shares cancelled (397 056) - (336 620)
In issue at end of period 1 854 614 550 1 854 875 730 1 854 596 765
Less: treasury shares (22 337 752) (10 809 049) (16 604 900)
Shares for earnings per share 1 832 276 798 1 844 066 681 1 837 991 865
Add: dilutive shares
MTN Zakhele shares issued 10 766 448 11 621 957 9 835 922
Share schemes 1 900 017 1 465 326 1 575 047
Shares for dilutive earnings per share 1 844 943 263 1 857 153 964 1 849 402 834
Rm Rm Rm
Reconciliation between profit attributable to
the equity holders of the Company and headline earnings^
Profit after tax 12 537 10 594 20 704
Net profit on disposal of non-current assets
held for sale (602) (698) (662)
Impairment/(reversal of impairment) of
property, plant and equipment and
non-current assets 46 (11) (20)
Basic headline earnings# 11 981 9 885 20 022
Earnings per share (cents)
- Basic 684 575 1 126
- Basic headline 654 536 1 089
Diluted earnings per share (cents)
- Basic 680 570 1 119
- Basic headline 649 532 1 083
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2013 2012* 2012*
Reviewed Reviewed Audited
Rm Rm Rm
9. Share of results of joint ventures and
associates after tax 1 658 1 720 3 008
Irancell Telecommunication Company
Services (PJSC) 1 361 1 670 2 896
Others 297 50 112
10. CAPITAL EXPENDITURE INCURRED 12 792 9 639 28 827
11. CONTINGENT LIABILITIES 630 917 1 224
12. AUTHORISED CAPITAL EXPENDITURE FOR PROPERTY,
PLANT AND EQUIPMENT AND SOFTWARE 27 157 22 539 27 157
13. INTEREST-BEARING LIABILITIES
Bank overdrafts 103 512 169
Current borrowings 10 081 9 033 10 593
Current liabilities 10 184 9 545 10 762
Non-current borrowings 31 964 25 192 21 322
42 148 34 737 32 084
^ Amounts are presented after taking into account non-controlling interests and tax.
# Headline earnings is calculated in accordance with circular 3/2012 headline earnings as issued by the
South African Institute of Chartered Accountants at the request of the JSE Limited.
* 2012 amounts restated, refer to note 18.
14. ISSUE AND REPAYMENT OF DEBT AND EQUITY SECURITIES
During the period under review the following entities raised and repaid significant debt instruments:
- MTN Nigeria Communications Limited raised R6,2 billion additional debt through a syndicated loan
facility.
- MTN Nigeria Communications Limited repaid R600 million relating to a syndicated term loan facility
and export credit facility.
- MTN Holdings Proprietary Limited raised R6,2 billion additional debt through a syndicated loan
facility and issuance of Senior Unsecured Notes.
- MTN Holdings Proprietary Limited repaid R4,4 billion relating to short-term general borrowings and
settlement of Senior Unsecured Notes.
In accordance with the Domestic Medium-Term Note Programme previously established by MTN Holdings
Proprietary Limited, the Group issued R2,6 billion (December 2012: R5,6 billion) of Senior Unsecured
Zero Coupon Notes. R2,9 billion (December 2012: R4,6 billion) of the Senior Unsecured Zero Coupon Notes
has been repaid.
There were no share buy-back transactions for the current period. During 2012 MTN Holdings Proprietary
Limited, a wholly owned subsidiary of the Group, acquired 15 573 340 shares in the ordinary share capital
of the Company for an amount of R2,1 billion with the cumulative amount of R3 billion spent in respect of
share buy-backs at the reporting date (inclusive of transaction costs). The shares so acquired are fully
paid up and are held as treasury shares.
15. NON-CURRENT ASSETS HELD FOR SALE
During the current period, the Group concluded a transaction with IHS Holding Limited (IHS) in which IHS
acquired 931 mobile network towers from MTN Ivory Coast SA for USD141 million and 576 mobile network
towers from Mobile Telephone Network Cameroon Limited. IHS will purchase a further 251 mobile network
towers from Mobile Telephone Network Cameroon Limited, resulting in the sale of 827 mobile network towers
for USD143 million. IHS is a 100% shareholder of the tower companies set up in each country. MTN Ivory Coast
SA and Mobile Telephone Networks Cameroon Limited have become anchor tenants of the towers sold for an
initial term of 10 years.
16. EVENTS AFTER REPORTING PERIOD
MTN Zakhele refinance
MTN Zakhele gave notice to MTN of its intention to excercise its call option in terms of the Notional Vendor
Financing (NVF) by delivering the NVF Call Option Early Exercise Notice on 29 July 2013, MTN delivered the
NVF Acceptance Notice on 1 August 2013. MTN Zakhele will purchase MTN shares to the value of approximately
R1,7 billion in the open market and is required to deliver an equivalent number of MTN shares to MTN by no
later than 20 August 2013.
This will be treated as a reduction of approximately R1,7 billion of the NVF balance in MTN Zakheles
accounts.
The shares transferred to MTN will be cancelled as required by the JSE and effectively a share buyback of
R1,7 billion will be completed at a minimal cost to MTN.
17. CHANGES IN SHAREHOLDING
Carrying amount
on transaction
date
Rm
17.1 MTN Cyprus Limited
During March 2013, the Group increased its shareholding
in MTN Cyprus Limited from 50% to 100% for EUR58 million.
Purchase consideration 690
Net assets acquired 163
Difference included in equity on consolidation 527
17.2 Disposal of 0,84% in MTN Ivory Coast SA
During March 2013, the Group decreased its shareholding
in MTN Ivory Coast SA from 67,67% to 66,83% for USD6 million.
Consideration received 57
Net assets disposed 25
Difference included in equity on consolidation 32
17.3 Satalite Data Networks Limited
During March 2013, the Group increased its shareholding
in Satalite Data Networks Limited from 60% to 100% for
ZAR47 million.
18. IMPACT OF THE APPLICATION OF IFRS 11
18.1 Income statement
Six months Financial year ended
ended 30 June 2012 31 December 2012
Adjustments Adjustments
required in required in
Previously accordance Previously accordance
reported with IFRS 11 Restated reported with IFRS 11 Restated
Rm Rm Rm Rm Rm Rm
Revenue 66 426 (7 008) 59 418 135 112 (13 245) 121 867
Other income 711 - 711 894 - 894
Direct network operating costs (10 389) 2 264 (8 125) (20 464) 4 276 (16 188)
Costs of handsets and other
accessories (4 687) 113 (4 574) (9 789) 199 (9 590)
Interconnect and roaming (7 043) 802 (6 241) (15 041) 1 787 (13 254)
Employee benefits (3 617) 121 (3 496) (7 775) 241 (7 534)
Selling, distribution and
marketing expenses (7 803) 336 (7 467) (16 052) 421 (15 631)
Other operating expenses (3 800) 209 (3 591) (8 321) 394 (7 927)
EBITDA 29 798 (3 163) 26 635 58 564 (5 927) 52 637
Depreciation of property,
plant and equipment (7 045) 590 (6 455) (14 860) 1 069 (13 791)
Amortisation of intangible assets (1 112) 116 (996) (2 386) 225 (2 161)
Operating profit 21 641 (2 457) 19 184 41 318 (4 633) 36 685
Net finance costs (1 805) 121 (1 684) (4 157) 367 (3 790)
Share of results of joint ventures
and associates after tax (93) 1 813 1 720 (180) 3 188 3 008
Profit before tax 19 743 (523) 19 220 36 981 (1 078) 35 903
Income tax expense (7 522) 523 (6 999) (12 913) 1 078 (11 835)
Profit after tax 12 221 - 12 221 24 068 - 24 068
18. IMPACT OF THE APPLICATION OF IFRS 11 (continued)
18.2 Statement of financial position
Six months Financial year ended
ended 30 June 2012 31 December 2012
Adjustments Adjustments
required in required in
Previously accordance Previously accordance
reported with IFRS 11 Restated reported with IFRS 11 Restated
Rm Rm Rm Rm Rm Rm
Non-current assets 110 716 (2 994) 107 722 121 097 (898) 120 199
Property, plant and equipment 70 776 (5 951) 64 825 77 485 (3 580) 73 905
Intangible assets and goodwill 31 359 (1 783) 29 576 33 935 (1 341) 32 594
Investments in joint ventures
and associates 1 841 5 253 7 094 1 765 2 880 4 645
Deferred tax and other
non-current assets 6 740 (513) 6 227 7 912 1 143 9 055
Current assets 62 476 (5 362) 57 114 60 287 (4 412) 55 875
Non-current assets held
for sale - - - 1 373 - 1 373
62 476 (5 362) 57 114 58 914 (4 412) 54 502
Other current assets 32 773 (622) 32 151 27 937 (1 415) 26 522
Restricted cash 1 725 (11) 1 714 5 277 (5) 5 272
Cash and cash equivalents 27 978 (4 729) 23 249 25 700 (2 992) 22 708
Total assets 173 192 (8 356) 164 836 181 384 (5 310) 176 074
Total equity 87 165 - 87 165 92 887 - 92 887
Attributable to equity holders
of the Company 83 545 - 83 545 89 006 - 89 006
Non-controlling interests 3 620 - 3 620 3 881 - 3 881
Non-current liabilities 35 021 (654) 34 367 33 307 (594) 32 713
Interest-bearing liabilities 25 621 (429) 25 192 21 742 (420) 21 322
Deferred tax and other
non-current liabilities 9 400 (225) 9 175 11 565 (174) 11 391
Current liabilities 51 006 (7 702) 43 304 55 190 (4 716) 50 474
Interest-bearing liabilities 9 837 (292) 9 545 10 790 (28) 10 762
Other current liabilities 41 169 (7 410) 33 759 44 400 (4 688) 39 712
Total equity and liabilities 173 192 (8 356) 164 836 181 384 (5 310) 176 074
18. IMPACT OF THE APPLICATION OF IFRS 11 (continued)
18.3 Statement of cash flows
Net cash from operating activities* 10 957 (4 982) 5 975 25 078 (5 016) 20 062
Net cash used in investing activities (13 730) 762 (12 968) (27 059) 2 847 (24 212)
Net cash used in financing activities (3 676) 1 531 (2 145) (5 759) 479 (5 280)
Net decrease in cash and cash equivalents (6 449) (2 689) (9 138) (7 740) (1 690) (9 430)
Cash and cash equivalents at beginning of period 35 213 (2 139) 33 074 35 213 (2 139) 33 074
Exchange losses on cash and cash equivalents (1 298) 99 (1 199) (1 942) 837 (1 105)
Cash and cash equivalents at end of period 27 466 (4 729) 22 737 25 531 (2 992) 22 539
* In addition to the IFRS 11 adjustments, dividends paid to non-controlling interests
were reclassified from financing activities to operating activities to include all
dividends paid to equity holders in operating activities as at 31 December 2012.
The June 2012 amount of R1 420 million has been reclassified accordingly.
Administration
Directorate:
PF Nhleko (Chairman), RS Dabengwa* (Group President and CEO), BD Goschen*, A Harper+, KP Kalyan,
NP Mageza, MLD Marole, AT Mikati++, MJN Njeke, JHN Strydom, F Titi, AF van Biljon (LID) and J van
Rooyen
*Executive +British ++Lebanese
Company secretary:
SB Mtshali, 216 - 14th Avenue, Fairland, 2195
Private Bag X9955, 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 and,
SizweNtsalubaGobodo Inc., 20 Morris Street East, Woodmead, 2191
PO Box 2939, Saxonwold, 2132
Sponsor:
Deutsche Securities (SA) Proprietary Limited
E-mail: investor_relations@mtn.co.za
Date: 14/08/2013 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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