MTN : interim results 30 June 2016

Revenue for the interim period improved to R79.1 billion (2015: R69.3 billion). EBITDA dropped to R18.9 billion (2015: R30.7 billion). Operating profit plummeted to R5.2 billion (2015: R19.9 billion). Loss after tax attributable to equity holders of the company was recorded at R5.5 billion (2015: profit of R11.9 billion). Furthermore, headline loss per share were 271 cents per share (2015: headline earnings of 654 cents per share).

Declaration of interim ordinary dividend
Notice is hereby given that a gross interim dividend of 250 cents per share for the period to 30 June 2016 has been declared payable to MTN shareholders

Prospects
The MTN Group continues to work towards achieving its vision of 'leading the delivery of a bold, new Digital World to MTN's customers'. The Group is in the process of undertaking, with external assistance, a deep and fundamental strategic review of its operations and processes to ensure it is operating far more optimally given the pressure on voice revenues, evolving customer needs for high quality data and more complex and competitive market environments. This will reset and position the business for future growth in a rapidly evolving sector.

As part of the review, the following key areas will be addressed:

• An advanced analytics unit will be established to support the business to drive network quality and high-speed data connectivity especially in key locations with high demand, provide compelling segmented offerings to consumers and enterprises, improve customer service and increase targeted smartphone uptake.
• Operating efficiencies and improving customer service remain a priority with a focus on the service channels productivity through digitisation and leveraging Mobile Money as a distribution channel. Continued network optimisation and improved opex management, including the implementation of zero-based budgeting, will also contribute to improving efficiencies.
• The group will continue to explore opportunities to create value through leveraging its extensive infrastructure across Africa and the Middle East.
• Improving the way of work through increased co-ordination between different parts of the business is key to the success of this strategy.
• The group will embark on a process of housing new revenue streams, particularly Digital services, outside the core business. This will allow for more agility and greater flexibility to accelerate growth in these areas. New revenue streams are expected to increase their contribution to revenue over the next 12-18 months.

The group will also continue to seek value-accretive expansion opportunities in selected geographies across Africa and the Middle East.

MTN's investments in towers with IHS Holding Limited are evidenced by the group's substantial ownership interest in INT Towers Ltd. and MTN's direct investment in IHS. IHS continues to grow and develop its business with leading market positions in 5 markets and has recently led in-market consolidation in Africa through its acquisition of Helios Towers Nigeria. IHS is now the largest independent tower operator in EMEA by tower count and the tenth largest independent tower company in the world, with more than 24,000 towers. IHS is extremely well positioned for future growth and build-out from 3G upgrades and the move to LTE across its key markets. MTN will benefit from IHS' strong growth, IHS will also help us accelerate MTN's network expansion in markets such as Nigeria further improving the benefits and services for MTN's customers.

MTN aims to list MTN Nigeria on The Nigerian Stock Exchange during 2017 and has established a management task team with the responsibility to guide the company towards such a listing. The proposed listing is subject to suitable market prevailing circumstances and conditions and the appropriate approvals from relevant regulators and other stakeholders.

MTN Ghana will proceed with the localisation of 35% of its shares during the course of 2016. This is a requirement of winning the auction for a 4G/LTE licence earlier this year.

MTN is confident that by year-end the group would have successfully completed the group's proposed management changes. In 2017, MTN will have a permanent and refreshed senior management team to take the group forward.

In Nigeria, following the reinstatement of regulatory services, MTN expects to improve competitiveness in this market and anticipate an improved performance for the remainder of the year. Data growth will also benefit from the increased investment in 3G and LTE networks in key cities and the utilisation of the recently acquired spectrum.

MTN anticipates a positive growth trend in South Africa, supported by a strong focus on customer service and improving the network quality, capacity and speed. Data growth will continue to be underpinned by the group's on-going significant investment in 3G and LTE. The continued easing of sanctions in Iran and its related economic uplift offers significant opportunities to expand services particularly in the digital space, benefiting from MTN's strong position and a youthful population. MTN continues to work towards remitting some of its cash amounting to approximately R15,4 billion from MTN Irancell, although this a complex process.

In November 2016, MTN's Broad-Based Black Economic Empowerment (BBBEE) vehicle, MTN Zakhele will unwind. Upon unwinding, MTN Zakhele shareholders will be given the option to receive cash, MTN shares or potentially re-invest into a new scheme. MTN is currently reviewing various options to create a new scheme to maintain its BBBEE ownership credentials in line with the BBBEE codes.

The group has declared an interim dividend of 250 cps. The FY 2016 minimum dividend, as previously noted at the group's FY2015 results, is anticipated to be 700cps. This takes into consideration the impact of the Nigerian regulatory fine and the limited US dollar liquidity in Nigeria. The minimum dividend remains at the discretion of the board. Should operating conditions improve materially, MTN would look to declare a higher dividend than advised.