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MTN Nigeria Communications PLCAnnual Report 2019

Y’ello!

MTN Nigeria Communications PLC Annual Report and Financial Statements 20192 3

Contents

Overview

Notice of Annual General Meeting (AGM)

Who We Are

A Brief History of MTN Nigeria

Communications PLC (MTN Nigeria)

Recent Awards and Recognition

Key Financial Highlights

Chairman’s Statement

Strategic Report

Business Model and Strategy

Chief Executive Officer’s Statement

Our People and Culture

Risk Management

Corporate Social Investment

Governance

Directors, Officers and Professional

Advisers

Board of Directors

Executive Management

Corporate Governance Report

Directors’ Report

Statement of Directors’ Responsibilities

in Relation to Financial Statements

Audit Committee Report

Reports of Independent Auditors

to the members of MTN Nigeria

Communications PLC

05

06

07

10

13

14

17

21

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27

30

35

40

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58

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64

66

82

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88

Financials

Statement of Profit or Loss

Statement of Other Comprehensive Income

Statement of Financial Position

Statement of Changes In Equity - Group

Statement of Changes In Equity - Company

Statement of Cash Flows

Notes to the Consolidated and Separate

Financial Statements

Other National Disclosures

Value Added Statements

Five-Year Financial Summaries

Additional Information

Share Capital History

Request of Change of Address

E-Bonus Request Form

E-Mandate Activation Form

Change of Mandate Form

Proxy Form

List of Unclaimed Dividends

93

94

95

96

97

98

99

100

176

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187

188

191

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MTN Nigeria Communications PLC2


OverviewNotice of Annual General Meeting (AGM)

Who We Are

A Brief History of MTN Nigeria Communications PLC (MTN Nigeria)

Recent Awards and Recognition



06

07

10

13

14

17

MTN Nigeria sponsored the 2019 Kano and Zaria Durbars. Always a colorful display of culture and pageantry, the Durbar is a spectacular display of a thousand year old tradition, that involves a royal parade of men on horses adorned with beautiful garments.


MTN Nigeria currently serves over 64 million people and communities nationwide. Our enduring industry leadership in coverage, capacity and innovation, reflect the steadfast and progressive nature of our customer base from day one.

MTN Nigeria Communications PLC is part of the MTN Group – an emerging market communication services provider at the forefront of technological and digital innovation with a presence in 21 countries in Africa and the Middle East.

Who We Are

The MTN Group has operations in Afghanistan, Benin, Botswana, Cameroon, Cote d’Ivoire , Ghana, Guinea Bissau, Guinea Republic, Iran, Liberia, Nigeria, Republic of Congo (Congo Brazzaville), Rwanda, South Africa, Sudan, South Sudan, Swaziland, Syria, Uganda, Yemen and Zambia. MTN also has ISP licences in Namibia and Kenya and a Value Added Service licence in Ethiopia.

Notice of Annual General Meeting (AGM)

6 MTN Nigeria Communications PLC

Notice is hereby given that the Annual General Meeting (AGM) of MTN Nigeria Communications PLC will be held at 11.00 a.m. on Friday, May 15 2020 at the Rooftop Event Hall, MTN Plaza, Falomo, Ikoyi, Lagos; to transact the following business:

AgendaOrdinary Business1. To receive the audited Financial Statements

for the year ended December 31, 2019 and the Reports of the Directors, Auditors and the Audit Committee thereon;

2. To declare a dividend;3. To elect/re-elect Directors;4. To appoint Auditors;5. To authorize the Directors to fix the remuneration

of the Auditors;6. To elect members of the Statutory Audit

Committee.

Notes:Proxy:A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him/her. In view of the Covid-19 pandemic, attendance shall only be by proxy. Designated proxies listed in the proxy form attached to the Annual Report are Dr. Ernest Ndukwe OFR (Chairman), Mr. Ferdinand Moolman (Managing Director/Chief Executive Officer) and Mrs. Uto Ukpanah (Company Secretary). To be valid, executed forms of proxy should be deposited at the Registered Office of the Company or sent via email to [email protected]. Alternatively executed proxy forms may be deposited with the Registrars, United Securities Limited, 9 Amodu Ojikutu Street, Victoria Island, Lagos or sent via email to [email protected]; not later than 48 hours before the time of holding the meeting.

Closure of Register of MembersNotice is hereby given that the Register of Members and the Transfer Books of the Company will be closed on Monday, April 20, 2020 to enable the Registrar prepare for payment of dividend.

Dividend and closure of Register of MembersIf approved by members at the Annual General Meeting, Dividend will be paid on Tuesday May 19, 2020 at the rate of N4.97 per every 2 kobo ordinary share; to shareholders whose names appear in the Company’s Register of Members at the close of business on Friday, April 17, 2020 (bringing total dividend for the year ended December 31, 2019 to N7.92).

Unclaimed Dividend WarrantsAll Shareholders are hereby informed that the Registrars of the Company are holding Dividend Warrants which have been returned as “unclaimed”. Some Dividend Warrants sent to Shareholders’ registered addresses are yet to be presented for payment or returned to the Registrars of the Company for validation. All Shareholders are encouraged to complete e-dividend Mandate Form to ensure that all outstanding dividends are paid electronically.

Statutory Audit CommitteeIn accordance with Section 395(5) of the Companies and Allied Matters Act, CAP C20 LFN 2004, a shareholder may nominate another shareholder for appointment as a member of the Audit Committee by giving notice to the Company Secretary at least 21 days before the Annual General Meeting.

E-DividendNotice is hereby given to all Shareholders to open bank accounts for dividend payment. A detachable application form for e-dividend is attached to the Annual Report to enable all Shareholders furnish their accounts to the Registrars as soon as possible.

Right of Shareholders to ask QuestionsShareholders have a right to ask questions not only at the Annual General Meeting, but also in writing prior to the meeting. Questions should be submitted to the Company Secretary at the Company’s registered office or via email - [email protected] not later than 5 days to the date of the Annual General Meeting.

Electronic Annual ReportThe electronic version of the Annual Report is available online for viewing and download from our website at www.mtnonline.com/investors. Shareholders who have provided their email addresses to the Registrars will receive the electronic version of the Annual report via email. Furthermore shareholders who are interested in receiving the electronic version of the Annual Report should request via email to [email protected]

BY ORDER OF THE BOARD

Uto UkpanahCompany Secretary

(FRC/2014/NBA/00000005748)

April 22, 2020

MTN Group: Located in

MTN Group: Subscribers worldwide

21countries

251millionMTN Nigeria: Subscribers nationwide

64.3million

MTN Nigeria Communications PLC Annual Report and Financial Statements 20198 98 MTN Nigeria Communications PLC

Our purpose is to make lives brighter

Our values define what is important to us, they guide our conduct and inform our actions

We believe everyone deserves the benefits of a modern, connected life

Our vision is to lead the delivery of a bold, new digital world

Inspired by our vision, driven by an unshakeable belief, and guided by our values, we work towards one purpose - to make our customers’ lives a whole lot BRIGHTER.

Our dedication to enabling connections that matter – among families, friends and communities is fuelled by this conviction, and has not faltered since the very first call was made on the MTN network - at Maritime House Apapa on May 16 2001.

This commitment, coupled with the support and trust placed in us by our customers, have made our growth and success possible.

A proudly Nigerian company with a rich African heritage, we are committed to using our technology and assets to help build a better tomorrow - where businesses expand; the economy grows, and people progress.

Guided by the principle of shared value which enables shared prosperity; we know that the success and growth of our business are tied to the wellbeing and development of the communities where we live and work. That is why we are constantly looking for opportunities and possibilities; to make a positive and sustainable impact.

The opportunity we have been granted to play a role in Nigeria’s evolution has been our great privilege. From this vantage point, we have borne witness to the ingenuity, drive, and resilience at the heart of our great nation. We understand that with real access and support, there is nothing Nigerians cannot achieve. And they choose us.

People, businesses and communities across the country have kept faith with us for over 18 years; trusting us to connect them with each other and the world.

Our people drive our success and exemplify leadership, innovation, relationship, integrity and a can-do spirit – MTN’s core values.

In a complex world of constant, rapid change and an ever-changing business environment, our organisational values are guiding principles that help shape our culture, inform our decisions and define our company. They are a shared set of beliefs that drive our behaviour and bind us together; permeating every aspect of our company, including our relationships with and among our employees, customers and partners.

Who We Are - continued

...because of you!

...every celebration, every new door and open invitation,

every fresh smile and addition to our story was made possible


The history of MTN Nigeria overlaps with some of the most revolutionary events that have taken place in thetelecoms sector of the country and one story cannot be told without touching on the other.

Prior to deregulation of thesector, the telecoms industry witnessed limitationsin infrastructure and quality of service. However, in 1992, the Nigerian Communications Commission was formed which paved the way for the democratization of the Nigerian telecommunications space, throughthe auction of licenses to private sector players.

The sheer size of the market and its hunger for communications technology made Nigeria an extremely compelling proposition and in collaboration with local partners and notwithstanding local reservations, the MTN Group was determined to invest by bidding for the GSM 900 and GSM 1800 license. On the 19th of January 2001, the MTN Group won their bid and became one of 5 international companies to do so. This would enable the birth of MTN Nigeria and thus change the landscape of the telecoms industry irrefutably.

In a matter of months, the first call was made in Lagos and by 2003, just 2 years after, MTN Nigeria had connected 1 million customers. Since then, we have been central to the exponential growth witnessed in the industry, and remain a major player in the Nigerian telecommunications market which is arguably the largest and the most competitive in Africa.

Comprehensive planning and a robust infrastructure meant that network rollout was seamless and swift, a fact for which MTN Nigeria won awards. In the subsequent years, voice services were soon followed by the provision of data with major investments in fibre optics and 4G expansions; further expanding capacity and the ability to provide communication solutions through video and content, and the delivery of mobile financial services.

MTN Nigeria’s customers, stakeholders and now shareholders have remained at the heart of major investments made in the expansion of MTN’s network coverage, capacity and quality of service. This has led to the design and development of communication solutions across formal and informal sectors in the country that have enabled growth,

transformed livelihoods, and ultimately many parts of the national economy.

Since MTN Nigeria began operations, it has created over 2.5 million jobs, contributed over N2.3 trillion to the national purse in taxes, levies and fees. Its innovative services have benefited stakeholders in the telecoms industry and has impacted Nigeria’s socio-economic growth and development favourably. It has become known for its wide network coverage, operational stability and fast Internet connectivity, serving about 5% of Africa’s population.

In 2019, MTN Nigeria became the first network to conduct trials for 5G technologies in West Africa, and became listed on the Premium Board of the Nigeria Stock Exchange, a milestone achievement.

A brief history of MTN Nigeria

10

MTN’s services have evolved over the years. From voice, to providing data, to better call quality and extensive coverage; from 2G to 4G, we have always focused on giving our customers greater freedom to live their best lives.

HISTORICAL MILESTONES

2001 20132003 20142004 20152005 20162006 20172007 20182010First call made on MTN Nigeria network

Incorporated MTN Nigeria Foundation

Commissioned one of the largest network switching centres in Africa

Connected 10 million

subscribers

Tower business transferred to

IHS, streamlining operations

Launched mobile financial services (Diamond Y’ello &

On Demand)

Set up Yello Digital

Financial Services Limited

Launched Africa’s first

3G smart feature phone

Acquired 2.6GHz spectrum;4G launch in Lagos, Abuja and Port Harcourt;Reached NCC fine resolution

Connected 1 million

subscribers

Connected 50 million subscribers

Launched fibre

network

Acquired Visafone; 700MHz spectrum

acquisition; Launched MTN

Music+

Acquired 3G spectrum; Awarded Unified Licence

Launched BRIGHT

strategy;Modernised subscriber definition

2019Became listed on the Premium Board of the Nigerian Stock Exchange;Obtained Super-Agent licence;Conducted 5G technology trial, first in West Africa

MTN Nigeria Communications PLC


Good together

Commercially launched on August 8, 2001

Serving over 64.3m customers

Employs over 1,800 people

Listed on the Nigerian Stock Exchange May 16, 2019

Shares held by over 4,800 investors

Extensive coverage

2G population coverage: 87%



20 Million Nigerians live in places where MTN is the sole provider

Over 16,000 base stations

12 switching centres

Over 28,000 km of fibre

Over 410 Customer touchpoints

Over 100,000 mobile money agents

64.3million+subscribers nationwide

87%coverage

Buoyed by the unstoppable spirit of the people we serve, MTN is Nigeria’s premier provider of communication solutions, and one of the largest mobile service providers in Africa and the Middle East. For this, we are grateful to YOU.

We marvel at your indomitable spirit and round-the-clock pursuit of progress. Striving to keep up with you, we have continued to expand coverage and capacity. You keep going…

Giving where we live

Working with you to support 18.6 million people

860 projects across 36 States and the FCT

Over N21 billion invested (1% of profit after tax) in various

projects across the country through MTN Nigeria Foundation

Enabling growth and transformation

Serving over 800,000 businesses including 850 corporations

Facilitating over 1 Billion financial transactions via USSD

Connecting over 50,000 automatic tellers and point-of-sale devices

Protecting over 12,000 vehicles

1bn+ N21bn+

CorporateSocial

Investment

transactionsUSSD

A powerhouse of ideas, we remain in awe as you create, evolve and grow your business from the comforts of home, shared workspaces, workshops and traditional offices. You worked with us to develop solutions and services tailored to suit your needs.

We are inspired as you leap from one accomplishment to the next, bringing the entire community forward with you. You welcomed us and made it possible to walk in step with you.

…together, we turn it up.

OUR STORY IN NUMBERS

12

Awards

Most Valuable Multinational Brand in Nigeria

Most Valuable Telecoms Brand in Nigeria

HR Champion Award - Ferdi Moolman, CEO MTN Nigeria

Best Innovation for Enterprise Service

Social Impact Award

Telco Partner of the Year

1

2

3

4

5

6

Awarding Body

Top 50 Brands Nigeria

Top 50 Brands Nigeria

HR magazine

Nigeria Tech Innovation & Telecom Awards (NTITA) by Instinct Wave and Association of Telecom Companies of Nigeria (ATCON)

Nigeria Tech Innovation & Telecom Awards (NTITA) by Instinct Wave and Association of Telecom Companies of Nigeria (ATCON)

Nigerian Inter-Bank Settlement Scheme / Central Bank of Nigeria

Year

2019

2019

2019

2019

2019

2019

The various awards won by MTN Nigeria during the year, further fuels our commitment to continue providing relevant digital solutions for our customers.

In its citation, Top 50 Brands Nigeria, a Lagos-based brand research company, described MTN Nigeria’s service as providing “World-class cellular network access and business solutions, with a differentiated and attractive array of product and service offerings, as well as a growing bouquet of ICT products”. MTN Nigeria was subsequently awarded the 2019 Most Valuable Multinational Award, as well as the Most Valuable Telecoms Brand Award.

The 2019 HR Champion Award was awarded to Ferdi Moolman, Chief Executive Officer of MTN Nigeria, for supporting the most innovative and far-reaching HR initiatives.


Recent Awards and RecognitionA brief history of MTN Nigeria - continued



Revenue

ARPU

‘19 ‘18 ‘17 ‘16 ‘15

‘19 ‘18 ‘17 ‘16 ‘15

Data 42.4%2019: N219.9bn2018: N154.4bn

‘19 ‘18 ‘17 ‘16 ‘15

Fintech 23.3%2019: N35.2bn2018: N28.6bn

‘19 ‘18 ‘17 ‘16 ‘15

Digital -77.1%2019: N4.6bn2018: N20bn

‘19 ‘18 ‘17 ‘16 ‘15

Voice 8.4%2019: N848.3bn2018: N782.3bn

13.1%2019: N208.3bn2018: N184.2bn

1.1%2019: N1,5192018: N1,503

12.6%2019: N1,169.7bn2018: N1,039.1bn

‘19 ‘18 ‘17 ‘16 ‘15

45.2%2019: N629.9 bn2018: N433.9bn

Revenue and ARPU EBITDA

Revenue

‘19 ‘18 ‘17 ‘16 ‘15

Capital Expenditure

‘19 ‘18 ‘17 ‘16 ‘15

90%2019: N423.6bn2018: N223.3bn

AFCF (Adjusted Free Cash Flow)

Growth 2019 2018 2017 2016 2015

(N billion, unless otherwise indicated)

Subscribers (million) 10.5% 64.3 58.2 52.31 61.8 61.3

APRU2 1.1% 1,519.1 1,503.2 1,411.2 1,071.5 1,045.5

Revenue 12.6% 1,169.7 1,039.1 887.2 793.7 807.4

Voice revenue 8.4% 848.3 782.3 657.6 608.6 633.5

Data3 42.4% 219.9 154.4 107.3 57.6 71.8

Digital revenue 4 -77.1% 4.6 20.0 60.3 80.0 64.5

Fintech revenue 23.3% 35.2 28.6 21.5 12.8 8.8

Other5 14.8% 61.8 53.8 40.5 34.0 28.0

EBITDA6 45.2% 629.9 433.9 345.6 356.0 434.0

EBITDA margin6 (% of revenue) 12pp 53.9% 41.8% 39.0% 44.9% 53.7%

Capital expenditure7 13.1% 208.3 184.2 225.4 196.0 130.0

Capital expenditure margin (% of revenue) 1pp 17.8% 17.7% 25.5% 24.7% 16.1%

Adjusted Free Cash Flow (AFCF)8 90% 423.6 223.3 143 191 356

AFCF margin (% of revenue) 14.7pp 36.2% 21.5% 16.2% 24.1% 44.1%

Notes:1 In June 2017, MTN Nigeria initiated subscriber redefinition to accurately reflect the active customer base and exclude

customers whose transactions are limited to incoming SMS messages, incoming calls on its network and airtime refills

from the active subscriber definition.2 ARPU – Average revenue per user.3 Data revenue includes fixed data.4 Digital revenue consists of revenue generated from rich media services, content VAS and mobile advertising.5 Other revenue consists of revenue from SMS, ICT and Infrastructure, devices, leased line and non-service revenue.6 EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortisation) includes the impact of N19.2 billion CBN

resolution (2018). IFRS 16 relating to accounting for leases was implemented in 2019 and EBITDA relating to periods

prior to 2019 was prepared on an IAS 17 basis where lease expenses were included in EBITDA.7 2019 capital expenditure excludes the impact of IFRS 16.8 AFCF excludes non-cash transactions.


N9.9k

12.6%

31.1%

I am delighted to welcome you all to the 2019 Annual General Meeting of our Company, MTN Communications Nigeria PLC, and to present to you the Annual Report and Financial Statements of the Company for the year ended 31st December 2019.

Over the last 19 years, our Company has evolved from a market entrant on the 16th of May 2001 when the first mobile call was made, to becoming Nigeria’s leading mobile network operator. The Company has indeed witnessed a series of significant milestones, the most historic being our listing on the Premium Board of the Nigeria Stock Exchange on the 16th of May 2019.

2019: N1,169.7bn; 2018: N1,039.1bn

2019: N290.1bn; 2018: N221.3bn

2019 EARNINGS PER SHARE

2019 REVENUE

2019 PROFIT BEFORE TAX

2018: N7.2k

I would therefore like to begin this report by commending the visionary spirit of our founding directors, both at MTN Group level and at MTN Nigeria.

Beyond the financial and operational performance in 2019, we are committed to continuing to invest in the technology, systems, talent and processes required to help us deliver on our promise to our stakeholders. During the year, we successfully hosted the first 5G trials in West Africa and also secured a super-agent licence from the Central Bank of Nigeria (CBN) - enabling us to build the nation’s largest agent network and in so doing accelerate growth in Financial inclusion.Our listing on the Nigerian Stock Exchange last year represents the first phase of our intention to expand the shareholder base of the Company. The second phase, which remains a key focus subject to conducive market conditions, is expected to involve a public offering to enable more Nigerian investors to participate in the MTN Nigeria investment opportunity.

OUR PEOPLE

With a strong Management team that is fully committed to delivering world class voice and data services, the Board is confident that our Company will continue to deliver on the vision of being the biggest and most trusted provider of high quality ICT services in Nigeria.


The welfare of our staff continues to be our priority and the Company has continued to invest in ensuring a good work environment for our employees. During the year, we also celebrated the launch of a gym, crèche and lounge at our head office as part of a new Beyond Work initiative for our most valuable resource, our internal Y’ello family.

There were some changes amongst our local Non-Executive directors on the Board. Dr. Pascal Dozie CON; Col. Sani Bello (rtd.); Mr. Gbenga Oyebode MFR; Mr. Babatunde Folawiyo; Mallam Ahmed Dasuki and Chief Victor Odili OON retired meritoriously from the Board in the course of the year. We thank them immensely for their courage, counsel and service.

I am also pleased to inform you that the composition of the new members that recently joined the Board of the Company now incorporates more gender diversity. It is therefore my pleasure to once again, welcome Mr Andrew Alli, Mr Michael Ajukwu, Mr Kabiru Ahmad OON, Dr Omobola Johnson, Mr A B Mahmood SAN, OON and Mrs Ifueko M. Omoigui Okauru MFR to the first Annual General Meeting of MTN Nigeria. I count on your overwhelming support to formally elect them as directors at this meeting.

Dr. Ernest Ndukwe, OFRChairman

“With a strong management team that is fully committed to delivering world class voice and data services, the Board is confident that our Company will continue to deliver on the vision of being the biggest and most trusted provider of high quality ICT services in Nigeria.”


Chairman’s Statement - continued

MACROECONOMIC OVERVIEW

The global economy continued its growth, albeit at a slower pace of 2.9% compared to 3.6% in 2018, as estimated by the International Monetary Fund (IMF), due to slower economic activity in a few emerging market economies and increased social unrest. The global economy also felt the impact of Brexit and the US-China trade dispute as investment spending slowed in advanced economies.

In 2020, the global economy is expected to be in recession, due to the impact of the COVID-19 pandemic, which has led to a global lockdown and disrupted demand and supply chains. The Russia and Saudi Arabia oil feud over market share, further escalates the situation. Although global central banks and fiscal authorities have taken measures to limit the economic impact of the pandemic, the IMF forecasts a contraction of 3% in global output for 2020.

On the domestic front, Nigeria continued its recovery in the aftermath of the 2016/2017 economic recession, with 2019 Gross Domestic Product (GDP) growth estimated at 2.3% by the IMF, an improvement from 1.9% recorded in 2018. Growth was driven by information and communications technology, agriculture and oil & gas sectors of the economy. The concerted efforts of the government, through the extension credits at low interest rates to employment generating sectors, as well as minimum wage increase, were broadly supportive of economic growth.

Inflation closed at 11.98% in December 2019, an increase in the recorded inflation figures of 11.44% in December 2018. The Naira traded in the 306.35-307.00 range in 2019 at the official window and in the 360.13-365.87 range at the

Investor and Exporter window. The foreign exchange reserve was down by 10.5% to US$38.60bn, enough to cover 5.5 months of import, at the end of 2019 as the CBN continued to supply FX to the market. The CBN’s support for the Naira is positive given its implications for foreign borrowing and imported goods and services.

Economic activity is expected to slow down significantly in 2020, due to the lockdown announced by the government, particularly in the commercial and capital cities of Nigeria, to curb the spread of COVID-19. The IMF forecasts the Nigerian economy will contract by 3.4% in 2020. Sectors exempted from the lockdown may see limited impact.

As a result of the global pandemic and falling oil prices, the Federal Government revised the budget downwards, lowering the benchmark price of crude oil to US$30 per barrel, while the CBN adjusted exchange rates, due to rising pressure on foreign exchange reserves. The Government has also removed the subsidy on premium motor spirit (PMS) and adjusted the pump price downwards to reflect the movement in global prices of crude oil.

In view of the uncertainty associated with the duration and related economic impact of the COVID-19 pandemic, it is expected that the fiscal and monetary authorities will introduce further measures that will help to minimise the effect of COVID-19 on the domestic economy.

PERFORMANCE OVERVIEW

Despite the macroeconomic challenges and regulatory hurdles, I am pleased to report that MTN Nigeria delivered a strong performance in 2019.

Service revenue increased by 12.6% year-on-year to NGN1.2 trillion driven by growth in voice

and data revenue; Voice revenue increased by 8.4%

to N848.3 billion; Data revenue rose by 42.4% to

N219.9 billion; EBITDA grew by 45.2% to

N629.9 billion with margin at 53.9%;

Profit before tax grew by 31.1% to N290.1 billion;

Profit after tax grew by 38.8% to N202.1 billion with earnings per share at N9.9 kobo.

These outstanding results have been made possible by our continuous investment in expanding and modernising our networks and the focus of the Board, Management and Staff of the Company on adhering to strict financial discipline and ethical business practice.

In line with our dividend policy, the Board has recommended a final dividend of N4.97 kobo per share to be paid out of distributable net income. This brings the total dividend for the year to N7.92 kobo per share.

A COMMITMENT TO GOVERNANCE

MTN Nigeria and its Board of Directors are committed to maintaining high governance and regulatory standards to ensure we are in line with globally benchmarked processes and procedures as well as Nigeria’s laws and regulations. We will continue to prioritise building and strengthening relationships with all policy and regulatory institutions in Nigeria and ensuring that we work collaboratively.

We are delighted with the progress made in resolving our dispute with the Attorney General of the Federation (AGF) on the adequacy of taxes and duties paid. We have discontinued the legal action against the AGF following the transfer of the matter to the relevant authorities and look forward to a final resolution. We have always fulfilled

our tax obligations and in the last 19 years of operations, have paid over N2.3 trillion in Government taxes and other levies.

During the year, we completed payment of the N330 billion negotiated settlement with the Nigerian Communications Commission (NCC) on the 2015 SIM Registration issue. The NCC also approved the transfer of additional spectrum following our purchase of Visafone Communications Limited in 2015. We are confident that we will resolve all outstanding issues, while maintaining good relationships with all authorities.

THE MTN NIGERIA FOUNDATION

One of the ways we are creating a net positive impact is by committing up to 1% of our profit after tax through the MTN Nigeria Foundation. For over 14 years, we have partnered with various communities, individuals and groups to create tangible impact around the country.

In 2019, we implemented the Anti-Substance Abuse Program (ASAP) and the Mother & Child campaign; both geared towards the most vulnerable of our society-Women and Children. Our 2019 campaigns directly impacted over 250,000 individuals.

Since inception we have spent over N21 billion, through the Foundation and supported 18.6 million people in over 860 projects across the 36 states of the country and the Federal Capital Territory - providing critical facilities to individuals and communities, administering medical treatments to over 145,000 people and making the dreams of over 8,000 students come true via scholarships.A detailed report of our activities will be contained in a separate Sustainability Report.

Dr. Ernest Ndukwe, OFRChairman

(FRC/2020/003/00000020337)

ONE AFRICA FOR ALL

Our overriding mission is to connect people. This mission has seen the MTN Group work across continents and countries, forging new partnerships to create a more united world. We know the importance and power of connecting people and the positive impact it has on the society. The sparks of violence that erupt because of hate, prejudice and xenophobia should have no place in our societies. We reiterate our unequivocal condemnation of all violence against any human being on account of race, creed or gender.

LOOKING AHEAD

2020 will see MTN Nigeria double down on our commitment to deliver the best customer experience. We will continue to execute our strategy with greater focus on opportunities in fintech and digital. We will continue to prioritise the expansion of our 4G network that will link more people to high-speed Internet access. While we continue to engage with relevant agencies of government regarding obtaining a Payment Service Bank licence, we are fully harnessing opportunities that the Super-Agent licence brings by working on building our network of agents and promoting employment and financial inclusion.Nurturing and earning the trust of our customers remain paramount for our Company and we will continue to direct investments to providing new products and services tailored just for their needs. It is this trust and goodwill that have helped the Company build one of the largest mobile networks in the world and Africa’s most admired brand.

Over the next three years, we plan to invest about N600 billion in our network. This investment will enable us accelerate our 4G network

expansion, deepen population coverage and support the Federal Government’s broadband initiative. We are excited about the possibilities that the transition to digital presents for our business, and the growth and development of Nigeria.

Our thoughts are with the people and communities affected by the corona virus pandemic and everyone working hard to contain its spread. While we acknowledge its potential impact on our supply chain, our priority in addressing this challenge remains the health and safety of our people, customers and the general public. Thus, we continue to engage and actively pursue new ways to leverage our core expertise, technology and infrastructure to support government’s efforts to keep citizens safe. Connecting people with their loved ones, providing collaboration/productivity tools, and enabling access to healthcare solutions, guidance and resources, while ensuring we continue to provide the access critical to safeguarding the delivery of essential social and security services, remain our focus.

May I, on behalf of the Board, Management and entire MTN Nigeria family, express sincere gratitude and appreciation to all our shareholders for their support in 2019, we thank you. To the 64.3 million subscribers and other stakeholders that place their trust in us every day, we appreciate their valued support and patronage.


Strategic ReportBusiness Model and Strategy



Risk Management

Corporate Social Investment

22

27

30

35

40

MTN 4G Data makes movie streaming better #JustForYou


Business Model and Strategy

GROWTH OPPORTUNITIES

We have identified six distinct growth opportunities (or ‘curves’) that we are pursuing simultaneously across the consumer, enterprise and wholesale market segments.

We provide reliable, secure Internet of Things (IoT) connectivity and have invested in state-of-the-art IoT platforms to enhance our offering. Our fintech offerings also extend into the enterprise space, particularly for SMEs and SOHOs.

Wholesale

MTN owns and runs the largest fixed and mobile infrastructure network in the region, and we plan to take advantage of our scale to provide high-quality services to wholesale customers. Through MTN GlobalConnect, an entity within the MTN Group, we provide wholesale services and other long-distance telecommunication services which include Wireless messaging, International connectivity, Capacity, Voice interconnect, Mobility services, and International roaming across the MTN operations. MTN GlobalConnect procures and manages the infrastructure, which is shared by MTN Group operating companies (opcos) and facilitates the easy routing of the traffic across the markets in which the Group operates. The creation of this company has better enabled MTN to open up our infrastructure to third parties, including other telcos and tech companies to resell excess capacity.

OUR MARKET SEGMENTS

We provide digital services to a broad spectrum of customers, summarised in three (3) broad segments – Consumer, Enterprise and Wholesale

Consumer

The consumer segment is made up of High-Value customers, Mid-market/Youth and the Mass market. Our value propositions are based on our understanding of consumer needs in line with the concept of our “EPIC”: easy, personalised, in-control and connected offerings. Our product offerings are not only connectivity (voice, data and SMS) but also the digital services customers use over that connectivity.

Our digital portfolio comprises eight key categories, namely: Music, Video, Education, Gaming, Infotainment, Instant Messaging, Advertising and other Lifestyle based Value Added Services. Our flagship digital products include the Ayoba instant messaging App and Music Time (A music streaming service delivered via mobile app). Through a range of partners, we offer fintech products including mobile wallets, payments, microloans, mobile commerce, micro-insurance that are universally accessible through our app or USSD. Our Super-Agent licence allows us to extend the reach of our delivery channels through a fast growing agent network. In addition, MTN’s mobile electricity product, the Lumos box is offered as a lifestyle bolt-on product that leverages our systems and channels to deliver seamless renewable energy across the country for all segments in the market.

Enterprise

Under our enterprise segment, we serve all businesses/organisations, including government and small, medium and large scale enterprises. We have adopted a hybrid segmentation approach for our enterprise customers, and the segments include Multinationals, Oil & Gas, Large Corporates, Public Sector (MDA and Government Agencies), Education (Universities), Small and Medium Scale Enterprises (SMEs) and Small Offices/ Home Offices (SOHOs).

Data Enterprise

WholesaleVoice

FintechDigital

2 5

4

1 6

3

CURVE 2: Data

Opportunities• Low data penetration• Growing demand for data• Increased level of

awareness• Pricing flexibility• Fast adoption of youth

Our Plan• Expand 4G coverage• Affordable handsets

customised to meet immediate demand

(Smart T)• Repositioning of our

commercial data offering• USIM upgrade to 4G• Service bundling including

OTT partnership• Education & Seamless

access and Experience

CURVE 1: Voice

Opportunities • Predominantly young

population• Price elasticity potential

still exists for voice

Our Plan• Best practice pricing &

combo Bundles• Ultra-rural site roll-out• Personal pricing with AI• Multi-product selling• Distribution

transformation• Omni-channel

experience

GrowthOpportunities

CURVE 3: Digital CURVE 4: Fintech

Opportunities• Increasing data adoption • Increasing awareness of digital

services• OTT service gap• Relevant local content availability

Our Plan• Improve customer journey and

experience on our services• Grow active user base of our digital

offerings• Launch own services and platform• Offer a rich portfolio of digital

products including music, video, gaming and messaging services

• Local content aggregation & Partnerships

• App and Digital Stores Adaption• Mobile Payments integration

Opportunities• Low level of banking penetration• Limited traditional banks footprint

in rural areas• Cash-based economy• Lack of credit history and financial

identity• Enabling regulation• Synergies with growing digital

services

Our Plan• Expand our super-agent network

and the service offering• Obtain Payment Service Bank

approval• Sync products distribution and

channels across the business• Build an ecosystem of payments

across Nigeria

Opportunities• Enterprise is

mobile-centric• Underserved SMEs• Unserved large

SME market• Low level of ICT

adoption• Cost efficiency drive

- focus on core business activities

• Fragmented service providers

Our Plan• Deepen enterprise

penetration across different markets

• Deploy vertical solutions across segments

• Expand channel coverage for SME

• Partnerships with relevant ICT players

• Provide End to End Solutions and services

• Drive MTN way of selling

CURVE 5: Enterprise

CURVE 6: Wholesale

Opportunities• Huge capacity

demand • Satellite to fibre

migration• Managed MPLS

needs• Fast growth in digital

services• Increasing need

to invest in infrastructure efficiently

Our Plan• Monetise existing

infrastructure• Harness

opportunities by leveraging the strengths and capabilities of operators within the MTN Group

• Long term contracts with key players

23Annual Report and Financial Statements 2019


Best Customer Experience

Our future focus• Lead Market in Net Promoter Score (NPS) • Reduce monthly churn• Achieve best brand in markets

Initiatives• Increased customer-engagement

channels and developed a loyalty program

• Enhanced myMTN app with new features and launched Web version to improve call to action for digital campaigns

• Sustained pro-customer communication campaigns addressing key pain points through initiatives like #ManageMyData, #YelloMoments, Social Army, etc.

Outcome• Maintained Net Promoter Score

(NPS) Leadership position - 62%, • Maintained No 1 position in

Network, Brand, and Distribution with consistent improvement in value perception and service delivery;

• Recorded digital recharge penetration of 38.3%, up 6.7pp.

Growth through Data and Digital

Our future focus• Achieve growth in data subscribers • Achieve growth in digital

subscriptions including mobile money users

Initiatives• Unlocked the 800MHz Spectrum • Optimisation and repositioning of

our entire data offering• Launched super-agent services on

the back of our super-agent license• Upgraded myMTN App to a digital

storefront for Digital Services • Optimisation of VAS services and

reintroduced auto renewal

Outcome• Solid data revenue growth of 42.4%

to N219.9 billion• Active data subs grew by 34.9% to

25.2m• Growth in 4G data subs by over

400% to 5 million• Roll-out of over 108,000 super-

agents nationwide• Grew active digital service

subscriptions by 519% to 2.1 million • Awarded “Telco Partner for the

year” by NIBSS and “Payment Innovation Driver: Telecom of

the Year“ by Interswitch

Returns and Efficiency

Our future focus• Improve ROIC- Return on Invested Capital • Report top-quartile TSR- Total

Shareholder Return• Increase AFCF yield• Improve EBITDA margin

Initiatives• Revamped our product

development and go-to-market process;

• Implemented cost optimisation initiatives ranging from digital transformation to value-for-money procurement

Outcome• Improved EBITDA margin; 53.9% up

12.1pp • EBITDA growth of 45.2% y-o-y to

N629.9bn • Earnings per share growth of

38.8% y-o-y to N9.9• Net debt to EBITDA ratio of 0.5x• Return on invested capital (ROIC)

of 87%• AFCF growth of 90.1% to N424bn

Hearts and Minds

Our future focus• Lead market in employee NPS • Improve employee engagement• Ensure effective risk & compliance

practices

Initiatives• Deployed a new and robust

electronic learning platform (MTN Learn) to facilitate continuous learning & development

• Attracting and retaining talent through our Talent Investment platforms, namely MTNN Internship Programme, Global Graduate Development Programme, and Talent Incubation Programme

• Launched “Women @ Y’ello” ; an MTN Nigeria female employees networking platform

• Implemented the Beyond Work Programme

Outcome• Secured the highest category of

the IIP certification (IIP platinum Accreditation)

• 97% of employees said they were proud to work for MTN Nigeria

• Achieved employee engagement index of 88%, up 5pp

• Recorded lower employee attrition rate of 4.8%, down 1.6pp

Ignite Commercial Performance

Our future focus• Grow network subscribers • Ensure stable voice revenue• Grow enterprise and wholesale

revenue

Initiatives• Launched self-service

advertisement portal for Small and Medium Enterprises (SMEs) and corporates;

• Simplified products structure and offerings to our key market segments (Youth, High-value and Mass) and focused our campaigns on these segments.

• Deployed new electronic voucher distribution platform for enhanced revenue efficiencies and out-bound dialer for improved CVM- Customer Value Management campaigns

Outcome• Double-digit service revenue

growth at 12.6%;• Improved gross additions by 15.7%

to 22.8 million; • Added 6.1 million new subscribers

to grow RGS90 by 10.5% to 64.3m • Increased enterprise business

revenue by 20.3% to N132.8 billion• Increased wholesale revenue by

45.2% to N46.0 billion

Technology Excellence

Our future focus• Lead market in network NPS • Increase efficiency of systems• Increase network coverage

Initiatives• Network roll-out to increase

capacity and coverage: 6,038 Logical 4G sites, 1,187 3G sites

• Optimal utilisation of U900MHz spectrum to support 3G

• Launched 4G+ services in three states – Lagos, Abuja and Port Harcourt

• Enhanced the ease of SIM upgrade and SIM swap by enabling trade channels with an App

Outcome• Achieved 4G coverage in 132 cites • Increased 4G traffic contribution

from 10.1% to 37.9%• Improved TCH-Traffic Channels

availability from 98.1% to 98.7%• Expanded 4G population coverage

from 14.8% to 43.8%• Achieved 3G population coverage

of 78.2%, up from 70.0%• Improved SIM registration

performance enhancement (98% within 10 min)

Business Model and Strategy - continued

OPERATIONAL STRATEGY

Our BRIGHT operational strategy serves as a compass for all MTNers and clearly defines the six pillars on which we are focusing to build our business sustainably. It is strongly hinged on execution excellence, with an inspiring philosophy situated within daily operations in a manner that drives measurable impact on revenue, cost and efficiency. Its operationalization is geared to deliver value to our customers.

24 MTN Nigeria Communications PLC

Our BRIGHT operational strategy serves as a compass for all MTNers...


DELIVERING ON OUR PROMISE

I first came to Nigeria in 2001, as part of the team that set up the MTN business when we acquired a licence; and was present, at Maritime House Apapa on May 16 2001, when the first call on our network was made. I wish I could say that at the time, I fully grasped the incredible potential that telecommunications had to transform the Nigerian economy and the lives of Nigerians.

The success story of our industry is a clear and undeniable demonstration of the opportunity that the Nigerian economy represents for investors, and I am proud to continue to be a part of its continued progress. Today, industry growth is being driven by the emergence of accessible and fast data which is beginning to transform many aspects of the Nigerian economy and act as a critical catalyst for broader development. The speed at which the digital economy is growing and how it is driving service delivery and creating new dynamic jobs is genuinely inspiring. I honestly believe that the opportunities for growth in Nigeria today are similar, if not greater than they were 19 years ago when we first began this journey.2019 was a good year despite its challenges, and I am gratified by the achievements we recorded. We made the final payment of the Nigerian Communications Commission (NCC) fine and listed on the Premium Board

of the Nigerian Stock Exchange, thereby concluding the requirements of the 2015 SIM registration fine. The NCC approved the transfer of the 800MHz spectrum we acquired from Visafone, which enabled us to unlock the frequency, accelerate 4G network expansion, and roll-out 4G+ services in three states – Lagos, Abuja and Port Harcourt. In the second half of the year, we became the first operator in West Africa to conduct 5G technology trials; we are excited about its potential for MTN and Nigeria. We also launched smart feature phones as part of our strategy to address the issue of handset affordability and drive data penetration.

In furtherance of our aspiration to effectively drive financial inclusion in Nigeria, we obtained a super-agent licence from the Central Bank of Nigeria (CBN). This has enabled us to build an agent network with over 108,000 registered agents and, once we receive a licence, we can seamlessly roll out the payment service bank. Our super-agent service operates under a wholly-owned subsidiary, Y‘ello Digital Financial Services, which is responsible for our fintech business. At the heart of these achievements is an unshakable commitment to our promise to create shared value for our shareholders, customers, employees and the broader stakeholder ecosystem. We know, without a doubt, that our growth and


evolution as a company is entirely dependent on our ability to create and grow that shared value.

PERFORMANCE REVIEW

I am encouraged by our performance in 2019. The foundation we put in place in 2018 led to sustained momentum in 2019. Although we saw a slowdown in the third quarter, principally due to SIM registration, the fourth quarter was very promising. As a result, we continued to deliver double-digit growth in service revenue in line with our medium-term guidance. Voice revenue growth remained healthy, and data revenue continued to accelerate, resulting in a 12.6% increase in service revenue.During the year, we focused on building our subscriber base, resulting in the growth of 10.5% in our subscriber base to a total of 64.3 million subscribers, representing 6.1m increase in net additions.Our active data subscribers rose by 34.9% to 25.2 million on the back of several initiatives. Voice revenue growth remained healthy at 8.4% and accounted for 72.7% of service revenue. We recorded rapid growth in data revenue enabled by greater population coverage, a revamp of our data portfolio and initiatives to drive 4G device penetration. Consequently, we added 5.3 million smartphones to our network, bringing smartphone penetration to 41.9% of our base.

“At the heart of our achievements, is an unshakable commitment and promise to create shared value for our shareholders, customers, employees and the wider stakeholder ecosystem.”

Ferdi MoolmanChief Executive Officer


Our 4G Population coverage increased to 43.8% and data traffic accelerated, growing by 85.5% YoY. Overall, data revenue rose by 42.4%, contributing 18.8% to service revenue. Digital revenue gained momentum as we started to see quarterly growth from Q3 2019. We focused on building a sustainable active user base for our digital business while improving the customer journey and experience on value-added services (VAS). Our active base has surpassed 2.1 million users, providing sufficient critical mass for our portfolio of digital products and services.

Our fintech business continued to expand, supported by the launch of our super-agent service in August 2019. We are pleased with the initial roll-out and uptake of the service in the first four months of operation. We maintain our focus on accelerating our agent network roll-out. To cater to a broader market segment and further accelerate adoption, we are also expanding the service offering – from basic transfer service and airtime/data sales to a more extensive bouquet, including cash deposit and withdrawal services, bill payments and facilitating e-commerce.

On the cost side, the increase in operating expenses on an IAS 17 basis was 4.4%, which was below the rate of inflation. This reflects progress with our cost management initiatives and reduction of non-recurring expenses. On an IFRS 16 basis, operating expenses declined by 21.4%. Recall that in January 2019, we adopted IFRS 16 accounting policy, which

impacted the treatment of leases that were classified as operating leases on IAS 17 basis. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 45.2%, which was ahead of revenue, resulting in a 12.1pp improvement in the margin to 53.9% (IAS 17: 44.8%). We maintained our leadership position in network net promoter score (NPS) as we continued to invest in improving service quality and driving 4G expansion with additional 10,895 sites. This resulted in a 13.1% increase in capital expenditure and CAPEX intensity of 17.8% on an IAS 17 basis.Overall, our bottom-line remained strong with growth of 31.1% and 38.8% respectively in profit before and after tax. Earnings per share increased by 38.8% to N9.9 kobo.

During the year, we successfully redeemed the preference shares, which simplified our capital structure and reduced our exposure to foreign exchange as the instruments were denominated in foreign currency.

In line with MTN’s mission, we have developed the BRIGHT operational strategy which serves as a compass for us and clearly defines the six pillars on which we are focusing to build our business sustainably. At its core, this strategy is about placing customers at the centre of everything we do, ensuring enterprise-wide alignment around a single imperative - exceeding customers’ expectations across our entire value delivery chain by leveraging our assets and capabilities to deliver a seamless, best-in-class experience of our

services, and products that are high in quality, easy to use, flexible and offer value-for-money.

PEOPLE FIRST

MTN Nigeria has 1,874 permanent employees and 1,912 3rd party staff. Over 99% of our employees are Nigerian nationals, indicative of our commitment to developing local content. 24% of female employees are in management - highlighting the importance we place on women in leadership roles.

I have led this team for four years and could not ask for a more talented or dedicated team. I am inspired by their commitment and dedication. Peter Drucker famously said that “culture eats strategy for breakfast.” I have found this premise to be true time and time again. We have built a culture that empowers our employees, values inclusivity and hard work and instils a responsibility for our customers and our communities. This is what defines us. It is also what unites us. Underpinning our success is a focused and consistent investment in our people. As an organisation, we strive to provide an enabling environment as well as hire and develop the best talent. Recognising that the critical role of championing my colleagues, who are by far our greatest assets, was too important a task for any one person, I collaborated with Chief Human Resources Officer as HR Champion to launch the Beyond Work initiative (a set of people-centric campaigns to help better engage staff). We received the Investors in Peoples

certification (IIP)-Platinum, one of the highest accolades a company can receive globally for their people management practices. A good example of this was evident in the course of 2019, when Mr. Adekunle Awobodu resigned as Chief Financial Officer. Mrs. Omolara Michael-Nwadu was appointed Acting Chief Financial Officer, holding fort until the resumption of Mr. Modupe Kadri, a testament to our strong people base.

We continue to work to build our internal capabilities and reward and recognise stellar performance through robust systems and structure.

LOOKING FORWARD

Driving profitable growth and building long-term shareholder value are top priorities for us, secondary only to maintaining the highest quality of service for our customers. Upholding global standards of corporate governance is another key focal point. We will continue to focus on the governance structures and culture required to support and protect our business, while ensuring effective stakeholder management and operational execution in times of crises. The last few years have not been bereft of challenges, but we are nevertheless unwavering in our commitment to our overarching mission. Our ambitions for the future, centre around sustainable value creation for all our stakeholders.

We have watched the outbreak of COVID-19 trigger an unthinkable chain of events, wreaking havoc on

health, social and economic systems worldwide. This has placed a heavy toll on families, communities and countries. Coupled with the fall of oil prices, the way we live, work and interact in our communities has been adversely affected, spreading an unprecedented climate of uncertainty.Delivering on our commitment, every day, is at the heart of what we do. That means providing reliable service, in good times, and more importantly, in challenging times. It also means playing our part in the fight against COVID-19, supporting national efforts and doing as much as we can to protect lives and livelihoods.That is why as a business, we have so far deployed a broad set of initiatives: facilitating federal and state government efforts and frontline health agencies including the NCDC, by providing connectivity support (devices, data and airtime), medical supplies and personal protective equipment. We have helped enhance the capacity and preparedness of individual states to manage the outbreak proactively by providing connectivity support (data and airtime), communication systems, analytical response management and risk profiling. In addition, we have lent our support to the Coalition Against COVID 19 (CACOVID) in educating the populace as well as providing meals to families in great need, amongst other efforts.

For our customers, we have ensured that the most vulnerable and marginalised communities are not left behind by providing free SMSs; waived fees for money

Chief Executive Officer’s Statement - continued

Far Right:A memorable moment after MTN’s successful trial of 5G technology, the first network in West Africa to do so.

Ferdi MoolmanChief Executive Officer

(FRC/2016/IODN/00000015147)

transfers using the Momo Agent Network from Y ello Digital Financial Services; provided bill payment extensions for post-paid customers, and deployed door-step delivery of HyNet and MIFI devices enabling access to our network and services.

Our services remained accessible on various online channels with reduced operating hours in locations with partial lockdown, maintaining strict hygiene and social distancing practices as we continue to monitor unfolding developments.

While we put measures in place to mitigate the impact on our network and overall business performance, we look forward to connecting more people to their loved ones, businesses to their customers and talent to opportunities, come what may, in 2020.

On behalf of the team at MTN Nigeria, I thank you for being a part of our journey. We look to the future with optimism and vigour. Together we will Turn It Up!

’



Our People are our most valuable players...

Underpinning our success is a focused

and consistent investment in our people.

As an organisation, we strive to provide

an enabling environment as well as hire

and develop the best talent because our

people make us what we are and remain

committed to delivering a bold new digital

world to our customers.

To sustain this intrinsic motivation, all

employees are encouraged to continually

demonstrate MTN’s core values and

vital behaviours, which remain the

cornerstone of business performance.

CORE VALUES:

1. Leadership ‘’Being a good example and taking responsibility’’

2. Integrity ‘’Being ethical and following-through on commitments

3. Relationship ‘’showing compassion, support and sharing = #GoodTogether’’

4. Innovation ‘’thinking out of the box and doing things differently’’

5. Can-Do ‘’demonstrating positivity and never giving up’’

VITAL BEHAVIOURS:

1. Complete Candour – openly and candidly sharing one’s views; regardless of the job level of the person being addressed.

2. Complete Accountability - Holding everyone accountable to commitments and results regardless of position.

3. Get It Done – Taking action to resolve problems/risks instead of waiting for someone else to notice them and escalating where I am unable to resolve the issue.

4. Active Collaboration – Sacrificing time and resources to support colleagues, within or outside my function where required.

In addition, our unique Employee Value Proposition (EVP) which is deployed across the MTN Group, is a competitive value proposition that has ensured an average of 2% regrettable turnover over the years and an ever-improving employee engagement score.

Some levers of the EVP include our wellness and medical proposition, an integrated learning management strategy, flexible and performance-driven reward and recognition programs, end-to-end talent management strategy and a conducive culture.

As part of its effort to continually assess and validate the strength of our EVP, MTN Nigeria once again submitted its people management practices for review by the Investors in People (IiP) UK - a business improvement tool designed to enhance business performance through people. It is the only internationally recognised people management development standard that links people practices to business performance. In August 2019, MTN Nigeria was awarded the IiP Platinum Award; which is the highest certification by the IiP. Indeed, internationally only 2% of organisations assessed by IiP hold the Platinum Certification. What it means is that internationally, including in Africa, the United Kingdom and USA where IiP has a presence, MTN Nigeria is in the top percentile of organisations with the best people practices.

In line with our vision, digital is a critical part of our DNA and will continue to transform and be positioned as an EVP that underpins our way of work. In addition to the various digital initiatives/solutions in the organisation, we recently created a Digital Planning Committee made up of a cross-functional team focused on designing digital imperatives to deliver more for our customers.

30

good together: people practices and business

By Gender

3rd Party Staff

North Central: 10.81%; North East: 2.15%;North West: 4.35%

South East: 23.12%;South-South: 21.77%;South West: 37.80%

Male: 67.26% Female: 32.74%

PermanentEmployees:

1,874

1,263 611

Key information – December 31, 2019

1,912



The ‘H’ pillar in our BRIGHT strategy speaks to how we continuously engage and connect with our employees to increase levels of engagement and ultimately improve organisational culture.

Our CEO (who is also the 2019 HR People Magazine’s HR Champion), consistently champions and chairs the Annual Group Culture Audit (GCA) survey and debrief sessions. The GCA is an Employee Opinion Survey (benchmarked with several organizations). It provides another avenue for employees to give their opinions on different areas of the work environment to enable Management respond with appropriate initiatives. In 2019, we recorded an unprecedented 100% employee participation with the following key results:

Improvement in all dimensions relative to the GCA 2018 result:

Our overall satisfaction index was 85, 7 points higher than in 2018

Sustainable Engagement was 88%, 5 points higher than in 2018

Leadership rose 10 points 97% of employees said they were

proud to work for MTNN;

Diversity & inclusion

A truly Nigerian company that embraces diversity, over 99% of our 1,874 permanent workforce are Nigerians representing all Geo-Political Zones. There are 15 expatriates (down from 300+ in 2002). 72% of our Executive Management Committee members are Nigerians - four of whom are women. In addition, two out of the three people that occupy ‘Head of Region’ positions are women.

MTN Nigeria has always taken a bold stance on gender-pay parity. In addition, to improve gender diversity and enhance the career development of women, we launched the Women @ Y’ello (The WAY) an MTN female employees networking programme in August 2018. Several initiatives have been launched on the back of the programme; which includes a book club, All Booked, with bi-monthly and quarterly reviews, and books at half price. Furthermore, the review of the maternity and paternity leave policies, introduction of telecommuting and the launch of a state-of-the-art crèche in the head office, may have contributed to the significant improvement in the satisfaction level of women across the company as evidenced in the result of the 2019 GCA survey.

Since 2009, MTN Nigeria Foundation has been providing part sponsorship to the Federal Ministry of Women Affairs and Social Development towards commemorating the ‘International Day of Persons with Disabilities’. This demonstrates MTN’s commitment to the social inclusion of Persons with Disabilities.

To internalize this commitment, we continue with upgrades at our various facilities in the interest of differently-abled employees and customers. In addition, for the first time, MTNNers celebrated the International Day of Persons with Disabilities on December 03, 2019 with an array of activities showcasing the contributions of differently-abled persons and our formidable partnership with stakeholders’ #Goodtogether.

Accountability for performance

We have a high performing culture that enables employees to deliver results whilst demonstrating our core values of leadership, integrity, relationship, innovation and can-do.

We align the company’s priorities and employees’ contributions through a structured cascading of company’s targets to employees in varying degrees of accountability.

Team performance is tracked on a monthly basis and shared during weekly management operations review meetings in order to provide visibility of business performance to leadership.

Given abundance of research linking the frequency of employee feedback to the effectiveness of the performance management system, we instituted Y’ello Feedback Days where managers are equipped and supported to have a gamified performance conversation with direct reports. Our managers are also supported through an internal licensing and certification programme to build managerial capabilities.

Recognising performance

Our employees are our greatest asset and source of competitive advantage. It is in cognizance of this that we reward and recognize their contribution and good performance using multiple approaches including short-term incentives, digitised recognition campaigns, long-service awards, quarterly team recognition awards, annual performance based salary increases and notional share incentives.

Beyond recognising individual performance, we devote a considerable amount of time regularly to celebrating team and corporate milestones through an initiative known as ‘Ring the Bell’. We leverage the momentum of enterprise achievement to inspire our employees to continue to do great work.

Building a learning organisation

At the heart of our strategy execution is our capability as an entity. This is one of the key elements of our Employee Value Proposition – Investing in Talent. We heavily invest in building capability both for now and the future. Our employee development strategy is premised on the 70-20-10 global learning philosophy.

Additionally, while we leverage our ecosystem’s capacities, we also have a learning engine; the internal faculty and learning delivery team that ensures that we respond to business dynamics and changing customer needs through products and services learning support. As a digital organisation, we have a robust online learning platform with over 9,000 activities and Books 24*7 with over 38,000 courses including Harvard and Ken Blanchard bouquet of leadership courses. Interventions from the MTN Academy also focus on building leadership capabilities at different levels.

MTN supports employee development in their pursuit of academic qualifications in line with our EVP (the MTN Deal) through a Tuition Reimbursement Programme and refund for professional certifications.

Engagement for results

Employee engagement is a critical link between employees’ satisfaction levels and business performance. According to Tower Watson, a 15% boost in engagement leads to a 2% increase in operating margin.

Therefore, we leverage various touch points to engage people on different issues affecting their wellbeing and the business on an ongoing basis. Some of the engagement platforms include Divisional/Regional Leadership Strategy Sessions and Divisional/Departmental Village meetings. In 2019, a total of 137 employee engagement sessions were held.

We also explore various opportunities to enrich the employee experience and energize the workforce. One of such opportunities was the MTN Kids Talent Show - “Show us What You’ve Got” to mark the Children’s Day celebration on May 27th. This is a first-of-its-kind for employees’ children to showcase their skills with the chance to win fantastic prizes.

Beyond Work Programme

Work can be demanding and stressful. Successfully combining work and life issues in Nigeria requires a lot of creativity to juggle all the responsibilities.

That is why Management launched the MTN Beyond Work Programme, to help our employees address some of these challenges.

From Telecommuting to wellness programmes and gym memberships across the country, we have it all covered as we continually aim to improve our employee experience. We opened a crèche to take care of the little ones while our employees work, as well as a lounge where employees can relax, network and bond.

Our People and Culture - continued

A truly Nigerian company, MTNN embraces diversity; over 99% of our 1,874 permanent workforce are Nigerians representing all Geo-Political Zones. There are 15 expatriates (down from 300+ in 2002). 72% of our Executive Management Committee members are Nigerians - four of whom are women. In addition, two out of the three people that occupy ‘Head of Region’ positions are women.

The Chairman and some members of the Executive Committee during the 21 Days of Y’ello Care programme 2019.

from left to right, Rahul De, Lynda Saint-Nwafor,Kolawole Oyeyemi, Esther Akinnukawe, Dr. Ernest Ndukwe - Chairman MTN Nigeria,Ugonwa Nwoye, Uto Ukpanah and Olubayo Adekanmbi

Creating a culture where employees thrive...



Our People and Culture - continued

We also offer special discounts on various goods and services from several partners… and so much more.

The Beyond Work Programme is an umbrella of solutions that signals the Company’s interest in the total well-being of its employees, emphasising the “caring factor” in alignment with the “H” component of our BRIGHT strategy.

Generally, the Beyond Work Programme is grouped into the following:

Health and Wellness programmes helping improve employee wellbeing i.e. health walks and monthly sporty Friday.

MTN Club 0803 platform giving employees access to products and services at discounted rates via strategic partnerships with vendors.

Work-life harmony supporting work-life balance through the introduction of telecommuting and adjustments to work hours.

Financial Literacy Programme to provide knowledge and skills for employees’ financial success, which includes an estate wills element.

Managing Talent for Differentiation

Leadership development is critical for business success and sustainability. As an organisation, we ensure there is a robust leadership pipeline that is equipped to unleash the potential of our people. One of the ways this is done is through the Talent Incubation Programme - a robust and inclusive development approach which comprises a bouquet of customised interventions across job levels focused on executive, leadership and pipeline development. In 2019 248 employees benefitted from the programme.

Executive development30 employees, including members of the Executive Committee and some direct reports were enrolled on the Executive Coaching Programme with internationally certified Master Coaches.

Leadership development167 employees across various job levels benefitted from a number of interventions under this pillar of the Talent Incubation Programmes in 2019. These interventions include attendance at international conferences, speed secondment to other opcos, a ‘fireside chat’ and leadership programmes at selected Ivy League business schools.

Pipeline Development28 employees were beneficiaries of the Aspire Leadership Programme in 2019. This is a high impact career development programme for high-performing non-management employees in preparation for future leadership roles.

The Global Graduate Development Programme (GGDP)The Global Graduate Development Programme is an initiative of MTN Group HR designed to refresh and build a long-term sustainable talent pipeline to achieve MTN’s vision of delivering a bold new digital world to customers. Seven Graduate Trainees have graduated from the programme.

The programme is currently in its fourth cycle with 23 participants at various stages of completion.

In Q4 2019, the 2019 cycle successfully completed the formal learning block of their programme with MTN Group Academy and Duke Corporate Education (A leadership institute) in Dubai. One of the trainees from Nigeria was part of the Customer Value Management team

that won the Action Learning Project which was centered on developing a retailer portal to help retailers teach customers how to use data to drive data usage.

The Career Mobility Framework “Y’ello Careers”

MTNN Career Mobility Framework (Y’ello Careers) seeks to provide a structured framework for enabling employee mobility aimed at building depth, improving employee engagement and enabling business continuity. A total of 348 employees benefitted from at least one developmental intervention (Acting Assignment, Job Rotation, Job Shadowing, Job Transfer and Project Participation) across the organisation in 2019.

Mentoring

The MTN Nigeria Mentoring programme ensures that participating employees are equipped to reach their full potential. In 2019 alone, through the MTN Mentoring Academy, a combined total of 175 employees benefited from the intensive mentoring programme.

MTN Nigeria is an employer of choice; and this is backed by the Investors In People (IiP) Platinum accreditation, among other awards. We deliberately continue to enrich our employee value propositions to ensure that this remains competitive to attract and retain talents. Ultimately, it is about creating an environment that inspires greatness and enables our people to reach their full potential. This in turn drives business performance, increases opportunities for our partners, and ultimately enhances MTN’s role as an agent of National Development.

Risk Management

A RISK BALANCED AND COMPLIANCE DRIVEN CULTURE

At MTN Nigeria, we believe that our strategy - a risk-balanced and compliance-driven culture - is essential to the sustainable achievement of our Strategic goals. The key objective of our Enterprise Risk Management Framework is identifying and evaluating potential events, which may impact our ability to achieve our objectives, in line with our strategy, risk appetite and risk preferences. This is reflected in our corporate governance principles and structures, policy direction, processes and procedures, standards of conduct and management systems.

Our Enterprise Risk Management activities ensures that the following risk management principles are embedded in our organisational culture:

Value creation and protection Risk management integration in all organisational

processes Risk management embedded in decision making Systematic, structured and timely risk management Risk management based on the best available

information Risk management tailored to business needs Consideration of human and cultural factors Transparent and inclusive risk management Dynamic, iterative and responsive to change Risk Ownership and accountability Risk management that facilitates continual

improvement of the organisation

These principles align with management’s mandate and commitment to risk management during the design, implementation, monitoring and continuous improvement of processes, products and services.

Our Risk Management process ensures the appropriate ownership of risk and accountability for risk management by all stakeholders in the value chain whilst ensuring collaboration between risk management and process owners across the Company. The governance of risk management is a responsibility of the Board. However, management and staff play a critical role in supporting the Board in achieving its risk management objectives.

Three Lines of Defence

To ensure the effectiveness of our Risk Management process, the Board and Management rely on line functions, including monitoring and assurance functions, within the Company. Consequently, MTN adopts the principles of the ‘Three Lines of Defence’ model which provides a clear allocation of responsibilities for the ownership and management of risk, to avoid overlaps and/or gaps in risk governance.

First line of defence - Primary risk management: These are the MTN Nigeria functions who own and manage risks. They are members of operational management who manage the Company’s risks by implementing and maintaining effective internal control procedures on a day-to-day basis.

Second line of defence - Challenge and risk control: These functions oversee risk management and compliance. They collaborate with operational management to develop and monitor processes and controls to mitigate identified risks. They co-ordinate and facilitate risk assessment sessions, develop risk management programs, and alert management to emerging issues and changing risk scenarios. At MTN Nigeria, the Risk and Compliance division leads the efforts of the second line of defence.

Third line of defence – Assurance: This function provides independent assurance of the effectiveness of controls and risk management procedures, and keeps the Board and Senior Management informed. The Internal Audit and Fraud Management function is responsible for the activities of the third line of defence at MTN Nigeria.

RISK MANAGEMENT GOVERNANCE STRUCTURE

Board of Directors/ Board Risk Management and Compliance Committee

Our Board sets our overall risk appetite, approves our risk management strategy and is ultimately responsible for the effectiveness of the risk management process and system of internal control within MTN Nigeria. Specifically, the Board, through the Board Risk Management and Compliance Committee, reviews the framework for the identification, measurement and management of risks; reviews quarterly risk management reports and directs appropriate actions to be taken by senior management; and periodically evaluates MTN Nigeria’s risk profile, action plans to manage the risks and progress on the implementation of these plans.

Governance Committee

The Governance Committee serves as the risk management committee at Management level. It comprises key divisional executives with responsibility for providing independent risk oversight, co-ordination, facilitation, monitoring and evaluation of the effectiveness and integrity of our risk management processes. Specifically, the Governance Committee reviews risk exposure reports and recommends appropriate actions to mitigate the impact; reviews and recommends appropriate policies and standards for the management of risks in the Company.

MTN’s high employee performance culture is

propelled by the ‘H’ pillar of our BRIGHT Strategy that continuously seeks

to increase employee connection, engagement

and productivity.



Risk and Compliance Division

The Risk & Compliance division, headed by the Chief Risk and Compliance Officer, oversees the day-to-day risk management activities within MTN Nigeria. The division provides central co-ordination and oversight for all risk management activities in MTN Nigeria to ensure that the full spectrum of risks are identified, measured, monitored and mitigated. Specifically, the Risk and Compliance Division coordinates the development of risk management policies, procedures and standards to assist in the effective management of risks; monitors the overall risk profile including risk trends from internal and external market changes; collaborates with other divisions to redesign controls that mitigate deficiencies noted in the internal and external audit reports; and report on aggregate risk profile, control effectiveness and actions taken.

Internal and External Audit

Our Internal Audit and Fraud Management function provides independent and objective evaluation of the effectiveness of our risk management and internal control system. Specifically, the Internal Audit and Fraud Management function provides independent assessment and evaluation on the adequacy and effectiveness of the Risk Management Framework; and provides assurance on the Company’s compliance with risk policies.

Our External auditors are statutorily responsible to shareholders to provide an independent opinion on our financial statements. The function also reports on risk management, internal control and compliance issues that come to their notice in the course of their audit.

RISK MANAGEMENT PROCESS

At MTN Nigeria, it is imperative that we consistently adhere to our risk management framework and processes in conducting our Enterprise Risk Management activities.

The MTN Enterprise Risk Management methodology is aligned to ISO 31000 Risk Management Standard and the COSO framework and supported by other leading global standards i.e. ISO 27001 and ISO 22301.

Our risk management process (pictorially depicted below) encompasses the following phases:

Establish Context: This is an information-gathering phase required to gain an understanding of the scope of the risk, internal and external environment in which MTN seeks to achieve its objectives. In establishing the context of the risk, we leverage information from MTN Nigeria’s Strategy and plan, policies and procedures, financial reports and performance indicators, supporting technology and information systems, relevant laws etc.

Risk Identification: Regular risk identification is imperative for the success of our risk management process as it ensures the inclusion of emerging risks in the risk management process. The aim of risk identification is to articulate all the relevant risks that can impact the achievement of our business and strategic objectives. At MTN Nigeria, we adopt a bottom-up approach to risk identification. Here, risks are identified at a process level, then at a functional level and at an entity/strategic level. Potential risks are identified via one-on-one interview sessions with process owners; focus group discussions /workshops; use of external consultants; questionnaires and surveys; and desktop research.

Risk Analysis and Evaluation: Our risk analysis aims to measure the significance of identified risks in relation to our business processes and risk appetite. In evaluating the level of risk at MTN Nigeria, it is a careful examination of risks, their causes, their mitigating controls, their likelihood of occurrence and their impact if they crystallise. We utilise qualitative and quantitative tools including key risk indicator monitoring in evaluating and prioritizing our risks. These processes are supplemented with ad-hoc on-site assessments or incident assessments when unexpected high risks occur or are envisaged.

Risk Treatment: Subsequent to the identification, analysis and evaluation of existing and potential risks, mitigation strategies are recommended, implemented, monitored and reported to the Governance Committee on a monthly basis and to the Board Risk Management and Compliance Committee on a quarterly basis. The committees review the monthly/quarterly risk management reports and approve the implementation of appropriate actions to mitigate the risk.

Risk Monitoring and Review: The objective of the process is to ensure that risks are monitored, escalated quickly and reported to the right levels within the MTN governance structure. The Risk and Compliance Division, headed by the Chief Risk and Compliance Officer, champions the risk monitoring and review process. They ensure the implementation of the risk management framework across MTN Nigeria and the management of all risks within the appetite of the Company.

TOP RISKS TO VALUE CREATION

Using an integrated assurance methodology, in 2019, we considered the following to be MTN Nigeria’s most

material risks based on the residual risk rating of each. This takes into account the probability of the risk occurring, the impact should it materialise and the mitigation strategies in place.

The top ten (10) risks have been classified based on the six (6) risk categories of MTN

1. Strategic2. Compliance 3. External4. Operational5. Financial6. Technology

Map Label Definition

1. Evolving Regulatory Environment2. Stakeholder Management3. Foreign Exchange Volatility4. Political and Country5. Fintech Strategy 6. Legal7. Information Security and Privacy 8. Brand perception and Reputation9. Business C

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