Capital allocation and enhanced risk management

MTN Group LimitedRalph Mupita – Group CFO

UBS conference – 26 March 2018

Recap on 2017 results1

Enhanced risk management3

2

Capital allocation2

Agenda

3

Recap on 2017 results

4

2017 group financial results - salient features

Group digital revenue

R13bn**

+14,2%*

Group revenue

R133bn**

+ 6,8%*

Group service revenue

R124bn**

+ 7,2%*

Group data revenue

R28bn**

+ 34,2%*

Adjusted HEPS

-15,1%

665 cents

Group EBITDA

+2,5%*

R47,0bn**

Group capital expenditure

23,7% of revenue

R31,5bn**

HEPS

-51,9%***

182 cents

* Constant currency view is shown and is adjusted for hyperinflation, tower profits, Nigeria fine and MTN Zakhele futhi impact** Reported*** Reported excluding the Nigeria regulatory fine

Final dividend of 450 cents per share

5

2017 group financial results - HEPS

ZAR (cents) 2017 2016 Change%

Attributable earnings / (loss) per share 246 (144) NM

Impairment of goodwill, PPE and non-current assets 275 60 NM

Profit on exercise of exchange right (IHS) (335) - (100,0)

Other (4) 7 NM

Basic headline earnings / (loss) per share 182 (77) NM

Nigeria regulatory fine - 455 NM

Basic headline earnings per share (excluding Nigeria regulatory fine) 182 378 (51,9)

Nigeria fine interest 46 45 2,2

Hyperinflation (excluding impairments) 96 37 NM

Foreign exchange losses and gains 159 235 (32,3)

MTN Zakhele Futhi 24 88 (72,7)

Loss on derecognition of loan (IHS) 158 - 100,0

Adjusted headline earnings per share (excluding non-operational items) 665 783 (15,1)

Impacted by non-operational items

6

Medium-term targets

Service

revenue

growth*Group upper single digit growth

South Africa

mid single

digit growth

Nigeria

double digit

growth

Improving

EBITDA

margins

Capex intensity between

20% to 15%

Dividend policy of

500 cents in 2018, growing

10% to 20% per year

2,0x – 2,5x Adjusted holdco leverage ∆

* Constant currency∆ Adjusted Holdco leverage = Holdco net debt / SA EBITDA + cash upstreaming

7

2017 2019 20202018 2020201920182017 2017 20192018 2020

Revenue EBITDA Capex Operating FCF

EBITDAEBITDA margin CapexCapex intensity Operating free cash flow

2020201920182017

Top line growth EBITDA growth Lower Capex Higher FCF

Other revenueService revenue

Constant currency

Growth – capital allocation and cash generation

8

Capital allocation

9

Capital allocation

Incremental ROIC > WACC +2%• Seeking projects with payback < 4 years

• Conflict markets to be self funding

1

Appropriate group and opco gearing• Stabilise net debt

• Maintain sufficient headroom in facilities

3

Dividends• Operating cash flow fund dividends over the medium term

• Dividend growth aligned to the investment case

• Maintain financial flexibility for risk and growth opportunities

4

M&A• Nigeria and Ghana IPO

• Proceeds to be used for de-leveraging, growth opportunities, share buy-backs and special dividends

5

Smart capex• Investing appropriately for network and NPS leadership

• Reducing unitary costs for network equipment

2

10

Capex profile - 2017 actual and 2018 guidance

1 078

Iran*

1 254

9 600

2 294

9 274

Nigeria

4 002

11 470

SEAGHA

2 4993 651

WECASA MENA

3 696

8 953

4 620

6 917

3 794

27 747

Group

31 461**

Other

20172018 guidance

Capex 2017

ZAR (million)

*Iran Capex at 49% and is not part of the consolidated Group Capex

** Reported

11

Output sample data from MTN Iran Smart Capex Model

Customers Device

Market & Position, Market share

Network utilisation and Demographics

Telecom expense breakdown

Usage behaviour

SIM

QoS data

Technology breakdown

Input

Segmentation

Market Potential

Competitor

Network

Financial

Model

Market sizing and market share analysis

New site establishment plan per city,

province

Modernisation plan per BTS

Expected growth of Usage or Throughput

per year

Period of investments

Expected Load per site, City, Province

Revenue, OPEX , CAPEX per year

Percentage of Market share per year

NPV, ROI, Payback

Output

Capital allocation drivers – smart capex

12

Capital allocation drivers - price book savingsRAN HW + SW standardisation key highlights - illustrative

Hardware Software

NigeriaSEAGHASASA

Average Hardware Pricing (unitary), Old vs New Prices

USD ‘000

Software Pricing (Tiered annual unitary pricing/site), Old vs New Prices

USD ‘000

Key Benefits• Price reduction

• YoY Price erosion for future years established and agreed

• Fully enabled hardware with maximum capacity

• Extended free warranty/support period

• Simplified & streamlined configurations, from 900 to 26 configurations

Key Benefits• Price reduction

• YoY Price erosion for some vendors already secured

• Flat fee per model (easy to deploy and to predict)

• Independent of traffic or subscriber growth

• Unlimited SW features all you can eat SW feature list)

Old Price - USD per annum New Price - USD per annum Old Price - USD per annum New Price - USD per annum

13

Leverage and funding

Group (ZAR million) 2017 2016

Cash and cash equivalents (22 575) (35 052)

Interest bearing liabilities 79 720 86 954

Net debt 57 145 51 902

Group leverage# 1,3 1,1

Holdco (ZAR million) 2017 2016

Cash and cash equivalents (7 452) (11 422)

Interest bearing liabilities 59 173 61 450

Net debt 51 721 50 028

Adjusted Holdco leverage∆ 2,7 2,6

Leverage

Naira USD

Nigeria borrowings (%)

49%2016: (65%)

51%2016: (35%)

ZAR USD

55%2016: (58%)

45%2016: (42%)

Head office borrowings (%)

# Group leverage = Group net debt / EBITDA adjusted for hyperinflation, MTN Zakhele Futhi and tower profits

∆ Adjusted Holdco leverage = Holdco net debt / SA EBITDA + cash upstreaming

Cash and cash equivalents include restricted cash and current investments; Interest bearing liabilities includes a foreign currency translation decrease of R6.9bn since Dec 16

14

Focus on managing holding company debt profile and refinancing risk

Debt and maturity profile

Instruments Amount due

2018 GBFs 750

Bonds and CPs 307

2019 Term facilities 1 237

Bonds and CPs 1 150

2020 Bonds and CPs 1 954

Term facilities 1 500

2021 Term facilities 24 518

2022 Eurobond 6 187

Bonds and CPs 1 529

Term Facilities 1 500

2024 Eurobond 9 281

Bonds and CP’s 1 017

2026 Eurobond 6 187

Total in ZAR^ 57 117

2018 2019 2020 2021 2022 2023 2024 2025 2026

ZAR denominated facilities USD denominated facilities

^Principal repayments

Enhanced risk management

16

MTN Group’s top risks

Risk Risk description1 Foreign exchange volatility and weakening currencies

2 Operational and compliance risks

3 Increased regulatory pressures

4 Suboptimal cash generation and upstreaming to the group

5 Political and economic risk in our key markets: South Africa, Nigeria and Iran

6 Spectrum cost and availability

7 Ability to successfully execute large group strategic and change programmes

8 Returns on capex deployed

9 Optimisation of investment portfolio

10 Increasing cyber and information risks

17

Enhancements to risk management framework

Splitting lines of assurance

• Our risk & compliance functions & internal audit functions will be separate functions

• OpCo internal audit functions will report directly to the Group

1

Strengthening our Compliance functions

• We are strengthening resource capacity by more than 200%

2

Embedding risk appetite into decision making

• Aligning our risk thresholds with the BRIGHT strategy

3

Rollout of escalation framework

• Group-wide framework to escalate risk events through executive and governance committees

4

Strengthening management KPIs on Governance

• Increased focus on closing findings, preventing repeat findings, lowering % of ineffective controls

5

Strengthening process consistency

• Creating a dedicated focus on policy and procedure compliance

• Implementation of group-wide ERP solution

6

Thank you

Questions?