Directors’ report

for the year ended 31 December 2008

The directors have pleasure in submitting their report on the annual financial statements of the Group for the year ended 31 December 2008.

Nature of business

MTN Group Limited (MTN Group or the Company) carries on the business of investing in the telecommunications industry through its subsidiary companies, joint ventures and associate companies.

Review of financial results and operations

The detailed reviews of financial results and the activities of MTN Group are contained in the reports of the chairman, the Group president and CEO, the Group finance director, the Group chief operating officer and the annual financial statements.

Subsidiary companies

Details of entities in which MTN Group has a direct or indirect interest are set out in Annexures 1 and Annexures 2, of the financial statements.

All the Group subsidiaries have a year-end consistent with that of the MTN Group, with the exception of MTN Irancell, which has a year-end of 19 March, due to statutory requirements in Iran.

Distribution to shareholders

A dividend of 181 cents per share (December 2007: 136 cents per share) amounting to R3,381 million (December 2007: R2,536 million) in respect of the financial year ended 31 December 2008 was declared on Wednesday, 11 March 2009, payable to shareholders registered on Friday, 27 March 2009. The payments of future dividends will depend on the board‘s ongoing assessment of MTN Group’s earnings, financial position, including its cash needs, future earnings prospects and other factors.

Shareholders on the South African register who dematerialised their ordinary shares receive payment of their dividends electronically, as provided for by STRATE. For those shareholders who have not yet dematerialised their shareholding in the Company in certificated form, please note that the Company operates an electronic funds transmission service, whereby dividends may be electronically transferred to shareholders‘ bank accounts. These shareholders are encouraged to mandate this method of payment for all future dividends, by approaching our share registrar, Computershare Investor Services (Proprietary) Limited, whose contact details are reflected in shareholders‘ information.

Share capital

Authorised share capital

There was no change in the authorised share capital of the Company during the year under review. The authorised share capital of MTN Group is 2,5 billion ordinary shares of 0,01 cent each. The movement in the issued ordinary share capital during the year under review is reflected below.

Issued share capital

The issued share capital of the company was increased during the year by the allotment and issue of shares to employees who exercised share options in terms of the MTN Group Limited Share Option Scheme. The allotments were as follows:

Accordingly, at 31 December 2008, the issued share capital of the Company was R186 801 (December 2007: R186 480) comprising 1 868 010 304 (December 2007: 1 864 797 807) ordinary shares of 0,01 cent each. No treasury shares were held at the date of this report.

Control of unissued share capital

The unissued ordinary shares are the subject of a general authority granted to the directors in terms of section 221 of the Companies Act, 1973 as amended (Act no 61 of 1973) (the Companies Act). As this general authority remains valid only until the next annual general meeting, which is to be held on 24 June 2009, members will be asked at that meeting to consider an ordinary resolution placing the said unissued ordinary shares up to a maximum of 10% of the Company’s issued share capital under the control of the directors until the next annual general meeting.

Further details of the authorised and issued ordinary shares as well as the share premium for the year ended 31 December 2008 appear in note 15 to the MTN Group annual financial statements.

Acquisition of the Company’s own shares

At the last annual general meeting held on 19 June 2008, shareholders gave the Company or any of its subsidiaries, a general approval in terms of sections 85 and 89 of the Companies Act, by way of special resolution, for the acquisition of its own shares. As this general approval remains valid only until the next annual general meeting, which is to be held on 24 June 2009, members will be asked at that meeting to consider a special resolution to renew this general approval until the next annual general meeting.

The Company did not exercise the approval to buy back shares during the year under review.

Shareholders‘ interest

Major shareholders

The following information was extracted from the Company‘s share register at 31 December 2008:

Disclosures in accordance with section 140A (8) (a) of the Companies Act and paragraph 8.63 of the JSE Listings Requirements

According to information received by the directors, the following shareholders held shares in excess of 5% of the issued ordinary share capital of the Company:

*Further details of the Newshelf 664 shareholding are provided in the Director`s report.

Certain of these shareholdings are partially or wholly included in the nominee companies reflected in the preceding table. Apart from this, the Company is not aware of any other party who has a shareholding of 5% or more in the Company.

Reward and remuneration philosophy

The principles of MTN Group's remuneration policy reflect the Group's objectives of a sound governance process and long-term value creation for the Group's shareholders. Also it is designed to support key business strategies and create a strong, performance-orientated environment. At the same time the policy must attract, motivate and retain talent.

Performance management

The performance of MTN employees is greatly enhanced through an effective performance management system at all levels of remuneration, whether through the fixed guaranteed package, or the various short-term and long-term incentive schemes.

As a multi-national company, all applicable employees and executives within the MTN Group of companies and operating units participate in the Group's Integrated Performance Framework (IPF) by means of performance agreements, thereby ensuring that the entire group is fully aligned in achieving the strategic objectives and goals as determined by the board. This process consists of two elements, namely the individual performance section, which rewards individuals for achieving their individual targets through the salary increase process; and the team performance section which rewards the team for achieving the strategically determined value drivers, coupled with the company's performance targets, and is rewarded through the performance bonus incentive scheme.

The MTN Group board of directors has delegated responsibility for remuneration policy to the nomination, remuneration, human resources and corporate governance committee (NRHR & CG committee). The role of this committee, among others, is to establish the overall principles that determine the remuneration of the Group's executive directors and senior management. The full details of the NRHR & CG committee's role, constitution and attendance are outlined in the corporate governance report.

In setting remuneration policy, the NRHR & CG committee recognises the need to be competitive in an international market. The committee's policy is to set remuneration levels which ensure that the executive directors and senior management are fairly and responsibly rewarded for their contribution to the Group's operating and financial performance. Also in order to promote a common interest with shareholders, performance linked share based incentives are considered to be an important element of the executive incentive policy.

Executive directors and senior management

The remuneration of the executive directors and senior management currently consists of three main components, to balance long- and short-term objectives; a base salary, annual bonus plan with performance targets and long-term incentives in the form of share-based incentive schemes. The last two are designed to encourage and reward superior performance, employee retention and to align the interests of the executive directors and senior management as closely as possible with the interests of shareholders. In addition to these main components, the executive directors and senior management also receive pensions, medical insurance, death/disability insurance and other benefits.

Performance bonuses for executive directors are linked to operational and financial value drivers pertaining to business performance against budget for individual operations and the MTN Group as a whole. These value drivers are determined by the board every year in respect of the next financial year. Each executive director's performance bonus is conditional upon achievement of their specific value drivers and key performance indicators which are structured to retain a balance between the performance of entities for which they are directly responsible, and that of the Group. In order to align incentive awards with the performance to which they relate, bonuses reflected are for amounts accrued in respect of each year and not the amounts paid in that year. The bonuses are determined by the NRHR & CG committee and are approved by the board.

The base salary of executive directors is subject to annual review and is set with reference to external market benchmarks, taking individuals into consideration. Executive directors do not receive payment of directors' fees or committee fees in respect of meetings attended.

MTN Group recognises the benefit that the involvement of the executive directors as non-executive directors of other companies (under certain conditions) has to the individual and to the company. however, each director is normally permitted to accept only one outside appointment. The directors' fees in that regard are ceded to MTN Group.

The total benefits received by executive directors are reflected in the following tables:

Remuneration of non-executive directors

MTN Group's non-executive directors receive annual retainer and meeting attendance fees. they do not participate in any type of share incentive scheme or receive pension-related benefits.

The non-executive directors' remuneration has been unchanged since the AGM held in June 2006. It is important to ensure that the remuneration of non-executive directors remains competitive in order to enable the Company to retain and attract persons of the required calibre in order to make meaningful contributions to the Company. Given its global footprint and growth rate and having regard to the appropriate capabilities, skills and experience required, the Group president and CEO, in consultation with the Group executive for human resources and Group financial director, conducted a review of the remuneration paid to non-executive directors, based on data provided by independent remuneration specialists and benchmarked against comparable international South African companies. The results indicated that the current remuneration paid was materially below that of comparable entities. The NRHR & CG committee debated and considered the revised remuneration proposal at length and after reaching consensus, recommended the revised remuneration proposal to the board, which sanctioned the proposal for recommendation to shareholders at the annual general meeting to be held on 24 June 2009. The proposed new fees structure is outlined in the notice of the fourteenth annual general meeting, and will have retrospective effect to 1 January 2008.

The fees received by executive and non-executive directors during 2008 are reflected in the following table:

**The fees are paid in euro but have been converted to rand for the sake of consistency.
†Fees are paid to M1 Limited.

The MTN Group share options, share appreciation rights and share rights schemes

In terms of the Company’s share option scheme, the total number of shares which may be allocated for the purposes of the scheme shall not
exceed 5% of the total issued ordinary share capital of the Company, being 81 799 691 shares approved by shareholders in 2001.

The following information is provided in accordance with the provisions of the schemes:

The vesting periods under the schemes are as follows: 20%, 20%, 30% and 30% on the anniversary of the second, third, fourth and fifth years respectively, after the grant date .The strike price is determined as the closing market price for MTN Group Limited shares on the day prior to the date of allocation.

If the options or appreciation rights remain unexercised after a period of 10 years from the date of grant, they lapse. Furthermore, rights are forfeited if the employee leaves the Group before they vest.

Share options
Details of the share options outstanding at year-end are as follows:

The options outstanding at the end of the period under review have a weighted average remaining contractual life of four years (December 2007: five years). During the year ended 31 December 2008, no options were granted. The fair values were calculated using the stochastic model. The inputs into the model are reflected below:

Expected volatility was determined by calculating the historical volatility of the Company’s share price over the previous six years. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The expected dividend yield was determined based on historical data.

Options exercised during the year yielded the following proceeds, after transaction costs:

The balances of share options, including executive director’s allocations in issue, are reflected below:

MTN Group share appreciation rights scheme and share rights scheme (“the rights schemes”)

The share appreciation rights scheme was implemented on 31 May 2006, and superseded the share option scheme.

On 26 August 2008, the board approved the share rights scheme, which superseded the share appreciation rights scheme in respect of future grants. Both the rights schemes operate under the same provisions with the exception that the share rights scheme was extended to allow participation by junior managers.

Share rights under the rights schemes are granted to eligible employees by the relevant employer subsidiary company. Exercised rights are equity settled whereby the relevant MTN Group subsidiary purchases the required MTN shares in the open market.

The balances of the share rights schemes, including executive director's allocations in issue, are reflected below:

# The vesting period in respect of part of the allocation made on 31 May 2006 was accelerated by six months, due to the fact that the Company had not issued any share incentive rights to eligible employees in 2005. The remaining contractual life of these rights is thus reduced by six months.

A valuation has been prepared using the stochastic model to determine the fair value of the share appreciation rights and the expense to be recognised during the year.

The inputs into stochastic model were as follows:

Expected volatility was determined by calculating the historical volatility of MTN Group Limited's share price over the previous six years. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The expected dividend yield was determined based on historical data.

The nominations, remunerations, human resources and corporate governance committee periodically assesses the effectiveness of the Company's long-term incentive scheme, to ensure alignment with shareholder requirements and international best practice.

A revised share-based incentive scheme is currently being developed with the assistance of independent experts.

Equity compensation benefits for executive directors, the Group secretary and directors of major subsidiaries

Participation in the MTN Group Limited share schemes for the year ended 31 December 2008.

Directors’ shareholdings and dealings

The interests of the directors, alternate directors and directors of major subsidiaries in the ordinary shares of the Company were as follows:

#Major subsidiary director
†VP for the MENA region

Mr PF Nhleko concluded the following share purchases and sales during the financial year under review:

    *Shares exercised under the Share Appreciation Rights Scheme
  **Shares exercised under the Share Options Scheme
***Shares purchased in the open market

Pursuant to the Alpine Trust unwind, the executive directors received the following number of MTN shares on 26 February 2009:

Shareholders are referred to the Integrated Business Report for the year ended 31 December 2007 in which it was disclosed that Mr PF Nhleko bought and restructured the forward purchase of 4 150 000 shares on numerous occasions between 24 May 2006 and 29 November 2007. During the year under review, Mr PF Nhleko continued to restructure the forward purchases and eventually closed out the trade of 27 October as follows: On 7 October 2008 the 4 150 000 forward purchased shares were restructured for a 13-month term to 30 November 2009 at forward price of R98,25. A put option was purchased at a strike price of R122,34 per share and the call option sold at a strike price of R129,09 in respect of the full 4 150 000 forward purchased MTN shares. Further, a call spread was concluded with a commercial bank for 5 000 000 contracts, buying a call strike price of R102,57 and selling a call strike price of R150,00 for 30 March 2009. On 27 October 2008, the 4 150 000 shares were restructured and early settled resulting in a purchase of 1 238 435 shares at R78,06.

Shareholders are referred to the Integrated Business Report for the year ended 31 December 2007 in which it was also disclosed that Mr PF Nhleko entered into a separate and independent 15-month term contract with a commercial bank on 28 December 2007 to acquire 15 893 822 shares at call strike price of R133,21 per share and sold calls at R195,00 per share. This trade was financed through a forward sale of 2 160 000 shares at R149,63 per share. During the year under review, Mr PF Nhleko restructured this trade as follows:
On 30 October 2008 a call spread was concluded with a commercial bank for 3 500 000 contracts buying a call strike price of R122 and selling a call strike price of R182 for 30 June 2009.

On 30 October 2008 a call spread was concluded with a commercial bank for 3 500 000 contracts, buying a call strike price of R135 and selling a call strike price of R195 for 17 September 2009.

Directors’ interests in MTN Group held through Newshelf 664 (Proprietary) Limited and derived from the Alpine Trust

Newshelf 664 (Proprietary) Limited ("Newshelf 664") owns 277,89 million MTN Group shares (equivalent to 14,89% (December 2007: 13,06%) of the issued capital of MTN Group). Newshelf 664 exercises the voting rights in respect of such shares. Initially, 243,5 million MTN Group shares were acquired from Transnet Limited ("Transnet") at an average price of R13,90 per share between December 2002 and March 2003. A further 34,39 million MTN Group shares were acquired from the Government Employees Pension Fund, represented by the Public Investment Corporation Limited ("PIC") on 22 December 2008, at a price of R99,00 per share ("the special dividend MTN shares").

The special dividend MTN shares were declared as a dividend in specie on the same date to the Alpine Trust ("the trust"), as the holder of the single ordinary share in Newshelf 664. The trust simultaneously distributed the special dividend MTN shares (except for 300 000 shares retained for costs) to its beneficiaries, in accordance with the trust's trust deed. The special dividend MTN shares were delivered to the trust's beneficiaries on 4 February 2009. As at 22 December 2008, the trust further agreed to sell its ordinary share in Newshelf 664 to the PIC for a nominal value. The trust has no further interest in Newshelf 664.

The trust's main objective is the advancement of black economic empowerment. In undertaking the distribution to its beneficiaries, as aforesaid, the trust has fulfilled its objectives. The benefits from the trust that have been distributed to MTN directors, comprising MTN Group shares, were disclosed on SENS on 9 February 2009, are further detailed below, and are included in this report in the directors' direct holdings of MTN shares at 31 December 2008.

The trust has six trustees, two of whom are directors of MTN Group, namely PF Nhleko and RS Dabengwa. The other trustees, being I Charnley, W Lucas-Bull, PM Jenkins (Chairperson) and Z Sithole, are independent. Furthermore, all the directors of Newshelf 664 have been appointed by the trust, such directors being PF Nhleko, I Charnley, RD Nisbet and RS Dabengwa (jointly, "the Newshelf 664 directors"). The Newshelf 664 directors are also included among the beneficiaries of the trust. Consequently, the interests of the Newshelf 664 directors in respect of the MTN Group shares held by Newshelf 664 are as follows:

• As a result of being trustees of the trust, PF Nhleko and RS Dabengwa, together with the other trustees, have a nominal indirect, non-beneficial interest in the MTN Group shares that are currently held by Newshelf 664.
• As a result of being directors of Newshelf 664, the Newshelf 664 directors have an indirect, beneficial interest in respect of the voting rights pertaining to the MTN Group shares that are currently held by Newshelf 664.
• During 2008, as a result of being beneficiaries of the trust, the Newshelf 664 directors had an indirect, beneficial interest in the MTN Group shares that were held by Newshelf 664. This beneficial interest was in the form of rights to participate in a predetermined ratio (“the participation ratio”) in the net assets of the trust. The participation ratio of each Newshelf 664 director, who are currently also executive directors of MTN Group Limited are as follows:

Subject to the terms and conditions of the trust deed, the rights to participate in the net assets of the trust vested in the above persons in full at the end of 2008 and the special dividend MTN shares were distributed to all beneficiaries of the trust in accordance with their participation ratios. As at the end of 2008, the beneficiaries of the trust ceased to hold any beneficial interest in Newshelf 664.

In addition, the Newshelf 664 directors have exercised an option to participate in 0,23% of the economic benefits attaching to the “B” class redeemable preference shares and the “B” class participating preference share held by the PIC, as funders to Newshelf 664, for which option the Newshelf 664 directors jointly paid an amount of R5 million. The capital acquisition consideration paid by each Newshelf 664 director was as follows:

The Newshelf 664 directors thus have an indirect beneficial interest in the MTN Group Limited shares acquired by Newshelf 664 to the extent that the proceeds of such shares (dividends and capital) are required to service and settle the preference share funding provided by the PIC, but only to the extent of the proportion that their funding of the preference shares bears to the total PIC funding.

The following persons, being directors of MTN Group Limited and its major subsidiaries and the MTN Group secretary, received the following numbers of MTN shares from the Alpine Trust, pursuant to the distribution of the special dividend MTN shares:

Directorate and Group secretary

The composition and profiles of the board of directors of MTN Group.

The Group secretary is Ms SB Mtshali, whose business and postal addresses are set out below:

During the financial year under review, the following MTN Group directors resigned from the board:

In accordance with the articles of association of the Company, one-third of the board is required to retire by rotation, at each annual general meeting. Retiring directors are those who have been in office the longest since their last re-election and directors who have been appointed between annual general meetings.

The directors retiring by rotation in terms of the articles of association at the forthcoming annual general meeting are Messrs RS Dabengwa, AT Mikati, MJN Njeke and J van Rooyen. The profiles of the directors retiring by rotation can be viewed in the notice to shareholders.

Profiles of the directors seeking re-election are contained in the notice of the fourteenth annual general meeting.

Interests of directors and officers

During the year under review, no contracts were entered into in which directors and officers of the Company had an interest which significantly affected the business of the Group. The directors had no interest in any third party or company responsible for managing any of the business activities of the Group. The emoluments of executive directors are determined by the Group NRHR & CG committee and approved by the board. No long-term service contracts exist between executive directors and the Company, with the exception of the contract of service between the Group president and CEO and the Company, of which the first contract had commenced on 1 July 2002 and terminated on 30 June 2007. The contract was subsequently renewed at the annual general meeting held on 13 June 2007 until 30 June 2010.

Material resolutions

MTN Nigeria Communications Limited passed a special resolution on 26 November 2008 authorising its merger with VGC Communications Limited, retaining the name MTN Nigeria Communications Limited. MTN Nigeria Communications Limited is a major subsidiary of the Company thus the transaction requires disclosure in terms of the JSE listings requirements.

Mergers and acquisitions

Details of the MTN Group’s acquisitions and disposals are presented in the Group president and CEO’s statement and the annual financial statements.

Post-balance sheet events

Subsequent to year-end, the Group acquired 100% of Verizon South Africa (Proprietary) Limited and the remaining 59% in I-Talk (Proprietary) Limited.

Property, plant and equipment

There were no changes in the nature of property, plant and equipment nor in the policy regarding their use during the financial year under review.

American depository receipt facility

A sponsored American depository receipt (ADR) facility has been established. This ADR facility is sponsored by the Bank of New York and details of the administrators are reflected under administration.

Borrowing powers

In terms of the articles of association of the Company, the borrowing powers of the Company are unlimited, however, all borrowings by the MTN Group are subject to limitations expressed in the treasury policy of the MTN Group. The details of borrowings appear in note 17 of the annual financial statements

Going concern

The directors have reviewed the MTN Group’s budget and cash flow forecast for the year to 31 December 2008. On the basis of this review and in the light of the current financial position and existing borrowing facilities, the directors are satisfied that the MTN Group has access to adequate resources to continue in operational existence for the foreseeable future and is a going concern and have continued to adopt the going concern basis in preparing the financial statements.

Auditors

PricewaterhouseCoopers Inc. and SizweNtsaluba vsp will continue in office as joint auditors in accordance with section 270(2) of the Companies Act. The audit committee reviewed the independence of the auditors during the year under review and declared itself satisfied that the auditors were independent of the Company.