Currently viewing: Risk mitigation table / Next: Chairman’s statement

Risk mitigation table

Integrated risks		Operational mitigation	Social/economic and environmental sustainability

	Exposure to currencies other than reporting currency	Increasing diversification of the operating portfolio will reduce concentration of risk. Operations are managed on a local currency basis. Cash flow and foreign exchange risk is managed through treasury policy and committee oversight. Much of this risk is also an opportunity.	MTN supports local banking markets, providing an opportunity to develop the banking industry, keep profits local and decreasing potential volatility on local currencies by moving cross border flows to receive and service obligations.
	Exposure to high risk countries	Diversification of the operating portfolio through further M&A, in other emerging markets. An independent and dedicated risk management team monitors country risk and business continuity. Sound governance is ensured through the representation of independent non-executive members on all boards while representation of local shareholders provides local insight and understanding. MTN takes a politically neutral stance but does engage – through its dedicated stakeholders relationship function. MTN adheres to a strong code of conduct. There are various initiatives aimed at managing the impact of sanctions including in separating funds management from sanctioned countries.	MTN has a commitment to support local ownership, usually through private placements or OTC trading. These structures are also beneficial to the company as local insight and understanding is shared. It is usually the largest national taxpayer and/or employer. It is involved in local social initiatives and its product is relevant to improving the lives of the local population.

	Increased regulation	MTN has taken actions including continued constructive and transparent engagement with authorities at a group and country level to ensure the success of social and commercial imperatives. This is best done through proactive relationships and insights into national challenges. MTN has also adopted a group-wide tax risk management process to proactively as well as reactively consider the implications of changing legislation and management of these risks.	Every operation has a dedicated regulatory team lead by a local member of the executive team. Again MTN’s local approach aimed at maintaining better relationships does assist, as does proactive engagement with regulators, showcasing international best practice and educating on environmentally friendly solutions. MTN engages on a range of social and environmental activities with government bodies.

	Slowing revenue growth	It is key to MTN to maintain its leadership position. MTN has embarked on a strategy to effectively penetrate deeper into the untapped voice markets by introducing a segmentation approach to better understand the customer and therefore offer more effective value propositions. This has been combined, in many countries, with the implementation of a more effective distribution strategy and framework. It has also recognised the need to diversify its revenue stream thereby offering its customers a more holistic service. MTN it has acquired ISPs in a number of countries and has been increasingly introducing more non-voice products including data and mobile money. In 2010 a dedicated commercial function under a senior VP at a group level was introduced for further development and implementation of these strategies. MTN has also invested in undersea cables which will allow for cheaper broadband for MTN which will in turn make data products more affordable and accessible. This together with the decreases in the price and distribution of smartphones will help penetrate the untapped data market which presents a large opportunity for MTN.	Segmentation of the market creates more affordable technology solutions to lower income segments of the market increasing communication for the broadest possible group of people. Services in line with data strategy include banking the “unbanked”, e-health and relevant social initiatives. MTN’s foundations are focused on education, health and other social and economic upliftment projects of communications. This helps increase literacy which is a stimulus for social and economic development in the country and will support further data.
	Inability to maintain and/ or grow profitability	MTN has aggressively over the last year been putting measures and structures in place to reduce costs to better respond to the evolving business model including new systems and processes. Although some of these initiatives are still in their infancy, many areas have been identified including a focused and ongoing procurement drive, infrastructure sharing (MTN has established a Tower Co in Ghana), shared services and outsourcing non-core activities, improving efficiency of the distribution channel, as well as tools such as ABC to leverage lessons and best practice across the group. Revenue opportunities up and down the value chain are often being considered on a collaborative basis.	Outsourcing, shared services and similar create opportunities for local entrepreneurs as well as the leveraging of local resources.

	Shortage of skilled human resources	MTN strives to be an employer of choice. it is on a continuous basis reviewing and enhancing its retention incentives to staff. These include competitive remuneration practices which cover both short- and medium-term incentives. MTN has also established an Academy as well as a talent management programme building leadership succession pools headed by a talent board under the chairmanship of a non-executive director. The diversity of its operations together with its sound reputation put it at an advantage when securing talent.	Addressing scarcity of skills have directed the MTN Academy’s initiatives to include more strategic investments in learning and organisational development across the group and its operations.
	Inability to timeously, effectively and efficiently invest and upgrade network and IT technology	Networks are monitored continuously ensuring adequate quality and headroom capacity. Standardisation and optimisation of systems and technologies together with outsourcing of non-core activities does not only provide reduced costs but also ensures discipline and focus on critical business requirements. Each operation has a capital expenditure steering committee to drive the initiatives implemented by the Group’s CTIO’s office.	Infrastructure sharing addresses environmental issues including CO₂ challenges. Energy efficient strategies including solar powered base stations, engineered solution efficiencies and a focus on waste mitigation.
	Poor customer experience	MTN has, in most countries, implemented a streamlined distribution framework which includes an enhanced and effective footprint to ensure broad and deep distribution. Customer service also forms part of the distribution framework and includes the regular training for store and call centre staff on new developments relating to products and services. This is aimed at ensuring a good and consistent MTN experience.	In many of our markets the distribution channels have created job opportunities. The commercial opportunities of the business has been taken further in some countries where MTN has assisted individuals from communities to establish their own businesses, also providing them with the various skills they require to effectively run businesses.
	Inadequate governance and control	Maturity of MTN’s control environment and governance structures continues to improve. Comprehensive governance and oversight structures exist including audit committees, risk committees, internal audit, fraud prevention and risk management measures covering all OPCOs in the Group. Although there will always be areas of focus as far as the control environment is concerned, MTN has made tremendous progress on this aspect. MTN has done a comprehensive assessment of the King III requirements especially on aspects like combined assurance, it governance, integrated reporting and compliance and projects are currently underway to address whichever gaps may exist in MTN’s compliance on this topic.	MTN not only focuses on these issues internally but also in all of its external dealings bringing an understanding and appreciation in the communities in which it operates.