MTN Irancell

		Launch date October 2006 MTN shareholding (%) 49 Market share (%) 46,9 Mobile penetration (%) 113 Population (million) 76 Forecast market size in 2014 (million) 99,3
Alireza Ghalambor Dezfouli MTN Irancell CEO

2012 performance

MTN Irancell added more than 5,8 million GSM subscribers to the network in 2012. We also grew market share, revenue and ARPU despite operating in an environment of high inflation and challenging economic conditions given the continued sanctions against the country. Iran is a mature, competitive mobile market where penetration is 113%.

MTN Irancell's revenue growth of 26% in local currency in 2012 was largely due to attractive value propositions supported by efficient distribution channels and good network quality. However, in rand terms, reported revenue growth was limited to 10,2% because of the rial's 14% depreciation against the rand.

MTN Irancell benefited from increased use of GPRS services, thanks to improved network quality and lower data prices. The number of subscribers to our WiMax service increased by nearly 60%. The acceleration in data use resulted in an 103% rise in local currency data revenue including WiMax data usage in the year. This was supported by growth in SMS revenue of 30,4% and an expansion of voice revenue by 24,1%, in local currency.

MTN Irancell widened the EBITDA margin by 1,7 percentage points because of its various cost control initiatives involving the optimisation of transmission, use of cheaper and more effective advertising channels and increasing logical airtime distribution. These largely negated the impact of sharp price increases particularly with regards to foreign currency denominated maintenance fees, fuel, electricity and imported goods.

MTN Irancell continued to invest in infrastructure rollout. The rollout of some projects was slower than planned because of delays in the delivery of equipment as well as the impact of sanctions on certain equipment suppliers. As MTN Irancell made significant upfront investment when it first launched its service, the network is robust and capable of taking on more subscribers.

In October 2012, the authorities introduced a new exchange rate, known as the trade rate, which effectively devalued the rial against US dollar by 103% for certain categories of transactions.

Outlook

Should inflation remain high in Iran, we expect some pressure on margins as a result of higher operational costs across the board and potential further foreign exchange losses on loans and additional depreciation expenses. However, this should be negated to an extent by an increase in subscribers and revenue in 2013.

We plan to continue expanding our network in 2013, assigning R1 002 million of capital expenditure mostly on reaching underserviced regions, developing new products and services and improving data capabilities. In the year, we expect 3,9 million subscribers to join MTN Irancell's network.

A snapshot of our performance¹

¹ Reflected at 100%.

Delivery against strategic objectives

Creating and managing stakeholder value

• Managed to attract and retain some of the best talent in the market.
• Continued to expose employees to learning and knowledge-share opportunities in other parts of the MTN Group through our rotation policies and MTN Academy courses.
• Engaged constructively with the authorities as we seek clarity on issues such as the right to provide 3G services and the negotiation of interconnect tariffs.
• Participated in the resettlement of the people affected by the earthquake that occurred in Tabriz in August 2012. We provided support to the affected communities by way of free on-net calls, allowing families and friends to stay in touch despite the lack of airtime availability.

Creating a distinct customer experience

• Invested IRR4 413 billion (R2 289 million) in the network, to improve quality and capacity.
• Offered various value-added solutions over MTN Irancell's GPRS and WiMax infrastructure, including electronic airtime charging and supported m-health.
• Launched various seasonal promotions, including buy one get one free SIM, happy hour and Friday bonus.
• Increased population and geographic coverage to 82% and 25,1% respectively.
• Added 642 dealers and 1,2 million points of sale, rebranded 421 dealer shops and signed up four new distributors.

Driving sustainable growth

• Made greater use of outdoor network sites and site insulation to manage heat and cooling exchanges.
• Continued to source all vouchers locally as well as a large proportion of SIM card assembly and personalisation.

Transforming our operating model

• Maintained a low operating cost base by continually exploring savings and optimisation opportunities in maintenance and distribution costs, developing inhouse capabilities to perform certain previously outsourced tasks, and engaging suppliers in longer term service contracts.

Innovation and best practice

• Developed ITS applications and storage saving technologies that are already being shared with other operations in the Group.
• Several of our staff are involved in Group projects aimed at creating process and operational efficiencies.
• Worked with IT service providers to improve functionality of applications.