MTN South Africa

		Launch date June 1994 MTN shareholding (%) 100 Market share (%) 37,7 Mobile penetration (%) 131 Population (million) 51,6 Forecast market size in 2014 (million) 80
Karel Pienaar MTN South Africa CEO

2012 performance

MTN South Africa had a good year in 2012, marked by a 15,4% expansion in our customer base to 25,4 million, larger market share, sharp growth in data's contribution to revenue and continued robust network rollout.

Strong promotions, the popular MTN Mahala and MTN Zone offerings, as well as attractive data services drove a 15% acceleration in the pre-paid market. The post-paid user base increased by 17,3% to 4,5 million thanks to competitive data offers and the continued success of hybrid packages and post-paid telemetry.

Net connections totalled 3,4 million, increasing our share of the competitive market by 0,7 percentage points to 37,7%. Blended ARPU declined to R122 from R134, as the effective tariff reduced by 7,8% to 1,07 c/min.

Total revenue grew by 7,1% to R41,4 billion. MTN South Africa's data revenue increased by 37,6% to R6,4 billion, contributing 15,5% to total revenue. We had 13,4 million data users at year end, up from 10,9 million in 2011. Our strategic partnership with Opera Mini to provide an MTN branded version of the world's leading mobile browser has been very successful, providing cheaper and faster internet browsing and social connectivity. We see this continuing to grow in the year ahead.

We continued to modernise our network, further enhancing our 3G coverage and capacity. We committed capital expenditure of R6 416 million (which includes a once-off special provision of R749 million for capitalisation of fibre leases).

Our 3G population coverage rose to over 65%. We rolled out more than 1 000 3G sites and connected over 800 sites to fibre, a big improvement over the prior year. In addition, we modernised over 1 600 sites to support future long-term evolution (LTE) services. We doubled our deployment of microwave links to over 1 800, bringing the total of sites with MTN self-provisioned transmission capacity close to 50%.

We also added diverse routes the 300km core ring in Gauteng, for services to business customers. The rollout of national broadband fibre remains a priority, and we made good progress on this during the year.

We launched LTE services in Johannesburg, Pretoria and Durban, with 281 sites live by year end, and plan further rollout in Cape Town and other major cities in 2013. Access to spectrum remains a challenge in providing for nationwide rollout especially in areas where there is high demand for GSM services. The Minister of Communications is finalising qualification criteria for LTE spectrum and has embarked on a process to address the high demand frequency bands in South Africa.

Outlook

We look forward to a dynamic 2013, focusing on LTE, cloud computing and convergence. We expect discussions around spectrum allocation to intensify as we look to provide customers with the many opportunities presented by LTE. As businesses seek simplified communication solutions, mobile operators will also play a key role to facilitate converged voice, video and data communications. We have earmarked capital investment of R5 712 million to develop and maintain our network for a world-class network smartphone experience. We expect 2,9 million subscribers to join us in the year ahead.

A snapshot of our performance

Delivery against strategic objectives

Creating and managing stakeholder value

• Maintained effective BEE ownership at more than 44%. Met our B-BBEE targets for enterprise development and procuring goods from SMEs. Obtained a level 2 contributor rating from ratings agency Empowerdex.
• Invested R63 million in community investment projects, mostly in education.
• Named Best Employer by CRF Institute's Best Employers Certification Index. Rated Best Provider in the Telecoms category by Orange.
• Launched various graduate, developmental and bursary programmes to attract talent.

Creating a distinct customer experience

• Provided data solutions such as MTN Opera Mini browser for faster downloads and Pay-D, enabling mobiles to be used for online debit card purchases.
• Offering retail customers enhanced information for work, life, learning and fun through MTN Play.
• Extended MTN Business's data offerings to include air/ water quality monitoring solutions and tools for telepresence, cloud computing and smart office management.
• Went live with LTE services.
• Boosted data revenue by 37,6% through competing effectively on our data offering, network capability and price.
• Modernised over 1 600 base station sites in preparation for LTE. Activated HSPA+ on nearly 1 000 sites.
• Re-farmed 2x10MHz in 90% of LTE sites to provide faster connection speeds.
• Increased network footprint. Widened 2G network coverage to 98,6% of population.

Driving sustainable growth

• Increased data's contribution to revenue to 15,5% from 12%.
• Increased MTN Zone's subscriber numbers by 20% to 14,1 million.
• Launched Mobile Money service with South African Bank of Athens.

Transforming our operating model

• Contained costs by optimising supplier contract agreements.
• Advanced enterprise development through partnership with Small Enterprise Development Agency.

Innovation and best practice

• Launched MTN Mahala Thursdays to incentivise customers to recharge on Thursdays. Results are pleasing.
• Provided price-sensitive customers with discounts allowing them to call for less or even free at any time of the day through MTN Zone Mahala Peak promotions.