Our top risks and what we are doing to mitigate them

MTN recognises the importance of properly skilled employees who are motivated by their work. We therefore strive to be an employer of choice to attract and retain key skills.

A shortage of skilled employees in emerging markets is exacerbated as competitive activity increases.

Major changes in the telecoms industry, as well as the introduction of our refined strategy, puts pressure on both the recruitment and development of employees.

• The MTN Deal, our value proposition to employees (EVP), was launched in April 2011. It represents MTN's pledge to understand and develop career opportunities and improve the employment offering beyond reward and recognition.
• The Group culture operating system is an investment by the Group executive committee supported by each country's CEO, to drive innovation and business execution by aligning the Group's culture in a way that supports efficiency goals.
• Provide ongoing learning initiatives via Group organisation development processes and the MTN Academy. In 2012 the total number of development interventions was over 61 000 with 32 000 e-learning courses completed by our employees.
• In parallel with the Group's updated vision to lead the delivery of a bold, new Digital World to our customers, we have instituted an HR process to define the skills we require.

Governance and control are critical to maintain profitability and business continuity. The implementation of mature and well-controlled processes is key. Adequate governance and control structures provide comfort and confidence to stakeholders across the value chain when dealing with MTN.

• We strive to maintain and enhance sound governance practices, which reflect prevailing international governance trends and the evolving legislative landscape. These practices are founded on values of responsibility, accountability, fairness and transparency.
• During 2012, the Group established the social and ethics committee of the board of directors and completed the establishment of our ethics position.
• Initiatives are underway to improve the standardisation of processes in certain areas of the business. These are part of the MTN Project NEXT! (discussed in CEO's report) and the shared services project.
• We are considering establishing a dedicated Group compliance function.
• Risk management and internal audit disciplines are well entrenched in most operating companies (opcos).
• MTN has concluded a comprehensive assessment of the King III requirements, including combined assurance, IT governance and integrated reporting, and has made significant progress in implementing these.
• MTN not only focuses on these issues internally, but also in our external dealings, bringing an improved understanding and appreciation to the communities in which we operate.

As competition continues to increase in all our markets, we need to ensure effective capital investments for the upgrading of network and information technology (IT) to cater for subscriber acquisition and increased traffic.

• Networks are monitored continuously; we focus on expanding our network quality and coverage to ensure sufficient capacity to carry traffic seamlessly. This is a key focus area within the new customer experience (Perfect 10) project as we strive to provide our customers with the best network and services.
• The standardisation and optimisation of systems and technologies, together with outsourcing of non-core activities, lead to reduced costs and ensure discipline and focus on critical business requirements.
• Infrastructure sharing through the establishment of tower companies reduces our rollout costs and the ongoing costs of operating our passive infrastructure.
• Implementing the Group chief technology and information officer’s initiatives via the capital expenditure steering committee.
• Monitoring our markets to ensure that capital spending is aligned to forecast growth.

MTN recognises the key to success is a strong focus on customer experience. This includes maintaining a positive brand perception, the availability of a broad range of products and services and high quality and consistent customer experience at all touchpoints.

As part of MTN's updated vision and mission, the organisation is being transformed to focus on our customers in the new Digital World.

• MTN is the number one telecommunication company in 15 of our markets and strives to maintain and enhance this position through network advantage, service excellence, ensuring a unique value proposition for customers and the alignment of the pricing and promotions strategy through our customer experience initiatives.
• In 2012, MTN was ranked first on the African continent among the BrandZ Top 100 Most Valuable Global Brands, thus becoming the first and only African brand to make the list. We also moved up to 188th position in the Brand Finance Global 500 grading, the number one most valuable brand in Africa.
• In 2012, we launched our new customer experience project - the Perfect 10 programme - rolling it out in Ghana and Nigeria. In 2013, it will be extended to the rest of the organisation. This project aligns with our key strategic objective of creating a distinct customer experience and helps to identify gaps in customer experience.
• We are building key capabilities to better service our customers, including improving the end-to-end customer experience, building customer service KPIs into internal performance management processes, creating a unique MTN branded user experience etc.
• We are continuously making the world more digital by launching new services both on our content platform MTN Play as well as our application platform, where we launched services such as Magic Voice.

Changing laws and regulations.

Increased regulatory or legal requirements may impact our commercial business. So too could adverse decisions by regulators, on issues such as spectrum allocation, tariff amendments etc.

In many markets, tariffs are not properly regulated. This results in price wars and new licences being launched into already saturated markets.

• Continued constructive and transparent engagement with authorities at a Group and country level to ensure the success of social and commercial initiatives.
• Every operation has a dedicated regulatory team led by a member of the executive team. Our approach is aimed at proactive engagement with regulators, showcasing international best practice and promoting environmentally friendly solutions.
• Revision of Group-wide tax risk management processes.

The social and economic landscape in which
we operate continues to develop at
a rapid pace and we are challenged to
integrate economic, environmental and social
considerations in our business activities.

• Social impact matters are assessed and mitigated through the following solutions:

  ––	The Group is reviewing its social, ethics and governance structures to ensure our activities reflect the most current operating risks related to civil society, labour, human rights, safe and healthy working conditions and ensuring responsible investments in the communities in which we operate.
  ––	MTN's products and services help close the digital divide in our markets and make a positive socio-economic impact. These include MTN Mobile Money, Pay As You Go, lowest cost data handsets, and many more. The implementation of the MTN enterprise unit in 2012 further focuses our activities on supporting commercial and industrial growth in our markets. Furthermore, MTN Business offers a range of machine-tomachine, smart and telemetry solutions that help businesses manage the costs, improve efficiencies and reduce their environmental impacts.
  ––	MTN's operations invest in communities through MTN Foundation projects focused on education, health, national priority issues and other social and economic upliftment initiatives.

• Our direct environmental and climate impact is assessed and managed through energy and carbon management, efficiency initiatives and environmental impact assessments.

We believe that information is critical to achieving our strategic business goals. It is therefore imperative to protect and secure all information resources from internal and external threats, misuse and fraud, failure and unavailability, unauthorised access, modification, disclosure and accidental or deliberate physical damage.

• We have rolled out a Group-wide information security programme to address information security requirements. This is based on global leading industry practices and standards such as ISO/IEC 27001:2005.
• The imminent introduction in South Africa of the Protection of Personal Information Act (PoPi) will have far-reaching effects on how we use and protect the information we are responsible for. We are addressing this as part of the information security programme.
• A Group information security officer will be appointed and appropriate supporting governance structures created.
• Regular monitoring of information security controls and emerging information security risks and their potential impact on MTN is ongoing.