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the black public and existing MTN Zakhele
shareholders another opportunity to invest – at a
meaningful discount – in MTN’s growth story.
Looking forward to a new era
The board is comfortable that the measures put in
place during the year are robust and preclude a
re‑occurrence of anything like what we have dealt
with of late. However, the reality is that MTN operates
in difficult environments, in which the respective
political dispensations and regulatory frameworks
remain unpredictable, exacerbated by the prevailing
economic vulnerability. The changes we have made
to the operating structure and management team
should give stakeholders comfort that we can
navigate these realities, and that we have our
attention firmly focused on those factors within our
control.
We have set aggressive six, 12 and 18-month
targets for IGNITE, providing a clear basis to hold
us to account. While ambitious, we believe the
targets are achievable, although the downside risks
to our assumptions include worsening macro-
economic conditions and currency weakness
specifically in Nigeria and South Africa, as well as
any undue regulatory changes.
Despite the recent disruptions in some markets,
Africa is still expected to deliver relatively robust
economic growth over the medium to long term.
MTN’s unique position and the transformation under
way will provide a springboard for the future growth
of our operations across the continent. At
MTN Nigeria, further improvements in network
quality will remain a priority and we expect to
strengthen our competitive position despite the
weak economy. We also expect the recovery by
MTN South Africa to continue, supported by a sharp
focus on customer service and significantly
improved network quality, capacity and speed.
Ultimately,
IGNITE is about
realising our
vision of leading
the delivery of a
bold, new
Digital World to
our customers.
New revenue streams, particularly digital services,
should increase their contribution over the next
18 months, supported by a more focused approach
and the process initiated to establish an advanced
analytics unit. We expect our e-commerce joint
ventures AIH, MEIH and IIG to continue growing
strongly in customers and revenue and with
improving unit economies. While a slowing economy
and associated currency volatility in Nigeria and
Egypt will affect AIH and MEIH, IIG is expected to
benefit from improving GDP growth in Iran. The
growth in that country following the easing of
sanctions offers significant opportunities to expand,
particularly in digital services.
MTN Nigeria will prepare for listing, subject to more
suitable macro-economic conditions and the
appropriate approvals from relevant stakeholders.
MTN Ghana is working with regulators on its
localisation transaction, which is expected to be
completed during 2017. Going forward, the
movement of monies from MTN Irancell is expected
to normalise.
Given the network investment required to support
our improving competitiveness over the next
18 months, capital expenditure will remain at
around R35 billion in 2017. We will continue to review
infrastructure investment opportunities, including
Iran.
I am in no doubt that the Group has heeded the
resounding wake-up call of this time. We have
delivered against all reasonable expectations that
our stakeholders had of us in response to the
challenges we faced. I am confident the building
blocks are now in place for a full recovery and higher
growth trajectory, as we look forward to a new era
for MTN.
Our ability to come through the difficulty, and to
emerge stronger for it, would not have been possible
without the resolute support of MTN’s people,
shareholders, regulators and governments. Our
appreciation is grounded in our commitment to
continue improving and restoring your trust by
keeping the promises we have made.
Phuthuma Nhleko
Group executive chairman
*
Constant currency (organic) information.
** Reported – includes hyperinflation and the relating goodwill
impairment, tower profits, Nigeria fine and MTN Zakhele Futhi impact.
*** The forward-looking financial information disclosed in this integrated
report has not been reviewed or audited or otherwise reported on by
our external joint auditors.
MTN Group Limited
Integrated Report 2016
27
STRATEGIC
OVERVIEW