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Material matter
Implications for value
Looking ahead
Economic environment
Tepid economic growth in
key markets in 2017; Nigeria
and South Africa moved
tentatively out of recession
but business and consumer
confidence remained weak.
The rand strengthened and
the naira decreased sharply.
Repatriating cash from our
diverse markets remained
complex and dependent on
prevailing legislation as well
as sufficient market liquidity.
•
•
Pressure on MTN revenue
and profitability.
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•
Foreign exchange translation
losses on rand-reported results.
•
•
Increased costs due to
some expenses denominated
in hard currencies.
•
•
Impairment of assets and goodwill
in Syria and Sudan.
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Increased debt.
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Repatriated R6,5 billion from Iran.
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•
Received R1,4 billion in dividends
from MTN Nigeria.
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•
Although challenging, the economic
environment should trend better over
the next three years, with modest GDP
growth, a moderation in forex volatility
and a reduction in headline inflation
in key markets.
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•
The full impact of MTN’s adoption of the
NAFEX rate in Nigeria in the last quarter
of 2017 will be felt in the results in 2018.
•
•
A strong rand compared to other operating
currencies will reduce the rand value of
earnings.
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•
Improved forex liquidity in Nigeria will
continue to assist in the repatriation of
dividends; however, these will be at a
weaker rate on the NAFEX market.
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•
A strengthening rand in 2018 could
reduce the rand value of foreign earnings.
Disruptive technologies and
market consolidation
New technologies are
displacing established ones,
altering the way businesses
operate and the way
consumers behave.
More non-telco players are
entering the market, leading
to greater competition, while
consolidation among telcos
is accelerating.
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•
Need to secure sufficient and
appropriate spectrum, or re-farm
existing spectrum, to facilitate
greater network rollout to support
a wider offering.
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•
Need to innovate to remain
competitive.
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•
Erosion of voice revenue
and pressure on data-access
pricing.
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•
Achieve required returns.
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•
Declining return on investment given
high investments in new technologies.
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•
Opportunities to offer additional services
and further grow our digital offering.
•
•
Greater disruption of financial services,
including growing popularity of crypto
currencies. As MTN enters this market, it will
need to update and adjust internal controls
to comply with greater regulatory
requirements.
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•
The greater complexity associated with
the growing convergence of telcos,
communications and financial services
will require companies to commit more
resources to managing this.
Complex and dynamic
political environments and
greater regulatory and
compliance requirements
We operate in some countries
suffering prolonged war and
conflicts and others marked
by political and policy
uncertainty. In all our
markets, the requirements
of regulators are growing.
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•
Reputational and relationship
risks.
•
•
Pressure on MTN revenue
and profitability.
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•
Demand for greater local
participation, including stock
exchange listings of local
operations, and a further
enhancement of in-country hiring
and procurement.
•
•
Greater information security, data
sovereignty and privacy
requirements.
•
•
Extending progress on quality
improvements and efficiencies by further
embedding risk management practices
across all aspects of the business.
•
•
Strong regulatory and compliance practices,
as articulated under BRIGHT, could serve as
a competitive advantage.
•
•
Progress on Ghana and Nigeria listings as
part of overall MTN commitment to drive
localisation.
•
•
Elections planned in South Africa and
Nigeria during 2019; signs of more positive
political sentiment regarding South Africa.
•
•
Continued focus on the application and
interpretation of dynamic tax legislation.
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•
A strategic approach to spectrum allocation.
Clear articulation of BRIGHT
strategy
After a thorough review
of the group strategy, the
management team developed
a clear growth plan for
MTN: BRIGHT.
•
•
BRIGHT provides MTNers with a
compass that clearly defines the
six elements on which we need
to focus to build our business
sustainably.
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Greater employee engagement,
improved culture audit score.
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•
Better customer experience.
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•
Need to attract and retain suitably
skilled talent.
•
•
Focus on capital allocation for
higher return on investment.
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•
With clearly defined KPIs and the regular
measurement, tracking and reporting
of performance, in 2018 MTN will implement
numerous initiatives to deliver on BRIGHT,
ensuring greater value creation for all our
stakeholders.
Growth in data volumes
in a decreasing price
environment
The economics of the data
business are challenging –
increasing volumes mean
more capex is required while
prices fall.
•
•
Our effective voice rate per minute
declined 20% in 2017.
•
•
Our effective data rate per
megabyte declined 31% in 2017.
•
•
Efficient capex deployment is key
to making a return.
•
•
The race for data subscribers is
a must-win battle – scale will
determine success.
•
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More efficient technologies available need
to be used.
•
•
Prices are likely to continue falling as
competition increases so driving volumes
must be the focus.
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A strategic approach to spectrum allocation.
MTN Group Limited
Integrated Report 2017
17
How we create value