Operating segments

The group has identified reportable segments that are used by the group executive committee (chief operating decision maker (CODM)) to make key operating decisions, allocate resources and assess performance. The reportable segments are largely grouped according to their geographic locations and reporting lines to the CODM.

The group’s underlying operations are now clustered as follows:

• South Africa
• Nigeria
• South and East Africa and Ghana (SEAGHA)
• West and Central Africa (WECA)
• Middle East and North Africa (MENA)

The following changes to the group’s segment presentation were made during 2017:

• The results for MTN South Africa and MTN Nigeria are reported separately. These results were previously reported in the SEA (now SEAGHA) and WECA regions respectively. The group appointed regional vice-presidents in 2017 to manage the rest of the operations in the three regions as part of its strategy to bolster leadership in each region.
• The group reallocated its operations in Ghana, which was previously included in the WECA region, to the SEA region and subsequently renamed this regional grouping SEAGHA. The reallocation was performed to balance the operational requirements of each region under each vice-president to further optimise the oversight responsibilities of the regional vice-presidents.
• In addition, during 2017, management changed the way it presents segment results for South Africa. Previously, the South African operating segment included the results of the MTN South Africa sub-group of companies. In 2017, the segment results presented for South Africa only include the results of the MTN South Africa operating company.

Comparative numbers have been restated accordingly.

Operating results are reported and reviewed regularly by the CODM and include items directly attributable to a segment as well as those that are attributed on a reasonable basis, whether from external transactions or from transactions with other group segments.

The measure of reporting profit for each segment, that also represents the basis on which the CODM reviews segment results, is EBITDA. EBITDA is defined as earnings before interest (which includes gains and losses on foreign exchange transactions), tax, depreciation and amortisation, and is also presented before recognising the following items:

• Impairment of goodwill
• Loss on derecognition of a long-term loan receivable
• Net monetary gain resulting from the application of hyperinflation
• Share of results of associates and joint ventures after tax

For the purposes of the review of segment results by the CODM, EBITDA also excludes the following items:

• Hyperinflation (note 1.5.7)
• Tower sale profits (note 2.3)
• Nigeria regulatory fine (note 1.5.8)
• MTN Zakhele Futhi share-based payment expense (note 8.1)
• Exchange right profit on IHS investment (note 2.3)

These exclusions have remained unchanged from the prior year, apart from the exchange right profit on the IHS investment that occurred during the year.

Irancell Telecommunication Company Services’ (PJSC) (Iran) proportionate results are included in the segment analysis as reviewed by the CODM and excluded from IFRS reported results for revenue, EBITDA and capex due to equity accounting for joint ventures. The results of Iran in the segment analysis exclude the impact of hyperinflation accounting.

¹ Restated to reflect the segments reallocated.

¹ Restated to reflect the segments reallocated.

The impact of hyperinflation on the segment analysis is as follows: