MTN

MTN delivered another solid operational and financial performance for the year ended 31 December 2020, under exceptionally challenging trading conditions. Service revenue grew ahead of our blended inflation, despite varying degrees of lockdown restrictions across most of our markets throughout the period. Our efficiency programme drove positive operating leverage, supporting an improved EBITDA margin.

Group service revenue increased by 11,9%* to R170,1 billion (2019: R141,8 billion). This was led by growth of 14,6%* in MTN Nigeria, 1,6% in MTN SA, 16,6%* in MTN Ghana and benefitted from solid overall top line growth from the regional opcos.

Voice revenue increased by 4,8%*, despite voice traffic coming under pressure – especially during the height of COVID-19 effects in Q2. There was some improvement in trends as lockdown restrictions eased, resulting in a recovery in voice revenue through the remainder of the year. The overall performance in the period was supported by a 28,8 million increase in Group subscribers to 279,6 million. We continued to enhance growth through our well-executed customer value management (CVM) initiatives and segmented customer propositions.

Data revenue expanded by 31,0%*, with a 110,0% increase in traffic brought about by higher levels of online demand resulting from the effects of COVID-19, including an increase in learn-from-home and work-from-home. At 31 December 2020 we had 114,3 million active data users, having added 19,0 million in the year. We surpassed the breakthrough 100 million mark in H1 as we continue to work towards our ambition of connecting 200 million data users to our networks in the medium-term.

Anchored in our intent of driving the industry-leading connectivity operations in our markets, we sustained our efforts to bridge the digital divide. We expanded our 3G and 4G coverage footprint adding 16,3 million and 55,0 million people respectively; invested in 5G in SA; recorded 140 million smartphones on our network; and reduced the effective rate per megabyte by 32,9%. Average data usage rose by 60% to 4,4 GB per month.

Fintech revenue rose by 23,9%*. The number of active Mobile Money (MoMo) users increased by 11,7 million to 46,4 million, generating a monthly ARPU of $1,2. The value of MoMo transactions was US$152 billion and we processed 12 400 transactions per minute (up 35% from 9 200 in 2019). While COVID-19 accelerated the adoption of mobile financial services, growth in fintech revenue was moderated by reductions in transaction fees to support our customers, lockdown restrictions on agents and a slowdown in economic activity.

At the end of December 2020, our aYo insurance joint venture had 11 million registered policy holders and 6 million active policies. In total, aYo generated US$6,4 million (R106 million) in service revenue and US$10,5 million (R172 million) premium income. We have concluded an agreement to increase our shareholding in aYo to 75% and will consolidate it in future once regulatory approvals are obtained.

Digital revenue increased by 27,1%*, with an acceleration in growth in H2, supported by greater uptake of our services. With this, the structural turnaround in the segment has been completed and we are positioned for further sustained growth. We expanded our instant messaging platform ayoba making good strides in the year, to record 5,5 million monthly active users, an addition of 3,5 million. It has now been integrated into 16 MTN markets and can be downloaded across many other markets on the Google Play store, Apple App Store and via the ayoba website as an OTT offering. In the year, ayoba expanded its services to include music, gaming, channels and money transfer.

Streaming service MusicTime! is now live in nine MTN markets, and 15 opcos live with MusicTime in the ayoba app. In the year, MTN extended its digital strategy with the launch of a new pan-African API marketplace called Chenosis, which will enable developers and businesses to discover and subscribe to what will become the largest library of open APIs published on the continent.

Enterprise revenue increased by 14,8%*, supported by growth in MTN SA, MTN Nigeria, MTN Ghana and MTN Côte d’Ivoire. Growth benefitted largely from increased data usage and remote working.

Wholesale revenue declined by 12,4%*, impacted in South Africa by the conclusion of our roaming agreement with Telkom and as we continued to account for Cell C revenue on a cash basis. We recognised revenue of approximately R2,0 billion (up 10% YoY) from Cell C for national roaming during the year, and R414 million remained unrecognised as at 31 December 2020. Phase 2 of the Cell C roaming agreement, which was concluded in May 2020, continues to be implemented. Cell C remains up to date with payments in line with its payment plan.

MTN GlobalConnect recorded strong commercial and financial performances, having billed new fixed wholesale deals to the value of US$28,8 million and delivered growth in external revenue of 54,0% to US$66,8 million.

The Group’s EBITDA margin in constant currency terms and excluding the effects of once-off items expanded by 0,9pp* to 42,7%*, driven by the 1,7pp* and 2,0pp* improvements delivered by MTN SA and MTN Ghana respectively. The EBITDA margin in MTN Nigeria (down by 3,0pp*) was impacted by costs linked to its accelerated 4G site rollout, an increase in the VAT rate as well as higher tower lease costs due to exchange rate adjustments.

MTN Group’s reported EBITDA margin was 45,3% compared to 42,4% in December 2019. This was impacted positively by the gain on disposal of our ATC Uganda and ATC Ghana tower associates and negatively by the impairment loss on the remeasurement of disposal groups. The 2019 margin had included the effects of the gain on dilution of our investment in Jumia, the gain on disposal of Travelstart as well as tower profits. The Group’s overall margin improvement in 2020 was assisted by our efficiency programme, including strict cost containment measures.

Basic earnings per share (EPS), increased by 87,0% to 946 cents (2019: 506 cents), supported by the weaker rand, good operational performance and an improved contribution of the share of profits from associates and joint ventures. EPS includes the impairment losses relating to MTN Syria and BICS of approximately 84 cents, as well as the benefit from gains amounting to approximately 341 cents on the disposal of the ATC Uganda and ATC Ghana tower joint ventures as announced in March 2020.

Reported headline earnings per share (HEPS) increased by 60,0% to 749 cents (2019: 468 cents). HEPS were negatively impacted by non-operational items amounting to 128 cents from the following items: 0 cents relating to the Nigeria fine interest (-8 cents in 2019); hyperinflation (excluding impairments) of 30 cents (-13 cents in 2019); the impact of foreign exchange gains and losses of -168 cents (-78 cents in 2019) and the reversal of the time value loss recognised on the Iran receivable of 10 cents (-12 cents in 2019).

We are particularly pleased with the momentum in growth of underlying earnings at the bottom-line. This bears testament to the progress we have made in enhancing the quality of our earnings in line with our strategy, particularly in relation to line items below the operating line.

We invested capex of R33,0 billion on an IFRS reported basis, which is 0,5% higher YoY (up by 8,9% to R28,6 billion under IAS 17). We managed to accelerate our investment in H2 as COVID-19 lockdown restrictions eased and continued to expand the capacity of our networks, rolling out 3 342 3G and 8 354 4G sites. Capex intensity reduced to 16,0% from 17,3% in December 2019 under IAS 17.

Group operating free cash flow increased by 117,1% to R28,3 billion, benefitting from positive operating leverage and solid EBITDA growth as well as our focus on efficiencies and liquidity management.

Return on equity (ROE) for the year increased to 17,0%, compared to 13,0% in December 2019. This adjusts for non-operational items, including hyperinflation, and was driven by the Group’s solid revenue growth, improved efficiencies and positive operating leverage. The expansion in ROE is a further demonstration of the improving quality of our earnings.

Our asset realisation programme (ARP), launched in March 2019 and enhanced in March 2020, aims to reduce debt, simplify our portfolio, reduce risk and improve returns. The stated target of our ARP is to realise capital of at least R25 billion over three to five years – over the past 12 months we have delivered approximately R4,3 billion in asset realisations.

MTN’s broader portfolio transformation ambition is to accelerate these objectives to actualise our focus on pan-Africa and structure the business to reveal value.

In March 2020, we completed the disposal of our 49% equity holdings in Ghana Tower Interco B.V. and Uganda Tower Interco B.V., which were part of the first phase of our ARP. However, COVID-19 brought about unprecedented uncertainty and volatility in global oil prices and capital markets, which impacted our short-term ability to continue with further significant realisations. We remain committed to execute on our portfolio transformation and continued to make significant progress in laying the groundwork for when conditions are more conducive to implement our ambitions.

During H2, we completed the exit from our 18,9% investment in e-commerce venture Jumia Technologies AG realising a total consideration of approximately R2,3 billion (US$138 million).

In August 2020, we announced plans to exit the Middle East in an orderly manner over the medium-term, aligning with our ambition to simplify our portfolio and focus on pan-African markets. As part of this process we classified MTN Syria as an asset held for sale and it remains the Group’s intention to exit its 75% stake in the business.

Also in H2, we completed the localisation of an 8% shareholding in MTN Zambia, netting approximately R178 million of proceeds. Further to our localisation ambition, in October 2020, we announced that the Group intends to sell down a further 12,5% of its investment in MTN Ghana, with a focus on local shareholding. This will increase its free-float on the Ghana Stock Exchange (GSE) to 25%, following the initial public offer in which 12,5% of its shares were listed on the GSE and nearly 130 000 Ghanaians were welcomed as shareholders.

In December 2020, we announced the intention to list MTN Rwanda directly on the Rwanda Stock Exchange (RSE) by way of introduction. This is an important first step towards further broadening local participation in Rwanda’s leading mobile network operator and developing the capital markets in the country.

In February 2021, we completed the sale of our 20% associate shareholding in Belgacom International Carrier Services SA (BICS) to PROXIMUS NV/SA. We have received proceeds of approximately €102,4 million (R1,8 billion) in cash. As at 31 December 2020, the carrying amount of MTN’s investment in BICS was R1,7 billion and the accumulated FCTR gain related to the asset was R1,2 billion. Upon release of the FCTR, we anticipate recording a profit on disposal of R1,2 billion.

SIM registration in Nigeria

On 9 December 2020, the National Communications Commission’s (NCC) suspended the sale and activation of new SIM’s for all operators in Nigeria. On 15 December 2020 the NCC further directed operators to update SIM registration records with national identification numbers (NIN’s) for every SIM connected to networks in Nigeria, with the current deadline to complete this specified as 6 April 2021.

MTN Nigeria has embraced the opportunity to play a more meaningful role in driving a solution for this issue and establish a sustainable and more reliable SIM registration process in the country. As at 28 February 2021, 37,2million (or 48,7%) of the MTN Nigeria subscriber base had submitted their NIN’s. These submissions remain subject to verification against the National Identification Management Commission (NIMC) database to complete the registration.

MTN Nigeria has been granted a licence to enrol citizens for new NINs and is scaling up its capacity to do so in collaboration with NIMC. In that context, MTN Nigeria is engaging with the authorities and industry stakeholders in the country to resume new SIM registration as soon as possible.

MTN Afghanistan anti-terrorism complaint

On 5 February 2021, MTN Group (MTN) filed a reply in support of its request that the court dismiss MTN from a civil case in U.S. court. In September 2020, MTN had asked the United States court to dismiss the case, filed against MTN on 27 December 2019, which asserted claims for civil monetary relief under the U.S. Anti-Terrorism Act.

MTN requested that the court dismiss the complaint for two independent reasons: firstly, the court lacks jurisdiction over MTN, which does not operate in the United States, and secondly, the complaint does not allege any conduct by MTN that violated the Anti-Terrorism Act.

On 8 December 2020, plaintiffs responded to MTN separately from other defendants because of MTN’s distinctive arguments as a telecommunications company with no presence in the United States, including that it argues that it is not subject to the U.S. court’s jurisdiction. MTN filed its reply to the plaintiffs on 05 February 2021. In its written reply, MTN reiterates its position that the plaintiffs case should be dismissed because the plaintiffs cannot establish jurisdiction over MTN in the United States or plead a viable claim under the U.S. Anti-Terrorism Act.

MTN conducts its business in a responsible and compliant manner in all its territories and will defend its position where necessary.

Spectrum in South Africa

In December 2020, MTN SA submitted its bid for high-demand spectrum to the Independent Communications Authority of South Africa (ICASA). The auction includes spectrum in the 700-800 MHz, 2,6 GHz and 3,5 GHz bands. Temporary spectrum allocated in early 2020 was extended to March 2021.

In January 2021, MTN SA filed an application in the Gauteng High Court to declare unlawful, and to review, correct or set aside two decisions made by ICASA relating to the spectrum auction process. MTN SA is challenging ICASA’s decision to implement an auction structure that creates two categories of mobile operators, namely Tier 1 and Tier 2, and the use of an opt-in auction round in which Tier 1 operators will not be allowed to participate. MTN SA has been classified as a Tier 1 operator.

MTN SA’s action is premised on two fundamental concerns. Firstly, the definitions used to differentiate a Tier 1 operator from the Tier 2 operator are, amongst others, impermissibly vague, arbitrary and unreasonable. Secondly, ICASA has included the highly sought-after 3,5 GHz band (that is optimal for 5G usage) in the portfolios that are available during the opt-in round. The categorisation and opt-in structure of the auction have created a very real outcome where MTN would be unable to bid for any of the 3,5 GHz, due to the bulk of the spectrum having been taken up by the Tier 2 operators in the initial opt-in round.

Given its desire not to delay the process, MTN SA has addressed the matter to the court on an urgent basis. MTN SA remains committed to reaching a constructive resolution on this matter and look forward to the release of high-demand spectrum.

MTN Ghana classified a significant market power

In June 2020, the National Communications Authority (NCA) classified MTN Ghana a significant market power and determined that it would be subject to special regulatory restrictions. From October 2020, MTN Ghana implemented the NCA’s directive to apply a 30% asymmetrical interconnect for two years. MTN Ghana remains in constructive discussions with the NCA in order to pave the way for an amicable resolution. These discussions are ongoing and the market will be updated on any significant developments.

MTN Syria placed under judicial guardianship

On 17 February 2021, a lawsuit was filed before the Administrative Court of Damascus (the Court) by the Syrian Ministry of Telecommunications and the Syrian Telecommunications and Post Regulatory Authority seeking interim measures against MTN Syria. On 25 February 2021, the Court placed MTN Syria under a judicial guardianship, with immediate effect.

The Court has appointed the Chairman of Tele Invest, the minority shareholder of MTN Syria, to serve as the judicial guardian. According to the Court order, the judicial guardian took over responsibility for managing the day-to-day operations of MTN Syria. MTN Syria remains a going concern.

MTN Group strongly disagrees with the Court’s decision to appoint a judicial guardian over MTN Syria, and on 1 March 2021, filed an appeal to remove the judicial guardian. On the same date, Tele Invest filed an appeal against the appointment of its Chairman as the judicial guardian. Both appeals remain pending. MTN continues to consider the potential impact of these latest developments and is considering further steps related to its investment in MTN Syria.

MTN Group is committed to continued compliance with all applicable laws and continues to monitor all developments to ensure it acts in accordance with applicable laws.

2020 was characterised by the COVID-19 pandemic and its impacts, including volatility in global commodities and capital markets as well as the implementation of varying degrees of restrictions. These were most severe in April 2020, after which they began to ease. However, towards year-end a second wave of infections emerged, resulting in renewed lockdown restrictions in some markets.

While economic activity improved as the year progressed, the trading environment remained challenging. We continued to focus on four key areas, namely: social (our people, communities and stakeholders); commercial (including our customers); network and supply chain; and funding and liquidity.

Social

The Group provided ongoing support through the MTN Global Staff Emergency Fund for employees; Y’ello Hope packages for our customers, communities and other stakeholders as well as through contributions to MTN foundations and government-led initiatives. The Group contributed R107 million through its foundations towards healthcare and government relief efforts in support of the fight against COVID-19.

The investment we made in Y’ello Hope initiatives provided approximately R1,8 billion in value to our stakeholders. We committed marketing resources to our global #WearItForMe campaign, which encouraged the wearing of masks to fight the spread of the virus.

In January 2021, we donated US$25 million in support of the African Union’s (AU) programme to secure much-needed COVID-19 vaccines for frontline health workers across the member states.

Commercial

Despite some periods of volatility, primarily in April 2020, our commercial trends were relatively resilient in 2020. Although we have observed some easing from peaks, most trends recovered well from the initial severe pressure caused by COVID-19 and maintained relatively elevated levels. We once again overview the trends in our data, voice and fintech volumes in context of COVID-19.

Comparing overall Group data traffic in December 2020 with that in April 2020, the level of activity was 32,5% higher, and grew by approximately 110% YoY for the financial year. In terms of our larger markets: MTN SA was up by 14,4% in December versus April 2020 (and 68,1% YoY), MTN Nigeria increased by 28,0% (and 33,5% YoY), while MTN Ghana was up by 16,7% (and 60,2% YoY).

Data demand, and online or connectivity services generally, benefitted from shifts in consumer spending patterns during peak periods of lockdown restrictions as spend that would normally have been directed elsewhere was channelled into data and other digital services. But as restrictions were lifted, we observed some reversal in this trend although we expect some structural element of the shift to remain.

We experienced some pressure on voice during strict lockdowns conditions, however the trajectory of voice traffic showed a solid recovery. Group voice traffic was up by 21,7% in end December 2020 compared with April 2020 and increased by 14,1% YoY for the financial year. For MTN SA, voice traffic was 23,7% higher in December versus April (and 40,8% YoY), MTN Nigeria was up by 49,3% (and 22,1% YoY) and MTN Ghana had increased by 42,2% (and 26,5% YoY).

Fintech recovered strongly from the lows experienced since April 2020, against which Group fintech transaction volumes in December 2020 were up by 48,5% and 34,5% higher, YoY for the financial year. On the same basis, the value of fintech transactions in US$ terms was up by 94,9% and 57,6% respectively. We zero-rated transaction fees to support our customers through challenges presented by COVID-19, which also helped to drive increased adoption.

COVID-19 has put pressure on the financial position of our postpaid and enterprise business unit customers. The increased credit risk culminated in larger long-outstanding balances on which a detailed review and adequacy of provisions was performed. During 2020 we recognised an impairment and write-down of trade receivables and contract assets of R2,2 billion, which reflects a 197% increase on FY 19.

Network and supply chain

Our priority throughout the pandemic has been to safeguard the capacity and resilience of our networks. We ensured this by implementing measures including building up an inventory of equipment and critical spares. Following a delay in the pace of site rollouts during the height of COVID-19 restrictions in H1, we managed to accelerate our investment in H2 and managed to meet our original (pre-COVID19) capex target for the year.

This helped to increase the headroom in our networks and, in December 2020, the headroom on our data networks was approximately 39,0% in South Africa, 50,0% in Nigeria and 29,0% in Ghana.

We continue to monitor our network and supply chain to mitigate against any significant interruptions that may be caused by the pandemic.

Funding and liquidity

Our ability to weather the volatility brought about by COVID-19 is demonstrated in the strength and resilience of our balance sheet. During 2020, we successfully fast-tracked and closed R18,2 billion in funding to mitigate refinance risks around upcoming maturities and our ongoing focus remains on managing liquidity as a priority.

As at 31 December 2020, our Group net debt was R49,7 billion and our net debt-to-EBITDA ratio of 0,8x, remains well within our covenant limit of 2,5x. Our interest cover was 7,7x, comparing favourably with the covenant limit of no less than 5,0x.

We maintained a healthy liquidity position at the Holdco level where our year-end Holdco net debt of R43,3 billion reflected a pleasing reduction on the December 2019 level of R55,3 billion. At the end of December 2020, our Holdco leverage of 2,2x was flat on the previous year as cash upstreaming, from Nigeria in particular, remained challenging. Holdco leverage did, however, improve from the June 2020 level of 2,7x aided by some H2 progress in our ARP and recovery in the rand against the US dollar. The ratio of US$ to ZAR denominated debt at Holdco level improved to 48:52, from 50:50 compared in 2019.

During the year, we upstreamed R8,7 billion in cash from most of our opcos with MTN Nigeria being the notable exception. Although some cash was repatriated from Nigeria (approximately R286million) during the year, this was not material and upstreaming continues to be delayed due to challenges in securing foreign currency in that market. Presently, the total dividends that have accrued to Group as at December 2020, and yet to be upstreamed, amount to NGN118,5 billion (approximately R4,2 billion). In February 2021, MTN Nigeria declared a final dividend for FY 2020 of which the Group’s net portion amounts to NGN87,5 billion (approximately R3,2 billion) – this is subject to approval by the MTN Nigeria shareholders at its annual general meeting (AGM), scheduled for 25 May 2021. The preceding ZAR-equivalent figures were calculated based on December 2020 closing rates.

We maintain a prudent approach to liquidity management and focus on cash preservation. At 31 December 2020, our Holdco liquidity headroom was R41,0 billion. This is comprised of R16,4 billion in cash (excluding the Nigeria dividends that have been paid and not repatriated) and R24,6 billion in committed, undrawn credit facilities.

Our focus over the medium-term remains on reducing our exposure to US dollar debt, as well as to improve the funding mix at the Holdco level through greater cash flows.

Over the past three years, our disciplined and prudent capital allocation framework has underpinned the Group’s solid organic topline growth, progress on reducing and optimising our leverage as well as improvement in our ROE. We will continue to be guided by this framework, which prioritises:

• Investment to drive organic growth;
• Stabilising leverage and rebalancing the mix to have rand debt making up at least 60% of Holdco net debt;
• Return cash to shareholders through dividends;
• Selective and strategic mergers and acquisitions; and
• Further returns of cash to shareholders through share repurchases and/or special dividends.

Our capital allocation framework aligns to our Ambition 2025 strategic priorities and emphasizes expense efficiencies and strengthening of the Holdco balance sheet, including appropriate liability management. It informs our focus on allocating capital in a manner that ensures the best possible short and long-term returns for the business and shareholders’ investment.

In H1 we suspended the interim dividend, informed by three key conditions negatively impacting our Holdco leverage evolution. These related to uncertainties around cash upstreaming from Nigeria, the timing of ARP proceeds and COVID-19 impacts. These conditions have not materially improved, resulting in Holdco leverage remaining above our target, the Board has resolved not to declare a final dividend for 2020 (2019: 550cps). This is in line with our capital allocation framework.

In light of these ongoing material uncertainties, the Board has also suspended the dividend policy and anticipates communicating a revised medium-term dividend policy when we announce our FY 2021 results in March 2022.

During this transition, the Board anticipates paying a total ordinary dividend of at least 260cps for the 2021 financial year. We anticipate that this will be a final dividend, with no interim dividend for FY 2021. On assessment of the progress of cash upstreaming from Nigeria, ARP delivery and COVID-19 impacts, the Board will consider returning further cash to shareholders in the form of special dividends or share repurchases after the release of FY2021 results

Going forward, MTN remains focused on capturing the exciting growth opportunities across our markets and our medium-term guidance has been enhanced to reflect this. To support this, we plan to invest approximately R29,1 billion in our network, fintech and digital services platforms in 2021, guided by our disciplined capital allocation framework.

Headline earnings reconciliation

Rm	IFRS reported 2020	Impairment   of goodwill,   PPE and   associates1	Impairment   loss on   remeasurement   of   disposal   group2	Gain on   disposal/   dilution of   investment   in JV/   Associate3	Other4	Headline earnings
2020
Revenue	179 361	–	–	–	–	179 361
Other income	6 228	–	–	(6 129)	–	99
CODM EBITDA before impairment of goodwill	81 311	42	1 113	(6 129)	(22)	76 315
Depreciation, amortisation and impairment of goodwill and joint venture	(36 716)	1 065	397	–	–	(35 254)
CODM EBIT	44 595	1 107	1 510	(6 129)	(22)	41 061
Net finance cost	(18 233)	–	–	–	–	(18 233)
Net monetary gain	1 582	–	–	–	–	1 582
Share of results of joint ventures and associates after tax	1 142	–	–	–	–	1 142
Profit before tax	29 086	1 107	1 510	(6 129)	(22)	25 552
Income tax expense	(9 439)	–	–	–	–	(9 439)
Profit after tax	19 647	1 107	1 510	(6 129)	(22)	16 113
Non-controlling interests	(2 625)	(9)	(7)	–	1	(2 640)
Attributable profit	17 022	1 098	1 503	(6 129)	(21)	13 473
EBITDA margin	45,3%					42,5%
Effective tax rate	32,5%					36,9%

 

Rm	IFRS  reported  2019	Impairment   of goodwill,   PPE and   associates1	Impairment   loss on   remeasurement of   disposal   group2	Gain on   disposal/   dilution of   investment   in JV/   Associate3	Other4	Headline  earning
2019
Revenue	151 460	–	–	–	–	151 460
Other income	1 510	–	–	(1 288)	(83)	139
CODM EBITDA before impairment of goodwill	64 229	330	–	(1 288)	(83)	63 188
Depreciation, amortisation and impairment of goodwill and joint venture	(32 800)	342	–	–	–	(32 458)
CODM EBIT	31 429	672	–	(1 288)	(83)	30 730
Net finance cost	(15 184)	–	–	–	–	(15 184)
Net monetary gain	787	–	–	–	–	787
Share of results of joint ventures and associates after tax	705	–	–	(37)	–	668
Profit before tax	17 737	672	–	(1 325)	(83)	17 001
Income tax expense	(6 908)	–	–	–	–	(6 908)
Profit after tax	10 829	672	–	(1 325)	(83)	10 093
Non-controlling interests	(1 729)	25	–	–	22	(1 682)
Attributable profit	9 100	697	–	(1 325)	(61)	8 411
EBITDA margin	42,4%					41,7%
Effective tax rate	38,9%					40,6%

Rm	Nigeria   fine   interest5	Hyperinflation   (excluding   impairments)6	Impact of   foreign   exchange   losses and   gains7	Reversal   of time   value loss   recognised   on the Iran   receivable8	Adjusted  2019
2019
Revenue	–	(905)	–	–	150 555
Other income	–	(6)	–	–	133
CODM EBITDA before impairment of goodwill	–	(282)	–	–	62 906
Depreciation, amortisation and impairment of goodwill and joint venture	–	598	–	217	(31 643)
CODM EBIT	–	316	–	217	31 263
Net finance cost	189	256	2 364	–	(12 375)
Net monetary gain	–	(787)	–	–	–
Share of results of joint ventures and associates after tax	–	466	(165)	–	969
Profit before tax	189	251	2 199	217	19 857
Income tax expense	–	–	(662)	–	(7 570)
Profit after tax	189	251	1 537	217	12 287
Non-controlling interests	(40)	(20)	(142)	–	(1 884)
Attributable profit	149	231	1 396	217	10 404
EBITDA margin					41,8%
Effective tax rate					38,1%

1	Represents the exclusion of the impact of goodwill, PPE and joint venture impairments. 2020: MEIH (R67million), goodwill (Liberia: R308 million, Guinea-Bissau: R165 million and Yemen: R525 million) and PPE (R42 million); 2019: MEIH (R342 million) and PPE (R355 million).
2	Represents the impairment loss on remeasurement of Syria (2020: R1 106 million; 2019: R0 million) and BICS (2020: R397 million; 2019: R0 million) disposal groups.
3	Represents the gain on disposal/dilution of investment in joint ventures and associates: Gain on disposal of tower companies (R6 136 million) and loss on disposal of CCA (R7 million); 2019: R1 325 million (Jumia: R1 039 million, MEIH: R37 million and gain on disposal of TravelStart: R249 million).
4	Release of a deferred gain in Ghana on the sale of tower assets (2020: R0 million; 2019: R19 million) and profit on the disposal of items of property, plant and equipment. 2020: R21 million; 2019: R42 million.
5	Exclusion of finance cost recognised as a result of the unwind of the discounting of the financial liability created on conclusion of the Nigeria regulatory fine. 2020: R0 million (2019: R149 million).
6	The impact of hyperinflation is excluded for the operations that are currently accounted for on a hyperinflationary basis (MTN Irancell, MTN Syria, MTN Sudan and MTN South Sudan) as well as those that have previously been accounted for on a hyperinflationary basis. The economy of Sudan was assessed to be hyperinflationary during 2018, and hyperinflation accounting has since been applied. Hyperinflationary accounting was applied previously in MTN Sudan until 30 June 2016. The economy of Iran was assessed to be hyperinflationary effective 1 January 2020, and hyperinflation accounting was applied for the current financial year. The economy of Iran was assessed to no longer be hyperinflationary effective 1 July 2015 and hyperinflation accounting was discontinued from this date onwards. For this operation the impact of hyperinflation unwinds over time mainly through depreciation, amortisation or subsequent asset impairments.
7	Adjustment for the net forex losses impacting earnings for the respective periods. 2020: forex loss of R3 016 million; 2019: forex loss of R1 396 million. This includes the impact of forex in Iran.
8	Represents the (reversal)/recognition of the time value loss recognised on the Iran receivable. 2020: -R174 million; 2019: R217 million.

Table 7: Cost analysis

	Actual  Rm	Prior  Rm	Reported  % change	Constant  currency  % change	%  of revenue
Handsets and other accessories	10 899	11 911	(8,5)	(9,4)	6,1
Interconnect	9 867	9 218	7,0	(0,1)	5,5
Roaming	872	599	45,6	36,5	0,5
Commissions	13 919	11 033	26,2	14,1	7,8
Government and regulatory costs	6 274	4 976	26,1	12,7	3,5
VAS/Digital revenue share	2 884	3 099	(6,9)	12,7	1,6
Service provider discounts	1 321	1 540	(14,2)	(14,4)	0,7
Network and IS maintenance	17 867	21 915	(18,5)	(23,3)	10,0
Marketing	2 948	3 409	(13,5)	(17,5)	1,6
Staff costs	12 616	10 562	19,4	13,5	7,0
Other opex	21 760	9 850	120,9	109,8	12,1
Total	101 227	88 112	14,9	9,1	56,4
Impairment loss on remeasurement of disposal group	1 510	–			0,8
Loss on disposal of joint venture	–	–			–
Hyperinflation	1 541	629			0,9
Total reported	104 278	88 741	17,5	9,1	58,1

Total costs increased by 9,1%*, stemming largely from higher costs related to the maintenance of network sites although partially mitigated by lower handset costs, particularly at MTN SA. There was upward pressure on costs in Nigeria due to the impact of naira depreciation on lease rentals in the year. There was also an impact from bad debt provisions which increased by 197%, mainly due to COVID-19 effects; refer to the commercial impacts section of the COVID-19 discussion for further detail.

The Group expense efficiency programme, including enhanced oversight of expenditure such as distribution and network costs, helped to contain overall cost increases below top line growth to drive positive operating leverage.

Table 8: Group EBITDA by country

	Actual Rm	Prior Rm	Reported % change	Constant Currency % change
South Africa	17 742	16 972	4,5	4,5
Nigeria	29 506	25 149	17,3	8,6
SEAGHA	16 802	12 136	38,4	29,4
Ghana	9 097	7 014	29,7	21,2
Uganda	4 118	3 150	30,7	14,9
Other	3 587	1 972	81,9	(6,7)
WECA	8 620	6 081	41,8	21,1
Cameroon	2 149	1 635	31,4	12,2
Côte d’Ivoire	3 042	1 814	67,7	42,7
Other	3 429	2 632	30,3	(33,8)
MENA	3 352	2 836	18,2	37,2
Syria	574	1 173	(51,1)	(16,8)
Sudan	1 428	677	110,9	123,8
Other	1 350	986	36,9	(69,8)
Head offices, GlobalConnect and eliminations	(699)	(534)
CODM EBITDA	75 323	62 640	20,2	13,4
Gain on disposal/dilution of investment in associates and joint ventures	6 129	1 039
Gain on disposal of subsidiary	–	249
Hyperinflation	1 369	282
Impairment loss on remeasurement of disposal group	(1 510)	–
Tower sale profits	–	19
CODM EBITDA before impairment of goodwill and joint ventures	81 311	64 229	26,6	13,4

Group EBITDA increased by 26,6% on a reported basis and by 13,4%* in constant currency, before once-off items. This was driven by strong performances across most operations, with MTN SA up 4,5%, MTN Nigeria up 8,6%* and increases of 29,4%*, 21,1%* and 37,2%* in SEAGHA, WECA and MENA respectively.

The healthy growth in EBITDA and strong service revenue growth resulted in an increase in the Group EBITDA margin by 0,9pp* to 42,7%*.

Table 9: Group depreciation and

	Depreciation				Amortisation
	Actual  Rm	Prior  Rm	Reported  % change	Constant  currency  % change	Actual  Rm	Prior  Rm	Reported  % change	Constant  currency  % change
South Africa	8 417	8 197	2,7	2,7	1 062	1 123	(5,4)	(5,4)
Nigeria	9 598	8 168	17,5	8,7	1 576	1 196	31,8	22,1
SEAGHA	4 115	3 709	10,9	4,2	779	497	56,7	52,1
Ghana	2 137	1 870	14,3	6,8	368	266	38,3	30,0
Uganda	1 138	1 049	8,5	(4,8)	327	128	155,5	124,0
Other	840	790	6,3	11,4	84	103	(18,4)	1,2
WECA	5 202	4 635	12,2	(3,6)	1 163	1 118	4,0	(10,5)
Cameroon	1 655	1 525	8,5	(7,3)	246	185	33,0	13,9
Côte d'Ivoire	1 636	1 444	13,3	(3,2)	546	499	9,4	(6,5)
Other	1 911	1 666	14,7	(0,6)	371	434	(14,5)	(25,7)
MENA	1 263	1 692	(25,4)	(12,0)	470	442	6,3	9,8
Syria	364	879	(58,6)	(32,1)	58	121	(52,1)	(20,5)
Sudan	202	177	14,1	17,4	24	25	(4,0)	–
Other	697	636	9,6	(4,3)	388	296	31,1	17,2
Head offices, GlobalConnect and eliminations	503	403			552	680
Total	29 098	26 804	8,6	2,9	5 602	5 056	10,8	4,9
Hyperinflation	810	516			141	82
Total reported	29 908	27 320	9,5	2,9	5 743	5 138	11,8	4,9

amortisation

The increase in the Group depreciation charge abated to 2,9%* as the trajectory continues to normalise and stabilise following the elevated capex profile of the past few years. Amortisation costs increased by 4,9%*.

As a result of our regular impairment testing, the Group partially impaired its goodwill in MTN Liberia by R308 million, MTN Yemen by R525 million and MTN Guinea-Bissau by R165 million. This has resulted primarily from increased risk premium and discount rate assumptions in the valuation analysis of the assets. Furthermore, the impact of COVID-19 restrictions on operational and valuation assumptions – offset by higher valuations of comparable technology companies – resulted in net impairment of R67 million being recognised against the Group’s investment in its joint venture, Middle East Internet Holdings S.A.R.L. (MEIH).

Table 10: Net finance cost

	Actual Rm	Prior Rm	Reported % change	Constant currency % change	% of revenue
Net interest paid	13 393	12 495	7,2	3,1	7,5
Net forex losses	3 972	2 245	76,9	75,2	2,2
Total	17 365	14 740	17,8	13,8	9,7
Nigeria regulatory fine interest unwind	–	189			–
Hyperinflation	868	255			0,5
Total reported	18 233	15 184	20,1	13,8	10,2

Net finance costs increased by 13,8%* to R18,2 billion driven by increase in forex losses.

At 31 December 2020, we recognised net forex losses of R4,0 billion compared to net forex losses of R2,2 billion in the prior period largely due to the weakening of the unofficial rate being used in Sudan and South Sudan.

We reported a positive contribution of R1,1 billion from associates and joint ventures, compared to R705 million in December 2019. The 2020 contribution was largely attributable to lower losses from the Digital Group, as Jumia was no longer equity accounted (from 12 April 2019), the recommencement of equity accounting for Mascom and the lower unwinding of depreciation on previously hyperinflated assets in Iran.

Table 11: Taxation

	Actual Rm	Prior Rm	Reported % change	Constant currency % change	Contribution to taxation %
Normal tax	9 293	5 947	56,3	44,7	98,5
Deferred tax	(1 469)	(100)			(15,6)
Foreign income and withholding taxes	1 421	1 060	34,1	26,6	15,1
Total	9 245	6 907	33,8	24,5	97,9
Hyperinflation	194	1			2,1
Total reported	9 439	6 908	36,6	24,5	100,0

The reported group effective tax rate (GETR) was 32,5%; lower than the prior year’s rate of 38,9% mainly due to the non-taxable gain from the disposal of the tower companies. For the year ended 31 December 2020, the Group’s reported taxation charge increased by 36,6% to R9,4 billion.

Cash inflows generated from operations increased by 61,2% to R58,5 billion driven by the solid operational performance across our markets. Key cash outflows included tax paid of R8,4 billion, net interest paid of R12,3 billion, capex of R30,2 billion and dividends paid to equity holders of R6,5 billion.

Table 12: Capital expenditure

	Actual  IFRS 16  Rm	Actual  IAS 17  Rm	Prior  IAS 17  Rm	Reported  % change	Constant  currency  % change
South Africa	7 542	7 209	7 562	(4,7)	(4,7)
Nigeria	12 694	10 016	8 011	25,0	15,3
SEAGHA	6 063	5 052	4 979	1,5	(2,8)
Ghana	3 021	2 773	2 705	2,5	(4,9)
Uganda	1 328	1 032	1 042	(1,0)	(6,7)
Other	1 714	1 247	1 232	1,2	5,9
WECA	3 418	3 255	2 799	16,3	(0,2)
Cameroon	950	900	509	76,8	50,6
Côte d'Ivoire	1 064	1 036	844	22,7	5,3
Other	1 404	1 319	1 446	(8,8)	(21,5)
MENA	1 642	1 573	1 941	(19,0)	6,5
Syria	751	721	904	(20,2)	84,3
Sudan	495	473	430	10,0	19,1
Other	396	379	607	(37,6)	(45,0)
Head offices, GlobalConnect and eliminations	1 286	1 127	833
Total	32 645	28 232	26 125	8,1	6,9
Hyperinflation	394	377	156
Total reported	33 039	28 609	26 281	8,9	6,9

Table 13: Net debt analysis

Rm	Cash and  cash  equivalents*	Interest-  bearing  liabilities	Inter-  company  eliminations	Net  interest-  bearing  liabilities	Net debt/   (cash) December  2020	Net debt/   (cash) December  2019
South Africa	1 901	28 069	(28 069)	–	(1 901)	(1 310)
Nigeria	17 230	19 107	–	19 107	1 877	7 796
SEAGHA	2 964	10 960	(5 894)	5 066	2 102	1 391
Ghana	1 702	2 079	–	2 079	377	114
Uganda	237	1 558	–	1 558	1 321	423
Other	1 025	7 323	(5 894)	1 429	404	854
WECA	2 448	12 350	(4 197)	8 153	5 705	6 657
Cameroon	490	1 978	(393)	1 585	1 095	1 593
Côte d'Ivoire	526	3 499	–	3 499	2 973	2 990
Other	1 432	6 873	(3 804)	3 069	1 637	2 074
MENA	1 384	3 734	(3 734)	–	(1 384)	(1 927)
Syria	–	616	(616)	–	–	(444)
Sudan	451	3 118	(3 118)	–	(451)	(338)
Other	933	–	–	–	(933)	(1 145)
Head offices, GlobalConnect and eliminations	20 640	63 922	–	63 922	43 282	55 313
Total reported	46 567	138 142	(41 894)	96 248	49 681	67 920
Iran	862	436	–	436	(426)	(313)

*	Includes restricted cash and current investments.

Group net debt reduced to R49.7 billion, from R67,9 billion in December 2019. This was boosted by the proceeds from ARP sales as well as no interim dividend being paid.

Holdco borrowings reduced to R43,3 billion, from R55,3 billion in December 2019. The reduction was mainly due to ARP proceeds and repayment of loans. The currency mix of MTN’s debt at December 2020 was 48,0% US dollar/euro and 52,0% South African rand (2019: 50% and 50% respectively), reflecting pleasing progress in our objective of optimizing the mix of our Holdco debt. At the end of December 2020, our Holdco leverage was flat at 2,2x, impacted by the 4,8% weakening of the rand against the US dollar and offset by asset sales.

We remain comfortably within our debt covenants, which are evaluated on a group consolidated basis. Our Group net debt-to-EBITDA ratio stood at 0,8x at 31 December 2020 (2019: 1,2x) against our covenant of 2,5x. Our interest cover ratio was 7,7x (2019: 6,6x) compared to the covenant of no less than 5,0x. Our Group cash balance at the end of December 2020 was R46,6 billion.

MTN South Africa

• Service revenue increased by 1,6%;
• Data revenue increased by 15,3%;
• Fintech revenue increased by 3,0%;
• Digital revenue increased by 7,0%;
• EBITDA increased by 4,5% to R17,7 billion;
• EBITDA margin increased by 1,7pp to 39,0%; and
• Capex of R7,5 billion on IFRS reported basis (R7,2 billion under IAS 17).

MTN SA delivered solid overall performance underpinned by strong commercial and operational execution as well as an acceleration in digital adoption arising from the impacts of the COVID-19 pandemic. This was despite a challenging macro and trading environment and volatility in the national roaming business.

The 1,6% growth in service revenue was supported by the prepaid (up 2,9%) and total postpaid (up 8,6%) businesses, which recovered well from the impact of regulation changes in 2019. Overall service revenue was also boosted by a resilient performance in the broader consumer business unit (CBU) and growth in the enterprise business unit (EBU). The core mobile business grew service revenue by 4,6%.

MTN SA’s results were impacted by lower revenue in the wholesale business. This arose from discontinuation of the roaming agreement with Telkom and the continuing effects of accounting for Cell C revenue on a cash basis. Excluding the impact of national roaming (both Cell C and Telkom), MTN SA would have recorded service revenue growth of 3,2%. Cell C has remained current with payments on the agreed upon plan.

Total subscribers increased by 3,1 million to 32,0 million on stronger gross additions and improved churn. The main driver was an increase in prepaid customers by 2,4 million, to a base of 25,3 million – the highest level in about two years.

Postpaid subscriber numbers increased by 664 000 to 6,8 million, in a highly competitive environment and limited by lockdown restrictions. It was encouraging to note that MTN SA achieved positive net connections for the five months in a row to December 2020. The postpaid subscriber base benefited from short-term university and college deals offered to support students during the height of COVID-19 impacts.

Total data revenue grew by 15,3%, supported by a 79% rise in traffic and an increase of 1,5 million in active data subscribers to 15,7 million; the significant traffic growth was supported by ICASA’s temporary assignment of high demand spectrum. In the year, the effective data tariff reduced by 35%, due to an increased adoption of mobile broadband deals, student deals and SME deals. MTN SA also implemented data price reductions in line with the agreement reached with the Competition Commission (CompCom) and remains committed to ensuring data affordability for its customers.

The consumer prepaid business continued to deliver pleasing and improving results, especially through H2. Service revenue for the year increased by 2,9%, driven by solid commercial execution of customer value management (CVM) initiatives and enhanced distribution. Service revenue slowed from 5,7% in the third quarter to 2,5% in the fourth quarter, impacted mainly by the release of loyalty provisions.

The consumer postpaid business performed strongly in a highly competitive trading environment, generating solid service revenue growth of 5,3% in the year. This was aided by subscriber growth, well-managed churn and the uptake of Data First offers (Mega Deals campaign). The business has shown pleasing resilience in a challenging environment, however with South Africa now in the midst of a second wave of COVID-19 infections, further macroeconomic challenges and pressure on consumers may present some headwinds to the business.

The enterprise business sustained its progress, achieving growth for the fifth consecutive quarter with service revenue up 14,3% for the year. The business benefited from a record number of customer additions, boosted by a surge in data deals as universities facilitated ‘learn from home’ initiatives and customers required ‘work from home’ solutions. Some of the deals were on a short-term basis, leading to a slowdown in the fourth quarter because of university churn.

Wholesale revenue declined by 16,4% because of the discontinuation of our roaming agreement with Telkom and the effects of accounting for Cell C revenue on a cash basis. For the year, we recognised R2,0 billion in roaming revenue from Cell C – this was up by 10% on the revenue recognised in the previous year. R414 million of Cell C roaming revenue remained unrecognised at December 2020. These payments are anticipated in 2021 upon successful recapitalisation and will be recognised in 2021. MTN SA commenced phase two of the roaming agreement with Cell C, effective 1 May 2020. The arrangement envisages a three-year transition towards a full national roaming arrangement under which MTN will carry all of Cell C’s network traffic.

MTN SA recorded a solid EBITDA margin of 39,0%, an improvement of 1,7pp, with EBITDA increasing by 4.5% YoY. In addition to service revenue growth, the margin performance was supported by cost efficiencies and channel optimisation, reductions in device volumes, as well as reductions in device subsidies. Based on an assessment of the prevailing macroeconomic environment, we recorded an additional R371 million provision for expected credit losses under IFRS 9.

The fintech business in SA continued to scale, with 2,5 million registered users and 207 000 active users at year-end. This follows the launch of Mobile Money in South Africa in January 2020. The platform continues to grow transactions driven by innovative and relevant solutions. MTN SA’s main focus is around distribution, as well as extending cash-in and cash-out points through both formal and informal channels.

In the year, our commitment to transformation and improving access to mobile technology across South Africa resulted in the company achieving the significant milestone of Level 1 BBBEE contributor status.

MTN SA continues to deliver and sustain the best network quality in SA on both customer and independent measures. It has been endorsed as the best network by MyBroadband, Tutela, Open Signal and P3 for more than three years in a row.

MTN SA launched 5G in June 2020 being the first in the MTN Group. We have over 150 sites across several spectrum bands in Johannesburg, Cape Town, Pretoria, Durban, Bloemfontein, Centurion, Port Elizabeth and a few towns, with ambitious plans to scale up to more than 1000 sites upon allocation of 3500MHz high demand spectrum.

MTN Nigeria

• Service revenue increased by 14,6%*;
• Data revenue increased by 51,7%*;
• Fintech revenue increased by 27,3%*;
• Digital revenue increased by 108,1%*;
• EBITDA grew by 8,6 %* to R29,5 billion*;
• EBITDA margin decreased by 3,0 pp* to 50,9%*; and
• Capex investment of R12,7 billion on a reported basis (R10,0 billion under IAS 17).

MTN Nigeria delivered considerable growth in its base, connecting 12,2 million new subscribers to its network, which helped to grow its service revenue by 14,6%*. The growth in our subscriber base provided support for voice revenue, which accounted for 67,0%* of service revenue and rose by 5,6%*, with an acceleration in growth to 8,9% YoY in H2. This was enabled by our expanded customer acquisition touchpoints, rural telephony initiatives and revamped acquisition offers. The suspension of new SIM registration in mid-December did not have a significant impact on voice revenue as we saw an increased level of activity from the existing base.

Data revenue rose by 51,7%* for the year, maintaining the positive momentum from the effects of COVID-19 lockdowns. The performance in data was enabled by a combination of increased subscribers, usage and ultimately traffic, which was in turn supported by increased network capacity and 4G penetration. Data traffic rose by 126,5% and average usage by 64,0%. MTN Nigeria added approximately 8,2 million new smartphones to the network, bringing smartphone penetration to 45,9% of our base, up from 41,9% in 2019.

Fintech revenue rose by 27,3%* boosted by airtime lending service, MTN Xtratime. MTN Nigeria expanded its MoMo agent network with the addition of more than 280,000 registered agents during the year. This achievement was aided by the conversion of traditional airtime agents in line with the ‘one distribution’ strategy. Fintech subscribers increased more than eight-fold to 4,7 million, driving higher transaction volume of approximately 51,5 million and core fintech revenue growth of 28,0%.

The uptake of digital services continued to gain traction with the revamp of MTN Nigeria’s portfolio of digital products and services, improved customer journey and increase in the active user base. As a result, digital revenue recorded a growth of 108,1%*. Active users increased to 2,8 million, from 1,6 million in H1 when the definition was revised (to capture only unique paid subscriptions). This was driven mainly by subscriptions for instant messaging platform, ayoba, which rose by 120,9% to 1,4 million.

Enterprise revenue increased by 0,8%*, supported by growth in revenue from devices and fixed connectivity. The economic impact of the COVID-19 lockdown, particularly in Q2, led to a decline in the uptake of products and services by the businesses supported by MTN Nigeria. The recovery in H2 was, however, encouraging as restrictions eased and economic activity began to improve. A further uplift in enterprise revenue is anticipated once the USSD pricing dispute is resolved and outstanding fees are recovered from the banks.

During the period, MTN Nigeria expanded the scope of its service agreement with IHS Holding Limited (IHS) and amended the currency conversion provision for tower services. The changes in the service agreement substantially improve MTN Nigeria’s terms and conditions for future network expansion. The contract adjustment included the movement of the reference rate for conversion to Naira from the CBN’s official rate to the NAFEX. MTN Nigeria also reviewed the treatment of non-recoverable VAT on lease payments to account for it as an expense over the lease period. These, together with the effects of Naira depreciation, put upward pressure on lease rental costs in the period.

In addition to this, the combined effect of the 2.5% increase in value-added tax (VAT) and COVID-19-related costs led to a 29.2% increase in operating expenses with knock-on effect on EBITDA. This resulted in the EBITDA margin softening by 3,0pp* to 50,9%* with EBITDA rising by 8,6%*.

Southern and East Africa and Ghana (SEAGHA)

• Service revenue increased by 18,7%*;
• Data revenue increased by 29,3%*;
• Fintech revenue increased by 24,5%*; and
• Digital revenue increased by 1,2%*

MTN’s SEAGHA region delivered a healthy performance despite a substantial downturn in economic activity resulting from COVID-19 containment measures. Total subscribers increased by 8,8 million in the year to 57,3 million.

MTN Ghana was once again a key driver of the strong performance in SEAGHA, with service revenue growth remaining in the double-digits (up 16,6%*) driven by improved performances across most revenue curves. Voice revenue (up 8,4%*) was supported by an increase in the number of active subscribers, as well as various CVM initiatives, which helped to manage churn and improve usage. The continued robust growth in data revenue (up 21,4%*) was supported by higher active data users and smartphones on the network. The increased usage was partly due to shifts in consumer behaviour amid the COVID-19 pandemic.

The growth in MoMo revenue (up 31,3%*) benefited from various promotions in the year, increased person-to-person (P2P) transactional activity and broader penetration of more advanced services such as retail merchant payments and international remittances. MTN Ghana’s EBITDA margin improvement of 2,0pp* to 52,8%* resulted from ongoing cost initiatives and distribution efficiencies.

MTN Uganda increased service revenue by 9,5%*, with positive growth delivered in most of its revenue lines notably, voice (up 3,9%*), data (up 27,8%*) and fintech (up 11,8%*). MTN Uganda’s performance was underpinned by increases in the user base and usage, helped by CVM initiatives. EBITDA margin expanded by 2,4pp* to 49,5%*, on higher revenue and effective implementation of cost efficiencies.

The rest of the SEAGHA portfolio also delivered strong results, with MTN Rwanda and MTN Zambia growing at a double-digit rate. Data growth was strong across all opcos, benefiting from increased traffic resulting in part from the effects of COVID-19. Overall, the SEAGHA portfolio excluding MTN Ghana delivered service revenue growth of 20,9%* for the year, and 24,8%* YoY in Q4. Service revenue continued to grow ahead of costs in most markets, driving positive operating leverage. Moving forward, disclosure of the region will change to reflect the new regional operating structure announced during 2020.

West and Central Africa (WECA)

• Service revenue increased by 8,8%*;
• Data revenue increased by 22,6%*;
• Fintech revenue increased by 29,4%*; and
• Digital revenue increased by 64,6%*

The WECA region delivered a solid result with growth continuing to significantly outstrip inflation. This was supported by strong double-digit base growth despite the COVID-19 restrictions as well as improved data and fintech activities. Execution of the expense efficiency programme resulted in most WECA opcos improving their EBITDA margins. The aggregate EBITDA margin of WECA increased by 3,2pp* for the year to 31,2%*. Total subscribers increased by 3,0 million in the year to 39,2 million.

MTN Côte d’Ivoire recorded an increase in service revenue of 8,6%*, supported by net additions of 0,8 million following positive net additions for the eighth month in a row to December. This result was also supported by strong revenue growth in data (up 30,1%*) and fintech (up 16,3%*). The EBITDA margin widened by 8,3pp* to 34,7%*.

MTN Cameroon delivered service revenue growth of 6,5%*, with strong growth in data (up 19,7%*), fintech (up 43,6%*) and digital (up 101,8%*). The performance was supported by gains in market share in a difficult operating environment and ongoing conflict in large parts of the country. The EBITDA margin for MTN Cameroon improved by 1,7pp* to 32,1%*.

Overall, excluding MTN Cameroon and MTN Côte d’Ivoire, the WECA markets grew their service revenue by an aggregate of 10,2%*, and 13,3%* YoY in Q4.

Middle East and North Africa (MENA) (excluding Iran)

• Service revenue increased by 27,2%*;
• Data revenue increased by 51,2%*;
• Fintech revenue increased by 50,5%*; and
• Digital revenue increased by 79,9%*.

Despite persistent geopolitical challenges, the operations within the MENA portfolio delivered a strong performance with a firm EBITDA margin. This was supported by solid growth in data revenue with a 16,3% YoY increase in active data subscribers (excluding MTN Irancell). The total number of subscribers (excluding MTN Irancell) was 26,0 million.

MTN Syria grew service revenue by 28,9%*, driven by growth in voice (up 12,1%*) and data (up 42,1%*). The EBITDA margin declined by 13,8pp* to 25,0%* as a result of a material devaluation in the local currency, which put pressure on foreign-denominated operational expenditure.

MTN Sudan increased service revenue by 80,8%*, underpinned by growth in voice (up 64,7%*) and data (up 126,3%*) on the back of increase in data bundle prices, active data subscribers and usage. The EBITDA margin expanded by 8,3pp* to 43,2%*, driven by strong growth in revenue.

Telecoms operations

MTN Irancell delivered a strong set of results amid ongoing challenges including US sanctions and re-entering classification as a hyperinflationary economy, the depreciation of the currency and the high rate of inflation. Service revenue grew by 36,4%*, with voice revenue up by 14,3%* and data revenue up by 56,9%*.

MTN Irancell’s EBITDA margin decreased by 0,3pp* to 37,2%*. Invested capex was R3,6 billion under IAS 17. The value of the Irancell loan and receivable as at 31 December 2020 was R2,8 billion.

E-commerce investments

Although Iran Internet Group (IIG) was impacted by COVID-19, ride-hailing app Snapp remained the market leader, ranking among the top ride-hailing apps globally with 464 million rides in 2020. Snapp Box is the leading last-mile delivery network in the country with over 100 000 orders each day. Food delivery app Snappfood grew 66% YoY; it leads the market with over 10 000 partner restaurants. Snapp market grew 181% YoY. It is the leading supermarket delivery app in the country.

Within Middle East Internet Holding (MEIH), ride-hailing service Jeeny and cleaning service app Helpling were both impacted by COVID-19 but then began to recover strongly. In 2020, Jeeny more than doubled its market share in Saudi Arabia.

These e-commerce holdings, while important investments, are not viewed as long-term strategic holdings for the Group and form part of the ARP.

Investments in tower and infrastructure companies

At 31 December 2020, the fair value of our 29% investment in IHS was recognised at R27,2 billion.

Positioning the business for accelerated growth and relevance to 2025

COVID-19 brought about unprecedented volatility and uncertainty globally and across our markets placing enormous pressure on economies and the lives of our staff, customers and other stakeholders. The pandemic also brought into sharper focus the impact of the digital divide, especially in our markets, and the need for accelerated digitalisation.

FY 2020 demonstrated the resilience and agility of the MTN business model, as well as its importance and relevance to the shifting global operating environment. Our revised strategy, Ambition 2025, is geared to accelerating the Group’s de-risking and growth into platforms that will provide digital solutions for the markets we serve. At the heart of our ambition is to continue leading the drive for digital and financial inclusion in Africa while aligning to its nation-state development agenda.

MTN has built Africa’s leading scale and connectivity business, underpinned by a large connected and registered customer base as well as an enhanced risk framework and disciplined capital allocation. This provides the cornerstone upon which our ambition rests; to accelerate the Group’s progression into a platform business led by fintech and expanding into other digital, enterprise and network services.

Our target over the next five years is to grow our total subscriber base to 300 million, our mobile data users to 200 million data subscribers and our home broadband users to 10 million. This objective forms the connectivity foundation upon which we aim to leverage our platform ambition, in terms of which we aim to scale our MoMo and ayoba user bases to 100 million.

In the nearer-term, we remain focused on sustaining the turnaround achieved in MTN SA, particularly the pleasing traction achieved in its core consumer and enterprise businesses. MTN Nigeria will continue to prioritise investment in its network to accommodate the rapidly growing demand for data. More broadly, we will continue to drive operational execution to maintain the good growth achieved across our markets.

The acceleration of our portfolio transformation and Holdco deleveraging are key priorities. While the disruption caused by COVID-19 hampered execution in 2020, we are pleased with some of the progress we were able to make in our ARP. Much of the groundwork has been done to advance further planned asset realisations during the course of the coming year.

We will continue to invest in the capacity and resilience of our networks as well as scaling our platforms to drive accelerated growth in our business. Our guidance for capex in 2021 is R29,1 billion, which is a slight increase of 1,8% on our 2020 capex.

Medium-term guidance

Although there remains some uncertainty around the effects of COVID-19, we are committed to delivering on our medium-term (three to five years) guidance. In the context of our revised strategy, Ambition 2025, we have amended the guidance framework to align with our refreshed strategic priorities.

• Group service revenue: low to mid-teens growth;
  • South Africa service revenue: mid-single-digit growth
  • Nigeria service revenue: mid-teens growth
  • Accelerate fintech: target a greater than 20% service revenue contribution
• Holdco leverage of not higher than 1,5x;
• ARP proceeds of at least R25 billion; and
• ROE of greater than 20%.

During the year, we announced some changes to the Executive Committee (Exco) and an amended regional operating structure to support the execution of our strategy and realising our ambition:

• Ralph Mupita was appointed President and GCEO, effective 1 September 2020;
• Sugen Perumal was appointed as Acting GCFO, effective 1 September 2020;
• Tsholofelo Molefe was appointed GCFO. She will take up the role from 1 April , and will join the Board on the same day;
• Ebenezer Asante became VP for WECA effective from 1 January 2021;
• Yolanda Cuba was appointed VP for SEA, effective 1 January 2021;
• Serigne Dioum assumed the role of Group Chief Digital and Fintech Officer, joining Exco on 1 January 2021;
• Kholekile Ndamase was appointed Group Chief M&A and Business Development Officer, joining Exco on 1 January 2021;
• Karl Toriola became MTN Nigeria CEO effective 1 March 2021; and
• Ferdi Moolman assumed the new role of MTN Group Chief Risk Officer on 1 March 2021.

Effective 1 January 2021, MTN Ghana became part of the Group’s West and Central Africa (WECA) region. From that date, MTN’s Southern and East Africa and Ghana (SEAGHA) region became known as the Southern and East Africa (SEA) region.

We announced the following changes to the board in the year:

• Christine Ramon stepped down as a director on 30 September 2020;
• Sindi Mabaso-Koyana was appointed as an independent non-executive director, effective 1 September 2020, and assumed the role of Chairman of the Audit Committee from 1 October;
• Rob Shuter stepped down as GCEO and an executive director effective 1 September 2020;
• Nosipho Molope was appointed as an independent non-executive director, effective 1 April 2021; and
• Noluthando Gosa was appointed as an independent non-executive director, effective 1 April 2021.

We thank all departing directors for their valuable contribution over many years.

For and on behalf of the board

MH Jonas	RT Mupita
Group Chairman	Group President and CEO

09 March 2021

Fairland

Date of release 10 March 2021

Lead sponsor
JP Morgan Equities South Africa Proprietary Limited

Joint sponsor
Tamela Holdings Proprietary Limited

Definitions:

• Service revenue excludes device and SIM card revenue;
• Data revenue is mobile and fixed access data and excludes roaming and wholesale;
• Fintech includes Mobile Money (MoMo), insurance, airtime lending and e-commerce;
• Mobile Money users are 30-day active users;
• CODM EBITDA (referred to as EBITDA) is defined as earnings before finance income and finance costs (which includes gains or losses on foreign exchange transactions), tax, depreciation and amortisation, and is also presented before recognising the following items: impairment of goodwill and joint ventures; net monetary gain resulting from the application of hyperinflation; share of results of associates and joint ventures after tax; gain on disposal of tower associates; impairment loss on remeasurement of disposal Groups; and gain on disposal/dilution of investment in associates and joint ventures (ATC Ghana and ATC Uganda, Travelstart and Jumia) and loss on disposal of investment in Content Connect Africa. EBITDA including these once-off items increased by 26,6%;
• ROE is calculated based on reported Group HEPS of 749 cps after adjusting for nonoperational impacts of 128 cps. Equity is also adjusted for non-operational items such as hyperinflation;
• All financial numbers are year on year (YoY) unless otherwise stated;
• All subscriber numbers are compared to the end of December 2019 unless otherwise stated;
• Holdco leverage = Holdco net debt (including GlobalConnect) / SA EBITDA + cash upstreaming;
• ARPU: average revenue per user;
• SME: small and medium-sized enterprises;
• All financial numbers are year on year (YoY) unless otherwise stated;
• All subscriber numbers are compared to the end of December 2019 unless otherwise stated.