Notes to the summary Group financial statementsfor the year ended 31 December 2022

The summary Group financial statements have been derived from the audited Group financial statements. The directors of the Company take full responsibility for the preparation of the summary Group financial statements and that the financial information has been correctly derived and are consistent in all material respects with the underlying audited Group financial statements. The summary Group financial statements for the year ended 31 December 2022 have been audited by our joint auditors PricewaterhouseCoopers Inc. and Ernst & Young Inc., who have expressed an unmodified opinion thereon. The auditors also expressed an unmodified opinion on the Group financial statements from which the summary Group financial statements were derived. A copy of the auditors’ report on the Group financial statements is available for inspection at the Company’s registered office or can be downloaded from the Company’s website www.mtn.com/investors/financial-reporting/annual-results, together with the financial statements identified in the auditors’ report.

The Group is a leading pan-African mobile operator that provides a diverse range of voice, data, digital, fintech, wholesale and enterprise services.

The summary Group financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for provisional financial statements and the requirements of the Companies Act, 71 of 2008 as amended applicable to summary financial statements. The summary financial statements were prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee (APC) and the Financial Pronouncements as issued by the Financial Reporting Standard Council (FRSC), and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.

The summary Group financial statements should be read in conjunction with the Group financial statements for the year ended 31 December 2022, which have been prepared in accordance with IFRS. A copy of the full set of the audited Group financial statements is available for inspection from the Company Secretary at the registered office of the Company or can be downloaded from the Company’s website: www.mtn. com/investors/financial-reporting/annual-results.

The accounting policies applied in the preparation of the Group financial statements from which the summary Group financial statements are derived, are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated Annual Financial Statements except as described below.

A number of amendments to accounting pronouncements are effective from 1 January 2022, but they do not have a material effect on the Group’s summary financial statements.

The financial statements (including comparative amounts) of the Group entities whose functional currencies are the currencies of hyperinflationary economies are adjusted in terms of the measuring unit current at the end of the reporting period. The impacts of hyperinflation disclosed for Irancell have been proportioned for the Group’s shareholding.

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

The Group has identified reportable segments that are used by the Group Executive Committee (the 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 clustered as follows:

• South Africa.
• Nigeria.
• South and East Africa (SEA).
• West and Central Africa (WECA).
• Middle East and North Africa (MENA).

South Africa and Nigeria comprise the segment information for the South African and Nigerian cellular network services providers respectively.

The SEA, WECA, and MENA clusters comprise segment information for operations in those regions which are also network services providers in the Group.

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.

A key performance measure of reporting profit for the Group is CODM EBITDA. CODM 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 investment in joint ventures (note 8).
• Net monetary gain resulting from the application of hyperinflation.
• Share of results of associates and joint ventures after tax (note 10).
• Hyperinflation (note 6).
• Gain on disposal of investment in associate (note 18.1).
• Impairment loss on remeasurement of non-current asset held for sale.
• Fair value gain on acquisition of subsidiary.
• Loss on deconsolidation of subsidiary.
• Gain on disposal of investment in associates.
• Gain on exit in Yemen.
• Gain on disposal of subsidiary.
• Gain on sale of MTN SA towers.
• Impairment loss on Yemen property, plant and equipment and intangible assets.

These exclusions have remained unchanged from the prior year except for the gain on sale of MTN SA towers. Impairment losses on property, plant and equipment and intangible assets are generally included in the CODM EBITDA as they are operational in nature. As the impairment of Yemen's property, plant and equipment and intangible assets arose from MENA exit strategy, it was not considered reflective of Yemen's performance for the period.

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

Impairments of goodwill relating to subsidiaries and the impairment of the joint venture are disclosed below:

Irancell loan and receivable

On 20 September 2019, the US Treasury Department's Office of Foreign Assets Control (OFAC) designated the Central Bank of Iran (CBI) as being subject to sanctions. Sanctions imposed on the CBI creates a secondary sanctions risk for MTN entities if the CBI allocates foreign currency to an MTN entity for the purpose of repatriating the receivable and/or loan. As at 31 December 2022, Iranian rial denominated receivables amounted to R2 194 million¹ (2021: R1 531 million) and the Iranian rial denominated loan amounted to R2 013 million² (2021: R1 882 million).

The Group has intercompany receivables of R5 828 million (including the Iranian rial denominated receivable and loan detailed above) owing from Irancell as at
31 December 2022. Considering the continued uncertainty of when the sanctions will be lifted, the Group has reassessed and determined that the settlement of R5 009 million of the outstanding receivables is neither planned nor likely to occur in the foreseeable future. Therefore, the balances have been reclassified from current to non-current in the summary consolidated statement of financial position and presented as part of investment in associates and joint ventures. The Group intends to repatriate the remaining intercompany receivables (including R770 million Iranian rial denominated receivable) when circumstances permit.

Treasury shares

Treasury shares of 1 319 536 (2021: 4 208 078) are held by the Group and 76 835 378 (2021: 76 835 378) are held by MTN Zakhele Futhi (RF) Limited (MTN Zakhele Futhi).

Headline earnings

Headline earnings/(loss) is calculated in accordance with the circular titled Headline Earnings as issued by the South African Institute of Chartered Accountants as amended from time to time and as required by the JSE Limited.

During the year under review the following entities raised and repaid significant debt instruments:

Uncertain tax exposures

The Group operates in numerous tax jurisdictions and the Group’s interpretation and application of the various tax rules applied in direct and indirect tax filings may result in disputes between the Group and the relevant tax authority. The outcome of such disputes may not be favourable to the Group. At 31 December 2022, there were a number of tax disputes ongoing in various of the Group’s operating entities. The most significant matter relates to a transfer pricing dispute which the Group is contesting with the South African Revenue Service that relates to the 2009 to 2012 tax years. Based on internal and external legal and technical advice obtained, the Group remains confident that it has a robust legal case to contest the exposure.

Legal and regulatory matters

The Group is involved in various legal and regulatory matters, the outcome of which may not be favourable to the Group and none of which are considered individually material.

The Group has applied its judgement and has recognised liabilities based on whether additional amounts will be payable and has included contingent liabilities where economic outflows are considered possible but not probable.

The Group’s functional and presentation currency is rand. The strengthening of the closing rate of the rand against the functional currencies of the Group’s largest operations contributed to the decrease in consolidated assets and liabilities and the resulting foreign currency translation reserve decrease of R279 million (2021: R579 million increase) for the year.

Net investment hedges

The Group hedges a designated portion of its dollar net assets in MTN Dubai for foreign currency exposure arising between the US$ and ZAR as part of the Group’s risk management objectives. The Group designated external borrowings denominated in US$ held by MTN (Mauritius) Investments Limited with a value of R16.0 billion (2021: R21.4 billion). For the period of the hedge relationship, foreign exchange movements on these hedging instruments are recognised in other comprehensive income as part of the foreign currency translation reserve (FCTR), offsetting the exchange differences recognised in other comprehensive income, arising on translation of the designated dollar net assets of MTN Dubai to ZAR. The cumulative foreign exchange movement recognised in other comprehensive income will only be reclassified to profit or loss upon loss of control of MTN Dubai. There was no hedge ineffectiveness recognised in profit or loss during the current or prior year.

On 16 November 2021, MTN SA entered into an agreement with IHS Group to sell its tower infrastructure (comprising approximately 5 700 tower sites) and power assets; cede related agreements including land lease agreements (on which the towers are constructed) to IHS Group; and lease back space on the towers which it would sell. Additionally, IHS Group, will provide electricity utility services at each site, as well as a direct current power backup service. The related conditions precedent were fulfilled and the transaction became effective on 30 May 2022.

Nature of transaction

As MTN SA has transferred its land leases and tower infrastructure to IHS Group and is leasing tower spaces back on this infrastructure, this part of the transaction has been accounted for as a sale and leaseback in terms of IFRS 16 Leases. MTN SA has agreed to lease tower spaces for its own use for a 10-year period, with an option to renew for a further 10 years. In addition, MTN SA has leased additional tower spaces that it can only utilise in terms of an existing barter arrangement for a period of 30 years.

As MTN SA is transferring its power assets and will be receiving electricity and other services going forward, the Group accounted for this part of the transaction as a disposal of property, plant and equipment as it no longer has the right to control the use of an identifiable asset. The electricity utility and power backup service arrangement are accounted for as a service arrangement and recognised as an expense as the service is received.

Pre-existing barter arrangement

Prior to the transaction, MTN SA had a barter arrangement with another mobile network operator, where they each co-located on each other’s towers on a non-cash basis. As the tower spaces that are exchanged are similar in nature, MTN SA had previously assessed that this barter arrangement lacks commercial substance and, therefore, is not required to be accounted for.

Subsequent to the transaction with IHS Group, MTN SA has retained the pre-existing barter arrangement with another mobile network operator. MTN SA received a reduced upfront purchase price for the tower infrastructure and thereby, in substance, prepaid for the lease of these barter spaces. Control of the barter spaces has transferred to IHS Group as MTN SA is not allowed to utilise the barter spaces for its own benefit or lease these spaces to any party other than the specified mobile network operator and the use of the tower spaces remains with IHS should the mobile network operator cancel the barter arrangement. MTN SA has therefore accounted for these barter spaces as part of the sale and leaseback arrangement.

MTN SA has measured the right-of-use asset from the sale and leaseback at the proportion of the previous carrying amount of the assets transferred (including the remaining land leases still to be transferred) that relates to the total right-of-use retained by MTN SA. The right-of-use retained was calculated by comparing the present value of the future lease payments (including the prepayment for the barter spaces) to the fair value of the assets transferred to IHS Group (including the existing land leases).

The remaining land leases transferred to IHS Group will be derecognised as they are legally ceded to IHS Group and the related gain or loss on derecognition will be accounted for as part of the overall gain or loss on disposal group.

MTN SA has recognised a R371 million gain (included in other income) on the disposal of the disposal group, including the land leases, which were ceded when the transaction became effective, up to 31 December 2022. This transaction resulted in a tax income of R34 million, which is included in income tax expense in the Group income statement.

The remaining land leases are presented as held for sale:

Dividends declared

Dividends declared at the Board meeting held on 10 March 2023 amounted to 330 cents per share.