MTN is committed to leading the delivery of a bold new digital world and through this, make our customers' lives a whole lot brighter.

MTN Group’s 2015 financial results reflect the challenging operating environment the business experienced in the year. Weak macro-economic conditions, increased market competition, heightened regulatory pressures, notably in Nigeria, and operational challenges in some of our markets resulted in a lower-than-expected performance.

Reported basic headline earnings per share (HEPS) declined by 51,4%** to 746 cents**. This was largely a result of the Nigerian regulatory fine provision (R9 287 million), which had a 402 cents negative impact on HEPS. Excluding the Nigerian regulatory fine provision, HEPS declined 25,3%. In addition, HEPS were negatively impacted by hyperinflation of 54 cents (positive impact of 69 cents in 2014) and losses from our investment in African Internet Holdings (AIH) and Middle East Internet Holdings (MEIH) 34 cents (versus 7 cents in 2014) and from the tower companies of 39 cents (versus 16 cents in 2014). While these investments are a short-term drag on reported earnings they remain key elements in the long-term strategy of the Group. Excluding the impact of the Nigerian regulatory fine provision, hyperinflation and the impact of AIH, MEIH and the towers, on a like-for-like basis HEPS has declined 14,3%.

Notwithstanding the challenging operating environment, MTN continued to benefit from its significant scale and footprint. The Group’s subscriber base increased by 4,1% to 232,5 million, despite the disconnection of 10,4 million subscribers to ensure compliance with subscriber regulatory registration requirements in Nigeria and Uganda. Nigeria and Uganda disconnected 6,7 million and 3,7 subscribers respectively. Subscriber growth was achieved through attractive segmented below-the-line campaigns and an increased focus on the customer experience enabling the Group to maintain its leadership position in 15 markets.

Group revenue remained flat in the year largely due to a decline in voice revenue in Nigeria and a reduction in handset revenue in South Africa following the industrial action experienced in the first half of the year which led to lower distribution of handsets. This was, however, largely offset by an increase in data revenue across the business.

Lower voice tariffs, which declined by 25% across operations in the year (average price per minute, in US dollar terms) drove a 15% increase in billable minutes. Voice revenue continued to come under pressure as a result of heightened competition and the related use of multiple SIM cards as well as pressure on consumer spending.

The Group benefited from a 108,5% increase in data traffic and an increased take-up of digital services. Despite a 45% decline in the effective data tariff (in US dollar terms), Group data revenue increased by 30,2% (32,6%*), partly offsetting a 5,6% (4,5%*) decline in voice revenue. Data revenue, including digital services, contributed 23,1% to total revenue.

MTN Nigeria’s competitiveness in the market was compromised by the suspension of regulatory services in October 2015. Under this suspension, the Nigerian Communication Commission (NCC) withdrew its approval process for new tariff plans and promotions until certain tariff plans and promotions linked to the ‘dominant operator’ ruling were removed from the market. MTN Nigeria has complied with these requirements and now awaits the NCC’s approval of new tariff plans and promotions submitted. MTN Nigeria continues to engage with the regulator regarding the ‘dominant operator’ ruling and suspension of regulatory services to find an amicable resolution. This, combined with the disconnection of subscribers in the year, negatively impacted MTN Nigeria’s results.

MTN South Africa continued to show encouraging service revenue, which excludes handset revenue and other revenue, growth trends, regaining relevance in the pre-paid segment in the second half of the year. Revenue growth in South Africa was supported by strong growth in data, benefiting from extensive 3G and LTE network rollout in the year.

The Group earnings before tax, depreciation, amortisation, interest and goodwill impairment losses (EBITDA) margin declined 3,9 percentage points (pp) to 40,9%. This was negatively impacted by an impairment for obsolete handsets in South Africa (R592 million) and an interconnect debt provision in Nigeria (R503 million). In addition, 2014 EBITDA was higher as a result of the Belgacom International Carrier Services (BICS) five-year profit amortisation, which ended in 2014 (R364 million) and a provision raised for Syria related to the build-operate-transfer licence, which was reversed in 2014 (R497 million). The underlying EBITDA margin was impacted by lower revenue growth, higher inflation, costs associated with the extensive network rollout and the depreciation of local currencies against the US dollar, which made foreign-denominated payments more costly. Higher lease costs associated with the sale of towers in Nigeria and commissions associated with new revenue streams also impacted the margin. The Group, however, continued to make good progress during the year on cost-containment initiatives including decreased advertising and staff costs as well as procurement efficiencies.

Cash inflows generated by operations decreased by 10,9% ** to R57 598 million** mainly as a result of lower EBITDA and a R5 221 million** increase in working capital.

Capital expenditure (capex) increased by 15,7% to R29 199 million with a key focus on 3G and LTE rollout. South Africa’s capex amounted to R10 948 million, representing 37,5% of total capex. During the year, the Group rolled out 3 116 2G sites, 7 891 co-located 3G sites and 5 241 co-located LTE sites. The Group also rolled out 1 469 km of long distance fibre and connected a total of 1 164 sites to fibre, enabling better quality data networks across its operations.

On 26 October 2015, MTN announced that the NCC had imposed a N1,040 trillion fine, subsequently reduced to N780 billion (equivalent to approximately US$3,9 billion using the exchange rate prevailing at the time) on MTN Nigeria. This was related to the late disconnection of approximately 5,1 million subscribers whose registration documents were considered incomplete.

On 17 December 2015, MTN Nigeria proceeded with legal action in the Federal High Court in Lagos challenging the fine. On 22 January 2016, the matter was adjourned by the judge to allow parties to find an amicable solution. On 24 February 2016, MTN Nigeria made a without prejudice good faith payment of N50 billion (equivalent to approximately US$250 million) to the Federal Government of Nigeria, on the basis that this will be applied towards a settlement, when one is eventually hopefully arrived at. In an effort to achieve an amicable settlement, MTN Nigeria, without prejudice, agreed to withdraw the matter from the Federal High Court.

MTN Nigeria recorded a R9 287 million provision for the fine at the end of the reporting period, negatively impacting reported EBITDA by 13,6%** and HEPS by 402 cents. Management has applied its judgement in determining the provision in accordance with IFRS. MTN Nigeria continues engaging with the Nigerian authorities in an attempt to ensure an amicable resolution in the interest of MTN Nigeria, its stakeholders and the Nigerian authorities.

The fine imposed on MTN Nigeria and the related process continues to receive extensive attention from the Group Board of Directors (the board) and management and the Group will continue to update shareholders on any material developments. Until the matter is resolved, MTN shareholders are advised to exercise caution when trading in MTN securities.

MTN Nigeria CEO and Regulatory and Corporate Affairs Executive both resigned on 31 December 2015.

In December 2015, the Group announced the implementation of a new operating structure incorporating a Group Chief Operations Officer (COO) position and Vice Presidents (VPs) for three regions, namely West and Central Africa (WECA), South and East Africa (SEA) and Middle East and North Africa (MENA). This multi-layer operating structure, effective 1 January 2016, will strengthen governance and operational oversight as well as improve stakeholder engagement to better position MTN in the rapidly changing industry.

In addition, the Group has revised its compliance structure and is in the process of appointing a Group Regulatory Executive and regional compliance officers to work with the VPs and the in country regulatory executives. Complying with regulatory requirements and, in particular, with subscriber registration regulations is a priority. Subscriber registration is often highly complex given the limited national identity databases and personal documents in many of the countries in which we operate. However, MTN remains committed to registering subscribers with the use of improved systems and processes. Ongoing subscriber registration processes are expected to impact net additions in some markets in the year ahead.

Due to the unfortunate circumstances occurring at MTN Nigeria, in the interests of the Company and its shareholders, the Group President and CEO Sifiso Dabengwa tendered his resignation on 9 November 2015. The Chairman, Phuthuma Nhleko, was appointed Executive Chairman on an interim basis to facilitate the resolution of the fine imposed and to drive the process for the appointment of a new Group CEO. The search for a new Group CEO is well under way and we hope to finalise this process in the second quarter of 2016.

Fani Titi also resigned as an Independent Non-Executive Director of the Board on 31 December 2015 to focus on demanding fiduciary responsibilities and other commercial interests. He joined MTN Group in July 2012 and also served as a member of the Remuneration and Human Resources Committee. The Board expresses its appreciation for the valuable contribution made by Mr Titi over the years.

MTN Group continues to work towards achieving its vision of “leading the delivery of a bold, New Digital World to our customers”. While 2015 was a difficult year for the Group, impacted as it was by challenges in our two key markets, we are hopeful that we will see improvements in operating conditions during 2016. The new operating structure, together with our strong platform, positions us well to take advantage of the next phase of evolution in the mobile telecoms sector.

We are confident that our operations will continue to benefit from strong growth in data together with our investment in AIH and MEIH and related activities in the digital space. This will be underpinned by organic growth, partnerships and acquisitions and will position the Company to become the leading digital player across our markets over the next few years.

In the near term, we anticipate the resolution of the ongoing suspension of regulatory services which continues to restrict new tariff plans and promotions for MTN Nigeria. Following the resumption of regulatory services we would anticipate an improved operational performance in 2016. However, net additions in Q1 2016 are expected to be impacted by the disconnection of 4,5 million subscribers at the end of February 2016 related to the ongoing subscriber registration process. MTN Nigeria is working to complete the registration process with these disconnected subscribers and is also actively engaging the high value subscribers. These disconnections follow a process that was initiated with the NCC during the last quarter of 2015.

The current economic challenges in Nigeria have resulted in increased pressure on US dollar liquidity and we expect this situation to remain a challenge in the short to medium term. We are, however, establishing contingency plans to ensure we can continue with the planned network rollout.

We expect the South African operation to continue the positive trend shown during H2 2015, improving its operational performance with the support of strong leadership, leveraging an enhanced 3G/LTE device strategy, as well as increased focus on customer services. The extensive 3G and LTE network rollout in 2015 will also benefit the operation in 2016.

The continued easing of sanctions in Iran and its related economic uplift offers significant opportunities to expand services, particularly in the digital space where we command a strong market position. We also expect acceleration in economic growth together with a reduction in inflation and some normalisation in the exchange rate. Although this is a complex process, MTN is working towards remitting some of its cash of R15 860 million from MTN Irancell during the first half of 2016.

Improving network quality and capacity in key markets remains a priority. We will continue to close and improve coverage of 3G, LTE and LTE advanced in Nigeria, South Africa, Ghana and Cameroon. In addition, improved quality and throughput in homes and fixed locations through the rollout of fibre-to-the-home (FTTH) in South Africa, Nigeria, Ghana and Iran will be a focus in 2016.

While the Group operates across 22 countries the earnings remain highly concentrated in a few markets with the associated volatility and risks as evident over the past few years. To this end management will continue to explore opportunities to address this over the medium term.

The Group has declared a second half dividend of 830 cents, which will bring the total dividend for FY2015 to 1 310 cents. This represents a YoY growth of 5,2%. During FY2016 the Company anticipates declaring a minimum dividend of 700 cents which takes into consideration the uncertainty regarding the regulatory fine imposed by the NCC and the dollar liquidity situation in Nigeria. We have adopted a cautious approach to the dividend outlook for FY2016, taking into account the interests of shareholders and lenders and the importance of maintaining an investment grade credit rating. This minimum dividends remain subject to the outcome of the regulatory fine imposed by the NCC and is at the discretion of the Board. Should the operating conditions improve, we will look to declare a higher dividend than advised.

NET SUBSCRIBER ADDITIONS

In the year, the Group continued to shape its business to drive growth in non-voice revenue in a rapidly changing telecommunications landscape. Centralising and streamlining processes and systems, outsourcing non-core functions and creating agility to remain competitive were key focus areas in the year.

The Group Consumer division established in 2015 continued to transform operations towards creating a distinct customer experience. The focus for the year was on embedding the use of customer analytics to offer segmented below-the-line campaigns and engage with customers more effectively. Other areas of focus were the close monitoring of net promoter scores and ensuring the agility of systems for speedy go-to-market campaigns.

Group Digital Services continued to expand its offerings across Africa and the Middle East, leveraging MTN’s core competencies of a strong brand, knowledge of and access to customers, scale and distribution. Key focus areas during the year were e-commerce, digital media and mobile financial services. MTN recorded strong growth in digital services revenue, supported by lifestyle services. MTN is now the largest distributor of music in Africa and has more than 800 companies providing 5 500 content services under the lifestyle offering.

MTN Mobile Money customers increased by 56,3% to 34,7 million across 15 countries. In the year, the focus was on the migration of the MTN Mobile Money platform to a more agile platform enabling converged campaigns and incentives, establishing dedicated functions across operations and providing niche services where MTN has a competitive advantage. MTN Mobile Money revenue increased by 55,8% and it now accounts for 16,8% of Uganda’s total revenue and 6,0% and 6,2% of each of Ghana and Rwanda’s total revenues respectively.

In 2015, we continued to leverage our investments in AIH and MEIH, our e-commerce joint ventures. AIH and MEIH offer a range of internet services including e-commerce retailing, as well as market place, taxi, travel, classified and food delivery services. AIH has 10 company verticals in over 23 countries in Africa that are market leaders and recorded approximately 2,3 million customers and 4,4 million transactions in the year. Jumia is now the #1 online shopping mall in 12 markets in Africa while Lamudi is the #1 real estate classified in 21 countries across Africa. In addition, MEIH has seven company verticals including Wadi, an online shopping retailer delivering a premium online shopping experience in the Middle East.

In the year, our EBU continued to align operations to become the ICT partner of choice for corporate, SME, public sector, financial services, manufacturing and logistics customers.

Revenue growth across operations was ahead of expectations, attributable to a number of key corporate wins and the expansion of our product and service offerings to customers. During the year, we launched MTN Pan African Internet of Things platform; MTN Business Cloud, a hybrid platform using Windows Azure Pack; the continued rollout of MTN Global MPLS (multiple protocol label switching), bringing the MTN Global MPLS footprint to 25 points of presence in Africa and various smaller key initiatives. Several partnerships secured in the year will enable EBU to further diversify its offerings in the market.

A key priority is to make customers aware of EBU’s offerings and address some challenges experienced by our Internet Service Provider businesses in Kenya, Botswana and Namibia. EBU has embarked on a market brand refresh initiative, which is expected to be completed in the first half of 2016.

REVENUE

Table 1: Group revenue by country

Group revenue remained flat at R146 353 million. Movements in average exchange rates had a limited impact on reported revenue. Whilst the rand weakened 12,9% against the US dollar it strengthened 2,4% against the Nigerian naira, 11,1% against the Ghanaian cedi, 2,4% against the Central African franc, 5,6% against the Ugandan shilling and 40,2% against the Syrian pound.

Revenue increased 1,4%*. This lower-than-expected revenue growth was mainly the result of a 2,1%* decline in Nigeria’s revenue and a 2,9% increase in South Africa’s revenue supported by increased service revenue, which excludes handset revenue and other revenue, partly offset by a reduction in handset revenue. Service revenue, which excludes handset revenue and other revenue, in the South African operation increased 7,5% in the year.

The large opco cluster’s revenue remained relatively flat on a reported basis and increased 5,5%*, supported by strong growth in Ghana and Sudan. This was, however, offset by a reduction in revenue in Cameroon and slower growth in Ivory Coast and Uganda.

The small opco cluster’s revenue grew by 4,0% on a reported basis and 1,6%*, largely supported by healthy growth in Benin and Zambia, Bissau, Congo Brazzaville and South Sudan.

Table 2: Group revenue analysis

COSTS

Table 3: Cost analysis

Group operating costs increased by 7,2% (8,1%*). This was largely the result of a 15,1% (15,7%*) increase in direct network operating costs linked to network expansion, higher rent and utilities costs and foreign-denominated expenses. An increase of 7,2% (7,9%*) in selling, distribution and marketing costs also contributed to the increase mostly related to digital revenue share commissions paid.

EBITDA

Table 4: Group EBITDA by country

Reported EBITDA decreased 19,2%** to R59 125 million**. This was negatively impacted by the provision of the Nigeria regulatory fine (R9 287 million) and positively impacted by the profit from the sale of towers (R8 263 million) and an adjustment for hyperinflation (R231 million) in Iran, Syria and Sudan.

Excluding these impacts, EBITDA declined 8,6% (6,9%*) to R59 918 million. This includes the impairment for handsets in South Africa (R592 million) and the interconnect debt provision in Nigeria (R503 million). In addition, 2014 EBITDA was higher as a result of the BICS (Belgacom International Carrier Services) five-year profit amortisation, which ended in 2014 (R364 million) and a provision made relating to the build-operate-transfer licence in Syria, which was reversed in 2014 (R497 million).

Excluding these impacts, EBITDA reduced by 5,6% to R61 013 million from R64 659 million. Underlying EBITDA was impacted by a decline in Nigeria’s EBITDA, as a result of a reduction in revenue, higher leasing costs and increased expenses denominated in foreign currencies. This was partly offset by an increase in South Africa’s EBITDA supported by well-managed costs and fewer handsets sold in the year. The large opco cluster’s EBITDA decreased by 4,3% (0,9%*) impacted by a 20,7% (19,0%*) decrease in EBITDA in Cameroon, 11,3% (8,8%*) in Ivory Coast, 14,4% (9,3%*) in Uganda and 29,3% (2,0%*) in Syria.

The Group recorded a 3,9 pp decline in its EBITDA margin to 40,9%, impacted by lower EBITDA margins in Nigeria and in the large and small opco clusters. Head office EBITDA had a 1,0 pp negative impact on Group EBITDA as a result of increased professional fees, the end of the BICS profit amortisation in 2014 and the reversal of a provision made relating to the build-operate-transfer licence in Syria in 2014.

DEPRECIATION AND AMORTISATION

Table 5: Group depreciation and amortisation

Depreciation increased by 5,6% (5,8%*) to R19 146 million as a result of higher capex in South Africa and Syria. Amortisation costs increased by 13,7% (16,3%*) to R3 674 million, driven by higher software spend in previous years.

NET FINANCE COSTS

Table 6: Net finance costs

Net finance costs of R3 005 million were lower than the R3 606 million recorded in the prior year. The decrease was mainly attributed to a 36,6% decrease in net interest paid to R1 596 million as a result of higher interest income on cash and investments in Nigeria. Unfavourable exchange rate movements resulted in net foreign exchange losses of R1 409 million (2014: R1 091 million). These included:

• Forex losses in Nigeria of R712 million incurred on US dollar borrowings and trade payables;
• Forex losses of R434 million in South Sudan as a result of the depreciation of the South Sudanese pound by 509% against the US dollar;
• Forex losses of R303 million in Zambia as a result of the depreciation of the Zambian kwacha by 72%; partially offset by;
• Forex gains of R348 million in Mauritius as a result of net US dollar-denominated intercompany receivables.

TAXATION

Table 7: Taxation

The Group’s reported effective tax rate increased to 32,4%** from 26,2%** in the previous year. This was impacted by hyperinflation, tower transaction proceeds and the provision for the Nigeria regulatory fine.

Excluding this impact, the Group’s taxation charge decreased by 13,4% (13,4%*) to R11 938 million and the effective tax rate for the year increased 1,5 pp to 32,6% mainly as a result of lower profit before tax due to the decrease in equity income from joint ventures and associates and a higher prior year overprovision of the current tax liability due to a change in the handset revenue treatment in South Africa. A prior year adjustment in respect of the revaluation of the deferred tax asset in MTN Cameroon arising from the change in the corporate tax rate to 33% from 38,5% and a higher effective withholding tax rate also contributed to the higher effective tax rate.

EARNINGS

Reported basic HEPS decreased 51,4%** to 746 cents** largely impacted by the Nigeria regulatory fine provision recorded in the year (402 cents), hyperinflation (54 cents), and losses incurred on the Group’s investments in AIH and MEIH (34 cents) and tower companies (39 cents). Attributable earnings per share (EPS) declined 36,7%** to 1 109 cents**.

CASH FLOW

Cash inflows generated from operations decreased by 10,9%** to R57 598 million** mainly as a result of the decline in EBITDA and the increase in working capital. Dividends paid to ordinary and non-controlling shareholders also impacted cash flow, increasing by 18,0%** in the year.

CAPITAL EXPENDITURE

Table 8: Capital expenditure

Capex increased 16,6%** to R29 611 million**, of which R136 million was related to foreign currency movements.

FINANCIAL POSITION

Table 9: Net debt analysis (Rm)

^# Includes restricted cash and current investments.

Net debt increased to R31 635 million** compared to net debt of R4 543 million** in the prior year. This was largely due to:

• Dividends of R3 176 million** paid to minority shareholders related to the Nigeria tower transaction;
• An increase in the dividends paid to MTN Group shareholders of R23 506 million**;
• An increase in capital expenditure in South Africa;
• The acquisition of 4G/LTE licence and digital TV spectrum (700MHz) and the purchase of Visafone in Nigeria (R6 784 million**);
• The conversion of the “Build operate transfer” arrangement to a full licence in Syria paid in 2015 (R1 591 million**);
• The renewal of licences in Cameroon (R1 515 million**) and Ivory Coast (R2 446 million**);
• A R5 221 million** increase in working capital;
• A capital call from AIH (R1 542 million**); and
• Lower cash generated from operations.

SOUTH AFRICA

• Subscribers increased by 9,3% to 30,6 million
• Revenue increased by 2,9%
• Service revenue, which excludes handset revenue and other revenue, increased by 7,5%
• Data revenue increased by 37,2%
• EBITDA margin increased by 1,3 pp to 33,4%

MTN South Africa delivered encouraging results despite operational challenges including industrial action in the first half of the year. A strong focus on customer experience, competitive offerings, aggressive network rollout and employee engagement resulted in a successful turnaround in the second half of the year. The operation increased its subscriber base by 9,3% to surpass 30 million customers.

The pre-paid segment increased by 12,3% to 25,3 million subscribers for the year, attributable to attractive voice and data offerings. The post-paid subscriber base decreased by 3,3% to 5,2 million as a result of the low availability of handsets, which normalised in the fourth quarter of the year.

Total revenue increased by 2,9%, driven mainly by healthy growth in data revenue. This was, however, offset by a 18,0% reduction in handset revenue and a 2,4% decrease in outgoing voice revenue. Service revenue, which excludes handset revenue and other revenue, increased 7,5%. Data revenue increased by 37,2% and contributed 31,7% to total revenue. This was supported by strong 3G and LTE network rollout as well as increased 3G and LTE device penetration. The number of smartphones on the network increased by 10,6% to 7,6 million.

EBU and digital services revenue showed positive trends with more services offered to EBU customers and content downloads gaining traction. The market in South Africa, however, remains highly competitive in this area.

The EBITDA margin expanded by 1,3 pp to 33,4% benefiting from cost-containment initiatives including lower staff and advertising costs and lower handset sales. However, the increased expansion of the network resulted in higher rent and utilities and transmission costs.

Capex for the period was R10 948 million, 92,9% higher than the previous year. In the year, the operation added 966 2G, 1 593 co-located 3G and 3 148 co-located LTE sites expanding 3G and LTE coverage and ensuring improved quality and capacity. Improving quality of service remains a priority, however, the rollout process did cause some network disruptions.

The operation continues to actively engage with the authorities regarding the planned auction of 2,6GHz and 3.5GHz spectrum frequency needed to further expand and enhance our LTE network. As a short-term solution, the operation has re-farmed existing spectrum to cater for LTE technology.

NIGERIA

• Subscribers increased by 2,3% to 61,3 million
• Revenue declined by 2,1%*
• Data revenue increased by 18,8%*
• EBITDA margin decreased by 5,6 pp to 53,0% (excluding tower profit)

MTN Nigeria experienced a challenging year with heightened regulatory pressure severely impacting performance. In particular, the suspension of regulatory services and the subscriber registration requirements, which led to the disconnection of 6,7 million subscribers. MTN Nigeria is working to complete the registration process with these disconnected subscribers and actively engaging the high value subscribers. Weak economic conditions and the limited availability of US dollars also contributed to a lower-than-expected performance.

While the operation reported a 2,3% increase in subscribers to 61,3 million, its market share reduced to 44,7% from 49,0% reported in the previous year. This was largely a result of the ongoing withdrawal of regulatory services restricting MTN Nigeria from introducing new tariff plans and promotions in the market and the disconnection of subscribers.

Total revenue reduced by 2,1%*. This was mainly due to the absence of new competitive offerings and multiple SIM card usage resulting in a decline in outgoing voice revenue. Data revenue increased by 18,8%* and contributed 19,5% to total revenue. While data revenue growth was supported by a 60,7% increase in smartphones and higher digital services revenue, it was negatively impacted by regulatory requirements, which obliged the operation to seek permission from the customer before charging out-of-bundle rates. Slow data speeds and lower effective data tariffs also had a negative impact.

Digital revenue showed positive growth supported by the continued success of digital music and mobile financial services. MTN Nigeria’s EBU was, however, negatively impacted by the constrained economy as a result of low international oil prices.

MTN Nigeria’s Mobile Money offering, Diamond Yellow, continued to gain traction with approximately 6,2 million accounts registered at the end of December 2015. The focus in the year was on partnering additional banks and other financial services companies as well as the expansion of an agent network.

The EBITDA margin declined by 5,6 pp to 53,0%. This was largely due to increased build-to-suit towers, higher lease costs from the sale of towers, the impact of a weaker naira on US dollar expenditure relating to managed services and network rollout costs, digital services revenue share, an increase in debt provisions and in marketing spend. The transfer of the final tranche of 4 696 towers to the tower company was completed on 1 July 2015.

During the year, 597 new 2G sites and 1 856 co-located 3G sites were added. Capex declined by 40,4% to R4 993 million, impacted by the tower transaction as well as increased use of build-to-suit towers. Notwithstanding this, the rollout of capex was below budget. Improving quality and data speeds of the network in some parts of the country remains a priority. MTN Nigeria is engaging with suppliers to resolve challenges experienced and is expected to ramp-up its rollout by the end of the second quarter of 2016.

On 3 November 2015, the regulator approved the renewal of MTN Nigeria’s operating spectrum in the 900MHz and 1 800MHz frequency bands to 31 August 2021. In addition, on 31 December 2015, MTN Nigeria concluded the acquisition of Visafone Communications Ltd. This combined with the acquisition of a 4G/LTE licence and digital TV spectrum will provide the operation with access to sufficient spectrum to rollout LTE services.

IRAN (JOINT VENTURE, EQUITY ACCOUNTED)

• Subscribers increased 5,0% to 46,1 million
• Revenue increased 11,6%
• Data revenue increased 90,2%*
• EBITDA margin decreased 1,3 pp to 41,5%

MTN Irancell delivered a strong performance despite the impact of a slow economy and sanctions. Subscribers increased by 5,0% to 46,1 million in a highly penetrated market. This was supported by the continued adoption of 3G and LTE services by the youth segment.

Total revenue increased by 11,6%* driven by higher data revenue. Data revenue increased by 90,2%* despite a steep fall in data prices, to contribute 30,2% to total revenue. This offset a 4,0%* decline in outgoing voice revenue as a result of aggressive competition in the market and data substitution. Data revenue was supported by a strong 3G and LTE network as well as a 52,7% increase in the number of smartphones on the network to 26,4 million, representing more than half of the subscriber base.

In the year, MTN Irancell launched its EBU ahead of the easing of sanctions in the country to provide dedicated ICT and business-to-business (B2B) services to business customers.

MTN Irancell’s EBITDA margin decreased by 1,3 pp to 41,5% as a result of an increase in regulatory fees and transmission costs associated with 3G and LTE network rollout.

Capex for the year amounted to R8 531 million (100%) with a focus on network modernisation and the continued expansion of the 3G and LTE networks. In the year, the operation rolled out 432 2G sites, 2 443 co-located 3G sites and 1 266 co-located LTE sites. The renewal of the operation’s WiMax licence to TDD-LTE at the end of 2015 will support a nationwide expansion of fixed LTE services in the year ahead.

LARGE OPCO CLUSTER

• Subscribers increased by 0,7% to 57,1 million
• Revenue increased by 5,5%*
• Data revenue increased by 47,7%*
• EBITDA decreased by 0,9%*

MTN Ghana delivered a solid performance despite a challenging economic environment. The operation increased its subscriber base by 17,3% to 16,2 million, largely attributable to attractive voice and data offers aimed at subscriber acquisition and churn management as well as digital and mobile financial services offerings.

Total revenue increased by 15,9%* supported by a 85,2%* growth in data revenue which contributed 30,6% to total revenue. This was due to appealing data bundle packages, an improved device strategy and an increased focus on 3G quality and coverage. The number of smartphones on the network increased by 40,8% to 3,2 million in the year.

Mobile financial services showed healthy growth. MTN Mobile Money customers increased by 68,1% to 5,7 million.

The EBITDA margin increased 3,1 pp to 40,5% despite an increase in US dollar-denominated expenses associated with the sharp depreciation of the cedi against the US dollar. The increase in margin was mainly due to well-maintained costs and no management fees paid to the Group in the year.

MTN Ghana invested R1 831 million in the network, adding 73 2G and 233 co-located 3G sites in the year. In December the operation won a 4G/LTE licence in the 800MHz spectrum band enabling MTN Ghana to improve the quality and capacity of its data network.

MTN Cameroon’s performance was below expectations largely due to aggressive competition and a limited 3G network. Subscriber numbers declined by 5,0% to 9,2 million, resulting in a decline in market share from 59,4% to 56,2%.

Total revenue declined by 4,6%* mainly due to a 12,5%* decrease in outgoing voice revenue. This was a result of lower effective tariffs and network challenges in the first half of the year. Following corrective measures, network quality showed improvements and stabilised revenue performance in the fourth quarter. Data revenue increased by 65,7%* and contributed 14,2% to total revenue. This was supported by attractive data promotions, growth in digital services and MTN Mobile Money. MTN Mobile Money subscribers increased 23,8% to 2,0 million in the year.

MTN Cameroon’s EBITDA margin decreased by 6,6 pp to 36,2% as a result of an increase in rent and utilities as well as maintenance and transmission costs associated with strengthening the 3G and 4G network.

Capex increased by 122,7%* to R1 911 million as a result of a focused 3G and 4G network rollout. During the year, the operation rolled out 162 2G and 609 largely co-located 3G sites. The renewal of the operation’s licence in the year allowed for a significant increase in the capacity of the network and enhanced data traffic speed.

MTN Ivory Coast increased its subscriber base by 4,1% to 8,3 million in a competitive market. This was supported by segmented offerings and bonus bundle promotions.

Total revenue increased by 2,2%* supported by encouraging growth in data revenue. Data revenue increased by 41,5%* to contribute 15,6% to total revenue. The increased uptake of digital services, MTN Mobile Money offerings and an aggressive rollout of 3G sites contributed to data growth. MTN Mobile Money subscribers increased 12,8% to 2,9 million. The focus going forward is on the expansion of distribution channels and the introduction of new products.

The operation’s EBITDA margin declined by 4,4 pp to 34,2%. This was a result of high maintenance costs and an increase in rent and utilities associated with network rollout.

MTN Ivory Coast spent R833 million on its capex programme and rolled out 132 2G and 339 co-located 3G sites during the period.

MTN Uganda’s subscriber base declined by 14,1% to 8,9 million, impacted by the disconnection of 3,7 million subscribers in the fourth quarter who did not fully comply with regulatory subscriber registration requirements.

Total revenue increased by 2,8%*, supported by a 17,4%* increase in data revenue that contributed 28,3% to total revenue. This was attributable to the launch of LTE services in the year, an increase in 3G and LTE devices and the continued success of MTN Mobile Money. Voice revenue continued to be impacted by high excise duties and the One Network Area initiative implemented in the region. Outgoing voice revenue decreased by 2,1%* mainly due to lower effective voice tariffs. Outgoing voice revenue, excluding roaming, decreased by 0,7%*.

MTN Mobile Money recorded a 30,2% increase in registered subscribers to 9,5 million.

The EBITDA margin decreased by 4,7 pp to 34,5%, negatively impacted by US-dollar denominated expenses.

Capex in the year amounted to R951 million with 161 new 2G sites and 100 co-located 3G sites rolled out, improving quality and capacity on the network.

MTN Syria increased its subscriber base by 1,9% to 5,9 million. Despite deteriorating conditions in the country, the operation increased total revenue by 4,7%* mainly as a result of strong data revenue growth. Data revenue increased by 22,8%* and contributed 27,7% of total revenue. The EBITDA margin declined by 1,2 pp to 17,7%. Capex amounted to R974 million in the year.

MTN Sudan showed good progress despite a 5,5% decline in subscribers to 8,5 million due to subscriber registration requirements. Total revenue increased by 14,8%*, supported by a 59,8%* increase in data revenue that contributed 21,9% to total revenue. The EBITDA margin improved 1,2 pp to 35,0% despite a high inflation environment. Capex in the year amounted to R819 million.

SMALL OPCO CLUSTER

• Subscribers increased by 7,3% to 37,4 million
• Revenue increased by 1,6%*
• Data revenue increased by 34,1%*
• EBITDA decreased by 8,0%*

The small opco cluster increased its subscriber base by 7,3% to 37,4 million. Benin, Congo Brazzaville, Guinea Bissau and South Sudan showed healthy double-digit subscriber growth. Despite weak economic conditions, revenue increased 1,6%* supported by positive growth in Benin, Congo Brazzaville, Zambia, Guinea Bissau and South Sudan. Difficult operating conditions in Yemen, Afghanistan, Liberia and Guinea Conakry resulted in a decline in revenue. Data revenue increased 34,1%* and continued to be impacted by slow 3G/LTE penetration. EBITDA decreased 8,0%* mainly due to high inflation and unfavourable currency movements impacting foreign-denominated expenses.

ANNEXURE

As the Group will continue in its strategy to monetise its passive infrastructure, similar tower sale transactions may continue going forward. In addition, the impact of hyperinflation on the Group’s results will continue for as long as Syria and Sudan are considered to be hyperinflationary economies.

^ Share of results of joint ventures and associates after tax