Press Releases

MTN Group subscribers rise to 48m as Group’s expanded footprint starts to bear fruit

Investcom contributed 21% to Group revenue and accounted for 35% of the revenue growth for the comparable period

Highlights of results

Group subscribers up 20% to 48,2 million for the six-month period from December 2006

Revenue increases 69% to R34,2 billion from June 2006

EBITDA up 75% to R15,2 billion from June 2006

EBITDA margin increased to 44,4%

Adjusted headline EPS of 324,7 cents

The MTN Group is pleased to announce that it has continued to deliver a solid performance with over 48 million subscribers and 69% growth in revenue for the six months to 30 June 2007.

The results of the comparative period to 30 June 2006 do not include the results of the Investcom acquisition, which was concluded in July 2006.

MTN’s total subscribers rose 20% from 31 December 2006 to 48,157 000. The former Investcom operations recorded subscriber growth of 28% to 10,8 million from 31 December 2006, contributing 22% of the Group’s total subscribers at 30 June 2007.

The MTN Group recorded revenue growth of 69% to R34,2 billion (30 June 2006: R20,2 billion). Excluding the positive effect of foreign currencies strengthening against the Rand, Group revenue would have been 60%.

The Investcom operations increased revenue by 98% to R7,5 billion compared to the six months to June 2006 (unaudited). These operations contributed R2,8 billion (18,9%) to the West and Central Africa region (WECA) revenue and R4,7 billion (92%) to the Middle East and North Africa region (MENA) revenue for the period under review.

Nigeria and South Africa were the key contributors, recording increases of 51% and 15% in revenue respectively for the six-month period to 30 June 2006. Nigeria’s growth in local currency was 33%, and the strengthening of the Naira against the Rand contributed 18%. Nigeria reported high revenue growth due to increased subscriber numbers and newly introduced competitive offers in the last quarter of 2006.

The Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 75% to R15,2 billion when compared to the six-month period ended 30 June 2006. Excluding the positive effect of foreign currencies strengthening against the Rand, Group EBITDA would have been 64%.

The Southern and East Africa region (SEA) contributed 34% to Group EBITDA growth and WECA contributed 54%. The MENA region contributed 8% of total EBITDA, up 3% from December 2006.

Profit after tax (PAT) increased 16.8% to R6,3 billion compared to the R5,4 billion for the six months to June 2006. Basic headline earnings per share (EPS) rose to 304,2 cents for the period, 5% above the 289,1 cents for the six months ended 30 June 2006. Adjusted headline earnings per share increased to 324,7 cents for the period from 278,5 cents for the six months ended 30 June 2006. The muted increase in PAT is impacted by the end of the pioneer status tax holiday and finance costs associated with loans for the Investcom acquisition.

Says MTN Group President and CEO, Mr Phuthuma Nhleko: “Our subscriber growth reflects the strong opportunity we have in our expanded footprint. The MTN Group’s leadership position in mostly high growth markets provides a solid platform to grow our subscriber base. The provision of appropriate products and excellent service to our customers remains our priority.

“The MTN Group is focused on enhancing the quality of our network and ensuring that we are well placed to benefit from a rapidly converging telecommunications market. Going forward, we will also continue driving operational synergies, improving the Group’s cost base and pursuing strategic expansion opportunities.”

Operational Review
South Africa
MTN South Africa delivered a stable performance in a very competitive market, increasing its total subscriber base by 7% from December 2006 to 13,4 million at June 2007. The postpaid subscriber base grew by 3% to 2,4 million subscribers and the prepaid base increased by a healthy 7% to 11,0 million over the six-month period. Low-denomination vouchers have been a key driver in stimulating usage.

Average revenue per user (ARPU) in the postpaid segment decreased to R435 from R487 in December 2006 and prepaid ARPU decreased to R87 from R94, both decreases owing to continued penetration into lower-usage segments. As expected, blended ARPU decreased 9% to R149 from R164 at December 2006.

The MTN data proposition is gaining momentum with a 58% increase in data revenue to R1,2 billion. This was due to competitive pricing and an increased 3G rollout. Excluding the positive effect of foreign currencies strengthening against the Rand, Group EBITDA would have been 64%.

Nigeria
MTN Nigeria increased its subscriber base by 14% to 14 million since 31 December 2006. Subscriber growth slowed in the second quarter due to capacity and quality constraints. The capacity and quality are being addressed with an accelerated infrastructure rollout. By the end of June 2007, 84 BTSs were rolled out and 111 BTSs were integrated during the month of July. The installation of the Lagos Metro and Niger Delta’s fibre optic cabling is nearing completion and will be commissioned in the second half of the year.

During the period, ARPU declined from US$18 to US$16, which is consistent with increased penetration into the lower segment of the market.

Iran
The period under review is the first full six months of MTN Irancell, which had a soft commercial launch on 21 October 2006. Prepaid services were launched in January 2007. During the period, MTN Irancell recorded net additions of 1,8 million subscribers to 1,98 million subscribers at 30 June 2007. Growth in subscriber numbers is stabilising with 3,2 million active subscribers recorded at 20 August 2007. The network has been significantly enhanced and now has sufficient capacity to service 6,5 million subscribers.

ARPU increased from US$9 in December 2006 to US$10 as a result of improvements in the quality and capacity of the network, thereby stimulating usage.

Ghana
Ghana recorded an exceptional increase of 31% in subscriber numbers for the period from 2,6 million in December 2006 to 3,4 million. This was underpinned by strong operational execution on the network rollout, distribution, promotional campaigns and new product offerings. This has resulted in market share increasing from 52% in December 2006 to 54% in June 2007.

ARPU decreased from US$17 for the six months to 31 December 2006 to US$16 for the six months to 30 June 2007, primarily due to the acquisition of lower-end customers.

Sudan
The Sudan operation, which successfully re-branded to MTN Sudan in June 2007, increased its subscriber base by 43% from December 2006, recording 457 000 net connections to 1,5 million subscribers at 30 June 2007. ARPU decreased from US$16 for the six months to December 2006 to US$15 for the six months to June 2007.

Syria
MTN Syria delivered a stable performance in this high growth market, recording a 16% increase in subscriber numbers to 2,6 million from 2,2 million in December 2006.

ARPU declined from US$22 for the six months to December 2006 to US$20 in the period under review. This was due to an increase in mobile penetration from 26% at 31 December 2006 to 30% at 30 June 2007.