Introduction and Overview

Introduction and Overview
Nigeria
Ahmad Farroukh- CEO Nigeria
Country overview
Population 150m
Market sizing 111m (2014)
Penetration 45.8%
Economics
GDP per capita
*GDP
USD 2
2,440
440
Inflation
13% (National Bureau of
Statistics)
Commercial banks'
prime lending rate
17.8% (averge)
Exchange rate
LC/USD = 152.00 (2010
est. av.)
Demographics
Language
English, several local
languages
Religion
Christian and Muslim
Source: Economist Intelligence Unit (EIU) Monthly Country Report – August 2010
2
Market dynamics
Political
environment
i
t
• Uncertainty pending general elections in 2011
• Implementation of political reforms aimed at ensuring free and fair
elections
• Real GDP growth rate forecast 2010 - 6.9%
• Average inflation forecast 2010 - 11.5%
• On going tightening of banking supervision aimed at strengthening the
Economic
environment
i
t
•
•
Regulatory
environment
sector
Economic growth
h - 7.68%
68% ((H210)
2 0)
• Growth in non-oil sector (agriculture, retail trade, services and
construction)
Relatively stable exchange rate
• Voluntarily SIM card registration implemented May 10
• Efficient
Effi i
use off current sales
l and
d distribution
di ib i
channels
h
l
• Appointment of a new Executive Vice Chairman and Chief Executive
•
Officer for the Regulator (NCC) - Jul 10
Ongoing reporting of QoS to the regulator
• Significant improvement in network quality
3
GSM competitors–
competitors– Jun 10
MTNN
ZAIN
Launch date
2001
2001
Subscribers
35.0m
15.1m
14.9m
3.1m
51.27%
22.17%
21.90%
4.66%
Market share
Shareholders
Initiatives
*
**
**MTNI
Private
•
•
•
•
(76%)
(24%)
MTN Fastlink
MTN One World
Blackberry
y
Google SMS
Globacom
Etisalat
2003
Bharti Airtel (65.7%)
Private
(34.3%)
Nigerian shareholders
• International roaming
• One network
• Fixed payphone
• National fibre
backbone
• Fixed line services
((corporate
p
segment)
g
)
• 3G packages
• Glo-1 submarine cable
2007
EMTS
Mubadala
PTHNV
•
•
•
•
(40%)
(30%)
(30%)*
GSM/EDGE
Home Zone
My
y cluB p
premiership
p
Easynet internet link
Premium
P
emi m Telecommunications
Telecomm nications Holdings Limited (PTHL),
(PTHL) a special purpose
p pose vehicle
ehicle which
hich holds the interest
inte est of Nigerian
Nige ian investors
in esto s in
Etisalat Nigeria. PTHNV offered 35 million shares (17.5%) for sale via Private Placement in March 2009
Legal Holding
4
Fixed wireless and CDMA segment
Fixed
i d wireless
i l
operators 31
3 Dec 09
2.50%
4.71%
C
CDMA
mobile
bil operators 31
3 Dec 09
4.14%
14.52%
21.90%
8.60%
3 74%
3.74%
2.43%
27.20%
68.47%
36.30%
Starcomms
Visafone
Multilinks
Reltel
21st Century
O'Net
Starcomms
Visafone
Multilinks
Reltel
NITEL
CMDA collective market share of total market – 10.15%
5
Management team
Ahmad Farro
Farroukh
kh
Chief Executive Officer
Karl Toriola
Chief Technical
Offi
Officer
Wale Goodluck
Corporate
Services
Executive
Andrew Bing
Chief Financial
Offi
Officer
Amina Oyagbola
Human
Resources
Executive
Bola Akingbade
Chief Marketing
Offi
Officer
Derek Appiah
Chief Enterprise
Solutions
Officer
Abdul Ismail
Chief
Information
Officer
Akin Braithwaite
Customer Relations
E
Executive
ti
Michael Ikpoki
Sales &
Distribution
Executive
6
Licences
Period
•
•
•
•
Digital Mobile Licence (GSM): Feb 01 – Jan 16
Unified Access Service licence ((“UASL”):
UASL ): Sep 06 – Aug 21
2 GHz Spectrum (3G): May 07 – Apr 22
3.5GHz (WiMAX): Jul 07 – Jun 12
Upfront fees
•
•
•
•
DML – US$285m
UASL – NGN114.6m
NGN114 6
2GHz – US$150m
3.5GHz – NGN13.9m
Coverage
•
•
•
•
•
2,101
,
cities and towns
Over 10,000 villages and communities
Highways spanning the 36 states and the Federal Capital Territory
83.9% geographic coverage (Jun 10)
84.6% population coverage (Jun 10)
7
Radio network rollout
• 6,356
6 356 BTS
BTS’s
s
• 2,367 cities and towns
• Over
O
20
20,000
000 villages
ill
and
d
communities
• 41,645
,
km of highway
g
y
• 97 MSC’s
• 106 BSC
BSC’s
s
• Adopt lower cost rollout
methodologies such as co-location
and infrastructure sharing
8
3G network coverage
• 1,422
1 422 live 3G sites to date
• 3G has enabled the launch and
rapid growth of mobile internet
and other data services
including corporate services
• 50 WiMax Sites
• WiMax is expected to further
improve MTN’s positioning in
the data services segment
• High density
9
Backbone route
10
Distribution channel
Selection of competent….
• Efficient distribution channels all
aligned to particular Trade
Partners down to the retail level
• Spread across the 36 states of the
federation and the Federal Capital
territory:
• 120 whole sale dealers
• 42 franchise operations
• 15 own shops
• 2 electronic channel distributors
Trade Partners alignment
g
to captive
p
markets and
clusters with joint responsibility for market
development.
Drive towards the evolution of trade partners as
brand ambassadors
Driven by…
System support and processes in trade partner
environment.
Automated order processing and fulfillment
Deployment of competitive commission reward
structure
Effective Business intelligence tools
Excellent distribution logistics/structures
• 96,000 Bizlift members till date
To enhance…
Trade partners profitability/ Sustainability
Excellent market development/ Penetration
Optimisationon of network infrastructure
Evolution of reliable and competent brand
ambassadors.
11
Data
Licence
Customers
• Unified licence
• Large corporations and Small and Medium Enterprises (SMEs)
• Data solutions – lease lines, high speed internet (ADSL), dedicated
Products
Coverage
Organisation
internet, satellite links, high speed internet (Wimax)
• Voice – fixed voice (prepaid and post paid)
• Nigeria wide – leased lines and satellite links
• Lagos, Ibadan, Port Harcourt, Abuja – high speed internet and
fixed voice
D i
b the
th Enterprise
E t
i Solutions
S l ti
Di i i
• Driven
by
Division
• Focus on mobile, fixed and converged sales and marketing
• The approach to customer relations is that a single customer
service interface is maintained for enterprises
Recent
sample
l
contracts
•
•
•
•
Etisalat – leased lines contract spanning two and a half years
Banks – leased lines contract spanning multiple years
Man fact ing and hospitality
Manufacturing
hospitalit – IP-MPLS
IP MPLS and leased line cont
contracts
acts
Oil and Gas – leased line and IP-MPLS contracts spanning multiple
years
12
Product and services
Product
Customer Benefit
Segment
Blackberry Weekly
Weekly mobile email and PIM subscription for
prepaid.
Youth/young professionals
MTN Pulse
Customers can be where they want to be seen,
making friends and sharing content
content.
Youth/young
y
gp
professionals
MTN Eye
MTN EYE gives you a view of major streets and
traffic hot spots, using a network of cameras
strategically located around the city.
All segments
MTN Play
A one-stop-shop Mobile portal where you can
download exciting videos, full track music,
ringtones, both local and international right on
your mobile phone
All segments
New Value Proposition
Life is richer with MTN.
All segments
MicroSIMs
Provides enjoyable and convenient internet access
on Apple Ipad and I Phone 4.
4
High Value/Professionals
MTN In-Flight Roaming
Another way of keeping in touch with family and
friends while on air across Europe, Asia, Middle
East and Australia.
High Value/Professionals
High speed internet access on the go. Best and
most expansive 3.5G network in Nigeria
Youth
MTN Fastlink
13
Product and services
Product
Customer Benefit
Segment
Blackberry from MTN
Mobile
M
bil
email
il and
d PIM.
PIM First
Fi t and
d only
l
prepaid
id
Youth/young professionals
solution in Nigeria
Google SMS
Search the web without the internet. Knowledge on
Youth/young professionals
the go enabled by MTN
DSTV Mobile from MTN
Never miss your favorite sports, news or movie
High Value
programmes. Mobile entertainment- only on MTN
MTN Video Cam
Be in two places at the same time.
time Keep watch over
High Value
your loved ones
MTN One World
Roam like you never left home! Pay what the locals
pay,
p
y, and recharge
g locally
y
MTN Back Up
Back up your important SIM contacts
Care
e(
(Emergency
e ge cy
MTN Ca
Access to medical and emergency
service to MTNN’s customers
Services)
MTN E-Care Self
Registration
Caller Tunez Reloaded
High Value/Professionals
High
Value/Mass/Youth/professionals
g
ambulance High
Value/Mass/Youth/professionals
Allows customers manage their postpaid account
Professionals
with ease
Ring back tone platform allows customers to upload
Youth/Mass/Corporates
DIY ring back tones
14
Brand leadership
Q210
Market Share
51.0%
Brand Preference
59.9%
B
Brand
d Awareness
A
69 9%
69.9%
Brand Affinity
61.6%
MTN remains the leading brand in the Nigerian telecoms space
15
Financials
Nigeria
Ishmael NwokochaNwokocha Senior Manager Nigeria
Revenue analysis
• Airtime and subscriptions fees
• Increase in the number of revenue
generating subscribers
17.7%
277
83
277.83
235.99
• Increase in the total billable minutes
• Increase in the number of blackberry
subscribers from 4,242 in Jun 09 to
,
33,015
• Interconnect Revenues
• Reduction in interconnect rates
24.9%
enforced by NCC with effect from 31
Dec 09
35.67
26.77
• Others
• VAS revenue increase attributable to
2010 FIFA promotion
• Increase in handset sales due increase
blackberry
ac be y and
a d introduction
t oduct o of
o Nokia
o a
in b
5330 for DSTV Mobile
Airtime &
Subscription fees
Interconnect
57.8%
16.16
25.50
Others
Total revenue
2009 (NGN 287.8bn)
287 8bn)
2010 (NGN 330.1bn)
330 1bn)
17
Operating expenses analysis
• Interconnect and roaming
33.16
26.3%
• Decrease primarily as a result of
decrease in interconnect rates by
NCC
• Direct network operating costs
26.25
24.98
24 8%
24.8%
18.79
• Increase in number of sites in
2010 resulting in increased rent,
maintenance costs and fuel usage
10.7%
• Cost of handsets and accessories
5.75
6.37
• Increase in quantity of handsets
sold
Interconnect & Roaming
Direct Network operating
cost
Cost of handsets,
accessories, etc
Total Opex
2009 (NGN 112.0bn)
112 0bn)
2010 (NGN 127
127.8)
8)
18
Operating expenses analysis
• Staff costs
• Marginal growth in head count
• Annual salary increases for staff
34.35
28.3%
• Selling,
Selling distribution and
27.17
26.78
marketing expenses
42.1%
• Increased sponsorships with
new events added e.g.
g Project
j
Fame competition, FIFA
Promotion, etc
• Rise in the business' need to
s ppo t its dist
support
distribution
ib tion network
net o k
partners
19.12
29.8%
10.28
7.92
• Others
• Increase in the cost of
maintenance and repairs of MTN
fleet
• increase in revenue which led to
increase in technical services
fees
Staff costs
Selling,
Selling Distribution &
Marketing
Others
Total Opex
2009 (NGN 112.0bn)
112 0bn)
2010 (NGN 127
127.8)
8)
19
Tax considerations
Effective tax rates
%
Material reconciling items Jun 10:
46
43
• Education tax 2.8%
33
33
Dec-09
Jun-10
• Commencement provisions 0.0%
0 0%
• Additional deferred tax 3.2%
• Investment allowance relief
(2.4%)
Dec-07
Dec-08
Nigeria – expected trends in effective tax rates
Illustrative %
75
Accounting
tax rate
50
46
43
34
Cash tax rate
25
25
23
25
33
17
0
Dec-07
Dec-08
Dec-09
Jun-10
20
Capital trends
2.5E-07
80.0%
71.0%
596
70.0%
0.0000002
NGN
N
Billions
60.0%
50.0%
1.5E-07
138
45.0%
40.0%
112
0.0000001
24.0% 22.0%
81
68
28.2%
32.0%
80
30.0%
191
20 0%
20.0%
5E-08
10.0%
0
171
2004
0.0%
2005
CAPEX
2006
2007
2008
2009
CAPEX to revenue %
21
Looking forward
Nigeria
Ahmad Farroukh- CEO Nigeria
MTN Foundation
General
Objectives
•
•
•
•
Established in Jul 04 as a separate entity
Founded to manage Corporate Social Responsibility initiatives across Nigeria
MTN Nigeria invests up to 1% of its PTA
Focus areas Economic Empowerment, education and health
• Facilitate economic empowerment of Nigerian citizens
• Provide access to educational opportunities
• Alleviate health challenges
• Rural Telephone Project - improving the social economic status of rural
•
•
Projects
•
•
•
women
Disability Support Project - provision of mobility aids and appliances to
persons living with disability
Science and Technology Scholarship Programme - scholarships of N200,000
each to 500 deserving students in tertiary institutions
UniversitiesConnect and SchoolsConnect Projects - establishment of ICT
centres in universities and secondary schools
Partners Against AIDS and Malaria in Communities (PAMAC) project HIV/AIDS
/
and Malaria education,, treatment and empowerment
p
programmes
p
g
MTNF refurbished Sickle Cell Clinics - Sickle cell education, treatment and
empowerment
23
Looking forward
Opportunities
Challenges
• Rural area penetration
• Poor infrastructure
• Strong brand
• Increasing competition from PTOs
• Industry leader
• Devaluation of local currency
• Strong demand
• Dependence on oil production and
revenue
• Capex rollout
• Political uncertainty
24
Nigeria
- income statement (LC)
Jun 10
Jun 09
%
change
Revenue
330,121
287,820
14.7%
EBITDA
202 442
202,442
175 856
175,856
15 1%
15.1%
61.3%
61.1%
Depreciation & amortisation
50,885
42,295
20.3%
Net finance costs
13,198
13,557
(2.6%)
138,359
120,003
15.3%
Income tax expense
45,757
39,508
15.8%
Profit after taxation
92,602
80,495
12.6%
NGN millions
EBITDA margin (%)
Profit before taxation
25
Thank you
Questions
Nigeria
- balance sheet (LC)
NGN millions
Non-Current
C
Assets
as at Jun 10
as at Jun 09
461,537
6
3
441,996
996
431,566
400,312
126
186
29,845
41,498
Current Assets
219,012
180,641
Bank and cash
152,768
107,739
66,244
72,902
680,549
622,637
Capital and reserves
156,397
149,155
Non-current liabilities
300,221
253,267
227,108
210,559
73 113
73,113
42 708
42,708
223,931
220,215
208,897
209,216
15,034
10,999
680,549
622,637
Property. plant and equipment
Intangible assets
Other non-current assets
Other current assets
Total assets
Long term liabilities
D f
Deferred
d taxation
t
ti
and
d other
th non-currentt liabilities
li biliti
Current liabilities
Non–interest bearing liabilities
Interest bearing liabilities
Total equity and liabilities
27
Nigeria
- funding structure
US$400m foreign currency term loan facility
5 year tenor
Outstanding balance of US$250m (as at Jun 10)
Currently in repayment with final repayment in Oct 12
Original US$
facility
•
•
•
•
Restructured
local
currency
facility
• NGN206bn term loan facility
• 5.5 years tenor
• Repaid in 4 equal annual installments from Dec 12 – Dec 15
New buyer’s
credit facility
• US$200m foreign currency buyer’s credit for purchase of Huawei equipment
• 5 year tenor
• Repaid in 7 equal semi-annual installments from Jun 12 – Jun 15
• US$250m foreign currency term loan facility linked to Ericsson equipment
New ECAbacked
facility
•
•
•
purchases
95% Comprehensive cover provided by EKN of Sweden
5 year tenor
Repayment in 8 equal semi-annual installments as of Dec 11 – Jun15
28