Group Technology & Information Investor Update

Group Technology &Information Investor Update

Karel PienaarGroup CTIO

2

Agenda

• Best mobile operator• Current network infrastructure

• Current network performance

• Network drivers – coverage, quality, efficiency

• Key network initiatives

• Key IS initiatives

• Future growth and innovation

• Preparing for Future Telco• New Telco Eco system

• Current MTN activities

• Demonstration• Technology demonstration

3

Agenda










4

The Challenge is to be a World Class Operator in our 21 operations

Before After

Switching Centre - Uganda

Building the Call Centre – Tehran“From a humble beginning”

5

Current performance benchmarkedNetwork infrastructure

1563751025,1141143,0111,42354981400295Sites

0001,1680000000Node B

000130000000Radio network controller

2002109101220Media gateway

1588001508,5782102,8012,8462,14396581333Base transceiver station

9714,82397742,6691,70042,73520,8065,0359364,0392,545Transceiver unit

392673575015276Base station controller

121141731121Home location register

1523824955164Mobile switching centre

ZambiaUgandaSwazilandSouth AfricaRwandaNigeriaIranCote

d’IvoireCongoBCameroonBotswanaAugust

6412,035840901152785335578420Sites

03058000010000Node B

0210000100Radio network controller

0200003000Media gateway

6652,7631,053128212391,365355125450Base transceiver station

4,54515,4738,1301,2401,64033819,2051,7261,1242,461Transceiver unit

24323823115723Base station controller

3431112111Home location register

414422112123Mobile switching centre

YemenSyriaSudanLiberiaGuineaConakry

GuineaBissauGhanaCyprusBeninAfghanistanAugust

6

Best mobile operatorCommitment to QUALITY

• Network Quality Key Performance Indicators:• BH Congestion• Call Setup Success rate• TRX Availability• Average Half rate Utilisation

7

Current network performancePeak BH Erlang

Peak Busy Hour Erlang (August 2007)

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000G

uine

a Bi

ssau

Zam

bia

Bots

wan

a

Cyp

rus

Con

goB

Swaz

iland

Rw

anda

Libe

ria

Beni

n

Afgh

anis

tan

Gui

nea

Con

akry

Cam

eroo

n

Yem

en

Cot

e d'

Ivoi

re

Uga

nda

Suda

n

Iran

Syria

Gha

na

Sout

h Af

rica

Nig

eria

8

Best mobile operatorCommitment to EFFICIENCY

• CAPEX Targets:• Cumulative Capex/BH Erlang (<1 million subs): $10,000-$15,000

(>1 million subs): $15,000-$20,000

• Cumulative Capex/Sub $100-$200

9

Current network performanceTechnology CAPEX

Capex per subscriber (2007)

0

100

200

300

400

500

600

Beni

n

Gui

nea

Con

akry

Yem

en

Sout

h Af

rica

Iran

Gha

na

Libe

ria

Rw

anda

Gui

nea

Biss

au

Swaz

iland

Afgh

anis

tan

Suda

n

Uga

nda

Cam

eroo

n

Syria

Cot

e d'

Ivoi

re

Nig

eria

Con

goB

Zam

bia

Cyp

rus

Mar

gina

l Cap

ex/s

ub [U

SD]

Cumulative Capex/subscriber Marginal Capex/subscriber

10

Best mobile operatorCommitment to coverage

Coverage (July 2007)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Iran

Sud

an

Afg

hani

stan

Cot

e d'

Ivoi

re

Ben

in

Gui

nea

Con

akry

Gui

nea

Bis

sau

Zam

bia

Gha

na

Nig

eria

Libe

ria

Uga

nda

Bot

swan

a

Cam

eroo

n

Con

goB

Rw

anda

Yem

en

Sw

azila

nd

Cyp

rus

Sou

th A

frica

Syr

ia

Geographic coverage Population coverage

Broad coverage ensures MTN reaches maximum potential customers…

coverage is absolutely critical

11

Best mobile operatorChallenges

• The Mobile Operator is also a Utility Provider• Initial infrastructure must be built• Transmission (Fixed Network), Power, Security, Transport

(4 million litres of diesel per month in Nigeria - 3% of OPEX)• All 10 switches and 70% of sites run off NEPA, but typically only 30%

availability • Focus on Affordability Issues

• How to profit from marginal ARPUs < $1 ?• Compete with basic spend items• Subscriber TCO (device, tariff, denominations)• Public access phones (>30% of traffic)

• Build a Trusted Brand• A powerful brand positions the mobile operator to launch new services

• Integrate with the Community• SMME/local development• Social responsibility

• Demand Often Exceeds Supply• Overcome problems of quality & capacity

• Become the Lowest Cost Operator• ASR’s below 30% are inefficient• Distribution e.g. virtual top-up

Doing business in developing markets is tough but the rewards are high and opportunities are huge

Existing Deployment of Vendors in 2007

2007 South Africa Swaziland Nigeria Zambia Uganda Rwanda Cameroon IranCongo-

Brazzaville Ivory CoastEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Siemens

Huawei Huawei Huawei Huawei HuaweiNokia

Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson SiemensHuawei Nokia Huawei

Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson SiemensHuawei Huawei Huawei Huawei

Siemens Harris/Stratex Harris/Stratex Harris/Stratex Nokia Siemens Harris/StratexCisco Cisco Marconi Cisco Cisco

Ericsson Ericsson Ericsson Ericsson Ericsson EricssonHuawei Nokia

Comverse Alcatel

Sudan Syria Liberia Ghana Guinea BissauGuinea

Conakry Afghanistan Benin Cyprus YemenEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson

SiemensAlcatel Alcatel Alcatel

Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson EricssonSiemens

Alcatel Alcatel AlcatelEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson

Alcatel Harris/Stratex Alcatel AlcatelSiemens Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson

Alcatel Alcatel Alcatel

Transmission

Pre-paid Platform

BSS/RAN

Transmission/Packet Switches

Pre-paid Platform

BSS/RAN

Core

Core

13

Best mobile operatorKey network initiatives overview

Least Cost operatorNetwork quality, efficiency drive

Leverage synergies across the Group

Fully integrate operations into Group standards and practice

VAS platforms, systems and interfaces standardisation

Connectivity project

FACTS rollout (transparent network quality metrics reporting system)

Evolving to next generation Network architecture and

services“New Telco”

(Convergence)

Capital projects management process standardisation

Network and IT Operation & Maintenance standards and procedures

CM support technologies standardisation

BTS sitebuild criteria and implementation

Centralize procurement of infrastructure

14

Key network initiativesWest terrestrial connectivity

Project to investigate the viability of terrestrial connectivity via microwave radio and fibre between all West Region OPCOs.

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Key network initiativesConnectivity between all OPCOs

August 17 - 2007 December 31 - 2008MTNInvestcom

Phase 1: Establishment of basic OpCoconnectivity

Phase 2: Improving and extending OpCoconnectivity in regions

• Establishment of regional connectivity hub structure

• Inter-regional traffic concen-trated on regional hubs

• MedNetforms most important connectivity

Phase 1: Establishment of basic OpCoconnectivityPhase 1: Establishment of basic OpCoconnectivity

Phase 2: Improving and extending OpCoconnectivity in regionsPhase 2: Improving and extending OpCoconnectivity in regions

• Establishment of regional connectivity hub structure

• Inter-regional traffic concen-trated on regional hubs

• Focus on upgrading existing links

16

Key network initiatives BTS site build process and implementation

• Network rollout standardisation• Site design• Vendors

• BTS Mechanical & Electrical design optimisation

• Generator Standards• Building Management System• Outdoor Units

• Development of standardises contractual approach for OPCO’s

• Pre-approved sitebuild vendors across the Group for tenders (8-12)

• Setting up adjustment factors for each country

Site build process focused on:• Improve cost efficiency• Improve rollout performance• Streamline approval process• Improve standardisation of site types

CAPEXManagement Fee $13,500

Antenna System $14,000

Tower Structure Cost $17,500

Transmission EQ Cost $15,000

Electrical Cost (ACs, DBs , trays etc.) $6,000

RBS Cost (Average single BTS) $20,000

Internal Power Systems $8,000

Shelter $5,000

Tower Civils and Installation Cost $17,500

Electrical Installation & Connection $6,000

Generator and Fuel System $16,000 or$32,000

Fencing $5,000

General installation Civil works $14,000

Total (Single Generator + 1 BTS) $157,500

BTS CAPEX breakdown

BTS OPEX breakdown

OPEX

Land Lease PA $4,800

Transmission lease cost (SA) $3,000

Electrical consumption cost PA $1,200

Tower Maintenance PA $700

General Civil Maintenance PA $700

BTS Maintenance PA $250

Fuel with no AC connection PA $15,000

Total $ 25,600

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Key network initiatives Eco friendly BTS sites

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Network initiatives Key evolution areas of the network

• GPRS -> EDGE• Driven by algorithm change for improved security• BSS modernisation (2202 -> 2206)• Compelling data offering

• GPRS roaming• 3G• HSxPA – LTE• WiMax• NGN• IP/MPLS area (IMS)• Fibre rollout• DVB-H

21

Current status of MTN OpCos

Strategic focus and investment around data and mobile media is directly related to the revenues generated by the different OpCo’s

Developed Markets Industry Norm Emerging Markets

Data % contribution to total revenue

Content % contribution to total data revenue4%25%

20% 5%

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Key network initiatives3G

• Combined 2G+3G CAPEX can be below the originally planned GSM investment• Options for cheap capacity (efficiency) or additional capacity (new spectrum)• Transmission infrastructure efficiency must keep up with increased capacity

Increased 3G efficiency provides opportunity to deliver cheaper voice in emerging markets

2000Source: CSFB Estimates

Cost per Erlang Equivalent of Capacity

$ ’0

00

‘02 ‘06E ‘07E‘01 ‘03 ‘04E ‘05E

GSMCDMAWCDMA

More Efficient

2005Source: MTN South Africa

Planned 2+3G CAPEX vs Original 2G Only Plan

Plan

ned

CA

PEX

20072006 2008 2009 2010

2G Only2G+3G

Initial Coverage

3G Efficiency Reduces CAPEX

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Key network initiatives3G

3G efficiency only applies once handset prices allow mass adoption in emerging markets

2001Source: MTN South Africa

3G H

ype

‘03 2008‘02 ‘04 ‘05

3G Launch

182+ operators live - 2007

Inflated hype and licence payments!

• MTN benefits from lessons learned & technological innovation since 3G pioneers• Fewer handset components lower manufacturing costs and drive economies of scale

Com

pone

nt C

ount

1060

Sources: CSFB

200

400

600

800

1000

Han

dset

Cos

t (U

S$)

50

100

150

200

250

UMTS2003

UMTS2004

UMTS2007

GSM2007

234

765170

400

100200

25

Handset CostComponent Count

Trend of Decreasing Costs for 3G Handsets3G Maturity + = 3G Opportunity

in Africa

‘06 ‘07

24

Peak Radio Throughput/UserAverage User Perceived Throughput

1800

3600

7200

HSDPA1 800 kbps 3 600 kbps

14000

7 200 kbps

0.8-1.2 Mbps

800

1200

1500

2200

3000

1000

1500

2000

1.0-1.5 Mbps 1.5- 2.2 Mbps 2 - 3 Mbps

14 400 kbps

Average Download time of 10 MBytes ~80 sec ~64 sec ~43 sec ~32 sec

2 000

300

200

R992 000 kbps

0.2-0.3 Mbps

~320 sec

473

EDGE

~571 sec

171

GPRS

~2133 sec

135-145 kbps35-40 kbps

473 kbps171 kbps

Source: Ericsson, Qualcomm

Latency

Source: RY Savy Research

Network Initiatives HSxPA – LTE Evolution

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Where is WiMAX going?

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Key Activities

Overview of key IS initiatives

Customer Care and Billing

Strengthen IS Infrastructure

Customer Facing

IS Initiatives

Employee Facing

IS InitiativesOpCo Connectivity

Informating the Organisation

Group Content Portal

Email, Conferencing (video, audio, web), IM, Intranet & Hyperion

Shared IS Services

HRIS

Common Billing processes and technical environment

IT standards & Asset management

Regional Shared DR

CRM & Billing Change Control

The right information at the right time to make appropriate decisions

Common DDWH environment for accurate information

HRIS Implementation & Rollout

Short Term Medium Term

Focus on creating an Agile base on which to build Efficient Proactive systems to benefit of MTN Group

World Class Data Centre

27

Future Growth and InnovationContinued Innovation is Key to Competitiveness

• Strong record of developing innovative products and tools that are ahead of market trends

• Internal focus:• Maximise performance• Manage quality• Reduce costs• Support new products

• External focus:• New revenues

• TNMS (network management system) • USSD/SMS-C• IBS (Intelligent broker system, open source)• Voucher distribution system• Pre-paid • VTU (Virtual Top Up)• 3G/GPRS realtime charging• Balance enquiry and recharge• Call Back• PPMED (Prepaid mediation)• FACTS / dashboards (web-fronted statistical views)• Optima (statistical, long term analysis)• REMEDY (Trouble ticket scheduling and tracking)• RAPTOR (call testing for revenue assurance and

quality)• Asset (Radio Network planning tool)• Datasafe (network data configuration)• FOTON (automatic frequency planning)• EDIP (Early Delivery Intelligent Platform, MIP, EDP,

SMSC)• USA (Universal Service Architecture)

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Future growth and innovationDrivers of MTN’s future technology

• Regulatory• Mobile number portability, legal intercept, interconnect rates• Self-provisioning by VANs/ISPs• International Voice for MCOs

• Increased Competition• Drives network requirements for differentiation in terms of coverage, quality

and products at lower cost than competitors• Strong competition with established fixed line telco in SME and corporate

market• Product/Service flexibility

• Least Cost Operator• Target Bottom-of-Pyramid• New Telco

• Fixed/mobile and fixed/wireless• Pre and postpaid• Media and entertainment• The internet

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Agenda










Mobile Operators

2BN+Users

New Telco contextA broad view of the MTN New Telco landscape

Source: MTN Group Technology, 2006

Fixed Operators

WiMAX

WiMAX3G

GSMWiFi

UMA

ISPs

HSPA WiMAX

VoIP

Infrastructure

NGNTx

IMSOSS

BilllingSDP

Media &Content

DVB-HMBMS

3GHSPAMp3

MPEG4P2P

Retail & Services

VoIP

SoftwareSymbianWindows

Opensource

Devices

iPodPhenomenon

SIM

Internet

VoIP

XMLHTML

TCP/IP

P2P

IMSSDP

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MTN Actions

New Telco contextGartner technology cycle

32

Time to maturity1 year 2 years 3 years 5 years

Low

Hig

h

Execute now!! Finalise plans Formalise strategy and experiment

Partner and execute Watch closely

Mature developments Trials and early developments Analysis underway

Low costvoice

InstantMessaging

Low cost Handsets

Mobile money

AttackFixed Voice

OutsourceMobileinternet

Corporatesolutions

VOIP

User generatedcontent

Contentportals

Mobile TV

Mobilesearch

AccessTechnologies

Triple/quadplay

Mobileadvertising

Managedservices

Softwareas service

Online communities

MVNOMobile

ApplicationsMobilemusic

M-commerce

Unlicencedmobile access

LocationServices

Peer2peer

IdentifyServices

Actively Tracking

New Telco contextTracking global trends

33

Media

Infrastructure

Internet

Devices

Fixed Operators

Retail & Services

ISPsSoftware

Expand down the Value Chain- Resell core infrastructure

VANS- Internet/ISP services

Attack adjacent industries(e.g. mobile financial services)

Mobile entertainment

Mobile music

Quad/ Play

Device Strategy

Attack fixed operators:- Fixed mobile substitution- Fixed mobile convergence

Mobile TV

Mobile Operators

Best mobile operator(specialise)

VoIP

1

2

3

4

5

6

8

91011

12

Software- Applications Service Provider- Manage access to the device

7

Mature Deployments

Analysis Underway

Trials and Early Deployments


New Telco contextCurrent MTN activities

34

Strategic initiatives The Internet goes mobile

• Situation • Connectivity moving from a want to need • User-generated content allow people to

participate in services in real time, spontaneously

• Handset Evolution enables a richer user Experience

• Mobile becoming the primary access method to Internet

• Overview of Activity• Use existing infrastructure to provide Internet

Access • Mobile Media and Content Services -

MTNLoaded• Provide internet related services – Instant

Messaging • Providing Consumer & Corporate ISP Services• OPCO’s engaged VANS model to date:• Nigeria, South Africa, Cameroon, Uganda,

Rwanda

Media &Content

Infrastructure

InternetDevices

Fixed Operators

Retail & Services

ISPsSoftwareMobile

Operators

OpportunityProvide services that combine user-generated and 3rd party content into a single user experience Drive uptake of content downloads, and advertisingPartner with global players to offer services


35

Strategic initiatives Infrastructure

• Situation• Alternative Access technologies have

matured in both Technology & Deployment• Technologies such as WiMAX provides

more cost effective Access Network• Evolution of Handsets allowed for access to

multiple networks from single devices

• Overview of Activity• Implementation of Fiber Transmission

Backbone (Nigeria, South Africa, Ghana, Uganda, Ivory Coast, Rwanda)

• Corporate High Road Strategy – South Africa• Providing Fixed Wireless Solutions as part of

Corporate solutions• Develop capability to resell transmission in

OPCO’s where we self provide, avoid empowering competition

Media &Content

Infrastructure

InternetDevices

Fixed Operators

Retail & Services

ISPsSoftwareMobile

Operators

OpportunityResell transmission backbone, facilities and switching capability Adopt a user transparent multi access network


36

Strategic initiatives Media & content – It is all about the user experience

• Situation • Evolution has lead to a Multi-sensory

Experience • Access to Media Content at appropriate

location• Advertisers and media companies see

mobile as a huge opportunity • By 2012, 100m media devices will ship with

Broadband connections - ABI Research• Overview of Activity

• Extended MTNLoaded to cater for:• Photo/video sharing• User-generated media• Competitions and contests • Mobile and web blogs• Social networking• Community chat / Forum

• Launched Mobile TV Initiative

Media &Content

Infrastructure

InternetDevices

Fixed Operators

Retail & Services

ISPsSoftwareMobile

Operators

OpportunityPartner with Media Companies to gain access to ContentCreate new revenue streams by providing users with access to appropriate content. Expanding of Brand beyond Mobile Telephony


37

Strategic initiativesDevice strategy

• Overview of Activity1. GSM Association & other operator alliances formation2. Ultra Low Cost Handset initiative 3. MTN Group SIM standardisation project:

• Application eco-system (Java) creation• Group-wide application deployment efficiency

4. Service Discovery Enhancement: MTN Idle Screen5. Over The Air configuration (OTA):

• SIM/USIM: subscriber self service• Handset: Intelligent Mobile Device Management

6. DVB-H Mobile TV:• DVBH/3G handset for Africa

• Nokia handset support: OMA BCAST SCP standard migration• SIM based ESG (TV Service Guide) rendering

7. Branded device (external and internal):• 3G/HSDPA PC/USB card in SA• 3G/laptop bundling in SA• 3G/wifi hub bundling in SA

Media &Content

Infrastructure

InternetDevices

Fixed Operators

Retail & Services

ISPsSoftwareMobile

Operators

Opportunity• GSMA, BMCo & strong MNO Alliances

help MNO’s gain greater control of handset design & clients [& other end user devices], to enhance services, customer experience, reduce cost, & ensure “lock in”

• Device control supports application eco-system for variety, innovation & new revenue streams creation

38

Agenda










39

Convergence - a connected life

High Speed Mobile Access

Live Video Streaming via HSPA

Skype Video Call over HSPA

IMS IP Centrex

IMS PTT / WeShare

IMS Mobile Blogging

Google Earth / LBS overlay

On Device Portal

MTN Banking

Value Wallet

Mobile Payment Acquiring

Mobile Gaming

NFC Credit Cards

NFC Content purchases

Notice

The information contained in this document has not been verified independently. No representation or warranty express or implied is made as to and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Opinions and forward looking statements expressed represent those of the Company at the time. Undue reliance should not be placed on such statements and opinions because by nature, they are subjective to known and unknown risk and uncertainties and can be affected by other factors that could cause actual results and Company plans and objectives to differ materially from those expressed or implied in the forward looking statements.

Neither the Company nor any of its respective affiliates, advisors or representatives shall have any liability whatsoever (based on negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation and do not undertake to publicly update or revise any of its opinions or forward looking statements whether to reflect new information or future events or circumstances otherwise.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

Group Technology & Information Investor Update

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