Revenue Operational Information

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MTN Group LimitedIntegrated Business Report or the year ended 31 December 2011

.beyondWelcome to possibility


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About this reportThis year, MTN Group Limited (MTN, the Group or the Company) has

moved urther in its journey towards providing a more integrated

report to its stakeholders. This incorporates the recommendations

o the revised King Code o Governance Principles or South Arica

(King III) and the latest work o the International Integrated

Reporting Committee. A structured approach was implemented to

defne material report content and provide a more holistic pictureincorporating the Groups fnancial, economic, social and

environmental perormance. This approach was achieved through

workshops and input rom key representatives o various disciplines,

including risk management, stakeholder management, fnancial

reporting, investor relations, company secretariat, sustainability and

human resources. Consideration was given to eedback rom key

stakeholders in compiling this report. The key improvement made

to the 2011 report is the inclusion o the Group opportunities as

part o its risk assessment. This orms the thread through the report,

providing insight into the most material aspects o the business

across MTNs markets. MTN has also better incorporated its social,economic and environmental contributions to the countries and

societies in which it operates.

The board has recently enhanced its committee structure, details

o which appear in governance highlights.

For more detailed inormation on the Groups sustainability

initiatives, stakeholders are directed to the separate sustainable

development report, available at www.mtn.com/sustainability.

A separate governance report is also available at www.mtn.com/investors. We welcome eedback on this report, which is datedMarch 2012, [email protected].

Reporting principlesMTN is a company incorporated in South Arica under the provisionso the Companies Act, 71 o 2008, as amended (Companies Act), and hasadopted many principles o King III, the Companies Act, the JSE ListingsRequirements and other legislative requirements. The Group subscribesto high ethical standards and principles o corporate governance and is inthe process o ensuring ull compliance with King III as ar as is practicaland easible and with the provisions o the new Companies Act. For moredetails, please see the corporate governance section on pages 50 to 57.

The Group ollows International Financial Reporting Standards (IFRS) tocompile its annual fnancial statements (AFS). MTN discloses the basis orreporting on joint ventures, subsidiaries, associates and leases in its AFS. Forreporting on sustainability issues, it also ollows the Global ReportingInitiatives (GRI) guidelines. MTN assesses itsel as level B GRI compliant.

AssuranceThe audit committee oversees the drating o the integrated report.On the basis o the recommendations rom the joint auditors(PricewaterhouseCoopers Inc and SizweNtsalubaGobodo (Inc), theaudit committee provides assurance on the annual fnancial

statements which have been prepared under the supervision o theGroup CFO, Nazir Patel. While good progress has been made to complywith sustainability assurance in the current year, MTN Group is workingtowards achieving ull compliance on sustainability assurance in 2013.

Board responsibilityThe board o directors acknowledges its responsibility to ensure theintegrity o the integrated report. The board has accordingly applied itsmind to the integrated report and in its opinion, the report airlypresents the integrated perormance o the Group.

Cyril Ramaphosa Sifso DabengwaChairman Group president and CEO

Navigation aid

Website link

Case study


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MTN Group Limited Integrated Business Report or the year ended 31 December 20111

Groupoverview

Perormancereview

Operationaland

fnancialreview

Sustainability

Financialstatement

s

Shareholderinorma

tion

Contents

03 Group overview

04 Profle

06 Structure and ootprint

08 Strategy

09 Key statistics

10 Interacting with stakeholders

11 Risk and opportunities summary

14 Chairmans statement

16 Board o directors

20 Executive committee

23 Perormance review

24 Group president and chie executive ocers report

28 Group chie fnancial ocers report

33 Operational and fnancial review

34 Five-year fnancial review

38 Operational perormance: South Arica

40 Operational perormance: Nigeria

42 Operational perormance: Iran

44 Operational perormance: Ghana

46 Operational perormance: Syria

49 Sustainability

50 Governance highlights

58 People and remuneration report74 Social and environmental report

81 Annual fnancial statements

83 Statutory certifcates and reports

88 Directors report

92 Annual fnancial statements

210 Glossary terms and acronyms

213 Notice o the AGM and shareholders

inormation

Scope and boundary o this report

MTNs integrated business report is available annually,

at least 15 business days ahead o its AGM, which is

scheduled to be held on 29 May 2012. The 2011 report

covers the period rom 1 January 2011 to 31 December2011. It provides a general narrative on the perormance

o the Groups businesses across 21 markets in the

Middle East and Arica, but ocuses its more detailed

commentary on the perormance o its main businesses

in South Arica, Nigeria, Iran, Ghana and Syria. This report

also includes the Groups consolidated annual fnancial

statements. The 2010 report was posted to shareholders

on 27 May 2011.

Group subscribers up16,2%

164,5 million

EBITDA margin up by 3,4 percentagepoints

44,9%

Adjusted HEPS up 43,2%

1 070,0 cents

Including proft rom sale o Ghana towers

Final dividendper share

476 cents

Dividend payout ratio increased to

70%

Share buybackcompleted

R927,3 million


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Background

As part o its transormation agenda, the Nigerian government

committed to accelerating economic growth in rural areas, where

citizens comprise 50% o the countrys population. Notionally less

than 30% o energy is supplied via grid power. MTN Nigeria set

itsel a target to increase rural mobile communication coverage

and reduce dependency on diesel by over 50% by 2020. MTN

Nigeria recognised that it could deepen its service oering while

helping the government realise its objectives.

Solution

MTN undertook to provide telecommunication access to

850 villages across Nigeria. Phase 1 is complete: 280 base

transceiver sites provide telecommunication services to

350 villages. MTN is implementing network sites using an

architecture methodology called ully meshed satellite

networks which reduces the need to hop across connection

points or networks at the last mile, thereby reducing

communication costs and improving the quality o voice calls.

Solar and hybrid solutions displaced the traditional use o diesel

to provide power to both s ites and villages.

Climate-riendly network and communitypower to close the digital divide


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Groupoverview

Perormancereview

Operationaland

fnancialreview

Sustainability

Financialstatement

s

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tion

Group overview

Profle

Structure and ootprint

Strategy

Key statistics

Interacting with stakeholders

Risk and opportunities summaryChairmans statement

Board o directors

Executive committee


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Profle

Botswana, Namibia and Kenya. In

2011, MTN SEA made up 37% o

Group revenue and 29%

o Group EBITDA.*

MTN WECA, comprising MTN

Nigeria, MTN Ghana, MTN

Cameroon, MTN Cte dIvoire,

MTN Congo-Brazzaville,

MTN Benin, MTN Guinea-Bissau,

MTN Guinea Conakry (trading

under the Areeba brand) and

MTN Liberia (trading under

Lonestar Cell brand). The Group

has GSM licences in all these

countries. It also has ISP

businesses in Nigeria, Cameroon,Cte dIvoire and Ghana. In 2011,

MTN WECA contributed 43% to

Group revenue and 54% to Group

EBITDA.*

MTN MENA, consisting o MTN

Irancell, MTN Syria, MTN Sudan,

MTN Aghanistan, MTN Yemen

and MTN Cyprus. The Group


countries. MTN also has ISP

businesses in Syria and Cyprus.

In 2011, MTN MENA made up

20% o Group revenue and 15%

o Group EBITDA.*

* Note: dierence in EBITDA percentagecalculation is due to head oce costs.

ibia

mpris

Ghana, MTN

n, MTN Cte d Ivoire,

ongo-Brazzaville,

Beni uinea-Bissau,

TN G

und

a

and 29%

A

n

oup 3

.*

MTN

Until recently, the Group organised

its operations into three regions:

South and East Arica (SEA), West

and Central Arica (WECA), and the

Middle East and North Arica

(MENA). It currently discloses

detailed inormation on its fve

largest markets: South Arica,

Nigeria, Iran, Ghana and Syria.

From April 2012, a new organisational

structure will be in place, better

reecting the contribution o the

various markets and helping to

optimise the business at a Group

level. This replaces the three regionalvice presidents reporting to the

Group President and CEO, with the

CEOs o South Arica and Nigeria and

a chie operations executive,

supported by an operations

executive. For the purposes o the

2011 fnancial year, the three regions

were the ollowing:

MTN SEA, made up o MTN South

Arica, MTN Zambia, MTN Uganda,

MTN Rwanda, MTN Swaziland and

Mascom Botswana. The Group


countries. It also has ISP

businesses in South Arica,

Zambia, Uganda, Rwanda,

investments in metropolitan and

long-distance fbre optic cables.

MTN continues accessing more

broadband capacity on undersea

cables.

MTNs vision is to be the leader in

telecommunications in emerging

markets.

It has 24 252 permanentemployees representingaround 55 nationalitiesand conductsits business in fve

dierent languages.

In 2011, MTN invested R265 million

in developing its employees,

mainly through the MTN Academies

established in Johannesburg, Accra

and Dubai.

MTNs head oce is in

Johannesburg, South Arica, where

the Group is listed on the JSE Limited

under the share code MTN.

MTN is the largestprimary listing on theJSE.

Incorporated in 1994, MTN Group

Limited is a multinational

telecommunications company

oering mobile communication and

related products and services to

individuals and businesses on three

continents. MTN has mobile licences

in 21 countries and internet serviceprovider (ISP) businesses in

13 countries, mostly in Arica and

the Middle East.

Recently, in additionto its mobilecommunications

business, it has alsoestablished partnerships,associates and jointventures to growrevenue and maintaincosts.

MTN is also invested in tower

management companies in Ghanaand Uganda. At the end o

December 2011, MTN had

164,5 million subscribers. In 2011,

total revenues reached R121,9 billion

and during the year the Group

invested R17,7 billion in developing

its network inrastructure. Included

in capital expenditure are


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Groupoverview

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Operationaland

fnancialreview

Sustainability

Financialstatements

Shareholderinormation

MTNs core oerings include:

Voice services

Voice services via 2G and 3G networks, including prepaid and postpaid airtime.

Although the majority o MTN customers are on prepaid packages, South Arica, Syria and Cyprus have a relatively large postpaid base.

MTN Zone is a dynamic taring service pioneered successully by MTN. The service oers discounted call rates based on network use and

available capacity.

MTNs voice oering also includes international roaming, teleconerencing acilities and various community payphones models.

MTN also provides interconnectionservices to other telecoms networks.

Data services

Mobile and fxed data services via various technologies (including 3G, WiMax, EDGE, HSPA, HSDPA, WCDMA).

Mobile messaging, including basic short message services (SMS), and multimedia message services or MMS, enabling customers to send various

media including music, photographs and videos rom their phones.

MTN Mobile Money a cash transer service launched in 12 markets.

MTN Play content portal provides entertainment service.

MTN also has various USSD services (including callback and balance enquiries).

MTN customers can access the Opera Mini Browser in some markets, oering access to the web rom mobile phones.

MTN has also launched m-insurance and m-health services in some markets.

As smartphones become more accessible to people, demand or internet service grows and so does MTNs opportunity.

ICT

MTN Business provides enterprise solutions and cloud computing serv ices. In 13 o its markets, MTN serves large corporate customers, providing solutions designed to manage costs, improve eciencies and deliver

consistent quality.

Among these are: corporate data solutions, satellite connectivity, inrastructure (data centres and hosting solutions), networking o customerbranches (an MPLS network), videoconerencing and ePresence, customer and productivity solutions, system security, converged services, other support

and sector-specifc services, and cloud computing.


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Structure and ootprint

100%

100%

100%

100% Service provider

100% Business Solutions

30%MTN Swaziland

96% MTN Uganda

53% Mascom Botswana

80% MTN Rwanda

86% MTN Zambia

100% MTN South Arica

MTN Dubai

MTN Holdings

MTN International

MTN Mauritius

70% MTN Cameroon

78,7% MTN Nigeria

65% MTN Cte dIvoire

49% MTN Irancell

100% MTN Congo-Brazzaville

49% Uganda Tower Inter Co

100%

60% Lonestar Cell

75% Areeba

98% MTN Ghana

85% MTN Yemen

85% MTN Sudan

75% MTN Benin

75% MTN Syria

100% MTN Guinea Bissau

50% MTN Cyprus

91% MTN Aghanistan

Branded names.

20%Belgacom InternationalCarrier Services

49% Ghana Tower Inter Co


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Groupoverview

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fnancialreview

Sustainability

Financialstatements


Groupoverview

Operationaland

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Financialstatements


MTN Irancell (49%)

2012

Guidance 2011

Subscribers (000)** 38 681 34 681Revenue (Rm) 11 050

EBITDA margin (%) 42,5

Capital expenditure (Rm) 1 306 1 168

**100%

MTN Syria

2012

Guidance 2011

Subscribers (000) 6 166 5 716

Revenue (Rm) 6 463


Capital expenditure (Rm) 869 449

MTN South Arica

2012

Guidance 2011

Subscribers (000) 24 933 22 033Revenue (Rm) 38 597



MTN Nigeria

2012

Guidance 2011

Subscribers (000) 45 641 41 641

Revenue (Rm) 34 879



MTN Ghana

2012

Guidance 2011

Subscribers (000) 11 106 10 156Revenue (Rm) 5 941


Capital expenditure (Rm) 1 128 851

Key perormance indicators

Group

2012

Guidance 2011

Subscribers (000) 184 801 164 501

Revenue (Rm) 121 884



*Group presence through corporate oce.

*


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Strategy

In Country

Voiceservices Data and related services

ICT evolution

Convergence and operationalevolution

In country Changes in local ownership, business

modeland new licences and spectrum

Expanding ootprint Bolt-on standalone opportunities in Arica

and the Middle East remain a strategicpriority

Scale and size o opportunity Number one or two operator

Transormation Limited number o potential opportunities Execution risk high

Consolidation anddiversifcation

Leverage existing scale andintellectual capacity

Revenue Expenditure M&A

Cost optimisation initiatives Procurement transormation project Growth o IT shared services initiative

Inrastructure sharing strategy

Back oce centralisation

Implementation o hybrid power systems

to reduce dependence on diesel

R e t u r n s t o s h a r e h o l d e r s

Convergence andoperational evolution

Leverage existing scale

and intellectual capacity

Consolidation and

diversification


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Key statistics

2011 2010 % change

Countries in which MTN has GSM licences1 21 21

Subscriber numbers (million) 164,5 141,6 16,2%

Countries in which MTN has largest market share 15 15

Market capitalisation (billion) at end December R271 R253 7,1%

Dividend payout ratio70%

55% 15 pct pointsRevenue (billion) R121,9 R114,7 6,3%

Datas contribution to revenue2 6,6% 5,4% 1,2 pct points

EBITDA (billion) R54,8 R47,5 15,2%3

EBITDA margin4 44,9% 41,5% 3,4 pct points

Average oreign exchange rates (rand to local currency)

Nigerian naira 21,76 20,67 (5,3%)

Ghanaian cedi 0,21 0,20 (5%)

Iranian rial 1 474 1 401 (5,2%)

Average rand/dollar rate 7,17 7,34 2,3%

Capital expenditure (billion) R17,7 R19,5 (9,2%)

Internal audit hours 166 000 130 000 27,7%

Employees5 24 252 26 055 (6,9%)

Investment in employee training (million) R265 R246 (7,7%)

CO2

emissions rom energy use (tonnes) 950 564 1 127 254 (15,7%)

Scope 1 direct emissions (tonnes) 536 541 743 646

Scope 2 indirect emissions (tonnes) 407 492 378 869

Scope 3 emissions (tonnes) 6 531 4 739

Countries in which MTN deploys alternative energy 14 14

Investment by MTN oundations R125 million R155 million (19,4%)

Brand value (million) $5 200 $4 920 5,7%

Note 1: Although MTN o perates in South Sudan it has no t yet been ormally granted its licence

Note 2: Excluding SMS revenue

Note 3: Percentage change calculated with ull EBITDA number

Note 4: 2011 fgure includes the proft rom the sale o the Ghana towers and the 2010 fgure excludes the MTN Zakhele transaction

Note 5: 2010 fgure was adjusted to exclude maintenance sta contracted to MTN who had previously been erroneously included in the sta number


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Interacting with stakeholders

The mobile communications

industry is heavily regulated. In

many countries, it provides key

inrastructure essential to economic

development as a de acto provider

o communications services and is

a large national taxpayer and a

signifcant employer. For these

reasons alone, engagement with awide spectrum o stakeholders is

important.

In 2011, MTN, including its board

members, made progress on

stakeholder engagement and input.

A stakeholder ramework, which

aims to better track and ormalise

stakeholder engagement and input,

will ultimately be rolled outthroughout the Group and its

operating companies. It takes into

account policies and principles

defned in King III and the AA 1000

Stakeholder Engagement Standard

and Inormation Privacy: Fair

Inormation Practices and Principles

(FTC, 1999).

In our 2010 report we identifedsome o our key stakeholders.

This year, we provide a ew select

examples o new initiatives to build

on these relationships.

Employees

We launched a new employee value

proposition and a new approach to

managing leadership talent. Further

details are contained in the people

and people and remuneration

report on pages 58 73.

Regulators

MTN has always prioritised

constructive engagement with

regulators and continues to build on

this in light o increased regulation

and its impact across our ootprint.

Government bodies

MTN closely guards its

independence. However, it

recognises the importance o

balancing this with appropriate

engagement with key government

bodies by the right people rom

MTN. The signifcance o this

engagement has recently beenhighlighted by the increase in

Western sanctions against certain

o our operating countries.

The media

MTN recognises the important role

o the media in our communication

with all stakeholders. The Group

is adopting a more proactive

approach to this engagement bothat a Group and local level.

NGOs

The new social and ethics

committee will provide guidance

on dealing with the challenges o

operating in high-risk countries as

well as better engaging with key

players on a broad spectrum o

issues.

Shareholders and the investor

community

During the year, we established a

new ormat o engagement with

our larger investors. In line with best

practice, the chairman and the

lead independent director gained

valuable frst-hand insight into their

views during these meetings. Wealso introduced a new orum or

sell-side analysts which is held

regularly ater the release o the

hal- and ull-year fnancial results.

These meetings have been well

attended by our senior executives

and a wide range o equity analysts

rom leading research houses.

CustomersAs competition increases, we

recognise the importance o better

understanding our customers needs

and their behaviour. To this end,

we are enhancing our business

intelligence tools and use thereo.

Distributors

Engagement with distributors is

managed on a country-by-countrybasis, through established corporate

structures.

Suppliers and business partners

The transormation o our

procurement processes has led

to a more centralised and

closer engagement with original

equipment manuacturers and other

key suppliers. The role and strategic

nature o our business partners such

as the tower companies have

undamentally changed as our

business model evolves.

Competitors

As markets mature, industry orums

have become more prevalent.As the leading mobile operator in

15 markets, MTN takes its role in

such groupings seriously, without

compromising issues o

competition.

Local communities and the

general public

As evidenced in this report, our

contribution to economic, socialand environmental sustainability

continues to grow and extends

well beyond our basic commercial

mandate. This is inormed by ormally

communicated government priorities

and the needs o the general public,

channelled through various

touchpoints with the organisation,

including our oundations, corporate

aairs departments and sta.

Ratings agencies

We assist key ratings agencies in

better understanding our business

and corporate structure. This is

managed ormally through regular

meetings.


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Low

Low

Hig

h

Customercentric approach

Costoptimisation

Slowingrevenue

Capital investments

Skilled humanresources

Governance

and control

Increasedregulations

Currencies

High-risk countries

Environmental andsocial considerations

Risk and opportunities summary

AdvancedowLimited

Progress o mitigation o risk or optimisation o opportunity

Degreeofcontrol


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Integrated risks and opportunities

12MTN Group Limited Integrated Business Report or the year ended 31 December 2011

Risk Opportunity (including socio-economic andenvironmental development)

Sustainable mitigation

Exposure to currencies other than

reporting currency (ZAR) impacting

reported fnancial results and

servicing oreign-denominated

obligations

Fluctuations in the exchange rate can be

avourable to reported rand results and

servicing o obligations

Contribution to the development o the

local banking industry

Upstreaming o cash Ecient local balance sheets

Local currency unding strategy, including gearing and upstreaming

principles

Management o oreign-denominated assets and liabilities to

minimise impact

Treasury policy and committee oversight or risk management A sustainable payout ratio coupled with opportunistic buybacks

Exposure to higher risk countries

Challenges include but not limited

to poor inrastructure, political and

social unrest, sanctions, irrational

competition and violations o

human rights

Potentially higher reward and scope or

growth

Provide key communications inrastructure

Grow ormal economy, bring transparency,

accountability and corporate structure

Commitment to support local ownership

Enterprise development

Opportunistic diversifcation o the portolio

Independent and dedicated risk management team which monitors

country risks and business continuity

Appropriate governance structures

MTN adopts a neutral stance although does engage through a

dedicated stakeholder unction

Ongoing vigilance in respect o sanctions compliance through legal

support and appropriate policies and controls

Social and ethics committee provides direction or decisions on socialand ethical challenges

Increased regulatory requirements

impacting commercial business

Sucient spectrum key or providing

new products in line with evolving

sector

Imposed taxes impacting proftability

Communications is a key element o

inrastructure to a country

Proactive engagement with regulators

contributing to the development o the

sector given the experience and credibility

o operating across multi-jurisdictions

Oten the largest national taxpayer

Continued constructive and transparent engagement with authorities

at a Group and country level to ensure the success o social and

commercial imperatives

Group-wide tax risk management process to proactively as well as

reactively consider the implications o changing legislation

Local market equity and credit exposure to MTN reduces the risk o

irrational behaviour

Slowing revenue growth as a result

o increased voice penetration,

aggressive competition and

substitute products Go to market

strategies as the market

demand shits

Creating more aordable voice and data

technology solutions to lower-income

segments o the market

Broader social impact on related services in

line with data strategy include banking the

unbanked, health and relevant

social initiatives

Broader and deeper penetration o the traditional voice market

A coordinated implementation o new data and related services through

a dedicated Group Commercial Function

Investments in undersea cables will allow or cheaper broadband which

will in turn make data products more aordable and accessible

Evolution o the business into a ully edged ICT player


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Sustainability

Financialstatemen

ts

Shareholderinorm

ation

13MTN Group Limited Integrated Business Report or the year ended 31 December 2011

Risk Opportunity (including socio-economic andenvironmental development)

Sustainable mitigation

Eciently manage costs to oset impacto slowing revenue growth in order tosustain proftability levels

Enhancing shareholder value through themonetisation o assets

Creating eciencies allowing the Companyto maintain competitiveness and enhancespeed to market

Improved customer service Leverage scale and improve consistencyand standardisation

Managing costs across the supply chain to better respond to the evolvingbusiness model

Focus areas include: Rationalisation o suppliers through a centralised procurement unction Standardisation o network inrastructure or ecient launch o products

and services

Inrastructure sharing through the establishment o tower companies(Ghana and Uganda) Shared services, alternative energy, improving eciency o the distribution

channel, as well as tools such as ABC to leverage best practice

Shortage o skilled human resourcesin emerging markets exacerbated bycompetition in search o similar expertise.This results in high retention costs orexperienced sta

Sta advance their learning anddevelopment through dynamic nature obusiness

The diversity o the ootprint in terms o sizeo operations as well as location and maturityadds to the benefts MTN canoer employees

MTN strives to be an employer o choice Ongoing review and enhancement o retention incentives to sta Talent management programme headed by a talent board is aimed at

building leadership succession pools MTN Academys learning initiatives including the creation o a leadership

development programme

Timeous, eective and ecient capitalinvestments or the upgrading o networkand inormation technology (IT) to cateror subscriber acquisition and increasedtrac as a result o price reductions.Planning o networks and IT upgrades tocater or new product developments andensure an appropriate ROI

Inrastructure sharing addressingenvironmental issues including CO2challenges

Energy-ecient strategies including solarpowered base stations and engineeredsolution

Reductions in costs o network equipmentprovide an opportunity to penetrate lowerincome segments o the market

Networks are monitored continuously, ensuring quality andheadroom capacity

Standardisation and optimisation o systems and technologies togetherwith outsourcing o non-core activities provide reduced costs and ensurediscipline and ocus on critical business requirements

Inrastructure sharing Capital expenditure steering committees to drive the initiatives

implemented by the Groups CTIOs oce

A customer centric approach becomescritical as the business evolves. Keyelements include maintaining a positivebrand perception, broad availability oproducts and services, high quality and

consistent customer experience at allcustomer touchpoints

Enterprise development or localentrepreneurs

SME engagement Inormal distribution channels have created

job opportunities

Implementation o a streamlined distribution ramework which includes anenhanced and eective ootprint to ensure broad and deep distribution

Customer service also orms part o the distribution ramework andincludes the regular training or store and call centre sta on newdevelopments relating to products and services. This is aimed at enhancing

customer experience

Governance and control is critical inall areas to maintain proftability andbusiness continuity. Implementation oprocedures o mature and well-controlledprocesses is key

Adequate governance gives comort andconfdence to stakeholders across the valuechain when dealing with MTN

Maturity o MTNs control environment and governance structurescontinues to improve although there will always be areas o particular ocus

Comprehensive governance and oversight structures exist including auditcommittees, risk committees, internal audit, raud prevention and riskmanagement measures covering all OPCOs

MTN has done a comprehensive assessment o the King III requirementsincluding combined assurance, IT governance and integrated reporting

Integrating environmental and socialconsiderationsin business activitiesensuring MTN is responsible and sensitiveto the impact o the environment andsociety when conducting business

Reducing MTNs environmental impact acrossoperations and value chain

Contributing to the social uplitment and

development o communities

Environmental impacts are addressed cross unctionally and includeinrastructure sharing which reduces MTN carbon ootprint, energy-ecientsolutions, e-waste management and managing EMF and RF feld responsibly

Social development is inherent in the nature o the business and is addressedby providing products and services that are value enhancing to society.MTNs operations invest in communities through MTN Foundations ocusedon education, health and other social and economic uplitment projects


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CyrilRamaphosaChairman

Recognising the challenges

o change

The Greek philosopher Heraclitus i s

credited with saying that the only

constant is change. At MTN we have

seen remarkable change in the past

decade and even in the past year.

Emerging economies across Arica

and the Middle East have grown

rapidly, providing an opportunity

to reap attractive returns or those

willing to invest in what traditionally

have been considered high-risk

markets. Several countries in the

region have experienced political

and social volatility, most notably

since the start o the Arab Spring

in 2010. The increased ease o

communication can be credited,

at least in part, or both the rate o

economic development and the

political change we have seen.

Mobile telephony in particular has

been an empowering and liberating

orce throughout the emerging

world.

At a sustainable energy conerence

in January, UN Secretary-General

Ban Ki-moon put it plainly: The

phenomenal spread o mobile

phone technology has touched

every corner o the world and

empowered billions o people

a direct result o innovation,

investment and government

support.

It is air to say that MTN has played a

undamental role in the economic

and social development in the

countries in which it operates. It, too,

has benefted rom its investments.

Its ambition is to speed up the

progress o the emerging world by

enriching the lives o its people. The

Company is committed to urthering

this journey by expanding its

oering beyond just voice to more

sophisticated services. Numerous

studies show that the eects o

mobile telephony on economic

growth are already signifcantly

stronger in developing countries

than in developed markets: just

imagine what the impact will be o

greater wireless internet access, not

to mention services such as mobile

banking, all driving development.

Apart rom the eect on society,

MTNs strategy to pursue

investments in emerging markets

has provided considerable value or

the Company. With a market

capitalisation o R271 billion at the

end o 2011, MTN is the largest

primary listed company on the JSE,

a key indicator o its success.

Ensuring sound governance

For MTN, sound governance and

a strict code o conduct are

undamental to the way we do

business. Because o the dierent

dynamics across MTNs 21 markets,

most risks are managed in-country

through dedicated local stakeholder

teams under the best practice

guidance o the Group.

Chairmans statement


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contribution in 2011. During the

year, we said goodbye to Phuthuma

Nhleko as Group president and CEO

and to independent non-executive

director Doug Band. Sifso

Dabengwa was welcomed as

incoming Group president and CEO.

He takes over as a new era o

telecommunications is beginning,requiring an evolution o the

business to changing customer

demands while maintaining an

appropriate cost base.

Following the decision last year not

to orm a ormalised subsidiary

company board or the international

operations, Phuthuma Nhleko will

not be rejoining the MTN Group board.

Looking orward

I have no doubt the year ahead

will bring new opportunities,

which will no doubt come with new

challenges. While the economic and

political outlook is quite cautious,

I am confdent that MTN will

continue to strive towards

overcoming the obstacles while

increasing returns to shareholders.

Cyril Ramaphosa

Chairman

March 2012

MTN has as its core value the

imperative to respect the human

and privacy rights o people in all

the markets in which we operate.

These rights are entrenched in the

terms o reerence o the boards

newly ormed social and ethics

committee and defned as the 10

principles set out in the UN GlobalCompact Principles. We oppose

abuse o these rights by any party,

including governments, and work

hard to ensure that our businesses

do not contribute to such abuse.

South Arica has human rights

enshrined as a undamental

principle within its constitution.

Given the countrys own recent

history and our struggle against

suppression and discrimination,

we are very conscious o our moral

obligations.

Following our announcement on

2 February 2012 o a potential claim

by Turkcell and allegations made

against MTN, the Group board has

proactively responded by settingup the independent Homann

Committee. The committee has

already started its work. Lord

Homann is a ormer senior British

judge, with the highest reputation

or independence. His ull and

detailed investigation will provide

the board with deeper

understanding o the matter.

MTN will address the

recommendations made by the

Committee at the end o that process.

Engaging transparently

Engagement is important, especially

as telecommunications is a regulated

industry. MTN works to ensure

transparency with governmentbodies and regulators, enabling a

balance between the commercial

and social success o the industry

and the vital inrastructure

it provides.

Local ownership is essential to

the commercial interests o

MTN companies by ensuring local

insight and understanding, but is

also valuable in ostering local

economic participation and

empowerment.

In 2011, the Group continued its

ongoing engagement with its many

stakeholders, urthering real

partnerships with key suppliers and

other business associates, anddeveloping its employees to ensure

that they can advance their careers.

MTN also worked harder to

understand peoples needs and to

better deliver on them, considering

existing as well as potential

customers. The Group accelerated its

eorts to engage with regulators on

the requirements or more inclusive

mobile communications that help

bridge the digital divide. Access to

sucient radio spectrum is vital to

continued growth.

Personally, I ound the meetings

ellow director Alan van Biljon and

I held with large investors very

useul, giving us an opportunity tohear shareholders views frst hand.

It mirrored eorts throughout

the Group or more interaction

with stakeholders.

Accomplishing much in 2011

In 2011, MTN accomplished a great

deal. The Group achieved a sound

operational perormance under

challenging conditions. Recognising

the strength o the balance sheet

and the continued healthy cash

ows, the board decided to increase

the dividend payout policy to 70% o

annual adjusted headline earnings

per share, up rom 55% a year beore

and 25% the year beore that.

The Group also took urther stepsin its journey to produce a more

integrated business report that

provides meaningul inormation

about all aspects o MTNs

perormance and position.

Appreciation

I would like to thank the board and

management team or their


18/236

Group board o directorsat 31 December 2011


1.

2.

4.

6.

Cyril Ramaphosa

Alan Harper

Peter Mageza

Alan van Biljon

Koosum Kalyan

Sifso Dabengwa

3.

5.

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7.

10.

11.

12.

Dawn Marole

9.

JJ Njeke

Jan Strydom

Nazir Patel

Je van Rooyen

8.

Azmi Mikati

12.


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Other directorships

Director o various companies in the

MTN Group.

Skills, expertise and experience

Nazir is a qualifed chartered accountant

with wide international experience

in Europe and the Middle East. Since

joining the MTN Group, Nazir has been

responsible or the Group fnancial

management and accounting unction,

has participated in several o the Groupsmerger and acquisition activities and

serves on a number o MTNs subsidiary

boards.

11. J van Rooyen (62) |

BCom, BCompt (Hons), CA(SA)

Independent non-executive director

Appointed: 1 July 2006

Board committee membership

Chairman o the risk management,

compliance and corporate governance

committee Audit committee

Social and ethics committee*

Other directorships


MTN Group, various companies in the

Uranus Group, Pick n Pay Stores Limited,

Exxaro Resources Limited and a trustee

o the International Financial Reporting

Standards (IFRS) Foundation.


Je is a ounder member and CEO o

Uranus Investment Holdings (Pty) Ltd andpreviously served as CEO o the Financial

Services Board. He is also a ounder

member and ormer president o the

Association or the Advancement o Black

Accountants (ABASA) and was chairperson

o the Public Accountants and Auditors

Board in 1995.

12. JHN Strydom (73) |

MCom (Acc), CA(SA)

Non-executive director

Appointed: 1 March 2004


Audit committee

Risk management, compliance and

corporate governance committee


Other directorships

Non-executive director o variouscompanies in the MTN Group, director o

the Public Investment Corporation Limited

and Growthpoint Properties Limited.


Jan is a registered chartered accountant

and a ounding partner o Strydoms

Incorporated Chartered Accountants

(SA), a frm specialising in business

valuations, litigation support and orensic

investigations. He is now a proessional

consultant to Strydoms. He is also a senior

member o the Special Income Tax Courtor taxation appeals.

QIndependent non-executivedirectors 8

QNon-executive directors 2

QExecutive directors 2

Group boardindependence status

7. MLD Marole (51) |

BCom (Acc), Dip Tertiary Education,

MBA, Executive Leadership

Development Programme


Appointed: 1 January 2010


Risk management, compliance

corporate governance committee


Other directorshipsDirector o various companies in the

MTN Group, Arican Bank Investments

Limited, Incwala Resources (Pty) Ltd,

Eyomhlaba Investment Holdings Limited,

Hlumisa Investment Holdings Limited,

Richards Bay Titanium (Pty) Ltd, R ichards

Bay Mining (Pty) Limited and DEMA

Incwala Investment.


Dawns career has primarily been in the

fnancial services sector and dates back

to 1983. She is the current chairperson oPOWA (People Opposing Women Abuse).

8. AT Mikati (39) (Lebanese) |

BSc

Non-executive director

Appointed: 1 July 2006


Nominations committee

Remuneration and human resources

Other directorships


MTN Group, CEO o M1 Group Limited

(an international investment group with a

strong ocus on the telecommunications

industry), director o various companies

in the M1 Group as well as EZ-Link, B-Pro

Limited, B-Jet Limited, Horizon Global

Services, IMC, Mint Trading, Unioil and

Facconable Group.


Azmi ounded T-One, a telecoms company

providing long-distance services between

the United States and other international

destinations.

9. MJN Njeke (53) |

BCom, BCompt (Hons), CA(SA), H Dip

Tax Law


Appointed: 1 June 2006


Risk management, compliance and

corporate governance committee Audit committee

Other directorships


MTN Group, Lengau Logistics (Pty) Ltd,

ArcelorMittal SA, Ivolve Procurement &

Rental Partner, Metropolitan Health Group,

MMI Holdings Limited, NM Rothschild

and Sons (SA) (Pty) Ltd, PSU Revenue

Management trading as PSU International,

RTG Fleet Services (Pty) Ltd, Resilient

Property Income Fund Limited, Serengeti

Properties (Pty) Ltd, Salvage Managementand Disposal (SMD), Sameh Properties and

Silver Unicorn Trading, Sasol Limited.


Johnson is chairman o MMI Holdings Ltd,

ArcelorMittal SA and Resilient Property

Income Fund. He served as a partner at

PricewaterhouseCoopers and is a past

chairman o the South Arican Institute o

Chartered Accountants.

10. NI Patel (54) |

BCom, BCompt (Hons), CA(SA)Executive director: Group chie fnancial

ocer

Appointed: 29 November 2009


Group executive and steering

committee

Attends various board committee

meetings ex ocio

*Social and ethics committee constituted in 2012.


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Group executive and steering committeeat 31 December 2011

1.

2.

3.

4.

5.6.

7.

8.

9.10.

Sifso Dabengwa

Nazir Patel

Christian de Faria

Jamal RamadanIgnatius Sehoole

Khumo Shuenyane

Ahmad Farroukh

Shauket Fakie

Jyoti Desai

Paul Norman

ew


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*Profles appear on pages 18 to 19 o this report.

**Retired in March 2012.

1. RS Dabengwa *

2. NI Patel *

3. C de Faria (55) (French) |Degree in Finance

Administration (CA)

Group chie commercial ocer

Directorships

Director o various companies in theMTN Group.


Prior to joining MTN in 2006, Chr istian

was CEO o PT Excelcomindo Pratama,

known as XL, the largest mobile operator

in Indonesia. Beore joining XL, he was

CEO o Telekom Malaysia International,

now known as Axiata, and was

responsible or international strategy and

involved in the rapid growth o

investments in Sri Lanka, Bangladesh andCambodia. From June 2006 to May 2010,

Christian was the vice-president or MTN

West and Central Arica. Since June 2010

he has had the responsibility or the

transormation o the supply chain

unction. He is leading the way in

products, services and innovation at

Group level as well as being responsible

or Group marketing.

4. S Fakie (58) |

BCom, BCompt (Hons), CA(SA)

Group chie business risk ocer

Directorships

Director o various companies in the MTN

Group and director o Absa Group Limited.


Shauket has over 37 years experience in

accounting, auditing, consulting and

advisory work. In 1999, he was appointed

Auditor-General o South Arica or a

seven-year term which ended in

November 2006.

5. JA Desai (54) |BA (Hons) BCom

Group chie technology and inormation

ocer

Other committee membership

Group commercial committee

Group technical committee

Directorships


MTN Group.


Jyoti started her career at The Standard

Bank o SA Limited. She moved to Telkom

SA in an executive position beore joining

MTN Nigeria as chie inormation ocer.

She then moved to Iran in 2005 to start

up the Iran operation as COO o MTN

Irancell beore taking up her current role.

6. PD Norman (46) |MA (Psych)

Group chie human resources and corporate

aairs ocer


Risk committee

Social and ethics committee

Group tender committee (Alternate

member)

Directorships

Director o various companies in theMTN Group and trustee o the Chartered

Accountants Medical Aid Fund.


Paul has been an executive at MTN since

1997. He has spent more than 20 years in

the feld o human resources and has

worked extensively in the transport and

telecommunications industries.

7. A Farroukh (51) (Canadian)|Masters in Business Administration

& Accounting and also a Certifed

Public Accountant in the USA

Regional vice-president: West and Central

Arica region


Commercial committee

Directorships


MTN Group.


Ahmad previously worked or

Mediterranean Investor Group, KPMG,

Deloitte & Touche and the Investcom

Holding Group. Ahmad also lectured in

Accounting at the American University o

Beirut. Prior to his appointment at MTN,

Ahmad was managing director o

Scancom Limited (Investcom Holding

Group), Ghana and regional manager or

West Arica. Prior to taking on his currentrole, Ahmad was the CEO o MTN Nigeria.

8. KL Shuenyane (41) |B Econ and Internat Stud;

CA (England and Wales)

Group chie strategy, mergers and

acquisitions ocer

Directorships


MTN Group.

Skills, expertise and experienceKhumo was previously head o direct

investments and a member o the

executive committee o Investecs South

Arican operations. He was also a member

o Investecs corporate fnance division.

9. I Sehoole (51) |BCom, BCompt (Hons), CA (SA), Cert

in Theory o Accountancy

Regional vice-president South and East

Arica region


Group tender committee

Directorships


MTN Group and o the Public Investment

Corporation (PIC) and Accounting

Standards Board.


Ignatius also serves on various

committees within the PIC. He was the

chairman o the Developing Nations

Committee o the International

Federation o Accountants (IFAC). He was

previously a managing director o the

inland region at Fedics (Pty) Limited,

senior executive at Murray & Roberts

Holdings (Pty) Limited and also theexecutive president o the South Arican

Institute o Chartered Accountants

(SAICA). Ignatius served as a member o

the King Committee and was also the

chairman o the National Treasury Audit

Committee until March 2010.

10. J Ramadan (56)** |(French and Lebanese) |MA (In Tech)

Regional vice-president Middle East and

North Arica region


Group technical committee

Group tender committee

Directorships


MTN Group.


Jamal was an executive director o

Investcom LLC, which he joined in 1996

as operations director. Prior to that, he

was director o IT and FTML (a subsidiary

o France Telecom) operating in Lebanon.


24/236

Background

Agriculture is a critical contributor to Aricas GDP, and povertyreduction. ICT can help improve the output, value, and impact

o agriculture in Arica. The agricultural industry is the backbone

o economic development in Ghana.

Solution

MTN Ghana and Esoko partnered to provide agricultural

inormation to MTN customers through SMS services at a cost

o 8p per text. Customers can request or inormation such as

produce price alerts, bids and oers, and news and advisories,using a short code. Customers can also access inventory counts

and transport inormation. This solution oers a platorm or

armers and agricultural enterprises to interact with their

customers. The benefts include increased eectiveness,

productivity and sustainability o income generation.

Facilitating agricultural market growth


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Group president and CEOs report

MTNs long-term vision is to be the

leader in telecommunications in

emerging markets. In 2011, the

Group made good progress towards

achieving this with a solid overall

perormance, while it refned its

strategic objectives in light o

evolving market dynamics.

Key to our vision is our customers.

Increased ocus and attention on all

aspects o the customer experience

are undamental to us and are

evident in all o the main strategic

objectives discussed below.

Maintaining and increasing

our leadership position

Subscriber numbers increased

16,2% to 164,5 million across

21 markets, helping bring more

people closer together. At the same

time, MTN increased its EBITDA

margin to 44,9%, including the proft

rom the sale o the Ghana passive

inrastructure (rom 41,5% in 2010).

This perormance was

notwithstanding a stronger rand in

the year, which depressed oreign

earnings when translated back into

MTNs reporting currency. Despite

heightened competition, the Group

maintained its leadership position in

most o its markets and remains the

largest mobile communication

provider in 15 countries.

Being a leader is not only about

subscribers. Superior service, network

quality and coverage as well as the

best value proposition in the market

are absolutely critical to business

success. Solid and reliable distributors

are also vital. With increasing demands

rom authorities everywhere, clearcommunication channels with

regulators are also important.

MTN understands that it needs to

work to maintain its strong brand

preerence by meeting customers

expectations or innovative and

broader service oerings and by

being frst to market. MTN

employees are rewarded or

meeting targets related to all these

goals. It is not without its challenges.

In the frst quarter o the year,

MTN Nigerias network quality was

impacted temporarily by a large

promotion which boosted tracvolumes. To maintain network

quality, the company which

marked 10 years o operating in

Nigeria in the year had to

withdraw the promotion. Again

towards the end o the year, network

quality was compromised as trac

volumes increased ollowing pricing

competition in the market. But

MTN acted quickly and decisively by

ocusing on immediate quick wins

including the redistribution o

capacity and the establishment o

cross unctional teams in the regions

to intervene and resolve site issues.

As we move orward we will ocus

on providing a balance betweenmaintaining sound quality levels

and increased demands or services

rom the subscriber base.

In 2011, MTN invested R17,7 billion

on developing network inra-

structure across its ootprint, to

ensure network quality and capacity.

This is below 2010s R19,5 billion


Sifso DabengwaGroup president and CEO

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Close partnerships at a Group

level with original equipment

manuacturers o handsets; MTNs

ocus on getting more data-capable

devices into the hands o customers

(without subsidies); its strong brand;

and its customer segmentation

model puts it in a solid position to

increase revenues rom data services

in the year ahead. The latter allows

the Group to have a segmented

tailored approach to each o the

identifed customer groupings.

Richer and more relevant content

and services are also very important.

MTN estimates that some 60%

o the data downloads on

MTN subscribers mobiles is local

content. This underscores the

importance o continuing to

develop good local content, make

access easier and improve on quality

and price.

At the end o 2011, 6,0 million

people in 12 countries were

registered MTN Mobile Money

subscribers. Uganda and Ghana

accounted or the lions share.

This compares to 4,3 million in

11 markets in 2010. In Uganda,

some $200 million a month is

transacted through Mobile Money.

Its popularity had a signifcant

impact on limiting churn. Equally

important is the role o Mobile

ater peak spending o R30 billion in

2008/2009 laid a solid oundation.

We continue to monitor our markets

to ensure that capital spending is

appropriate.

Revenue rom traditional voice

calls remains the largest revenue

contributor. There is still potential to

grow this as well as augment the

Groups voice oerings. Incoming

interconnect revenue grew in the

year in key countries such as Nigeria

and Ghana as competitors ocused

on an all-net tari strategy. In South

Arica, incoming interconnect

revenue continued to drop as the

price per minute declined in line

with the pre-determined glide path

to lower mobile termination rates.

The higher subscriber base in the

year, as well as many enhanced

oerings, helped lit Group revenues

6,3% to R121,9 billion and expand

the Groups earnings beore interest,

taxation, depreciation and

amortisation (EBITDA) to

R54,75 billion.

Data and the implementation

o a ull ICT oering

MTN moved ahead with plans

to implement a ull ICT oering.

Central to a comprehensive ICT

service is to ensure that the Group

has made the appropriate capital

investments and has the right skills

to execute this strategic objective.

The Group is already connected to

two other submarine cables: the

Eastern Arica Submarine Cable

System (EASSy) and the Europe India

Gateway (EIG). These cables, as well

as MTNs investment in the West

Arican Cable System (WACS) and

various metropolitan and national

fbre optic cables, support new or

enhanced data oerings.

Data revenues percentage

contribution to MTNs total revenue

remains relatively low (in single

digits, excluding SMS) in all our

markets except or South Arica and

Iran. But it is growing. For the Group,

data revenue grew by 30,5% while

SMS revenue grew by 14,2% to

total 12,8% o revenue on a

combined basis. In South Arica,

where the market is more mature

and MTN subscribers have

3,6 million smartphones, total data

revenue, including SMS, rose to

21,4% (total revenue excluding

revenue rom handsets). In Iran it

was 23,2%, up 2,4 percentage

points. However data in Iran is

almost entirely rom SMS. MTNs

Nigerian operation more than

doubled revenue rom data services

and total revenue (including SMS)

increased to 6% rom 4,6% as the

Company encouraged the use o

smartphones.

In the year, MTN continued to invest

in various transmission and radio

technologies, rom undersea and

metropolitan fbre optic cables to

2G, 3G and WiMax. It established the

role o Group chie commercial

ocer, to which Christian de Faria

was appointed.

In addition, within the South Arican

group o companies, MTN Business

Solutions has provided a valuable

platorm or the development o ICT

services on the corporate side. It is

our intention to leverage this

capability urther across the

ootprint. However, the more

sophisticated products o a ull ICT

strategy, such as managed network

services, managed hosted services

in the cloud and M2M, are in initial

stages o development. Access

remains the key oering or most

people across our ootprint.

The launch in the year o the Main

One undersea cable led to a drop in

transmission costs in West Arica. In

particular, MTN Nigerias access to

the fbre optic cable system linking

West Arica to Europe is helping the

Company deliver greater broadband

capacity at a reduced cost to

customers. This provides more

inclusive access to new data services

and greater capacity and availability

o networks.


28/236


Employees who make an

outstanding contribution to the

Group are rewarded every year

through the Yello Stars programme.

Employees also take great

satisaction in volunteering or

those less ortunate in the Groups

annual 21 Days o Yello Care

volunteerism eort. Many enjoy

moving between operations to

share their knowledge while

developing their careers. The Group

spent R265 million on training in

the year.

Increasing returns to

shareholders

A central pillar o MTNs strategy

is to increase cash returns to

shareholders while continuing to

expand its business and invest in

better, aster networks across a wider

geography. Management targets

improving cash ow, to ensure that

the management ees and dividends

earned in MTN operations ow back

to the Group in an ecient way.

Using both ordinary dividends and

share buybacks, MTN is able to return

cash to shareholders as part o a

sustained returns strategy. During

the year, MTN executed its frst share

buyback totalling R927,3 million.

While no decision has been made

to urther gear the Group balance

sheet, dividends on annual earnings

Money in enabling the purchase

and monetisation o content and

related services oerings. These

include insurance (such as the new

uneral insurance oering by MTN

Ghana) and health services, such as

providing medical advice to mobile

phone users, which enhance

customer loyalty and reduce churn.

MTNs recent partnership with Visa,

allows Mobile Money customers to

take advantage o the acceptance

o Visa payment methods across the

globe. MTN estimates that only a

fth o customers own a credit card.

To make paying easier, MTNs mobile

wallet allows the cost o a purchase

o or example an app to be

debited directly to subscribers

airtime. The Group recently

launched a trial at South Arican

universities allowing students to

pay or caeteria meals with

their mobiles.

While the increasing aordability

o data-capable handsets and the

growth in use o social media has

stimulated demand or data services,

the availability o the appropriate

spectrum allocation as well as 3G

licence is also vital. In all o MTNs

markets, teams dedicated to

engaging with regulators on this

essential issue are in place.

By reducing its cost base, MTN is

able to proftably service those

customers at the lower end o the

income scale and increase overall

access.

Since MTN initiated its centralised

procurement unction in late 2010,

the Group increased the number o

categories purchased centrally,

improving pricing across the board.

All MTNs operating companies

rom Aghanistan to Yemen are

ocused on enhancing their

customer service oerings; ensuring

eciency o the channels used

to distribute products and services;

and using their marketing

expenditure, capital investments

and their people eectively.

The Group recognises the

importance o properly skilled

employees who are motivated by

their work. As competitive activity

increases, demand or industry

talent grows, making retention

eorts that much more important.

In April the Group launched The

MTN Deal. This is a mutual

commitment between MTN and

its employees. It represents

MTNs pledge to understand,

develop career opportunities and

improve employment oering

beyond reward and recognition.

The Group recently established clear

targets throughout its operations

with regard to growing the

contribution o data to overall

revenues. These include a KPI on

data proftability.

Enhancing operational

eciency

As more mobile communications

licences are issued across

MTNs ootprint, and competition

intensifes, mobile operators need

to become more ecient in

everything they do. While many o

MTNs markets continue to grow,

many others are maturing as mobile

penetration rates move towards

100% and growth slows. The Group

understands that it needs to do

things more eciently.

Among several organisation-wide

initiatives are: the frst shared IT

services project (launched in 2011

in the SEA region); the procurement

transormation project to ensure

a more centralised approach;

the spino with minority ownership

o passive inrastructure including

towers (such as the deals in Ghana

and Uganda); as well as the back

oce centralisation project or

support services (still in its inancy)

and the accelerated implementation

o hybrid power systems.

Group president and CEOs reportcontinued

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in inrastructure and cost

optimisation initiatives are a priority

in support o this strategy.

Value-accretive opportunities which

ft within the parameters o

MTNs M&A strategy will still be

considered. We will continue to

manage the challenges brought

about by sanctions and political

instability in some o our markets.

There remains a strong commitment

to improving shareholder returns.

In 2012, MTN has earmarked capital

spending o R24,4 billion, with

Nigeria and South Arica accounting

or approximately 62% o this

investment. The Group expects to

sign up 20,3 million new subscribers

in the year, o which 53,7% are in

Nigeria, South Arica and Iran.

Sifso Dabengwa

Group president and CEO

March 2012

have been increased to 70% and

buybacks will continue to be

implemented as and when

appropriate.

M&A outlook and priorities

MTN continues to consider

bolt-on stand-alone opportunities

across Arica and the Middle East.

However it is very clear that the

ollowing criteria must be met: ft

within the organisational strategy o

the Group; have sucient scale and

size; and preerably be a number

one or number two operator.

Financial discipline is crucial in the

process. Transormational

transactions seem unlikely due

to the limited number o

opportunities and high

execution risk.

Looking ahead

All the changes required ahead,

particularly the need to optimise

at a Group level, necessitate a

change in MTNs structure.

Accordingly, the regional

structures will be replaced by a

grouping o the various

operations based on scale and size.

The success o any new strategy is

based on successul implementation

in our key markets o South Arica

and Nigeria. Accordingly, the CEOs

o these operations will report

directly to me rom 1 April 2012. As

a third contributor to the Group, to

oversee all the other operations, a

these international issues. In

partnership with its legal advisers,

MTN ensures that it remains

compliant with the various

sanctions regimes in place.

MTN has set up the independent

Homann Committee to investigate

Turkcells allegations and will

careully consider the

recommendations made by the

Committee.

MTN remains cautiously optimistic

about the year ahead with

macroeconomic conditions in key

markets not expected to change

signifcantly. The key ocus areas

over the year are to maintain and

improve our market position and

improve the customer experience.

There will be continued eort to

strengthen our position in non-voice

services in all markets. Increased

eciency in rolling out investments

new position, Chie Operations

Executive (COE) has been created,

also reporting to me. An operational

structure below the COE will ensure

adequate support or various

size-based groupings o these

operations. This will allow or

appropriate sharing o best practice

between businesses o similar scale.

I welcome the CEOs Karel Pienaar

rom South Arica and Brett Goschen

rom Nigeria onto the exco team

and congratulate Ahmad Farroukh

on his new role as COE. Finally a big

thank you to the outgoing regional

VPs Jamal Ramadan, who will be

retiring, and Ignatius Sehoole,

who will join the business risk

management team within the

organisation.

Political unrest in the Middle

East remains a concern and

MTN continues to be sensitive to

Keyto our visionis our customers


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Group chie fnancial ocers report

MTN delivered satisactory fnancial

results supported by a sound

operational perormance. The

reduction in taris by competitors

resulted in a change in trac

patterns impacting voice revenues.

Data usage showed an upward

trend compensating slower growth

in voice revenues, while cost

containment initiatives continued to

gain momentum, allowing the

Group to maintain a healthy EBITDA

margin. This enabled MTN to

increase returns to shareholders,

taking the dividend yield to 5,2%

rom 3,7% a year earlier.

However, the strong rand against

the US$ continued to negatively

impact Group results. This is despite

the weakening o the rand to the

US$ in the second hal o the year.

The once-o proft impact on the

sale o the Ghana towers has been

separated in the analysis.

On 14 February 2012, Moodys

upgraded MTNs global local

currency senior unsecured rating to

Baa2 rom Baa3 and its national scale

issuer rating to A1.za rom A2.za. The

outlook on all ratings is positive.

Considerations or the

period

Changes in ownership

In August 2011, MTN settled the

Nigeria put option through the

acquisition o the IFC interest and

thereby increased its

shareholding in the company

rom 76,08% to 78,83%.

In October 2011, MTN increased

its shareholding in MTN Rwanda

rom 55% to 80%.

In April 2011, MTN reduced itsshareholding in MTN Zambia

rom 90% to 86%. For IFRS

consolidation purposes, the

step down in equity

shareholding has not impacted

the proportionate consolidation

at 97,8% as risks and rewards are

not deemed to have passed to

the purchaser.

In February 2011, MTN Rwanda

sold its 70% investment in

Supercell.

Put options

As detailed above, the Nigerian put

option was settled in August 2011,

resulting in movements o

R254 million in fnance costs,

R266 million in air value adjustments,

R205 million in orex losses and

R138 million in non-controlling

interests share o profts. The much

smaller Aghanistan put option

resulted in R31 million o orex gains

and R2 million in non-controlling

interests share o profts in the

current year.

Currency

Currency continued to have a

meaningul impact on the results,

reducing local currency growth rates

when translated to rand. The average

Nigerian naira exchange rate

dropped 5% against the rand, the

Iranian rial lost 5% and the Ghanaiancedi was 10% weaker.

The individual country analysis is

covered in pages 38 to 47, giving

more detail on individual country

perormance. A high-level review o

the consolidated results ollows.


NazirPatelGroup chie

fnancial ocer

erview


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Groupove

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fnancialreview

Sustainability

Financialstateme

nts


operations enjoyed local currencygrowth o 9,6%, 26,5% and 15,1%

respectively. However, with

approximately 68% o MTNs

earnings generated outside South

Arica, the translation into rand o the

2011 results had a signifcant impact

on fnal reported Group fgures.

Revenue analysisRevenue increased by 6,3% as MTN

grew its subscriber base by 16,2% to

164,5 million users. Revenue growth

in local currencies continued to

reect more positively due to the

dampening eect o a strong rand.

In Nigeria, Iran and Ghana, MTN

The contribution o airtime andsubscription revenue reduced to

65,5% rom 68,4% or the prior year,

mainly due to slower growth in

Nigeria and Syria. Notwithstanding

lower termination rates in some

countries, total Group interconnect

revenue increased by 8,9% as

incoming trac increased in Nigeria

and Ghana on increased competition.

Interconnect revenue in South Arica

bucked the trend, reducing 9,8% as

termination rates declined in line with

the predetermined glide path without

a meaningul change in incoming

trac.

Proft analysis

R million 2011 2010

Variance

%

Airtime and subscription 79 854 78 400 1,9

Interconnect 18 530 17 012 8,9

Data 8 096 6 206 30,5

SMS 7 501 6 570 14,2

Mobile telephones and accessories 5 030 3 678 36,7

Other 2 873 2 818 1,9

Total revenue 121 884 114 684 6,3

Other income 1 458

Direct network operating costs 18 782 16 818 (11,7)

Costs o handsets and other accessories 8 160 6 819 (19,7)

Interconnect and roaming costs 13 395 12 593 (6,4)

Employee benefts costs 6 754 5 961 (13,3)

Selling, distribution and marketing expenses 14 805 14 741 (0,4)

Other 6 696 10 215 34,4

Total costs 68 591 64 174 (6,9)EBITDA 54 750 47 537 15,2

EBITDA margin % 44,9% 41,5% 3,4 pct points

MTN Zakhele costs 2 973

Proft rom sale o Ghana towers 1 185

EBITDA 53 565 50 510 6,0

EBITDA margin % 43,9 44,0 (0,1) pct points

Capex 17 717 19 466 (9,0%)

Q RSAQ Business SolutionsQ NigeriaQ IranQ SyriaQ Other

7%4%4%

57%

15%

13%

Total revenue analysis

Q Airtime and subscriptionQ InterconnectQ DataQ SMSQ Mobile handset and accessoriesQ Other

2,4

4,16,2%

65,5%15,2%

6,6%


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Group chie fnancial ocers reportcontinued

Data revenue (excluding SMS) across

the Group remained strong,

increasing 30,5%, driven by an

increase in data trac o 55%. South

Arica contributed 57% o the total

Group data revenue (excluding

SMS). This strong perormance rom

South Arica, particularly in the

second hal o the year, was the

main driver o total data revenue

growth or the year. This should not

undermine the importance o data

as a revenue contributor rom

countries outside o South Arica.

Data growth doubled in Nigeria over

the year, increasing its contribution

to Group data revenues to 13% rom

9% in the previous year. SMS also

continued to grow strongly.

Handset revenues increased on

higher prepaid handset volumes in

South Arica as well as on increased

demand or smartphones.

Other income

Other income includes the Groups

proft on the sale o the Ghana

towers o R1 185 million as well as a

deerred gain o R273 million.

Cost analysis

Total operating costs increased by

2%, lower than revenue growth. This

is mainly due to higher direct

network operating costs due to an

increased number o sites, higher uel

costs, including electricity and diesel,

and higher transmission costs inSouth Arica. This was oset by lower

selling, distribution and marketing

expenses in almost all operations,

lower proessional ees and other

operating expenses thanks to tighter

cost management.

Handset costs are directly related to

handset sales. Employee benefts

increased due to high ination and

competition or human resources

across the ootprint. Insourcing o IT

in South Arica also had a negative

impact on employee costs but a

positive impact on IT costs.

The Groups reported EBITDA marginincreased by 3,4 percentage points

to 44,9%. However, when adjusted

or one-time MTN Zakhele costs in

2010 and the Ghana tower sale

proft in 2011, the EBITDA margin

was marginally down at 43,9%. The

strong perormance considering

revenue pressures was due to

margin expansion in South Arica

and Iran and despite a small

deterioration in margins in Nigeria.

Capital expenditure

Following a peak in network

inrastructure investments in 2008

and 2009, MTN reduced overall

capital expenditure to R17,7 billion

rom R19,5 billion in the prior year.

The ratio o capex to revenue

declined to 14,5% rom 17,0% in

2010 and 27,9% in 2009. Capital

expenditure was below that

authorised or the period by

approximately 20% mainly due to

slower spend in Nigeria and Iran.

However, execution in the second

hal was signifcantly up on the frst

hal o the year with 68% o all

capital expenditure being

capitalised ater June 2011. The

strong momentum is anticipated tocontinue into 2012 as most o the

unspent capital expenditure in 2011

had already been committed by

year-end. The stronger rand had a

positive impact on capital

expenditure during the year.

Capex/rev 28% 17% 15%

Capital expenditure

15

504

109

70

1

20

09

84

96

57

08

157

44

H2H1

2009 2010 2011

31 248

19 46617 717

verview


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Groupov

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Financialstateme

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Interest and tax

Net fnance cost

breakdown (Rm) 2011 2010

%

change

Net fnance costs

Net interest paid 1 454 1 925 24,4Net orex losses 744 924 19,5

Functional currency (gains)/losses (778) 1 223 163,6

Put option 162 22 (686,4)1 582 4 094 61,4

Tax table (Rm) 2011 2010

%

change

Tax analysis

STC, WHT and CGT 2 580 1 450 (77,9)

Deerred tax 1 089 1 984 45,1

Normal tax 10 184 7 834 (30,0)Eective tax rate (%) 36,80 36,27 0,5 pct points

Net fnance cost

breakdown (Rm) 2011 2010

%

change

Tax table (Rm) 011 2010

%

change

Net fnance costs decreased sharply

due to unctional currency gains o

R778 million compared with losses

o R1,2 billion in the prior year. A

weaker rand in the second hal o

the year resulted in realised gains on

the conversion o currency.

The Groups eective tax rate

increased marginally. The relatively

high eective rate was mainly the

result o the secondary tax on

companies on higher Group

dividends as well as withholding

taxes related to stronger ows o

cash rom operations to the Group

and the Ghana tow

Revenue Operational Information

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