South AfricaKarel PienaarCEO MTN South Africa

Agenda

2

• Overview of South Africa market landscape

• MTN SA strategic intent for Full Service ICT Sector

• Key Technology overview on enabling the Full ICT strategic intent

• Network Investments and Broadband Enablement

• IT – Preparing for ICT

3

Competition has enabled a dynamic market

• Electronic Communications Act (ECA)

• Neotel licensed

• ECA implementation

• Altech Court Case

• Growth of investment in infrastruture

• New infrastruture providers / investors

• Emergence of new business models

• Growing competition

• More choice - expansion of products and services

• Downward pricing pressure

• Alternative business models enabled

4

Changes and new players in the SA telecoms industry

Mobile Operators

and new adjacent players

ISP

Data Centre, Tower and FibrePlayers

Other VANS

Players in the ISP & Business Space

Other Broadband Players

I3 africa

5

Africa analysis view

Key Challenges

• Increasingly competitive market

• Regulatory intervention

• Manage in a mature market

• Manage convergence and service integration (fixed, mobile and data)

Key Challenges

• Manage business in a maturing market

• Marginally declining ARPU

• Manage convergence and service integration (fixed, mobile and data)

• Manage customer quality, maintain service and network quality

Key Opportunities

• Defend / Grow customer base

• Differentiate within target market segments

• Deployment of infrastructure

• Bundled services

Key Opportunities

• Market growth (dual SIM ownership distortion)

• Maintain mobile voice revenue

• Data and VAS services

Mobile Market Fixed Market

Increased competition with increased focus on customer value as differentiator

Competitors will / are targeting Telkom’s revenue stream

6

Africa analysis viewBroadband

0

400

800

1200

1600

2000

0 10 20 30 40

Mobile

Fixed

Key Challenges

• Increasingly competitive environment (services and new infrastructure)

• Product differentiation

• Manage wholesale / retail markets

• Fixed differentiation from the mobile broadband offering

Key Opportunities

• Differentiation of bundled offering

• Bandwidth-intensive applications hence specific event tariffs

• Alternative broadband infrastructure (e.g. rollout of LTE) (but spectrum dependent)

• Speed /QoS linked offers with fair usage

Different trends are driving the fixed and mobile broadband markets. The uncapped fixed product is changing the roles of service providers where as mobile broadband pricing strategies remains key

Mobile Market Fixed Market

Source: SA Telecoms Model 3.0, Africa Analysis

Mobile surpasses

fixed growth

2003 2005

7

Smartphone forecast 2010 - 2016

• Smartphones are expected to grow to 19.6 million in SA by 2016

• Proportion of handset models which are considered smartphones will continue to increase

• A smartphone is defined as a mobile phone which can install 3rd party native applications (not Java apps).

• Base figures are obtained by looking at the annual reports of service providers, as well as user data from BMI-T publications.

• Future growth rates are estimated by looking at recent growth rates, global smartphone forecast, other BMI-T forecasts and the technology product lifecycle

• 3 million smartphones currently on MTN network

4,751,071

7,531,154

10,167,058

12,810,493

15,244,487

17,683,605

19,628,802

56%

35%

26%

19%

16%

11%

0%

10%

20%

30%

40%

50%

60%

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2010 2011 2012 2013 2014 2015 2016

Smartphones Growth

Source – BMI-T

8

Tablet forecast 2010 - 2016

• Tablets are expected to reach 1.7 million in SA by 2016

• Bundling with data contracts will make tablets more affordable

• Ultra cheap models will also accelerate growth into the market

• A tablet is defined as a touch screen computer, which runs an operating system other than Windows, and has a size of more than 5 inches

• Base figures have been estimated based on smartphone penetrations, and the ration between smartphones and tablets in the market

• Future growth rates are estimated by looking at recent growth rates, global smartphone forecast, other BMI-T forecasts and the technology product lifecycle

• MTN tablets – currently 21 859

34,000

189,040

446,134

731,660

1,038,958

1,412,983

1,709,709

456%

136%

64%

42%36%

21%

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2010 2011 2012 2013 2014 2015 2016

Tablets Growth

Source – BMI-T

MTN’s vision on broadbandEverywhere You Go

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• Broadband connectivity will be a catalyst for socio-economic development and will enhance South Africa’s global competitiveness

• Bringing Mobility and High Speed internet access

• Bridging the Digital Divide – bringing broadband to the rural/under-served areas

• Supporting education, socio economic upliftment and innovation

• Enabling MTN’s customers to access information, entertainment, applications and services with much more richness and computing capacity

• MTN will provide technology & communication solutions in the “cloud”

10

Content delivery embracing South Africa

11

Driving the consumption of data

Applications Mobile Social Networking

Mobile Multimedia

Enhanced Location Awareness

Touch Web Virtual GoodsAugmented

Reality

To become the Leading ICT Service Provider in our market by being indispensable to our

Customer Segments (Consumer, SME and

Corporate) and Partners

12

MTN SA strategic intent for full serviceICT Sector

Africa analysis view

13

In becoming a Full ICT Service Provider for Consumer, SME and Corporate MTN will focus on complimenting its mobile and fixed offerings with the “Growth Zone” and expanding into fixed voice and extended value chain

Future Growth Areas

Current Revenue Sources

Low High

Low

High

Importance

Import

ance

Expansion into fixed line / fixed data and IT Services through :

MPLS networks Data center investment Cloud Computing Services Business Model SaaS Fibre LTE

Driving converged offerings (mobile voice, mobile data, fixed data and fixed voice and services )

Delta Partners view

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Needs to deploy both a selective fixed play and offer mobile driven convergent services

• Advertising Play

• Media/content Play (Music, LBS)

• Consumer gateway (“Portals”, SN)

• Network as a Service

• M-payments Play

• M2M & Mobility Solutions

• Conferencing – VoIP, Email

• IT Services (For selective Bespoke)

• LAN (for end-to-end SLAs)

• Conferencing – HQ Image

• Cloud Saas, Iaas

• Data Center & Security services

• Fixed Connectivity

• Mobile Data Network quality (3G, HSDPA++, LTE)

Infotainment(smartdevice and feature phone)

“Mobile ICT”(Smartdevicesdriven)

“Fixed ICT”(PC driven, fixed line or dongle HSDPA+, LTE)

Pipe (Low cost)

Smart Pipe

Consumer

Consumer Gateway Business

Strategic Options

• Multiple services to hook the High Value Clients

• Some M2M and mobility solutions require HSDPA+, LTE

• Battle ground of Google, Apple, SNs

• Requires local content and partnerships with key global players

• Requires fixed connectivity, or HSDPA+, LTE

• Leverage Network Assets

• Enables base to develop platforms for Mobile ICT

Recommended Option

CORE Mobile

Rationale Being indispensible to our customers

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• Service consistency is central to service satisfaction.

• Customer expectations have also increased and they expect more value from a service interaction with a company. The consumer base of South Africa is becoming like minded with regard to their service expectations.

• Accolades such as the recent Ask Afrika Orange Index® survey in the Telecommunication as the best Telecommunications Provider and the best Internet Service Provider in the country

• 2010 Africa.Com : MTN won two categories - Best Network Improvement

• MTN’s Brand strength - MTN has invested in the growth of the brand and its recognition in the country and the continent’s most valued brand reflects this investment -Brandirectory (Feb 2011) and Brand Africa (Sept 2011) - MTN as most valuable on continent

• Sunday Times Top Brands Survey (Aug 2011) - Best Telecoms Service Provider in the Consumer Category

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Evolution to date

2G (98% population coverage)

GPRS

114Kbps

(2002 onwards)

EDGE 240Kbps (2003

onwards)

3G (55% population coverage)

R99

384Kbps

(2005 onwards)

HSPA

1.8-14.4Mbps

(2008 onwards)

HSPA+ 21-42Mbps

(2010 onwards)

LTE (100+ pilot sites)

LTE

73Mbps- 10MHz (2X2)

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Spectrum re-farming – 900 MHz & 1800 MHz

10 MHz 1800 re-farming for LTE

• Device eco-system exists

• Coverage

• Multi Standard Radio

5 MHz 900 re-farming for UMTS

• UMTS900 rural data volume out growing GSM data on live sites

● Higher Current Spectrum re-use & Modulation efficiency

● Re-use of current MTN infrastructure

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MTN LTE sites approachPlanning for the Future....

• 4 LTE clusters are being piloted in Gauteng

• These clusters comprise of 100+ LTE sites

• Ericsson and Huawei equipment being used for the Pilot

• Aim is to trial the LTE technology & understand its benefits/deployment

• Provide select users the ability to experience the latest mobile broadband technology

• Challenges with full LTE deployment

• LTE Trial on 1800 MHz spectrum using a 10 MHz carrier (FDD)

• Limitation exists with regards to higher speeds and capacity due to insufficient spectrum

• Deployment is limited to small areas where 1800 MHz can be refarmed – actively pursuing partnerships in 1800 Mz band

• Access to 2600 MHz and 800 MHz is critical to ensure that future capacity needs are met and full potential of LTE being reached

19

LTE – network tests

Local International

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HD streams- LTE

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Long term fibre rollout

National

• Coverage Area:

• Bloemfontein

• Bloemfontein City Centre

• Port Elizabeth

• Uitenhage

• East London

• Kwazulu Natal

• Amanzimtoti

• Ballito

New Sites:

• ~1840 till 2014 ~ 900 target for 2012

Vendors

• MTN – Metro build & Leveraging NLD, DFA, i3, COJ

Fibre Km (incl. MTN, i3 & DFA)

• ~4500

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New switch centres (Hubs) to enable hosting and cloud computing solutions

• Centres situated across South Africa with plans to connect then to the National Backhaul

• 100sqm available for third parties

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ICT conceptual view

Communications CAAS

Software

Orc

he

str

ati

on

an

d P

rovis

ion

ing

Infrastructure

Platform

Service Catalogue

Securi

tyG

overn

ance

Partners

IAAS

PAAS

SAAS

Development Community

Managem

ent

Customers

Storage Database

Disaster Recovery

Virtualisation Servers

Network Backup

MiddlewareDevelopment

ToolsOperating Systems

MTN SERVICES

Call Center

Mobility Connectivity Bandwidth

Internal Applications

Cloud Applications

Kiosk Store

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Service catalogue examples

Productivity

Communication

Customer Mgt

Enterprise Resource Planning

Finance

Security

OA

Collaboration Portal

Document Management

Process Designer

IP TelephonyUnified Comms

CRMReport

DesignerSubscriber Analytics

SAP Oracle Payroll HR

Accounting

Firewall Backup

Desktop

Email

Procurement

Logistics

Sales Force Applications

25

Cloud capability differentiators

Devices

Banking and payments

Telecoms

Mobility

Data Center Hosting

On site technical support

Networking

Reporting

Auditing

SLA Management

Monitoring

Service Desk

SecurityMTNSA

3rd Party Service Offerings

Eg. Health, insurance, education, finance, CRM, ERP, Collaborationetc…

BundledService Offerings

Eg. Hosted PBX with SIM,s, devices, laptops, printers, CRM ‘lite’, Collaboration

MTN Service Offerings

Eg. Virtual servers, storage, backup, application, platform, other white-labeled services

Corporate

SME

Consumer

CUSTOMERS

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Mobile ICT ecosystem

Gearing

the

Organisation

Consolidated Self-service

Convergent Charging Platform

M2M Offerings

• Datazone for off peak rates

• Improve APN service Offering

• M2M Policy control

M2M

Mobile Payments

• App Stores, micro payments

• NFC• STD Bank

M Commerce

Hosted Mobile

• HPBX• Mi-Cloud• Cloud

Computing

Cloud

Network as a Service

• One API compliant network API’s

• Developer Support

• SDP

NaaS

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Long term approach supported by focus on sustainability

• Establish national networks to penetrate deeper into individual markets.

• Invest in fibre networks and international submarine cable connectivity

• Key focus on quality service delivery and driving of efficiencies

• Strong corporate social investment - app 1% of profit (e.g. 1GOAL initiative, 13 MTN Foundations)

• Drive for sustainability (Carbon footprint ) through innovation sustainable solutions (e.g. Tri-Gen Plant)

Thank you

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.

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