Group Technology & Information Investor Update - MTN Group

Group Technology &Information Investor UpdateKarel PienaarGroup CTIO

Agenda2• 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

Agenda3• 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

The Challenge is to be a World Class Operator inour 21 operations4Switching Centre - UgandaBeforeAfterBuilding the Call Centre – Tehran“From a humble beginning”

Current performance benchmarkedNetwork infrastructure5AugustBotswanaCameroonCongoBCoted’IvoireIranNigeriaRwandaSouthAfricaSwazilandUgandaZambiaMobile switching centre4615549238251Home location register121137114121Base station controller672155057367293Transceiver unit2,5454,0399365,03520,80642,7351,70042,6699774,823971Base transceiver station333581962,1432,8462,8012108,578150800158Media gateway0221109021002Radio network controller000000013000Node B00000001,168000Sites295400815491,4233,0111145,114102375156AugustAfghanistanBeninCyprusGhanaGuineaBissauGuineaConakryLiberiaSudanSyriaYemenMobile switching centre321121224144Home location register1112111343Base station controller32715132383224Transceiver unit2,4611,1241,72619,2053381,6401,2408,13015,4734,545Base transceiver station4501253551,365392121281,0532,763665Media gateway0003000020Radio network controller0010000120Node B00100000058300Sites4207835585327115908402,035641

6Best mobile operatorCommitment to QUALITY• Network Quality Key Performance Indicators:• BH Congestion• Call Setup Success rate• TRX Availability• Average Half rate Utilisation

NigeriaSouth AfricaGhanaCurrent network performancePeak BH Erlang7Peak Busy Hour Erlang (August 2007)180,000160,000140,000120,000100,00080,00060,00040,00020,000-Guinea BissauZambiaBotswanaCyprusCongoBSwazilandRwandaLiberiaBeninAfghanistanGuinea ConakryCameroonYemenCote d'IvoireUgandaSudanSyriaIran

Best mobile operatorCommitment to EFFICIENCY8• CAPEX Targets:• Cumulative Capex/BH Erlang (1 million subs): $15,000-$20,000• Cumulative Capex/Sub $100-$200

CyprusZambiaCurrent network performanceTechnology CAPEX9Capex per subscriber (2007)6005004003002001000BeninGuinea ConakryYemenSouth AfricaIranGhanaLiberiaRwandaGuinea BissauSwazilandAfghanistanSudanUgandaMarginal Capex/sub [USD]CameroonSyriaCote d'IvoireCongoBNigeriaCumulative Capex/subscriber Marginal Capex/subscriber

SyriaBest mobile operatorCommitment to coverageBroad coverage ensures MTN reachesmaximum potential customers…coverage is absolutely criticalCoverage (July 2007)Geographic coverage Population coverage100%90%1080%70%60%50%40%30%20%10%0%South AfricaIranSudanAfghanistanCote d'IvoireBeninGuineaConakryGuineaBissauZambiaGhanaNigeriaLiberiaUgandaBotswanaCameroonCongoBRwandaYemenSwazilandCyprus

Best mobile operatorChallengesDoing business in developing markets is tough but the rewards are high andopportunities are huge• 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-up11

Existing Deployment of Vendors in 20072007BSS/RANCoreSouth Africa Swaziland Nigeria Zambia Uganda Rwanda Cameroon IranCongo-Brazzaville Ivory CoastEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson SiemensHuawei Huawei Huawei Huawei HuaweiNokiaEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson SiemensHuawei Nokia HuaweiTransmission/PacketSwitchesPre-paidPlatformEricsson Ericsson Ericsson Ericsson Ericsson Ericsson SiemensHuawei Huawei Huawei HuaweiSiemens Harris/Stratex Harris/Stratex Harris/Stratex Nokia Siemens Harris/StratexCisco Cisco Marconi Cisco CiscoEricsson Ericsson Ericsson Ericsson Ericsson EricssonHuaweiNokiaComverseAlcatelBSS/RANCoreTransmissionPre-paidPlatformSudan Syria Liberia Ghana Guinea BissauGuineaConakry Afghanistan Benin Cyprus YemenEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson EricssonSiemensAlcatel Alcatel AlcatelEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson EricssonSiemensAlcatel Alcatel AlcatelEricsson Ericsson Ericsson Ericsson Ericsson Ericsson Ericsson EricssonAlcatel Harris/Stratex Alcatel AlcatelSiemens Ericsson Ericsson Ericsson Ericsson Ericsson EricssonAlcatel Alcatel Alcatel

Best mobile operatorKey network initiatives overview13Network quality, efficiencydriveLeast Cost operatorEvolving to next generationNetwork architecture andservices“New Telco”(Convergence)Leverage synergiesacross the GroupVAS platforms, systems and interfaces standardisationConnectivity projectFACTS rollout (transparent network quality metrics reporting system)Capital projects management process standardisationNetwork and IT Operation & Maintenance standards and proceduresCM support technologies standardisationBTS sitebuild criteria and implementationCentralize procurement of infrastructureFully integrate operations into Group standards and practice

Key network initiativesWest terrestrial connectivity14Project to investigate the viability of terrestrial connectivity via microwave radioand fibre between all West Region OPCOs.

Key network initiativesConnectivity between all OPCOs15August 17 - 2007 December 31 - 2008MTNInvestcomPhase 1: Establishment of basic OpCoconnectivityPhase 2: Improving and extending OpCoconnectivity in regions• MedNetforms mostimportantconnectivity• Focus onupgradingexisting links• Establishmentof regionalconnectivityhub structure• Inter-regionaltraffic concen -trated onregional hubs

Key network initiativesBTS site build process and implementationSite build process focused on:• Improve cost efficiency• Improve rollout performance• Streamline approval process• Improve standardisation of site types• Network rollout standardisation• Site design• Vendors• BTS Mechanical & Electrical designoptimisation• Generator Standards• Building Management System• Outdoor Units• Development of standardises contractualapproach for OPCO’s• Pre-approved sitebuild vendors across the Groupfor tenders (8-12)• Setting up adjustment factors for each country16

BTS CAPEX breakdownCAPEXManagement Fee $13,500Antenna System $14,000Tower Structure Cost $17,500Transmission EQ Cost $15,000Electrical Cost (ACs, DBs ,trays etc.)$6,000RBS Cost (Average singleBTS)$20,000Internal Power Systems $8,000Shelter $5,000Tower Civils and InstallationCostElectrical Installation &ConnectionGenerator and Fuel System$17,500$6,000$16,000 or$32,000Fencing $5,000General installation Civil works $14,000Total (Single Generator + 1BTS)$157,500

BTS OPEX breakdownOPEXLand Lease PA $4,800Transmission lease cost (SA) $3,000Electrical consumption cost PA $1,200Tower Maintenance PA $700General Civil Maintenance PA $700BTS Maintenance PA $250Fuel with no AC connection PA $15,000Total $ 25,600

Key network initiativesEco friendly BTS sites19

Network initiativesKey evolution areas of the network20• 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

Current status of MTN OpCosStrategic focus and investment around data and mobile media is directly related to therevenues generated by the different OpCo’s25%Developed Markets Industry Norm Emerging MarketsData % contribution to total revenue20% Content % contribution to total data revenue5%4%21

Key network initiatives3G22Increased 3G efficiency provides opportunity to deliver cheaper voice in emerging markets• 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$ ’000Cost per Erlang Equivalent ofCapacityGSMCDMAWCDMAMoreEfficientPlanned CAPEXPlanned 2+3G CAPEXvs Original 2G Only Plan3G EfficiencyReducesCAPEXInitialCoverage2G Only2G+3G2000 ‘01 ‘02 ‘03 ‘04E ‘05E ‘06E ‘07ESource: CSFB Estimates2005 2006 2007 2008 2009 2010Source: MTN South Africa

23Key network initiatives3G3G efficiency only applies once handset prices allow mass adoption in emergingmarketsTrend of Decreasing Costs3G Maturity+ = for 3G Handsets3G Opportunityin Africa3G HypeInflated hype andlicence payments!3G Launch182+ operatorslive - 2007Component Count10008006004002001060234Handset CostComponent Count765170400200100 2525020015010050Handset Cost (US$)2001 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 2008Source: MTN South AfricaUMTS2003UMTS2004UMTS2007GSM2007Sources: CSFB• MTN benefits from lessons learned & technological innovation since 3G pioneers• Fewer handset components lower manufacturing costs and drive economies of scale

Network InitiativesHSxPA – LTE EvolutionLatency7200140003600300022002 000180020001500150012001000Source: RY Savy Research800Peak Radio Throughput/UserAverage User Perceived Throughput171GPRS171 kbps35-40 kbps473300200EDGE R99 HSDPA473 kbps 2 000 kbps 1 800 kbps 3 600 kbps 7 200 kbps 14 400 kbps135-145 kbps 0.2-0.3 Mbps 0.8-1.2 Mbps 1.0-1.5 Mbps 1.5- 2.2 Mbps 2 - 3 MbpsAverage Download time of 10 MBytes ~2133 sec ~571 sec ~320 sec ~80 sec ~64 sec ~43 sec ~32 secSource: Ericsson, Qualcomm24

Where is WiMAX going?25

Overview of key IS initiatives26Focus on creating an Agile base on which to buildEfficient Proactive systems to benefit of MTN GroupKey ActivitiesShort TermMedium TermCustomerFacingIS InitiativesCustomer Care andBillingCommon Billing processes andtechnical environmentCRM & Billing Change ControlStrengthen ISInfrastructureIT standards & Asset managementRegional Shared DRWorld Class Data CentreEmployeeFacingIS InitiativesOpCo ConnectivityInformating theOrganisationHRISEmail, Conferencing (video, audio,web), IM, Intranet & HyperionGroup Content PortalThe right information atthe right time to makeappropriate decisionsShared IS ServicesCommon DDWH environment foraccurate informationHRIS Implementation & Rollout

Future Growth and InnovationContinued Innovation is Key to Competitiveness27• Strong record of developinginnovative products and toolsthat are ahead of markettrends• 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 andquality)• 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)

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, qualityand products at lower cost than competitors• Strong competition with established fixed line telco in SME and corporatemarket• Product/Service flexibility• Least Cost Operator• Target Bottom-of-Pyramid• New Telco• Fixed/mobile and fixed/wireless• Pre and postpaid• Media and entertainment• The internet28

Agenda29• 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

New Telco contextA broad view of the MTN New Telco landscapeMedia &ContentRetail &ServicesVoIP3GHSPAMp3MPEG4P2PDVB-HMBMSWiMAX3GGSMWiMAXFixed OperatorsWiFiUMAOpensourceMobile OperatorsHSPAWiMAXSoftwareSymbianWindows2BN+UsersVoIPISPsiPodPhenomenonDevicesSIMNGNTxIMSOSSBilllingSDPVoIPP2PIMSSDPXMLHTMLTCP/IPInternetInfrastructureSource: MTN Group Technology, 2006

New Telco contextGartner technology cycle31MTN Actions

New Telco contextTracking global trends32Execute now!! Finalise plans Formalise strategy and experimentLow HighLow costvoiceInstantMessagingMobileinternetLow costHandsetsMobile moneyMobilesearchAccessTechnologiesAttackFixed VoiceOutsourceCorporatesolutionsMobile TVContentportalsMobilemusicVOIPMVNOManagedservicesUser generatedcontentTriple/quadplayLocationServicesMobileadvertisingMobileApplicationsM-commerceSoftwareas serviceOnlinecommunitiesUnlicencedmobile accessIdentifyServicesPeer2peerPartner and executeWatch closely1 year 2 years 3 years 5 yearsTime to maturityMature developments Trials and early developments Analysis underway Actively Tracking

New Telco contextCurrent MTN activitiesMature DeploymentsTrials and Early DeploymentsAnalysis Underway1011Mobile entertainmentMediaMobile music9Mobile TV87SoftwareRetail &ServicesAttack adjacent industries(e.g. mobile financial services)Software- Applications Service Provider- Manage access to the device112Quad/ PlayMobile Operators3Best mobile operator(specialise)2VoIPFixedOperatorsAttack fixed operators:- Fixed mobile substitution- Fixed mobile convergence4InternetISPsVANS- Internet/ISP servicesDevices6Device StrategyInfrastructure5Expand down the Value Chain- Resell core infrastructureSource: MTN Group Technology, 200633

Strategic initiativesThe Internet goes mobile• Situation• Connectivity moving from a want to need• User-generated content allow people toparticipate in services in real time,spontaneously• Handset Evolution enables a richer userExperience• Mobile becoming the primary access method toInternet• Overview of Activity• Use existing infrastructure to provide InternetAccess• Mobile Media and Content Services -MTNLoaded• Provide internet related services – InstantMessaging• Providing Consumer & Corporate ISP Services• OPCO’s engaged VANS model to date:• Nigeria, South Africa, Cameroon, Uganda,RwandaRetail &ServicesSoftwareDevicesMedia &ContentMobileOperatorsInfrastructureFixedOperatorsISPsInternetOpportunityProvide services thatcombine user-generated and3 rd party content into a singleuser experienceDrive uptake of contentdownloads, and advertising Partner with global playersto offer servicesSource: MTN Group Technology, 200734

Strategic initiativesInfrastructure• Situation• Alternative Access technologies havematured in both Technology & Deployment• Technologies such as WiMAX providesmore cost effective Access Network• Evolution of Handsets allowed for access tomultiple networks from single devices• Overview of Activity• Implementation of Fiber TransmissionBackbone (Nigeria, South Africa, Ghana,Uganda, Ivory Coast, Rwanda)• Corporate High Road Strategy – South Africa• Providing Fixed Wireless Solutions as part ofCorporate solutions• Develop capability to resell transmission inOPCO’s where we self provide, avoidempowering competitionRetail &ServicesSoftwareDevicesMedia &ContentMobileOperatorsInfrastructureFixedOperatorsISPsInternetOpportunity• Resell transmission backbone,facilities and switching capability• Adopt a user transparent multiaccess networkSource: MTN Group Technology, 200635

Strategic initiativesMedia & content – It is all about the user experience• Situation• Evolution has lead to a Multi-sensoryExperience• Access to Media Content at appropriatelocation• Advertisers and media companies seemobile as a huge opportunity• By 2012, 100m media devices will ship withBroadband 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 InitiativeRetail &ServicesSoftwareDevicesMedia &ContentMobileOperatorsInfrastructureFixedOperatorsISPsInternetOpportunity Partner with Media Companies togain access to Content Create new revenue streams byproviding users with access toappropriate content. Expanding of Brand beyondMobile TelephonySource: MTN Group Technology, 200636

37Strategic initiativesDevice strategy• Overview of Activity1. GSM Association & other operator alliances formation2. Ultra Low Cost Handset initiative3. MTN Group SIM standardisation project:• Application eco-system (Java) creation• Group-wide application deployment efficiency4. Service Discovery Enhancement: MTN Idle Screen5. Over The Air configuration (OTA):• SIM/USIM: subscriber self service• Handset: Intelligent Mobile Device Management6. DVB-H Mobile TV:• DVBH/3G handset for Africa• Nokia handset support: OMA BCAST SCP standard migration• SIM based ESG (TV Service Guide) rendering7. Branded device (external and internal):• 3G/HSDPA PC/USB card in SA• 3G/laptop bundling in SA• 3G/wifi hub bundling in SARetail &ServicesSoftwareDevicesMedia &ContentMobileOperatorsInfrastructureFixedOperatorsISPsInternetOpportunity• GSMA, BMCo & strong MNO Allianceshelp MNO’s gain greater control ofhandset design & clients [& other enduser devices], to enhance services,customer experience, reduce cost, &ensure “lock in”• Device control supports applicationeco-system for variety, innovation &new revenue streams creation

Agenda38• 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

Convergence - a connected life39Skype Video Call over HSPAGoogle Earth / LBS overlayOn Device PortalNFC Credit CardsNFC Content purchasesLive Video Streaming via HSPAHigh Speed Mobile AccessMTN BankingValue WalletMobile Payment AcquiringMobile GamingIMS IP CentrexIMS PTT / WeShareIMS Mobile Blogging

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