IMPORTANT NOTICE

THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1) QIBS (AS DEFINED BELOW) OR (2) PERSONS OTHER THAN US PERSONS (AS DEFINED IN AND IN ACCORDANCE WITH REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)) IN AN OFFSHORE TRANSACTION

IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the attached offering circular (the “Offering Circular”) following this page and you are therefore advised to read this disclaimer carefully before reading, accessing or making any other use of the Offering Circular. In accessing the Offering Circular, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information from (or on behalf of) MTN (MAURITIUS) INVESTMENTS LIMITED (the “Issuer”), MTN Group Limited, Mobile Telephone Networks Holdings Limited, MTN International (Mauritius) Limited, MTN International Proprietary Limited or Mobile Telephone Networks Proprietary Limited (together the “Guarantors”), Barclays Bank PLC, Citigroup Global Markets Limited, Merrill Lynch International or The Standard Bank of South Africa Limited (together the “Joint Bookrunners”) or J.P. Morgan Securities plc, Mizuho Securities USA Inc., MUFG Securities EMEA plc, SMBC Nikko Capital Markets Limited or Standard Chartered Bank (the “Co-Managers” and, together with the Joint Bookrunners, the “Managers”) as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES DESCRIBED IN THE OFFERING CIRCULAR HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER UNITED STATES JURISDICTION, AND SUCH SECURITIES MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, US PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THE OFFERING CIRCULAR MAY NOT BE FORWARDED OR DISTRIBUTED IN WHOLE OR IN PART TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND, IN PARTICULAR, MAY NOT BE FORWARDED TO ANY US ADDRESS. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE OFFERING CIRCULAR IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORISED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES.

Confirmation of your representation: In order to be eligible to view the Offering Circular or make an investment decision with respect to the securities described therein, prospective investors must be either (1) Qualified Institutional Buyers (“QIBs”) (within the meaning of Rule 144A (“Rule 144A”) under the Securities Act), or (2) a person other than a US person (as defined in and in accordance with Regulation S under the Securities Act) purchasing in an offshore transaction. The Offering Circular is being sent to you at your request, and by accepting the email and accessing the Offering Circular you shall be deemed to have represented to the Issuer, the Guarantors and the Managers that (1) either (a) you and any customers you represent are QIBs, or (b) you are a person other than a US person (as defined in Regulation S under the Securities Act) and you are purchasing the securities being offered in an offshore transaction (within the meaning of Regulation S under the Securities Act) and the electronic mail address that you gave us and to which this email has been delivered is not located in the United States, and (2) you consent to delivery of the Offering Circular by electronic transmission.

You are reminded that the Offering Circular has been delivered to you on the basis that you are a person into whose possession the Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver or disclose the contents of the Offering Circular to any other person.

The materials relating to this offering of securities do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that this issuance of securities be made by a licensed broker or dealer, and a Manager or any affiliate of any Manager is a licensed broker or dealer in the relevant jurisdiction, this offering shall be deemed to be made by such Manager or affiliates on behalf of the Issuer and the Guarantors in such jurisdiction.

The Offering Circular may only be distributed to, and is only directed at (a) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), (b) high net worth bodies corporate falling within Article 49(2) of the Order, and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on the Offering Circular or any of its contents.

The Offering Circular has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Issuer, the Guarantors or the Managers, any person who controls them or any director, officer, employee or agent of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Offering Circular distributed to you in electronic format and the hard copy version available to you on request from the Managers. Please ensure that your copy of the Offering Circular is complete. You are responsible for protecting against viruses and other destructive items. MTN (MAURITIUS) INVESTMENTS LIMITED (incorporated with limited liability in Mauritius) US$500,000,000 5.373% Guaranteed Notes due 2022 US$500,000,000 6.500% Guaranteed Notes due 2026 each guaranteed on a joint and several basis by MTN Group Limited (incorporated with limited liability in the Republic of South Africa) Mobile Telephone Networks Holdings Limited (incorporated with limited liability in the Republic of South Africa) MTN International (Mauritius) Limited (incorporated with limited liability in Mauritius) MTN International Proprietary Limited (incorporated with limited liability in the Republic of South Africa) and Mobile Telephone Networks Proprietary Limited (incorporated with limited liability in the Republic of South Africa) MTN (MAURITIUS) INVESTMENTS LIMITED (the “Issuer”) is issuing US$500,000,000 5.373% Guaranteed Notes due 2022 (the “2022 Notes”) and the US$500,000,000 6.500% Guaranteed Notes due 2026 (the “2026 Notes” and, together with the 2022 Notes, the “Notes” and each a “Series”). The Notes will be guaranteed on a joint and several basis by MTN Group Limited (“MTN Group”), Mobile Telephone Networks Holdings Limited, MTN International (Mauritius) Limited, MTN International Proprietary Limited and Mobile Telephone Networks Proprietary Limited (together the “Guarantors”) pursuant to a deed of guarantee in respect of each Series (each a “Guarantee” and together, the “Guarantees”) to be dated the Issue Date (as defined below). Interest on the 2022 Notes will be paid in arrear on the thirteenth day of each February and August, provided that if any such date is not a Business Day (as defined below), then such payment will be made on the next Business Day. Principal of the 2022 Notes is scheduled to be paid on 13 February 2022, but may be paid earlier under certain circumstances as further described herein. The 2022 Notes initially will be sold to investors at a price equal to 100% of the principal amount thereof. For a more detailed description of the 2022 Notes, see “Conditions of the 2022 Notes”. Interest on the 2026 Notes will be paid in arrear on the thirteenth day of each April and October, provided that if any such date is not a Business Day (as defined below), then such payment will be made on the next Business Day. Principal of the 2026 Notes is scheduled to be paid on 13 October 2026, but may be paid earlier under certain circumstances as further described herein. The 2026 Notes initially will be sold to investors at a price equal to 100% of the principal amount thereof. For a more detailed description of the 2026 Notes, see “Conditions of the 2026 Notes”. INVESTING IN THE NOTES INVOLVES RISKS. PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER “RISK FACTORS” BEGINNING ON PAGE 1 OF THIS OFFERING CIRCULAR. This offering circular (the “Offering Circular”) has been approved by the Central Bank of Ireland, as competent authority under Directive 2003/71/ECas amended (including by Directive 2010/73/EU) (the “Prospectus Directive”). The Central Bank of Ireland only approves this Offering Circular as meeting the requirements imposed under Irish and EU law pursuant to the Prospectus Directive. Application has been made to the Irish Stock Exchange plc (the “Irish Stock Exchange”) for the Notes to be admitted to the official list of the Irish Stock Exchange (the “Official List”) and to trading on its regulated market (the “Main Securities Market”). Such approval will only relate to Notes which are to be admitted to trading on a regulated market for the purposes of Directive 2004/39/EC and/or which are to be offered to the public in any Member State of the European Economic Area. References in this Offering Circular to the Notes being listed (and all related references) will mean that the Notes have been admitted to the Official List and have been admitted to trading on the Main Securities Market. The Main Securities Market is a regulated market for the purposes of Directive 2004/39/EC. The Notes are expected to be rated Baa3 by Moody’s Investors Service Limited (“Moody’s”) and BB+ by Standard & Poor’s Credit Market Services Europe Limited (“S&P” and, together with Moody’s, the “Rating Agencies”). A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. As at the date of this Offering Circular, each of the Rating Agencies is established in the European Union and is registered under Regulation (EU) No 1060/2009, as amended (the “CRA Regulation”). The Notes and the Guarantees have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state of the United States, and are being offered: (a) for sale in the United States to qualified institutional buyers only (each a “QIB”) as defined in, and in reliance upon, Rule 144A under the Securities Act (“Rule 144A”), and (b) for sale to non-US persons (as defined in RegulationS under the Securities Act (“Regulation S”)) in offshore transactions in reliance upon Regulation S (together, the “Offering”). Prospective purchasers that are QIBs are hereby notified that the seller of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act pursuant to Rule 144A. Investors in the Notes will be deemed to have made or be required to make certain representations and warranties in connection with purchasing the Notes. For the purpose of the Securities Act 2005 of Mauritius, Notes will only be issued to sophisticated investors (which term means that they subscribe for a minimum amount of US$200,000 and they are either (i) QIBs in the United States or (ii) qualified investors (as defined in Directive 2003/71/EC, as amended)). In addition, no Notes will be issued to the public in Mauritius. For a description of certain restrictions on sale and transfer of investments in the Notes, see “Subscription and Sale”, “Selling Restrictions” and “Transfer Restrictions” herein. The Notes and the Guarantees are being offered under Rule 144A and Regulation S by each of Barclays Bank PLC, Citigroup Global Markets Limited, Merrill Lynch International and The Standard Bank of South Africa Limited (each, a “Joint Bookrunner” and, collectively, the “Joint Bookrunners”), J.P. Morgan Securities plc, Mizuho Securities USA Inc., MUFG Securities EMEA plc, SMBC Nikko Capital Markets Limited and Standard Chartered Bank (the “Co- Managers” and, together with the Joint Bookrunners, the “Managers”), subject to their acceptance of, and right to reject, orders in whole or in part. The Notes will be issued in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof. The Notes in respect of each Series will initially be represented by two global certificates in registered form (the “Global Certificates”), one of which will be issued in respect of the Notes of such Series (the “Rule 144A Notes”) offered and sold in reliance on Rule 144A (the “Restricted Global Certificate”) and will be registered in the name of Cede & Co., as nominee for the Depository Trust Company (“DTC”), and the other of which will be issued in respect of the Notes of such Series (the “Regulation S Notes”) offered and sold in reliance on Regulation S (the “Unrestricted Global Certificate”) and will be registered in the name of a nominee of a common depositary for Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream, Luxembourg”). It is expected that delivery of the Global Certificates will be made in immediately available funds on 13 October 2016 (i.e., the fifth Business Day following the date of pricing of the Notes (such date being referred to herein as the “Issue Date” and such settlement cycle being herein referred to as T+5)). Joint Bookrunners BARCLAYS BOFA MERRILL LYNCH CITIGROUP STANDARD BANK Co-Managers J.P. MORGAN MIZUHO SECURITIES MUFG SMBC NIKKO STANDARD CHARTERED BANK

The date of this Offering Circular is 11 October 2016 This Offering Circular constitutes a prospectus for the purpose of Article 5 of the Prospectus Directive. This Offering Circular is to be read in conjunction with our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016 and our audited consolidated financial statements for the years ended 31 December 2015 and 2014, which form part of this Offering Circular and are included herein.

The Issuer and MTN Group, whose respective addresses are set out herein, accept responsibility for the information contained in this Offering Circular and each of the Guarantors accepts responsibility for the information contained in each part of this Offering Circular relating to itself and the Guarantees. To the best of the knowledge and belief of the Issuer and MTN Group, with regard to the information contained in this Offering Circular, and each Guarantor, with regard to the information contained in this Offering Circular relating to itself and the Guarantees (each having taken all reasonable care to ensure that such is the case), the information contained in this Offering Circular is in accordance with the facts and there are no other facts the omission of which would be likely to affect the import of such information.

This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Issuer, the Guarantors or the Managers to subscribe for or purchase, any Notes (or beneficial interests therein). This Offering Circular is intended only to provide information to assist potential investors in deciding whether or not to subscribe for or purchase Notes (or beneficial interests therein) in accordance with the terms and conditions specified by the Managers. The Notes (and beneficial interests therein) may not be offered or sold, directly or indirectly, and this Offering Circular may not be circulated, in any jurisdiction except in accordance with legal requirements applicable to such jurisdiction.

The distribution or delivery of this Offering Circular and the offer or sale of the Notes (or beneficial interests therein) in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Circular may come are required by the Issuer, the Guarantors and the Managers to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of the Notes (or beneficial interests therein) and on the distribution or delivery of this Offering Circular and other offering material relating to the Notes, see “Selling Restrictions” and “Transfer Restrictions”.

No person has been authorised in connection with the offering of the Notes (or beneficial interests therein) to give any information or make any representation regarding the Issuer, the Guarantors, the Managers, the Notes or the Guarantees other than as contained in this Offering Circular. Any such representation or information must not be relied upon as having been authorised by the Issuer, the Guarantors or the Managers. The delivery of this Offering Circular at any time does not imply that there has been no change in the affairs of the Issuer or any Guarantor or that the information contained in it is correct as at any time subsequent to its date or that any other information supplied in connection with the Offering is correct as at any time subsequent to the date indicated in the document containing the same. This Offering Circular may only be used for the purpose for which it has been published. The Managers expressly do not undertake to review the financial condition or affairs of the Issuer or any Guarantor during the life of the Notes or to advise any investor in the Notes of any information coming to their attention. None of the Managers have independently verified the information contained herein. Accordingly, no representation or warranty, express or implied, is made by the Managers as to the accuracy or completeness of the information set forth in this Offering Circular, and nothing contained in this Offering Circular is, or should be relied upon as, a promise or representation, whether as to the past or the future, by any of the Managers. None of the Managers assumes any responsibility or liability for the accuracy or completeness of the information set forth in this Offering Circular. No Manager accepts any liability in relation to the information contained in this Offering Circular or any other information provided by the Issuer or any Guarantor in connection with the offer or sale of the Notes or their distribution.

Neither this Offering Circular nor any other information supplied in connection with the offering of the Notes

(a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by the Issuer, any of the Guarantors or any of the Managers that any recipient of this Offering Circular or any other information supplied in connection with the offer or sale of the Notes should purchase the Notes. Each person contemplating making an investment in the Notes must make its own investigation and analysis of the creditworthiness of the Issuer and the Guarantors and its own determination of the suitability of any such investment, with particular reference to its own investment objectives and experience, and any other factors that may be relevant to it in connection with such investment. In particular, each potential investor should: • have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained in this Offering Circular or any applicable supplement;

i • have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact such investment will have on its overall investment portfolio; • have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including where the currency for principal and interest payments is different from the potential investor’s currency; • understand thoroughly the terms and conditions of the Notes and be familiar with the behaviour of financial markets in which they participate; and • be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

None of the Issuer, the Guarantors, the Managers or any of their respective representatives is making any representation to any offeree or purchaser of the Notes (or beneficial interests therein) regarding the legality of any investment by such offeree or purchaser under applicable legal investment or similar laws. Each investor should consult with its own advisers as to the legal, tax, business, financial and related aspects of an investment in the Notes.

ii INFORMATION

The Notes and the Guarantees have not been and will not be registered under the Securities Act or under the securities or “blue sky” laws of any state of the United States or any other US jurisdiction. Each investor, by purchasing a Note (or a beneficial interest therein), agrees that the Notes and the Guarantees (or beneficial interests therein) may only be reoffered, resold, pledged or otherwise transferred only upon registration under the Securities Act or pursuant to the exemptions therefrom described under “Transfer Restrictions”. Each investor will also be deemed to have made certain representations and agreements as described therein. Any resale or other transfer, or attempted resale or other attempted transfer, that is not made in accordance with the transfer restrictions may subject the transferor and transferee to certain liabilities under applicable securities laws.

This Offering Circular is being provided on a confidential basis in the United States to a limited number of QIBs for informational use solely in connection with the consideration of the purchase of the Notes and the Guarantees. It may not be copied or reproduced in whole or in part nor may it be distributed or any of its contents disclosed to anyone other than the prospective investors to whom it is originally submitted.

Notes offered and sold to QIBs in reliance upon Rule 144A will be represented by beneficial interests in one or more permanent global certificates in fully registered form without interest coupons. Notes offered and sold to non-US persons in offshore transactions pursuant to Regulation S will be represented by beneficial interests in a global certificate in fully registered form without interest coupons. Except as described in this Offering Circular, beneficial interests in the Global Certificates will be represented through accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC, Euroclear and Clearstream, Luxembourg. Except as described in this Offering Circular, owners of beneficial interests in the Global Certificates will not be entitled to have the Notes registered in their names, will not receive or be entitled to receive physical delivery of the Notes in definitive form and will not be considered holders of the Notes (“Noteholders”) under the Notes and the Agency Agreement in respect of each Series.

An application has been made to admit the Notes to listing on the Official List and to have the Notes admitted to trading on the Main Securities Market.

The Notes have not been approved or disapproved by the US Securities and Exchange Commission (the “SEC”), any state securities commission or any other US, South African, Mauritian, Irish, United Kingdom or other regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of this Offering or the accuracy or adequacy of this Offering Circular. Any representation to the contrary may be a criminal offence.

The distribution of this Offering Circular and the offering of the Notes (and beneficial interests therein) in certain jurisdictions may be restricted by law. Persons that come into possession of this Offering Circular are required by the Issuer, the Guarantors and the Managers to inform themselves about and to observe any such restrictions.

This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy the Notes (or any beneficial interest therein) in any jurisdiction to the extent that such offer or solicitation is unlawful. In particular, there are restrictions on the distribution of this Offering Circular and the offer and sale of the Notes (and beneficial interests therein) in the United States, South Africa, Mauritius and the United Kingdom.

iii STABILISATION

In connection with the issue of each Series, Citigroup Global Markets Limited (the “Stabilisation Manager”) (or persons acting on behalf of the Stabilisation Manager) may over-allot Notes of a Series or effect transactions with a view to supporting the market price of the Notes of a Series at a level higher than that which might otherwise prevail. However, stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes of the relevant Series is made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the Issue Date and 60 days after the date of the allotment of the Notes of a Series. Any stabilisation action or over-allotment must be conducted by the Stabilisation Manager (or persons acting on behalf of the Stabilisation Manager) in accordance with all applicable laws and rules.

iv AVAILABLE INFORMATION

The Issuer has agreed that, for so long as any Notes are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, it will, during any period in which it is neither subject to and in compliance with Section 13 or 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, furnish upon request to any holder or beneficial owner of Notes, or any prospective purchaser designated by any such holder or beneficial owner, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

v FORWARD-LOOKING STATEMENTS

This Offering Circular contains statements that may be considered to be “forward-looking statements” as that term is defined in the US Private Securities Litigation Act of 1995. Forward-looking statements appear in a number of places throughout this Offering Circular, including, without limitation, under “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business Description”, and include, but are not limited to, statements regarding the objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs or plans of the MTN Group and its subsidiaries (the “Group”) or the Group’s intentions relating to acquisitions, competitive strengths and weaknesses, business strategy and the trends management anticipates in the telecommunications industry and the political and legal environment in which the Group operates and other information that is not historical information.

In some cases, forward-looking statements may be identified by words such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “plans”, “should”, “could”, “would”, “may”, “will”, “seeks”, “estimates”, “probability”, “risk”, “target”, “goal”, “objective”, “future” or similar expressions or variations on such expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements.

The Issuer and the Guarantors have identified some of the risks inherent in forward-looking statements under “Risk Factors” in this Offering Circular. Other important factors that could cause the Group’s actual results, performance, achievements or financial condition to differ materially from those in forward-looking statements include, among others: • changes in government policies or political, social, economic, legal, regulatory or accounting conditions in South Africa, Nigeria or other jurisdictions where any such changes could affect the Group’s financial condition, results or prospects; • the Group’s ability to obtain and retain the licences necessary for doing business and to comply with regulatory requirements; • the Group’s ability to fund future operations and capital needs through borrowing or otherwise; • the Group’s ability to implement successfully any business strategies; • legal or regulatory claims in connection with our operations; • the Group’s ability to integrate businesses, including recently acquired businesses, and to realise operational benefits from such integration; • the Group’s ability to retain or increase market share and retain customers; • the Group’s ability to attract and retain qualified personnel; • the results of the Group’s investments and capital expenditures; • the loss of suppliers or disruption of supply chains; • a decrease in demand for the Group’s products and services; • the effects of increased competition in the telecommunications market; • the effects of inflation, interest rate and exchange rate fluctuations; • reliance on software and hardware systems that are susceptible to failure; and • the Group’s success in identifying other risks to businesses and managing the risks of the aforementioned factors.

This list of important factors is not exhaustive. There may be other risks, including risks of which the Issuer and the Guarantors are unaware, that could adversely affect the Group’s results or the accuracy of forward-looking statements in this Offering Circular. When relying on forward-looking statements, investors should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which the Issuer and the Guarantors operate. Such forward-looking statements speak only as at the date on which they are made. Accordingly, neither the Issuer nor any Guarantor undertakes

vi any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. Neither the Issuer nor any Guarantor makes any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved. Such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario.

The forward-looking statements contained in this Offering Circular are based on the beliefs of the Group’s management, as well as the assumptions made by and information currently available to the Group’s management. Although the Group’s management believes that the expectations reflected in such forward-looking statements are reasonable, no assurances can be given that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. Important factors that could cause actual results to differ materially from the Group’s management’s expectations are contained in cautionary statements in this Offering Circular, including, without limitation, in conjunction with the forward-looking statements included in this Offering Circular and specifically under “Risk Factors” and above. In addition, under no circumstances should the inclusion of such forward-looking statements in this Offering Circular be regarded as a representation or warranty by the Issuer, the Guarantors, the Managers or any other person with respect to the achievement of the results set out in such statements or that the underlying assumptions used will in fact be the case. If any of these risks and uncertainties materialise, or if any of these underlying assumptions prove to be incorrect, the Group’s actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected.

All subsequent written and oral forward-looking statements attributable to the Issuer or any Guarantor are expressly qualified in their entirety by reference to these cautionary statements.

vii INDUSTRY AND MARKET DATA

This Offering Circular contains historical and forward-looking market and industry data which have been obtained from Group data and from industry publications, market research and publicly available information. In particular, market data, statistics and information relating to the demographics and economy in Africa and the Middle East and in particular the countries in which the Group operates and the telecommunications markets in those areas have been derived from available Group data, as well as data published by the UN World Population Prospects, the CIA World Factbook, World Bank, DataMarket, the Nigerian Communications Commission, the African Development Bank Group, IMF, Analysys Mason and Marketline.

The information provided from the sources referred to above has been accurately reproduced and, as far as the Issuer and the Guarantors are aware and have been able to ascertain from information published by such sources, no facts have been omitted which would render the reproduced information inaccurate or misleading. Where third-party information has been used in this Offering Circular, the source of such information has been identified.

Neither the Issuer nor any Guarantor has independently verified the information in industry publications or market research, although management believes the information contained therein to be reliable. None of the Issuer, any of the Guarantors nor any of the Managers represents that this information is accurate.

viii PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Financial Information This Offering Circular contains (i) consolidated financial information for the Group as at and for the six months ended 30 June 2016 and 2015, derived from our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016, contained elsewhere in this Offering Circular, (ii) consolidated financial information for the Group as at and for the years ended 31 December 2015 and 2014, derived from our audited consolidated financial statements for the year ended 31 December 2015, and (iii) consolidated financial information for the Group as at and for the year ended 31 December 2013, derived from our audited consolidated financial statements for the year ended 31 December 2014, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, the South African Institute of Chartered Accountants Financial Reporting Guides as issued by the Accounting Practices Committee, financial pronouncements as issued by the Financial Reporting Standards Council, the Johannesburg Stock Exchange listing requirements and the requirements of the Companies Act, 2008 (the “South African Companies Act”).

The financial information included in this Offering Circular is not intended to comply with the United States Securities and Exchange Commission requirements. Compliance with such requirements would require, among other things, compliance with the requirements of Regulation S-X and the exclusion of certain non-IFRS measures.

Restatement of financial information The consolidated financial information for the six months ended 30 June 2015 has been restated in our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016. Following the change in respect of the income statement line items as disclosed in the income statement for the year ended 31 December 2015, the expense categories “Government and regulatory costs” and “Value-added services (VAS) costs” have been disclosed separately or reclassified between expense categories for the six months ended 30 June 2015 to present the expenses in more appropriate categories in accordance with the classification for six months ended 30 June 2016. In line with the presentation for the six months ended 30 June 2016, cash used in acquiring intangible assets in the six months ended 30 June 2015 has been disclosed as a significant item separately from cash used in other investing activities in the condensed consolidated statement of cash flows. Please see note 16 to our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016 included elsewhere in this Offering Circular.

The consolidated financial information for the year ended 31 December 2014 has been restated in our audited consolidated financial statements for the years ended 31 December 2015. Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2015, the expense categories “Government and regulatory costs” and “Value-added services (VAS) costs” have been disclosed separately or reclassified between expense categories for the year ended 31 December 2014 to present the expenses in accordance with the classification for the year ended 31 December 2015. In addition, an amount of R1,293 million in respect of the year ended 31 December 2014 was reclassified from data revenue to airtime and subscription revenue in our audited consolidated financial statements for the year ended 31 December 2015. The Group manages its risk to foreign exchange exposure on a net basis and consequently the foreign exchange gains and losses previously disclosed on a gross basis for the year ended 31 December 2014 and included in the relevant finance income or finance cost line are disclosed on a net basis in the audited consolidated financial statements for the year ended 31 December 2015. See note 1.6 to our audited consolidated financial statements for the year ended 31 December 2015 included elsewhere in this Offering Circular.

Prior to 1 January 2014, we applied the residual value method of revenue recognition (“Residual Method”) in respect of multiple element revenue arrangements. Under the Residual Method, fair value is ascribed to each of the undelivered elements in the transaction (typically the service contract) and any consideration remaining is allocated to the delivered item(s) (typically the handset). From 1 January 2014, we applied the relative fair value method of revenue recognition (the “Relative Fair Value Method”) in respect of multiple element revenue arrangements. The Relative Fair Value Method allocates the consideration received or receivable to each of the elements of a transaction (delivered and undelivered) according to their stand-alone selling prices. This change in accounting treatment affects our results and financial position information in our operation in South Africa and, as a result, our consolidated results and financial position information. Accordingly, in this Offering Circular, unless otherwise indicated, to aid comparability all comments and amounts in respect of our results and financial position information are presented under the Relative Fair Value Method of revenue recognition in respect of

ix multiple element revenue arrangements which differs from the corresponding financial information contained in the 2013 accounts. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements— Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and note 48 to our audited consolidated financial statements for the year ended 31 December 2014 for more information.

Presentation of certain information on a constant currency basis Furthermore, as a result of the impact of exchange rate fluctuations on our results, in our results of operations discussion in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we have presented revenue changes between periods on a constant currency or “organic” basis to identify the underlying operational drivers impacting the change in revenue. In determining the change in constant currency terms, the latest year’s results have been adjusted to the prior year’s average exchange rates, which are based on a weighted average calculation of monthly exchange rates performed at a disaggregated level for each of the Group’s components and key revenue lines. This detailed basis of measurement isolates the impact of currency volatility in each territory during the year. The organic growth percentage has then been calculated by utilising the constant currency results compared to the prior year’s results. In addition, in respect of Irancell, MTN Sudan and MTN Syria, the constant currency information has been prepared excluding the impact of hyperinflation. In 2015, the Iranian economy was assessed to no longer be a hyperinflationary environment. We therefore discontinued hyperinflation accounting in that operation effective 1 July 2015. The organic information may not fairly present our results of operations. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Effect of exchange rate fluctuations” for more information.

Adjustments for the impact of currencies of hyperinflationary economies The financial statements (including comparative amounts) of the Group entities whose functional currencies are the currencies of hyperinflationary economies are adjusted in terms of the measuring unit current at the end of the reporting period. All items recognised in the income statement are restated by applying the change in the general price index from the dates when the items of income and expenses were initially earned or incurred. Therefore, on our consolidated income statement, revenue is presented after adjusting for the impact of the currencies of hyperinflationary economies. Revenue from products and services—revenue from outgoing voice, revenue from incoming voice, revenue from data, revenue from SMS, revenue from mobile telephones and accessories and revenue from other sources as well as revenue by geographical breakdown—presented in this Offering Circular is presented without adjustments being effected for the impact of currencies of hyperinflationary economies. Consequently, total revenue comprises revenue from products and services or revenue on a geographical basis together with an adjustment for the impact of hyperinflation. As a result, in this Offering Circular, the proportionate contribution of revenue from a category of products and services or from a specific hyperinflationary economy is expressed as revenue from that category of products and services or that specific hyperinflationary economy, prior to any adjustments for hyper-inflation, as a percentage of total revenue, including any adjustments for hyperinflation.

Presentation of alternative performance measures (“APMs”) This Offering Circular contains certain non-IFRS measures or alternative performance measures (“APMs”), including “EBITDA”, “EBITDA margin”, “net debt” and “net debt/EBITDA ratio”. We have presented EBITDA and the associated margin as we believe that they enhance an investor’s understanding of our financial performance and because we use these measures in our business operations to evaluate the performance of our operations. These measures are not a measure of a company’s financial performance or earnings under IFRS and as such should not be viewed as an alternative to profit, operating profit or other measures of earnings under IFRS. Nor should these measures be viewed as an alternative to cash flow from operating activities or as a measure of liquidity. We use these measures as supplemental measures of operating performance because they are measures that are regularly used by security analysts, rating agencies, investors and other parties to evaluate a company’s operating performance. We also believe that these measures serve as a useful indicator of our ability to incur and service our indebtedness. EBITDA and similar measures are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. One should exercise caution in comparing EBITDA as reported by the Group to EBITDA of other companies. We define EBITDA as profit before depreciation of property, plant and equipment, amortisation of intangible assets, impairment of goodwill, finance income, finance costs, share of results of associates and joint ventures

x after tax, net monetary gains/losses and income tax expense. We define EBITDA margin as EBITDA expressed as a percentage of total revenue. For further information on the reconciliation of these measures to measures disclosed in the consolidated financial statements, see “Selected Historical Consolidated Financial and Operating Information—Other Financial and Operating Information”. EBITDA should not be considered an indication of our performance or as an alternative to cash flows as a measure of our liquidity as determined in accordance with IFRS and should not be considered in isolation, because its ability to convey meaningful information is limited in various respects. For example, EBITDA, among other things: • does not reflect any cash capital expenditure requirements for the assets being depreciated and amortised that may have to be replaced in the future; • does not reflect changes in, or cash requirements for, our working capital needs; and • does not reflect the significant financial cost of, or the cash requirements necessary to service interest payments on, our debts.

We have presented net debt and net debt/EBITDA ratio as we believe that they enhance investors’ understanding of our financial position and because we use these measures to evaluate our liquidity and financial profile. We define net debt as the sum of the current and non-current portion of interest-bearing liabilities less cash and cash equivalents, restricted cash and current investments (excluding investments in cell captives). See notes 7.1.3, 7.1.7 and 7.4 to our audited consolidated financial statements for the year ended 31 December 2015 and notes 20, 43.3 and 43.7 to our audited consolidated financial statements for the year ended 31 December 2014 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”. We define the net debt/EBITDA ratio as the ratio of net debt to EBITDA. See “Selected Historical Consolidated Financial and Operating Information—Net Debt” for a reconciliation of net debt to measures disclosed in the consolidated financial statements.

Rounding Certain amounts which appear in this Offering Circular have been subject to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

Currency Presentation References in this document to “US dollars”, “US$” or “$” refer to United States dollars; references to “ZAR”, “R” or “Rand” are to South African Rand, the lawful currency of South Africa; references to “Euro” or “EUR” are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended; references to “Naira”, “N” or “NGN” are to the Nigerian Naira, the lawful currency of Nigeria; references to “GNF” are to the Guinean Franc, the lawful currency of Guinea-Conakry; references to “GBP” are to the pound sterling, the lawful currency of the UK; references to “Cedi” are to the Ghanaian Cedi, the lawful currency of Ghana; references to “Syrian pound” or “SYP” are to the Syrian Pound, the lawful currency of Syria; references to “SDG” are to the Sudanese Pound, the lawful currency of Sudan; references to “SSP” are to the South Sudanese Pound, the lawful currency of South Sudan; references to “ZMW” are to the Zambian Kwacha, the lawful currency of Zambia and references to “Iranian rial” or “IRR” are to the Iranian rial, the lawful currency of Iran.

xi EXCHANGE RATES

The table below sets forth, for the periods indicated, the period-end, average and high and low rates determined by the Bloomberg Composite Rate, in each case for the purchase of ZAR, all expressed in ZAR per US dollar. The ZAR/US$ exchange rate determined by the Bloomberg Composite Rate on 5 October 2016 was ZAR 13.7028 to US$1. The rates may differ from the actual rates used in the preparation of MTN Group’s financial statements and other financial information appearing in this Offering Circular.

Period High Low Average(1) End(2) ZAR per US$1.00 Year 2011 ...... 8.5412 6.5791 7.2609 8.0751 2012 ...... 8.9608 7.4531 8.2098 8.4778 2013 ...... 10.5404 8.4575 9.6504 10.5206 2014 ...... 11.7600 10.3008 10.8493 11.5510 2015 ...... 15.7558 11.2815 12.7773 15.4868 Month Six months ended 30 June 2015 ...... 12.5794 11.2815 11.9177 12.1514 March 2016 ...... 15.9532 14.6915 15.3809 14.6915 April 2016 ...... 15.2295 14.2185 14.6062 14.2506 May 2016 ...... 15.9223 14.2506 15.3028 15.6809 June 2016 ...... 15.6330 14.4683 15.0462 14.6895 Six months ended 30 June 2016 ...... 16.9238 14.2185 15.4106 14.6895 July 2016 ...... 14.7584 13.8984 14.4063 13.8984 August 2016 ...... 14.7313 13.2814 13.7988 14.7313 September 2016 ...... 14.6623 13.4570 14.0515 13.7324 (1) For each of the years 2011 to 2015, represents the yearly averages of the ZAR/US dollar exchange rates determined by the Bloomberg Composite Rate for the relevant period. For the months of 2016, this represents the monthly averages of the ZAR/US dollar exchange rates determined by the Bloomberg Composite Rate for such month, which averages were computed by calculating the average of the daily ZAR/US dollar exchange rates on the business days of each month during the relevant period. (2) Represents the ZAR/US dollar exchange rates for the purchase of US dollars determined by the Bloomberg Composite Rate on the last working day of the relevant period.

Fluctuations in the exchange rates between the Rand and the US dollar in the past are not necessarily indicative of fluctuations that may occur in the future. No representation is made that Rand amounts referred to in this Offering Circular could have been or could be converted into US dollars at the above exchange rates or at any other rate.

xii ENFORCEABILITY OF CIVIL JUDGMENTS

The Issuer is a limited liability company incorporated under the laws of Mauritius, and the Guarantors, excluding MTN Mauritius (which is a limited liability company organised under the laws of Mauritius), are limited liability companies incorporated under the laws of South Africa. A majority of the directors and officers of the Issuer and the Guarantors named herein reside inside South Africa or Mauritius and all or a significant portion of the assets of such persons may be, and the majority of the assets of the Issuer and the Guarantors are, located in South Africa, Nigeria, Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius. As a result, it may not be possible for investors to effect service of process upon such persons outside South Africa, Nigeria, Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius, as applicable, or to enforce any judgments against them obtained in the courts of jurisdictions other than South Africa, Nigeria, Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius, as applicable, predicated upon the laws of such other jurisdictions. In order to enforce such judgments in South Africa, investors should initiate enforcement lawsuits before the competent South African courts.

Recognition of Non-Mauritian Judgments in Mauritius A judgment obtained in a foreign court may be enforced in Mauritius pursuant to a procedure known as exequatur. The Supreme Court of Mauritius (the “Supreme Court”) may register and enforce, by way of exequatur under article 546 of the Code de procédure civile, an in personam judgment of a foreign court obtained against the Issuer or any Guarantor without reconsideration of the merits, if the judgment remains valid and capable of execution in the country where it was delivered, the Issuer or such Guarantor has been regularly summoned to the proceedings leading to the judgment and the foreign court had jurisdiction over the Issuer or such Guarantor and the matter submitted to it. The Supreme Court can refuse to recognise and enforce a judgment obtained in a foreign court if the judgment is contrary to any principle affecting public order, as such term is interpreted under Mauritian law, the judgment was obtained by fraud or in a manner contrary to the principles of natural justice, including in respect of procedure, or the judgment is for a claim that under Mauritian law would be characterised as based on a tax or as being expropriatory, penal or contrary to any other public law. Further, the Supreme Court has discretion to stay or decline to hear an action on the foreign judgment if the foreign judgment is under appeal or there is another subsisting judgment in any jurisdiction relating to the same cause of action as the foreign judgment.

There exists also an alternative procedure for enforcement of judgments rendered by superior courts in the United Kingdom and the enforcement of such UK judgments will be made in accordance with the Reciprocal Enforcement of Judgments Act 1923.

A foreign arbitral award may be recognised and enforced in Mauritius pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 2001. The recognition and enforcement of the foreign arbitral award may be refused by the Supreme Court at the request of the party against whom it is invoked on certain limited grounds. Further, the recognition and enforcement can also be refused if the Supreme Court finds that the subject-matter of the dispute is not capable of settlement by arbitration under the law of Mauritius or the recognition or enforcement of the award would be contrary to the public policy of Mauritius.

Recognition of Non-South African Judgments in South Africa An authenticated judgment obtained outside of South Africa will be recognised and enforced in accordance with procedures ordinarily applicable under South African law for the enforcement of foreign judgments, namely a provisional sentence summons or application or action claiming enforcement of the foreign judgment; provided that the judgment was pronounced by a proper court of law, was final and conclusive (in the case of a judgment for money, on the face of it), has not become stale, and has not been obtained by fraud or in any manner opposed to natural justice or contrary to the international principles of due process and procedural fairness, the enforcement thereof is not contrary to South African public policy, the foreign court in question had jurisdiction and international competence according to the applicable South African rules on international competence and enforcement is not precluded in terms of the Protection of Businesses Act, 1978 (the “SA PB Act”). A foreign judgment will probably not be recognised in South Africa if the foreign court exercised jurisdiction over the defendant solely by virtue of an attachment to found jurisdiction or on the basis of domicile alone. South African courts will not enforce foreign revenue or penal laws (e.g. fines or governmental levy (distinct from private judgments)) and South African courts have, as a matter of public policy, generally not enforced awards for multiple or punitive damages. In terms of the Conventional Penalties Act, 1962, a creditor may not, in respect of an act or omission which is the subject of a penalty stipulation, recover both the penalty and damages or except

xiii where expressly provided for, damages in lieu of the penalty. Certain defined judgments obtained in a court other than South Africa may not be enforced in South Africa without the permission of the South African Minister of Trade and Industry under the SA PB Act. Permission from the South African Minister of Trade and Industry will similarly not be granted if it would result in the recovery of punitive damages.

Where obligations are to be performed in a jurisdiction outside South Africa they may not be enforceable under the laws of South Africa to the extent that such performance would be illegal or contrary to public policy under the laws of South Africa or the foreign jurisdiction, or to the extent that the law precludes South African courts from granting extra-territorial orders. South African courts have the discretion of refusing the granting of orders with extra-territorial effect if the granting of such order would be ineffectual.

Under the South African Recognition and Enforcement of Foreign Arbitral Awards Act, 1977 (the “SA Enforcement Act”), any foreign arbitral award may, subject to the provisions of sections 3 and 4 thereof, be made an order of court. Any such award which has been made an order of court pursuant to the provisions of the SA Enforcement Act may be enforced in the same manner as any judgment or order to the same effect (subject to the provisions of the SA PB Act, which apply mutatis mutandis to foreign arbitral awards). A South African court may refuse to enforce a foreign arbitral award if it finds that the reference to arbitration would not have been permissible in South Africa in respect of the dispute, or enforcement of the award would be contrary to public policy in South Africa.

xiv TABLE OF CONTENTS

Page INFORMATION ...... iii STABILISATION ...... iv AVAILABLE INFORMATION ...... v FORWARD-LOOKING STATEMENTS ...... vi INDUSTRY AND MARKET DATA ...... viii PRESENTATION OF FINANCIAL AND OTHER INFORMATION ...... ix EXCHANGE RATES ...... xii ENFORCEABILITY OF CIVIL JUDGMENTS ...... xiii RISK FACTORS ...... 1 OVERVIEW OF THE GROUP ...... 22 THE OFFERING ...... 30 USE OF PROCEEDS ...... 34 CAPITALISATION ...... 35 SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION ..... 36 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 40 BUSINESS DESCRIPTION ...... 82 MANAGEMENT ...... 113 RELATED PARTY TRANSACTIONS ...... 120 DESCRIPTION OF OTHER INDEBTEDNESS ...... 121 INDUSTRY ...... 129 CONDITIONS OF THE 2022 NOTES ...... 133 CONDITIONS OF THE 2026 NOTES ...... 146 THE GLOBAL CERTIFICATES ...... 147 BOOK-ENTRY CLEARANCE SYSTEMS ...... 149 TAXATION ...... 151 EXCHANGE CONTROL ...... 156 SUBSCRIPTION AND SALE ...... 157 SELLING RESTRICTIONS ...... 160 TRANSFER RESTRICTIONS ...... 162 COMMERCIAL PAPER REGULATIONS UNDER THE SOUTH AFRICAN BANKS ACT ...... 165 LEGAL MATTERS ...... 166 GENERAL INFORMATION ...... 167 GLOSSARY ...... 169 INDEX TO FINANCIAL STATEMENTS ...... F-1

xv RISK FACTORS

An investment in the Notes involves certain risks. Prior to making an investment decision, prospective purchasers of the Notes should carefully read the entire Offering Circular. In addition to the other information in this Offering Circular, prospective investors should carefully consider, in light of their own financial circumstances and investment objectives, the following risks before making an investment in the Notes. If any of the following risks actually occurs, the market value of the Notes may be adversely affected. In addition, factors that are material for the purpose of assessing the market risks associated with the Notes are also described below. Each of the Issuer and the Guarantors believes that the factors described below represent the principal risks inherent in investing in the Notes, but makes no representation that the statements below regarding the risks of holding any Notes are exhaustive.

RISKS RELATING TO OUR BUSINESS If we do not continue to provide telecommunications or related services that are useful and attractive to customers, we may not remain competitive, and our business, financial condition, results of operations and prospects may be adversely affected. Our commercial success depends on providing services such as mobile voice, data access and digital services that provide our customers with attractive products and services at a competitive cost. Many of the services we offer are technology-intensive and the development or acceptance of new technologies may render such services non- competitive, replace such services or reduce prices for such services. The telecommunications industry is characterised by an increasing pace of technological change in existing mobile systems and industry standards combined with ongoing improvements in the capacity and quality of technology to cater to changing customer needs. As new technologies develop, our equipment may need to be replaced or upgraded, we may need to acquire additional licences and bandwidth or our networks may need to be rebuilt in whole or in part in order to sustain our competitive position as a market leader. While we endeavour to upgrade our existing infrastructure (such as by upgrading our second-generation wireless networks (“2G”) to third and fourth generation wireless networks (“3G” and “LTE”, respectively) and fibre, to respond successfully to technological advances, we may require substantial capital expenditures and access to related or enabling technologies in order to integrate the new technology with our existing technology. If we are unable to anticipate customer preferences or industry changes, or if we are unable to modify our service offerings on a timely and cost-effective basis, we may lose customers.

As convergence of services accelerates, we have made and will have to continue to make substantial additional investments in new technologies to remain competitive and changes in technology and services may also lead us to competing with new competitors including both emerging players as well as established technology companies entering new sectors. Our operating results will also suffer if our new products and services are not responsive to the needs of our customers, are not appropriately timed with market opportunities, are not effectively brought to market or are not priced competitively. The new technologies we choose may not prove to be commercially successful or profitable.

We cannot be certain that existing, proposed or as yet undeveloped technologies will not become dominant in the future and render the technologies we use less commercially viable or profitable or that we will be successful in responding in a timely and cost-effective way to keep up with new developments. As telecommunications technology continues to develop, our competitors may be able to offer telecommunications products and services that are, or that are perceived to be, substantially similar or better than those offered by us. This could have a material adverse effect on our business, financial condition, results of operations and prospects. If we are not successful in anticipating and responding to technological change and resulting consumer preferences in a timely and cost-effective manner, our quality of services, business, financial condition, results of operations and prospects could be materially adversely affected.

A failure in the operations of our networks, gateways to our networks or the networks of other operators could adversely affect our business, financial condition, results of operations and prospects. We depend to a significant degree on the uninterrupted operation of our networks to provide our services. From time to time, customers of certain operating companies within our Group have experienced blocked or dropped calls or slow data speeds because of network capacity constraints. For example, we recently had a 48-hour network outage in some areas in South Africa. We may not be able to improve or maintain these relevant networks at current levels, particularly if our traffic volume grows significantly beyond our headroom capacity.

1 For example, growth in data services and consequently data revenue has at times been constrained in Nigeria as a result of slow data speeds. In particular, since the majority of our markets (other than South Africa) are prepaid markets with no fixed-term contracts, network outages or other issues can have a particularly significant impact as customers may choose an alternative service provider, and we may need to engage in costly marketing activities to retain or attract customers.

We also rely to a certain extent on interconnection with the networks of other telecommunications operators to carry calls from our customers to the customers of fixed-line operators and other mobile operators, both within a given country and internationally. While we have interconnection and international roaming agreements in place with many other telecommunications operators, we have no direct control over the quality of these networks and the interconnections and international roaming services they provide. Any difficulties or delays in interconnecting with other networks and services, or the failure of any operator to provide reliable interconnections or roaming services to us on a consistent basis, could result in a loss of subscribers or a decrease in traffic, which could adversely affect our business, financial condition, results of operations and prospects.

In addition, our network, including our information systems, information technology and infrastructure, and the networks of other operators with whom our customers interconnect, are vulnerable to damage or interruptions in operation from a variety of sources including earthquakes, fires, floods, power loss, equipment failure, network software flaws, transmission cable disruption or similar events. Any interruption of our operations or the provision of any service, including for a short period of time, whether from operational disruption, natural disaster or otherwise, could damage our ability to attract and retain customers, cause significant customer dissatisfaction and have a material adverse effect on our brand, business, financial condition, results of operations and prospects.

We are subject to intense competition in many of the markets in which we operate. We operate in an increasingly competitive environment, particularly around pricing, across our markets which adversely affects our revenue and margins. Our competitors generally fall into three broad categories: (i) international diversified telecommunications companies; (ii) state-owned and partly state-owned telecommunications companies; and (iii) local and regional telecommunications companies. Some of our global competitors have substantially greater financial, personnel, technical, marketing and other resources. In a number of countries, our competitors are also government-owned entities or major local business participants, and may have the advantage of being an incumbent service provider. Local and regional operators may be able to leverage their knowledge of the local markets more efficiently than us.

Increasing competition has also led, in certain markets, to declines in the prices we are able to charge for our services. For example, in 2015, voice tariffs declined by 25% across the Group’s operations in the year’s average price per minute in US dollar terms and the Group’s effective data tariff in US dollar terms declined by 45% and may lead to further price declines in the future, which could adversely affect our overall profitability. Some of our competitors may further reduce pricing and offer unsustainable price reductions or discounts in an effort to strengthen their market position, and we may not be able to match their price reductions while maintaining our profitability.

The continuing trend toward business combinations, consolidation in the media industry and strategic alliances in the telecommunications industry may create increased competition, including from non-conventional and OTT players (internet-based alternatives to traditional telephony services) such as social networking sites, messaging applications and video on demand services. Although new laws and regulatory initiatives may provide us with increased business opportunities by removing or substantially reducing certain barriers to competition, in so doing they also create a more competitive business environment and may encourage new entrants, which could adversely affect our key performance indicators, such as our total voice minutes on network and data usage on network.

Increased competition may also lead to increased churn, a reduction in the rate at which we are able to add new customers or to a decline in customer numbers and a decrease in our market share as customers purchase telecommunications services, or other competing services, from other providers and/or increasingly switch between providers based on pricing and the products and services that are offered.

There can be no assurance we will not experience increases in churn rates, reflecting increased numbers of customer deactivations, particularly as competition for existing customers intensifies. An increase in churn rates may result in lower revenue and higher costs resulting from the need to replace customers, and may consequently have a material adverse effect on our business, financial condition, results of operations and prospects.

2 Our revenue from voice services is declining and unlikely to improve and our future revenue will be increasingly dependent on data services Revenue from fixed-line and mobile telephony voice services is in decline across the industry globally, but at the same time there is an upward trend in data revenue. Data revenue made up 25.1% of our total revenue in the six months ended 30 June 2016 and 23.0% of our total revenue in the year ended 31 December 2015, as compared to 17.7% and 14.9% of total revenue in the years ended 31 December 2014 and 31 December 2013, respectively. We expect that the demand for data services will continue to be driven by rising smartphone and tablet penetration and usage, usage of video and other multimedia services, as well as improvements in mobile network capability. Although we have identified data revenue as one of the most important drivers for future profit growth and are investing in and upgrading our infrastructure and new consumer propositions in response to this trend, there is no assurance that we will successfully monetise the increase in data traffic and any increase in the revenue generated from data services may not be sufficient to offset the substantial capital expenditures required to upgrade our networks to handle increased data traffic as well as the decline in voice services revenue. This could have a material adverse effect on our business, financial condition, results of operations and prospects.

We have operations in sanctioned countries that could subject us to increased government scrutiny, make business more difficult and expose us to allegations or investigations in respect of sanctions violations, with possible damage to our reputation and financial position. We have conducted or currently conduct business activities in a wide range of countries, including Iran, Sudan and Syria which have been, are or may become subject to sanctions regimes of the United States, the European Union, United Kingdom, and United Nations (“UN”). In connection with such business, we have engaged or currently engage in business with certain persons or entities that are the target of sanctions.

The United States, through sanctions overseen primarily by the US Treasury Department’s Office of Foreign Assets Control and the US State Department, and the European Union and its Member States have laws that regulate, restrict or prohibit certain business activities in sanctioned countries or dealing with certain individuals or entities within such countries or with significant ties to such countries. Any failure to comply with these laws and regulations may expose us to risk of adverse and material financial, operational, or other impacts.

Neither we nor any of our affiliates is subject to US sanctions as a US person or as an entity located in the United States; however, certain US secondary (extraterritorial) sanctions are applicable to all US and non- US persons regardless of whether they have any ties or contacts to the United States. We are not generally subject to EU sanctions as an EU person or as an entity located in the EU. However, some of our affiliates are organised in EU Member States or affiliated jurisdictions (Cyprus, Belgium, Germany, Luxembourg and the British Virgin Islands, respectively and some of our tower investments are held in Dutch entities), and are subject to EU sanctions.

Our activities in sanctioned countries are: • In Iran, our joint venture, Irancell Telecommunication Company Services (PJSC) (“Irancell”), in which we hold a 49% interest, provides a range of telecommunications services to 47.3 million subscribers or 46.4% of the Iranian market, as at 30 June 2016, representing 20% of our total subscriber base. • In Sudan, our affiliate, MTN Sudan Company Limited, in which we hold a majority interest, provides prepaid and postpaid telecommunications services to 8.8 million subscribers or 33.8% of the market. Our business in Sudan generated 3% of our total revenue, 4.4% of our total EBITDA and 4% of our total subscribers for the six months ended 30 June 2016. In 2015, our business in Sudan represented 2.4% of our total revenue, 2.1% of our total EBITDA and 4% of our total subscribers. • In Syria, our affiliate, MTN Syria (JSC), in which we hold a majority interest, provides telecommunications services to 5.8 million subscribers, representing 40.9% of the market, as at 30 June 2016. Our business in Syria generated 1.3% of our total revenue, 1.6% of our total EBITDA and 2% of our total subscribers for the six months ended 30 June 2016. In 2015, our business in Syria represented 1.8% of our total revenue, 0.8% of our total EBITDA and 3% of our total subscribers.

Our business interests and activities have been disclosed to the South African government and the US State Department and Treasury Department. The US government applies extensive sanctions against Iran, some of which may also apply to non-US persons, under numerous laws and executive orders. The US State Department has historically given guidance on sanctions compliance which may be applicable to our business operations.

3 Sanctions regimes and related laws and regulations are complex and constantly changing. Sanctions regimes and related laws and regulations may be enacted, amended, enforced or interpreted in a manner that materially impacts our operations. We work closely with US, South African, and other legal authorities to remain compliant with all applicable sanctions. Neither we nor our affiliates, to the best of our knowledge, are the subject of a current government investigation or enforcement action in respect of any sanctions matter.

If we or our affiliates are found to be in violation of sanctions laws, we or our affiliates could be subject to financial or other penalties, and investors may decide, or be required, to divest their interest, or not to invest, in us. The enforcement of sanctions laws may interfere with our operations. For example we have been unable for a number of years to repatriate significant funds (R15.4 billion as at 30 June 2016) owed to us by our Iranian joint venture, Irancell; however, following the relaxation in January 2016 of nuclear-related sanctions imposed on Iran by the US and the EU it may become possible to repatriate these funds as international financial institutions become more accustomed to and comfortable with doing business in Iran. Even where there is no violation of sanctions laws, government investigations or other actions by pressure groups related to the conduct of business in countries subject to international sanctions may result in reputational or other harm to us. Any of the foregoing could result in a material adverse effect on our business, financial condition and results of operations.

Because we operate in highly regulated business environments, changes in law, regulations or governmental policy affecting our business activities could adversely affect our business, financial condition, results of operations and prospects. We have ventures in a large number of jurisdictions, and therefore we must comply with an extensive range of laws and regulations pertaining to the licensing, construction and operation, as well as monitoring (including call interceptions), of telecommunications networks and services, as implemented by relevant agencies or other regulatory bodies. Among the most significant of these laws and regulations are those governing tariffs, customer registration and identification, the ability to offer and/or bundle products and services, the allocation of frequency spectrum, interconnection and access, and those governing the regulatory agencies that monitor and enforce regulation and competition laws that apply to the telecommunications industry. In addition, we are required to comply with anti-money laundering, anti-bribery and corruption and sanctions laws and regulations. Decisions by regulators regarding the grant, amendment or renewal of licences, to us or to third parties, or regarding laws, rules, and regulations, could materially and adversely affect our operations in these geographic areas. We cannot provide any assurance that governments or regulatory bodies in the countries in which we operate will not issue telecommunications licences to new operators whose services will compete with those services provided by us.

As we operate in a number of emerging markets, the interpretation and application of laws and regulations affecting telecommunications services may be subject to increased uncertainties due to developing or incomplete regulatory regimes and ensuring compliance may be more difficult compared to more developed markets. In many of the countries in which we operate, local regulators have significant latitude in the administration and interpretation of telecommunications licences and laws, rules and regulations. In addition, the actions taken by these regulators in the administration and interpretation of these licences and laws, rules and regulations may be influenced by local political and economic pressures. Terrorist-related activities have caused an increased focus by regulators in many of the jurisdictions in which we operate on subscriber registration requirements and the need to disconnect improperly registered customers. Obtaining required identity documentation can be challenging in a number of the markets in which we operate due to a lack of, or incomplete, national identity scheme. For example, in Nigeria and Uganda stricter customer SIM card registration requirements have resulted in MTN Nigeria disconnecting 6.7 million subscribers in 2015 and a further 4.5 million at the end of February 2016 and MTN Uganda disconnecting 3.7 million subscribers in 2015 who did not fully comply with the subscriber registration requirements and subscriber net additions for the year were impacted negatively, eroding the market share of MTN Nigeria and MTN Uganda.

Enforcement of regulations may also be subject to increased uncertainties, including limited regulatory history, inconsistent application of regulations and unclear penalties, which may be sizeable. For example, in Nigeria in October 2015, the Nigerian Communications Commission (“NCC”) imposed a N1.040 trillion fine (which was at the time equivalent to US$5.2 billion) on MTN Nigeria for failure to disconnect improperly registered customers on a timely basis. The fine was subsequently reduced to a total cash amount of N330 billion over three years (as at 10 June 2016, the equivalent of US$1.671 billion at the official exchange rate prevailing at the time), amongst other conditions, in a settlement reached on 10 June 2016 to the Federal Government of Nigeria in full and final settlement of the matter. For a further discussion, see “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.” Accordingly, although we seek to comply with prevailing regulations in each of our markets, we cannot provide any assurance that we will not be subject to future regulatory enforcement actions.

4 Increases in, or changes to, regulation could result in higher operational costs and decrease our ability to present attractive offers to our subscribers and potential subscribers, which could adversely affect our business, financial condition and results of operations. In addition, other changes in the regulatory environment concerning the use of mobile phones may lead to a reduction in the usage of mobile phones or otherwise adversely affect us. Decisions by regulators and new legislation, including in relation to retail, wholesale and interconnect price regulation, could adversely affect the pricing of, or adversely affect the revenue from, the services we offer. Decisions by regulators may include limiting our pricing flexibility, raising our costs, reducing our retail or wholesale revenues or conferring greater pricing flexibility on our competitors.

The industry in which we operate is constantly advancing and, as a result, the laws applicable to this industry are evolving. In addition, enforcement priorities are subject to change and we are subject to additional laws and regulations, including, but not limited to, those governing anti-money laundering requirements, anti-bribery and anti-corruption requirements, sanctions and licensing regimes, as we introduce new products and services. There can be no assurance that we will be able to comply with the evolving legal and regulatory landscape.

Our ability to grow profitably depends in part on our ability to continue to grow internationally through organic expansion and/or further acquisitions. Our ability to grow profitably will depend in part on our ability to continue to grow our international operations through organic expansion and/or further acquisitions. Such acquisitions may vary in size, and could be significant enough that they would have a material impact on the Group and require an increase in our overall level of indebtedness and leverage. The success of our acquisition and investment strategy depends on the ability of management to identify and compete for suitable acquisition and investment targets, to assess the value, strengths, weaknesses, contingent or other liabilities and potential profitability of such acquisitions and investments, to negotiate acceptable purchase, financing and other terms and, in some cases, the selection of appropriate international and local partners, and the continued contributions by certain of our key management and technical personnel. Our acquisition and investment strategy also depends on our ability to obtain the appropriate regulatory and governmental approvals, licences, spectrum allocation and registrations, and may be limited by regulatory constraints in the countries in which we operate due to antitrust laws, asset control laws or political conflicts. See “—Current and future antitrust and competition laws in the countries in which we operate may limit our growth and subject us to antitrust and other investigations or legal proceedings”. In addition, the success of our acquisitions and investments will depend on, and may be limited by, our ability to finance acquisitions and investments, which may be limited by our overall level of indebtedness and liquidity profile, restrictions contained in our debt instruments and our other existing and future financing arrangements, our ability to upstream dividends from certain jurisdictions and one-off events such as the payment of the Nigerian Regulatory Fine. See “Business—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine”.

Once targets are acquired, the success of our acquisitions and investments is dependent on the ability of our management and employees to integrate the acquired businesses, to implement an effective management structure given the terms of the investment (particularly in cases where we have only a minority interest or have a joint venture partner), to realise the benefits of expected planned synergies (such as branding, marketing and equipment sourcing) and to successfully operate and manage new and acquired businesses, particularly in new jurisdictions (such as rolling out a new network, managing vendors, establishing billing systems and addressing security concerns). These risks can be particularly significant in emerging markets, where it is difficult to assess the regulatory, business and operating environment given limited history and precedent and other economic operating and political factors. See “—Risks Relating to the Countries in Which We Operate—We are subject to the risks of political, social and economic instability associated with emerging market countries and regions in which we operate or may seek to operate”. Additionally, we regularly evaluate and analyse our businesses from a strategic point of view.

There can be no assurance that we will be able to identify and complete future acquisitions or investments on appropriate terms and at an acceptable cost or that we will successfully execute our acquisition, investment or roll-out plans or that we will realise the benefit of such plans when completed. The use of cash to fund acquisitions may limit the availability of our working capital. In addition, we may exit certain markets in which we operate should there be a compelling business or regulatory reason to do so. We cannot give any assurance that our recent rate of growth will be maintained in the future or that demand for our services will enable us to achieve a satisfactory return on any acquisitions or investments that we make or support the leverage taken on for such acquisitions or investments. Our inability to expand our existing business internationally, or to find, complete, operate and integrate suitable acquisitions or investments and to operate with increased leverage, could have a material adverse effect on our business, financial condition, results of operations and prospects.

5 Our investment plans are based on models reflecting management’s predictions of market conditions in the markets in which we seek to operate. There can be no assurance that such models will correctly anticipate actual investment results. Our investment plans, including in particular our acquisitions and greenfield roll-out plans, are influenced by our modelling of anticipated investment returns. We use the results of our modelling to identify and execute potential investment strategies, such as acquisitions or greenfield network development. These models rely on certain assumptions of market fundamentals, such as macroeconomic assumptions, economic growth forecasts, pricing and competition in the relevant markets, in determining a given investment’s timing, cost and expected profitability for us. If actual market conditions deviate from the assumptions underlying these models, we could be required to modify, scale back or delay our acquisition and expansion plans. If we are not able to modify our plans, our financial returns could be materially adversely affected. Changing market fundamentals could likewise affect our ability to adhere to our acquisition and expansion plans in ways that could have a material adverse effect on our business, financial condition, results of operations and prospects.

We maintain and regularly review our internal controls over financial reporting, risk elevation and corporate compliance, but these controls cannot eliminate the risk of errors or omissions in such reporting or compliance with laws. We maintain and regularly review internal controls over our financial reporting, risk elevation and corporate compliance. However, internal control over financial reporting, risk elevation and corporate compliance have inherent limitations. They are processes that involve human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. In addition, it can be circumvented by collusion or improper management override. We have in the past had issues with risk elevation and corporate compliance in our operating companies, including Nigeria, and have recently engaged external consultants to advise on, among other things, risk elevation and corporate compliance with respect to our operating companies. Following these consultations, we have undertaken remedial actions to strengthen our risk elevation and corporate compliance functions, including anti-money laundering, anti-bribery and corruption and sanctions compliance. A failure to detect or correct deficiencies and weaknesses in a timely manner could have an adverse effect on the accuracy of financial reporting. A failure to adequately monitor compliance with laws and regulations could have a material adverse effect on our business, financial condition, results of operations and prospects. Although we have undertaken organisational changes to strengthen the compliance of our operating companies with laws and regulations and the reporting by the operating companies in to the Group, there can be no assurance that such changes will eliminate the risk of a failure in risk elevation and corporate compliance or prevent enforcement actions by regulators, impositions of fines or reputational damage, among others.

Many of our operations are in countries with volatile exchange rates and negative fluctuations in currency exchange rates could materially and adversely affect our business, financial condition and results of operations. Our results of operations are directly affected by the exchange rates for currencies of countries in which we operate and which fluctuate in relation to the Rand, such as the US dollar, the Euro, the Naira, the Cedi, the Syrian pound and the Iranian rial, amongst others. In particular, our operations are located in emerging markets which are subject to a higher degree of currency volatility compared to more developed markets, and subject our operations to a higher degree of currency risk. Because the Rand is our reporting currency, we must translate the assets, liabilities, turnover and expenses of all of our operations with a functional currency other than the Rand into Rand at the applicable exchange rates, being the period-end rate for assets and liabilities, the average period rate for revenue and expenses, and the transaction date rate for specific transactions in equity.

Consequently, increases or decreases in the value of the Rand in relation to these other currencies may affect the value of these items with respect to our non-Rand businesses in our consolidated financial statements, even if their value has not changed in their original currency. Since 2015, the value of the Rand has fallen against other currencies, which leads to an increase in the reported results of operations of the non-Rand businesses. On the other hand, a stronger Rand against the US dollar will reduce the reported results of operations of the non-Rand businesses. These translations could affect the comparability of our results between financial periods or result in changes to the carrying value of our assets, liabilities and equity. For example, the recent devaluation of the Naira has reduced the value of revenue received by the Group from our operations in Nigeria.

In 2015, 27.2% of our total revenue and 27.7% of our costs were denominated in Rand. In 2015, we had net exchange losses of R1,471 million, of which R712 million, R434 million, R303 million and R75 million were

6 related to net exchange losses in Nigeria, South Sudan, Zambia and Ghana, respectively. We generally do not hedge our foreign currency earnings. There can be no assurance that future exchange rate fluctuations between the Rand and the currencies of countries in which we operate will not have a material adverse effect on our business, financial condition and results of operations.

Fluctuations in rates could increase our finance costs and/or make it difficult to meet our obligations under finance facilities. Our finance costs are highly sensitive to many factors beyond our control, including the interest rate, exchange rate and other monetary policies of governments and central banks in the jurisdictions in which we operate. A significant proportion of our debt is denominated in US dollars which has become more expensive to service as a result of the fall in value of the Rand in relation to the US dollar. As of 30 June 2016, R25,701 million of MTN Group debt and R5,588 million of MTN Nigeria debt is denominated in US dollars. The floating rate portion of our loans and borrowings is subject to interest rate risk resulting from fluctuations in the relevant reference rates underlying such debt. Consequently, because a significant portion of our debt is subject to floating interest rates, any increase in such reference rates will result in an increase in our interest rate expense and may have a material effect on our financial condition, results of operations and prospects. Any future unhedged interest rate risk may result in an increase in our interest expense and may have a material adverse effect on our business, our financial condition and results of operations.

In addition, the imposition of exchange controls and limits on convertibility due to hard currency liquidity shortages may make it difficult for us to repay foreign-denominated debt and/or upstream dividends to the parent company, as has been the case in Nigeria in the last 12 months.

If our risk management and loss limitation methods fail to adequately manage our exposure to losses, the losses we incur could be materially higher than our expectations and our financial condition and results of operations could be materially adversely affected. We historically have sought and will in the future seek to manage our exposure to losses through a number of loss limitation methods, including internal risk management procedures.

Our methods of managing risk include setting a Group framework for general risk management and internal audit which are then implemented by our operating companies. These methods may not predict future exposures, which could be significantly greater than anticipated. Our risk management methods depend on the evaluation of information regarding markets or other matters that are publicly available or otherwise accessible to us and the successful implementation of Group risk policies by our operating companies. This information may not always be accurate, complete, up-to-date or properly evaluated. Any upgrades or changes to our risk management methods might not be successful. Further, insufficient resources and cost-cutting initiatives by our operating companies could impact on their ability to implement the Group risk framework and manage their risks; for example, reducing staff tasked with monitoring fraud could result in our Group being impacted by increased fraud-related costs. Accordingly, if the estimates and assumptions that we enter into our risk models are incorrect, if such models prove to be an inaccurate forecasting tool, or if our operating companies fail to successfully implement our risk framework and policies, the losses we might incur could be materially higher than our expectation of losses, and our financial condition and results of operations could be adversely affected.

We have implemented a series of organisational and management changes in an effort to strengthen our risk elevation and corporate compliance functions. However, there can be no assurance that this will adequately manage our exposure to losses, which could have a material adverse effect on our business, financial condition and results of operations.

Continued cooperation between us and our key equipment and service providers is important to maintain our telecommunications operations. Once a manufacturer of telecommunications equipment has designed and installed its equipment within our system, we will often be reliant on the manufacturer for continued service and supply. We outsource the management and operation of much of our infrastructure to the original equipment manufacturer or technology provider. Our ability to maintain and grow our subscriber base depends in part on our ability to source adequate supplies of network equipment and on the effective management and operation of our network equipment by third parties. For example, we have made substantial equipment purchases from, and have entered into vendor financing arrangements with certain of our vendors in certain jurisdictions. Continued cooperation with these equipment and service providers is essential in order for us to maintain our operations.

7 We do not have direct operational or financial control over our key equipment and service providers, including tower operators, such as American Tower Corp (“ATC”) and IHS Holdings Limited (“IHS”), with whom we have entered into sale and lease back transactions in respect of our tower infrastructure in some of the markets in which we operate, and have limited influence with respect to the manner in which our key equipment and service providers conduct their businesses. Our reliance on these equipment and service providers subjects us to risks resulting from any delays in the delivery of services. We cannot assure investors that our key equipment and service providers will continue to provide equipment and services to us at attractive prices or that we will be able to obtain such equipment and services in the future from these or other providers on that scale, in the geographies where we operate and within the time frames required, if at all. The inability or unwillingness of key equipment and service providers to provide our operations with adequate equipment and supplies on a timely basis and to manage our infrastructure in accordance with best practices, including at attractive prices, could materially and adversely impact the ability of these operations to retain and attract subscribers or provide attractive product offerings, either of which could materially and negatively impact our business, financial condition, results of operations and prospects.

A downgrade in our credit ratings could adversely affect our ability to access the debt capital markets and may increase our borrowing costs. Our credit ratings, which are intended to measure our ability to meet our debt obligations as they mature, are an important factor in determining our cost of borrowing. The interest rates of our borrowings are partly dependent on our credit ratings. Furthermore, our credit rating is partially correlated to the sovereign credit ratings in our key operations, particularly South Africa and Nigeria. On 16 September 2016, S&P lowered its long-term foreign and local currency sovereign credit ratings on the Federal Republic of Nigeria to “B” from “B+” as a result of a marked contraction in oil production, a restrictive foreign exchange regime and delayed fiscal stimulus. As a result of the increased country risk in Nigeria and our ability to be rated above the sovereign credit rating, our long-term corporate credit rating was lowered by S&P from “BBB- (negative)” to “BB+ (stable)”, while our corporate rating continued to be assessed as Baa3 (negative) by Moody’s. Per the terms of the up to US$1 billion credit facility entered into on 25 August 2016, the margin on our US$656,250,000 Term Facility and US$218,750,000 Revolving Facility thereunder increased from 1.80% per annum to 2.15% per annum and 1.40% per annum to 1.75% per annum, respectively, as a consequence of the downgrade to our corporate rating. Per the terms of the ZAR1.5 billion credit facility entered into on 18 August 2016, the margin increased from 2.25% per annum to 2.55% per annum also as a result of the downgrade to our corporate rating. There can be no assurance that any of our ratings will remain the same in the future and that there would not be additional or further downgrades as result of ongoing deterioration in the Nigerian economy and/or the South African economy or otherwise. A downgrade of our credit ratings (or announcement of a negative ratings watch) may increase our cost of borrowing and may also limit our ability to raise capital. Moreover, actual or anticipated changes in our credit ratings or the credit ratings of the Notes (if applicable) generally may affect the market value of the Notes. In addition, ratings assigned to the Notes (if applicable) may not reflect the potential impact of all risks related to the transaction, the market or any additional factors discussed in this Offering Circular and other factors that may affect the value of the Notes. A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to revision or withdrawal at any time by the assigning rating organisation and each rating should be evaluated independently of any other rating.

Current and future antitrust and competition laws in the countries in which we operate may limit our growth and subject us to antitrust and other investigations or legal proceedings. The antitrust and competition laws and related regulatory policies in many of the countries in which we operate generally favour increased competition in the telecommunications industry and may prohibit us from making further acquisitions or continuing to engage in particular practices to the extent that we hold a significant market share in such countries. For example, in 2013 the Nigerian Communications Commission (the “NCC”) declared that we were a dominant operator in the mobile voice segment of the Nigerian market. The NCC placed certain obligations on us, including the requirement that we refrain from offering differential pricing on our on-net and off-net mobile voice service. From October 2015 to May 2016 the regulator suspended regulatory services to MTN Nigeria. This entailed the NCC withdrawing its approval of new tariff plans and promotions until certain tariff plans and promotions were removed from the market. This resulted in our Nigerian operations being uncompetitive during that period which negatively impacted our revenues and margins. In addition, violations of antitrust and competition laws and policies could expose us to administrative proceedings, civil lawsuits or criminal prosecution, including fines and imprisonment, and to the payment of punitive damages. Regulators are particularly focused on establishing rules and a regulatory framework for interconnection between fixed and mobile networks, including mobile termination (i.e., the ability of a telecommunications provider to

8 terminate a call on another operator’s network (i.e., calling between networks)) and the related pricing mechanisms (i.e., mobile termination rates). In fixed-line networks, although the incumbent provider has generally been obliged by the regulator to offer access to its network for the purposes of interconnection or call termination at prices which have usually been set by the regulator to equal cost, such pricing could also be set well below cost. Decisions by any of our regulators requiring us to provide mobile termination and interconnection services well below current rates or to pay rates to our competitors that are higher than the rates which our competitors pay us, which is more likely to be required in countries in which we are viewed or designated by the local regulator as having significant market power, could prevent us from realising a significant amount of revenue and have a material adverse effect on our business, financial condition, results of operations and prospects. For instance, in South Africa the Independent Communications Authority of South Africa (“ICASA”) requires us to pay a higher termination rate to our competitor Cell-C (currently R0.24 per minute), than Cell-C is required to pay us (currently R0.16 per minute). In October 2016 ICASA is expected to decrease rates further. Please see “Business Description—Litigation, Arbitration and Disputes—ICASA Termination Rates.” Such asymmetrical regulatory intervention negatively impacts our competitive position and our profit.

In addition, antitrust and competition laws are subject to change and existing or future laws may be implemented or enforced in a manner that is materially detrimental to us. We cannot predict the effect that current or any future lawsuits, appeals or investigations by regulatory bodies or by any third party in any of the countries in which we operate will have on our business, financial condition, results of operations or prospects. Although to date we have not been subject to any material antitrust or competition-related lawsuits, there can be no assurance that these lawsuits will not occur and as a result cause us material losses and expenses. In addition, any fines, or other penalties imposed by an antitrust or competition authority as a result of any such investigation, or any prohibition on us engaging in certain types of business in one or more of the regions in which we operate, could have a material adverse effect on our business, financial condition, results of operations and prospects.

We are, and may in the future be, involved in disputes and litigation, the ultimate outcome of which is uncertain. We are subject to numerous risks relating to legal and regulatory proceedings to which we, our associates and joint ventures are currently a party or which could develop in the future. We operate in a highly regulated industry in a number of jurisdictions where the law may be unclear or subject to changing interpretations. We are currently engaged in litigation in South Africa with Turkcell Iletisim Hizmetleri AS (“Turkcell”). The proceedings relate to the unsuccessful effort of a Turkcell subsidiary to obtain the second Global System for Mobile Communications (“GSM”) licence tendered in Iran in 2005. Should there be an adverse finding in these proceedings, the damages for the alleged breach carries an exposure of up to US$4.2 billion. While we believe that the claim is unfounded and that the proceedings will be resolved in a satisfactory manner, there can be no assurance in this respect.

Our involvement in litigation and regulatory proceedings may adversely affect our reputation. Furthermore, litigation and regulatory proceedings are unpredictable and legal or regulatory proceedings in which we are or become involved (or settlements thereof) may have a material adverse effect on our business, financial condition, results of operations and prospects. For a description of current litigation and disputes, see “Business Description—Litigation, Arbitration and Disputes.”

Telecommunications businesses require substantial capital investment and we may not be able to obtain sufficient financing on favourable terms, or at all. We operate in a capital-intensive industry that requires substantial amounts of capital and other long term expenditures, including those relating to the development and acquisition of new networks and the expansion or improvement of existing networks. Our capital expenditures have been R29,611 million, R25,406 million and R30,164 million in each of 2015, 2014 and 2013, respectively. We have authorised R35,114 million for capital expenditures in 2016, with South Africa and Nigeria making up 32.1% and 31.7%, respectively, of the allocated capital expenditures. In the past, we have financed these expenditures through a variety of means, primarily through syndicated banking facilities, particularly at the operating company level, and debt capital markets in some instances, and to a lesser extent, through equity capital markets. This is likely to remain unchanged in the future. Our ability to arrange external financing, and the cost of such financing, depends on numerous factors, including our future financial condition and results of operations, as well as that of our individual operating companies, general economic and capital markets conditions, interest rates, credit availability from banks or other lenders, investor confidence in us, applicable provisions of tax and securities laws and political and economic conditions in any relevant jurisdiction.

9 We are exposed to certain risks in respect of the development, expansion and maintenance of our telecommunications networks. Our ability to increase our subscriber base depends in part upon the success of the expansion and management of our telecommunications networks. The build-out of our networks is subject to risks and uncertainties which could delay the introduction of services in some areas and increase the cost of network construction. Network expansion and infrastructure projects, including those in our development pipeline, typically require substantial capital expenditure throughout the planning and construction phases and it may take months or years before we can obtain the necessary permits and approvals and the new sites become operational. During the planning and expansion process, we are subject to a number of construction, financing, operating, regulatory and other risks beyond our control, including, but not limited to: • shortages or unavailability of materials, equipment and skilled and unskilled labour; • access to US dollars; • increases in capital and/or operating costs, including as a result of foreign exchange rate movements; • changes in demand for our services; • labour disputes and disputes with contractors and sub-contractors; • inadequate engineering, project management, capacity or infrastructure, including as a result of failure by third parties to fulfil their obligations relating to the provision of utilities and transportation links that are necessary or desirable for the successful operation of a project; • electricity and power interruptions due to electricity load-shedding and/or blackouts, and energy shortages; • regulatory regimes impacting our business; • failure to complete projects according to specifications; • failure to meet licence obligations; • adverse weather conditions and natural disasters; • environmental regulations, including the need to perform feasibility studies and conduct remedial activities; • political, social and economic conditions; • fraud; • accidents; • theft and malfeasance; • terrorist action; • changes in law, rules, regulations, governmental priorities and regulatory regimes; and • an inability to obtain and maintain project development permission or requisite governmental licences, permits or approvals.

The occurrence of one or more of these events may have a material adverse effect on our ability to complete our current or future network expansion projects on schedule or within budget, if at all, and may prevent us from achieving the projected revenues, internal rates of return or capacity associated with such projects. There can be no assurance that we will be able to generate revenues or profits from our expansion projects that meet our planned targets and objectives, or that such revenues will be sufficient to cover the associated construction and development costs, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

If we fail to attract and retain qualified and experienced employees, our business may be harmed. If we are unable to attract and retain experienced, capable and reliable personnel, especially senior and middle management with appropriate professional qualifications, or if we fail to recruit skilled professional and technical staff at a pace consistent with our growth, our business, financial condition, results of operations and prospects may be materially adversely affected. Experienced and capable personnel in the telecommunications industry remain in high demand and there is continuous competition for their talents. We may not be able to successfully recruit, train or retain the necessary qualified personnel in the future. The loss of some members of our senior management team or any significant number of our mid-level managers and skilled professionals may, particularly with regards to digital content and advertising, result in a loss of organisational focus, poor execution of operations and corporate strategy or an inability to identify and execute potential strategic initiatives such as expansion of capacity or acquisitions and investments. These adverse consequences could, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations and prospects.

10 Our ability to exercise control over our subsidiaries and joint ventures is, in some cases, dependent upon the consent and cooperation of other participants who are not under our control. Disagreements or terms in the agreements governing our subsidiaries and joint ventures could adversely affect our business, financial condition, results of operations and prospects. We currently operate through subsidiaries and joint ventures. While we have a majority interest in most of these entities which allows us to maintain management control, our level of ownership of each of our subsidiaries and joint ventures varies from market to market, and we do not always have a majority interest. Although the terms of our investments vary, our business, financial condition, results of operations and prospects may be materially and adversely affected if disagreements develop with our partners.

Our ability to withdraw funds, including dividends, from our participation in, and to exercise management control or joint management control over our subsidiaries and joint ventures, respectively, depends, in some cases, on the consent of our other partners in these entities and/or the consent of regulatory authorities. Further, failure to resolve any disputes with our partners in certain of our operating subsidiaries and joint ventures could restrict payments made by these operating entities to our Group and have a material adverse effect on our business, financial condition, results of operations and prospects.

RISKS RELATING TO THE TELECOMMUNICATIONS INDUSTRY We could experience breaches in privacy laws and other information security requirements, which may materially adversely affect our reputation, lead to subscriber lawsuits, loss of subscribers or hinder our ability to gain new subscribers and thereby materially adversely affect our business. We may be exposed to breaches in privacy laws and other information security requirements which could result in the unauthorised dissemination of information about our subscribers, including their names, addresses, home phone numbers, passport details, financial information and individual tax numbers. The breach of security of our database and illegal sale of our subscribers’ personal information could materially adversely impact our reputation, prompt lawsuits against us by individual and corporate subscribers, lead to adverse actions by the telecommunications and other regulators, lead to a loss in customers and hinder our ability to attract new customers. If severe customer data security breaches are detected, the regulatory authority can sanction us, and such sanction can include suspension of operations for some time period. These factors, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations and prospects.

In addition, our information security requirements have increased, and will continue increase, over time as we expand the scope of our digital services and process an increasing amount of sensitive personal information, including financial transactions. We are currently in the process of reviewing and upgrading our information security procedures in a number of markets, but we cannot assure you that such changes will be or effective or sufficient to protect customer information in an evolving cybersecurity threat environment.

Our telecommunications licences, permits and frequency allocations are subject to finite terms, ongoing review and/or periodic renewal, any of which may result in modification or early termination. In addition, our inability to obtain new licences and permits could adversely affect our business. The terms of our licences, permits and frequency allocations are subject to finite terms, ongoing review and/or periodic renewal and, in some cases, are subject to modification or early termination or may require renewal with the applicable government authorities. While we do not expect that we or any of our subsidiaries, associates or joint ventures will be required to cease operations at the end of the term of their business arrangements or licences, and while many of these licences provide for terms on which they may be renewed, there can be no assurance that these business arrangements or licences will in all cases be renewed on equivalent or satisfactory terms, or at all. Upon termination, the licences and assets of these companies may revert to the local governments or local telecommunications operators, in some cases without any or adequate compensation being paid.

We have in the past paid significant amounts for certain of our telecommunications licences and the competition for these licences has historically been high. We anticipate that we may have to continue to pay substantial licence fees in certain markets, particularly those with anticipated high growth rates and incur substantial costs to meet specified network build-out requirements that we commit to in acquiring such licences. There can be no assurance that we will be successful in obtaining or funding these licences, or, if licences are awarded, that they can be obtained on terms acceptable to us. If we obtain or renew further licences, we may need to seek future funding through additional borrowings or equity offerings and there can be no assurance that such funding will

11 be obtained on satisfactory terms, or at all. Failure to obtain financing on satisfactory terms or at all may have a material adverse effect on our business, financial condition, results of operations and prospects.

Our operations could be adversely affected by natural disasters or other catastrophic events beyond our control. Our business operations, technical infrastructure (including our network infrastructure) and development projects could be adversely affected or disrupted by natural disasters (such as earthquakes, floods, tsunamis, hurricanes, fires or typhoons) or other catastrophic or otherwise disruptive events, including, but not limited to: • changes to predominant natural weather, hydrologic and climatic patterns; • major accidents, including chemical or other material environmental contamination; • acts of terrorism; • cyber security incidents; • power loss; • strikes or lock-outs or other industrial action by workers or employers; and • medical pandemics.

The occurrence of any of these events, or a similar such event, in the regions in which we operate or affecting any part of our telecommunications network may cause disruptions to our operations in part or in whole, may increase the costs associated with providing services as a result of, among other things, costs associated with remedial work, may subject us to liability or impact our brands and reputation and may otherwise hinder the normal operation of our business, which could materially adversely affect our business, financial condition, results of operations and prospects.

In addition, our technical infrastructure is vulnerable to damage or interruption from information and telecommunications technology failures, acts of war, terrorism, intentional wrongdoing, human error and similar events. Unanticipated problems affecting any part of our telecommunications network, such as system failures, hardware or software failures, computer viruses or hacker attacks could affect the quality of our services and cause service interruptions. Any of these occurrences could result in reduced user traffic and reduced revenues and could harm our operations.

Further, any security breaches, such as misappropriation, misuse, penetration by viruses, worms or other destructive or disruptive software, leakage, falsification or accidental release or loss of information (including customer, personnel and vendor data) maintained in our information technology systems and networks or those of our business partners could damage our reputation, result in legal and/or regulatory action against us, and require us to expend significant capital and other resources to remedy any such security breach.

The effect of any of these events on our business, financial condition, results of operations and prospects may be worsened to the extent that any such event involves risks for which we are uninsured or not fully insured, or which are not currently insurable, such as acts of war and terrorism. See “Business Description—Insurance”.

Failure in our information and technology systems could result in interruptions of our business operations. Our information and technology systems are designed to enable us to use our infrastructure resources as effectively as possible and to monitor and control all aspects of our operations. Although our critical systems are designed with high availability to avoid any downtime, any failure or breakdown in these systems could interrupt the normal business operations and result in a significant slowdown in operational and management efficiency for the duration of such failure or breakdown. Any prolonged failure or breakdown could dramatically impact our ability to offer services to our customers, which could have a material adverse effect on our business, financial condition, results of operations and prospects. For example, we depend on certain technologically sophisticated management information systems and other systems, such as our customer billing system, to enable us to conduct our operations. For example, in South Africa, we experienced significant disruptions while upgrading our South African network. Any significant delays or interruptions in providing services, such as the disruptions which occurred while upgrading our South African network, could negatively impact our reputation as an efficient and reliable telecommunications provider.

12 In addition, we rely on third-party vendors to supply and maintain much of our information technology. In the event that one or more of the third-party vendors that we engage to provide support and upgrades with respect to components of our information technology ceased operations or became otherwise unable or unwilling to meet our needs, we cannot assure investors that we would be able to replace any such vendor promptly or on commercially reasonable terms, if at all. Delay or failure in finding a suitable replacement could materially adversely affect our business, financial condition, results of operations and prospects.

Actual or perceived health risks or other problems relating to mobile handsets or transmission and/or network infrastructure could lead to litigation or decreased mobile communications usage. The effects of any damage caused by exposure to an electromagnetic field have been and continue to be the subject of careful evaluations by the international scientific community, but to date there is no conclusive scientific evidence of harmful effects on health. However, we cannot rule out that exposure to electromagnetic fields or other emissions originating from wireless handsets or transmission infrastructure is not, or will not be found to be, a health risk.

Our mobile communications business may be harmed as a result of these alleged or actual health risks. For example, the perception alone of these health risks could result in a lower number of customers, reduced usage per customer or potential customer liability. In addition, these concerns may cause regulators to impose greater restrictions on the construction of base station towers or other infrastructure, which may hinder the completion of network build-outs and the commercial availability of new services and may require additional investments.

Industrial action or adverse labour relations could disrupt our business operations and have an adverse effect on operating results. While only a limited number of our operations, involving in aggregate approximately 1,200 employees, or approximately 6%, are currently subject to collective bargaining, union or similar labour agreements, more of our operations may in the future be subject to collective bargaining, union or similar labour agreements. In addition, our employees also benefit from local laws regarding employee rights and benefits. If we are unable to negotiate acceptable labour agreements or maintain satisfactory employee relations, the results could include work stoppages, strikes or other industrial action or labour difficulties (including higher labour costs), which individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations and prospects. For example, in 2015 the functioning of MTN South Africa’s call centres was disrupted by a seven week strike, affecting customer service. One of the results of the resolution of this strike was the recognition of the Communications Workers Union.

RISKS RELATING TO THE COUNTRIES IN WHICH WE OPERATE We are subject to the risks of political, social and economic instability associated with emerging market countries and regions in which we operate or may seek to operate. Overview We conduct our business in a number of emerging market countries and regions with developing economies, many of which have uncertain legal and regulatory systems and some of which from time to time have experienced economic, social or political instability. In addition, some of the countries in which we operate, such as Ghana and Rwanda, are in the process of transitioning to a market economy and, as a result, are experiencing changes in their economies and their government policies that can affect our investments in these countries.

There is also a risk that our operations in certain of the countries in which we operate could be expropriated by the relevant government or regulatory authorities, either by formal change in ownership, revocation of an operating licence or by changes in regulatory or financial policies that have an equivalent effect. Governments in these jurisdictions and countries, as well as in more developed jurisdictions and countries, may be influenced by political or commercial considerations outside of our control, and may act arbitrarily, selectively or unlawfully, including in a manner that benefits our competitors. In addition, we may from time to time enter into business relationships with entities subject to European, United States, UN or other international sanctions. By doing so, we could experience adverse publicity, which may in turn result in reputational harm in certain jurisdictions.

Specific country risks that may have a material adverse effect on our business, financial condition, results of operations and prospects include, among other things: • political instability, riots or other forms of civil disturbance or violence; • war, terrorism, invasion, rebellion or revolution, or disease outbreaks;

13 • government interventions, including expropriation or nationalisation of assets; • increased protectionism and the introduction of tariffs or subsidies; • changing fiscal, regulatory and tax regimes; • arbitrary or inconsistent government action, including capricious application of tax laws and selective tax audits; • inflation in local economies; • difficulties and delays in obtaining requisite governmental licences, permits or approvals; • restricted access to cash; • cancellation, nullification or unenforceability of contractual rights; and • underdeveloped industrial and economic infrastructure.

Changes in investment policies or shifts in the prevailing political climate in any of the countries in which we operate, or seek to operate, could result in the introduction of increased government regulations with respect to, among other things: • price controls; • export and import controls; • income and other taxes; • environmental legislation; • customs and immigration; • foreign ownership restrictions; • foreign exchange and currency controls; and • labour and welfare benefit policies.

Political climate Various countries in Africa and the Middle East, such as Syria, Sudan, South Sudan and Yemen, have experienced varying degrees of political instability and armed conflict in recent years. Ongoing and future armed conflicts or political instability in those regions could impact our operations, including our ability to purchase adequate political risk and political violence insurance. For example, in Afghanistan, Syria, South Sudan and Nigeria, terrorist and other armed groups have engaged in campaigns against their respective governments and allies, and have struck both military and civilian targets resulting in continued risk to our operations, including the threat of damage to our infrastructure. There can be no assurance that terrorist groups will not escalate violent activities or that the relevant governments will be successful in maintaining the prevailing levels of domestic order and stability.

Investing in countries that are politically and economically undeveloped or developing, as we have done and expect to continue to do, is risky and uncertain. Any changes in the political, social, economic or other conditions in such countries, or in countries that neighbour such countries, could have a material adverse effect on the investments that we have made or may make in the future, which in turn could have a material adverse effect on our business, financial condition, results of operations and prospects. Additionally, political and economic challenges in one emerging market economy may have contagion effects in other economies, which in turn could have a material effect on our business, financial condition, results of operations and prospects.

We are subject to political and economic conditions in the key markets in which we operate. Our key operations are located in South Africa and Nigeria. Our results of operations are, and will continue to be, significantly affected by financial, economic and political developments in or affecting those markets and, in particular, by the level of economic activity in those markets. For example, the continued weak economic situation in South Africa has depressed consumer business confidence and negatively impacted consumer demand in the country. In Nigeria, low oil prices and a devalued local currency have negatively affected consumer demand. It is not possible to predict the occurrence of events or circumstances, such as war or hostilities, or the impact of such occurrences, and no assurance can be given that we would be able to sustain the

14 operation of our business if adverse financial, economic, political or other events or circumstances were to occur. Any future economic downturn, either regionally or domestically in any of the key markets in which we operate, could have a material adverse effect on our business, financial condition, results of operations and prospects. Investors should also note that our business and financial performance could be adversely affected by political, financial, economic or related developments both within and outside the key markets in which we operate because of inter-relationships within the global financial markets. In addition, the implementation by a national or local government in any of the key markets in which we operate of regulations adverse to our interests, including changes with respect to royalty payments, taxation or telecommunications regulations, or changes to grants and licences of properties used by us in those markets, could have a material adverse effect on our business, financial condition, results of operations and prospects and thereby adversely affect our ability to perform our obligations in respect of the Notes.

In recent years, there has been significant political and social unrest, including violent protests in a number of countries in which we operate. Certain countries in which we operate, such as Syria, Sudan, South Sudan and Afghanistan are currently in a state of civil war or armed conflict and do not have stable political environments. Instability in any of these countries may result from a number of factors, including government or military regime change, foreign intervention, civil unrest or terrorism. To a varying extent in each of these countries, extremists have engaged in a campaign, sometimes violent, against various governments in the region and terrorists have struck both military and civilian targets. For example, in Syria the ongoing conflict continually makes the refuelling of our base stations challenging due to the security risks faced by our employees, which has negatively impacted our financial results in the country as a result of network downtime. There can be no assurance that extremists or terrorist groups will not escalate violent activities in the countries in which we operate or that the governments of those countries will be successful in maintaining the prevailing levels of domestic order and stability. There can be no assurance that such significant political and social unrest will not escalate or that the governments of countries in which we operate will be successful in maintaining domestic order and stability.

Any of the foregoing circumstances could have a material adverse effect on the political and economic stability of the countries in which we operate and, in particular, could impact the level of economic activity in those countries and, consequently, could have a material adverse effect on our business, financial condition, results of operations and prospects, and thereby adversely affect our ability to perform our obligations in respect of the Notes.

We may pursue investment opportunities in countries in which we have no previous investment experience or in jurisdictions that are subject to greater social, economic and political risks. We may not be able to adequately assess the risks of investing in new jurisdictions irrespective of advice from our advisers. Investments made by us in emerging markets may involve a greater degree of risk than investments in developed countries. For example, emerging market investments may carry the risk of more volatile equity markets, less favourable and less sophisticated fiscal and commercial regulation and a less favourable business and operating environment, a greater likelihood of severe inflation, unstable currency, exchange controls, restrictions on repatriation of profits and capital, corruption, political, social and economic instability (including warfare and civil unrest) and government actions or interventions, including tariffs, royalties, protectionism, subsidies, expropriation of assets and cancellation of contractual rights, than investments in companies based in developed countries. An occurrence of any of the foregoing risks or failure by us to correctly identify the risks associated with an investment could have a material adverse effect on our business, financial condition and results of operations.

A downturn in the domestic, regional or global economy may adversely affect our business. We are exposed to risks associated with any future downturn in the domestic, regional or global economy. Global financial markets have remained volatile since the global financial crisis that started in 2008 and remain susceptible to renewed shocks. There can be no assurance that economic performance, whether globally or in the regions in which we operate, can or will be sustained in the future. To the extent that economic growth or performance, either globally or in the regions in which we operate, slows down or begins to decline, this could have an adverse effect on our operations. Many of our strategic partners and suppliers, who are based overseas, may, in the event of a global downturn or a downturn in any specific region, experience financial difficulties that could affect their ability to service us in a timely and efficient manner. Any future global downturn, such as that experienced from 2008 to 2011, could have a material and adverse effect on our revenues, financial position, results of operations and prospects.

15 Economic conditions can have a material adverse effect on telecommunications businesses, including a material adverse effect on the quality and growth of their customer base and service offerings. For example, customers may decide that they can no longer afford mobile services, or that they can no longer afford the data services and value-added services that are instrumental in maintaining or increasing total revenue generated per subscriber, and, in turn, increasing our revenues. Subject to differing levels of price elasticity of demand in each market in which we operate, any future economic downturn in those markets could have a material adverse effect on our business, financial condition, results of operations and prospects. High rates of inflation in some of the countries in which we operate may also cause consumer purchasing power to decrease, which may reduce consumer demand for our Group’s services.

A loss of investor confidence in the financial systems of emerging as well as mature markets may cause increased volatility in the financial markets in the countries and regions in which we operate and a slowdown in economic growth or economic contraction in those countries and regions. Any such increased volatility or slowdown could have a material adverse effect on our business, financial condition, results of operations and prospects.

In some markets, requirements for foreign companies to broaden local ownership of their subsidiaries through listing on local stock exchanges could lead to a dilution of earnings for the Group and limitations on foreign investment or ownership could hinder the Group’s ability to operate. In some markets there are requirements for foreign companies to broaden local ownership of their subsidiaries through listing on local stock exchanges. For example it is a requirement of the award of a 4G/LTE licence in Ghana that MTN Ghana must have a minimum of 35% Ghanaian ownership by the first quarter of 2017, and it is a requirement of the settlement of the Nigerian Regulatory Fine that MTN Nigeria be listed on the Nigerian Stock Exchange (please see Business Description—Nigeria—Industry for further details). Additionally, 21% of Irancell may be required to be offered to members of the Iranian public. Any listing of a large MTN operation could lead to a dilution of MTN earnings, which could have a material adverse effect on our business, financial condition, and prospects. In some markets, limitations on foreign investment or ownership could hinder the Group’s ability to operate effectively which could have a material adverse effect on our business, financial conditions, and prospects.

Some of the countries in which we operate lack infrastructure or have infrastructure in very poor condition and, particularly in Africa, have an insufficient supply of electricity. Some of the countries in which we operate often lack modern infrastructure or have infrastructure in poor or very poor condition, including, in particular, roads and power networks. In general, the rural areas in each of the countries in which we operate often lack even the most basic infrastructure, as any development tends to be concentrated in urban areas. We must often build our cell sites without the benefit of roads and other infrastructure, which increases our network development and maintenance costs. A number of countries in which we operate have limited spectrum availability. For example, in South Africa, we face challenges with regard to the availability of spectrum. Spectrum shortages limit our ability to provide more customers with broadband services and faster data speeds, and so limit profitability.

The electricity supply is insufficient in certain of the African countries in which we operate due to underdevelopment of electricity sectors compared to the pace of economic growth in such countries. In certain countries, including South Africa and Nigeria, we must rely on diesel-powered generators or solar panels to power our radio sites and some of our towers have solar back-up power or hybrid deep cycle backup batteries. These measures increase our costs and impact the profitability of our African operations, although the impact is mitigated, to some extent, by the sale of our towers in Nigeria, Ghana, Uganda, Rwanda, Ivory Coast, Zambia and Cameroon, though in some instances we retain interests in tower entities.

We operate in locations where there are high security risks, which could result in harm to our employees and contractors or substantial costs. Some of our subsidiaries, joint ventures and associates operate in high-risk locations, such as Afghanistan, Sudan, South Sudan, Syria and Yemen, where the country or location has suffered, or is suffering from political, social or economic instability, or war or civil unrest. In those locations where we have employees, assets or operations, those subsidiaries, associates and joint ventures may incur substantial costs to maintain the safety of their personnel and to protect their assets. Despite these precautions, the safety of our personnel in these locations may continue to be at risk, and we may not be able to obtain insurance to effectively mitigate these risks. In

16 addition, network maintenance and expansion projects in these areas could be delayed or cancelled due to the need for heightened security for employees and contractors operating in these areas. The security situation in Afghanistan, Sudan, South Sudan, Syria and Yemen and other regions in which we operate remains unstable and could have a material adverse effect on our business, financial condition, results of operations and prospects.

A decrease in commodity prices may adversely affect our business. Commodity prices have historically been highly volatile, and such high levels of volatility are expected to continue in the future. Declines in commodity prices may have adverse economic effects globally or in the regions in which we operate. For example, the global decline in crude oil prices since 2014 to sub $100 per barrel levels has had a significant impact on the GDP and consequently the exchange rate in Nigeria, which has affected our revenue from our operations in Nigeria. Efforts by the government to protect the currency and limit the devaluation thereof has resulted in a rapid depletion of foreign currency reserves and a significant slowdown of capital inflows. Additionally, foreign exchange reserves in Nigeria have been prioritised for certain uses and industries and consequently has resulted in challenges in repatriating funds out of the country. The recent downturn in commodities prices and the global oil surplus have also been damaging to the currencies, and consequently the consumer spending, of South Africa, Nigeria, Iran, Sudan and Ghana. The decline in disposable incomes and consumer expenditure has adversely affected our revenue and margins. Any further decrease in commodity prices could have a material and adverse effect on our revenues, financial position, results of operation and prospects.

RISKS RELATING TO THE NOTES The Notes will constitute unsecured obligations of the Issuer and the Guarantees will constitute unsecured obligations of each Guarantor. The Notes will constitute unsecured and unsubordinated obligations of the Issuer and the Guarantees will constitute unsecured and unsubordinated obligations of each Guarantor. The Notes and the Guarantees will rank equally with all of the other unsecured and unsubordinated indebtedness of the Issuer and each Guarantor, respectively. However, the Notes and the Guarantees will be effectively subordinated to the secured indebtedness and securitisations, if any, of the Issuer and each Guarantor, respectively, to the extent of the value of the assets securing such transactions, and will be subject to certain preferential obligations under South African and/or Mauritian law, as applicable, such as wages of employees.

Generally, lenders and trade and other creditors of the subsidiaries of the Issuer and the Guarantors are entitled to payment of their claims from the assets of such subsidiaries before these assets are made available for distribution to the Issuer or the relevant Guarantor, as the case may be, as a direct or indirect shareholder. Any debt that the subsidiaries of the Issuer or any Guarantor may incur in the future will also rank structurally senior to the Notes and the Guarantees, respectively.

The Issuer and the Guarantors are dependent on cash flows received from other members of the Group to meet their respective payment obligations on their debt obligations, including under the Notes and under the Guarantees, and their ability to distribute funds is often dependent upon the consent of third parties, including regulators, who are not under our control. The Issuer is a special purpose vehicle with no business operations other than the issue of the Notes, the issue of US$750,000,000 Guaranteed Notes due 11 November 2024 issued by it on 10 November 2014 and the transactions ancillary thereto, and will, accordingly, depend upon the receipt of sufficient funds from other members of the Group to meet its obligations. The Group intends to provide funds to the Issuer or the Guarantors, as applicable, in order to meet their respective obligations on the Notes and under the Guarantees through payments or advances under intra-Group loans or other funding payments from the Group. To date, the Issuer has principally funded its obligations with cash flows from interest income from loans and advances to MTN Mauritius which are derived from dividend and management fee payments from our operating companies. However, the payment of the Nigerian Regulatory Fine is expected to be funded through our operating cash flows from Nigeria. Accordingly, we expect the amount of retained earnings available for dividends from MTN Nigeria to be reduced. For a further discussion, see “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

The amount of such payments under intra-Group loans or other funding payments from the Group that can be made available to the Issuer and/or the Guarantors will depend on the profitability and cash flow of the various members of the Group and the ability of such companies to make such payments to the Issuer and/or the Guarantors.

17 In addition, the Guarantors conduct their business through their respective operating subsidiaries and joint ventures, and will, accordingly, depend upon the receipt of sufficient funds from other members of the Group and such joint ventures in the form of management fees and dividends to meet their respective obligations The operating subsidiaries are separate legal entities and are under no contractual or other obligations to pay dividends. The amount of such dividends and management fees that will be received by each Guarantor depend on the profitability and cash flows of their respective subsidiaries and joint ventures. The Group’s subsidiaries and such joint ventures may not, however, be able to, or may not be permitted under the terms of their existing or future indebtedness or applicable law to make dividend or management fee payments to their shareholders (who may include the Guarantors) so that payments can be made to the Issuer and/or the Guarantors on loans extended by the Issuer and/or the Guarantors. Additionally, the ability of the operating subsidiaries to pay dividends may be subject to the availability of foreign currency, exchange rate controls, central bank permission and compliance with sanctions laws.

In the event that the Issuer and the Guarantors do not receive payments under intra-Group loans, dividends, management fees or other funding payments from other members of the Group or its joint ventures, the Issuer may be unable to make required principal and interest payments on the Notes of either or each Series and the Guarantors may be unable to meet their respective payment obligations under the relevant Guarantee of either or each Series.

In addition, other than the Issuer in relation to the Notes and the Guarantors in relation to the Guarantees, the other members of the Group are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the Notes or the Guarantees or to make funds available for these purposes, whether by loans, dividends, distributions, management fees or other payments, and do not guarantee the payment of interest on, or principal of, the Notes.

The operating subsidiaries and joint ventures have obligations to creditors under their respective supply transactions or borrowings. Any right that the Issuer or the Guarantors may have to receive assets of any of their respective subsidiaries or joint ventures upon any such subsidiary’s or joint venture’s liquidation, and the consequent right of Noteholders to benefit from the distribution of proceeds from those assets to the Issuer or any Guarantor, will be effectively subordinated to the claims of creditors of such subsidiaries and joint ventures (including tax authorities, employees, trade creditors and lenders to such subsidiaries).

Decisions of the holders of the required majority of the Notes of each Series bind all Noteholders of such Series. The terms and conditions of the Notes of each Series will contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions will permit Noteholders holding defined percentages of Notes of each Series to bind all Noteholders of the relevant Series, including Noteholders of such Series who did not attend and vote at the relevant meeting and Noteholders of such Series who voted in a manner contrary to the majority.

The Notes are subject to redemption at the option of the Issuer. The optional redemption feature of the Notes may limit their market value. During any period where the Issuer may elect to redeem the Notes of the relevant Series, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period.

The Issuer may be expected to redeem Notes of a particular Series when its cost of borrowing is lower than the interest rate on the Notes of that Series. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest on the Notes of the relevant Series being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.

The Issuer may create and issue further Notes. The Issuer may from time to time without the consent of the Noteholders create and issue further Notes of each Series, having terms and conditions that are the same as those of the Notes of such Series, or the same except for the amount of the first payment of interest, which new Notes may be consolidated and form a single series with the outstanding Notes of the relevant Series even if doing so may adversely affect the value of the original Notes of such Series.

18 It may not be possible for investors to enforce foreign judgments against the Issuer, any Guarantor or their respective management. The Issuer is a limited liability company incorporated under the laws of Mauritius and the Guarantors, excluding MTN Mauritius (which is a limited liability company organised under the laws of Mauritius), are limited liability companies incorporated under the laws of South Africa. A majority of the directors and officers of the Issuer and the Guarantors named herein reside inside South Africa or Mauritius and all or a substantial portion of the assets of such persons may be, and the majority of the assets of the Issuer and the Guarantors are, located in South Africa, Nigeria, Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius. As a result, it may not be possible for investors to effect service of process upon such persons outside South Africa, Nigeria, Cameroon, Ghana, Iran, Ivory Coast, Sudan, Syria, Uganda and Mauritius, as applicable, or to enforce any judgments against them obtained in the courts of jurisdictions other than South Africa, Mauritius, Nigeria or Ghana, as applicable, predicated upon the laws of such other jurisdictions. For further information, see “Enforceability of Civil Judgments”.

There is no public trading market for the Notes and an active trading market may not develop or be sustained in the future. There is no active trading market for investments in the Notes. If investments in the Notes are traded after their initial issuance, then they might trade at a discount to their initial offering price, depending upon prevailing interest rates, the market for similar securities, general economic conditions and the financial condition of the Issuer and each Guarantor. Although application has been made for the Notes to be listed on the Official List maintained by the Irish Stock Exchange and to be admitted to trading on the Main Securities Market, there can be no assurance that an active trading market will develop or, if developed, that it can be sustained. If an active trading market for investments in the Notes is not developed or maintained, then the market or trading price and liquidity of investments in the Notes may be adversely affected.

The market price of the Notes is subject to a high degree of volatility. The market price of investments in the Notes could be subject to significant fluctuations in response to actual or anticipated variations in our operating results, adverse business developments, changes to the regulatory environment in which the Group operates, changes in financial estimates by securities analysts and the actual or expected sale by any of the Issuer and the Guarantors of other debt securities, as well as other factors. In addition, in recent years global financial markets have experienced significant price and volume fluctuations that, if repeated in the future, could adversely affect the market price of investments in the Notes without regard to our financial condition or results of operations.

The market price of investments in the Notes is also influenced by economic and market conditions in those markets in which the Group operates and, to varying degrees, economic and market conditions in emerging markets generally. Although economic conditions differ in each country, the reaction of investors to developments in one country may cause capital markets in other countries to fluctuate. Developments or economic conditions in other emerging market countries have at times significantly affected the availability of credit to the South African, Nigerian and Mauritian economies and resulted in considerable outflows of funds and declines in the amount of foreign investments in South Africa, Nigeria and Mauritius. Crises in other emerging market countries may diminish investor interest in securities issued by South African and Mauritian entities, including the Notes, which could adversely affect the market price of investments in the Notes.

Interest rate risks. Investment in the Notes involves the risk that if market interest rates subsequently increase above the rate paid on the Notes of the relevant Series, this will adversely affect the value of the Notes of such Series.

Credit ratings may not reflect all risks. In addition to the ratings on the Notes expected to be provided by Moody’s and S&P, one or more other independent credit rating agencies may assign credit ratings to the Notes. The ratings might not reflect the potential impact of all risks related to structure, market and other factors that may affect the value of the Notes. Credit ratings assigned to the Notes do not necessarily mean that they are a suitable investment. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. Similar ratings on different types of notes do not necessarily mean the same thing. The initial ratings by Moody’s and S&P will not address the likelihood that the principal on the

19 Notes will be prepaid or paid on the scheduled maturity date. Such ratings also will not address the marketability of investments in the Notes or any market price. Any change in the credit ratings of the Notes or the Issuer could adversely affect the price that a subsequent purchaser will be willing to pay for investments in the Notes. The significance of each rating should be analysed independently from any other rating.

In general, European-regulated investors are restricted under the CRA Regulation from using credit ratings for regulatory purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA Regulation (and such registration has not been withdrawn or suspended), subject to transitional provisions that apply in certain circumstances whilst the registration application is pending. Such general restriction will also apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended). The list of registered and certified rating agencies published by the European Securities and Markets Authority (“ESMA”) on its website in accordance with the CRA Regulation is not conclusive evidence of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures being taken against a relevant rating agency and the publication of the updated ESMA list. Certain information with respect to the credit rating agencies and ratings is set out on the cover of this Offering Circular.

Transfer of investments in the Notes will be subject to certain restrictions. The Notes have not been and will not be registered under the Securities Act or any US state securities laws. Prospective investors may not offer or sell the Notes, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Similar restrictions will apply in other jurisdictions. Prospective investors should read the discussion under “Transfer Restrictions” for further information about these transfer restrictions. It is their obligation to ensure that their offers and sales of the Notes within the United States and other countries comply with any applicable securities laws.

Investors in the Notes must rely on DTC, Euroclear and Clearstream procedures. The Regulation S Notes of each Series will be represented on issue by an Unrestricted Global Certificate that will be delivered to a common depositary for, and registered in the name of a common nominee of, Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the relevant Unrestricted Global Certificate, investors will not be entitled to receive Notes in definitive form. Euroclear and Clearstream, Luxembourg and their respective participants will maintain records of the beneficial interests in the relevant Unrestricted Global Certificate. While the Notes of a Series are represented by the Unrestricted Global Certificate in respect of that Series, investors will be able to trade their beneficial interests only through Euroclear and Clearstream, Luxembourg and their respective participants.

The Rule 144A Notes of each Series will be represented on issue by a Restricted Global Certificate that will be deposited with a nominee for DTC. Except in the circumstances described in the relevant Restricted Global Certificate, investors will not be entitled to receive Notes in definitive form. DTC and its direct and indirect participants will maintain records of the beneficial interests in the relevant Restricted Global Certificate. While the Notes of a Series are represented by the Restricted Global Certificate, investors will be able to trade their beneficial interests only through DTC. While the Notes of a Series are represented by the Restricted Global Certificate in respect of that Series, the Issuer will discharge its payment obligation under the Notes of that Series by making payments through one of DTC, Euroclear or Clearstream, Luxembourg (together, the “Clearing Systems”). A holder of a beneficial interest in a Global Certificate must rely on the procedures of the relevant clearing system and its participants to receive payments under the Notes. None of the Issuer and the Guarantors has any responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in any Global Certificate. Holders of beneficial interests in a Global Certificate will not have a direct right to vote in respect of the Notes of the relevant Series. Instead, such holders will be permitted to act only to the extent that they are enabled by the relevant clearing system and its participants to appoint appropriate proxies.

Return on an investment in the Notes will be affected by charges incurred by investors. An investor’s total return on an investment in the Notes will be affected by the level of fees charged by an agent, nominee service provider and/or clearing system used by such investor. Such a person or institution may charge fees for the opening and operation of an investment account, transfers of Notes, custody services and on payments of interest and principal. Potential investors are, therefore, advised to investigate the basis on which any such fees will be charged on the Notes.

20 Legal investment considerations may restrict certain investments. The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (i) the Notes are legal investments for it, (ii) the Notes can be used as collateral for various types of borrowing, and (iii) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Notes under any applicable risk-based capital or similar rules.

The Offering Circular does not contain separate single company accounts for each of the Guarantors Although item 3.5.2 of the Prospectus Handbook of the Central Bank of Ireland requires that the Offering Circular include separate single company accounts for each of the Guarantors, the Issuer has submitted a request to the Central Bank of Ireland for the omission of such single company accounts from the Offering Circular, and the Central Bank of Ireland has granted such omission request. The Guarantors are holding companies of the Group, with the exception of MTN South Africa, which is an operating company. The Offering Circular contains the Group’s (i) reviewed condensed consolidated interim financial statements as at and for the six months ended 30 June 2016, contained elsewhere in this Offering Circular; and, (ii) audited consolidated financial statements as at and for the years ended 31 December 2015 and 31 December 2014 contained elsewhere in this Offering Circular, which consolidate the financial information of each Guarantor.

21 OVERVIEW OF THE GROUP

This overview contains information about our Group, the Issuer and the Guarantors. It does not contain all the information that may be important to prospective investors. Before making an investment decision, prospective investors should read this entire Offering Circular carefully, including the financial statements and the notes thereto and the other financial information contained in this Offering Circular, as well as the risks described under “Risk Factors”. Certain defined terms used herein are defined elsewhere in this Offering Circular.

Overview We are a leading emerging market mobile operator by subscribers headquartered in Johannesburg, South Africa. Through our extensive investment in advanced communication infrastructure, the talent of our people and the strength of our brand, as at 30 June 2016 we connected approximately 232.6 million customers in 22 countries across Africa and the Middle East. We offer an integrated suite of communications products and services to our customers, including mobile voice, data, digital services and information and communications technology (“ICT”) enterprise products and services to our small and medium enterprise (“SME”) customers and corporate clients. We operate a predominantly prepaid business with over 97% of our customers on prepaid plans as at 30 June 2016. We offer postpaid services mainly in South Africa, where approximately 17% of our customers are on postpaid plans as at 30 June 2016, as well as in Cyprus. We are the market leader by number of subscribers in 15 of the 22 countries in which we offer voice, data and digital services (source: Group data). As at 30 June 2016, we employed 20,376 people. We are listed on the Johannesburg Stock Exchange and had a market capitalisation of R263,757 million as at 30 June 2016.

MTN Group was founded in 1994, when M-Cell (later renamed MTN Group Limited in 2002) was incorporated in South Africa, our home market. Employing the experience we gained from establishing ourselves in our home market and from serving our South African customers, we commenced our expansion into the rest of Africa. In 2001, we acquired GSM 900 megahertz (“MHz”) and GSM 1800 MHz licences in Nigeria. At the time, this was our single largest investment and in 2015 our Nigerian operation contributed 35.3% of our total revenue and approximately 26% of our subscriber base, which represented the largest contributions to our subscriber base and revenue among our operations. Our operations have since 2001 expanded to other emerging markets in both Africa and the Middle East and, as at 30 June 2016, we had approximately 232.6 million customers across these continents. In the last few years we have started to focus on investments that would help us to expand our offerings in digital and financial value-added services. In 2007, MTN Nigeria was awarded a 3G licence and acquired a 4G spectrum licence in 2015. In 2006, we commenced operations in Iran through our joint venture, MTN Irancell. In 2010, we launched MTN Mobile Money in several of the markets in which we operate. Today we serve over 36 million MTN Mobile Money customers in 14 markets. In 2015, MTN Ghana was declared a winner in the auction process for a 15 year 4G/LTE licence.

The following diagram illustrates our development and growth during the strategically significant years from 1993 to 2016:

1993-1997 1998-2005 2006-2016

Operations 1 Operations 11 Operations 22

Population 41 million Population 274 million Population 585 million

Market cap. R2.7 billion Market cap. R103 billion Market cap. R264 billion (31 December 1997) (31 December 2005) (30 June 2016)

22 Our two most significant markets are South Africa and Nigeria. Our operations in South Africa contributed 25.1% and 27.2% of our total revenue for the six months ended 30 June 2016 and the year ended 31 December 2015, respectively. As at 30 June 2016, we had approximately 29.8 million subscribers in South Africa. Our operations in Nigeria contributed 36.6% and 35.3% of our total revenue for the six months ended 30 June 2016 and the year ended 31 December 2015, respectively. As at 30 June 2016 we had approximately 59.0 million subscribers in Nigeria. Together, operations in these two countries accounted for 61.7% of Group revenue for the six months ended 30 June 2016 and 62.5% of Group revenue for the year ended 31 December 2015.

Strengths We believe that we benefit from the following competitive strengths that position us to achieve our strategic objectives: • Leading market position in 15 markets and brand recognition; • Economies of scale and synergies across our operations; • Diversified and balanced international portfolio, and a proven track record of establishing new telecommunications operations in emerging markets with significant growth potential; • Extensive telecommunications network and strong network quality; • Strong distribution network; • Experienced and diversified employees; • Strong long-term financial profile; and • Detailed information on the behaviour of 233 million customers to leverage for expansion into new revenue streams.

Strategies Our vision to lead the delivery of a bold new digital world to our customers is built on five strategic pillars: • Driving sustainable growth; • Creating and managing stakeholder value; • Creating a distinct customer experience; • Transforming our operating model; and • Innovation and best practice.

Interim results and Other Recent Developments Trading Update Trading conditions remained largely unchanged from the trends noted in the six months ended 30 June 2016. Costs, excluding the Nigerian regulatory fine and associated professional fees, remained largely in line in nominal currency terms with the preceding period. However, we expect reduced margins in Nigeria in the current period as a result of the recent devaluation of the Nigerian Naira.

Other Recent Developments Credit Ratings On 16 September 2016, S&P lowered its long-term foreign and local currency sovereign credit ratings on the Federal Republic of Nigeria to “B” from “B+” as a result of continued low oil prices and shortages of foreign exchange affecting the country. S&P caps our credit rating at two notches above the blended sovereign credit rating of South Africa and Nigeria, which was previously lowered from “BB” to “BB-.” S&P consequently lowered our long-term corporate credit rating to “BB+ (stable)” from “BBB- (negative)” on 30 September 2016 to reflect the increased country risk in Nigeria and the lowered blended sovereign credit rating of South Africa and Nigeria.

Recent Media Reports In recent weeks, various media reports have contained allegations of improper repatriation of money out of Nigeria by MTN Nigeria. The reports refer to allegations made on the floor of the Senate that MTN Nigeria had illegally repatriated $13.92 billion out of Nigeria over a period of 10 years in collusion with a number of

23 commercial banks. MTN Nigeria is cooperating fully with the Nigerian authorities investigating the matter to resolve it promptly. We believe the allegations are completely unfounded and without any merit. See also “Risk Factors – Risks Relating to our Business – Because we operate in highly regulated business environments, changes in law, regulations or governmental policy affecting our business activities could adversely affect our business, financial condition, results of operations and prospects.”

Resolution of the Nigerian Regulatory Fine In October 2015 the Nigerian Communication Commission (“NCC”) imposed a N1.040 trillion fine on MTN Nigeria (equivalent to approximately US$5.2 billion using the exchange rate prevailing at the time). This related to the late disconnection of 5.1 million subscribers whose registration documents were considered incomplete following the Nigerian regulator’s introduction of a SIM registration process.

On 10 June 2016, the Group announced that the Nigerian regulatory fine matter was resolved with the Federal Government of Nigeria on the following terms: MTN Nigeria has agreed to pay a total cash amount of N330 billion over three years (the equivalent of US$1.671 billion at the official exchange rate prevailing at the time) to the Federal Government of Nigeria in full and final settlement of the matter payable as set out hereunder. The payment of the Nigerian Regulatory Fine is expected to be funded through the operating cash flows of MTN Nigeria.

The monetary component of the settlement will be paid as follows: • Naira 50 billion (paid on 24 February 2016) • Naira 30 billion (paid on 24 June 2016) • Naira 30 billion on 31 March 2017 • Naira 55 billion on 31 March 2018 • Naira 55 billion on 31 December 2018 • Naira 55 billion on 31 March 2019 • Naira 55 billion on 31 May 2019

As at 31 December 2015, we recorded a provision of N119.6 billion (the equivalent of R9.3 billion translated at the closing rate at 31 December 2015 of R1 = N12.88) in connection with the Nigerian Regulatory Fine. The recorded provision for the fine as at 31 December 2015 was less than the settlement amount subsequently agreed. On 10 June 2016, as a result of the settlement, the nature of the fine was changed from a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets to a financial liability under IAS 39 Financial Instruments: Recognition and Measurement as from this date onwards MTN Nigeria was contractually obliged to settle the fine in cash.

In addition to the monetary settlement set out above: • MTN Nigeria has agreed to subscribe to the voluntary observance of the Code of Corporate Governance for the Telecommunications Industry and will ensure compulsory compliance therewith; • MTN Nigeria has undertaken to take immediate steps to ensure the listing of its shares on the Nigerian Stock Exchange as soon as commercially and legally possible; and • MTN Nigeria shall always ensure full compliance with its licence terms and conditions as issued by the NCC.

Following a review of our operating structure subsequent to the imposition of the Nigerian Regulatory Fine, we have undertaken a series of organisational and management changes as described below in an effort to strengthen our risk elevation procedures and corporate compliance functions.

Senior Management Changes Appointment of group president and CEO Following the resignation of the Group President and CEO in November 2015 the Executive chairman, Phuthuma Nhleko, conducted an extensive global search for a candidate suited to the demands of the group’s future strategy. The Board has resolved in June 2016 to appoint Rob Shuter as the new Group President and

24 CEO. Mr. Shuter may commence his role as soon as it is practically possible in 2017 but not later than 1 July 2017 after the completion of his current contractual obligations. Given the appointment of Mr. Shuter as Group President and CEO, Mr. Nhleko will return to his role as non-executive Chairman as soon as practicably possible following Mr. Shuter’s assumption of his position as Group President and CEO.

Resignation of the Group CFO Brett Goschen, the Group CFO, left MTN effective 30 September 2016 and resigned from the Board as an executive director. Gunter Engling has assumed the position of Acting Group CFO following Mr Goschen’s departure until a permanent CFO is appointed. Mr. Engling is a chartered accountant who was previously the Group finance executive and CEO of MTN Rwanda.

Appointment of MTN Nigeria CEO In December 2015, Ferdi Moolman was appointed as CEO of MTN Nigeria replacing Michael Ikpoki. Prior to assuming the role of CEO of MTN Nigeria, Mr Moolman was CFO of MTN Nigeria.

Appointment of MTN Nigeria Regulatory and Corporate Affairs Executive In December 2015, Amina Oyagbola was appointed Head of Regulatory and Corporate Affairs for MTN Nigeria following the resignation of Akinwale Goodluck.

Organisational Changes We have reintroduced the role of Group Chief Operating Officer and have established the role of Vice Presidents for each of our three regions, namely West and Central Africa, South and East Africa and Middle East and North Africa, and have introduced segment reporting on the basis of these three regions. Additionally, we are in the process of establishing regulation compliance officers to work with the Vice Presidents and in country regulatory executives in order to strengthen our compliance and governance structure.

The Issuer The Issuer was incorporated as a private company limited by shares under the laws of Mauritius on 3 October 2014 under the name MTN (Mauritius) Investments Limited (with registered number 125821 C1/GBL) and operates under the Companies Act 2001 of Mauritius. The Issuer holds a Category 1 Global Business Licence (“GBL 1”) issued by the Financial Services Commission (the “FSC”) under the Financial Services Act 2007 of Mauritius. The registered office of the Issuer is at c/o Globefin Management Services Ltd, 1st Floor, Anglo- Mauritius House, Intendance Street, Port Louis, Mauritius. The issued share capital of the Issuer is composed of 100 ordinary shares of US$ 10.00 each. The Issuer is a wholly owned subsidiary of MTN International (Mauritius) Limited (“MTN Mauritius”) and therefore an indirect wholly owned subsidiary of MTN Group. MTN Mauritius holds all of the fully paid-up ordinary shares issued by the Issuer, so that the stated capital of the Issuer is US$1,000. The constitution of the Issuer specifies that the Issuer may engage in any activity which is not prohibited under the terms of its GBL 1; the provisions of the constitution are customary provisions of constitutions adopted by a wholly owned private company with a GBL 1. The Issuer is not subject to any borrowing limits in its constitution. The Issuer has issued US$750,000,000 Guaranteed Notes due 11 November 2024 (the “2024 Notes”) on 10 November 2014 and has not otherwise issued any listed or unlisted securities.

The Issuer is organised as a special purpose entity. The Issuer was established to raise capital by the issue of the 2024 Notes and the Notes offered hereby. The Issuer does not have any particular dividend policy, has not paid any dividends since incorporation and is not expected to pay dividends over the next year.

The Issuer has not engaged, since its incorporation, in any activities other than those incidental to: (i) its registration as a global business company; (ii) the issuance of the 2024 Notes; (iii) the authorisation of this Offering Circular and the issue of Notes hereunder; (iv) the ownership of such interests and other assets referred to herein; (v) the other matters contemplated in this Offering Circular; (vi) the authorisation and execution of the other documents referred to in this Offering Circular to which the Issuer is or will be a party; and (vii) other matters which are incidental or ancillary to those activities.

25 The Issuer’s ongoing activities will principally comprise: (i) the issue of the Notes under this Offering Circular and the 2024 Notes; (ii) the entering into of any documents relating to this Offering Circular and the issue of Notes hereunder; (iii) the exercise of related rights and powers and other activities referred to in this Offering Circular or reasonably incidental to those activities; and (iv) the exercise of related rights and powers and other activities related to the 2024 Notes.

No financial statements for the Issuer are included in this Offering Circular, and the Issuer will not publish financial statements on an interim basis or otherwise.

The Issuer has no subsidiaries, employees or executive directors.

The directors of the Issuer and their respective business addresses and principal activities are:

Name Business Address Principal Activities Paul Deon Norman 216 14th Ave Fairland, Group Chief Human Resources Roodepoort 2195 South Africa and Corporate Affairs Officer Roshan Nathoo 1st Floor, Anglo-Mauritius Managing Director – Globefin House, Intendance Street, Management Services Port-Louis, Mauritius (Fiduciary and Corporate Services) Sivakumaren Mardemootoo 1st Floor, Anglo-Mauritius Attorney at Law – Managing House, Intendance Street, Partner of Mardemootoo Port-Louis, Mauritius Solicitors

Mr. Paul Deon Norman is a non-executive director of the Issuer and serves as Group Chief Human Resources and Corporate Affairs Officer at MTN Group. He has received several awards for his achievements, including HR Practitioner of the Year from the Institute of People Management South Africa in 2003 and a Lifetime Achievement Award from the South African Board for People Practices in 2012. He holds a B.A. and M.A. in Psychology from Rhodes University in Grahamstown, South Africa, as well as an Executive MBA from the Institute for Development Management in Switzerland. He is a registered psychologist, and he has also participated in the Executive Development Program at the Wits Business School in Johannesburg, South Africa.

Mr. Roshan Nathoo is a non-executive director of the Issuer. He is also the Managing Director of Globefin Management Services Ltd and the Company Secretary of the Issuer. Previously, Mr. Nathoo was the Chief Operating Officer of the Standard Bank Group in Mauritius, the Managing Director of Standard Bank Trust (Mauritius) and a Senior Manager at the representative of Arthur Andersen in Mauritius. Mr. Nathoo is a Fellow of the Association of Chartered Certified Accountants (UK), a member of the Chartered Institute of Management Accountants (UK) and a member of the Society of Trust and Estate Practitioners (UK).

Mr. Sivakumaren Mardemootoo is a non-executive director of the Issuer. He is also the Managing Partner and head of the Banking & Corporate Finance Practice at Mardemootoo Solicitors. He is also a founding partner of LEGIS & Partners, a Corporate and Property Advisory Firm. Mr. Mardemootoo holds a “Licence en Droit” and a “Maitrise en Droit” from the University of Aix-Marseille, France. He also holds a Master of Laws (LL.M) from the University of Texas at Austin School of Law. He was admitted to practice as an attorney in Mauritius in 1997.

The Corporate Administrator and Company Secretary of the Issuer is Globefin Management Services Ltd, a company incorporated in Mauritius and licensed by the Mauritius FSC.

The Guarantors MTN Group MTN Group was incorporated on 23 November 1994, under the Companies Act, 2008 of the Republic of South Africa. The registration number of MTN Group is 1994/009584/06 and its registered address is 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa. Its telephone number is +27 11 9123000.

MTN Group is listed on the Johannesburg Stock Exchange.

26 Mobile Telephone Networks Holdings Limited Mobile Telephone Networks Holdings Limited (“MTN Holdings”) was incorporated on 17 March 1993, under the Companies Act, 2008 of the Republic of South Africa. The registration number of MTN Holdings is 1993/001411/06 and its registered address is 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa. Its telephone number is +27 11 912 3000.

MTN Holdings is a wholly owned subsidiary of MTN Group and is directly controlled by MTN Group.

MTN International Proprietary Limited MTN International Proprietary Limited (“MTN International”) was incorporated on 10 February 1998, under the Companies Act, 2008 of the Republic of South Africa. The registration number of MTN International is 1998/002351/07 and its registered address is 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa. Its telephone number is +27 11 912 3000.

MTN International is a wholly owned subsidiary of MTN Holdings and is indirectly controlled by MTN Group.

MTN International (Mauritius) Limited MTN International (Mauritius) Limited (“MTN Mauritius”) was incorporated on 27 March 1998, under the Companies Act 2001 of Mauritius. The registration number of MTN Mauritius is 19434/3597 and its registered address is c/o Globefin Management Services Ltd, 1st Floor, Anglo-Mauritius House, Intendance Street, Port Louis, Mauritius. Its telephone number is +230 213 1913.

MTN Mauritius is a wholly owned subsidiary of MTN International and is indirectly controlled by MTN Group.

Mobile Telephone Networks Proprietary Limited Mobile Telephone Networks Proprietary Limited (“MTN South Africa”) was incorporated on 17 March 1993, under the Companies Act, 2008 of the Republic of South Africa. The registration number of MTN South Africa is 1993/001436/07 and its registered address is 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa. Its telephone number is +27 11 912 3000.

MTN South Africa is a wholly owned subsidiary of MTN Holdings and is indirectly controlled by MTN Group.

27 The diagram below illustrates our simplified organisational structure:

MTN Group

100% 100% MTN Holdings MTN Treasury

100% 100% 30% MTN South Africa MTN Internaonal MTN Swaziland

100% MTN Maurius

100% 100% MTN (Maurius) MTN Dubai Investments Limited

58.8% 78.83% 75% 65% MTN Cote d’Ivoire Nigeria Guinea Conakry Benin

86% 70% 75% 60% Zambia Cameroon Syria Liberia

53.1% 80% 97.7% 100% Botswana Rwanda Ghana Guinea Bissau

100% 96% 82.3% 100% Congo Uganda Yemen Cyprus Brazzaville

49% 85% 100% Iran Sudan Afghanistan Issuer

20% Guarantor 100% Belgacom South Sudan Internaonal Carrier Services

Non-guarantor of The Notes

(1) Each of MTN Group, MTN Holdings, MTN International and MTN Mauritius is a Guarantor and a holding company for the Group. None of them is an operating company. MTN South Africa is a Guarantor and an operating company.

MTN Group, as the holding company for the Group, accounted for 100% of the Group EBITDA and 100% of Group net assets on a consolidated basis as at and for the years ended 31 December 2014 and 2015 and as at and for the six months ended 30 June 2016.

MTN Holdings (through intermediate holding companies) holds the operating companies of the Group and accounted for the following percentages of Group EBITDA and net assets on a consolidated basis for the periods indicated:

28 As at and for the six As at and for the year ended months ended 31 December 2014 31 December 2015 30 June 2016 EBITDA (%) ...... 100 100 100 Net assets (%)* ...... 102 101 101

*The net asset value for MTN Holdings and its subsidiaries includes shares held by MTN Holdings in its shareholder, MTN Group Limited.

MTN South Africa accounted for the following percentages of Group EBITDA and net assets for the periods indicated:

As at and for the six As at and for the year ended months ended 31 December 2014 31 December 2015 30 June 2016 EBITDA (%) ...... 17 22 31 Net assets (%) ...... 7 5 4

MTN International holds, in its own name and through its subsidiary MTN Mauritius, the operating companies of the Group that accounted for the following percentages of Group EBITDA and net assets on a consolidated basis for the periods indicated:

As at and for the six As at and for the year ended months ended 31 December 2014 31 December 2015 30 June 2016 EBITDA (%) ...... 83 77 67 Net assets (%) ...... 85 84 88

Together, MTN South Africa and MTN International, through the operating subsidiaries held by MTN International on a consolidated basis, accounted for the following percentages of Group EBITDA and net assets for the periods indicated:

As at and for the six As at and for the year ended months ended 31 December 2014 31 December 2015 30 June 2016 EBITDA (%) ...... 100 99 98 Net assets (%) ...... 92 89 92

MTN Treasury, which is not a Guarantor, did not account for any Group EBITDA or net assets as at and for the year ended 31 December 2014 or 2015 or as at and for the six month period ended 30 June 2016.

MTN Group holds through MTN International a 30% joint venture interest in MTN Swaziland, which is not a Guarantor. MTN Swaziland accounted for the following percentages of Group EBITDA and net assets for the periods indicated:

As at and for the six As at and for the year ended months ended 31 December 2014 31 December 2015 30 June 2016 EBITDA (%) ...... 0 0 0 Net assets (%) ...... 0 0 0

MTN Group’s share of net income from MTN Swaziland, which is accounted for under “Share of results of associates and joint ventures after tax”, amounted to R97 million, R95 million and R50 million for the years ended 31 December 2014 and 2015 and for the six month period ended 30 June 2016, respectively.

Note that all percentages of net assets and EBITDA given in this note have been rounded to the nearest whole number.

29 THE OFFERING

This overview of the Offering must be read as an introduction to this Offering Circular and any decision to invest in the Notes should be based on a consideration of this Offering Circular as a whole. This overview is indicative only, does not purport to be complete and is qualified in its entirety by the more detailed information appearing elsewhere in this Offering Circular. See in particular “Conditions of the 2022 Notes” and “Conditions of the 2026 Notes”.

Words and expressions defined in “Conditions of the 2022 Notes” and “Conditions of the 2026 Notes” shall have the same meanings in this section “The Offering”.

Issue: US$500,000,000 principal amount of 5.373% Guaranteed Notes due 2022 and US$500,000,000 principal amount of 6.500% Guaranteed Notes due 2026.

Issuer: MTN (MAURITIUS) INVESTMENTS LIMITED.

Guarantors: MTN Group Limited

Mobile Telephone Networks Holdings Limited

MTN International (Mauritius) Limited

MTN International Proprietary Limited

Mobile Telephone Networks Proprietary Limited.

Interest and Interest Payment Dates: The 2022 Notes will bear interest from and including 13 October 2016 at the rate of 5.373% per annum payable semi-annually in arrear on each of 13 February and 13 August in each year (each an “Interest Payment Date” in respect of the 2022 Notes).

The first payment in respect of the 2022 Notes (representing a short first coupon) for the period from and including 13 October 2016 to but excluding 13 February 2017 shall be made on 13 February 2017.

The second payment in respect of the 2022 Notes (representing a full six months’ interest) shall be made on 13 August 2017.

The 2026 Notes will bear interest from and including 13 October 2016 at the rate of 6.500% per annum, payable semi-annually in arrear on each of 13 April and 13 October in each year (each an “Interest Payment Date” in respect of the 2026 Notes).

The first payment in respect of the 2026 Notes (representing a full six months’ interest) shall be made on 13 April 2017.

Issue Prices: 100% of the principal amount in respect of the 2022 Notes and 100% of the principal amount in respect of the 2026 Notes.

Issue Date: 13 October 2016.

Maturity Dates: 13 February 2022 in respect of the 2022 Notes and 13 October 2026 in respect of the 2026 Notes.

Status: The Notes of each Series will be direct, unconditional, unsubordinated and (subject to the provisions of Condition 5) unsecured obligations of the Issuer and (subject as provided above) will rank pari passu, without any preference among the Notes of such

30 Series, with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights.

The obligations of each Guarantor under the relevant Guarantee for each Series will be direct, unconditional, unsubordinated and (subject to the provisions of Condition 5) unsecured obligations of the relevant Guarantor and (subject as provided above) will rank pari passu, with all other outstanding unsecured and unsubordinated obligations of the relevant Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights.

Redemption at the option of the Issuer: In respect of each Series, the Issuer may at any time redeem all of the Notes of such Series, but not some only, at the greater of (a) 100 per cent. of the principal amount of the Notes of such Series and (b) the sum of the present values of the Remaining Scheduled Payments of such Series (as defined in Condition 8) discounted to the date of redemption on a semi-annual basis at the U.S. Treasury Rate plus a spread of 50 basis points, together with accrued interest on the principal amount of the Notes of such Series to the date of redemption. See “Conditions of the 2022 Notes” and “Conditions of the 2026 Notes”.

Negative Pledge: The terms of the Notes of each Series contain a negative pledge provision binding on the Issuer and the Guarantors as further described in Condition 5.

Taxation; Payment of Additional Amounts: All payments in respect of the Notes by or on behalf of the Issuer or any Guarantor shall be made free and clear of, and without withholding or deduction for, or on account of, any present or future taxes, duties, levies, assessments or governmental charges (including related interest and penalties) of whatever nature (“Taxes”) imposed, assessed or levied by or on behalf of any of the Relevant Jurisdictions (as defined in Condition 9), unless such withholding or deduction of the Taxes is required by law. In that event, the Issuer or, as the case may be, the Guarantors will (subject to certain exceptions) pay such additional amounts as may be necessary in order that the net amounts received by the Noteholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes in the absence of the withholding or deduction, all as further described in Condition 9. See “Taxation—Certain South African Tax Considerations”, “Taxation—Certain Mauritian Tax Considerations” and “Conditions of the 2022 Notes” and “Conditions of the 2026 Notes”.

Redemption for Taxation Reasons: The Notes of each Series may be redeemed at the option of the Issuer in whole, but not in part, at any time (subject to certain conditions), at their principal amount (together with interest (if any) accrued to (but excluding) the date fixed for redemption) if: • as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction, or any change in the application or official interpretation of the laws or regulations of a Relevant Jurisdiction, which change or amendment becomes effective after 11 October 2016, on the next Interest Payment Date either (i) the Issuer would be required to pay additional amounts as provided or referred to in Condition 9 or (ii) the Guarantors would

31 be unable for reasons outside their control to procure payment by the Issuer and in making payment themselves would each be required to pay such additional amounts; and • the requirement cannot be avoided by the Issuer or, as the case may be, the Guarantors taking reasonable measures available to it or them. Events of Default: The Notes will be subject to certain Events of Default including (among others) non-payment of principal for five days, non-payment of interest for seven days, failure to perform or observe any of the other obligations in respect of the Notes of a Series, cross-default and certain events related to disposals, bankruptcy and insolvency, all as further described in Condition 11. See “Conditions of the 2022 Notes” and “Conditions of the 2026 Notes”. Substitution: The terms of the Notes contain provisions allowing for the substitution of the Issuer as principal debtor, as more fully described in Condition 15. Use of Proceeds: The Issuer and the Guarantors will incur various fees and expenses in connection with the issue of the Notes, including, amongst other things, underwriting fees, distributor commissions, legal counsel fees, rating agencies expenses and listing expenses. The net proceeds of the issue of the Notes will be used for capital expenditures, to pay down working capital facilities and general corporate purposes. Form and Denominations: Notes will be issued in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof, as further described in Condition 1. See “Conditions of the 2022 Notes” and “Conditions of the 2026 Notes”. Notes in respect of each Series offered and sold in reliance upon Regulation S will be represented by beneficial interests in the Unrestricted Global Certificate in registered form, without interest coupons attached, which will be delivered to a common depositary for, and registered in the name of a common nominee of, Euroclear and Clearstream, Luxembourg. Notes in respect of each Series offered and sold in reliance upon Rule 144A will be represented by beneficial interests in the Restricted Global Certificate, in registered form, without interest coupons attached, which will be deposited with a custodian for, and registered in the name of, Cede & Co. as nominee for DTC. Except in limited circumstances, individual certificates for the Notes will not be issued in exchange for beneficial interests in the Global Certificates. See “The Global Certificates—Registration of Title”. Governing Law: In respect of each Series, the Notes, the Agency Agreement, the Deed of Covenant, the deed poll dated 13 October 2016 entered into by the Issuer, under which it has agreed to comply with the information delivery requirements of Rule 144A(d)(4) under the Securities Act (the “Deed Poll”), the Guarantee and any non-contractual obligations arising out of or in connection with the Notes, the Agency Agreement, the Deed of Covenant, the Deed Poll and the Guarantee in respect of each Series, as the case may be, will be governed by, and construed in accordance with, English law. Selling and Transfer Restrictions: The Notes and the Guarantees have not been and will not be registered under the Securities Act or any state securities laws and beneficial interests therein may not be offered or sold within the United States or to, or for the account or benefit of, any US person (as defined in Regulation S under the Securities Act) except to QIBs in reliance

32 upon the exemption from the registration requirements of the Securities Act provided by Rule 144A or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The offer and sale of Notes (or beneficial interests therein) is also subject to restrictions in South Africa, Mauritius and the United Kingdom. See “Selling Restrictions”.

Interests in the Rule 144A Notes will be subject to certain restrictions on transfer. See “Transfer Restrictions”. Interests in the Global Certificates will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream, Luxembourg, in the case of the Regulation S Notes, and by DTC and its direct and indirect participants, in the case of Rule 144A Notes.

Listing: Application has been made to the Irish Stock Exchange for the Notes to be admitted to listing on the Official List and to trading on the Main Securities Market.

Regulation S Security Codes for the 2022 Notes: ISIN: XS1503116912

Common Code: 150311691

Rule 144A Security Codes for the 2022 Notes: ISIN: US55377XAC02

CUSIP: 55377XAC0

Common Code: 150315638

Regulation S Security Codes for the 2026 Notes: ISIN: XS1493823725

Common Code: 149382372

Rule 144A Security Codes for the 2026 Notes: ISIN: US55377XAB29

CUSIP: 55377XAB2

Common Code: 149969136

Expected Rating(s): Baa3 by Moody’s Investors Services Limited and BB+ by Standard & Poor’s Credit Market Services Europe Limited.

Fiscal Agent, Principal Paying Agent and Transfer Agent: Citibank, N.A., London Branch.

Registrar: Citigroup Global Markets Deutschland AG.

Listing Agent: A&L Listing Limited.

Risk Factors: For a discussion of certain risk factors relating to the Issuer, the Guarantors, the Notes and the Guarantees that prospective investors should carefully consider prior to making an investment in the Notes, see “Risk Factors”.

33 USE OF PROCEEDS

The Issuer and the Guarantors will incur various fees and expenses in connection with the issue of the Notes, including, amongst other things, underwriting fees, distributor commissions, legal counsel fees, rating agencies expenses and listing expenses. The net proceeds of the issue of the Notes will be used by the Issuer for capital expenditures, to pay down working capital facilities and general corporate purposes.

34 CAPITALISATION

The following table sets out the consolidated debt and capitalisation of the Group as at 30 June 2016. The information has been extracted without adjustment from our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016 and should be read in conjunction with “Selected Historical Consolidated Financial and Operating Information”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Description of Other Indebtedness” and our consolidated financial statements for the years ended 31 December 2015 and 2014 included elsewhere in this Offering Circular.

As at 30 June 2016 (unaudited) (Rm) Debt: Borrowings – interest-bearing liabilities ...... 81,947 Total debt(1)(2) ...... 81,947 Equity: Ordinary share capital and share premium ...... 43,068 Retained earnings ...... 66,740 Other reserves ...... 9,988 Total equity ...... 119,796 Attributable to equity holders ...... 116,669 Non-controlling interests ...... 3,127 Total capitalisation(3) ...... 201,743

(1) “Total debt” is defined as the sum of the current and non-current portion of interest-bearing liabilities. (2) We have incurred additional indebtedness subsequent to 30 June 2016 in the amounts of US$300 million and R4,300 million as at 31 August 2016. (3) “Total capitalisation” is defined as the sum of our total debt and total equity.

Save as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Other Indebtedness”, there have been no significant changes in the consolidated debt or capitalisation of the Group since 30 June 2016.

35 SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

The selected consolidated income statement information, consolidated statement of financial position information and consolidated statement of cash flows information as at and for the six months ended 30 June 2016 and 2015 have been derived from our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016, which are included elsewhere in this Offering Circular. The selected consolidated income statement information, consolidated statement of financial position information and consolidated statement of cash flows information as at and for the years ended 31 December 2015, 2014, and 2013 of the Group have been derived from our audited consolidated financial statements for the years ended 31 December 2015 and 2014, which are included elsewhere in this Offering Circular.

The selected consolidated financial information has been derived from, and should be read in conjunction with, the reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016 and the audited consolidated financial statements for the years ended 31 December 2015 and 2014, and the related notes thereto, included elsewhere in this Offering Circular, as well as the sections entitled “Presentation of Financial and Other Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Selected Consolidated Income Statement Information The following table summarises our consolidated income statement information for the periods indicated:

Year ended 31 December Six months ended 30 June Restated(1) Restated(2)(3) Restated(2)(3) 2013 2014 2015 2015 2016 (audited) (unaudited) (Rm) Revenue ...... 137,270 146,930 147,063 69,304 79,115 Other income ...... 1,327 7,928 8,409 411 367 Direct network operating costs ...... (18,299) (16,354) (18,809) (8,327) (12,291) Costs of handsets and other accessories(2) ...... (10,744) (10,314) (10,829) (4,449) (6,065) Interconnect and roaming costs ...... (13,816) (13,653) (13,102) (6,330) (7,358) Staff costs ...... (8,670) (8,838) (8,587) (4,155) (4,777) Selling, distribution and marketing expenses(2) ..... (16,362) (17,174) (18,412) (8,439) (9,624) Government and regulatory costs(3) ...... — (5,734) (5,888) (2,835) (2,982) Other operating expenses ...... (10,276) (9,600) (11,433) (4,505) (7,004) Nigeria regulatory fine ...... — — (9,287) — (10,499) Depreciation of property, plant and equipment ..... (16,458) (18,262) (19,557) (8,905) (10,913) Amortisation of intangible assets ...... (2,820) (3,251) (3,736) (1,845) (2,174) Impairment of goodwill ...... — (2,033) (504) — (604) Operating Profit ...... 41,152 49,645 35,328 19,925 5,191 Net finance costs ...... (1,234) (3,668) (3,010) (2,319) (5,945) Net monetary gain ...... — 878 1,348 496 919 Share of results of joint ventures and associates after tax ...... 3,431 4,208 1,226 2,027 (1,692) Profit/(loss) before tax ...... 43,349 51,063 34,892 20,129 (1,527) Income tax expense ...... (12,487) (13,361) (11,322) (6,249) (4,726) Profit/(loss) after tax ...... 30,862 37,702 23,570 13,880 (6,253)

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. (2) Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2015, value-added services costs that were previously included in the costs of handsets and other accessories were reclassified based on the underlying nature of these costs and included in selling, distribution and marketing expenses for the years ended 31 December 2014 and 2015 and the six months ended 30 June 2015 and 2016. Please see “Presentation of Financial and Other Information” for more information.

36 (3) Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2015, government and regulatory costs that had previously been included in direct networking operating costs and other operating expenses which comprise government revenue share, regulatory fees and levies and spectrum fees, have been disclosed as a separate category of expense in the income statement called “government and regulatory costs” for the years ended 31 December 2014 and 2015 and the six months ended 30 June 2015 and 2016. Please see “Presentation of Financial and Other Information” for more information.

Selected Consolidated Financial Position Information The following table summarises our consolidated statement of financial position information for the periods indicated:

As at 31 December As at 30 June Restated(1) 2013 2014 2015 2015 2016 (audited) (unaudited) (Rm) Non-current assets ...... 153,083 163,218 218,435 161,219 200,447 Property, plant and equipment ...... 92,903 87,546 106,702 85,501 93,462 Intangible assets and goodwill ...... 37,751 36,618 55,887 37,484 52,172 Investment in joint ventures and associates ...... 12,643 25,514 35,552 24,978 32,169 Deferred tax and other non-current assets ...... 9,786 13,540 20,294 13,256 22,644 Current assets ...... 76,573 90,467 95,432 85,269 82,468 Non-current assets held for sale ...... 1,281 3,848 10 3,959 466 Other current assets(2) ...... 33,470 42,628 59,510 49,295 54,410 Restricted cash ...... 2,222 893 1,735 1,001 637 Cash and cash equivalents ...... 39,600 43,098 34,177 31,014 26,955 Total assets ...... 229,656 253,685 313,867 246,488 282,915 Total equity ...... 121,812 133,442 151,838 127,420 119,796 Shareholders’ equity ...... 116,479 128,517 146,369 122,702 116,669 Non-controlling interests ...... 5,333 4,925 5,469 4,718 3,127 Non-current liabilities ...... 49,860 52,613 72,510 51,495 84,000 Interest bearing liabilities ...... 34,664 39,470 52,661 39,511 64,190 Deferred tax and other non-current liabilities ...... 15,196 13,143 19,849 11,984 19,810 Current liabilities ...... 57,984 67,630 89,519 67,573 79,119 Non-current liabilities held for sale ...... — — — 15 208 Interest bearing liabilities ...... 11,361 13,809 22,510 16,548 17,757 Other current liabilities(3) ...... 46,623 53,821 67,009 51,010 61,154 Total equity and liabilities ...... 229,656 253,685 313,867 246,488 282,915

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. (2) Includes trade and other receivables. (3) Includes trade and other payables.

37 Selected Consolidated Cash Flows Information The following table summarises our consolidated statement of cash flows information for the periods indicated: Year ended 31 December Six months ended 30 June 2013 2014 2015 2015 2016 (audited) (unaudited) (Rm) Net cash generated from/(used in) operating activities ...... 27,025 27,132 13,122 1,432 (436) Net cash used in investing activities ...... (19,835) (25,991) (34,290) (14,471) (14,209) Net cash from financing activities ...... 6,264 2,639 8,101 1,558 13,608 Net increase/(decrease) in cash and cash equivalents .... 13,454 3,780 (13,067) (11,481) (1,037) Net cash and cash equivalents at beginning of year/period ...... 22,539 39,577 43,072 43,072 34,139 Exchange gains/(losses) on cash and cash equivalents . . . 3,584 (182) 3,860 (787) (6,272) Net monetary gains/(losses) on cash and cash equivalents ...... — (103) 274 134 107 Net cash and cash equivalents at end of year/period .. 39,577 43,072 34,139 30,938 26,937

Net Debt The following table summarises the calculation of our net debt for the periods indicated: As at 31 December As at 30 June Restated(1) 2013 2014 2015 2015 2016 Non-current interest-bearing liabilities ...... 34,664 39,470 52,661 39,511 64,190 Current interest-bearing liabilities ...... 11,361 13,809 22,510 16,548 17,757 Cash and cash equivalents ...... (39,600) (43,098) (34,177) (31,014) (26,955) Restricted cash ...... (2,222) (893) (1,735) (1,001) (637) Current investments (excluding investments in cell captives)(2) ...... (3,851) (4,745) (7,624) (6,883) (5,098) Net debt ...... 352 4,543 31,635 17,161 49,257 Net debt/EBITDA(3) ...... 0.01x 0.06x 0.46x 0.28x 0.84x (1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. (2) Current investments (excluding investments in cell captives) is calculated as current investments less investments in cell captives. Investments in cell captives are financial assets held at fair value through profit or loss. The fair value of the investments in cell captives is determined based on the net asset value of the cell captive at the reporting date. (3) Net debt/EBITDA is calculated as net debt divided by EBITDA. Net debt/EBITDA for the year ended 31 December 2015 and the six months ended 30 June 2016 is presented before giving effect to the Nigeria regulatory fine. For the six months ended 30 June 2015 and 2016, the net debt/EBITDA ratio is presented on an annualised basis and is calculated as net debt as at each of 30 June 2015 and 2016, divided by annualised EBITDA for the respective six month period.

Other Financial and Operating Information The following table summarises our other financial and operating information for the periods indicated: Year ended 31 December Six months ended 30 June Restated(1) 2013 2014 2015 2015 2016 Group EBITDA (Rm)(2) ...... 60,430 73,191 59,125 30,675 18,882 EBITDA margin (%)(2) ...... 44.0 49.8 40.2 44.3 23.9 Total voice minutes on network (millions) ...... 203,682 212,962 243 879 110,617 119,394 Total data usage on network (terabytes) ...... 54,548 106,927 222,976 87,914 208,137

38 Year ended 31 December Six months ended 30 June Restated(1) 2013 2014 2015 2015 2016 South Africa EBITDA (Rm)(2) ...... 14,067 12,509 13,370 6,724 5,979 EBITDA margin (%)(2) ...... 34.7 32.1 33.4 35.6 30.1 Total voice minutes on network (millions) ...... 21,366 27,997 34,403 17,629 17,001 Total data usage on network (terabytes) ...... 24,188 38,019 61,330 26,388 42,413 Nigeria EBITDA (Rm)(2) ...... 29,235 31,620 27,504 14,132 14,421 EBITDA margin (%)(2) ...... 60.7 58.6 53.0 57.3 49.8 Total voice minutes on network (millions) ...... 65,001 60,504 68,910 31,047 33,107 Total data usage on network (terabytes) ...... 13,785 19,378 39,778 18,316 23,537

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. (2) We define EBITDA as profit before depreciation of property, plant and equipment, amortisation of intangible assets, impairment of goodwill, finance income, finance costs, share of results of associates and joint venture after tax, net monetary gains/losses and income tax expense. We define EBITDA margin as EBITDA expressed as a percentage of total revenue.

39 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the results of operations and financial condition of the Group as at and for the six months ended 30 June 2016 and 2015 and as at and for the years ended 31 December 2015, 2014 and 2013.

You should read the following discussion in conjunction with the section “Presentation of Financial and Other Information” and our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016 and our audited consolidated financial statements for the years ended 31 December 2015 and 2014, as well as the related notes thereto, beginning on page F-2 of this Offering Circular. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in the “Risk Factors” section of this Offering Circular. Our actual results may differ materially from those contained in, or implied by, any forward-looking statements.

OVERVIEW We are a leading emerging market mobile operator by subscribers headquartered in Johannesburg, South Africa. Through our extensive investment in advanced communication infrastructure, the talent of our people and the strength of our brand, as at 30 June 2016 we connected approximately 232.6 million customers in 22 countries across Africa and the Middle East. We offer an integrated suite of communications products and services to our customers, including mobile voice, data, digital services and ICT enterprise products and services to our SME and corporate clients. We operate a predominantly prepaid business with over 97% of our customers on prepaid plans. We offer postpaid services mainly in South Africa, where approximately 17% of our customers are on postpaid plans as at 30 June 2016, as well as in Cyprus. We are the market leader by number of subscribers in 15 of the 22 countries in which we offer voice, data and digital services (source: Group data). As at 30 June 2016, we employed 20,376 people. We are listed on the Johannesburg Stock Exchange and had a market capitalisation of R263,757 million as at 30 June 2016.

MTN Group was founded in 1994, when M-Cell (later renamed MTN Group Limited in 2002) was incorporated in South Africa, our home market. Employing the experience we gained from establishing ourselves in our home market and from serving our South African customers, we commenced our expansion into the rest of Africa. In 2001, we acquired GSM 900 MHz and GSM 1800MHz licences in Nigeria. At the time, this was our single largest investment and in 2015 our Nigerian operation contributed 35.3% of our total revenue and approximately 26% of our subscriber base, which represented the largest contributions to our subscriber base and revenue among our operations. Our operations have since 2001 expanded to other emerging markets in both Africa and the Middle East and, as at 30 June 2016, we had approximately 232.6 million customers across these continents. In the last few years we have started to focus on investments that would help us expand our offerings in digital and financial value-added services. In 2007, MTN Nigeria was awarded a 3G licence and acquired a 4G spectrum licence in 2015. In 2006, we commenced operations in Iran through our joint venture, MTN Irancell. In 2010, we launched MTN Mobile Money in several of the markets in which we operate. Today we serve over 36 million MTN Mobile Money customers in 14 markets. In 2015, MTN Ghana was declared a winner in the auction process for a 15 year 4G/LTE licence.

40 The following table shows our consolidated revenue information by service and product and our EBITDA margins for the periods indicated: Six months ended Year ended 31 December 30 June Restated(1) Restated Restated 2013 2014(2) 2015 2015 2016 (unaudited) (Rm, except for percentages) Revenue from outgoing voice ...... 86,757 90,671 85,027 41,392 44,690 from incoming voice ...... 15,367 14,919 14,690 6,889 7,777 from data ...... 20,504 26,024 33,874 15,013 19,849 from short message service (“SMS”) ...... 5,364 4,518 4,097 2,042 1,735 from mobile telephones and accessories ...... 7,541 7,890 6,985 2,905 3,885 from other sources(3) ...... 1,737 2,132 1,680 969 942 Revenue prior to IFRS hyperinflation adjustment ...... 137,270 146,154 146,353 69,210 78,878 IFRS hyperinflation adjustment ...... — 776 710 94 237 Total revenue (audited) ...... 137,270 146,930 147,063 69,304 79,115 EBITDA margins (%)(4) ...... 44.0 49.8 40.2 44.3 23.9 (1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. (2) During the year ended 31 December 2015, an amount of R1,293 million in respect of the year ended 31 December 2014 was reclassified from data revenue to airtime and subscription revenue to accurately reflect the respective categories on a comparative basis. See “Presentation of Financial and Other Information” for more information. (3) Other revenue is principally composed of connections, SIM card, itemised billing and calling-line identification service revenue. (4) We define EBITDA as profit before depreciation of property, plant and equipment, amortisation of intangible assets, impairment of goodwill, finance income, finance costs, share of results of associates and joint venture after tax, net monetary gains/losses and income tax expense. We define EBITDA margin as EBITDA expressed as a percentage of total revenue. Our annual capital expenditure has increased rapidly since we were established. Our cumulative capital expenditure amounted to R99,031 million in the period from 1 January 2013 to 30 June 2016. We have largely funded our capital expenditure through our strong operating cash flows from our local businesses as well as financing at the subsidiary level. Our capital expenditure decreased by 15.8% to R25,406 million in 2014 from R30,164 million in 2013. This was slightly lower than budget due to improved procurement processes. Our capital expenditure in 2015 was R29,611 million, 16.6% higher than the previous year, which was used to roll- out 966 2G, 1,593 co-located 3G sites and 3,148 co-located LTE sites, supporting increased minutes of use (“MOU”) and faster data speeds on our 3G and LTE networks. We expect our annual capital expenditure in the medium term to increase in the coming years as we increase our capital expenditures in Nigeria and South Africa as we upgrade and expand wireless and fixed-line networks and deploy fibre network infrastructure. We have authorised R35,114 million for capital expenditures in 2016, with South Africa and Nigeria making up 32.1% and 31.7%, respectively, of the allocated capital expenditures. Please see “—Liquidity and Capital Resources— Capital Expenditures” for more information.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND COMPARABILITY OF FINANCIAL STATEMENTS Our performance and results of operations have been and will continue to be affected by a number of factors, including external factors. Certain of these key factors that have had, or may have, an effect on the results of our operations are set forth below.

Growth in minutes and data traffic Our revenue is principally derived from the purchase of voice minutes and, to a lesser (but growing) extent, data and digital services. Revenue is no longer driven just by number of subscribers but also by consumer spending on data and digital services. Data usage has become an increasingly important measure of demand and component of

41 revenue, reflecting evolving customer trends across a range of customer segments, as revenue from voice services has been affected by decreases in the price per voice minute in recent years as a result of competitive pressure. These metrics are particularly relevant for the majority of our businesses (other than South Africa) as they operate principally on a prepaid basis whereby we sell customers packages of minutes of voice and/or data traffic. These metrics are used to develop and customise products and services for different customer segments and to ensure that the network has the appropriate capacity to carry traffic.

The table below shows our growth in total minutes on network and total data usage on network (i) for the Group, (ii) in South Africa, (iii) in Nigeria, and (iv) in Ghana, for the periods indicated:

Six months ended Year ended 31 December 30 June 2013 2014 2015 2015 2016 Group Total voice minutes on network (millions) ...... 203,682 212,962 243,879 110,617 119,394 Total data usage on network (terabytes) ...... 54,548 106,927 222,976 87,914 208,137 South Africa Total voice minutes on network (millions) ...... 21,366 27,997 34,403 17,629 17,001 Total data usage on network (terabytes) ...... 24,188 38,019 61,330 26,388 42,413 Nigeria Total voice minutes on network (millions) ...... 65,001 60,504 68,910 31,047 33,107 Total data usage on network (terabytes) ...... 13,785 19,378 39,778 18,316 23,537 Ghana Total voice minutes on network (millions) ...... 18,160 17,956 23,874 11,033 14,153 Total data usage on network (terabytes) ...... 3,046 7,388 12,266 4,833 10,569

As we penetrate deeper into lower income countries and as both subscriber and machine-to-machine data traffic continues to grow as a percentage of our total revenue, we believe these metrics will be significant in assessing the performance of our business.

Number of mobile subscribers Our total mobile subscriber base increased by 0.69% to 232.6 million as at 30 June 2016 from 231 million as at 30 June 2015. Over the last several years, the increase in the mobile subscriber base has been a significant driver of our revenue growth, particularly in South Africa and Nigeria, where we added an aggregate total of 4 million subscribers and 5.4 million subscribers in 2014 and 2015, respectively. From 31 December 2015 to 30 June 2016, we experienced a decrease in subscriber numbers in South Africa and Nigeria, in an amount of 0.78 million subscribers in South Africa and 2.27 million subscribers in Nigeria. In South Africa, subscriber numbers were negatively impacted by network outages in some areas, competition and economic pressure affecting customer spending. In Nigeria, our ability to attract and retain subscribers was affected by the mandatory disconnection of subscribers and the suspension of regulatory services until May 2016, when we attained the necessary approvals to introduce market-related pricing plans and promotions. On a Group level, our subscriber growth was offset by the 11.2 million subscribers we disconnected in Nigeria in 2015 and 2016 as well as an additional 6.8 million subscribers disconnected in Uganda and Cameroon as a result of subscriber registration requirements. For a more detailed discussion see “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

42 Our mobile subscriber numbers as at the periods indicated were as follows:

As at 31 December As at 30 June % % % 2013 change 2014 change 2015 change 2016 (million) South Africa ...... 25.7 8.95 28.0 9.29 30.6 (2.61) 29.8 Nigeria ...... 56.8 5.46 59.9 2.34 61.3 (3.75) 59.0 Iran ...... 41.4 6.04 43.9 5.01 46.1 2.60 47.3 Ghana ...... 12.9 7.75 13.9 17.27 16.3 7.98 17.6 Cameroon ...... 8.7 11.49 9.7 (5.15) 9.2 4.35 9.6 Uganda ...... 8.8 18.18 10.4 (14.42) 8.9 11.24 9.9 Ivory Coast ...... 7.1 12.68 8.0 3.75 8.3 (1.20) 8.2 Syria ...... 5.8 1.72 5.9 1.69 6.0 (3.33) 5.8 Sudan ...... 8.7 3.45 9.0 (5.56) 8.5 3.53 8.8 Other(1) ...... 31.9 7.52 34.3 9.0 37.4 (2.14) 36.6 Total ...... 207.8 7.31 223.0 4.30 232.6 0.00 232.6 (1) Includes customers in Benin, Guinea Conakry, Guinea Bissau, Liberia, Congo-Brazzaville, Rwanda, Zambia, Botswana, Swaziland, South Sudan, Cyprus, Yemen and Afghanistan.

Our revenue is driven by overall market demand for communications services in the markets served by our Group, which is in turn directly affected by a number of macroeconomic and other trends. In particular, demand for our services depends primarily on a number of demographic and economic factors, all of which are outside of our control, such as population growth and gross domestic product (“GDP”). According to the United Nations, the population of Africa is expected to grow by approximately 2.55% per year over the coming years (Source: UN World Population Prospects, 2015 Revision). We expect our subscriber base to continue to grow along with these demand and population trends. Many of the countries in which we operate are among the fastest growing societies in the world in terms of population and GDP during the periods under review. For instance, the real GDP growth rates in 2015 for the Ivory Coast, Ghana and Uganda were 8.4%, 3.5% and 5.9%, respectively, (source: CIA World Factbook) which, given the recent slump in commodities and oil prices which has damaged a number of economies in the area, are notably high. These factors vary substantially across the markets in which we operate and have historically impacted our results of operations. Population growth and rising GDP generally correspond to increased demand for our services. We believe that the countries in which we operate, which are primarily located in Africa and the Middle East, have favourable demographic profiles for a communications operator.

Additionally, many of the countries in which we operate are emerging market economies with limited landline infrastructure. In 2000, there were fewer than 10 million fixed-line phones across Africa, with a penetration rate of 1%. The provision of mobile telephony and data services has transformed Africa and its various economies. Between 31 December 2013 and 30 June 2016 alone, our total mobile subscribers increased by 24.8 million subscribers, or 12%. Mobile phones and mobile data are used not only for voice communication, but as a platform to provide access to the internet and various services, including financial and government services, as well as business solutions, by-passing the requirement for traditional infrastructure. In conjunction with the demand for mobile technology to provide such services, many of the countries in which we operate are experiencing an increasing use of the internet for leisure and entertainment, including the consumption and creation of online content and media. We believe such demand and cultural trends will likely continue in the future and have a positive impact on our subscriber base.

Furthermore, the number of customers we have at any time is dependent on the number of new customers and the number of our customers whose services are terminated over a given period, which is measured by churn. Voluntary terminations are motivated by a number of factors, including pricing (particularly for our mass market subscribers who are highly price elastic and where we experience the highest amount of churn amongst our customer segments), the breadth of our service offerings, subscriber regulations, and the quality of our service. Customer disconnections can also occur on an involuntary basis. We routinely disconnect customers who have shown no activity over the last 90 days. As a result, in addition to attracting new customers, we also seek to retain existing customers, which in turn reduces our rate of churn. We seek to attract new customers and retain existing customers through offering attractive services and pricing, as well as maintaining our brand value and high quality customer service.

43 As our subscriber base grows, we are also able to further leverage our scale to (i) secure more competitive pricing from vendors, (ii) reduce infrastructure duplication and (iii) promote and raise the visibility of our brand without incurring additional marketing costs.

Competition, pricing levels and retail tariffs The markets in which we operate are competitive in nature and, while we believe a certain amount of consolidation in the industry as a result of regulatory pressure and the need for scale (particularly in markets with five or more operators) should alleviate competitive pressure in the medium term, we expect that competition will continue to remain high. Emerging markets mobile telecommunications operators compete for customers principally on the basis of price, services offered, advertising and brand image, quality and reliability of service and coverage area. Price competition is significant on voice and data services, which still represent the vast majority of our revenue (together as a percentage of total revenue they were 89.3%, 89.6%, 90.8% and 91.4% in 2013, 2014, 2015 and the six months ended 30 June 2016, respectively), and these services are largely commoditised, as the ability to differentiate these services among operators is limited and penetration is high. This has resulted in increased pricing pressure especially in competitive markets such as South Africa and Nigeria where competitors have pushed down pricing. Pricing pressure, high penetration into lower income segments, the increasing use of multiple SIMs and higher volumes of machine-to-machine SIMs have also resulted in a decline in our average revenue per customer/unit (“ARPU”) in some of our markets, which in turn has reduced profitability. Blended ARPU for each of South Africa and Nigeria was R165.05 and N2,164, respectively, for the six months ended 30 June 2016. Additionally, there has been a significant increase in the number of non-conventional and OTT players (internet based alternatives to traditional telephony services) in the market such as free messaging platforms including social networking sites and mobile messaging applications, and this has impacted traditional telecommunications revenue streams.

The number of services the average customer uses in a given market, and thus the level of fees that the average customer pays, drives the revenue that we are able to generate from our customer base. We therefore aim to increase the amount of data and digital services that our customers use in order to increase revenue. Selling additional services to our existing customers thus increases the revenue generated by that customer base. In an effort to counter the impact of competition and declining voice revenue and ARPU, we have expanded our offering to include data, digital, financial and information and communications technology enterprise services. We also employ dynamic tariffing, bundled packages and targeted promotions to subscribers (such as free airtime and top-up incentives) to enhance the competitiveness of our voice business. Each of our potential products or service offerings is vetted through a structured internal process which assesses the product’s potential cost, performance and features, value and time-to-market, with the ultimate aim of minimising operating and capital expenditures and increasing market share. This business model has enabled us to expand our customer base in highly competitive markets, particularly in Africa, and thereby increase our sales volume and, in turn, our revenue.

Furthermore, a change in our pricing structure as a result of regulatory tariff policies could reduce the fees we are able to charge for our services, which in turn would reduce ARPU. Mobile rates are determined by each respective regulator in the countries in which we operate. In recent years these rates have generally decreased as regulators have promoted the interests of subscribers. Additionally, we are occasionally subject to asymmetrical regulatory intervention, particularly given our leading market positions, which can give our competitors an advantage. Such asymmetrical regulatory intervention negatively impacts our competitive position and our profit. Please see “Business Description—Litigation, Arbitration and Disputes—ICASA Termination Rates”.

Expanding our service offering through the introduction of new services Revenue growth, particularly in maturing markets where penetration is increasingly high, is driven by the development of additional products and services which can be offered to both new and existing customers. Adding additional service options to our offering, such as Mobile Money, a way of transferring money, making payments and doing other transactions using a mobile phone, mobile content on MTN Play, which provides news, games and ringtones amongst other content, Games Club, a premium mobile gaming proposition, or MTN Magic Voice, a service that allows our users to change their voice when making a call, allows us to increase ARPU, which in turn leads to greater revenue. We have been offering new digital services such as MTN Go, a voice, data and SMS bundle and MTN Hello World, a global roaming platform. We continue to be one of the major distributors of digital music in Africa. As at 30 June 2016 we had 36.5 million Mobile Money customers across 15 countries, who contributed R1,289 million to our total revenue.

44 The availability of new services also helps to attract new customers, which also leads to an increase in revenue. Uganda, Ghana, Rwanda, Benin and Iran have seen strong subscriber growth as a result of digital service offerings. We believe leveraging technology and delivering more services via the internet represents a significant opportunity, particularly as internet penetration across our footprint is low and we aim to increase our presence in the digital space and take advantage of growth in data traffic and ICT enterprise solutions. Expanding our third generation wireless telephone coverage (“3G”) and fourth generation (“LTE”), as well as access to affordable data-enabled devices, will continue to drive data usage. During the six months ended 30 June 2016, revenue from data as a percentage of our total revenue increased to 25.1%, compared to 21.7% during the six months ended 30 June 2015. During 2015, revenue from data as a percentage of our total revenue increased to 23.0% as of 31 December 2015, compared to 17.7% as of 31 December 2014.

We expect innovation to be a key driver of growth in the years ahead, mainly with 3G and LTE in the short to medium term. In particular, MTN Mobile Money and financial services are becoming an increasingly important part of our service offering. We are not only focused on acquiring subscribers for these services but also on increasing the volume of transactions and expanding our product range to include short-term insurance, ATM withdrawals and remote payments for airline tickets. As we expand and adapt MTN Mobile Money and other financial services to the local markets in which we operate, we expect these services to make a substantial contribution to our revenue growth as a result of their potential to address the lack of traditional financial services in many of the countries in which we operate. Further, we plan to deliver innovative ICT enterprise solutions to corporate and SME customers though our enterprise business unit, such as fibre connectivity. We have also begun offering digital local content services such as music, gaming and media offerings and digital lifestyle services through our service delivery platforms and MTN Play. Our investment in, Africa Internet Holdings, Middle East Internet Holdings and Iran Internet Group, enable us to participate in the e-commerce opportunities in Africa and the Middle East.

Impact of regulation and regulatory fines Registration requirements in Nigeria and Uganda led to MTN Nigeria disconnecting 6.7 million subscribers in 2015 and a further 4.5 million at the end of February 2016 and MTN Uganda disconnecting 3.7 million subscribers who did not fully comply with the subscriber registration requirements. This meant that subscriber net additions for the year were impacted negatively, eroding the market share of MTN Nigeria and MTN Uganda. We offered free minutes in Nigeria and Uganda following the disconnections, in order to rebuild our customer base in those countries, which also negatively impacted our revenue.

Nigerian Regulatory Fine The late disconnection by MTN Nigeria of 5.1 million subscribers whose registration documents were considered incomplete led to the NCC initially imposing a N1.040 trillion fine on MTN Nigeria. We subsequently reached a settlement whereby the fine was agreed to be reduced to a total cash amount of N330 billion over three years, amongst certain other conditions (the “Nigerian Regulatory Fine”). For a further discussion, see “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

Payment of the Nigerian Regulatory Fine MTN Nigeria has made payments to the NCC of N80 billion in respect of the Nigerian Regulatory Fine through 30 June 2016 as follows: • Naira 50 billion on 24 February 2016; and • Naira 30 billion on 24 June 2016;

The outstanding cash amount of the Nigerian Regulatory Fine as at 30 June 2016 was Naira 250 billion (the equivalent of R12.9 billion, translated at the 30 June 2016 closing rate of R1 = N19.33) which will be paid as follows: • Naira 30 billion on 31 March 2017; • Naira 55 billion on 31 March 2018; • Naira 55 billion on 31 December 2018; • Naira 55 billion on 31 March 2019; and • Naira 55 billion on 31 May 2019

45 The payment of the Nigerian Regulatory Fine is expected to be funded through operating cash flows from MTN Nigeria. Accordingly, we expect the amount of retained earnings available for dividends from MTN Nigeria to be reduced. We have also undertaken a series of organisational and management changes as further described in “Overview of the Group—Interim results and Other Recent Developments—Other Recent Developments— Organisational Changes”.

Accounting treatment of the Nigerian Regulatory Fine As at 31 December 2015, we recorded a provision of N119.6 billion (the equivalent of R9.3 billion translated at the closing rate at 31 December 2015 of R1 = N12.88) in connection with the Nigerian Regulatory Fine. The recorded provision for the fine as at 31 December 2015 was less than the settlement amount subsequently agreed upon. On 10 June 2016, as a result of the settlement, the nature of the fine was changed from a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets to a financial liability under IAS 39 Financial Instruments: Recognition and Measurement as from this date onwards MTN Nigeria was contractually obliged to settle the fine in cash. See Note 17 to our reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016 included elsewhere in this Offering Circular.

Capital expenditure requirements necessary to build out the network in new markets and expand the network in existing markets to support customer growth In order to support our rapidly growing customer base and demand for higher-bandwidth data services, we have had to expand our mobile network coverage and capacity to accommodate the increases in usage, which requires the purchase of additional spectrum, the expansion of existing infrastructure and other capital expenditures.

Increases in our capital expenditures affect our investing cash flows, property, plant and equipment and intangible asset balances, interest expense (to the extent they are funded by debt) and depreciation and amortisation expense. In addition, as new mobile subscribers are added to our network and their usage of our services increases, we incur higher operating expenses, including access charges, network operations costs, employee costs and selling, general and administrative expenses. This partly offsets the increased revenue generated by growing our customer base and reduces our operating profit.

Our capital expenditure decreased by 15.8% to R25,406 million in 2014 from R30,164 million in 2013. This was slightly lower than budget due to improved procurement processes. Our capital expenditure in 2015 was R29,611 million, 16.6% higher than the previous year, which was used to roll-out 966 2G, 1,593 co-located 3G sites and 3,148 co-located LTE sites, supporting increased minutes of use (“MOU”) and faster data speeds on our 3G and LTE networks. We expect our annual capital expenditure in the medium term to increase in the coming years as we increase our capital expenditures in Nigeria and South Africa as we upgrade and expand networks, deploy fibre network infrastructure and increase the capacity and quality of data networks. We have authorised R35,114 million for capital expenditures in 2016, with South Africa and Nigeria making up 32.1% and 31.7%, respectively, of the allocated capital expenditures. For the six months ended 30 June 2016, capital expenditure was R13,850 million, an increase of 27.4% compared with the same period in 2015.

Acquisitions and Disposals Traditionally our acquisition strategy has involved identifying and acquiring assets, either in the form of companies with existing networks or licences to operate a network, in target markets and then investing to increase their efficiency and improve both coverage and capacity. Although acquisitions of companies with existing networks generally allow for the rapid expansion of capacity and immediate generation of cash flow, they often require a greater capital investment than would typically be necessary to achieve organic growth. In addition, acquisitions involve risks inherent in identifying and assessing the value, strengths and weaknesses of acquisition targets, as well as the potential for significant integration and efficiency improvement costs. Significant capital expenditures and risks are also involved when we acquire a licence to operate and are required to build our own network. While we will continue to consider and review potential acquisition targets, if and when they present themselves, value accretive opportunities are scarce and when available may require substantial investment by the Group and have a significant impact on our financial results and leverage. We have evolved our acquisition strategy to include opportunities that will grow non-voice revenue streams and monetisation of assets as well as our access to new and developing markets.

Additionally, as part of our asset optimisation plan we seek to identify and dispose of passive infrastructure to allow management to focus on products and services and to enhance our operational efficiency by reducing

46 capital expenditure and depreciation going forward. Sale and leaseback transactions relating to towers have resulted in an effective swap of depreciation for operating expenditure, thereby negatively impacting our EBITDA. Our material acquisitions and disposals from 2013 to 30 June 2016 were as follows: • In March 2013, we acquired an additional 50% stake in our subsidiary MTN Cyprus Limited for R690 million, making it a wholly-owned subsidiary. • In 2013 and 2014, we entered into tower sale and leaseback transactions in Nigeria, Ghana, Uganda, Cameroon and Ivory Coast, Rwanda and Zambia amounting to gross sale proceeds of R9,001 million. • In 2014, we became a 33.3% partner in Africa Internet Holding, along with Rocket Internet and Millicom International Cellular, to develop internet businesses in Africa. We invested EUR168 million in 2014 and a further EUR135 million in March 2016. We expect our total investment in the joint venture to be approximately EUR405 million, EUR303 million of which has been invested as of 30 June 2016. • In 2014, we and Rocket Internet started a 50/50 joint venture, Middle East Internet Holding (“MEIH”), to develop internet businesses in the Middle East. We invested EUR120 million consisting of a EUR40 million cash payment and EUR80 million contingent consideration. • In November 2014, we acquired our Nashua Mobile subscriber base from Nashua Mobile Proprietary Limited for R1,246 million. The acquisition of this subscriber base enabled us to consolidate a major portion of our postpaid subscriber base into one entity. • In 2015 we completed the transfer of the tower portfolio of MTN Nigeria (approximately 9,000 towers) to a new company jointly owned by us and IHS over which IHS has full operational control. IHS is the biggest single country tower company in Africa. • On 22 January 2016, we made an investment in TravelLab Global AB (Travelstart) in an amount of US$27 million. Travelstart is an online travel agency focused on emerging markets. We jointly control Travelstart indirectly through funds managed by Amadeus Capital Partners. • In March 2016, we concluded the acquisition of the Altech Autopage subscriber base from Altron TMT Proprietary Limited for R678 million. The acquisition will enable us to service and interact directly with these customers and will reduce future commission expenditure.

Optimisation of Cost and Group Structure As the telecommunication environment continues to evolve towards data and as competition intensifies, we expect revenue and margins will come under further pressure. As a result, we have initiated cost optimisation and efficiencies into the business to ensure that we have an effective cost base for future growth and profitability. A number of initiatives have already resulted in cost benefits. These include centralising procurement, reducing costs in our distribution network through the renegotiation of contracts in South Africa, which has resulted in lower distribution costs and the realignment of our commission structure in Nigeria, which has resulted in lower commission costs. Other steps which we have implemented and will continue to implement include optimising employee numbers in all operations as well as moving more base stations onto national grids and continuing our focus on introducing hybrid power to our base stations.

In 2013, we launched “Project Next!”, a back-office transformation initiative for supply chain, human resources and finance functions which aims to centralise transactional activities, implement standardised processes with clear roles and responsibilities and optimise and consolidate the technology landscape of the Group.

We regularly review our operational and organisational structure as part of our commitment to cost optimisation and enhancing operational efficiencies and we may in future implement internal reorganisations and/or other operational and organisational changes to achieve these goals.

Accounting Changes Reclassification of expenses Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2015, the expenses detailed below have been disclosed separately or reclassified between expense categories for the year ended 31 December 2014 to present the expenses in accordance with the classification for the year ended 31 December 2015.

47 Government and regulatory costs Government and regulatory costs that had previously been included in direct networking operating costs and other operating expenses which comprise government revenue share, regulatory fees and levies and spectrum fees, have been disclosed as a separate category of expense in the income statement called “government and regulatory costs.”

Value-added services (VAS) costs VAS costs were previously included in the costs of handsets and other accessories. Based on the underlying nature of these costs, they were reclassified and included in selling, distribution and marketing expenses.

Change in revenue recognition accounting policy for multiple element revenue arrangements Prior to 2014, we accounted for arrangements with a multiple of deliverables (i.e. multiple element revenue arrangements) by dividing these arrangements into separate units of accounting and recognising revenue through the application of the Residual Method.

From 1 January 2014, we changed our accounting policy for recognising revenue relating to multiple element revenue arrangements from applying the Residual Method to the Relative Fair Value Method on a voluntary basis.

Previously under the Residual Method, fair value was ascribed to each of the undelivered elements (typically the service contract) and any consideration remaining (after reducing the total consideration of the arrangement with the fair value of the undelivered elements) was allocated to the delivered item(s) in the transaction (typically the handset). This resulted in limited amounts of revenue being allocated to the elements delivered upfront (i.e. the handset). Under the Relative Fair Value Method, the consideration received or receivable is allocated to each of the elements (delivered and undelivered) according to the relative fair value of the elements included in the arrangement. This results in more revenue being recognised at inception of a post-paid phone contract because previously only a small portion of the total value of the post-paid contract revenue was allocated to the handset while the full cost of the handset was recognised at inception. This application of the Relative Fair Value Method results in revenue being allocated proportionately to the handset and the service contract.

This change in accounting treatment mainly affects our income and financial position information in our operation in South Africa and, as a result, our consolidated income and financial position information.

This change results in more relevant and reliable information being presented in respect of revenue recognised in relation to multiple element revenue arrangements as revenue is now being recognised in relation to each of the elements delivered and to be delivered based on the relative fair value of the relating elements in relation to the total consideration received. The current accounting policy results in an improved correlation between the recognition of revenue and associated costs and also aligns us more closely with the requirements of IFRS 15: Revenue from Contracts with Customers. The change in accounting policy was applied retrospectively from the beginning of January 2013.

The impact of the change in the accounting policy for revenue recognition in multiple element revenue arrangements is disclosed in note 48 to our audited consolidated financial statements for the year ended 31 December 2014, contained elsewhere in this Offering Circular.

As a result, our results of operations for the year ended 31 December 2013 and going forward will not be directly comparable to our historical results of operations. To aid comparability, the financial information presented in this Offering Circular is presented in accordance with the Relative Fair Value Method, unless otherwise indicated.

Effect of exchange rate fluctuations Our results of operations are directly affected by the exchange rates for currencies of countries in which our companies operate and which fluctuate in relation to the Rand, such as the US dollar, the Euro, the Naira, Cedi and the Iranian rial. Some of the countries in which we operate are considered hyperinflationary, including Syria and Sudan. As the Rand is our presentation currency, we must translate the assets, liabilities, turnover and expenses of all of our operations with a functional currency other than the Rand into Rand at the applicable exchange rates, being the period-end rate for assets and liabilities, the weighted average period rate for revenue

48 and expenses and the transaction date rate for specific transactions in equity. Consequently, increases or decreases in the value of the Rand in relation to these other currencies may affect the value of these items with respect to our non-Rand businesses in our consolidated financial statements, even if their value has not changed in their functional currency. For example, a stronger Rand against the US dollar will reduce the reported results of operations of the non-Rand businesses, and conversely a weaker Rand will increase the reported results of operations of the non-Rand businesses. These translations could affect the comparability of our results between financial periods or result in changes to the carrying value of our assets, liabilities and equity. In particular, a number of the markets in which we operate have had volatile currency fluctuations, including the South African Rand and Nigerian Naira, and this has had a significant impact on our reported results of operations. See “Risk Factors—Risks Relating to Our Business—Many of our operations are in countries with volatile exchange rates and negative fluctuations in currency exchange rates could materially and adversely affect our business, financial condition and results of operations.”

In addition, foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. For example, in 2014 and 2015 we had net exchange losses of R1,101 million and R1,471 million respectively, due to depreciation of the Naira against the US dollar and the Iranian rial against the Rand, and net exchange losses of R3,606 million for the six months ended 30 June 2016 due to the depreciation of our local currencies against the US dollar.

As a result of the impact of exchange rate fluctuations on our results, in our results of operations discussion below we have presented revenue changes between periods on a constant currency or “organic” basis to identify the underlying operational drivers impacting the change in revenue. In determining the change in constant currency terms, the latest year’s/period’s results have been adjusted to the prior year’s/period’s average exchange rates, which are based on a weighted average calculation of monthly exchange rates performed at a disaggregated level for each of the Group’s territories and key revenue lines. This detailed basis of measurement isolates the impact of both currency volatility and business mix in each territory during the year. The organic growth percentage has then been calculated by utilising the constant currency results compared to the prior year’s/period’s results. In addition, in respect of Irancell, MTN Sudan and MTN Syria, the constant currency information has been prepared excluding the impact of hyperinflation. In 2015, the Iranian economy was assessed to no longer be a hyperinflationary environment. We therefore discontinued hyperinflation accounting in that operation effective 1 July 2015. The organic information may not fairly present our results of operations.

Seasonality Although our business is not subject to significant seasonal effects, mobile revenue tends to increase during holiday periods (caused by increased usage of roaming services by subscribers travelling abroad), especially during the December holiday period (resulting from intensified usage of messaging services). On the other hand, mobile revenue tends to decrease in the first quarter of each year due to lower usage after the December holiday period and as a result of the fewer number of calendar and business days in February.

DESCRIPTION OF SELECTED INCOME STATEMENT LINE ITEMS Revenue Revenue comprises the fair value of the consideration received or receivable from the sale of goods and services in the ordinary course of our activities, namely outgoing voice services, incoming voice services, data services, SMS services, sales of mobile telephones and accessories and other revenue. Revenue is shown net of indirect taxes, estimated returns and trade discounts and after eliminating sales within the Group.

Other income Other income primarily consists of income on tower sales and the realisation of the deferred gain on the asset swap for the investment in Belgacom International Carrier Services (“BICS”) over a five year period, which arose when we contributed various assets in the Group in exchange for an equity share in BICS.

Direct network operating costs Direct network operating costs consist primarily of rent, utility and transmission costs.

Costs of handsets and other accessories Costs of handsets and other accessories consist of the cost of acquiring handsets and accessories.

49 Interconnect and roaming costs Interconnect and roaming costs consist of interconnect and roaming costs.

Staff costs Staff costs primarily consist of salaries and wages, post-employment benefits, share options granted to directors and employees, training and other costs.

Selling, distribution and marketing expenses Selling, distribution and marketing expenses primarily consist of dealer commission, as well as advertising and public relations related costs.

Government and regulatory costs Government and regulatory costs consist of government revenue sharing, regulatory fees and levies and spectrum fees.

Other operating expenses Other operating expenses mainly consist of professional and consulting fees, as well as other non-network related rent and utility costs.

Nigeria regulatory fine Nigeria regulatory fine consists of the expenses relating to settling the late disconnection of subscribers in Nigeria in connection with the Nigerian Regulatory Fine.

Depreciation of property, plant and equipment Depreciation of property, plant and equipment consists of depreciation charges on our property, plant and equipment.

Amortisation of intangible assets Amortisation of intangible assets consists of amortisation expenses incurred on our intangible assets.

Impairment of goodwill Impairment of goodwill consists of goodwill impairment losses.

Net finance costs Net finance costs mainly consist of interest income and foreign exchange transaction gains less interest expenses relating to borrowings and finance leases, finance costs relating to put options, foreign exchange transaction losses and other finance costs.

Net monetary gain The financial statements (including comparative amounts) of the Group entities whose functional currencies are the currencies of hyperinflationary economies are adjusted in terms of the measuring unit current at the end of the reporting period.

As the presentation currency of the Group is that of a non-hyperinflationary economy, comparative amounts are not adjusted for changes in the price level or exchange rates in the current year. In the first period of application, the adjustments determined at the beginning of the period are recognised directly in equity as an adjustment to opening retained earnings. In subsequent periods, the prior period adjustments related to components of owners’ equity and differences arising on translation of comparative amounts are accounted for in other comprehensive income.

50 Items in the statement of financial position not already expressed in terms of the measuring unit current at the reporting period, such as non-monetary items carried at cost or cost less depreciation, are restated by applying a general price index. The restated cost, or cost less depreciation, of each item is determined by applying to its historical cost and accumulated depreciation the change in a general price index from the date of acquisition to the end of the reporting period.

All items recognised in the income statement are restated by applying the change in the general price index from the dates when the items of income and expenses were initially earned or incurred.

Gains or losses on the net monetary position are recognised in profit or loss and included in this line item.

Share of results of joint ventures and associates after tax Share of results of joint ventures and associates after tax consists of our portion of the profit/loss in our joint ventures and associates less our portion of the tax expense/benefit on that profit/loss.

Income tax expense Income tax expense comprises current and deferred tax applicable to the income of the Group.

SEGMENTS Subsequent to 31 December 2015, we changed the composition and presentation of our segment analysis. We now operate our business in three segments: South and East Africa (“SEA”), West and Central Africa (“WECA”) and Middle East and North Africa (“MENA”). Comparative results for the segments have been presented accordingly for the year ended 31 December 2015 and six months ended 30 June 2015. Operating results include items directly attributable to a segment as well as those that are attributable on a reasonable basis, whether from external transactions or from transactions with other group segments.

Year ended Six months ended 31 December 30 June 2015 2015 2016 (unaudited) (Rm) Revenue SEA ...... 51,419 24,456 25,156 South Africa ...... 40,038 18,882 19,841 Uganda ...... 5,148 2,540 2,804 Other SEA ...... 6,233 3,034 2,511 WECA ...... 81,443 38,296 46,347 Nigeria ...... 51,942 24,649 28,941 Ghana ...... 7,903 3,496 5,165 Cameroon ...... 5,806 2,742 3,202 Ivory Coast ...... 6,424 3,081 3,751 Other WECA ...... 9,368 4,328 5,288 MENA ...... 13,766 6,569 7,402 Syria(1) ...... 2,605 1,329 1,068 Sudan(1) ...... 3,472 1,610 2,345 Other MENA ...... 7,689 3,630 3,989 Major joint venture - Iran(2) ...... 13,660 6,435 8,324 Head office companies and eliminations ...... (275) (111) (27) Hyperinflation impact ...... 710 94 237 Iran revenue exclusion(2) ...... (13,660) (6,435) (8,324) Total ...... 147,063 69,304 79,115

(1) Excludes the increase in revenue resulting from hyperinflation accounting of Syria (R103 million for the six months ended 30 June 2016, R28 million for the six months ended 30 June 2015 and R391 million for the year ended 31 December 2015) and Sudan (R134 million for the six months ended 30 June 2016, R66 million for the six months ended 30 June 2015 and R319 million for the year ended 31 December 2015).

51 (2) Irancell Telecommunication Company Services (PJSC) proportionate revenue forms part of the MENA region but is reported separately in the segment analysis as reviewed by the Group executive committee (chief operating decision maker (“CODM”)) and is excluded from IFRS reported revenue due to equity accounting for joint ventures and excludes the increase in revenue resulting from hyperinflation accounting (June 2015: R271 million and December 2015: R287 million). In 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015.

Year ended 31 December Six months ended 30 June 2015 2015 2016 (unaudited) (Rm) EBITDA SEA ...... 16,903 8,555 7,213 South Africa ...... 13,370 6,724 5,979 Uganda ...... 1,775 915 842 Other SEA ...... 1,758 916 392 WECA ...... 38,116 19,303 20,574 Nigeria ...... 27,504 14,132 14,421 Ghana ...... 3,197 1,387 2,004 Cameroon ...... 2,101 1,036 1,218 Ivory Coast ...... 2,195 1,126 1,349 Other WECA ...... 3,119 1,622 1,582 MENA ...... 4,324 2,051 2,359 Syria(1) ...... 460 215 305 Sudan(1) ...... 1,216 539 829 Other MENA ...... 2,648 1,297 1,225 Major joint venture - Iran(2) ...... 5,665 2,582 3,139 Head office companies and eliminations ...... 575 365 (873) Hyperinflation impact ...... 231 49 90 Nigeria Regulatory Fine(3) ...... (9,287) — (10,499) Tower sale profits(3)(4) ...... 8,263 352 18 Iran EBITDA exclusion(2) ...... (5,665) (2,582) (3,139) EBITDA ...... 59,125 30,675 18,882 Depreciation, amortisation and impairment of goodwill ...... (23,797) (10,750) (13,691) Net finance costs ...... (3,010) (2,319) (5,945) Net monetary gain ...... 1,348 496 919 Share of results of joint ventures and associates after tax ...... 1,226 2,027 (1,692) Total ...... 34,892 20,129 (1,527)

(1) Excludes the increase in EBITDA resulting from hyperinflation accounting of Syria (R41 million for the six months ended 30 June 2016, R25 million for the six months ended 30 June 2015 and R106 million for the year ended 31 December 2015) and Sudan (R49 million for the six months ended 30 June 2016, R24 million for the six months ended 30 June 2015 and R125 million for the year ended 31 December 2015). (2) Irancell Telecommunication Company Services (PJSC) proportionate EBITDA forms part of the MENA region but is reported separately in the segment analysis as reviewed by the CODM and is excluded from IFRS reported EBITDA due to equity accounting for joint ventures and excludes the increase in EBITDA resulting from hyperinflation accounting (June 2015: R141 million and December 2015: R215 million). During 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015. The Group’s share of results from Irancell Telecommunication Company Services (PJSC) includes expenses resulting from discontinuation of hyperinflation accounting amounting to R1, 039 million mainly relating to the subsequent depreciation and amortisation of previously hyper-inflated assets that were historically written up under hyperinflation reporting. (3) Tower sale profit and the expense relating to the regulatory fine imposed by the Nigerian Communications Commission (NCC) are excluded from segment results. (4) Tower sale profits are calculated as the sum of (a) the profit on tower sales in Nigeria, comprising the sales proceeds less contingent consideration plus the fair value of the retained interest in Nigeria Tower InterCo B.V. and the equity derivative, less the carrying amount of assets and related liabilities disposed of, and (b)

52 the realisation of the deferred gain on the Ghana tower sale. In 2011, Scancom Limited (MTN Ghana) concluded a transaction with American Tower Company (ATC), which involved the sale of MTN Ghana’s base transceiver station (BTS) sites to Ghana Tower InterCo B.V. which is an associate of the Group. Profit was eliminated to the extent of the Group’s interest in the associate. Such unrealised profit is realised by the Group as the underlying assets are depreciated by the associate.

RESULTS OF OPERATIONS The following table summarises our consolidated income statement information for the periods indicated:

Year ended 31 December Six months ended 30 June Restated(1) Restated(2)(3) Restated(2)(3) 2013 2014 2015 2015 2016 (audited) (unaudited) (Rm) Revenue ...... 137,270 146,930 147,063 69,304 79,115 Other income ...... 1,327 7,928 8,409 411 367 Direct network operating costs ...... (18,299) (16,354) (18,809) (8,327) (12,291) Costs of handsets and other accessories(2) ...... (10,744) (10,314) (10,829) (4,449) (6,065) Interconnect and roaming costs ...... (13,816) (13,653) (13,102) (6,330) (7,358) Staff costs ...... (8,670) (8,838) (8,587) (4,155) (4,777) Selling, distribution and marketing expenses(2) ..... (16,362) (17,174) (18,412) (8,439) (9,624) Government and regulatory costs(3) ...... — (5,734) (5,888) (2,835) (2,982) Other operating expenses ...... (10,276) (9,600) (11,433) (4,505) (7,004) Nigerian regulatory fine ...... — — (9,287) — (10,499) Depreciation of property, plant and equipment ..... (16,458) (18,262) (19,557) (8,905) (10,913) Amortisation of intangible assets ...... (2,820) (3,251) (3,736) (1,845) (2,174) Impairment of goodwill ...... — (2,033) (504) — (604) Operating Profit ...... 41,152 49,645 35,328 19,925 5,191 Net finance costs ...... (1,234) (3,668) (3,010) (2,319) (5,945) Net monetary gain ...... — 878 1,348 496 919 Share of results of joint ventures and associates after tax ...... 3,431 4,208 1,226 2,027 (1,692) Profit/(loss) before tax ...... 43,349 51,063 34,892 20,129 (1,527) Income tax expense ...... (12,487) (13,361) (11,322) (6,249) (4,726) Profit/(loss) after tax ...... 30,862 37,702 23,570 13,880 (6,253)

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. (2) Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2015, value-added services costs that were previously included in the costs of handsets and other accessories were reclassified based on the underlying nature of these costs and included in selling, distribution and marketing expenses for the years ended 31 December 2014 and 2015 and the six months ended 30 June 2015 and 2016. See “Presentation of Financial and Other Information” for more information. (3) Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2015, government and regulatory costs that had previously been included in direct networking operating costs and other operating expenses which comprise government revenue share, regulatory fees and levies and spectrum fees, have been disclosed as a separate category of expense in the income statement called “government and regulatory costs” for the years ended 31 December 2014 and 2015 and the six months ended 30 June 2015 and 2016. See “Presentation of Financial and Other Information” for more information.

53 Results of operations for the six months ended 30 June 2016 and 2015 Revenue Overview Revenue increased by 14.2% to R79,115 million in the six months ended 30 June 2016 from R69,304 million in the six months ended 30 June 2015. This was primarily due to the weakness in the Rand exchange rate in the six months ended 30 June 2016, which led to higher contributions to revenue from our operations outside of South Africa. On an organic basis, revenue increased by 1.7%. Our revenue growth was negatively impacted by a decline in revenue growth in Nigeria, Cameroon, Ivory Coast and Uganda, mainly due to regulatory challenges and aggressive competition in these markets. Revenue in South Africa increased primarily due to higher handset sales and data revenue growth, while the revenue growth in Ghana was attributable to competitive voice and data offerings.

Revenue by products and services The following table shows our revenue for the six months ended 30 June 2015 and 2016 by product and service:

Six months ended 30 June 2015 2016 % change (unaudited) (Rm) (%) Revenue from outgoing voice ...... 41,392 44,690 8.0 from incoming voice ...... 6,889 7,777 12.9 from data ...... 15,013 19,849 32.2 from SMS ...... 2,042 1,735 (15.0) from mobile telephones and accessories ...... 2,905 3,885 33.7 from other sources ...... 969 942 (2.8) Revenue prior to IFRS hyperinflation adjustment ...... 69,210 78,878 14.0 IFRS hyperinflation adjustment ...... 94 237 152.1 Total revenue ...... 69,304 79,115 14.2

Revenue from our outgoing voice services increased by 8.0% to R44,690 million in the six months ended 30 June 2016 from R41,392 million in the six months ended 30 June 2015. On an organic basis revenue from outgoing voice services decreased 5.4%. This was primarily due to a decrease in revenue from our outgoing voice services in Nigeria and South Africa. In Nigeria, outgoing voice revenue was negatively impacted by subscriber disconnections and the withdrawal of regulatory services until the beginning of May 2016. In South Africa, revenues from outgoing voice services were negatively impacted by a 48 hour network outage in February 2016 and increased churn in the post-paid segment due to competition. Although the duration of the network outage was limited, this had a negative impact on our ability to attract and retain subscribers. We are continuing to invest in our South African infrastructure. Despite an increase in average voice traffic by 7.9% as compared with the six month ending 30 June 2015, our effective voice tariff on an organic basis declined by 12.2%, mainly due to free minutes offered in an effort to win back disconnected subscribers in Nigeria and Uganda and price competition in most key markets.

Revenue from our incoming voice services increased 12.9% to R7,777 million in the six months ended 30 June 2016 from R6,889 million in the six months ended 30 June 2015. On an organic basis revenue for incoming voice services decreased 2.7%. This was primarily due to a decline in our mobile termination rates (the charges competitors pay us for terminating calls on our network).

Revenue from our data services increased 32.2% to R19,849 million in the six months ended 30 June 2016 from R15,013 million in the six months ended 30 June 2015. On an organic basis revenue from data services increased 19.7%. This was primarily due to an increase in data traffic of 135.3%, the number of data users on our 3G networks, enhanced product offerings and increased adoption of data-enabled devices and smartphones in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015. In South Africa, data revenue increased to R6,766 million in the six months ended 30 June 2016 from R5,677 million in the six months ended 30 June 2015. In Nigeria, data revenue increased to R5,587 million in the six months ended 30 June 2016 from R4,661 million in the six months ended 30 June 2015. The increase was partially offset by declining effective tariffs for data services.

54 Revenue from our SMS services decreased 15.0% to R1,735 million in the six months ended 30 June 2016 from R2,042 million in the six months ended 30 June 2015. On an organic basis revenue from SMS services decreased 22%. This was primarily due to increased use of data services in place of SMS in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015 and declining SIM traffic.

Revenue from our mobile telephones and accessories increased 33.7% to R3,885 million in the six months ended 30 June 2016 from R2,905 million in the six months ended 30 June 2015. On an organic basis revenue from our mobile telephones and accessories increased 36.5%. The increase in revenue from mobile telephones and accessories was mainly attributable to an increase in the number of prepaid handsets sold in South Africa in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015 as a result of our increased focus on the prepaid market, as well as increased sales of handsets in the post-paid market and because sales of handsets in the six months ended 30 June 2015 were impacted by an industrial strike and supply chain challenges.

Other revenue decreased 2.8% to R942 million in the six months ended 30 June 2016 from R969 million in the six months ended 30 June 2015. On an organic basis other revenue decreased 12.1%.

Revenue by Country The following table shows our revenue for the six month period ended 2015 and 2016 from our significant geographic markets:

Six months ended 30 June 2015 2016 % change (unaudited) (Rm) (%) Key markets South Africa ...... 18,882 19,841 5.1 Nigeria ...... 24,649 28,941 17.4 Large opcos Ghana ...... 3,496 5,165 47.7 Cameroon ...... 2,742 3,202 16.8 Ivory Coast ...... 3,081 3,751 21.7 Uganda ...... 2,540 2,804 10.4 Syria ...... 1,329 1,068 (19.6) Sudan ...... 1,610 2,345 45.7

Key markets Revenue from South Africa increased 5.1% to R19,841 million in the six months ended 30 June 2016 from R18,882 million in the six months ended 30 June 2015. This was primarily due to strong data revenue growth, attributed to increased smartphone sales, improved 3G and LTE network quality and additional service offerings, including international content. The increase was partially offset by the decrease in our subscriber base of 2.6% in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015 due to competition in the South African market, network outages in some areas and negative economic conditions in South Africa affecting customer spending.

Revenue from Nigeria increased 17.4% to R28,941 million in the six months ended 30 June 2016 from R24,649 million in the six months ended 30 June 2015. On an organic basis revenue decreased 4.8%. This was primarily due to a decrease in both voice and data revenue as the subscriber base decreased by 3.7%, due to the mandatory disconnection of subscribers and the suspension of regulatory services until May 2016, when we attained the necessary approvals to introduce market-related pricing plans. Other key contributors to the decrease in revenue (on an organic basis) were the lower outgoing voice and data revenue, impacted by regulatory restrictions on “out-of-bundle” data tariffs.

Large opcos Revenue from Ghana increased 47.7% to R5,165 million in the six months ended 30 June 2016 from R3,496 million in the six months ended 30 June 2015, mainly due to continued weakness in the Rand against the Cedi. On an organic basis revenue increased 18.9%. This was primarily due to increases in data revenue, an increase in outgoing voice revenue and the further growth of MTN Mobile Money, with an increase in the MTN

55 Mobile Money subscriber base by 23.3%, in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Revenue from Cameroon increased 16.8% to R3,202 million in the six months ended 30 June 2016 from R2,742 million in the six months ended 30 June 2015. On an organic basis revenue decreased 8.7%. This was mainly due to a decline in outgoing voice revenue impacted by price competition and free minutes used in relation to the subscriber registration process. However, data revenue increased by 49.5% (on an organic basis), supported by increased 3G device penetration and the rollout of 3G and LTE networks.

Revenue from Ivory Coast increased 21.7% to R3,751 million in the six months ended 30 June 2016 from R3,081 million in the six months ended 30 June 2015. On an organic basis revenue decreased 3.9%. This decrease was mainly due to lower outgoing voice revenue impacted by a decrease in minutes from a lower subscriber base. This was partially offset by a 13.4% increase (on an organic basis) in data revenue in the six months ended 30 June 2016, as compared to the six months ended 30 June 2015 supported by increased 3G and LTE coverage.

Revenue from Uganda increased 10.4% to R2,804 million in the six months ended 30 June 2016 from R2,540 million in the six months ended 30 June 2015. On an organic basis revenue decreased 2.3%. This was primarily a result of a decline in both outgoing and incoming voice revenue, impacted by the decline in mobile termination rates and the subscriber disconnections. Data revenue increased by 22.7% (on an organic basis) in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Revenue from Syria decreased 19.6% to R1,068 million in the six months ended 30 June 2016 from R1,329 million in the six months ended 30 June 2015. On an organic basis revenue increased 10.5%. This was primarily due to an increase in outgoing voice and data revenue. Data revenue increased by 16.9% (on an organic basis) in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Revenue from Sudan increased 45.7% to R2,345 million in the six months ended 30 June 2016 from R1,610 million in the six months ended 30 June 2015. On an organic basis revenue increased 15.7%. This was primarily due to a 78.3% (on an organic basis) increase in data revenue in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Other income Other income decreased 10.7% to R367 million in the six months ended 30 June 2016 from R411 million in the six months ended 30 June 2015. This was primarily due to reduced profit from the sale of towers in Nigeria.

Direct network operating costs Direct network operating costs increased 47.6% to R12,291 million in the six months ended 30 June 2016 from R8,327 million in the six months ended 30 June 2015. This was primarily due to aggressive 3G and LTE network expansion in key markets, higher rent and utilities costs and higher foreign-denominated expenses mainly in Nigeria in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Costs of handsets and other accessories Costs of handsets and other accessories increased 36.3% to R6,065 million in the six months ended 30 June 2016 from R4,449 million in the six months ended 30 June 2015. This was primarily due to an increase in the number of handsets sold as well as an increase in the average cost of smartphones purchased combined with foreign currency impacts (with higher US dollar and Euro denominated costs, when translated into South African Rand) in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Interconnect and roaming costs Interconnect and roaming costs increased 16.2% to R7,358 million in the six months ended 30 June 2016 from R6,330 million in the six months ended 30 June 2015. This was primarily due to higher off-network billable traffic driven by SIM registration incentives.

Staff costs Staff costs increased 15.0% to R4,777 million in the six months ended 30 June 2016 from R4,155 million in the six months ended 30 June 2015. This was primarily due to delayed outsourcing of call centre and warehouse staff.

56 Selling, distribution and marketing expenses Selling, distribution and marketing expenses increased 14.0% to R9,624 million in the six months ended 30 June 2016 from R8,439 million in the six months ended 30 June 2015. This was primarily due to an increase in marketing and commission expenditures related to the re-connecting of subscribers disconnected following the imposition of stricter registration requirements in Nigeria.

Government and regulatory costs Government and regulatory costs increased 5.2% to R2,982 million in the six months ended 30 June 2016 from R2,835 million in the six months ended 30 June 2015. This includes government and regulatory costs that had previously been included in direct network operating costs and other operating expenses. It does not include the payments to the Nigerian government in settlement of the Nigerian Regulatory Fine. The increase was primarily due to foreign currency rate movements.

Nigeria regulatory fine Nigeria regulatory fine of R10,499 million in the six months ended 30 June 2016 represents the income statement impact of the remeasurement of the provision for the Nigerian Regulatory Fine, which was changed on 10 June 2016 from a provision to a financial liability (with the amount being increased to reflect the outstanding settlement amount) following the settlement with the Nigerian regulatory authorities.

Other operating expenses Other operating expenses increased 55.5% to R7,004 million in the six months ended 30 June 2016 from R4,505 million in the six months ended 30 June 2015. This increase primarily relates to costs incurred for professional services relating to the negotiations that led to a reduction in the Nigerian Regulatory Fine, impairment of property, plant and equipment in South Sudan and costs associated with subscriber registrations.

Depreciation of property, plant and equipment Depreciation of property, plant and equipment increased 22.5% to R10,913 million in the six months ended 30 June 2016 from R8,905 million in the six months ended 30 June 2015. This was primarily due to higher depreciation charges because of higher capital expenditures in South Africa in 2015.

Amortisation of intangible assets Amortisation of intangible assets increased 17.8% to R2,174 million in the six months ended 30 June 2016 from R1,845 million in the six months ended 30 June 2015. This was primarily due to amortisation costs associated with higher spending on software in previous years as well as goodwill impairments.

Net finance costs Net finance costs increased 156.4% to R5,945 million in the six months ended 30 June 2016 from R2,319 million in the six months ended 30 June 2015. This was primarily due to an increase in net foreign exchange losses to R3,606 million in the six months ended 30 June 2016, as compared to R1,481 million in the six months ended 30 June 2015, impacted by unfavourable exchange rates, in particular the depreciation of the Nigerian Naira against the US dollar and the Iranian rial against the rand. An increase in the net interest expense to R1,855 million in the six months ended 30 June 2016 from R839 million in the six months ended 30 June 2015 due to an increase in debt also contributed to the increase in net finance costs.

Share of results of joint ventures and associates after tax Share of results of joint ventures and associates after tax decreased 183% to a loss of R1,692 million in the six months ended 30 June 2016 from R2,027 million in the six months ended 30 June 2015. This was primarily due to foreign exchange losses as well as a charge of R1,039 million incurred in Iran mainly relating to the subsequent depreciation and amortisation of previously hyper-inflated assets that were historically written up under hyperinflation reporting. Iran hyperinflation accounting was discontinued effective 1 July 2015.

Income tax expense Income tax expense decreased 24.4% to R4,726 million in the six months ended 30 June 2016 from R6,249 million in the six months ended 30 June 2015. This was primarily due to lower profit before tax and a

57 higher deferred tax credit due to increased unrealised foreign exchange losses on US dollar-denominated intercompany loans and third party payables in Nigeria in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015. The effective tax rate was 49.2% (on a normalised basis) in the six months ended 30 June 2016 as compared to 32.9% (on a normalised basis) in the six months ended 30 June 2015.

Results of operations for the years ended 31 December 2015 and 2014 Revenue Overview Revenue remained largely flat at R147,063 million in 2015 and R146,930 million in 2014. This was primarily due to a decline in voice revenue in Nigeria and a reduction in handset revenue in South Africa following the industrial action experienced in the first half of the year which led to lower distribution of handsets. This was, however, largely offset by an increase in data revenue across the business.

Revenue by products and services The following table shows our revenue for 2014 and 2015 by product and service:

Year ended 31 December Restated 2014(1) 2015 % change (unaudited) (Rm) (%) Revenue from outgoing voice ...... 90,671 85,027 (6.2) from incoming voice ...... 14,919 14,690 (1.5) from data ...... 26,024 33,874 30.2 from SMS ...... 4,518 4,097 (9.3) from mobile telephones and accessories ...... 7,890 6,985 (11.5) from other sources ...... 2,132 1,680 (21.2) Revenue prior to IFRS hyperinflation adjustment ...... 146,154 146,353 0.1 IFRS hyperinflation adjustment ...... 776 710 (8.5) Total revenue ...... 146,930 147,063 0.1 (1) During the year ended 31 December 2015, an amount of R1,293 million in respect of the year ended 31 December 2014 was reclassified from data revenue to airtime and subscription revenue to accurately reflect the respective categories on a comparative basis. See “Presentation of Financial and Other Information” for more information

Revenue from our outgoing voice services decreased 6.2% to R85,027 million in 2015 from R90,671 million in 2014. On an organic basis, revenue from outgoing voice services decreased 5.0%. This was primarily due to a decrease in voice tariffs in 2015 as compared to 2014 driven by price competition in South Africa and Nigeria and a loss of high value subscribers in Nigeria.

Revenue from our incoming voice services decreased 1.5% to R14,690 million in 2015 from R14,919 million in 2014. On an organic basis, revenue from incoming services decreased 1.2%. This was primarily due to a fall in voice tariffs as well as consumers increasingly using multiple SIM cards from various operators.

Revenue from our data services increased 30.2% to R33,874 million in 2015 from R26,024 million in 2014. On an organic basis, revenue from data services increased 32.6%. This was primarily due to strong growth in the number of data users in 2015 as compared to 2014, supported by our expanded 3G and LTE network rollout and increased smartphone adoption as well as new products and services. In particular, in our key markets, data revenue increased to R12,709 million in 2015 from R9,264 million in 2014 in South Africa and to R10,113 million in 2015 from R8,754 million in 2014 in Nigeria.

Revenue from our SMS services decreased 9.3% to R4,097 million in 2015 from R4,518 million in 2014. On an organic basis, revenue from SMS services decreased 7.6%. This was primarily due to decreased SMS volumes owing to increase use of OTT applications.

Revenue from our mobile telephones and accessories decreased 11.5% to R6,985 million in 2015 from R7,890 million in 2014. On an organic basis, revenue from mobile telephones and accessories decreased 11.3%. This was primarily due to lower handset sales in South Africa following the industrial action experienced in the first half of the year which led to lower distribution of handsets.

58 Other revenue decreased 21.2% to R1,680 million in 2015 from R2,132 million in 2014. On an organic basis, other revenue decreased 21.3%. This was primarily due to declines in revenue from VAS services as a result of increased competition.

Revenue by Country The following table shows our revenue for 2014 and 2015 from our significant geographic markets:

Year ended 31 December 2014 2015 (audited) (Rm) Key markets South Africa ...... 38,922 40,038 Nigeria ...... 53,995 51,942 Large opcos Ghana ...... 7,149 7,903 Cameroon ...... 6,194 5,806 Ivory Coast ...... 6,418 6,424 Uganda ...... 5,289 5,148 Syria ...... 3,449 2,605 Sudan ...... 2,701 3,472

Key markets Revenue from South Africa increased 2.9% to R40,038 million in 2015 from R38,922 million in 2014. This was driven mainly driven by healthy growth in data revenue. This was, however, offset by an 18.0% reduction in handset revenue and a 2.4% decrease in outgoing voice revenue. Service revenue, which excludes mobile telephones and accessories revenue and other revenue, increased 7.6%. Data revenue increased by 37.2% and contributed 31.7% to total revenue. This was supported by strong 3G and LTE network rollout as well as increased 3G and LTE device penetration. The number of smartphones on the network increased by 10.6% to 7.6 million despite decreased handset sales in 2015 as compared to 2014.

Revenue from Nigeria decreased 3.8% to R51,942 million in 2015 from R53,995 million in 2014. On an organic basis, revenue decreased 2.1%. This reflected the absence of new competitive offerings and multiple SIM card usage resulting in a decline in outgoing voice revenue. Data revenue increased by 18.8% (on an organic basis) and contributed 19.5% to total revenue. While data revenue growth was supported by a 60.7% increase in the number of smartphones and higher digital services uptake, it was negatively impacted by regulatory requirements, which obliged the operation to seek permission from the customer before charging out-of-bundle rates which resulted in a decline in data revenue. Slow data speeds and lower effective data tariffs also had a negative impact.

Large opcos Revenue from Ghana increased 10.5% to R7,903 million in 2015 from R7,149 million in 2014. On an organic basis, revenue increased 15.9%. This was primarily due to the 79.9% (85.1% on an organic basis) growth in data revenue from R1,344 million to R2,418 million.

Revenue from Cameroon decreased 6.3% to R5,806 million in 2015 from R6,194 million in 2014. On an organic basis, revenue decreased by 4.6%. This was primarily due to a 12.5% (on an organic basis) decrease in outgoing voice revenue as a result of lower effective tariffs and network challenges in the first half of the year but was offset by an increase in data revenue of 65.7%.

Revenue from Ivory Coast increased 0.1% to R6,424 million in 2015 from R6,418 million in 2014. On an organic basis, revenue increased by 2.2%. This was primarily due to an increase in data revenue and an increase in MTN Mobile Money subscribers.

Revenue from Uganda decreased 2.7% to R5,148 million in 2015 from R5,289 million in 2014. On an organic basis, revenue increased 2.8%. This was primarily due to an increase in data revenue of 17.3% (on an organic basis). This was attributable to the launch of LTE services in the year, an increase in 3G and LTE devices and the continued success of MTN Mobile Money. However this was offset by a decrease in outgoing voice revenue of 2.1% (on an organic basis) mainly due to lower effective voice tariffs.

59 Revenue from Syria decreased 24.5% to R2,605 million in 2015 from R3,449 million in 2014. On an organic basis, revenue increased 4.7%. This was primarily due to an increase in data revenue of 22.9% (on an organic basis) and an increase in the subscriber base despite deteriorating conditions in the country.

Revenue from Sudan increased 28.5% to R3,472 million in 2015 from R2,701 million in 2014. On an organic basis, revenue increased 14.8%. This was primarily due to an increase in data revenue of 59.8% (on an organic basis) but was offset by a 5.5% decline in subscribers to 8.5 million due to subscriber registration requirements.

Other income Other income increased 6.1% to R8,409 million in 2015 from R7,928 million in 2014. This was primarily due to the profit on the tower sales in Nigeria.

Direct network operating costs Direct network operating costs increased 15.0% to R18,809 million in 2015 from R16,354 million in 2014. The increase in the direct network operating costs was primarily due to network expansion, higher rent and utilities costs, increased tower leasing costs on the back of the tower sales transaction entered into in Nigeria and commissions associated with new revenue streams, together with operational currency weakness impacting US dollar linked expenses.

Costs of handsets and other accessories Costs of handsets and other accessories increased 5.0% to R10,829 million in 2015 from R10,314 million in 2014. This was primarily due to an increase in the average cost of handsets purchased in MTN South Africa and foreign currency impacts in 2015 as compared to 2014.

Interconnect and roaming costs Interconnect and roaming costs decreased 4.0% to R13,102 million in 2015 from R13,653 million in 2014. This was primarily due to lower MTR’s and the impact of foreign exchange rates.

Staff costs Staff costs decreased 2.8% to R8,587 million in 2015 from R8,838 million in 2014. This was primarily due to organisational restructuring and staff attrition in South Africa.

Selling, distribution and marketing expenses Selling, distribution and marketing expenses increased 7.2% to R18,412 million in 2015 from R17,174 million in 2014. This was primarily due to an increase in costs related to the Nigerian SIM registration process and strong growth in VAS/Digital revenue share.

Other operating expenses Other operating expenses increased 19.1% to R11,433 million in 2015 from R9,600 million in 2014. This was primarily due to a provision of R503 million for interconnect debt in 2015, a provision for inventory obsolescence related to handsets in South Africa due to fewer handset sales as a result of labour strikes and an Ebola awareness donation of US$10 million in Nigeria.

Depreciation of property, plant and equipment Depreciation of property, plant and equipment increased 7.1% to R19,557 million in 2015 from R18,262 million in 2014. This was primarily due to an increase in depreciable assets due to a higher capital base in South Africa and Syria in 2015 as compared to 2014 following continued network investment.

Amortisation of intangible assets Amortisation of intangible assets increased 14.9% to R3,736 million in 2015 from R3,251 million in 2014. This was primarily due to increased spend on software in 2015 as compared to 2014.

60 Net finance costs Net finance costs decreased 17.9% to R3,010 million in 2015 from R3,668 million in 2014. This was primarily due to a 37.1% decrease in the net interest expense to R1,618 million in 2015 from R2,572 million in 2014 as a result of higher interest income on cash and investments, offset by unfavourable exchange rate movements that resulted in net foreign exchange losses of R1,391 million in 2015 compared to net foreign exchange losses of R1,096 million in 2014.

Share of results of joint ventures and associates after tax Share of results of joint ventures and associates after tax decreased 70.9% to R1,226 million in 2015 from R4,208 million in 2014. This was primarily due to adjusting for hyperinflation in respect of our operation in Iran. Our operation in Iran had increased revenue by 17.4% over the period, with data revenue increasing by 90.2% (on an organic basis) despite the 4% (on an organic basis) decline in outgoing voice revenue.

Income tax expense Income tax expense decreased 15.3% to R11,322 million in 2015 from R13,361 million in 2014. This was primarily due to lower profit before tax resulting from a decrease in equity income from joint ventures/associates and a higher provision for current tax liability in 2014 compared to 2015 due to the change in handset revenue treatment within South Africa. The effective tax rate for the Group in 2015 was 32.5% compared to an effective tax rate of 26.17% in 2014.

Results of operations for the years ended 31 December 2014 and 2013 Revenue Overview Revenue increased 7.0% to R146,930 million in 2014 from R137,270 million in 2013. This was primarily due to an increase of 12.1% in MTN Nigeria’s revenue (partially offset by a 3.9% decline in MTN South Africa’s revenue), an increase in data revenue of 33.2% and growth in other markets.

Revenue by products and services The following table shows our revenue for 2013 and 2014 by product and service:

Year ended 31 December Restated(1) 2013 2014(2) % change (unaudited) (Rm) (%) Revenue from outgoing voice ...... 86,757 90,671 4.5 from incoming voice ...... 15,367 14,919 (2.9) from data ...... 20,504 26,024 26.9 from SMS ...... 5,364 4,518 (15.8) from mobile telephones and accessories ...... 7,541 7,890 4.6 from other sources ...... 1,737 2,132 22.7 Revenue prior to IFRS hyperinflation adjustment ...... 137,270 146,154 6.5 IFRS hyperinflation adjustment ...... — 776 — Total revenue ...... 137,270 146,930 7.0

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. (2) During the year ended 31 December 2015, an amount of R1,293 million in respect of the year ended 31 December 2014 was reclassified from data revenue to airtime and subscription revenue to accurately reflect the respective categories on a comparative basis. See “Presentation of Financial and Other Information” for more information.

61 Revenue from our outgoing voice services increased 4.5% to R90,671 million in 2014 from R86,757 million in 2013. On an organic basis, revenue from outgoing voice services decreased 0.9%. This was primarily due to price competition in key markets resulting in lower voice tariffs, particularly in South Africa.

Revenue from our incoming voice services decreased 2.9% to R14,919 million in 2014 from R15,367 million in 2013. On an organic basis, revenue from incoming voice services decreased 5.9%. This was primarily due to a fall in our mobile termination rates (the charges which our competitors pay us for terminating calls on our network) in 2014 as compared to 2013 depressing revenue growth.

Revenue from our data services increased 26.9% to R26,024 million in 2014 from R20,504 million in 2013. On an organic basis, revenue from data services increased 30.9%. This was primarily due to an expanded 3G network, strong growth in data usage in 2014 and an increase in the number of smartphones and 3G-enabled devices in our markets. In particular, in our key markets, data revenue increased to R9,264 million in 2014 from R8,656 million in 2013 in South Africa and to R8,754 million in 2014 from R7,285 million in 2013 in Nigeria.

Revenue from our SMS services decreased 15.8% to R4,518 million in 2014 from R5,364 million in 2013. On an organic basis, revenue from SMS services decreased 17.5%. This was primarily due to decreased SMS volumes owing to increased use of OTT applications.

Revenue from mobile telephones and accessories increased 4.6% to R7,890 million in 2014 from R7,541 million in 2013. On an organic basis, revenue from mobile telephones and accessories increased 4.5%. This was primarily due to high demand for handsets and an increase in more expensive handsets in MTN South Africa being sold in 2014 as compared to 2013.

Other revenue increased 22.7% to R2,132 million in 2014 from R1,737 million in 2013. On an organic basis, other revenue increased 19.6%. This was primarily due to an increase in revenue from our provision of internet services and increased VAS offerings in 2014 as compared to 2013.

Revenue by Country The following table shows our revenue for 2013 and 2014 from our significant geographic markets:

Year ended 31 December Restated(1) 2013 2014 (audited) (Rm) Key markets South Africa ...... 40,482 38,922 Nigeria ...... 48,159 53,995 Large opcos Ghana ...... 8,269 7,149 Cameroon ...... 5,204 6,194 Ivory Coast ...... 5,480 6,418 Uganda ...... 4,467 5,289 Syria ...... 3,229 3,449 Sudan ...... 2,496 2,701 (1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information.

Key markets Revenue from South Africa decreased 3.9% to R38,922 million in 2014 from R40,482 million in 2013. This was primarily due to a 36.0% decline in interconnect revenue due to lower mobile termination rates (“MTRs”) although this was offset by an increase in data revenue of 7.0% as a result of higher volumes due to lower pricing.

62 Revenue from Nigeria increased 12.1% to R53,995 million in 2014 from R48,159 million in 2013. On an organic basis, revenue increased 3.7%. This was primarily due to a 28.3% increase in data revenue mainly as a result of the 18.1% increase in data users, increased smartphone penetration and the introduction of products such as the 4.5G smartphone data plan. This growth was offset by a decline in on-net traffic due to the dominance ruling and lower-than-anticipated subscriber numbers which resulted in a 1.7% (on an organic basis) decline in outgoing voice revenue.

Large opcos Revenue from Ghana decreased 13.5% to R7,149 million in 2014 from R8,269 million in 2013. On an organic basis, revenue increased 13.8%. This was primarily due to an increase in data revenue of 122.9% (on an organic basis) as a result of an increase in data users to approximately 8 million. The strong growth in data was a result of improved 3G coverage, reduced data prices and a significant uptake of digital services.

Revenue from Cameroon increased 19% to R6,194 million in 2014 from R5,204 million in 2013. On an organic basis, revenue increased 6.9% This was primarily due to an increase in data revenues of 35.1% (on an organic basis).

Revenue from Ivory Coast increased 17.1% to R6,418 million in 2014 from R5,480 million in 2013. On an organic basis, revenue increased 5.0%. This was primarily due to an increase in data revenues of 33.7% (on an organic basis) supported by an increase in data users which was significantly boosted by the first 3G sites coming on air in the country.

Revenue from Uganda increased 18.4% to R5,289 million in 2014 from R4,467 million in 2013. On an organic basis, revenue increased 6.8%. This was primarily due to an increase in data revenue of 36.6% (on an organic basis) supported by increased use of MTN Mobile Money from 2013 to 2014.

Revenue from Syria increased 6.8% to R3,449 million in 2014 from R3,229 million in 2013. On an organic basis, revenue increased 25.9%. This was primarily due to growth in data revenue of 108% (on an organic basis) from 2013 to 2014, partially offset by the increased impact of the ongoing conflict and political crisis in the country.

Revenue from Sudan increased 8.2% to R2,701 million in 2014 from R2,496 million in 2013. On an organic basis, revenue increased 16.5%. This was primarily due to an increase in our data revenue of 136.5% (on an organic basis) which was mainly attributable to attractive data bundles.

Other income Other income increased 497.4% to R7,928 million in 2014 from R1,327 million in 2013. This was primarily due to increased income from tower sales in 2014 as compared to 2013.

Direct network operating costs Direct network operating costs decreased 10.6% to R16,354 million in 2014 from R18,299 million in 2013. This was primarily due to decreased distribution costs.

Costs of handsets and other accessories Costs of handsets and other accessories decreased 4% to R10,314 million in 2014 from R10,744 million in 2013. This was primarily due to the reclassification of value added service costs into selling, distribution and marketing expenses. Excluding the effects of the reclassification, costs of handsets and other accessories increased by 11% to R11,926 million due to the adoption of high end smartphones, higher average costs per handset and foreign exchange impacts.

Interconnect and roaming costs Interconnect and roaming costs decreased 1.2% to R13,653 million in 2014 from R13,816 million in 2013. This was primarily due to decreased interconnect and roaming costs owing to increased Nigeria interconnect costs offset by foreign exchange impacts and a decrease in South Africa interconnect costs.

Staff costs Staff costs increased 1.9% to R8,838 million in 2014 from R8,670 million in 2013. This was primarily due to an increase in aggregate remuneration in 2014 as compared to 2013 offset by headcount reduction in South Africa, Nigeria and Uganda.

63 Selling, distribution and marketing expenses Selling, distribution and marketing expenses increased 5% to R17,174 million in 2014 from R16,362 million in 2013. This was primarily due to the reclassification of value added service costs from costs of handsets and other accessories into selling, distribution and marketing expenses which was offset by a decrease in costs due to decreased commissions.

Other operating expenses Other operating expenses decreased 6.6% to R9,600 million in 2014 from R10,276 million in 2013. This was primarily due to cost containment initiatives.

Depreciation of property, plant and equipment Depreciation of property, plant and equipment increased 11% to R18,262 million in 2014 from R16,458 million in 2013. This was primarily due to higher capital expenditures in 2013 as compared to 2014.

Amortisation of intangible assets Amortisation of intangible assets increased 15.3% to R3,251 million in 2014 from R2,820 million in 2013. This was primarily due to increased spending on software in Nigeria, Uganda and Cameroon.

Net finance costs Net finance costs increased 197.2% to R3,668 million in 2014 from R1,234 million in 2013. This was primarily due to the effects of net foreign exchange and functional currency losses in 2014 as compared to 2013, with net foreign exchange losses of R1,096 million in 2014 as compared to net foreign exchange gains of R1,065 million in 2013, as well as due to an increase in the net interest expense to R2,572 million in 2014 from R2,299 million in 2013.

Share of results of joint ventures and associates after tax Share of results of joint ventures and associates after tax increased 22.6% to R4,208 million in 2014 from R3,431 million in 2013. This was primarily due to the increase in profits from Irancell.

Income tax expense Income tax expense increased 7% to R13,361 million in 2014 from R12,487 million in 2013. This was primarily due to withholding tax payable as a result of increased dividend upstreaming, the lower investment allowance deductions resulting from lower capex additions in Nigeria as well as handset adjustments due to the voluntary change in accounting policy relating to revenue recognition in South Africa. The effective tax rate in 2014 was 26.17% as compared to an effective tax rate of 28.8% in 2013.

LIQUIDITY AND CAPITAL RESOURCES Overview Our primary sources of liquidity are cash flows from operations, bank borrowings and the issuance of securities. Our principal uses of cash flows from operations include capital expenditures, interest, dividend and tax payments and principal loan repayments.

Our ability to fund planned capital expenditures and working capital, and to make scheduled payments of principal, or to pay the interest on, or to refinance, our indebtedness, will depend on our future performance and our ability to generate cash, which, to a certain extent, is subject to general economic, financial, competitive, legislative, legal, regulatory and other factors that are beyond our control, as well as the factors discussed under “Risk Factors” and “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements”.

We believe that our cash flows from operating activities, bank borrowings and issuance of securities will be sufficient to fund our anticipated capital expenditure, working capital requirements and debt service requirements as they become due. We aim to ensure we have sufficient liquidity to meet our obligations over a rolling 18 to

64 24 month period, based on a conservative review of probable cash available to meet our obligations (i.e. excluding restricted cash, for more information please see “—Critical Accounting Judgements, Estimates and Assumptions—Restricted cash”), exclusive of one-off transactions in our pipeline with the expectation of a net cash inflow and inclusive of one-off transactions in our pipeline with the expectation of a net cash outflow. We cannot, however, assure you that our business will generate sufficient cash flows from operating activities or that future borrowings or access to capital markets will be available in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs.

Consolidated Cash Flow The following table summarises our consolidated statement of cash flows information for 2013, 2014 and 2015:

Year ended 31 December Restated(1) 2013 2014 2015 (audited) (Rm) CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations ...... 59,708 64,628 57,598 Finance income received ...... 1,752 2,584 2,591 Finance costs paid ...... (3,947) (3,993) (4,855) Income tax paid ...... (11,184) (11,779) (13,506) Dividends paid to equity holders of the company ...... (16,187) (20,527) (23,506) Dividends paid to non-controlling interests ...... (3,571) (4,289) (5,777) Dividends received from associates ...... 220 233 230 Dividends received from joint ventures ...... 234 275 347 Net cash generated from operating activities ...... 27,025 27,132 13,122 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment ...... (24,568) (19,562) (21,612) Acquisition of intangible assets ...... (3,586) (3,282) (10,412) Proceeds from sale of property, plant and equipment and intangible assets ...... 106 541 772 Proceeds on sale of towers ...... 2,378 6,465 6,515 Acquisition of subsidiary ...... — — — Increase in non-current investments ...... (128) (5,657) (3,319) Acquisition of business, net of cash ...... (47) (1,634) (3,040) Loans granted ...... (64) (1,007) (1,007) Increase in investment in associates or joint ventures ...... (69) (1,524) — Increase in investment in insurance cell captives ...... (628) (173) (952) Proceeds from/(purchase of) bonds, treasury bills and foreign deposits ...... 3,423 (1,057) (542) Decrease/(increase) in restricted cash ...... 3,348 899 (693) Net cash used in investing activities ...... (19,835) (25,991) (34,290) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of ordinary shares ...... 5 3 — Net cash outflows from changes in shareholding ...... (881) — — Proceeds from borrowings ...... 33,279 30,603 23,384 Repayment of borrowings ...... (25,951) (25,620) (14,802) Share buyback purchases ...... — (2,249) (173) Settlement of vested equity rights ...... — (209) (288) Other financing activities ...... (188) 111 (20) Net cash from/(used in) financing activities ...... 6,264 2,639 8,101 Net increase/(decrease) in cash and cash equivalents ...... 13,454 3,780 (13,067) Net cash and cash equivalents at beginning of year ...... 22,539 39,577 43,072 Exchange gains/(losses) on cash and cash equivalents ...... 3,584 (182) 3,860 Net monetary gains/(losses) on cash and cash equivalents ...... — (103) 274 Net cash and cash equivalents at end of year ...... 39,577 43,072 34,139

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting

65 Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information.

The following table summarises our condensed consolidated statement of cash flows for the six months ended 30 June 2015 and 2016:

Six months ended 30 June 2015 2016 (unaudited) (Rm) Net cash inflow/(outflow) from operating activities ...... 1,432 (436) Net cash outflow from investing activities ...... (14,471) (14,209) Net cash inflow from financing activities ...... 1,558 13,608 Decrease in cash and cash equivalents ...... (11,481) (1,037) Cash and cash equivalents at beginning of period ...... 43,072 34,139 Exchange losses on cash and cash equivalents ...... (787) (6,272) Net monetary gain on cash and cash equivalents ...... 134 107 Cash and cash equivalents at end of period ...... 30,938 26,937

The six months ended 30 June 2016 and 2015 Net cash inflow from operating activities decreased 130.4% to a net cash outflow of R436 million in the six months ended 30 June 2016 from a net cash inflow of R1,432 million in the six months ended 30 June 2015. This was primarily due to a reduction in cash generated from operations because of the payment of a portion of the Nigerian Regulatory Fine in the amount of R5.9 billion. In this regard, a N50 billion good faith payment was paid without prejudice by MTN Nigeria on 24 February 2016. This payment formed part of the monetary component of the settlement. A further payment of N30 billion was made on 24 June 2016 resulting in a remaining cash balance of Naira 250 billion (the equivalent of R12.9 billion, translated at the 30 June 2016 closing rate of R1 = N19.33) outstanding as at 30 June 2016.

Net cash outflow from investing activities decreased 1.8% to R14,209 million in the six months ended 30 June 2016 from R14,471 million in the six months ended 30 June 2015. This was primarily due to increased acquisitions of property, plant and equipment, offset by changes in investments in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015.

Net cash inflow from financing activities increased 773.4% to R13,608 million in the six months ended 30 June 2016 from R1,558 million in the six months ended 30 June 2015. This was primarily due to relatively higher proceeds from borrowings in the six months ended 30 June 2016 as compared to the six months ended 30 June 2015, primarily as a result of borrowings made under our new facilities entered into in the six months ended 30 June 2016. See “Description of Other Indebtedness.”

The years ended 31 December 2015 and 2014 Net cash generated from operating activities decreased 51.6% to R13,122 million in 2015 from R27,132 million in 2014. This was primarily due to a decrease in revenue from MTN Nigeria as a result of the factors discussed above, higher leasing costs and increased foreign currency expenses and an increase in working capital as a result of inventories, receivables and prepayments and trade payables.

Net cash used in investing activities increased 31.9% to R34,290 million in 2015 from R25,991 million in 2014. This was primarily due to an increase in cash outflows on the acquisition of property, plant and equipment and intangible assets.

Net cash from financing activities increased 207% to R8,101 million in 2015 from R2,639 million in 2014. This change was primarily due to reduced repayments of borrowings and decreased share buybacks in 2015 as compared to 2014, partially offset by a decrease in proceeds from borrowings.

The years ended 31 December 2014 and 2013 Net cash generated from operating activities increased 0.4% to R27,132 million in 2014 from R27,025 million in 2013. This was primarily due to a 8.2% increase in cash generated from operations offset by higher dividends and tax paid in 2014 as compared to 2013.

66 Net cash used in investing activities increased 31% to R25,991 million in 2014 from R19,835 million in 2013. This was primarily due to the acquisition in November 2014 of the Nashua Mobile subscriber base from Nashua Mobile Proprietary Limited which resulted in an increase in non-current investments.

Net cash from financing activities decreased 57.9% to R2,639 million in 2014 from R6,264 million in 2013. This was primarily due to share buybacks and the settlement of vested equity rights.

Capital Expenditures Our capital expenditures mainly consist of expenditures on network infrastructure, capital work in progress, software, information systems, furniture and office equipment, as well as other expenditures. Network infrastructure improvements are principally focused on building out fibre networks and focusing on high value city centres.

Our capital expenditure increased by 16.6% to R29,611 million in 2015 from R25,406 million in 2014 representing 20.1% and 17.3% of total revenue for each period, respectively, mainly as a result of significant capital expenditure of R10,948 million in South Africa in order to bolster our network capacity and quality in the country by adding 966 2G, 1,593 co-located 3G and 3,148 co-located LTE sites. During 2015, in Nigeria we added 597 new 2G sites and 1,856 co-located 3G sites. Capital expenditure in Nigeria was R4,993 million in 2015 and improving quality and data speeds of the network in some parts of the country remains a priority. In Iran, capital expenditure in 2015 was R8,531 million with a focus on network modernisation and the continued expansion of the 3G and LTE networks where we added 432 2G sites, 2,443 co-located 3G sites and 1,266 co- located LTE sites. Capital expenditure in 2014 was 15.8% lower than in 2013 (at R30,164 million) of which R517 million related to foreign currency movements.

The following table shows a breakdown of our capital expenditures by type of expenditure for the periods indicated:

Six months ended Year ended 31 December 30 June 2013 2014 2015 2016 (audited) (unaudited) (Rm) Property, plant and equipment ...... 26,804 22,154 25,751 11,683 Land and buildings ...... 581 380 465 94 Leasehold improvements ...... 181 196 177 95 Network infrastructure ...... 12,332 7,539 8,802 5,623 Information systems, furniture and office equipment ...... 1,496 1,287 1,484 599 Capital work in progress/other ...... 11,966 12,604 14,700 5,235 Vehicles ...... 248 148 123 37 Intangible assets ...... 3,360 3,252 3,860 2,167 Software ...... 1,991 2,144 2,860 871 Capital work in progress ...... 1,369 1,108 1,000 1,296 Total ...... 30,164 25,406 29,611 13,850

67 The following table shows a geographic breakdown of our capital expenditures for the periods indicated:

Six months ended Year ended 31 December 30 June 2013 2014 2015 2016 (audited) (unaudited) (Rm) South Africa ...... 5,835 5,676 10,948 4,773 Nigeria ...... 14,298 8,375 4,993 2,534 Ghana ...... 1,690 1,400 1,831 1,646 Syria ...... 892 357 974 191 Cameroon ...... 768 862 1,911 1,121 Ivory Coast ...... 830 1,185 833 842 Uganda ...... 553 667 951 364 Sudan ...... 1,072 1,392 819 549 Small opco cluster ...... 3,809 3,888 4,368 1,645 Head office companies and eliminations(1) ...... 417 1,440 1,571 107 IFRS hyperinflation adjustment ...... — 164 412 78 Consolidated total ...... 30,164 25,406 29,611 13,850 Iran(2) ...... 1,758 3,112 4,180 2,313

(1) Consists mainly of capital expenditure incurred by our head office companies and intersegment eliminations. (2) Irancell Telecommunication Company Services (PJSC) proportionate results are included in the segment analysis as reviewed by the CODM and excluded from IFRS reported results due to equity accounting for joint ventures.

We expect our annual capital expenditure to increase in the medium term as we increase our capital expenditures in Nigeria and South Africa as we upgrade and expand wireless and fixed-line networks and deploy fibre network infrastructure. For the six months ended 30 June 2016, capital expenditure was R13,850 million, an increase of 27.4% compared with the same period in 2015. We rolled out a further 873 2G, 3,660 3G and 2,691 LTE sites and 1,132 km of long-distance fibre in the six months ended 30 June 2016. We have authorised R35,114 million for capital expenditures in 2016, with South Africa and Nigeria making up 25.9% and 36.1%, respectively, of the allocated capital expenditures.

Funding Strategy Capital Structure Considerations Gearing While we do not have a stated gearing policy, we are committed to a conservative gearing profile and maintaining an investment grade rating.

Our net debt/EBITDA ratio was 0.46x (excluding the impact of the Nigerian regulatory fine), 0.06x and 0.01x for the years ended 31 December 2015, 2014 and 2013, respectively, and 0.84x (excluding the impact of the Nigerian regulatory fine) and 0.28x for the six months ended 30 June 2016 and 2015, respectively. For the six months ended 30 June 2015 and 2016, the net debt/EBITDA ratio is presented on an annualised basis and is calculated as net debt as at each of 30 June 2015 and 2016, divided by annualised EBITDA for the respective six month period.

We define net debt as the sum of the current and non-current portion of interest-bearing liabilities less cash and cash equivalents, restricted cash and current investments (excluding investments in cell captives).

Dividends and Management Fees from Subsidiaries Dividends and management fees are paid to either of MTN Mauritius or MTN Dubai by our operating subsidiaries (with the exception of our subsidiary in South Africa which pays its dividends to MTN Holdings and management fees to MTN Group Management Services). Cash held in MTN Dubai and MTN Mauritius is further paid to MTN Holdings as dividends. Maximising the upstreaming of cash from operating subsidiaries and managing the lack of foreign currency in certain of our subsidiaries continue to be a key focus in liquidity management.

68 Shareholder return For the period ending 30 June 2016, we have declared an interim dividend of R2.50 per share. We plan to pay a minimum of R7 per share to investors in 2016. The payment of this minimum dividend remains at the full discretion of the Board and will be considered by taking account of the needs of our business and the associated free cash generation along with the availability of upstreamed cash at the holding company level. Our share buyback policy is opportunistic in nature and is used to support our commitment to shareholder returns.

Payment of Regulatory Fines The payment of the Nigerian Regulatory Fine is expected to be funded through our operating cash flows in Nigeria and will be settled in Naira. Accordingly, we expect the amount of retained earnings available for dividends from MTN Nigeria to be reduced.

Holding Company Funding At the holding company level, we utilise a mix of Rand and US dollar denominated facilities. These are primarily used to fund our operations in South Africa, meet our working capital requirements and potential future acquisitions. Additionally, we rely on cash flows from our operations in South Africa and other operating companies abroad in the form of dividends and management fees. MTN Holdings acts as the direct financing vehicle for the South African business and our international holding companies provide limited bridge funding to our international operating companies.

At the holding company level, our debt comprises 49% revolving credit facilities, 28% capital markets debt, 16% term loan facilities and 7% general banking facilities. See “Description of Other Indebtedness”.

Currently our operations in South Africa, Guinea-Conakry, South Sudan, Zambia and Sudan have debt provided by our holding companies.

The holding companies (MTN Holdings, MTN International (Mauritius) Limited and the Issuer) have incurred R52,065 million of gross debt out of a total of R81,947 million consolidated gross debt as of 30 June 2016. The holding companies hold R7,000 million of cash and cash equivalents, compared to a total of R32,960 million consolidated cash and cash equivalents as of 30 June 2016. The next largest business, MTN Nigeria, as of 30 June 2016 had R16,922 million of non-recourse debt and R14,785 million of cash and cash equivalents.

Operating Company Funding At the operating company level, we generally fund our operations through non-recourse debt in local currency. If this is not possible, depending on the circumstances prevailing at the time, we may provide guarantees or intercompany loans to those operating companies. Our preference is for our operating companies to incur, on average across the Group, approximately 80% of their debt in local currency denominated facilities for the purposes of (i) matching our local revenue streams, (ii) unlocking local debt capacity and delivering value to local financial markets, (iii) improving the efficiency of our operating companies’ balance sheets for local partners, and (iv) to reduce the impact of foreign currency volatility. The proportion of local currency borrowings by operational companies varies by jurisdiction and depends upon a number of factors.

Currently, our operations in Nigeria, Liberia, Ivory Coast, Uganda, Zambia, Cyprus, Benin, Cameroon, Congo- Brazzaville, Ghana, Sudan, and our joint ventures in Botswana and Swaziland (accounted for under the equity method), have non-recourse debt. Our operations in Syria, Rwanda, Afghanistan, Yemen and Guinea-Bissau currently have no long term debt. Our operations in Zambia and Cyprus have recourse debt.

69 The following table shows a geographic breakdown of our net debt for the periods indicated:

Six months ended Year ended 31 December 30 June 2013 2014 2015 2016 (unaudited) (Rm) South Africa ...... 2,562 (1,828) (1,507) (3,457) Nigeria ...... 11,121 6,820 1,695 2,138 Large Opco cluster ...... (5,061) (4,842) 2,810 5,959 Ghana ...... (705) (230) 15 918 Cameroon ...... (2,478) (2,877) 118 739 Ivory Coast ...... 448 308 2,399 2,032 Uganda ...... (444) (576) (86) 1,198 Syria ...... (3,492) (3,149) (1,525) (736) Sudan ...... 1,610 1,682 1,889 1,808 Small opco cluster ...... (673) (1,962) (1,279) (447) Head office companies and eliminations ...... (2,473) 6,355 29,916 45,064 Total reported ...... 352 4,543 31,635 49,257

Off-Balance Sheet Arrangements We do not have any material off-balance sheet arrangements.

Provisions and Contingent Liabilities As at 30 June 2016, we had R1,308 million in contingent liabilities, as compared to R875 million as at 31 December 2015, principally related to uncertain tax and regulatory exposures in various tax jurisdictions where the Group operates. We do not have any defined benefit pension schemes and do not contribute to post- retirement health benefit schemes. As at 30 June 2016, we had R325 million in provisions primarily relating to ongoing litigation and arbitration proceedings.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT CREDIT RISK, LIQUIDITY RISK, FOREIGN EXCHANGE AND INTEREST RATE RISK Our overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on our financial performance. We use derivative financial instruments, such as forward exchange contracts and interest rate swaps, to hedge certain exposures, but as a matter of principle, we do not enter into derivative contracts for speculative purposes.

Risk management is carried out under policies approved by our board of directors (the “Board”) and boards of relevant subsidiaries. The MTN Group executive committee identifies, evaluates and hedges financial risks in co- operation with our operating units. The Board provides written principles for overall risk management, as well as for specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and investing excess liquidity.

Credit Risk Credit risk, or the risk of financial loss to our Group due to customers or counterparties not meeting their contractual obligations, is managed through the application of credit approvals, limits and monitoring procedures. See note 7.1.4 to our audited consolidated financial statements for the year ended 31 December 2015 and note 43.4 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

Cash and cash equivalents and current investments Our exposure and the credit ratings of our counterparties are continuously monitored and the aggregate values of transactions concluded are spread amongst approved financial institutions. We actively seek to limit the amount of credit exposure to any one financial institution and credit exposure is controlled by counterparty limits that are reviewed and approved by the credit risk department.

70 The operations in Nigeria, Dubai and South Africa (including head office entities) hold their cash balances in financial institutions with a rating range from B- to AAA.

Given these credit ratings, management does not expect any counterparty to fail to meet its obligations.

Trade receivables We have no significant concentrations of credit risk, due to our wide spread of customers across various operations and dispersion across geographical locations. We have policies in place to ensure that retail sales of products and services are made to customers with an appropriate credit history.

The recoverability of interconnect receivables in certain international operations is uncertain; however, this is actively managed within acceptable limits and has been incorporated in the assessment of an appropriate revenue recognition policy and the impairment of trade receivables, where applicable. In addition, in certain countries there exists a right of set-off with interconnect parties to assist in settling outstanding amounts.

Liquidity Risk Liquidity risk is the risk that an entity in our Group will be unable to meet its obligations as they become due. Our approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet our liabilities when due under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. We ensure that we have sufficient cash on demand (currently, we are maintaining a positive cash position) or access to facilities to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. See note 7.1.5 to our audited consolidated financial statements for the year ended 31 December 2015 and note 43.5 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

Interest rate risk Interest rate risk is the risk borne by an interest-bearing asset or liability, due to variability of interest rates. Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents, restricted cash, current investments, trade and other receivables/payables, loans receivable/payable and bank overdrafts. The interest rates applicable to these financial instruments are a combination of floating and fixed rates in line with those currently available in the market. Our interest rate risk arises from the repricing of our forward cover and floating rate debt, incremental funding or new borrowings, the refinancing of existing borrowings and the magnitude of the significant cash balances which exist.

Debt in the South African entities and all holding companies (including MTN (Dubai) Limited and MTN International (Mauritius) Limited) is managed on a fixed versus floating interest rate basis, in line with the approved Group Treasury Policy. Significant cash balances are also considered in the fixed versus floating interest rate exposure mix. Debt in the majority of our non-South African operations, including our local facilities in Nigeria, is at floating interest rates. This is due to the limited availability and expensive nature of derivative products in these financial markets, if they are available at all. We continue to monitor developments which may create opportunities as these markets evolve in order that each underlying operation can be aligned with the Group Treasury Policy. We make use of various products, including interest rate derivatives and other appropriate hedging tools as a way to manage these risks; however, derivative instruments may only be used to hedge existing exposures.

71 At the dates indicated below, the interest rate profile of our interest-bearing financial instruments was as follows: As at 31 December 2013(1) 2014 2015 Fixed Variable Fixed Variable Fixed Variable rate rate rate rate rate rate instruments instruments instruments instruments instruments instruments (unaudited) (Rm) Non-current financial assets Loans and other non-current receivables ...... 1,736 856 3,071 905 6,040 1,253 Investments ...... 111 — 223 — 262 — Current financial assets Trade and other receivables ...... 123 5,255 74 5,988 136 16,235 Current investments ...... 3,851 — 4,745 — 7,624 — Restricted cash ...... 189 1,663 155 366 498 276 Cash and cash equivalents ...... 25,729 7,252 20,788 7,395 18,731 5,874 31,739 15,026 29,056 14,654 33,291 23,638 Non-current financial liabilities Borrowings ...... 4,850 29,772 11,947 27,523 15,785 36,938 Other non-current liabilities ...... 723 347 693 298 1,202 279 Current financial liabilities Trade and other payables ...... 128 69 107 54 1,536 945 Borrowings ...... 7,623 3,715 4,220 9,563 3,852 18,295 Bank overdrafts ...... 12 11 — 26 — 38 13,336 33,914 16,967 37,464 22,375 56,495

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information. See note 7.1.6.1 to our audited consolidated financial statements for the year ended 31 December 2015 and note 43.6.1 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

Sensitivity analysis We have used a sensitivity analysis technique that measures the estimated change to profit or loss of an instantaneous increase or decrease of 1% (100 basis points) in market interest rates, from the rate applicable at 31 December of each year, for each class of financial instrument held as of that balance sheet date, with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation. The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables, in particular foreign currency rates, remain constant. As at 31 December 2013(1) 2014 2015 Upward Downward Downward Upward Downward Change change change Change Upward change Change change change in in in in change in in in in in interest interest interest interest interest interest interest interest interest rate rate rate rate rate rate rate rate rate (unaudited) (%) (Rm) (Rm) (%) (Rm) (Rm) (%) (Rm) (Rm) JIBAR ...... 1 (62.5) 62.5 1 (102.7) 102.7 1 (118.3) 118.3 LIBOR ...... 1 (187.3) 187.3 1 1.4 (1.4) 1 28.9 (28.9) Three-month LIBOR ...... 1 (3.6) 3.6 1 (0.8) 0.8 1 (0.0) 0.0 NIBOR ...... 1 — — 1 (174.9) 174.9 1 (194.7) 194.7 EURIBOR ...... 1 (10.2) 10.2 1 (14.3) 14.3 1 (25.8) 25.8 Money market ...... 1 31.1 (31.1) 1 22.8 (22.8) 1 14.5 (14.5) Prime ...... 1 (1.3) 1.3 1 — — 1 25.5 (25.5) Other ...... 1 44.9 (44.9) 1 40.4 (40.4) 1 (20.4) 20.4

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements”and“Presentation of Financial and Other Information” for more information.

72 See note 7.1.6.1 to our audited consolidated financial statements for the year ended 31 December 2015 and note 43.6.2 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

Currency Risk Currency risk is the exposure to exchange rate fluctuations that have an impact on cash flows and financing activities. We operate internationally and are exposed to foreign currency risk arising from various foreign currency exposures. Foreign currency risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. We are also exposed to translation risk as holding companies do not report in the same currencies as operating entities.

Where possible, entities in our Group use forward contracts to hedge their actual exposure to foreign currency. Our Nigerian subsidiary manages foreign currency risk on major foreign purchases by placing foreign currency on deposit as security against Letters of Credit when each order is placed. We have foreign subsidiaries whose assets are exposed to foreign currency translation risk, which is managed primarily through borrowings denominated in the relevant foreign currencies to the extent that such funding is available on reasonable terms in the local capital markets.

See note 7.1.6.2 to our audited consolidated financial statements for the year ended 31 December 2015 and note 43.6.3 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

Foreign currency exposure Included in our statement of financial position are the following amounts denominated in currencies other than the functional currency of the reporting entities:

Year ended 31 December 2013(1) 2014 2015 (unaudited) (Rm) Assets Non-current assets US$...... 203 318 419 Current assets US$...... 6,935 9,169 6,424 Euro ...... 1,406 2,477 1,435 Iranian rial ...... 3,110 5,640 9,592 ZAR ...... 13 29 16 GBP ...... — — 3 11,464 17,315 17,470 Total assets ...... 11,667 17,633 17,889 Liabilities Non-current liabilities US$...... 5,832 14,651 20,777 Euro ...... 540 1,155 1,059 6,372 15,806 21,836 Current liabilities US$...... 6,624 8,375 8,853 Euro ...... 1,332 1,043 2,304 ZAR ...... 32 57 7 Ugandan Shilling ...... — — 75 GBP ...... 369 Botswana pula ...... 4 2 — 7,995 9,483 11,248 Total liabilities ...... 14,367 25,289 33,084

(1) Prior to 1 January 2014, we applied the Residual Method in respect of multiple element revenue arrangements. The accounts from 2013 were restated in the financial statements for the year ended

73 31 December 2014 to aid comparability with the 2014 financial results. Please see “—Key Factors Affecting Our Results of Operations and Comparability of Financial Statements—Accounting Changes—Change in revenue recognition accounting policy for multiple element revenue arrangements” and “Presentation of Financial and Other Information” for more information.

Sensitivity analysis We have used a sensitivity analysis technique that measures the estimated change to profit or loss and equity of an instantaneous 10% strengthening or weakening in the Rand against all other currencies, from the rate applicable at 31 December of each year, for each class of financial instrument held as of that balance sheet date, with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice, market rates rarely change in isolation. We are mainly exposed to fluctuations in foreign exchange rates in respect of the US dollar, Euro, Naira, Syrian pound and Iranian rial. This analysis considers the impact of changes in foreign exchange rates on profit, excluding foreign exchange translation differences resulting from the translation of Group entities that have functional currencies different from the presentation currency, into the Group’s presentation currency. The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables, in particular interest rates, remain constant.

Increase/(decrease) in profit before tax Weakening in Strengthening Change in functional in functional Denominated: functional currency exchange rate currency currency (%) (Rm) (Rm) 2015 US$:ZAR ...... 10 (1,256.4) (1,256.4) US$:SYP ...... 10 (105.8) 105.8 US$:SDG ...... 10 (136.9) 136.9 US$:SSP ...... 10 (73.9) 73.9 US$:NGN ...... 10 (861.7) 861.7 EUR:SDG ...... 10 (222.1) 222.1 EUR:US$ ...... 10 9.8 (9.8) US$:GNF ...... 10 (63.2) 63.2 US$:ZMW ...... 10 (37.1) 37.1 IRR:ZAR ...... 10 1,208.6 (1,082.6) 2014 US$:ZAR ...... 10 (144.8) 144.8 US$:SDG ...... 10 (42.8) 42.8 US$:SSP ...... 10 (109.2) 109.2 US$:NGN ...... 10 (265.5) 265.5 EUR:SDG ...... 10 (492.0) 492.0 EUR:US$ ...... 10 (160.5) 160.5 US$:GNF ...... 10 (28.1) 28.1 SYP:US$ ...... 10 (155.3) (155.3) US$:ZMW ...... 10 (63.4) 63.4 IRR:ZAR ...... 10 564.0 (564.0)

Price risk We are not directly exposed to commodity price risk or material equity securities price risk.

Capital Risk Management Our policy is to maximise borrowings at an operating company level, on a non-recourse basis, within an acceptable level of debt for the maturity of the local company. The average maturity of borrowings at an operating company level is 5 years from the date of incurrence. See note 7.1.7 to our audited consolidated financial statements for the year ended 31 December 2015 and note 43.7 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

74 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS In the opinion of our management, the following accounting policies and topics are critical for the consolidated financial statements in the present economic environment. The influences and judgements, as well as the uncertainties which affect them, are important factors to be considered when looking at our present and future operating earnings.

The preparation of the consolidated financial statements in conformity with IFRS requires assumptions, judgements and estimates to be made which can impact the reported amounts of assets, liabilities, income and expenses. Estimates and the underlying assumptions are based on historical experience and numerous other factors within the scope of the particular circumstances. Actual amounts may deviate from estimated amounts. All estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

We have summarised below our accounting policies that require judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities. For more information see the notes to our audited consolidated financial statements included in the financial statements included elsewhere in this Offering Circular.

Provisions We exercise judgement in determining the expected cash outflows related to our provisions. Judgement is necessary in determining the timing of outflow as well as quantifying the possible range of the financial settlements that may occur.

The present value of our provisions is based on management’s best estimate of the future cash outflows expected to be required to settle the obligations, discounted using appropriate pre-tax discount rates that reflect current market assessment of the time value of money and the risks specific to each provision. Additional information on provisions is disclosed in note 6.3 to the audited consolidated financial statements for the year ended 31 December 2015 and note 28 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

In 2015 the NCC imposed a fine on MTN Nigeria that is related to the late disconnection by MTN Nigeria of 5.1 million subscribers whose registration documents were considered incomplete. We provided R9.3 billion in our financial statements for the year ended 31 December 2015 based on management’s judgement. The ultimate resolution of the fine resulted in, among other requirements, a cash amount of N330 billion (as at 10 June 2016, the equivalent of US$1.671 billion at the official exchange rate prevailing at the time) to be paid over three years. On 10 June 2016 the nature of the fine changed from a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets to a financial liability under IAS 39 Financial Instruments: Recognition and Measurement, as from this date onwards MTN Nigeria was contractually obliged to settle the fine in cash. For a further discussion, see “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

Impairment of goodwill We test goodwill for impairment on an annual basis, in accordance with the accounting policy disclosed in note 5.2 to our audited consolidated financial statements for the year ended 31 December 2015 and note 12 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations are performed internally by us and require the use of estimates and assumptions.

The input factors most sensitive to change are management estimates of future cash flows based on budgets and forecasts, growth rates and discount rates. Further detail on these assumptions has been disclosed in note 5.2 to the audited consolidated financial statements for the year ended 31 December 2015 and note 12 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular. We have performed a sensitivity analysis by varying these input factors by a reasonably possible margin and assessing whether the changes in input factors result in any of the goodwill allocated to appropriate cash generating units being impaired. Goodwill impairment losses of R504 million, R2,033 million and Rnil were recognised in 2015, 2014 and 2013, respectively. See note 5.2 to the audited consolidated financial statements for the years ended 31 December 2015 and note 12 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

75 Sale of tower assets We apply judgement and follow the guidance in IFRS 3 Business Combinations to determine whether the sale of tower assets constitutes the sale of a business or an asset.

We determined that the tower assets in Nigeria which were sold in two tranches during the years ended 31 December 2014 and 2015, were an integrated set of activities capable of being conducted and managed for the purpose of providing a return and therefore constituted the sale of a business. In exercising our judgement we considered the following: • the transfer of assets resulted in the transfer of employees that are key to the inputs and processes being transferred; • the sale agreements provide for the transfer of all substantial assets required to operate the towers including related tower rights, site maintenance agreements, tenant leases and inventory; • the processes involved in the tower businesses such as the site management systems and site maintenance programmes, were transferred along with the assets; and • the tower assets are able to produce outputs through the management and leasing of sites to other parties.

Income taxes We are subject to income taxes in numerous jurisdictions. As a result, significant judgement is required in determining our provision for income taxes. There are numerous calculations and transactions for which the ultimate tax position is uncertain during the ordinary course of business. We recognise tax liabilities for anticipated tax issues based on estimates of whether additional taxes will be payable. Where payment is possible but not probable the tax exposure is disclosed as a contingent liability (see note 6.8 to the audited consolidated financial statements for the year ended 31 December 2015 contained elsewhere in this Offering Circular). Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax in the period in which such determination is made.

Deferred tax assets Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deferred tax assets can be utilised. When recognising deferred tax assets, we exercise judgement in determining whether sufficient taxable profits will be available. This is done by assessing the future financial performance of the underlying Group entities to which the deferred tax assets relate. Our deferred tax assets as at 31 December 2015 amounted to R542 million (2014: R1,109 million). See note 3.2 to our audited consolidated financial statements for the year ended 31 December 2015 and note 16 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

Determining whether an arrangement contains a lease We apply the principles of IFRIC 4 Determining whether an Arrangement contains a Lease in order to assess whether our arrangements constitutes or contain leases. The requirements to be met in order to conclude that an arrangement constitutes or contains a lease are as follows: • the provision of a service in terms of the arrangement should be dependent on the use of one or more specific assets; and • the arrangement must convey a right to use these assets.

All other arrangements that do not constitute or contain leases are treated as service level agreements; the costs are expenses as incurred.

For the purpose of applying IFRIC 4 on tower space lease arrangements, we consider the tower asset as a whole in assessing whether the arrangement contains a lease. This is consistent with the guidance on determining a component of an asset in IAS 16 Property, Plant and Equipment. We have resolved that an arrangement contains a lease as defined in IAS 17 Leases where the arrangement provides an exclusive right to use specific tower space which is more than an insignificant part of the tower asset.

Determining whether an arrangement qualifies as an operating lease or a financial lease We apply our principal accounting policies for leases to account for arrangements which constitute or contain leases and follow the guidance of IAS 17 to determine the classification of leases as either operating or finance leases.

76 During the years ended 31 December 2014 and 2015, we entered into sale and leaseback transactions with IHS that resulted in the sale of our mobile network towers in Nigeria. See note 2.3 to our audited consolidated financial statements for the year ended 31 December 2015 and note 5 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular.

The critical elements that we considered with respect to the classification of the lease transaction were: • whether the lease terms are for the major part of the economic life of tower assets; and • whether at inception of the leases, the present value of the minimum lease payments amounts to at least substantially all of the fair value of tower assets.

We have estimated that the lease term of the tower assets is not for a major part of the economic life of the tower assets, taking into account the non-cancellable period for which we have contracted, and any options to renew such period where it is reasonably certain that we will exercise the option.

The minimum lease payments were determined by separating the payments required by the lease arrangements into those pertaining to the lease and those pertaining to other elements such as services and cost of inputs on the basis of their relative fair values. Management exercised judgement in estimating the fair value of the other elements by reference to comparable internal cost structures and other independent tower operators. The discount rate used in calculating the present value of the minimum lease payments reflects the rate of interest MTN Nigeria would incur in borrowing the funds necessary to purchase similar assets.

The fair value of the tower assets was determined by reference to the amounts at which the tower assets were sold which represents the prices at which the assets could be sold in an orderly transaction between market participants under current market conditions. We determined that the present value of the minimum lease payments did not equal substantially all of the fair value of the underlying tower assets.

Following our assessment, the leaseback transactions were classified as operating leases.

Hyperinflation We exercise significant judgement in determining the onset of hyperinflation in countries in which we operate and whether the functional currency of our subsidiaries, associates or joint ventures is the currency of a hyperinflationary economy.

Various characteristics of the economic environment of each country are taken into account. These characteristics include, but are not limited, to whether: • the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency; • prices are quoted in a relatively stable foreign currency; • sales or purchase prices take expected losses of purchasing power during a short credit period into account; • interest rates, wages and prices are linked to a price index; and • the cumulative inflation rate over three years is approaching, or exceeds, 100%.

Management exercises judgement as to when a restatement of the financial statements of a Group entity becomes necessary. Following management’s assessment, MTN Irancell, MTN Sudan and MTN Syria have been accounted for as entities operating in hyperinflationary economies. During 2015 the Iranian economy ceased to be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015. See note 1.3.3 to the audited consolidated financial statements for the years ended 31 December 2015 and 2014 contained elsewhere in this Offering Circular.

Restatements Reclassification of expenses Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2014, the expenses in relation to government and regulatory costs and value-added services costs have been disclosed separately or reclassified between expense categories to present the expenses in accordance with the classification in the year ended 31 December 2015. See note 1.6.1 to the audited consolidated financial statements for the year ended 31 December 2015 contained elsewhere in this Offering Circular.

77 Reclassification of revenue During the year ended 31 December 2015, an amount of R1,293 million in respect of 2014 was reclassified from data revenue to airtime and subscription revenue to accurately reflect the respective categories year-on-year. See note 2.2 to the audited consolidated financial statements for the year ended 31 December 2015 contained elsewhere in this Offering Circular.

Reclassification of foreign exchange gains and losses We manage our risk to foreign exchange exposure on a net basis and consequently in year ended 31 December 2015 the foreign exchange gains and losses previously disclosed on a gross basis and included in the relevant finance income or finance cost line is now disclosed on a net basis. See note 2.5 to the audited consolidated financial statements for the year ended 31 December 2015 contained elsewhere in this Offering Circular.

Restatement of goodwill disclosed per operation We restated our previously disclosed allocation of goodwill for a number of our operations. The restatement relates to a gain realised on a foreign currency hedge on initial acquisition of these operations. The gain was previously disclosed within the “other” category of goodwill. In addition, goodwill relating to the South African businesses acquired have been moved from the “other” category to be included within Mobile Telephone Networks Proprietary Limited (South Africa). See note 1.6.4 to the audited consolidated financial statements for the year ended 31 December 2015 contained elsewhere in this Offering Circular.

Impairment of trade receivables An impairment of trade receivables is established when there is objective evidence that we will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that the trade receivable is impaired.

The carrying amount of the trade receivable is reduced through the use of an allowance and the amount of the loss is recognised in profit or loss. When a trade receivable is uncollectible it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited to profit or loss.

Gains or losses arising from the modification of the terms of a debt instrument are recognised immediately in profit or loss where the modification does not result in the derecognition of the existing instrument.

Connection incentives and subscriber acquisition costs Connection incentives paid to service providers are currently expensed by us in the period in which these costs are incurred. Service providers utilise the incentives received to fund a variety of administrative costs and/or to provide incentives to maintain or sign up customers on our behalf, at their own discretion. The portion of the incentive used by the respective service providers as an incentive to retain/obtain existing/new subscribers on our behalf, is to be capitalised only to the extent that it is reliably measurable (prepaid discount). In accordance with the framework under IFRS, we do not capitalise these fees due to the portion of incentives utilised to acquire/ retain subscribers on behalf of the Group by the respective independent service providers, not being reliably measurable.

In accordance with the recognition criteria in terms of International Accounting Standard 38: Intangible Assets, we have also resolved not to capitalise commissions paid to dealers, utilised to acquire new subscribers, as intangible assets (subscriber acquisition cost), due to the portion utilised to acquire subscribers on our behalf not being reliably measurable.

Interconnect revenue recognition Due to the receipt of interconnect revenue in certain operations not being certain at transaction date, we have resolved only to recognise interconnect revenue relating to these operations as the cash is received or where a right of set-off exists with interconnect parties in settling outstanding amounts.

78 Property, plant and equipment Property, plant and equipment represent a significant proportion of our asset base. Therefore, the judgements made in determining their estimated useful lives and residual values are critical to our Group’s financial position and performance. Useful lives and residual values are reviewed on an annual basis with the effects of any changes in estimates accounted for on a prospective basis.

In determining residual values, we use historical sales and management’s best estimate based on market prices of similar items.

Useful lives of property, plant and equipment are based on management estimates and take into account historical experience with similar assets, the expected usage of the asset, physical wear and tear, technical or commercial obsolescence and legal restrictions on the use of the assets.

The estimated useful lives of property, plant and equipment for 2015 were as follows:

Buildings owned ...... 5–50 Buildings leased(1) ...... 1–20 Network infrastructure ...... 2–20 Information systems equipment ...... 1–10 Furniture and fittings ...... 3–15 Leasehold improvements(1) ...... 2–15 Office equipment ...... 2–12 Motor vehicles ...... 3–10 (1) Shorter of lease term and useful life.

Intangible assets with finite useful lives The relative size of our intangible assets with finite useful lives makes the judgements surrounding the estimated useful lives and residual values critical to our financial position and performance. Useful lives are reviewed on an annual basis with the effects of any changes in estimate accounted for on a prospective basis. The residual values of intangible assets are assumed to be zero.

The basis for determining the useful lives for the various categories of intangible assets is as follows:

Licences The useful lives of licences are determined primarily with reference to the unexpired licence period.

Customer relationships The useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to factors such as customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life.

Software The useful life is determined with reference to the licence term of the computer software. For unique software products controlled by us, the useful life is based on historical experience with similar assets as well as anticipation of future events such as technological changes, which may impact the useful life.

Other intangible assets Useful lives of other intangible assets are based on management’s estimates and take into account historical experience as well as future events which may impact the useful lives.

The estimated useful lives of intangible assets with finite useful lives for 2015 were as follows:

Licences ...... 3–20 Customer relationships ...... 5–10 Software ...... 3–6 Other intangible assets ...... 3–10

79 Classification of significant joint arrangements Joint arrangements are all arrangements where two or more parties contractually agree to share control of the arrangement, which only exists when decisions about the relevant activities require unanimous consent of the parties sharing control. Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

We exercise judgement in determining the classification of our joint arrangements.

Irancell Telecommunication Company Services (PJSC) We hold an effective interest of 49% in the issued ordinary share capital of Irancell Telecommunication Company Services (PJSC). The joint arrangement provides us and the other parties to the agreement with rights to the net assets of the entity. Under the contractual agreement unanimous consent is required for all key activities. The entity has therefore been classified as a joint venture of the Group.

Mascom Wireless Botswana Proprietary Limited We hold an effective interest of 53.11% in the issued ordinary share capital of Mascom Wireless Botswana Proprietary Limited. The joint arrangement provides us and the other parties to the agreement with rights to the net assets of the entity. We have joint control over this arrangement as under the contractual agreement, no party has the right to control the managing company unilaterally. The entity has therefore been classified as a joint venture of the Group.

Restricted cash We exercise judgement in determining the appropriate treatment of restricted cash. The judgement exercised takes into account the severity of exchange control regulations, the availability of foreign currency in the operations affected and the purpose for which the funds will be used. As at 30 June 2016 an amount of R637 million (31 December 2015: R1,735 million) has been treated as restricted cash.

See also note 4.3 to the audited consolidated financial statements for the years ended 31 December 2015 and note 22 to our audited consolidated financial statements for the year ended 31 December 2014 contained elsewhere in this Offering Circular for restricted cash amounts as at these dates.

Change in revenue recognition accounting policy for multiple element revenue arrangements Prior to 2014, we accounted for arrangements with a multiple of deliverables (i.e. multiple element revenue arrangements) by dividing these arrangements into separate units of accounting and recognising revenue through the application of the Residual Method.

From 1 January 2014, we changed our accounting policy for recognising revenue relating to multiple element revenue arrangements from applying the Residual Method to the Relative Fair Value Method on a voluntary basis.

Previously under the Residual Method, fair value was ascribed to each of the undelivered elements (typically the service contract) and any consideration remaining (after reducing the total consideration of the arrangement with the fair value of the undelivered elements) was allocated to the delivered item(s) in the transaction (typically the handset). This resulted in limited amounts of revenue being allocated to the elements delivered upfront (i.e. the handset). Under the Relative Fair Value Method, the consideration received or receivable is allocated to each of the elements (delivered and undelivered) according to the relative fair value of the elements included in the arrangement.

This change in accounting treatment mainly affected our income and financial position information in our operation in South Africa and, as a result, our consolidated income and financial position information.

This change results in more relevant and reliable information being presented in respect of revenue recognised in relation to multiple element revenue arrangements as revenue is now being recognised for each of the elements delivered and to be delivered based on the relative fair value of the relating elements in relation to the total consideration received. The current accounting policy results in an improved correlation between the recognition

80 of revenue and associated costs and also aligns us more closely with the requirements of IFRS 15: Revenue from Contracts with Customers. The change in accounting policy was applied retrospectively from the beginning of January 2013.

The impact of the change in the accounting policy for revenue recognition in multiple element revenue arrangements is disclosed in note 48 to our audited consolidated financial statements for the year ended 31 December 2014, contained elsewhere in this Offering Circular.

As a result, our results of operations for the year ended 31 December 2013 (as restated in our audited consolidated financial statements for the year ended 31 December 2014 included elsewhere in this Offering Circular) and going forward will not be directly comparable to our historical results of operations. To aid comparability, the financial information presented in this Offering Circular is presented in accordance with the Relative Fair Value Method, unless otherwise indicated.

81 BUSINESS DESCRIPTION

Overview We are a leading emerging market mobile operator by subscribers headquartered in Johannesburg, South Africa. Through our extensive investment in advanced communication infrastructure, the talent of our people and the strength of our brand, as at 30 June 2016 we connected approximately 232.6 million customers in 22 countries across Africa and the Middle East. We offer an integrated suite of communications products and services to our customers, including mobile voice, data, digital services and ICT enterprise products and services to our SME and corporate clients. We operate a predominantly prepaid business with over 97% of our customers on prepaid plans. We offer postpaid services mainly in South Africa, where approximately 17% of our customers are on postpaid plans as at 30 June 2016, as well as in Cyprus. We are the market leader by number of subscribers in 15 of the 22 countries in which we offer voice, data and digital services (source: Group data). As at 30 June 2016, we employed 20,376 people. We are listed on the Johannesburg Stock Exchange and had a market capitalisation of R263,757 million as at 30 June 2016.

MTN Group was founded in 1994, when M-Cell (later renamed MTN Group Limited in 2002) was incorporated in South Africa, our home market. Employing the experience we gained from establishing ourselves in our home market and from serving our South African customers, we commenced our expansion into the rest of Africa. In 2001, we acquired GSM 900 MHz and GSM 1800 MHz licences in Nigeria. At the time, this was our single largest investment and in 2015 our Nigerian operation contributed 35.3% of our total revenue and approximately 26% of our subscriber base, which represented the largest contributions to our subscriber base and revenue among our operations. Our operations have since 2001 expanded to other emerging markets in both Africa and the Middle East and, as at 30 June 2016, we had approximately 232.6 million customers across these continents. In the last few years we have started to focus on investments that would help us expand our offerings in digital and financial value added services. In 2007, MTN Nigeria was awarded a 3G licence and acquired a 4G spectrum licence in 2015. In 2006, we commenced operations in Iran through our joint venture, MTN Irancell. In 2010, we launched MTN Mobile Money in several of the markets in which we operate. Today we serve over 36 million MTN Mobile Money customers in 14 markets. In 2015, MTN Ghana was declared a winner in the auction process for a 15 year 4G/LTE licence.

The following diagram illustrates our development and growth from 1993 to 2016:

1993-1997 1998-2005 2006-2016

Operations 1 Operations 11 Operations 22

Population 41 million Population 274 million Population 585 million

Market cap. R2.7 billion Market cap. R103 billion Market cap. R264 billion (31 December 1997) (31 December 2005) (30 June 2016)

Our two most significant markets are South Africa and Nigeria. Our operations in South Africa contributed 25.1% and 27.2% of our total revenue for the six months ended 30 June 2016 and the year ended 31 December 2015, respectively. As at 30 June 2016, we had approximately 29.8 million subscribers in South Africa. Our operations in Nigeria contributed 36.6% and 35.3% of our total revenue for the six months ended 30 June 2016 and the year ended 31 December 2015, respectively. As at 30 June 2016 we had approximately 59.0 million subscribers in Nigeria. Together, operations in these two countries accounted for 61.7% of total revenue for the six months ended 30 June 2016 and 62.5% of total revenue for the year ended 31 December 2015.

82 The table below provides a geographic breakdown of our main markets, together with a summary of operational data, as at 30 June 2016 unless specified otherwise (source: Group data):

Technology Percentage coverage as at Number of of total 31 December subscribers in Market Country of operation Revenue Revenue Technology 2015(1) millions Market share position Key Markets Rm (%) (%) (%) South Africa 19,841 25.1 2G 98.7% 29.8 32.3 2 3G 93.3% LTE 42.5% Nigeria 28,941 36.6 2G 91.5% 59.0 46.2 1 3G 66.6% Long term evolution (“LTE”) Large Opcos Cameroon 3,202 4 2G 92.0% 9.6 57.4 1 3G 50.0% LTE 24.4% Ghana 5,165 6.5 2G 82.5% 17.6 53.8 1 3G 42.0% Iran 8,324 10.5(2) 2G 85.7% 47.3 46.4 2 3G 38.9% worldwide interoperability for microwave access (“WiMax”) 96.0% LTE 14.0% Ivory Coast 3,751 4.7 2G 94.5% 8.2 32.8 1 3G 71.1% WiMax 43.0% Sudan 2,345 3.0 2G 54.5% 8.8 33.8 2 3G 29.1% Syria 1,068 1.3 2G 75.0% 5.8 40.9 2 3G 60.0% Uganda 2,804 3.5 2G 79.5% 9.9 52.7 1 3G 20.3% WiMax 21.0% LTE 2.3% (1) Technology coverage figures represent the percentage of the population that is covered by each technology as at 31 December 2015. (2) Equity accounted. • For the six months ended 30 June 2016 and the years 2015, 2014 and 2013, we had consolidated revenues of R79 billion, R147 billion, R147 billion, and R137 billion, respectively. • The revenue breakdown for the six months ended 30 June 2016 for outgoing voice, incoming voice, data, SMS, mobile telephones and accessories and other sources was R44,690 million (56.5% of total revenue), R7,777 million (9.8% of total revenue), R19,849 million (25.1% of total revenue), R1,735 million (2.2% of total revenue), R3,885 million (4.9% of total revenue) and R942 million (1.2% of total revenue), respectively. • The 2015 revenue breakdown for outgoing voice, incoming voice, data, SMS, mobile telephones and accessories and other sources was R85,027 million (57.8% of total revenue), R14,690 million (10.0% of total revenue), R33,874 million (23.0% of total revenue), R4,097 million (2.8% of total revenue), R6,985 million (4.7% of total revenue) and R1,680 million (1.1% of total revenue), respectively. • Further, we have a demonstrated track record of efficient cost management and sustainable growth, as exhibited by our EBITDA margins of 23.9% (including the effect of the Nigerian Regulatory Fine

83 recognised in the six months ended 30 June 2016 or 37.1% excluding the Nigerian Regulatory Fine) and 40.2% (including the effect of the provision for the Nigerian Regulatory Fine or 46.5% excluding the Nigerian Regulatory Fine), 49.8% and 44.0% for the years ended 31 December 2015, 2014 and 2013, respectively.

We have been offering mobile services in emerging markets for over 20 years and have leveraged this experience to roll-out best practices to our newer markets as we pursue a diversification strategy across our markets, products and services, and technology. Furthermore, we believe that the mobile communications services industry in our markets will continue to grow due to a combination of factors. These include limited fixed-line coverage and penetration, the relatively high cost of fixed-line infrastructure deployment and low and increasing mobile penetration.

We aim to expand beyond our core voice offerings by leading the delivery of data access and digital services across the emerging markets in which we operate. To achieve this, we are investing and growing our 3G and fourth generation wireless telephone (“4G”) capacity and coverage to provide data solutions to our subscribers and support growing data traffic. Our digital strategy is focused on three key areas of opportunity namely e-commerce, digital entertainment and media and mobile financial services. Furthermore, we are evolving to offer a range of digital and financial services to our customers by leveraging our technology and distribution footprint to maximise the opportunity of low internet penetration in our markets. We offer a range of financial services, country specific content, entertainment, lifestyle and general content and e-commerce. Financial services, in particular MTN Mobile Money, a service which offers customers bill payment and money transfer services, is an increasingly important part of our service offerings. Today we serve over 36 million MTN Mobile Money customers in 14 markets. We have made good progress positioning our non-voice businesses, in particular through our investments in the digital services business, Africa Internet Holdings, our e-commerce venture which has been highly successful creating the largest online mall in Africa, Jumia. MTN is now the largest distributor of music in Africa. We also offer digital solutions for 2G feature phones that are not smart phones that allow the purchase of and receipt of content via SMS.

The telecommunications environment is rapidly changing. There has been a significant increase in the number of non-conventional and OTT players (internet based alternatives to traditional telephony services) in the market such as social networking sites and messaging applications, and this has impacted traditional telecommunications revenue streams. However, the advent of new technologies and services has also provided us with an opportunity for long term sustainable growth through the provision of both digital and financial services, as well as the potential for strategic partnerships with OTT players. In addition, we face heightened competition, changing customer expectations and increasing regulatory pressures. These dynamics require us to create sustainable and saleable improvements to our (i) revenue streams, such as through our commitment to digital and financial services and pro-active approach to maintaining amicable relationships with regulators as well as anticipating regulatory developments; and (ii) cost structures. We have embarked on several cost saving initiatives which have already resulted in measurable benefits. These initiatives include the centralisation of procurement (which gave rise to approximately R7,147 million in savings in 2015, a 25% improvement year on year), the monetisation of our tower assets, the standardisation of back office functions, the renegotiation of distribution arrangements, and the realignment of the commission structure in our key markets.

Recent Accolades Over the years, we have received numerous accolades and awards that speak to the efficient and reliable service that we provide our customers. We were named the most admired and most valuable African brand in the 2015 Brand Africa 100 listings, Brand Finance South Africa’s top brand for a second year in a row and also named Africa’s top brand by the Brand Finance South Africa’s Top 50 awards. We were named as the only South African company on the World Champions list compiled by Citi Group, and we are the only African brand on the Millward-Brown BrandZ Top 100 Most Valuable Global Brands 2014 survey. Furthermore in 2014, we were named a top sustainable global business in Newsweek’s Top 500 Sustainable Global Business survey, were recognised at the Nedbank Sustainable Business Awards, were included in Citi Group’s Global Champions List and won corporate social responsibility awards in Cameroon, Ghana, Uganda and Rwanda.

84 Strengths We believe that we benefit from the following competitive strengths that position us to achieve our strategic objectives:

Leading market position in 15 markets and brand recognition We are the largest telecommunications service provider in Africa with approximately 232.6 million subscribers as at 30 June 2016 (source: Group data). Further, we hold the leading market position by number of subscribers in 15 of the 22 countries in which we operate. We have significant experience in all facets of building, operating and financing successful mobile telecommunications businesses in high growth and emerging markets, having developed mobile networks or acquired existing operations in numerous markets. In particular, we have developed substantial experience in planning, building and managing mobile networks, obtaining project finance and managing financial risk, developing strong local branding strategies and introducing effective, affordable and reliable product and service offerings tailored to local markets. By leading the development of the mobile telecommunications industry in the markets in which we operate, we have (i) built a leading market share in two of our largest markets (Nigeria and Ghana), (ii) increased our market share in other growing markets such as Sudan and (iii) increased our brand visibility to become one of the most recognisable brands on the African continent.

Further, we believe that the MTN brand, which we use across all our markets except in Liberia, is generally associated with high quality, availability, competitive pricing, customer service and innovation. We were named the most admired and most valuable African brand in the 2015 Brand Africa 100 listings, Brand Finance South Africa’s top brand for a second year in a row and also named Africa’s top brand by the Brand Finance South Africa’s Top 50 awards. We were named as the only South African company on the World Champions list compiled by Citi Group, and we are the only African brand on the Millward-Brown BrandZ Top 100 Most Valuable Global Brands 2014 survey. Furthermore in 2014, we were named a top sustainable global business in Newsweek’s Top 500 Sustainable Global Business survey, were recognised at the Nedbank Sustainable Business Awards, were included in Citi Group’s Global Champions List and won corporate social responsibility awards in Cameroon, Ghana, Uganda and Rwanda.

Our leading market positions provide us with a competitive advantage, as it is more difficult for other providers to compete with our scale across the markets in which we operate and our high customer base in our mobile business.

Economies of scale and synergies across our operations We believe that our size and market share offer significant benefits in allowing us to leverage economies of scale through a number of means, including the centralisation of our procurement, the standardisation of our technology and back-office functions, the development of best practice across our operations and the increase in the awareness of our brand across Africa without increasing costs and therefore reducing margins. The telecommunications industry is subject to rapid advances in technology, and we believe that with our scale and market share we are well positioned to timely bring new products and services to the market and at lower costs than our competitors.

We are able to continue pursuing economies of scale and synergies from operating multiple mobile networks in numerous markets. Our scale has enabled us to develop the flexibility and best practices required for operational success in the fast developing emerging markets in which we operate. To achieve further network synergies, we have also standardised our networks to the greatest extent possible which will facilitate supply cost reductions and ensure a simplified and efficient network operating model. In addition, our management structure facilitates the sharing of information and experience among our operating companies to ensure cohesion and to enhance best practice across our operations.

Each operating company employs innovative, targeted marketing and promotion campaigns (such as discounts and bundle options) to individual subscribers (for example via SMS) and they continually review and refresh their promotional offers to engage subscribers and prompt them to purchase airtime, data or additional services. Best practices and strategies developed at individual operating companies or as a result of initiatives and campaigns at MTN Group are rolled out across the network of operating companies.

85 Diversified and balanced international portfolio; proven track record of establishing new telecommunications operations in emerging markets with significant growth potential We have established a diversified and balanced international portfolio of telecommunications services, with operations in 22 countries. We have successful operations in some of the most populous countries in these regions, namely SEA, WECA and MENA. Our subscriber base has grown from approximately 12.5 million as at 31 December 2006 to 232.6 million as at 30 June 2016.

Moreover, we believe that most of our operations have benefited from the positive relationships and co-operation we have built with local regulators, due to the shared vision of increasing teledensity in the countries in which we operate. We believe we have acquired adequate spectrum across our markets to meet our current needs and cater for future growth requirements. This in turn is expected to reduce our capital expenditure requirements allowing us to offer lower cost services and to grow our customer base across Africa.

Extensive telecommunications network and strong network quality We continually enhance our market and competitive position through our on-going investment in infrastructure with R29,611 million, R25,406 million, and R30,164 million capital expenditure for 2015, 2014 and 2013, respectively. In 2015, we rolled out 3,116 2G, 7,891 3G sites and 5,241 LTE sites, increasing coverage, usage and supporting faster data speeds on our 3G networks. We rolled out a further 873 2G, 3,660 3G, and 2,691 LTE sites and 1,132 km of long-distance fibre in the six months ended 30 June 2016. The efficient execution of our capital expenditure programme improves network quality, coverage and capacity, and facilitates higher voice and data traffic helping to ensure that we remain competitive and are able to roll-out data solutions and digital services beyond traditional voice offerings. We also believe that our network quality is among the strongest in Africa and the Middle East. Our network is supported by equipment suppliers that are at the forefront of technologies that are crucial to our business.

Strong distribution network Accessibility through an extensive distribution network and a simple activation process is key to customer relations and growth, particularly for pre-paid subscribers, who at 30 June 2016 comprise over 97% of our subscriber base. Our products are sold in MTN retail outlets and through numerous wholesalers, many of which have long term relationships with us. For example, in South Africa we have over 400 retail stores, including 100 directly-owned stores, and in Nigeria at 30 June 2016 we operated through 78 trade partners who distribute our products and services through their distribution channels to approximately 505,000 registered retailers. We believe that our strong distribution network is a critical part of our business and a key reason for our large customer base. Additionally, we have introduced convenient services such as electronic recharge options as well as augmented our distribution base to increase customer access to our services.

Experienced and diversified management team with enhanced structure We have a strong management team with extensive telecommunications industry experience and a track record of operational excellence that we believe is necessary to successfully lead the development of our business. We recently reviewed our operating structure with a view to strengthening operational oversight, leadership, governance and regulatory compliance across the MTN Group bringing in a new CEO and organising the business according to regional clusters: West and Central Africa, South and East Africa, and Middle East and North Africa – with a senior executive responsible for each regional cluster. We also re-instated the position of Group COO. Both the regional senior executives and the COO report directly to MTN’s CEO. We expect that these changes will improve our ability to coordinate our businesses, while ensuring we are also able to locally manage our operations, which we believe has been key to our growth. We are also in the process of searching for a new MTN Group CFO and have appointed an acting CFO while the process is ongoing. We believe that the composition and organisation of our management team puts us in a strong position to successfully implement our growth strategy, as well as to focus on improving our operating performance while retaining appropriate levels of oversight of our operations.

Strong long-term financial profile The combination of our competitive strengths has enabled us to deliver strong long-term financial performance. Our revenue was R79,115 million for the six months ended 30 June 2016 as compared to R69,304 million for the six months ended 30 June 2015, R147,063 million in 2015 as against R146,930 million and R137,270 million in 2014 and 2013, respectively. We have retained consistently high EBITDA margins through efficient cost

86 management and sustainable growth, including in challenging environments. We achieved EBITDA margins of 37.1% (excluding the effect of the Nigerian Regulatory Fine or 23.9% including the Nigerian Regulatory Fine) and 44.3% for the six months ended 30 June 2016 and 2015, respectively, and 46.5% (excluding the effect of the Nigerian Regulatory Fine or 40.2% including the Nigerian Regulatory Fine), 49.8% and 44.0% for the years ended 31 December 2015, 2014 and 2013, respectively.

Detailed information on the behaviour of 233 million customers to leverage for expansion into new revenue streams We collect detailed information and data on the usage behaviour of our 233 million customers. For example, we are able to collect financial data, travel patterns, application usage and website surfing statistics. Utilising this information, we are able to roll out new data and digital service offerings to our customers as a way of increasing our sources of revenue.

Strategy The following table sets forth our five main strategies in order to deliver a “bold new digital world”:

Strategic Themes Strategic priorities over three to five years

Sustainable shareholder returns Creating and Responsible corporate citizenship managing stakeholder value Creating a great place to work Instilling sound governance and values

Brand Leadership Creating a distinct customer Customer experience experience Customer analytics Network quality and coverage

MTN in digital space Adjacent sectors Driving sustainable growth Enterprise strategy Voice and data evolution M&A and partnerships

Asset optimisation Transforming the operating model Supply chain management Process standardisation and optimisation

Innovation Innovation and best practice Best practice sharing

The key components of our business strategy are:

Driving sustainable growth We intend to continue to exploit the benefits that our scale provides by ensuring that we are at least a number one or number two player in each of the markets in which we operate. We aim to promote connectivity across developing markets and seek to do this by expanding into new markets where we believe there is potential for profitable growth and where such markets could add value to our operations. Through various auctions, we have acquired spectrum across multiple frequency bands in order to capture more growth. We aim to continue expanding our service offerings by growing our 3G and 4G coverage. Further, we continue to explore opportunities to expand our product offering outside of traditional mobile voice by increasing our presence in data provision and the digital space by leveraging technology and maximising the opportunity of low internet penetration in our markets as consumer spending on data and digital services becomes increasingly important.

87 We intend to achieve this by delivering additional services through the internet. This will be supported by our investments in Africa Internet Holdings, Middle East Internet Holdings and Iran Internet Group which will allow us to increase our internet offerings particularly in the realm of e-commerce, making shopping more intuitive, cost-effective and enjoyable across Africa and the Middle East. We have also continued to roll-out MTN Mobile Money, a service which offers customers traditional bill payment and money transfer services, and other financial services products to our customers, many of whom have limited access to traditional banking, also remain key priorities. In 2015, we increased our MTN Mobile Money registered subscribers to over 34 million from 18.4 million in 2013. We are not only focused on acquiring subscribers for these services but also on increasing the volume of transactions and expanding our product range to include short-term insurance, ATM withdrawals and remote payments for airline tickets. As we expand and adapt MTN Mobile Money and other financial services to the local markets in which we operate, we expect these services to make a substantial contribution to our revenue growth as a result of their potential to address the lack of traditional financial services in many of the countries in which we operate.

We plan to execute this by investing in network improvements in high-value, urban areas first as well as building out fibre-optic networks. Through our digital services offerings, we aim to increase the number of customers using data services as well as increase the amount of data consumption.

Additionally, we are continually evaluating investment opportunities to grow our brand and our offerings in new and existing markets, which may involve significant M&A, joint venture or partnership transactions. In the past, we have looked at implementing strategically important transactions in various jurisdictions including Africa, the Middle East and South-East Asia including the Indian Subcontinent, and we continue to evaluate opportunities in these and other areas. Such potential transactions could have a significant impact on our business and the scale of our operations. In evaluating investment opportunities, we do not focus solely on having a majority equity or voting interest in international opportunities (although that is an important consideration), but also consider minority stakes. In doing so, we have regard to the experience of potential partners, control over management, strategy, operations and the board of the investee, which can drive value creation, and give us the ability to take advantage of synergies.

Furthermore, as we operate in emerging markets with relatively low internet penetration, we are able to review and proactively respond to the challenges faced by telecommunications providers in more mature markets. For example, responding to the declines in voice and SMS revenue (due to free messaging applications, voice over internet protocol and OTT players) by ensuring that we continually evolve our strategy and provide the digital and financial services to ensure continued sustainable long term growth.

Creating and managing stakeholder value We intend to maximise value for our stakeholders, including our investors and employees. By ensuring that our operations are managed cost-effectively and efficiently in terms of operating costs, financing costs and capital expenditures we aim to generate sustainable returns for our stakeholders. In 2015, we made solid progress on cost optimisation across our business. A number of initiatives have already resulted in cost benefits. These include centralising procurement, reducing costs in our distribution network through the renegotiation of contracts in South Africa, which has resulted in lower distribution costs and the realignment of our commission structure in Nigeria, which has resulted in lower commission costs.

We recognise the importance of properly skilled employees who are motivated by their work. We therefore strive to be an employer of choice to attract candidates and retain key staff. We aim to foster an inclusive and dynamic working environment to enhance productivity in our workforce. We understand that the diversity of our people is a constant source of inspiration, creativity, learning and innovation. We believe that the health, knowledge, skills, experience, drive and inventiveness of our employees are key to our success. Our employees are offered competitive pay and compensation benefits. In 2011, we launched “The MTN Deal”, our value proposition to our employees. It represents our pledge to our employees to develop their careers and improve their overall employee experience beyond reward and recognition. In addition, we launched the MTN Academy in 2008. The MTN Academy provides a standardised approach to employee learning and development initiatives across the markets in which we operate. Employees are actively encouraged to continuously look for opportunities to improve their capabilities and skills through extensive training available digitally, face-to-face and from other sources supplied by MTN Academy, or from external accredited and reputable organisations. On a regular basis, MTN Academy compiles internal reports for management on the nature of training undertaken by employees, amount of time spent on each module, and pass-rates. Certain elements of training are mandatory for all employees. Directors also receive regular and informative updates and training on legislative, regulatory, and any other

88 business-related changes throughout their tenure. They are also encouraged to discuss their development needs with the chairman, and are provided with training where necessary. In 2015, we spent R223 million on the training of our employees and we intend to continue investing in our employees.

We aim to be a good corporate citizen and continue to invest in numerous community projects across the countries in which we operate by partnering with both public and private organisations to implement sustainable development projects and make a positive and lasting impact. For example, we have established MTN Foundations in 15 of the countries in which we operate to invest in education, health, economic empowerment and areas of national priority.

Furthermore, we understand that governance and control are critical to maintain profitability and business continuity. We strive to maintain and enhance sound governance practices that reflect prevailing international governance trends and the evolving legislative landscape. These practices are founded on values of responsibility, accountability, fairness and transparency. To this end in 2015 we reviewed our operating structure with a view to strengthening operational oversight, leadership, governance and regulatory compliance across the MTN Group bringing in a new CEO and organising the business according to regional clusters: West and Central Africa, South and East Africa, and Middle East and North Africa—with a senior executive responsible for each regional cluster. We also re-instated the position of Group COO. The regional senior executives and COO reporting directly to MTN’s CEO.

Creating a distinct customer experience We intend to further strengthen our market positions while maintaining profitability by investing in and improving our current offerings to increase customer satisfaction and experience. Our brand has won numerous accolades in recent years demonstrating our success in this endeavour including being named the most admired and most valuable African brand in the 2015 Brand Africa 100 listings. In this way, we aim to enhance our brand image, retain existing subscribers and appeal to new customers. In 2012, we launched “Perfect 10”, a project designed to enhance our service by identifying gaps in our customer experience and working to rectify them. Perfect 10 aims to provide customers with a seamless experience of our network, products and services. Such customer focused initiatives are designed to ensure that we adequately service and grow this profitable segment of our customer base. Evidencing the strength of our brand and our success in providing a high quality customer experience, in 2015 we registered 9 million new subscribers to our network (this figure was affected by the disconnection of subscribers in Nigeria related to registration requirements). In the six months ended 30 June 2016, our subscriber growth was offset by the further subscriber disconnections in Nigeria, Uganda and Cameroon, which led to the number of subscribers remaining flat at 30 June 2016 as compared to 31 December 2015.

We aim to continue providing an intuitive and appealing customer experience through easy access to our products via our numerous points of sale, increasing our direct sales forces as well as our range of affordable prepaid and postpaid offerings and retaining and continuously improving our simple activation processes. Accessibility through an extensive distribution network is key to customer retention, innovation and growth in the prepaid mobile market. Further, we aim to continue providing service options directly tailored to the unique needs of our customer base, such as per-second billing, low increment credit top-ups and alternate ways to continue talking when customers run out of balance via our “MTN XtraTime” offering, which increases flexibility for our lower income customers. We have also launched products for customers who operate 2G, non-smartphones in an effort to migrate them to higher value data services.

In addition, we are committed to providing our customers with the most technologically advanced telecommunication services appropriate to their market by investing in and upgrading our infrastructure in order to improve the quality, coverage, as well as reliability, of our services and provide customers with reliable data access, additional digital and financial services and complementary products and services based on market maturity and need. In 2015, our capital expenditure was R29,611 million and included expanding 3G and LTE to cater to the increasing demand for data services.

Transforming our operating model We continue to transform our organisation through asset optimisation and increasing operational efficiencies which will help drive the delivery of sustainable returns. We have been rolling out “Project Next!”, a back-office transformation initiative for supply chain, human resources and finance functions that aims to centralise transactional activities, implement standardised processes, and optimise and consolidate our technology

89 functions. This will help to ensure that our operations can focus on their core activities. In addition, centralised procurement continues to realise gains with the establishment of a procurement company in Dubai and the development of a blueprint for our supply chains. We realised meaningful cost reductions in our distribution network through the renegotiation of distribution contracts in South Africa and the realignment of our commission structure in Nigeria leading to lower commission costs. In addition, the monetisation of our tower assets and other passive infrastructure is a key focus and we continue to explore tower transactions on an on- going basis. To date, we have completed tower transactions in Nigeria, Uganda, Ghana, Cameroon, Ivory Coast, Rwanda and Zambia. In 2015 we completed the transfer of the tower portfolio of MTN Nigeria (approximately 9,000 towers) to IHS realising profits of R8,233 million in 2015 and R7,329 million in 2014. As the telecommunications environment continues to evolve towards increased data communication and as competition intensifies, our returns will come under pressure. We intend to continue to embed asset optimisation and efficiencies, including supply chain optimisation and operational standardisation into the business to ensure that we have the most effective base for future growth.

We will also continue to design and implement market-specific strategies in each of the individual markets in which we operate in order to maximise value from our market segments by continuing to undertake a systematic approach involving dedicated analytics and research to develop an optimal pricing structure for our products and services. These strategies are tailored to the particular conditions of each market, such as the stage of development, the cultural and financial characteristics of the market, demand for particular products and services and our own competitive position in that market.

Innovation and best practice We believe that our innovative digital services and our customer focused solutions underpin our strong market position. We aim to leverage our experience within the markets in which we operate to anticipate the needs of our customers, and to develop innovative products and services tailored specifically to each of our markets. For example, our operating companies have recently introduced a number of innovative products and services to our markets, including per-second billing, the ability for our customers to transfer airtime and SMS credits to one another and to borrow credit from us. In addition, we seek to partner with producers of VAS and OTT providers in order to ensure that we continue to remain innovative and relevant as technology and its use continues to rapidly evolve.

Further, to the extent applicable, we seek to transfer best practices that we develop in our markets to all of our operations to ensure operational cohesion and best practices generally across our Group. Additionally, strategies developed at MTN Group are distributed to and implemented by our operating companies. We intend to roll-out tried and tested initiatives more broadly across our operations to enhance brand visibility, maintain customer contact and expand the services we provide to our customers.

Products and Services Description of our voice and data technology Our mobile network is designed using 2G, 3G and 4G LTE technologies (with speeds of up to 100 megabytes per second (“Mbps”)). Our network is supplied by leading telecommunication equipment manufacturers. We have 2G-enabled networks and 3G-enabled networks across most of our operations. 4G LTE technologies are available in some of the markets in which we operate, including South Africa, Nigeria, Cameroon, Iran, Uganda and Zambia.

Our 2G technologies have enabled us to offer users voice services, SMS, multimedia services (“MMS”), VAS and data services. We deploy general packet radio service (“GPRS”), enhanced data rates for GSM evolution (“EDGE”) and EDGE Evolution, with speeds of up to 1Mbps on our 2G network. We offer certain services, such as MTN Mobile Money, to 2G customers without smartphones.

Our 3G technologies have enabled us to offer our users a wide range of advanced services, including data services, such as wireless broadband, while achieving greater network capacity through improved spectral efficiency. In those markets in which we use 3G technology, 3G enables us to offer new services to our users like video calls, mobile broadband data, and a full internet experience with richer mobile content. Our 3G networks also give us more capacity to provide data and voice services than our 2G networks using our current spectrum. Our 3G networks are normally co-located with existing 2G infrastructure allowing faster and cost-effective network deployment. We have also expanded our 3G networks using high-speed uplink packet access (“HSUPA”), high-speed downlink packet access (“HSDPA”) and evolved high-speed packet access (“HSPA+”) technologies with speeds of up to 42Mbps.

90 We have implemented a cost-efficient radio access network which aims to minimise the impact of network infrastructure on the environment by utilising extended cell features that require fewer base stations per cell, as well as technologies that conserve energy by shutting down hardware during periods of low mobile traffic. Where possible, we intend to use the same 2G and 3G base stations for our WiMax network, which will add to these cost and environmental benefits by requiring fewer towers and saving energy by using less power. In addition, we have embarked on a drive to reduce our dependency on diesel by introducing hybrid power solutions to replace generators and connecting rural base stations to the national power grid.

Our 4G technologies are available in some of the markets in which we operate, such as South Africa, Nigeria, Cameroon, Iran, Uganda and Zambia. These technologies have allowed us to offer faster upload and download speeds as compared with our 3G technologies. 4G enables us to offer our users fast access to high definition video streaming, video conferencing, multiple chatting, instant uploading of photos and other data intensive applications. We believe that 4G will support a “data revolution” across the markets in which we operate, driving fundamental changes in lifestyles, business and society and will also support economic growth in rural areas by enhancing the reach of e-governance, e-health and e-education services, and will be a significant source of revenue in the long term.

We continue to invest in various transmission and radio technologies, including international undersea cables. We have made multiple investments in cables from the east and west coasts of Africa terminating in Europe and the Middle East.

In addition, we continue to explore new undersea projects where commercially beneficial. We have signed a memorandum of understanding to form a consortium, for constructing the new Africa-1 submarine cable system, as one of five international telecom companies (the others being Saudi Telecom Company, Telecom Egypt, Telkom SA and PCCW Global) with other carriers expected to join at a later stage. The project is expected to complement existing cable infrastructure and will ensure capacity requirements for Africa’s digital broadband future in addition to providing better quality of service. Since 2008, we have invested approximately US$232 million in broadband submarine and international backhaul terrestrial fibre-optic cables making us one of the largest investors in information and communication capacity across the continent.

Voice Services Overview Our voice services include local, national and international calls. In addition, we provide VAS including the following: • dynamic tariffing services that offer discounted call rates based on available network capacity (“MTN Zone”); • services that allow several subscribers to share the same mobile phone with their own personal accounts and without having to swap subscriber identity module (“SIM”) cards each time (“MTN Virtual”); • services that allow subscribers to borrow airtime which is then recouped when they next recharge (“MTN Prolongation”); • services that allows subscribers to send and receive airtime to or from each other, either directly from a subscriber’s mobile phone or through a message request (“Me2U”); • MMS services; • SMS services; • auto top-up services (“MTN Auto Top-Up”); • ring-back; • voicemail; • missed call notification; and • Blackberry services.

Voice services has an average population penetration rate of around 50%-60% (with the lowest penetration rate being 25% in South Sudan and the highest being 164% in South Africa) in our markets and while we believe that voice communication services will remain a significant revenue generator for us in the medium term, we expect

91 data to be an increasingly important revenue generator. We also expect data and financial VAS to play a role in differentiating us from our competitors and increasing the loyalty of our mobile subscribers, notably among those in the higher customer-value segments. We are continually looking at VAS opportunities in order to grow our portfolio.

Plans We operate a predominantly prepaid business with postpaid constituting a relatively small component of our revenues. As at 30 June 2016, approximately 97% of our subscribers were on prepaid plans and approximately 3% of our subscribers (primarily in South Africa and, to a lesser extent, Cyprus) were on postpaid plans. In most of our markets we do not subsidise handsets, but remain involved through partnerships with handset retailers.

• Prepaid Mobile Services Prepaid services require the payment of a non-refundable subscription fee (that includes connection charges and a charge for a SIM card). Prepaid customers pay in advance for a fixed amount of airtime and services and recharge their account when they run out of credit. There are various methods through which customers can purchase airtime, including through the purchase of scratch cards or vouchers that provide a pin that the customer enters into their phone in order to download the airtime, or through their MTN Mobile Money account. We also regularly offer both SIM card and airtime promotions to our customers. The promotions are tailored to meet the specific needs of our customers within each of the markets in which we operate.

• Postpaid Mobile Services Postpaid services require the customer to pay an initial one-time non-refundable connection fee and following which the customer is billed on a monthly basis (including a monthly subscription charge which is dependent upon the plan to which the customer subscribes). We offer a number of different plans, depending on the individual needs of the customer, which include smartphone plans offering discounted smartphones. We also offer specially designed postpaid tariff plans to our business customers and different bundled offerings depending on the size of the organisation. We also offer add-on services, including tariffs to cater to the data and calling needs of the customers. The business packages can also be bundled with smartphones.

Data Our data services include all data communications services, including 3G and 4G LTE data bundles, BlackBerry service and other value-added services for mobile subscribers. We offer separate data plans to both our prepaid and postpaid voice subscribers.

Our mobile data service offerings focus on mobile broadband offerings over our 3G and 4G networks. The customer can use mobile broadband either on a prepaid basis or under a mobile data postpaid subscription package. Data services are an increasingly important contributor to our mobile business, as digitisation accelerates rapidly across our markets.

Digital Services Overview Traditional voice and data services once defined the telecommunications industry, but they are now just two of a growing range of services. We aim to expand beyond our core offerings by leading the delivery of digital access across the emerging markets in which we operate, as consumer spending on data and digital services becomes increasingly important. The need for a broader digital offering has led us to refresh our vision and mission and refine our strategic objectives to ensure that we maintain our leading position in communications in emerging markets and sustain a business model that maximises value for all of our stakeholders.

The cornerstone of our digital services offerings is our mobile content solutions that we offer our subscribers.

Mobile Content We provide our customers with a variety of mobile content solutions, including entertainment, lifestyle and music offerings. “MTN Play” is a content portal that provides a variety of entertainment and informative

92 services; “MTN Opera Mini” is a service that allows customers in certain markets to access the web from their mobile phones at lower costs and faster speeds; “MTN Afrinolly” allows subscribers to receive the latest Nollywood movie trailers and music videos to their phone; “MTN Magic Voice” allows customers to change the sound of their voice during a call; “MTN Mobile News” provides customers with the most up to date local and international news, sports news, entertainment news, fashion news and finance news and “MTN Pulse” offers customers 10MB of free data for seven days after a top-up of a certain amount, as well as reduced call and SMS rates to other MTN Pulse subscribers. In addition, mobile messaging, including basic SMS and MMS enable customers to send various media including music, photographs and videos from their phones. We also offer various services for easy and fast navigation or requests (such as balance enquiries or call-me-back requests).

Financial Services The majority of the countries in which we operate are cash economies with most retail transactions being conducted in cash and with limited access to traditional banking services. In view of these market dynamics, we offer our customers, through “MTN Mobile Money”, the ability to use their mobile phone to pay utility bills, pay for goods and services from a range of businesses, play the national lottery and transfer funds to any other in- country customer on our network. We have rolled out MTN Mobile Money to 14 markets across our network, including Nigeria. There is significant potential for our MTN Mobile Money services, as there are approximately 2 billion people across the world who do not have access to formal or semi-formal financial services (source: World Bank—April 2015). To send money to anyone within the MTN network using their mobile phone, subscribers deposit cash with an MTN agent at an MTN point of sale. Once the subscriber has received a text message confirming the deposit, the subscriber can access the MTN Menu on their phone to transfer money to another customer. The recipient of the money transfer can withdraw cash from an MTN point of sale. To pay bills, subscribers select the relevant utility company from the MTN Menu on their phone and enter their unique reference number and the amount. The subscriber then enters a personal pin and confirms payment.

We are not only focused on acquiring subscribers for our financial services but also on increasing the volume of transactions and expanding our product range to include micro lending, short-term insurance and ATM services.

Enterprise Services We are a provider of ICT enterprise services to corporate and government customers. We deliver end-to-end telecommunications solutions to our business customers by serving as the single point of contact for all their telecommunication needs. ICT enterprise services involve the combination of network, hardware, software and service solutions together with support functions to achieve a customer’s business objectives or provide a particular business solution. We provide a full suite of ICT enterprise services, including corporate data solutions, satellite connectivity, infrastructure, networking, video-conferencing, system security and cloud computing. MTN Business Cloud, which is available across all of our operating companies, offers cloud-based infrastructure, platforms and databases as services. We own a state of the art national and international long- distance network infrastructure, including submarine cable, fibre connectivity and satellite connectivity, enabling us to provide connectivity service within the markets in which we operate. Our ICT enterprise services are designed to manage cost, improve efficiencies and deliver consistent quality to our business customers. We provide ICT enterprise services in South Africa, Nigeria, Botswana, Zambia, Namibia, Kenya, Uganda, Cameroon, Ghana and Ivory Coast.

We aim to become a business partner to our enterprise customers by developing solutions tailored to customers’ specific needs rather than acting as a commodity services provider. We have a dedicated business solutions unit that works closely with enterprise customers across our operations to act as a communications consultant for our corporate and SME clients.

Operations Overview As we are present in 22 diverse markets, with varying cultural norms and levels of economic development, we operate a decentralised business model with significant operational discretion delegated to management at the operational level. However, we retain supervisory oversight at the Group level over the operating companies through our reporting structure which clusters operations according to region – West and Central Africa, South and East Africa and Middle East and North Africa with a senior executive responsible for each cluster. The CEOs of MTN South Africa and MTN Nigeria have seats on the Group executive committee. This approach is designed

93 to ensure that our business practices are appropriately tailored to the needs of each of our markets while retaining centralised oversight of all of our operations. The Group’s central management (“Group Management”) oversees the activities of our operating companies and is responsible for, amongst other things, the adoption of strategic plans, the monitoring of operational performance and management, and the development of appropriate and effective risk management policies and processes. However, the implementation of Group policies and initiatives, as well as the day-to-day operations are left to the individual operating companies and their management, which carry out their activities within a general operational framework implemented at the Group level. Further, pursuant to certain guidelines, it is compulsory for operating companies to escalate material issues to Group Management to ensure a cohesive and effective overall Group approach. The Group executive committee meets once a month to discuss any material issues.

Distribution Each operating company is responsible for its distribution activities and manages the relevant relationships in the countries and regions in which it operates. We generally sell airtime to regional wholesalers (which are commercial providers of mobile services with distribution networks across Africa and the Middle East). These wholesalers subsequently sell the airtime on to smaller distributors who then sell to mass resellers (which are registered agents that purchase our products such as SIM cards and payphone cards in bulk and distribute them across a specified geographic area) who proceed to sell to small businesses, such as grocery and convenience stores. It is from these end points that customers purchase airtime. For example, in Nigeria as at 30 June 2016 we operate through 78 trade partners who distribute our products and services through their distribution channels to approximately 505,000 registered retailers. In South Africa we have long-standing relationships with large retailers to sell our products and services (including handsets) and we have over 400 retail outlets, including 100 directly-owned stores.

Marketing Each operating company is responsible for marketing its products and services in the countries and regions in which it operates, based on campaigns introduced by MTN Group, which are then rolled out to the operating companies. As the number of products and services they offer continues to grow, we believe that increasing customer awareness of these new products is critical to our success. Each operating company seeks to increase consumer awareness of its new products and services, build customer loyalty, differentiate its services from those of competitors, enhance customer experience and improve ease of use.

Our operating companies track the spending habits of their subscribers and tailor their marketing approach accordingly to each of the following customer and demographic segments: professionals, business (including SME and corporate clients), youth and the mass market. They market their network primarily by emphasising what we believe to be a superior network quality, coverage and capacity (relative to competitors) to all customer segments (though more affluent customers tend to respond more to network quality and coverage concerns) and tailor the advertising of certain services to specific demographics, such as music and video services to the youth segment. They employ traditional advertising methods including television and radio advertising, sponsorship of sports teams and the purchase of billboard space in prominent locations. Additionally, they employ more directed marketing, particularly in respect of the mass market which entails a more considered approach. As mass market customers (the vast majority being prepaid customers) are generally more sensitive to price, they employ targeted marketing and promotion campaigns (such as discounts and bundle options) to individual subscribers (for example via SMS) and they regularly refresh their promotional offers to ensure that they continually stimulate and engage their subscribers and prompt them to purchase airtime, data or additional services. In addition, if customers are inactive for a period of time, they send them tailored promotions in which they offer them free airtime if they reactivate their service by topping-up. Depending on the response of the customer, they gradually provide these customers with further incremental discounts and promotions.

Customers We service the following four main customer segments: professionals, business (including SME and corporate clients), youth and the mass market. The professionals segment comprises our more affluent non-institutional customer base. These customers tend to be less price sensitive and place an emphasis on the quality of the service that we provide them. The business segment constitutes SME and corporate clients, amongst others. Our business customers place an emphasis on our ability to provide them with complete end-to-end communications solutions. The youth segment typically includes students. The mass-market captures all of our other customers. Mass- market customers tend to be more price sensitive than our other customer segments and are also more receptive to promotional campaigns.

94 Pricing We generally price our services at a slight premium to our competitors as our operational philosophy is centred on providing our subscribers with higher network functionality as compared to our competitors, including network quality, coverage and capacity.

Our tariff structure differs between postpaid and prepaid plans, with prepaid customers subject to higher tariffs to offset the absence of monthly subscription fees. In addition, our pricing is highly variable and depends on the country of operation, the type of plans on offer and our ongoing need to refresh our pricing to respond to continually changing market dynamics.

Postpaid Customer Service and Billing Our billing operations are fully automated using telecommunications industry specific billing applications. The billing of postpaid voice services is performed using a single application while the billing of data services is performed using multiple applications.

Back Office Services We have been rolling out “Project Next!”, a back-office transformation initiative for supply chain, human resources and finance functions that aims to centralise transactional activities, enhance operational efficiencies, implement standardised processes, and optimise and consolidate our technology functions.

Competition We compete against both national and international players within the markets in which we operate. We have recently experienced more aggressive pricing competition from our competitors in respect of voice and data services as they seek to win market share. In the coming years we expect to see some consolidation in the industry as a result of both economic and regulatory factors.

Regulation The operation of telecommunications networks and the provision of related services are regulated to varying degrees by national, state, regional or local governmental and/or regulatory authorities. In order to comply with applicable law, telecommunications regulations and the licences we are granted under such laws, we may be required to obtain consents or approvals from regulatory authorities for certain activities, such as operating or owning our wireless networks and establishing the rates we charge our customers. For example, we cannot raise our rates beyond a specified regulatory ceiling, unless the relevant regulator raises such ceiling.

The regulatory regimes in the countries in which we operate vary from market to market and are influenced by factors such as population, economic development, geographical landscape, available technologies, customer penetration rates, political factors, government, social and economic policy and the number of existing competitors.

We work with local regulators in each of the countries where we operate with a view to ensuring fair and efficient regulation that is appropriate to the particular characteristics of the relevant market. In every country in which we operate, we have a dedicated manager who continually liaises with the respective regulator to ensure we maintain effective communication and an amicable relationship with the regulator. Our approach is aimed at proactive engagement with regulators and monitoring our relationship with the government, regulators and various stakeholders in the markets in which we operate. In addition to certain other organisational changes, we are in the process of establishing regulation compliance officers to work with the Vice Presidents and in-country regulatory executives in order to strengthen our compliance and governance structure. See “Overview of the Group—Interim results and Other Recent Developments—Other Recent Developments—Organisational Changes.”

MTN Nigeria has recently been fined N330 billion (the equivalent of R25.1 billion, translated at the 10 June 2016 closing rate of R1 = N13.15) by the NCC in connection with the late registration of subscribers in Nigeria. For a further discussion, see “—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

95 Key Markets South Africa Overview We commenced operations in South Africa in 1994 after being awarded a mobile licence in the country in 1993.

In 2015 South Africa had the third largest economy in Africa and boasts an abundance of natural resources, well-developed financial, legal, commercial and communications sectors, and modern infrastructure which supports the efficient distribution of goods and services throughout the country. In 2015, South Africa’s GDP was an estimated US$329 billion. Real GDP growth for South Africa for the last three years averaged 1.7% per year, with approximately 2.2% growth in 2013, 1.5% growth in 2014 and 1.3% growth in 2015. South Africa’s GDP per capita has remained relatively flat in the last three years at $13,200 (source: CIA World Factbook). South Africa has a population of approximately 55.0 million people. Telecommunications is one of the fastest growing sectors of the South African economy, driven by strong growth in mobile telephony and broadband connectivity. In 2015, the telecommunications industry contributed approximately 4.6% of South Africa’s GDP (source: DataMarket).

For the six months ended 30 June 2016 we generated 25.1% of our total revenue, or R19,841 million, and EBITDA of R5,979 million from our operations in South Africa. In 2015, we generated 27.2% of our total revenue, or R40,038 million, and EBITDA of R13,370 million from our operations in South Africa. As at 30 June 2016, we had approximately 29.8 million subscribers in South Africa, an increase of 16% since 31 December 2013.

Strategy Given the high mobile penetration rate of 164% in the South African market, we aim to continue to provide more data and digital services to our customers with competitive pricing and promotions for all our offerings. We will continue to grow our ICT enterprise services, with a particular emphasis on fibre connectivity. We also intend to continue to invest in our network, particularly focusing on high-value urban areas, and extend our fibre infrastructure to deliver fibre-to-the-home to gated communities and business customers.

Offerings We offer postpaid and prepaid voice, data and digital products and services to our customers in South Africa through 2G, 3G and LTE technologies. Our principal postpaid subscriber base is in South Africa and accounted for 17% of our total subscriber base in South Africa as at 30 June 2016. Postpaid offerings consist of a variety of voice and data packages that include a handset, while prepaid services include a variety of innovative offerings such as discounted pricing, per second billing and free minute promotions. South Africa is the only market in which we subsidise the cost of handsets.

Competition The South African mobile industry has become more competitive in recent years driving down rates offered by operators.

As at 30 June 2016, there were three other main mobile network operators in South Africa: Vodacom South Africa, Cell C and Telkom Mobile. As at 30 June 2016, we were the second largest mobile operator by subscribers in South Africa with 32.3% of the market, behind Vodacom South Africa. Cell C and Telkom South Africa are third and fourth, respectively (source: Group data).

Industry For the twelve months ended 30 June 2016, the South African mobile communications market was valued at approximately $10 billion with a total subscriber base of 95 million. Of total service revenue in the three months ended 30 June 2016, voice revenue had a market share of 62% while data revenue accounted for the remaining 38%.

As at 31 March 2016, South Africa had a mobile penetration rate of 164% with approximately 82% of the subscribers being prepaid customers.

Vodafone-controlled Vodacom is the largest mobile operator, followed by us, Cell-C and Telkom’s mobile business (source: Group data). The mobile sector is characterised by strong competition between the operators in

96 the prepaid space as well as for high-end contract customers. MVNOs including Virgin Mobile are active in the market, enhancing retail competition and affecting margins, which tend to be lower than in markets with a more traditional emerging market profile. Like our competitors, we have focused on the development of mobile broadband to deliver fixed-line equivalent internet access services. 3G HSDPA networks are well-deployed and Vodacom, MTN, and Telkom have launched 4G/LTE services.

The South African mobile operators currently operate mainly in the frequency bands of 900MHz, 1.8GHz, and 2.1GHz. The 800MHz band is considered crucial to the roll-out of extensive coverage of 4G/LTE services, especially in rural areas. LTE services are currently deployed by Vodacom and MTN in the 1.8GHz band (having re-farmed some spectrum), and Telkom has also rolled out LTE services in the 2.3GHz frequency band.

Fixed-line penetration in South Africa stands at approximately 26%, in comparison fixed-line penetration rates are approximately 61% for Eastern Europe and 60% for Western Europe (equally weighted average for the countries considered; fixed-line penetration rate is defined as main telephone lines per 100 inhabitants). As at 31 March 2014, the fixed-line sector is still dominated by Telkom with approximately 3.6 million access lines (source: Group data) and as at 30 September 2013, approximately 85% of the fixed-line broadband subscriber base (source: Analysys Mason). We have started to extend our fibre infrastructure to deliver fibre-to-the-home to gated communities and business customers; however, the current scope of these operations is limited.

All of the large South African telecommunications operators are also active in the IT services and enterprise solutions segment. They compete with a number of international IT services players like Dimension Data (owned by Nippon Telegraph and Telephone) and Deutsche Telekom’s T-Systems unit as well as local specialised IT services players.

Regulation Key Statutes and Licences The Electronic Communications Act, 2005 (the “ECA”) is the primary legislation regulating the electronic communications sector, including telecommunications and broadcasting services. The ECA encompasses a number of areas including licensing, spectrum, interconnection, rights of way, numbering, broadcasting, competition, universal service and consumer issues.

In addition to the ECA, there are other key pieces of legislation that regulate certain aspects of the sector including the: • Electronic Communications and Transactions Act, 2002; • Competition Act, 1998 (“CA”); • Regulation of Interception of Communications and Provision of Communication-Related Information Act, 2002 (“RICA”); • Consumer Protection Act, 2008; and • Independent Communications Authority of South Africa Act, 2000, which established the industry regulator, the Independent Communications Authority of South Africa (“ICASA”).

ICASA is the regulatory authority responsible for, amongst other things, licensing the providers of telecommunications and broadcasting services, and the persons who operate the electronic communications networks over which such services are provided. There are a number of key regulations published by ICASA that govern or regulate a range of areas relevant to the electronic communications sector such as the: • technical standards for electronic communications equipment; • consumer issues and electronic communications network standards; • licensing processes and procedures; • standard terms and conditions for class and individual licences; • compliance reporting to ICASA; • licence fees and contributions to the Universal Service and Access Fund (“USAF”), which funds projects and programmes that strive to achieve universal service and access to ICTs by all South African citizens;

97 • radio frequency spectrum; • call termination rates and interconnection; • facilities leasing; and • numbering.

Under the ECA, ICASA can issue two types of licences, namely class and individual licences for the provision of electronic communications network services (“ECNS”) and electronic communications services (“ECS”). In 2008, ICASA converted nearly 400 former value added network services licences to ECNS and ECS licences. Less than 200 of the 400 former value added network services licensees that were converted are active/significant players in the current market.

In the ordinary course of business, licence applications for individual licences may only be made in response to an invitation to apply issued by the Minister of Communications (although, since the splitting of the Ministry of Communications in 2014, this will now be the role of the Minister of Telecommunications and Postal Services). ICASA has issued MTN (Pty) Limited with two licences, namely an Individual ECNS licence (“I-ECNS”) and an Individual ECS licence (“I-ECS”). Our I-ECNS was issued for 20 years and our I-ECS licence was issued for 15 years. In addition, MTN is the holder of a number of radio frequency spectrum licences.

Regulatory Costs Our licence fee is 0.35% of revenue generated from licensed services and our contribution to the USAF is 0.2% of annual turnover (derived from the licensee’s licenced activities). These calculation methodologies are prescribed in regulations published by ICASA.

These amounts are in addition to the fees paid to ICASA for the utilisation of radio frequency spectrum on the basis of a radio frequency spectrum licence. A radio frequency spectrum licence is required in addition to any service licence. Radio frequency spectrum licences are renewable every year, the cost being based on administrative incentive pricing as detailed in the radio frequency spectrum fees regulations. The numbers assigned by ICASA currently incur no fees.

Competition Regulation ICASA regulates the electronic communications industry in terms of competition matters in tandem with the Competition Commission (which primarily has investigative powers), established under the CA, which regulates competition matters across all industries, including the electronic communications industry. An agreement has been reached between ICASA and the Competition Commission defining their respective areas of jurisdiction and regulating interaction between them. The CA also establishes the Competition Tribunal with adjudicative powers, and the Competition Appeal Court.

Anticipated Developments The Minister of Communications was responsible for making policy and issuing policy directions to ICASA and for making key regulatory decisions regarding licensing and spectrum. However, this remit changed when the Ministry of Communications was split into two separate ministries in 2014, namely the Ministry of Communications and the Ministry of Telecommunications and Postal Services. Pursuant to a proclamation issued by the President of South Africa on 16 July 2014, the administration, powers and functions entrusted by the ECA were transferred from the Minister of Communications to the Minister of Telecommunications and Postal Services.

The Department of Communications developed a broadband policy in December 2013, with the intention to provide broadband access to all citizens by 2030. It is anticipated that the Minister of Telecommunications and Postal Services will issue a policy directive to ensure that high demand broadband spectrum is assigned to operators. On 23 May 2014, prior to the President of South Africa’s proclamation, the Department of Communications issued a statement on broadband radio spectrum policy directives in which it was indicated that these policy directives are anticipated to be published in October 2014. The assignment of spectrum must be on a fair value and competitive basis and ensure the viability of possible new entrants, whilst encouraging competition and taking into account broader interests of existing licence holders. The National Broadband Advisory Council was launched in March 2014, and comprises representatives and experts from government, business and civil society who will review broadband policy on an ongoing basis.

98 Nigeria Overview We commenced operations in Nigeria in 2001 after we acquired GSM 900MHz and 1800MHz licences.

In 2015, Nigeria had the largest economy in Africa. In 2015, Nigeria’s GDP was an estimated US$490 billion. Real GDP growth for Nigeria for the last three years averaged 4.8% per year, with approximately 5.4% growth in 2013, 6.3% growth in 2014 decreasing sharply to 2.9% growth in 2015 primarily as a result of the global slump in oil prices. Nigeria has also experienced a significant fall in value of the Naira since its link to the US Dollar was severed in June 2016 which is anticipated to lead to increased inflation in the short term and a more stable macroeconomic environment in the medium to long term. Nigeria’s GDP per capita has increased in the last three years, from $5,900 in 2013 to $6,100 in 2015 (source: CIA World Factbook). Nigeria is also the most populous country in Africa, with its current population estimated to be around 180 million, and is now the largest mobile telecommunications market in Africa, with mobile subscribers estimated at more than 140 million as at April 2015 (source: Nigerian Communications Commission). In 2013, Nigeria overtook South Africa to become our largest contributor of revenue and in 2015 accounted for 35.3% of total revenue for the year. We see Nigeria as a key market and intend to continue to maintain or increase our market share there despite the recent disconnection of 6.7 million subscribers during 2015 and a further 4.5 million subscribers in the six months ended 30 June 2016 whose registration documents were considered to be incomplete. In 2013, the telecommunications industry contributed approximately 2.9% of Nigeria’s GDP (source: DataMarket).

For the six months ended 30 June 2016, we generated 36.6% of our total revenue, or R28,941 million, and EBITDA of R14,421 million from our operations in Nigeria. In 2015, we generated 35.3% of our total revenue, or R51,942 million, and EBITDA of R27,504 million from our operations in Nigeria. As at 30 June 2016, we had approximately 59.0 million subscribers in Nigeria, an increase of 4% since 31 December 2013. Nigeria is our largest market in terms of number of subscribers, revenue and EBITDA contribution to the Group. We continue to benefit from our first-mover advantage and extensive investments we have made in our network in Nigeria including improving data network speeds in key cities, which has recently led to better network quality. At the end of December 2015, we had 11,214 2G and 4,856 co-located 3G sites in Nigeria. We also had the largest fibre network with more than 18,000 km of fibre across the country.

Strategy At the end of December 2015, the mobile penetration rate in Nigeria was 83%. As mobile penetration increases we aim to grow our data and digital businesses. The implementation of these goals will further enable us to target more affluent customers with greater spending power with our wide range of data and digital service offerings.

Offerings We mainly offer prepaid voice, data and digital services through 2G and 3G technologies. Our financial service offering, “Diamond Yellow”, in partnership with Diamond Bank Plc, provides our customers with a relatively safe and easy means of opening and operating a full bank account through the convenience of their MTN mobile phone. MTN Nigeria acquired Visafone Communications Limited, a provider whose 4G LTE licence and digital TV spectrum will allow MTN Nigeria to roll out LTE services. In June 2016, we submitted a bid for the 2.6GHz band and were subsequently awarded the spectrum license as sole approved bidder. This spectrum will enhance our LTE capacity in Nigeria.

Competition We operate in a competitive environment in Nigeria and saw strong price competition in 2012, which lead to rate cuts on our network. This resulted in a significant increase in traffic volumes. As a result, our capital expenditure peaked in 2013 to resolve network congestion. Since these price declines, the competitive environment has been more stable. However, competitors have recently been offering products at below-cost prices in order to gain market share.

As at 30 June 2016, we were first in terms of mobile market share by subscribers in Nigeria with 46.2% of the market, ahead of Airtel, GloMobile and Etisalat, which ranked second, third and fourth, respectively (source: Group data).

99 Industry Nigeria has grown to become one of the largest telecom markets in Africa and within our footprint. There has been rapid growth in the number of mobile users in Nigeria, partly in response to the shortcomings of the fixed-line network. In 2015, the total telecom sector contributed 8.5% to GDP. The mobile market accounts for approximately 99.88% of the total subscriber base of 149 million; while fixed/fixed wireless subscribers account for 0.12% of the subscriber base. (source: NCC; CIA World Factbook).

As at 30 June 2016, Nigeria had a mobile penetration rate of 83%. We are the largest mobile operator with approximately 59.0 million subscribers, followed by Bharti owned Airtel, Globacom and Etisalat controlled EMTS (source: Group data). The mobile sector sees strong competition between the four main mobile operators, focusing on promotional activity, service innovation and network differentiation. We have sustained our market leadership for a number of years based on our market share which at the end of June 2016 was 46.2%.

Regulation The telecommunications sector in Nigeria is under the general purview of the Federal Minister of Communications Technology (the “MoCT”), while the Nigerian Communications Commission (the “NCC”) is empowered by the Nigerian Communications Act of 2003 to regulate the industry. The MoCT is mandated to facilitate universal, ubiquitous and cost-effective access to communications infrastructure, to promote the utilisation and development of ICT and to utilise ICT to drive transparency in governance. The NCC is mandated to monitor all significant matters relating to the performance of all licensed telecoms service providers and publish annual reports.

The powers of the NCC range from the issuance of various licences relating to the provision of communications services, equipment and products to regulating competition, issuing spectrum and numbering resources to the industry. Our Nigerian operation holds an 800 MHz licence (through our acquisition of Visafone), a 900MHz licence, a 1800MHz licence, a 2600 MHz licence, a 3G spectrum licence, a unified access licence (including international gateway), a WACS licence, a WiMax, 3.5GHz spectrum licence and a microwave spectrum licence. The NCC also has the power to enforce its mandate, with the aim of achieving fair competition, ethical market conduct and optimal quality of service in the Nigerian telecommunications industry. Over the years the NCC has developed a body of subsidiary legislation and intervened to address issues such as competition regulation, mobile number portability, numbering and short codes, SIM registration, approval of infrastructure, technical standards of masts and towers as well as to resolve disputes between operators.

In 2013, under the stewardship of the MoCT, national telecommunications policy was revised to encompass the broad spectrum of issues affecting the industry such as setting new targets and goals for the industry. The policy also includes the National Broadband Plan designed to provide a roadmap for the implementation of broadband in Nigeria.

In April 2013 the NCC declared MTN Nigeria dominant in the mobile voice market and it declared both MTN Nigeria and Globacom ‘dominant’ in the wholesale leased lines and transmission capacity market. As a consequence, both MTN Nigeria and Globacom are required to offer the same off-net tariff, as they offer on-net. The NCC also imposed a ban on promotions which was lifted in mid-September 2014. The NCC suspended regulatory services to MTN Nigeria in October 2015 and withdrew its approval of new tariff plans and promotions until tariff plans and promotions, that were linked to its determination of MTN Nigeria as a “dominant operator”, were removed from the market. This has been resolved and regulatory services have resumed. We continue to engage with the NCC in respect of matters relating to the dominant operator ruling. Following the lifting of the ban and the revision of some targeted promotional offers to include off-network calls, there has been an improvement in subscriber growth in the Nigerian market.

MTN Nigeria’s performance has also been severely impacted by the disconnection of 6.7 million subscribers during 2015 whose registration documents were considered to be incomplete. A further 4.5 million subscribers were disconnected in the six months ended 30 June 2016. In addition in 2015 the NCC imposed a fine on MTN Nigeria that is related to the late disconnection by MTN Nigeria of 5.1 million subscribers whose registration documents were considered incomplete. The ultimate resolution of the fine includes a cash payment of N330 billion (as at 10 June 2016, the equivalent of US$1.671 billion at the official exchange rate prevailing at the time) to be paid over three years. For a further discussion, see “—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine.”

100 We have agreed with the NCC to list MTN Nigeria on the Nigerian Stock Exchange and aim to do so during 2017. The proposed listing is subject to suitable market prevailing circumstances and conditions as well as relevant regulatory approvals.

Large Opcos Our large opco cluster comprises Ghana, Cameroon, Ivory Coast, Uganda, Syria, Sudan and Iran.

Ghana Overview We commenced operations in Ghana in 1996 after our acquisition of Investcom LLC, which owned a mobile operator in the country.

In 2015, Ghana had the 13th largest economy in Africa. In 2015, Ghana’s GDP was an estimated US$36 billion. Real GDP growth for Ghana for the last three years averaged 4.9% per year, with approximately 7.3% growth in 2013, 4.0% growth in 2014 and 3.5% growth in 2015. Ghana’s GDP per capita has increased in the last three years, from $4,200 in 2013 to $4,300 in 2015 (source: CIA World Factbook). Ghana has a population of approximately 26.3 million people. Ghana entered the ranks of the continent’s middle income nations in 2010 after nearly three decades of positive economic growth that helped to reduce poverty by successfully increasing average incomes (source: GlobalComms Database). This emerging middle class has a direct impact on the growing demand for consumer goods and services across the continent, including mobile phones and telecommunication services. Mobile subscriptions totalled 35 million users (a subscription rate of 133 subscribers per 100 habitants). In 2013, the telecommunications industry contributed approximately 2.4% of Ghana’s GDP (source: StatsGhana; CIA World Factbook).

For the six months ended 30 June 2016, we generated 6.5% of our total revenue, or R5,165 million, from our operations in Ghana. In 2015, we generated 5.4% of our total revenue, or R7,903 million, from our operations in Ghana. As at 30 June 2016, we had approximately 17.6 million subscribers in Ghana.

Competition As at 30 June 2016, we were the largest operator in Ghana with 53.8% of the market share by subscribers. Vodafone Ghana ranked second, Millicom Ghana ranked third, Airtel Ghana ranked fourth, GloMobile Ghana ranked fifth and Kasapa ranked sixth (source: Group data).

Cameroon Overview We commenced operations in Cameroon in 2000 after our acquisition of state-run wireless operator CamTel Mobile. The privatisation of the telecommunications industry and the introduction of competition in Cameroon provided the catalyst for growth and development of Cameroon’s mobile market.

Cameroon has remained stable in a region marked by political and security crises. In 2015, Cameroon’s GDP was an estimated US$28 billion. Real GDP growth for Cameroon for the last three years averaged 5.8% per year, with approximately 5.6% growth in 2013, 5.9% growth in 2014 and 5.9% growth in 2015. Cameroon’s GDP per capita has increased in the last three years, from $2,900 in 2013 to $3,100 in 2015 (source: CIA World Factbook). Ghana has a population of approximately 23.7 million people.

For the six months ended 30 June 2016, we generated 4% of our total revenue, or R3,202 million, from our operations in Cameroon. In 2015, we generated 3.9% of our total revenue or R5,806 million, from our operations in Cameroon. As at 30 June 2016, we had approximately 9.6 million subscribers in Cameroon.

Competition As at 30 June 2016, we were the largest mobile operator in Cameroon, with 57.4% of the market share by subscribers. Orange Cameroun was the second largest mobile operator by market share (source: Group data).

101 Uganda Overview We commenced operations in Uganda in 1998 after we acquired a mobile licence in the country.

Uganda has a record of prudent macroeconomic management and structural reform. Real GDP growth for Uganda for the last three years averaged 4.6% per year (source: CIA World Factbook).

For the six months ended 30 June 2016, we generated 3.5% of our total revenue, or R2,804 million, from our operations in Uganda. In 2015, we generated 3.5% of our total revenue, or R5,148 million from our operations in Uganda. As at 30 June 2016, we had approximately 9.9 million subscribers in Uganda.

Competition As at 30 June 2016, we were the leading mobile operator in terms of market share with 52.7% of the market by subscribers. Airtel Uganda ranked second and Uganda Telecom Ltd. ranked third (source: Group data).

Ivory Coast Overview We commenced operations in Ivory Coast in 1996 after we acquired a 51% stake in Loteny Telecom, a mobile operator in the country.

Following the end of more than a decade of civil conflict in 2011, Ivory Coast has experienced a boom in foreign investment and economic growth. Real GDP growth for Ivory Coast for the last three years averaged 8.4% per year (source: CIA World Factbook).

For the six months ended 30 June 2016, we generated 4.7% of our total revenue, or R3,751 million, from our operations in Ivory Coast. In 2015, we generated 4.4% of our total revenue, or R6,424 million, from our operations in Ivory Coast. As at 30 June 2016, we had approximately 8.2 million subscribers in Ivory Coast.

Competition As at 30 June 2016, we were the leading mobile operator in terms of market share with 32.8% of the market by subscribers. Orange Cote d’Ivoire was second and Moov Cote d’Ivoire was third (source: Group data).

Syria Overview We commenced operations in Syria in 2002 after our acquisition of Investcom LLC, which owned a mobile operator in the country. We previously operated under a Build, Operate and Transfer (“BOT”) contractual service arrangement granted and controlled by the Syrian Telecommunications Establishment (“STE”) that provided for revenue sharing between MTN Syria and the STE. Effective 1 January 2015 we converted the BOT to a twenty year freehold concession valid until December 2034. The initial licence fee for 20 years was SYP25 billion (US$115 million equivalent as at 30 June 2016).

Syria’s economy continues to suffer as a consequence of over five years of political and civil unrest that has resulted in more than 400,000 deaths across the country. The widespread disruptions and stringent sanctions have resulted in shortages of basic commodities. This in turn is fuelling inflation, which reached a high of nearly 90% in 2013 reducing to 29% in 2014 and is estimated to have been 30% in 2015 and to be 25% in 2016 (source: The World Bank).

Syria enjoyed a healthy rate of subscriber growth in the years to 2010, as high demand for telecommunications services drove the subscriber growth rate to a high of 38.4% in end-2007. The country’s telecommunications infrastructure has undergone significant improvement and digital upgrades, including fibre-optic technology and expansion of networks to rural areas. However, the conflict in the country has since slowed annual subscriber growth from 15% reported in 2011 (prior to the conflict) to 0.5% in 2015. Mobile cellular services have a subscription rate of 80 connections per 100 persons. (Source: CIA World Factbook).

102 For the six months ended 30 June 2016, we generated 1.3%, or R1,068 million, from our operations in Syria. In 2015, we generated 1.8% of our total revenue, or R2,605 million, from our operations in Syria. As at 30 June 2016, we had approximately 5.8 million subscribers in Syria.

Competition There are only two mobile operators in Syria. As at 30 June 2016, we were ranked second with 40.9% of the market share by subscribers, and SyriaTel was ranked first (source: Group data).

Sudan Overview We commenced operations in Sudan in 2005 after our acquisition of Investcom LLC, which owned a mobile operator in the country.

Years of civil war and social conflict have had a significant impact on the economy of Sudan, while the secession of South Sudan in 2011 poses a significant challenge for the country’s economic development (source: GlobalComms Database).

Sudan’s mobile market is growing rapidly, due to the high level of competition, relatively low cost of services and limited availability of fixed-line telephony, but the country’s ongoing economic turmoil threatens to undermine the future development of the sector. Wireless penetration decreased from around 73% of the population at 31 December 2013 to approximately 69% at 30 June 2016 (source: GlobalComms Database). Although Sudan lost around seven million people when the South gained independence—reducing its total population from just over 40 million at end-2010 to around 32.6 million a year later—the separation did not have a significant impact on its mobile subscriber base, as the vast majority of wireless customers were based in the north (source: GlobalComms Database).

For the six months ended 30 June 2016, we generated 3.0% of our total revenue, or R2,345 million, from our operations in Sudan. In 2015, we generated 2.4% of our total revenue, or R3,472 million, from our operations in Sudan. As at 30 June 2016, we had approximately 8.8 million subscribers in Sudan.

Competition The market leader is Zain Sudan, although its dominance has recently come under threat following increased competition from us and Sudan Telecom. As at 30 June 2016 we had 33.8% of the mobile market by subscribers. Sudan Telecom ranked third in terms of market share (source: Group data).

Iran Overview We commenced commercial operations in Iran through our joint venture, Irancell, in 2006. MTN Irancell is a joint venture between us and Iran Electronic Development Company (“IEDC”) which operates and provides MTN branded products and services in Iran. We own a 49% share of the joint venture under a joint control arrangement. IEDC owns the remaining 51%. On 4 August 2014, we entered into an arrangement to upgrade our licence agreement with the Communications Regulatory Authority in Iran to include 3G mobile broadband as well as higher standards (such as 4G) and to obtain access to additional spectrum frequency for an amount of IRR3,000 billion (US$117.1 million equivalent as at 30 June 2014) which will be funded by the local operation.

Iran’s economy is dominated by oil and gas exports. Economic sanctions imposed by the US and EU have had a severe impact on Iran’s GDP, with the economy entering recession in early 2012 and experiencing a contraction of approximately 6% in the year to 20 March 2013 and Iran has not yet seen the expected economic improvement resulting from sanctions relief. Real GDP growth for Iran for 2015 was 0% (source: CIA World Factbook) but real GDP growth is projected to reach 4.2% and 4.6% in 2016 and 2017, respectively (source: The World Bank).

As at 30 June 2016, we had approximately 47.3 million subscribers in Iran.

Competition As at 30 June 2016, Irancell was the second largest mobile operator in Iran, with 46.4% of the market share by subscribers. Mobile Communication Company of Iran was the largest and Taliya Mobile third-largest (source: Group data).

103 Network Infrastructure Mobile networks Our mobile infrastructure is designed using 3rd Generation Partnership Project (a collaboration between groups of telecommunications associations) standardised technologies, utilising architectures that are specifically designed to be future-proof and upgradable along the evolutionary path towards developing technologies such as LTE and LTE-Advanced. We implement various release levels of the latest high-performance mobile data technologies including HSDPA, HSUPA, HSPA+, and Dual Carrier HSPA+ on our 3G network, and GPRS and EDGE on our 2G network. We have also launched LTE in several operations in both the frequency division duplexing LTE as well as time division duplexing LTE configurations. These technologies allow our customers to enjoy mobile broadband connectivity across all 22 of our markets, at speeds up to 100Mbps in certain locations. We also use local area wireless technology as an additional data technology to provide a broadband experience in locations where fast mobile packet data is not available or as an offloading technology in locations where excess data traffic is alleviated from the packet data network.

We have designed sustainable cost-efficient radio access networks, which aim to minimise the impact of network infrastructure on the environment by utilising extended cell features that require fewer base stations per cell, as well as technologies that conserve energy by operating at ambient temperatures without the need for air conditioning. Further savings are achieved by automatic shutting down of hardware during periods of low mobile traffic. We use common hardware technology platforms and have deployed over 45,000 radio base stations, of which a high percentage are software definable in terms of their assortment of 2G, 3G and LTE capabilities, thereby minimising disruptions to subscribers during network upgrades. Co-locating radio base stations for 2G, 3G and LTE capability, reduces capital expenditure and operating expenditure, as well as power consumption and the physical impact on the environment.

Our radio resource control feature enables our 2G, 3G and LTE networks to operate as a common resource, allowing traffic to be switched between networks to provide greater network availability and higher data transmission rates to our subscribers. In the event that users find themselves outside LTE coverage, the network automatically switches users to the 3G network and ultimately down to 2G if 3G coverage is insufficient.

Fixed-line and internet networks In order to ensure fast connectivity between our base stations and the rest of the network, we have installed extensive optical fibre. There are multiple long distance fibre connections between cities in various operations. Through our ICT enterprise business, further fibre installations are built to connect corporations, business campuses and office parks. The latest initiatives see fibre being installed to the home in order to provide internet protocol television, voice, data and several other value add-ons such as home automation.

We have also deployed a state-of-the-art next generation multiprotocol label switching (“MPLS”) network that ensures improved quality of service, high reliability, simplified operation and most importantly provides low latency scalable networks. Our MPLS network delivers dynamic, secured and future-ready services with both centralised and de-centralised network applications, both locally and internationally.

Satellite connectivity Our satellite capacity is procured through our Global Carrier Services capability based in Dubai, which provides mainly C-band capacity. In order to augment satellite coverage, large operations within the Group may procure capacity directly from satellite capacity providers. The satellite capacity is used for international voice and data transport and also aims to provide backup in case of submarine or terrestrial transmission failures.

Towers Infrastructure Towers comprise the non-active components of a wireless telecommunications infrastructure network, including the tower structure, shelters, industrial air conditioners, diesel generators, batteries, switch mode power supplies and voltage stabilisers.

In our drive to transform the company’s operating model and outsource the management of non-core passive infrastructure to experienced independent companies, we have entered into several sale and lease back agreements in respect of our tower infrastructure. To date, we have entered into such agreements with independent tower companies IHS, in respect of towers in Rwanda, Zambia, Ivory Coast and Cameroon, and America Tower Corporation in respect of towers in Ghana and Uganda, the latter being associates in which we have retained a minority interest.

104 In 2015 we completed the transfer of the tower portfolio of MTN Nigeria (approximately 9,000 towers) to a new company jointly owned by us and IHS over which IHS has full operational control. The transaction is driving network efficiencies for MTN Nigeria and is expected to further expand service offerings and data capacity. IHS is the biggest single country tower company in Africa.

We continue to explore other similar opportunities across the Group on a country by country basis.

Network Partners Overview Our Group Chief Technology Officer is responsible for ensuring a standardised approach across our operations, from the type of technology we employ to the procurement of such technology.

We generally outsource the management and operation of our infrastructure to the original equipment manufacturer (“OEM”) or technology provider, who is contractually obligated to meet specified performance targets as well as to scale their operations within defined parameters to meet our growth strategy. The management service contracts with our OEMs and technology providers are typically for durations of three to five years, and we have the ability to terminate based on their performance. Our partners are managed by our operating companies with ultimate review by Group Management.

Equipment and Technology Partners We have forged long term strategic partnerships in all areas including equipment and technology with companies at the forefront of technologies that are crucial to our business. We believe that our business models have enabled us to partner with global leaders who share our objective of co-creating innovative and tailor made solutions for the markets in which we operate.

Telemedia Partners For telemedia services in the markets in which we operate (e.g. fixed-line broadband and telephone), we have partnered with prominent international technology companies.

IT Partners We have maintained a strategic partnership with several organisations for our business and enterprise IT systems, including Oracle, Microsoft, Cisco, IBM and HP, amongst others.

Customer Care Partners Our customer care partners help us to provide a strong customer experience. Our customer care partners include Technotree, Jamcracker and Comviva, amongst others. Technotree provides us with innovative convergent billing, customer management and management dashboard solutions including the creation of a customer management platform that is able to fully service convergent products and services; Jamcracker provides us with solutions that enable us to manage and deliver our own multi-cloud services and Comviva enables us to manage, optimise and monetise our data infrastructure.

Content and Value Added Partners We work with globally recognised organisations such as Adaptive Mobile, OnMobile and IntegraT, providing each of our customers with a unique experience in VAS such as caller ring back tone, music on demand, email services and other applications. We have revenue sharing agreements in place with most of these content partners.

We also have partnerships with independent developers and Rocket Internet (one of the world’s largest e-commerce focused venture capital firms). We believe these relationships will be valuable as we continue to increase our presence in the digital space.

Towers Infrastructure Partners Our tower partners, such as American Tower Corporation and IHS, provide and maintain site infrastructure such as towers, shelters and other equipment needed to operate our mobile network. We have sold our tower infrastructure in Ghana and Uganda to ATC and in Nigeria, Ivory Coast, Cameroon, Rwanda and Zambia to IHS.

105 We have subsequently entered into lease back agreements in respect of these towers and have ownership interests under joint venture agreements with ATC and IHS. These sale and lease back agreements are in line with our asset optimisation strategy.

Information Technology Each of our operating companies maintains its own information technology (“IT”) systems. Our IT systems are comparable to those typically used by other telecommunications service providers, and comprise operational support systems (which support our telecommunications network and include processes such as maintaining network inventory, provisioning services, configuring network components and managing faults) and business support systems (which support processes related to our customers, such as taking orders, processing bills, collecting payments and customer relationship management). We believe that our existing IT systems are adequate for the purposes of our existing business.

Each of our operating companies maintains its own disaster recovery systems in order to ensure the recovery and continuation of its technology infrastructure following potential disruptive events, such as natural disaster or terrorism. Each operating company has procedures in place to either back up critical data on-site and automatically copy this backed-up data to off-site storage, or to back-up and replicate critical data directly to off- site storage. Each of our operating companies reports to the Group on a quarterly basis. We have not had a serious disaster issue to date.

Insurance Our operations are subject to a wide variety of operational and other risks, including accidents, fire and weather related hazards. We maintain various types of insurance policies customary in the industry in which we operate to protect against the financial impact arising from unexpected events when the amount of the potential loss would be significant enough to prevent normal business operations. We also have insurance coverage in respect of 80% to 90% of the political violence and political risks to which our operations are exposed. However, in certain contexts we are unable to fully insure against political violence and political risk to the extent that such coverage is unavailable due to market factors. For example, we have been unable to fully secure insurance coverage in respect of our exposure to political risk in Nigeria due to market capacity limitations and in respect of our exposure to political violence in Iran, Sudan, South Sudan and Syria where insurers have exited due to sanctions compliance requirements. In order to counter such lack of supply, we have established a captive insurance company with the specific objective of insuring risks which the insurance market will not readily cover or will not do so at a cost acceptable to us.

We cannot give any assurance that our insurance policies will be adequate to protect us from all expenses related to potential future claims for personal injury, property damage and consequential business interruption losses or that these levels of insurance will be available in the future at commercially reasonable prices. However, we believe that our existing insurance is sufficient in light of identified risks and is consistent with industry standards based on the countries in which we operate and the scope of our operations. See “Risk Factors—Risks Relating to the Telecommunications Industry—Our operations could be adversely affected by natural disasters or other catastrophic events beyond our control”.

Material Property/Real Estate The property, plant and equipment that we own includes administrative and commercial office buildings, business centres and technical properties, which consist of switching, international exchanges, transmission equipment, mobile base stations, data centres, cabling and other technical ancillaries. Other properties include stores and warehouses and technical workshops.

106 The table below sets forth details of property and real estate owned or leased by us as at 30 June 2016 that is considered to be material and/or integral to our business.

Property Owned or Leased Description Golden Plaza Falomo, Lagos, Leased MTN Nigeria Head Office Nigeria 6th Avenue, Ambassadorial Leased MTN Ghana Head Office Enclave, Ridge – Accra MTN Innovation Centre Owned MTN Group and MTN South Africa Head 14th Ave Fairland, Roodepoort, Office 2195 South Africa

Intellectual Property We do not own any material intellectual property rights apart from various trademarks and the licences required to operate our business (as discussed in more detail below).

Licences Our operating licences specify the services we can offer and the frequency spectrum we can utilise for wireless operations. As of 30 June 2016, we held over 50 licences across various frequencies and across the countries we operate in. These licences are subject to review, local law ownership requirements, interpretation, modification or termination by the relevant authorities. The operating licences are generally renewable upon expiration. We aim to ensure that we have the appropriate amount of spectrum and the required licences to meet our strategic objectives over the long term. However, there is no assurance that our licences will be renewed or that any renewal on new terms will be commercially acceptable. See “Risk Factors—Risks Relating to the Telecommunications Industry—Our telecommunications licences, permits and frequency allocations are subject to finite terms, ongoing review and/or periodic renewal, any of which may result in modification or early termination. In addition, our inability to obtain new licences and permits could adversely affect our business”.

The table below sets forth details of material licences held by the Group as at 31 December 2015:

Licence agreements Type Granted/renewed Term Key Markets South Africa ECS licence 15/01/2009 15 years ECNS licence 15/01/2009 20 years 900MHz 1 800MHz 1/01/2010 Renewable annually 3G Nigeria 1 800MHz 03/11/2015 5 years 900MHz 03/11/2015 5 years 3G spectrum licence 01/05/2007 15 years Unified access licence (including international gateway) 01/09/2006 15 years WACS 01/01/2010 20 years WiMax, 3.5GHz spectrum 2007 Renewable annually Digital Terrestrial TV Broadcasting licence 12/08/2015 10 years 800MHz 01/01/2015 10 years Microwave spectrum 8GHz – 26GHz 2001 Renewable annually Large Opcos Ghana 900 MHz 1 800MHz 02/12/2004 15 years 3G International Gateway(1) 23/01/2009 15 years Fixed access service of 08/11/2014 5 years unified access 06/07/2015 4 years

107 Licence agreements Type Granted/renewed Term Cameroon 2G 3G 15/02/2015 15 years 4G Ivory Coast 900MHz 02/04/1996 20 years 1 800MHz 02/04/1996 20 years WiMax 2.5 – 3.5GHz 31/07/2002 20 years 3G/UMTS 1.9/2.1GHz 31/05/2012 10 years Universal networks 04/01/2016 17 years Uganda 900MHz 15/04/1998 20 years 1 800MHz Key markets Syria 900MHz 29/06/2002 15 years 1 800 MHz 22/03/2007 10 years 3G 29/04/2009 8 years ISP 2009 Renewable annually Freehold licence 01/01/2015 20 years Sudan 2G+3G Transmission VSAT gateway 25/10/2003 20 years VSAT hub VSAT terminal Small opcos Benin 900MHz 19/10/2007 25 years 1 800 MHz 19/10/2007 25 years Universal licence 19/03/2012 20 years Guinea-Conakry 900MHz 31/08/2005 18 years 1 800MHz 31/08/2005 18 years 3G 14/08/2013 10 years WiMax 04/08/2014 5 years Congo-Brazzaville 900MHz 25/11/2011 15 years 1 800MHz 25/11/2011 15 years International gateway 05/02/2002 15 years Optical fibre licence 02/04/2010 15 years 3G 25/11/2011 17 years 2G 25/11/2011 15 years International gateway by optical fibre 03/06/2013 10 years Liberia Universal Telecommunication licence 04/08/2015 15 years Guinea-Bissau 900MHz 23/05/2014 10 years 1 800MHz 23/05/2014 10 years 3G 17/07/2015 10 years 4G 17/07/2015 10 years Afghanistan 3G unified licence 01/07/2012 15 years Yemen 900MHz 31/07/2000 15 years 1 800MHz 17/02/2008 15 years Cyprus 900MHz 1 800MHz 01/12/2003 20 years 4G (LTE) 2 100MHz Rwanda GSM 01/07/2008 13 years SNO 30/06/2006 15 years Zambia 900MHz 1 800MHz 23/09/2010 15 years 2 100 MHz (1) Licence renewal confirmed in 2015.

108 Employees As at 30 June 2016, we had 20,376 employees. The following table sets forth a breakdown of employees by country as at 30 June 2016, 31 December 2015, 2014 and 2013: As at As at As at As at 31 December 2013 31 December 2014 31 December 2015 30 June 2016 South Africa ...... 7,378 5,787 5,549 5,186 Nigeria ...... 3,286 2,402 2,215 2,073 Ghana ...... 1,450 2,495 2,135 1,010 Iran ...... 2,702 1,213 996 2,194 Ivory Coast ...... 867 814 795 745 Cameroon ...... 903 1,248 1,135 800 Uganda ...... 1,305 817 838 1,074 Syria ...... 1,092 988 987 993 Sudan ...... 627 563 549 532 Other(1) ...... 5,814 5,877 5,885 5,769 Total ...... 25,424 22,204 21,084 20,376

(1) “Other” includes Afghanistan, Benin, Botswana, Congo-Brazzaville, Cyprus, Guinea-Bissau, Guinea-Conakry, Liberia, Rwanda, South Sudan, Swaziland, Yemen and Zambia.

Business Risk Management We believe that business risk management is fundamental to effective corporate governance and the development of sustainable business. Our business risk management function encompasses: • general risk management; • business continuity and crisis risk management; • information and technology governance; • fraud risk management; and • internal audit.

Risk management MTN Group is listed on the Johannesburg Stock Exchange. As a listed company, we are required to comply with the requisite listing, disclosure and corporate governance requirements. Our business risk management division follows a combined assurance methodology in line with the requirements of the King III Code of Corporate Governance (“King III”), the world’s first corporate governance code to explicitly address IT governance. Our objective is to instil greater risk awareness throughout the organisation, standardise the approach to risk management and to embed the process into the day-to-day running of the business. We have adopted a robust risk management framework that consists of proactively identifying and understanding the factors and events that may impact the achievement of our strategic and business priorities, then managing them through effective mitigating plans, internal controls and monitoring and reporting processes.

Business continuity and crisis risk management We are committed to ensuring that critical services are maintained without interruption or disruption, and in the event of a catastrophic event, that critical services are resumed at the earliest opportunity. We consider disaster recovery and business continuity management (“BCM”) to be vital components of risk management and corporate governance. BCM establishes a strategic and operational framework that: • proactively improves our resilience against disruption to our key objectives being achieved; • provides a rehearsed method of restoring our ability to supply key products and deliver critical services to an agreed level within a specified time after a disruption occurs; and • delivers a proven capability to manage disruptions and protect our reputation and brand.

Information and technology governance We have established various positions, processes and supporting governance structures to help us meet our goal of implementing King III across our business. For example, a Group Information Security Officer has been

109 appointed and charged with the responsibility of managing and monitoring our Group-wide information security programme. This programme is based on global leading industry practices and standards such as ISO/IEC 27001:2005.

Risk management practices at all levels within our business will continue to help us ensure that technology governance is fully integrated across all of our operations, and that current and emerging information security risks, such as cyber security and data privacy, are proactively addressed.

Fraud Risk Management Our fraud risk management strategy is based on three core elements: prevention, detection and response.

The proactive management of fraud risk is embedded within our enterprise risk management processes and also informs the residual rating and consideration of risk on a principal risk level. Our operating companies are required to identify, monitor, mitigate and report on significant fraud risks on a continual basis. All our stakeholders have access to a third party website and email address through which they can report fraud and corruption, and 20 of our operations have an established and dedicated whistleblowing line.

In 2015, we received 128 whistleblowing reports about fraud and other administrative matters. Our fraud risk management framework ensures that every whistleblowing report is reviewed, investigated and reported to the audit committee, where applicable and relevant. Current and emerging fraud risks such as mobile financial services, cybercrime and procurement fraud continue to be assessed and monitored.

Internal audit teams Our internal audit teams’ role is that of an objective and independent value-adding assurance provider to our executive committee and Board. The independence of our internal audit teams is explicitly stated within the business risk management charter. The internal audit teams embrace a risk-based auditing approach in line with King III. The remit of our internal audit teams extends to all operations and all high-risk processes in line with our internal audit methodology. The internal audit teams consider the risks that may hamper the achievement of strategic priorities and further determines the effectiveness of our internal control and risk management processes.

In 2015, more than 165,000 hours were spent on internal audit and for 2016 we expect that internal audit activities will exceed 130,000 hours.

Litigation, Arbitration and Disputes We are, from time to time, party to various legal actions arising in the ordinary course of our business. We do not believe that the resolution of these legal actions will, individually or in the aggregate, have a material adverse effect on our financial condition or results of operations, except as noted below.

Turkcell In early 2012, Turkcell Iletisim Hizmetleri AS and East Asian Consortium B.V (the “Plaintiffs”) filed a lawsuit against us and others in a US federal court. The lawsuit was based on claims related to Turkcell subsidiary East Asian Consortium B.V’s unsuccessful effort to obtain the second GSM licence in Iran during 2005 which we were awarded. Turkcell’s allegations were investigated by a special committee appointed by our Board (the Hoffmann Committee) and its findings reported by MTN to stakeholders in February 2013. After a thorough examination of Turkcell’s allegations and consideration of the available evidence, the Hoffmann Committee concluded that the allegations were unfounded. MTN will continue to vigorously defend any proceedings instituted by Turkcell in respect of such matters. Turkcell withdrew its claims in the US proceedings on 1 May 2013.

In November 2013, the Plaintiffs filed a lawsuit against us and others in the South Gauteng High Court of South Africa, seeking damages of approximately US$4.2 billion plus interest. The Plaintiffs’ claim arose from substantially the same allegations on which it founded US proceedings against MTN in early 2012.

In 2015 MTN succeeded in its objection to their claim forcing Turkcell to amend their summons meaning that their case has had to be founded anew. In 2016, Turkcell refiled their case. MTN is considering their new stated case.

110 Nigerian Regulatory Fine In October 2015, the NCC imposed a N1.040 trillion fine on MTN Nigeria (equivalent to approximately US$5.2 billion using the exchange rate prevailing at the time the fine was initially imposed), which was subsequently reduced to N780 billion. The fine related to the late disconnection of the 5.1 million subscribers whose documents were considered incomplete following the Nigerian regulator’s introduction of a SIM registration process.

On 10 June 2016, we announced that we have achieved a resolution with the Nigerian authorities and MTN Nigeria has agreed to pay a total cash amount of N330 billion over three years (as at 10 June 2016, the equivalent of US$1.671 billion at the official exchange rate prevailing at the time) to the Federal Government of Nigeria in full and final settlement of the matter payable, as follows: • Naira 50 billion (paid on 24 February 2016) • Naira 30 billion (paid on 24 June 2016) • Naira 30 billion on 31 March 2017; • Naira 55 billion on 31 March 2018; • Naira 55 billion on 31 December 2018; • Naira 55 billion on 31 March 2019; and • Naira 55 billion on 31 May 2019.

The payment of the Nigerian Regulatory Fine is expected to be funded through the operating cash flows of MTN Nigeria. Accordingly, we expect the amount of retained earnings available for dividends from MTN Nigeria to be reduced.

In addition to the monetary settlement set out above: • MTN Nigeria has agreed to subscribe to the voluntary observance of the Code of Corporate Governance for the Telecommunications Industry and will ensure compulsory compliance therewith; • MTN Nigeria has undertaken to take immediate steps to ensure the listing of its shares on the Nigerian Stock Exchange as soon as commercially and legally possible; and • MTN Nigeria shall always ensure full compliance with its license terms and conditions as issued by the NCC.

In December 2015 we announced several changes to the Group’s operating structure, intended to strengthen the Group’s oversight over its operations. The new operating structure reintroduces the role of Chief Operating Officer and clusters operations according to region with Vice Presidents of South and East Africa, Middle East and North Africa and West and Central Africa being appointed.

We have recently engaged external consultants to advise on, among other things, corporate compliance and risk management with respect to our operating companies and have undertaken remedial actions to strengthen our risk elevation procedures and corporate compliance functions, including anti-money laundering, anti-bribery and corruption and sanctions compliance. See “Risk Factors—Risk Factors Relating to Our Business—We maintain and regularly review our internal controls over financial reporting, risk elevation and corporate compliance, but these controls cannot eliminate the risk of errors or omissions in such reporting or compliance with laws.”

We have been informed by the Johannesburg Stock Exchange of a probable investigation regarding our disclosure obligations under the listing rules in connection with the Nigerian Regulatory Fine. We have formally responded and the Johannesburg Stock Exchange is evaluating our response.

COSON Copyright Claim The Copyright Society of Nigeria (“COSON”) has filed a claim for N16 billion (US$56.6 million at 30 June 2016 exchange rate) for infringement of copyright by MTN Nigeria. It is also seeking injunctions against MTN Nigeria to prevent it from continuing to use the disputed copyrights. MTN Nigeria has since filed its notice to defend the action.

ICASA Termination Rates On 4 February 2014, the ICASA published the Call Termination Regulation (the “Regulation”) and mobile termination rates. On 12 February 2014, we initiated legal action against the ICASA as we believed that the Regulation was arbitrary and unlawful. On 31 March 2014, the South Gauteng High Court of South Africa

111 granted a final order in favour of ourselves and Vodacom (who also brought legal action against the ICASA). The order confirmed the unlawfulness of the Regulation. However, the judge ruled that the order be suspended for six months which resulted in the call termination rates from the Regulation being applied between 1 April 2014 and 30 September 2014. This required us to pay a higher termination rate to our competitor Cell-C (R0.44 per minute), than Cell-C was required to pay us (R0.20 per minute).

ICASA subsequently engaged in a review process, in which MTN participated, which culminated in the published final Call Termination Regulations on 30 September 2014. The regulations gave a 3 year period during which call termination rates must decline from R0.20 to R0.13 per minute starting in October 2014. Call termination rates have declined in the subsequent period. However, we are still required to pay a higher termination rate to Cell-C (R0.24 per minute) than Cell-C is required to pay us (R0.16 per minute). The next decrease in call termination rates is expected in October 2016.

Environmental Matters We have not been subject to any material fines or regulatory action involving non-compliance with environmental regulations in any of the jurisdictions in which we operate. We are not aware of any non-compliance in any material respect with the relevant environmental regulations.

Corporate Social Responsibility (“CSR”) Since our establishment in 1994, we have recognised and embraced society’s expectation that we provide a positive impact within the communities in which we operate. As we have grown, society’s expectations have understandably grown as well. As a result, we have established MTN Foundations in 15 of the countries in which we operate. Our CSR strategy, which encompasses education, health, economic empowerment and national priority areas, is implemented through our MTN Foundations. In 2015, we invested approximately R335 million across our CSR programmes.

Education A lack of access to education is one of the challenges confronting the markets in which we do business. As a result, we have chosen education as our primary CSR focus area in an effort to improve communities’ access to high-quality education and help young people to work towards becoming economically active citizens. In 2015 alone we provided over 500 schools with learning materials and provided over 3,500 scholarships. We also established multi-media labs and distributed other educational technological material. Through various education initiatives, we believe we have impacted the lives of our 200,000 beneficiaries.

In 2015, we invested R155 million in our CSR education programmes. Our education programmes received the majority of our CSR investment spend.

Health The well-being of the communities in which we operate is important to us. Through our health portfolio programmes, we aim to ensure that people have access to adequate medical and healthcare facilities.

Economic Empowerment We aim to make a marked contribution to the development of entrepreneurs and small businesses in our markets through entrepreneurial skills development and funding.

Black Economic Empowerment In 2010, we entered into a broad-based black economic empowerment (“B-BBEE”) transaction pursuant to which MTN Zakhele (RF) Limited (“MTN Zakhele”), an investment company, was formed. MTN Zakhele, which owns approximately 4% of the issued share capital of MTN Group Limited, reaches maturity on 24 November 2016 and is required to settle all outstanding third party funding obligations at that time, with the residual amount being distributed to its shareholders. On 22 August 2016, we announced our intention to implement a new BEE transaction, MTN Zakhele Futhi, which includes a reinvestment option for current MTN Zakhele shareholders.

National Priority Areas (“NPA”) We operate in countries that cut across a broad developmental spectrum and comprise of different cultures, religions and socio-economic backgrounds. As a result, we aim to identify NPAs, or specific national needs in the countries in which we operate, that we can help to address through development and support initiatives.

112 MANAGEMENT

Board of Directors The Board of MTN Group currently consists of 13 members. Eleven members of our Board are independent non- executive directors.

Our Board retains full and effective control over the Group and is responsible, among other things, for the adoption of strategic plans, the monitoring of operational performance and management and the development of appropriate and effective risk management policies and processes. The full extent of the Board’s responsibilities is contained in an approved board charter which outlines the mandate of the directors.

The address of the Board is MTN Group Limited, Innovation Centre, 216 14th Avenue, Fairland, Roodepoort, 2195, South Africa.

The table below sets forth certain information with respect to the current members of our Board as at the date of this Offering Circular.

Name Age Position Appointed Mr. Phuthuma Nhleko(1) ...... 55 Executive Chairman of the Board ...... 2015 Mr. Paul Hanratty ...... 55 Member of the Board; independent non- executive director ...... 2016 Mr. Alan Harper ...... 59 Member of the Board; independent non- executive director ...... 2010 Ms. Koosum Kalyan ...... 61 Member of the Board; independent non- executive director ...... 2006 Mr. Shagyan Kheradpir ...... 55 Member of the Board; independent non- executive director ...... 2015 Mr. Peter Mageza ...... 61 Member of the Board; independent non- executive director ...... 2010 Ms. Dawn Marole ...... 56 Member of the Board; independent non- executive director ...... 2010 Mr. Azmi Mikati ...... 43 Member of the Board; non-executive director ...... 2006 Mr. Stan Miller ...... 58 Member of the Board; independent non- executive director ...... 2016 Ms. Christine Ramon ...... 48 Member of the Board; independent non- executive director ...... 2014 Mr. Nkululeko Sowasi ...... 53 Member of the Board; independent non- executive director ...... 2016 Mr. Alan van Biljon ...... 68 Member of the Board; independent non- executive director ...... 2002 Mr. Jeff van Rooyen ...... 66 Member of the Board; independent non- executive director ...... 2006 (1) Mr. Nhleko will serve as Executive Chairman until Mr. Rob Shuter assumes the position in 2017.

Mr. Phuthuma Nhleko was appointed the Chairman of our Board and a non-executive director in 2013. He agreed to take up the post of executive Chairman following the resignation of the Group CEO in late 2015 until Rob Shuter can take up the position in 2017. He is also the chairman of various holding companies in our Group, as well as the chairman of the Pembani Group and a director of Rapid African Energy, Afrisam (South Africa) (Pty) Limited and Opiconsivia Investments 230 (Pty) Limited. Mr. Nhleko previously served as Chairman of our Board and non-executive director from 2001 to 2002, and as Group president, Chief Executive Officer and executive director from 2002 until 2011. He previously served as a director of Johnic Holdings, Nedcor, Bidvest, Tsogo Sun KwaZulu-Natal, Alexander Forbes, BP plc and Anglo American plc. Mr. Nhleko holds a BSc in civil engineering from Ohio State University and an MBA in finance from Atlanta University.

113 Mr. Paul Hanratty is an independent non-executive director on our Board. He is a Fellow of the Institute of Actuaries and served as CEO of Old Mutual South Africa prior to 2009 when he became CEO of Old Mutual Long Term Savings in London and subsequently an Executive Director of Old Mutual plc. He has chaired the Boards of insurance, asset management and banking operations in the UK, Scandinavia, emerging markets and South Africa for the Old Mutual Group. Mr. Hanratty holds a B.Bus.Sc (Hons.), Fellow of Institute of Actuaries (FIA), Advanced Management Programme Harvard.

Mr. Alan Harper is an independent non-executive director on our Board. He is the chairman of the Board’s remuneration and human resources committee and a member of the Board’s nominations committee. He is also a director of various holding companies in our Group, as well as a director of Azuri Technologies Limited and Gigabit Fibre Limited. Mr. Harper holds a BA (Hons).

Ms. Koosum Kalyan is an independent non-executive director on our Board. She is also the chairman of the Board’s social and ethics committee and a member of the Board’s risk management, compliance and corporate governance committee. Ms. Kalyan is also a director of various holding companies in our Group, non-executive chairman of Edgo Merap, director of AOS Orwell Energy, Aker Solutions, director at Anglo American South Africa and Petmin Mining and Member of the Thabo Mbeki Foundation Advisory Council. Ms. Kalyan holds a BCom (Law) (Hons) Economics, Senior Executive Management Programme (London Business School).

Mr. Shagyan Kheradpir is an independent non-executive director on our Board. He is a member of the Board’s risk management and compliance and corporate governance committees. He is currently the CEO and Chairman of Coriant International Group, a global optical networking company. Mr Kheradpir joined Coriant after having worked closely with the senior management team since earlier this year in the role of Operating Executive to Marlin Equity Partners. He is the former CEO of Juniper Networks. Prior to joining Juniper in 2014, he spent 3 years as the Group Chief Operating & Technology Officer at Barclays Bank PLC in the United Kingdom. Mr Kheradpir also spent in excess of 10 years at Verizon Communications until 2011 where he held the position of EVP & Chief Information & Technology Officer. Mr Kheradpir holds a Bachelors, Masters & Doctorate in Electrical Engineering.

Mr. Peter Mageza is an independent non-executive director on our Board. He is the Chairman of the Board’s risk management, compliance and corporate governance committee, a member of the audit committee; as well as the social and ethics committee. Mr. Mageza is also a director of various companies in our Group, as well as a director of Remgro Limited, Sappi Limited, RCL Group, Eqstra Holdings Limited and Ethos Private Equity Limited. Mr. Mageza is a Fellow of the Association of Chartered Certified Accountants.

Ms. Dawn Marole is an independent non-executive director on our Board. She is a member of the Board’s risk management, compliance and corporate governance committee, as well as the Board’s social and ethics committee. Ms. Marole is also a director of various holding companies in our Group, as well as a director of The South African Post Office (SoC) Limited, Richards Bay Mining (Pty) Limited, Santam Limited and the Development Bank of Southern Africa. Ms. Marole holds a BCom (Acc), Dip Tertiary Education, MBA, Executive Leadership Development Programme.

Mr. Azmi Mikati is a non-executive director on our Board. He is a member of the Board’s nominations committee, audit committee and remuneration and human resources committee. He is also a director of various holding companies in our Group, as well as the CEO of the M1 Group Limited (an international investment group with a strong focus on the telecommunications industry), director of various companies in M1 Group and director of Orascom Construction Ltd. He also serves on the boards of the Children Cancer Centre, the International College and Columbia University Board of Visitors. Mr. Mikati has a BSc.

Mr. Stan Miller is an independent non-executive director on our Board and a member of the risk management, compliance and corporate governance committee. He is currently working with Len Blavatnik in London and Capital Group in New York. Mr. Miller is also an executive Chairman for MTS, the telecommunications conglomerate which covers investments in multiple emerging countries. Mr. Miller has extensive commercial experience, having spent nearly 20 years as a divisional Chief Executive with standalone responsibility, including as Chief Executive Officer of International for KPN. Mr. Miller has successfully expanded the KPN through a number of mobile virtual network operators. At KPN he was responsible for its mobile activities in Germany, Belgium and abroad. He also served as Chairman of E-Plus and BASE where he introduced a strategy that changed the business model, creating significant value for KPN’s shareholders. Before relocating from South Africa, Mr. Miller was part of the M-Net founding management team and then subsequently joined Nethold where he served in various senior management roles before becoming Chief Executive Officer.

114 Ms. Christine Ramon is an independent non-executive director on our Board and the chairman of the audit committee. She is a director of AngloGold Ashanti Limited, Lafarge and deputy chair of the Financial Reporting Standards Council of South Africa. Ms. Ramon holds a BCompt, BCompt (Hons), CA (SA).

Mr. Nkululeko Sowazi is an independent non-executive director on our Board and a member of the nominations committee and remuneration and human resources committee. He is also a director of various companies in the Actom Group. He serves as a Chairman of Home Loan Guarantee Company NP and Housing for HIV, Kagiso Tiso Holdings (Pty) Ltd, Tiso Investments Holdings (Pty) Ltd (RF) and a non-executive director of Idwala Industrial Holdings (Pty) Ltd, Grindrod Ltd, Vanguard Group Ltd, TIH Africa Ltd, SAI Holdings Ltd, Tiso Black star Group (Pty) Ltd and Mobius Motors Ltd. He holds a Masters degree.

Mr. Alan van Biljon is an independent non-executive director on our Board and a member of the Board’s nominations committee. He is also a director of various holding companies in our Group, a chairman and trustee of Standard Bank Group Retirement Fund and Liberty Group Pension and Provident Funds (withdrawn from Liberty Group on 31 March 2015). Mr. van Biljon holds a BCom, CA (SA), MBA.

Mr. Jeff van Rooyen is an independent non-executive director on our Board. He is a member of the Board’s remuneration and human resources committee; audit committee and social and ethics committee. Mr. van Rooyen is also a director of various holding companies in our Group, various companies in Uranus Group, Pick n Pay Stores Limited, Pick n Pay Holdings Limited, Exxaro Resources Limited and former chairman of Financial Reporting Standards Council of South Africa. Mr. van Rooyen has a BCom, BCompt (Hons), CA (SA).

Group Secretary The Group Secretary plays a key role in the continuing effectiveness of the Board. The Group Secretary ensures that all directors are provided with adequate guidance on governance and applicable laws. The Group Secretary further ensures that directors have full and timely access to information training that equips them with the tools required to effectively perform their duties and obligations. As at the date of this Offering Circular, the Group Secretary is Ms. Bongi Mtshali. Ms. Mtshali holds a Higher Diploma in Company Law from the University of the Witwatersrand and a Fellowship of the Institute of Chartered Secretaries.

Corporate Governance Our Board has six standing committees: the executive committee; the audit committee; the risk management, compliance and corporate governance committee; the nominations committee; the social and ethics committee; and the remuneration and human resources committee.

Executive Committee The executive committee consists of ten members. The primary objective of the executive committee is to facilitate the effective control of our operational activities. It is responsible for making recommendations to the Board on our policies and strategies and for monitoring their implementation in line with the Board’s mandate.

The table below sets forth certain information with respect to the current members of our executive committee as at the date of this Offering Circular.

Name Age Position Appointed Mr. Phuthuma Nhleko(1) ...... 55 Executive Chairman of the Board ...... 2015 Ms. Jyoti Desai ...... 58 Group Chief Operating Officer ...... 2009 Mr. Gunter Engling ...... 43 Acting Group Chief Financial Officer ...... 2016 Mr. Michael Fleischer ...... 55 Group Chief Legal Counsel ...... 2014 Mr. Ismail Jaroudi ...... 45 Group Vice President for the Middle East and North Africa ...... 2015 Mr. Ferdi Moolman ...... 52 Chief Executive Officer, MTN Nigeria ...... 2015 Mr. Paul Deon Norman ...... 50 Group Chief Human Resources and Corporate Affairs Officer ...... 1997 Mr. Mteto Nyati ...... 51 Chief Executive Officer, MTN South Africa . . . 2014 Mr. Karl Toriola ...... 44 Group Vice President for the West and Central Africa ...... 2015 Mr. Stephen van Coller ...... 50 Group Vice President for M&A and Strategy . . . 2016 (1) Mr. Nhleko will serve this role until Mr. Rob Shuter assumes the role of Group President and Chief Executive Officer in 2017.

115 Ms. Jyoti Desai is the Group Chief Operating Officer. She is also a director of various companies in our Group. Ms. Desai previously worked at The Standard Bank of South Africa Limited and Telkom before joining MTN Nigeria as Chief Information Officer. She also served as Chief Operations Officer of Irancell. Ms. Desai holds a BA (Honours) in Psychology and a BCom in Law from the University of South Africa.

Mr. Gunter Engling has assumed the position of Acting Group Chief Financial Officer until a permanent CFO is appointed. Mr. Engling is a chartered accountant and was previously the CEO of MTN Rwanda. Mr. Engling has been at MTN for almost 13 years, having held many senior positions in MTN, including Group Executive Finance reporting to the Group CFO, General Manager Finance of MTN Nigeria and CFO of MTN Ghana. Mr. Engling has extensive knowledge and understanding of MTN Group’s financial matters, workings and stewardship. Mr. Engling boasts substantial financial and audit management experience in the media and entertainment, telecommunications and technology industries. Before moving to MTN, he worked at PricewaterhouseCoopers (PwC), gaining experience in Amsterdam, Saudi Arabia and South Africa. He holds an Honours Degree in Accounting from the University of Stellenbosch and is a qualified Chartered Accountant.

Mr. Michael Fleischer is the Group Chief Legal Counsel. He was previously a partner at the law firm of Webber Wentzel Bowens and then served as general counsel and executive vice president of Gold Fields Limited. Mr. Fleischer was admitted as an attorney of the High Court of South Africa in 1991. He has a Bachelor Procurationis from the University of the Witwatersrand and an Advanced Taxation Certificate from the University of South Africa.

Mr. Ismail Jaroudi is the Group Vice President for the Middle East and North Africa. He is also a director of various companies in our Group. Mr. Jaroudi was CEO of MTN Syria from 2006 until his appointment as Group vice president for MENA. Prior to this, he held senior operational roles for Investcom’s subsidiaries across the Middle East and North Africa.

Mr. Ferdi Moolman is the Chief Executive Officer of MTN Nigeria. He is also a director of various companies in our Group. Mr. Moolman joined MTN Nigeria in 2003 as a senior manager: financial operations. He was previously COO at Irancell and most recently CFO at MTN Nigeria.

Mr. Paul Deon Norman serves as Group Chief Human Resources and Corporate Affairs Officer at MTN Group. He has received several awards for his achievements, including HR Practitioner of the Year from the Institute of People Management South Africa in 2003 and a Lifetime Achievement Award from the South African Board for People Practices in 2012. He holds a B.A. and M.A. in Psychology from Rhodes University in Grahamstown, South Africa, as well as an Executive MBA from the Institute for Development Management in Switzerland. He is a registered psychologist, and he has also participated in the Executive Development Program at the Wits Business School in Johannesburg, South Africa.

Mr. Mteto Nyati is the Chief Executive Officer, MTN South Africa. He is a director of various companies in our Group and was previously the Group Enterprise Officer from October 2015 to June 2015. He is also a Director of Christel House. Mr. Nyati has previously held various directorships including serving on the AdvTech Board as well as on the Board of the University of Pretoria Centre for Responsible Leadership. Mr. Nyati joined MTN from Microsoft where he was general manager for the Middle East and Africa emerging regions. Prior to that he was the managing director of Microsoft South Africa for six years. He also spent 12 years at IBM where he held a number of senior executive roles.

Mr. Karl Toriola is the Group Vice President for the West and Central Africa. Mr. Toriola has been at MTN for 10 years, having held senior operational roles at MTN Group and MTN Iran and most recently was the Group Operations Executive overseeing the 12 Tier 3 Operations. He was formerly also the Chief Technology Officer at MTN Nigeria and CEO at MTN Cameroon. He is also a director of various companies and a member of various board committees in our Group and a Non-executive Director of American Towers Uganda since 2013. Mr. Toriola holds a BSc in Electronics and Electrical Engineering from University of Ife and an MSc in Communication Systems from University of Wales, Swansea, UK.

Mr. Stephen van Coller is the Group Vice President for M&A and Strategy. Mr. van Coller previously held the position of CEO of the corporate and investment banking unit of Barclays Africa. Prior to joining Barclays Africa, he served as managing director at the Johannesburg-based investment banking unit of Deutsche Bank. He is a chartered accountant and holds a B.Com (Hons) from the University of Stellenbosch and a Higher Diploma in Accounting from the University of KwaZulu-Natal.

116 Audit committee The audit committee consists of four members. The primary objective of the audit committee is to assist the Board in discharging its duties relating to safeguarding the assets of the Group, and monitoring the operations, financial systems and control processes including internal financial controls, and the preparation of financial statements and related financial reporting in compliance with all applicable legal requirements and accounting safeguards.

The members of the audit committee are: KC Ramon (Chairman), NP Mageza, J van Rooyen and Azmi Mikati.

Risk management, compliance and corporate governance committee The risk management, compliance and corporate governance committee consists of five members. The primary objective of the risk management, compliance and corporate governance committee is to improve the efficiency of the Board and assist it in discharging its duties which include: (i) identifying, considering and monitoring risks impacting our company; and (ii) responsibility for the sustainability framework and sustainability reporting for our Group.

The members of the risk management, compliance and corporate governance committee are: NP Mageza (Chairman), KP Kalyan, S Kheradpir, SP Miller and MLD Marole.

Remuneration committee The remuneration committee consists of five members. The primary objective of the remuneration committee is to oversee the formulation of a remuneration policy to ensure that we attract, motivate and retain quality employees, directors and senior management committed to achieving the overall goals of the Group.

The members of the remuneration and human resources committee are: A Harper (Chairman), AT Mikati, PF Nhleko, J van Rooyen and N Sowazi.

Social and ethics committee The social and ethics committee consists of four members. The primary objective of the social and ethics committee is to oversee and monitor our role in partnership with other committees to ensure that our business is conducted in an ethical and properly-governed manner, and to develop or review policies, governance structures and existing practices.

The members of the social and ethics committee are: KP Kalyan (Chairman), NP Mageza, MLD Marole and J van Rooyen.

Nominations committee The nominations committee consists of five members. The primary objective of the nominations committee is to improve the efficiency of the Board in discharging its duties relating to the nomination of Board members and senior management.

The members of the nominations committee are: PF Nhleko (Chairman), A Harper, AT Mikati, AF van Biljon and N Sowazi.

Compensation The compensation paid or accrued to the directors and executive committee for the year ended 31 December 2015 was R198.7 million.

Conflicts of Interest There are no actual or potential conflicts of interest between the duties of the directors of the Board and senior executive management listed above or the directors of the Issuer or any of the Guarantors, to the Group, the Issuer or any Guarantor and his or her private interests or other duties.

None of the directors of the Issuer or of any Guarantor perform any activities outside of the Group that are significant with respect to the Issuer or the relevant Guarantor, respectively.

117 Independent Directors The boards of each of the Issuer and each Guarantor contain independent directors.

The tables below set out the directors for the Issuer and each of the Guarantors (other than MTN Group) as at the date of this Offering Circular.

Issuer

Name Business Address Mr. Paul Norman ...... Globefin Management Services Ltd, 1st Floor, Anglo- Mauritius House, Intendance Street, Port Louis, Mauritius Mr. Roshan Nathoo ...... Globefin Management Services Ltd, 1st Floor, Anglo- Mauritius House, Intendance Street, Port Louis, Mauritius Mr. Sivakumaren Mardemootoo ...... Globefin Management Services Ltd, 1st Floor, Anglo- Mauritius House, Intendance Street, Port Louis, Mauritius

MTN Mauritius

Name Business Address Mr. Paul Norman ...... Globefin Management Services Ltd, 1st Floor, Anglo- Mauritius House, Intendance Street, Port Louis, Mauritius Mr. Roshan Nathoo ...... Globefin Management Services Ltd, 1st Floor, Anglo- Mauritius House, Intendance Street, Port Louis, Mauritius Mr. Sivakumaren Mardemootoo ...... Globefin Management Services Ltd, 1st Floor, Anglo- Mauritius House, Intendance Street, Port Louis, Mauritius

MTN Holdings

Name Business Address Mr. Phuthuma Nhleko ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Paul Hanratty ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Alan Harper ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Koosum Kalyan ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Shagyan Kheradpir ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Peter Mageza ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Dawn Marole ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Azmi Mikati ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Stan Miller ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Christine Ramon ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Nkululeko Sowasi ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Alan van Biljon ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Jeff van Rooyen ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa

MTN International

Name Business Address Mr. Phuthuma Nhleko ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Paul Hanratty ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Alan Harper ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Koosum Kalyan ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Shagyan Kheradpir ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Peter Mageza ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Dawn Marole ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Azmi Mikati ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Stan Miller ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Christine Ramon ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Nkululeko Sowasi ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Alan van Biljon ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Jeff van Rooyen ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa

118 MTN South Africa

Name Business Address Mr. Phuthuma Nhleko ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Mike Bosman ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Jyoti Desai ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Shauket Fakie ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Mike Harper ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Trudy Makhaya ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Nosipho Molope ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Paul Norman ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Mteto Nyati ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Mr. Sandile Ntsele ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa Ms. Lerato Phalatse ...... 21614th Avenue, Fairland, Roodepoort, 2195, South Africa

119 RELATED PARTY TRANSACTIONS

In the ordinary course of our business, we enter into transactions, such as sales, asset purchases, rent and service transactions with our subsidiaries, joint ventures and associates and other entities in which we have a material interest. We believe that these transactions are entered into on an “arm’s-length” basis and their terms are no less favourable than those arranged with third parties.

Please see note 10 to our audited consolidated financial statements contained elsewhere in this Offering Circular for the year ended 31 December 2015 for further information on related party transactions determined in accordance with IFRS.

120 DESCRIPTION OF OTHER INDEBTEDNESS

The following summary of certain provisions of our credit arrangements and other indebtedness does not purport to be complete and is subject to, and qualified in its entirety by reference to, the underlying credit arrangements and other documentation. We utilise a variety of short-term and long term debt instruments.

Our principal sources of external financing include both secured and unsecured short-term as well as long term facilities (in Rand and other currencies). As at 30 June 2016, we had total debt of R81,947 million. Due to the international nature of our operations and the multitude of currencies in which we generate revenues and cash flows, a significant portion of our debt is denominated in currencies other than the South African Rand (e.g. US dollars or Nigerian naira for our operations in Nigeria).

Our long term funding strategy is to maximise funding at the operating company level without recourse to the Group and to upstream cash from the operating companies up to the Group.

The following table sets forth our material external indebtedness, excluding capital market indebtedness and short-term general borrowing facilities at the Group-level, as at 30 June 2016:

Outstanding Holding Company Debt Currency Facility size balance Tenor Facility type Maturity date MTN Holdings US$1 billion International Unsecured, Syndicated Revolving Credit Revolving Credit Facility ...... US$ 1,000,000,000 1,000,000,000 5 years Facility March 2019 Bilateral ZAR Term Unsecured, Bullet Term Loan ...... ZAR 2,000,000,000 2,000,000,000 3 years Loan May 2017 Bilateral ZAR Term Unsecured Term Loan Loan and Revolving and Revolving Credit Credit Facility ...... ZAR 3,000,000,000 3,000,000,000 3 years Facility December 2017 Unsecured, Syndicated Syndicated ZAR Term Term Loan and Loan and Revolving Revolving Credit Credit Facility ...... ZAR 7,500,000,000 7,500,000,000 5 years Facility February 2021 Unsecured, Bilateral Bilateral ZAR Revolving Revolving Credit Credit Facility ...... ZAR 3,500,000,000 3,500,000,000 5 years Facility February 2021 Unsecured, Bilateral Bilateral ZAR Revolving Revolving Credit Credit Facility ...... ZAR 3,000,000,000 3,000,000,000 5 years Facility February 2021

Operating Company Debt MTN Nigeria Communications Limited Local Syndicated Unsecured, Syndicated Facility ...... NGN 329,000,000,000 219,054,096,459 6.5 years Term Loan November 2019 International Syndicated Unsecured, Syndicated Facility ...... US$ 280,000,000 280,000,000 6 years Term Loan April 2019 KFW Bank SEK (Buyer’s Credit Unsecured, Buyers Facility) ...... US$ 300,000,000 182,000,000 6.2 years Credit Facility July 2019 Chinese Banks Syndicate (Buyer’s Credit Unsecured, Buyers Facility) ...... US$ 300,000,000 85,050,000 6.6 years Credit Facility December 2019

121 Subsequent to 30 June 2016, we have entered into new facilities. The following table sets forth our material external indebtedness that we have incurred as at 31 August 2016:

Outstanding Holding Company Debt Currency Facility size balance Tenor Facility type Maturity date MTN Holdings August 2021 5 years (Term (Term Facility); Unsecure, Facility); 3 years Term Loan and August 2019 Up to US$1 billion Credit Up to (Revolving Revolving (Revolving Facilities ...... US$ 1,000,000,000 300,000,000 Credit Facility) Credit Credit Facility) Unsecured, ZAR Term Loan ...... ZAR 1,500,000,000 1,500,000,000 5 years Term Loan August 2021 Unsecured ZAR Term Loan ...... ZAR 3,300,000,000 2,800,000,000 5 years Term Loan August 2021

US$1 Billion International Revolving Credit Facility On 28 March 2014, MTN Group and certain of its subsidiaries entered into a US$1 billion revolving credit facility agreement with a syndicate of international banks to be used for the refinancing of existing debt and the general corporate purposes of the Group. The members of the Group which are permitted to borrow loans under the US$1 billion revolving credit facility agreement are MTN Group, Mobile Telephone Networks Holdings Proprietary Limited, MTN International (Mauritius) Limited and MTN Treasury Limited. Our obligations under the US$1 billion revolving credit facility agreement are guaranteed by each such company and also by MTN International Proprietary Limited and MTN South Africa.

Loans drawn under the US$1 billion revolving credit facility bear interest at a rate equal to the aggregate of applicable LIBOR plus a margin of 1.10% per annum. The final maturity date under the US$1 billion revolving credit facility agreement is 28 March 2019, and the availability period for drawing loans under the US$1 billion revolving credit facility agreement expires one month prior to the final maturity date.

Each lender under the US$1 billion revolving credit facility agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

The US$1 billion revolving credit facility agreement contains customary positive and negative covenants, including restrictions, subject to certain exceptions, on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the US$1 billion revolving credit facility agreement requires MTN Group to maintain certain financial covenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, R14,689.5 million (the full US$1 billion), translated at the 30 June 2016 closing rate of US$1 =R14.6895 was outstanding under the US$1 billion international revolving credit facility agreement.

Up to US$1 Billion Credit Facilities On 25 August 2016, MTN Group and certain of its subsidiaries entered into an up to US$1 billion credit facilities agreement with a syndicate of international banks to be used for the working capital and general corporate purposes of the Group. The members of the Group which are permitted to borrow loans under the up to US$1 billion credit facilities agreement are MTN Group, Mobile Telephone Networks Holdings Limited and MTN International (Mauritius) Limited. Our obligations under the up to US$1 billion credit facilities agreement are guaranteed by each such company and also by MTN International Proprietary Limited and MTN South Africa.

The up to US$1 billion credit facilities agreement allows for the provision of a term facility (the Term Facility (US$656,250,000)) and a revolving credit facility (the Revolving Facility (US$218,750,000)). Loans drawn under the Term Facility bear interest at a rate equal to the aggregate of LIBOR plus a margin of 2.15% per annum. Loans drawn under the Revolving Facility bear interest at a rate equal to the aggregate of LIBOR plus a

122 margin of 1.75% per annum. If at any time MTN Group is assigned a long term corporate credit rating/corporate family rating (as applicable) higher than BB+ / Ba1 by at least one of Standard & Poor’s Rating Service and Moody’s Investor Services Limited, then the margin applicable to each of the Term Facility and the Revolving Facility will be reduced by 0.35%. The final maturity date of the Term Facility is 25 August 2021 and the final maturity date of the Revolving Facility is 25 August 2019. The availability period for drawing loans under the Term Facility expires 90 days after the date of the up to US$1 billion credit facilities agreement. The availability period for drawing loans under the Revolving Facility expires one month prior to the final maturity date for the Revolving Facility.

The up to US$1 billion credit facilities agreement contains a provision which allows a borrower, on not less than three days’ notice, to increase the size of the total commitments by an aggregate amount not exceeding US$125,000,000. Any such increase must be made on a pro rata basis between the Term Facility and the Revolving Facility. Such increase may either be provided by an existing lender under the up to US$1 billion credit facilities agreement, or alternatively by a bank, financial institution, trust, fund or other entity which is not already an existing lender, in which case such new lender will acquire rights and assume obligations as if it had been an existing lender.

Each lender under the up to US$1 billion credit facilities agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loan on 30 days’ notice following a change of control of MTN Group.

The up to US$1 billion credit facilities agreement contains customary positive and negative covenants, including restrictions, subject to certain exceptions, on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the up to US$1 billion credit facilities agreement requires MTN Group to maintain certain financial covenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 31 August 2016, US$300,000,000 was outstanding under the Term Facility and no loans were outstanding under the Revolving Facility.

R2 Billion Credit Facility On 30 May 2014, MTN Group and certain of its subsidiaries entered into a R2 billion credit facility with Sumitomo Mitsui Banking Corporation Europe Limited to be used for general corporate purposes of the Group, the financing of acquisitions and investments and the refinancing of existing debt. The members of the Group which are permitted to borrow loans under the R2 billion credit facility agreement are MTN Group, MTN Telephone Networks Holdings Proprietary Limited and MTN Treasury Limited. Our obligations under the R2 billion revolving credit facility agreement are guaranteed by each such company and also by MTN International Proprietary Limited, MTN International (Mauritius) Limited and MTN South Africa.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 1.10%. The final maturity date for any loans drawn under this facility is 30 May 2017.

The lender under the R2 billion credit facility agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

The R2 billion facility contains customary positive and negative covenants, including restrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R2 billion facilities agreement requires MTN Group to maintain certain financial covenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net

123 borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, the full R2 billion was outstanding under this facility.

R3 Billion Credit Facilities On 15 December 2014, MTN Group and certain of its subsidiaries entered into a R3 billion credit facilities agreement with The Standard Bank of South Africa Limited to be used for general corporate purposes of the Group, the financing of acquisitions and investments and the refinancing of existing debt. The members of the Group permitted to borrow loans under the R3 billion credit facilities agreement are MTN Group and MTN Treasury Limited. Our obligations under the R3 billion credit facilities agreement are guaranteed by Mobile Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa, MTN International (Mauritius) Limited and MTN Treasury Limited.

The credit facilities agreement allows for the provision of a term facility (Facility A (R1 billion)) and a revolving credit facility (Facility B (R2 billion)). Loans drawn under Facility A and Facility B bear interest at a rate equal to the aggregate of JIBAR plus a margin of 1.1%. The final maturity date for Facility A and Facility B is 15 December 2017. The availability period for drawing loans under Facility A expires 12 months after the date of the R3 billion credit facilities agreement. The availability period for drawing loans under Facility B expires 30 days prior to the final maturity date.

The lender under the R3 billion credit facilities agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

The R3 billion facilities agreement contains customary positive and negative covenants, including restrictions, subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R3 billion credit facilities agreement requires MTN Group to maintain certain financial covenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, an aggregate principal amount of R1 billion was outstanding under Facility A and an aggregate principal amount of R2 billion was outstanding under Facility B.

R7.5 Billion Syndicated Credit Facilities On 12 February 2016, MTN Group and certain of its subsidiaries entered into a R7.5 billion credit facilities agreement with Nedbank Limited, FirstRand Bank Limited (acting through its Rand Merchant Bank division) and The Standard Bank of South Africa Limited to be used for the settlement of amounts outstanding under the existing facilities agreement dated 13 December 2012, general corporate purposes of the Group, the financing of acquisitions and investments and the refinancing of existing debt. The members of the Group permitted to borrow loans under the R7.5 billion credit facilities agreement are MTN Group and MTN Telephone Networks Holdings Limited (previously MTN Telephone Networks Holdings Proprietary Limited). Our obligations under the R7.5 billion credit facilities agreement are guaranteed by Mobile Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa and MTN International (Mauritius) Limited.

The credit facilities agreement allows for the provision of a term facility (Facility A (R5.5 billion)) and a revolving credit facility (Facility B (R2 billion)). Loans drawn under Facility A and Facility B bear interest at a rate equal to the aggregate of JIBAR plus a margin of 2.05%. The final maturity date for Facility A and Facility B is 15 February 2021. The availability period for drawing loans under Facility A expires 12 months after the date of the R7.5 billion credit facilities agreement. The availability period for drawing loans under Facility B expires 30 days prior to the final maturity date.

Each lender under the R7.5 billion credit facilities agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

124 The R7.5 billion facilities agreement contains customary positive and negative covenants, including restrictions, subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R7.5 billion credit facilities agreement requires MTN Group to maintain certain financial covenants. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, an aggregate principal amount of R5.5 billion was outstanding under Facility A and an aggregate principal amount of R2 billion was outstanding under Facility B.

R3.5 Billion Revolving Credit Facility On 3 February 2016, MTN Group and certain of its subsidiaries entered into a R3.5 billion revolving credit facility with Absa Bank Limited to be used for general corporate purposes of the Group incorporated in South Africa, the financing of acquisitions and investments by any member of the Group incorporated in South Africa and the refinancing of existing debt of any member of the Group incorporated in South Africa. The members of the Group which are permitted to borrow loans under the R3.5 billion revolving credit facility agreement are MTN Group and MTN Telephone Networks Holdings Limited (previously MTN Telephone Networks Holdings Proprietary Limited). Our obligations under the R3.5 billion revolving credit facility agreement are guaranteed by MTN Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa and MTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 1.95%. The final maturity date for any loans drawn under this facility is 12 February 2021.

The lender under the R3.5 billion revolving credit facility agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

The R3.5 billion revolving credit facility agreement contains customary positive and negative covenants, including restrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R3.5 billion revolving credit facility agreement requires MTN Group to maintain certain financial covenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, R3.5 billion was outstanding under this facility.

R3 Billion Revolving Credit Facility On 10 February 2016, MTN Group and certain of its subsidiaries entered into a R3 billion revolving credit facility with Nedbank Limited to be used for general corporate purposes of the Group, the financing of acquisitions and investments and the refinancing of existing debt. The members of the Group which are permitted to borrow loans under the R3 billion revolving credit facility agreement are MTN Group and MTN Telephone Networks Holdings Limited (previously MTN Telephone Networks Holdings Proprietary Limited). Our obligations under the R3 billion revolving credit facility agreement are guaranteed by MTN Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa and MTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 1.90%. The final maturity date for any loans drawn under this facility is 16 February 2021.

The lender under the R3 billion revolving credit facility agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

125 The R3 billion revolving credit facility agreement contains customary positive and negative covenants, including restrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R3 billion revolving credit facility agreement requires MTN Group to maintain certain financial covenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 30 June 2016, R3 billion was outstanding under this facility.

R3.3 Billion Term Loan Facility On 24 August 2016, MTN Group and certain of its subsidiaries entered into a R3.3 billion term loan facility with ICBC (Europe) S.A. and The Standard Bank of South Africa Limited consisting of: (i) a R1.65 billion term loan facility to be used for general corporate purposes of the Group, the financing of acquisitions and investments and the refinancing of existing debt; and (ii) a R1.65 billion term loan facility to be used for the reimbursement or financing of invoiced amounts owed to certain of our vendors. The members of the Group which are permitted to borrow loans under the R3.3 billion term loan facility agreement are MTN Group and MTN Telephone Networks Holdings Limited. Our obligations under the R3.3 billion term loan facility agreement are guaranteed by MTN Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa and MTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 2.25%. The final maturity date for any loans drawn under this facility is 24 August 2021.

Any lender under the R3.3 billion term loan facility agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

The R3.3 billion term loan facility agreement contains customary positive and negative covenants, including restrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R3.3 billion term loan facility agreement requires MTN Group to maintain certain financial covenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 31 August 2016, R2.8 billion was outstanding under this facility.

R1.5 Billion Term Loan Facility On 18 August 2016, MTN Group and certain of its subsidiaries entered into a R1.5 billion term loan facility with Standard Chartered Bank consisting of: (i) a R1 billion term loan facility; and (2) a R0.5 billion term loan facility; each to be used for the financing of capital expenditure, working capital and general corporate purposes of the Group. The members of the Group which are permitted to borrow loans under the R1.5 billion term loan facility agreement are MTN Group and MTN Telephone Networks Holdings Limited. Our obligations under the R1.5 billion term loan facility agreement are guaranteed by MTN Telephone Networks Holdings Limited, MTN International Proprietary Limited, MTN South Africa and MTN International (Mauritius) Limited.

Loans drawn under the facility bear interest at a rate equal to the aggregate of JIBAR plus a margin of 2.55% (as adjusted for changes in MTN Group’s credit rating). If at any time MTN Group is assigned a long term corporate credit rating higher than BB+ by Standard & Poor’s, then the applicable margin shall be reduced by 0.30%. The final maturity date for any loans drawn under this facility is 18 August 2021.

The lender under the R1.5 billion term loan facility agreement has the right to demand cancellation of its commitments and repayment of its participation in any outstanding loans on 30 days’ notice following a change of control of MTN Group.

126 The R1.5 billion term loan facility agreement contains customary positive and negative covenants, including restrictions subject to certain exceptions on our ability to sell or otherwise dispose of assets beyond a certain limit, create liens on assets, or effect a reconstruction or merger.

In addition, the R1.5 billion term loan facility agreement requires MTN Group to maintain certain financial covenants if the facility is terminated or cancelled at any time. MTN Group must ensure that, as at the end of each 12-month period ending on the last day of each financial year and each half financial year, the consolidated total net borrowings of the Group do not exceed 2.50 times our adjusted consolidated EBITDA over the same period, and that the ratio of our adjusted consolidated EBITDA to our consolidated net finance costs during the same period is not less than 5.00 to 1.00.

As at 31 August 2016, R1.5 billion was outstanding under this facility.

Nigerian Credit Facilities MTN Nigeria regularly enters into loan facilities with major international banks to finance capital expenditures and working capital requirements and to refinance existing debt, among other purposes. Borrowings under these facilities are usually due within five to seven years.

As at 30 June 2016, the aggregate amount outstanding under these credit facilities was R16,922 million.

Ivory Coast Credit Facilities MTN Ivory Coast regularly enters into term loan facilities with major international banks to finance capital expenditures and working capital requirements and to refinance existing debt, among other purposes. Borrowings under these facilities are due within seven years.

As at 30 June 2016, the aggregate amount outstanding under these credit facilities was R2,842 million.

Cameroon Credit Facilities MTN Cameroon regularly enters into term loan facilities with major international banks to finance capital expenditures and working capital requirements and to refinance existing debt, among other purposes. Borrowings under these facilities are usually due within four years.

As at 30 June 2016, the aggregate amount outstanding under these credit facilities was R1,483 million.

Uganda Credit Facilities MTN Uganda regularly enters into term loan facilities with major international and regional banks to finance capital expenditures and working capital requirements and to refinance existing debt, among other purposes. Borrowings under these facilities are usually due within five years.

As at 30 June 2016, the aggregate amount outstanding under these credit facilities was R1,279 million.

Ghana Credit Facilities MTN Ghana regularly enters into term loan facilities with major international and regional banks to finance capital expenditures and working capital requirements and to refinance existing debt, among other purposes. Borrowings under these facilities are usually due within twelve months.

As at 30 June 2016, the aggregate amount outstanding under these credit facilities was R1,141 million.

Credit Facilities Waivers Following the initial imposition of the Nigerian regulatory fine and uncertainty regarding the terms and conditions of the fine, we sought and received waivers from lenders under certain of our material credit facilities with respect to any potential defaults that may arise as a result of the payment of the Nigerian regulatory fine. These waivers are valid until 1 July 2017. Following the settlement of the Nigerian regulatory fine, including the agreement of a payment schedule, with the Nigerian authorities, we do not believe any further waivers or extensions of existing waivers will be required. See “Business Description—Litigation, Arbitration and Disputes—Nigerian Regulatory Fine”.

127 General Short-term Borrowing Facilities We regularly enter into general short-term borrowing facilities at the Group level with international and South African banks. Borrowings under these facilities are usually due within 30 days and the facilities typically mature within 12 months. Borrowings under these facilities generally bear interest at a floating rate. These general short- term borrowing facilities are used for general corporate purposes of the Group.

Capital Markets In addition to bank borrowings, we have also raised debt funding through the domestic capital markets. In 2006 and subsequently updated in 2010, MTN Holdings Proprietary Limited established a R10 billion Domestic Medium-Term Note Programme. As at 30 June 2016, there was R3,300 million outstanding under the Programme.

In November 2014, MTN (Mauritius) Investments Limited issued US$750 million Guaranteed Notes due 11 November 2024.

MTN Holdings Proprietary Limited is currently in the process of increasing its 2010 R10 billion Domestic Medium-Term Note Programme to R20 billion. Terms and conditions are expected to by and large remain the same with the exception of updates for latest market standards.

Guarantees In the normal course of business, we have issued guarantees to secure certain obligations of some of our operations under bank financing agreements. As at 30 June 2016, we had issued R62,683 million of guarantees, with a maximum exposure of R105,420 million.

128 INDUSTRY

The telecommunication sector has had a transformational impact on the global economy over the last few decades. It has provided the technological backdrop for more efficient, instant communication between individuals and the transfer of data and information in large quantities across the globe.

While more developed economies have experienced these developments as a rapid evolution and growth on the basis of communication networks that were deployed from the late 19th century onwards, the impact on emerging market economies has been even more profound, effectively connecting people and businesses. The telecommunication sector has thus been a key factor in supporting the growth and development of emerging markets by facilitating the participation of individuals in their local economy.

Fixed-line-based telecommunication services have had a limited proliferation in emerging markets due to their historically high cost of deployment and high usage costs. The arrival of mobile communication has profoundly changed the industry dynamics and the rapid roll-out of mobile networks across emerging markets has significantly improved access to services similar to those in more developed markets.

Over the past several years, the cost of telecommunication services and mobile devices has continuously decreased, allowing access to these services for an ever increasing proportion of society. As industry standards continue to improve, the level of service and capacity to transport data has increased, enabling the delivery of more sophisticated services and solutions. Fixed-line networks are gradually upgraded to next-generation networks, which allow faster processing of larger quantities of data and more efficient network management than traditional public switched telephone networks. Mobile networks have converged towards a few standards with GSM as the most widespread standard. GSM operators have organically moved on from the basic 2G network standard to 3G/Universal Mobile Telecommunications System (“UMTS”) networks and, increasingly, 4G/LTE networks which are capable of delivering high-speed broadband services to customers. The build out of LTE networks and the rapid expansion of 4G network coverage have continued and, given the growing number of smartphone and tablet users (which consume considerably more data than traditional cellular phone devices), there is a greater need for adequate spectrum.

In South Africa, the ICASA has recognised the need for additional spectrum and has invited interested companies to apply for spectrum within the 700MHz, 800MHz and 2,600MHz bands. The issuance of spectrum licences will accelerate the roll-out of the 4G network across the country enabling high-speed connections and faster downloads.

Regulators award permits and licences for the operation of telecommunication services, and grant spectrum required to deliver mobile services, normally for a finite period, such as 15 or 20 years. The telecommunication sector in most of our markets of operation tends to be regulated by a combination of government ministries, such as the ministry of communication, and national regulatory bodies. As a consequence, spectrum allocations must be renewed, normally for a fee or, if demand exceeds supply, the regulator may hold an auction for certain spectrum bands. In addition, regulatory bodies regulate certain fees and charges that telecommunication operators may charge, such as fixed or mobile termination fees that operators charge each other for terminating a call on their network that has originated on a different network and for which only the providing network receives a call charge fee from its customer (the “calling party pays principle”). Other areas of regulation include limitations to roaming charges, i.e., fees charged to customers when using a network abroad, as well as terms and conditions for operators with a dominant infrastructure position to provide other operators with access to its infrastructure. Regulators are also responsible for monitoring the quality levels of services provided by telecommunication operators, and they may impose fines or restrictions of service on operators if expected levels of quality of service are not met.

Mobile Services The proliferation of mobile services has experienced high growth globally, including in emerging markets. It is today the predominant access technology for telecommunication services across most emerging economies, and specifically within our regions of operation. Of the approximately 7.2 billion mobile subscribers globally, approximately 1.3 billion are in Africa and the Middle East, comprising approximately 19% of the global mobile subscriber base. In contrast, there are approximately 0.8 billion fixed-line subscribers globally, with approximately 0.08 billion in Africa and the Middle East, i.e., only approximately 11% of the global fixed-line subscriber base.

129 Mobile and fixed-line subscribers worldwide (m), (Mobile: March 2016, Fixed: 2015)

3,817 362

169

1,037 952 97 700 69 61 370 398 23 Africa Africa Europe Europe Asia Pacific Asia Pacific Middle East Middle East Latin America Latin America North America North America

Total mobile subscribers (m) Total fixed-line subscribers (m)

Across our markets of operation mobile coverage has continuously increased and generally achieves levels of between 134% and 164% of the population in the more advanced markets like Ghana and South Africa, but may only be at levels of between 26% and 59% of the population in less advanced markets such as South Sudan and Yemen. We and other mobile operators continue to invest considerably into our respective networks in order to increase both coverage and capacity of the networks.

Mobile penetration rates, measured in number of mobile subscribers divided by the population, have increased considerably over the last few years, but still have growth potential in most emerging markets when compared to developed economies. Demographic growth, growing levels of disposable income, increasing coverage and service availability, as well as further expected declines in costs for consumers, are expected to contribute to further growth in the mobile telecommunication sector and generate new subscribers in the future. In addition, the adoption of new devices such as smartphones and tablets is expected to continue to drive additional usage, as subscribers may rely on more than one subscription for their multiple devices. Additional growth may also come from technological advances such as machine-to-machine traffic in the future.

Mobile penetration rates in selected countries in 2005 and March 2016

164% 144% 132% 138% 134% 123% 110% 90% 80% 83% 70% 74% 60% 47% 20% 20% 10% 10%

Germany Switzerland UK Japan South Africa Ghana Sudan Nigeria Uganda

2005 2016

One of the key parameters in the rapid take-up of mobile services has been the offer of prepaid services, which allows customers to avoid entering into a contract of a specified length with an operator, tailoring their consumption to the availability of funds and actual usage needs. While mobile network operators in most developed markets have embarked on a process of converting prepaid subscribers to contract subscribers, this development has not significantly begun in emerging markets. The higher cost of more sophisticated handsets such as the iPhone or Android-based smartphones lends itself more to a contract-based subscription, as the cost of the handset for the consumer can be recovered over the life of the contract, and the mobile network operator may offer a subsidy on the handset cost to the consumer, knowing the customer will remain a subscriber at least for a specified contract period. In emerging markets, where the penetration of high-end devices is lower, the flexibility of prepaid subscriptions remains more attractive. Consumers may have several prepaid SIM cards and switch them in their handset in order to take advantage of offers and lower on-net calling rates. In addition, many emerging markets lack the wide-spread bank account system required for the operation of contract subscriptions. As at 31 December 2015, of our total subscriber base of approximately 232.5 million, a majority are prepaid subscribers. Our South African operation has a significant postpaid subscriber base, with 17% of its total subscriber base being postpaid as at 30 June 2016.

130 Mobile communication prices have generally decreased significantly since services began gaining wider adoption about a decade ago. This has been a direct consequence of technological advances, growing competition amongst mobile operators as well as regulatory changes, such as the reduction of roaming charges and mobile termination rates. As a consequence, subscriber bases have grown, as more consumers have been able to afford the services. Usage, measured in minutes of use for voice services, has increased considerably, but has not compensated for the effect of decreasing prices to sustain average revenue per user for mobile operators. In addition, consumers with less spending power are being added as subscribers, diluting the ARPU. While the effect of one consumer using multiple SIMs is to add to the subscriber count, it is ARPU dilutive. ARPUs across our markets of operation differ considerably depending on the level of affluence, mix of prepaid and postpaid subscribers and the market penetration rate. Blended ARPU across all operators amounts to approximately $7.20 in South Africa, while it can be below $2.40 in markets such as Uganda.

Mobile operators have traditionally charged subscribers for usage based voice and text services, and this still represents the bulk of our business across our markets of operation. Postpaid subscribers are offered service bundles including voice minutes, SMS and data usage allowances. Operators with larger scale and a leading market position, like us in most of our operations, tend to benefit from an on-net community effect. With no termination charge payable to another operator, on-net calls can be offered more cheaply, and thus prospective new subscribers have an incentive to subscribe to a network where most of their friends and family are already subscribers. However, decreasing mobile termination rates and the wide-spread usage of multiple SIM cards have somewhat eroded that benefit. Network operators also try to differentiate their services through features such as calling circles with preferential rates, calling credits or promotions and loyalty programmes.

Increasingly, VAS have been rolled out which provide more than simple voice or data exchange. Apart from offering additional revenue opportunities, VAS are a tool to prevent churn among the subscriber base, as customers become accustomed to the use of specific tools and applications, thus lowering the appetite to switch providers in case of a new promotion by a competing network operator. Emerging market mobile operators have been instrumental in developing data application over non-smartphone devices, in order to facilitate a fast adoption of their services. Mobile banking services have been a large success in emerging markets, where most consumers do not have regular bank accounts. Money can be sent over the mobile banking platform of operators and balances can be used to pay bills, friends and family or for mobile services. Mobile operators tend to charge a commission per transaction for the handling of a transaction on their network. They do not generally hold account balances, but underlying deposits are normally held by partnering financial institutions. We offer MTN Mobile Money in 14 out of our 22 markets of operation. During 2015, the customer base for MTN Mobile Money grew by 56% to over 34.7 million customers, contributing 17% to Uganda’s total revenue and 6% each to Ghana and Rwanda’s total revenue as of 31 December 2015. Similar areas of VAS, where the mobile network operator can offer a unique service intermediation, include airtime lending, micro-retail lending, handset insurance and other insurance products.

The arrival of smartphones has created new opportunities and challenges for mobile operators, and trends observed in developed markets are expected to affect emerging markets, albeit with a time delay. OTT applications such as internet based chat services (e.g., WhatsApp, WeChat) as well as voice and video services (e.g., Skype) are a threat to traditional voice and SMS revenue streams for operators. At the same time, the increasing demand for data services requires considerable network investments that need to be borne by the mobile operators. However, new revenue streams can also be developed, as mobile operators can charge for online content and digital services. In the effort of accelerating our expansion into the digital space, we entered into partnerships covering both Africa and the Middle East with Rocket Internet in 2014. Rocket is one of the world’s leading internet incubators with a presence in Africa and the Middle East.

Competition at retail level does not only occur between the mobile network operators but resellers and mobile virtual network operators (“MVNOs”) may also compete with the network operators for customers. MVNOs purchase network capacity from the network operators and offer this capacity on a resale basis to their own customers. MVNOs have had a profound impact in many developed markets, specialising in certain market segments such as ethnic minorities, but they have had a generally lower impact in emerging markets. Out of our markets of operation, significant MVNOs only exist in South Africa.

Over the last few years, an independent tower sector has developed particularly across Africa, and to a lesser extent in the Middle East. Tower operators build tower sites that are then offered to mobile operators on which to install their equipment in exchange for a monthly rental fee. Independent tower operators manage the tower sites in terms of access, security, electronics, air-conditioning and maintenance and are focused on renting space on one tower to several mobile operators, thus increasing the efficiency of the network of tower sites. Several

131 mobile operators, including MTN, have sold sites or partial ownership in a tower network entity to specialist tower operators over the last few years. The mobile operators typically enter long term rental agreements of approximately 10-15 years at the time of a sale transaction. Higher up-front sale proceeds are generally balanced with higher committed lease rates throughout the contractual rental period and vice versa. MTN most recently sold 8,850 of its Nigerian mobile network towers in two tranches in 2014 and 2015 to INT Towers Ltd (of which MTN holds a 51% stake, 49% held by IHS).

Fixed-line Services Fixed-line services in emerging markets have achieved a far lower penetration than in developed markets, as meaningful network deployment largely did not occur before the second half of the 20th century. Costs of network deployment are high, and in many markets the lack of wide-spread affluence has limited the commercially viable reach of fixed-line networks to businesses and middle- and upper-class residential neighbourhoods. With the arrival of mobile services in the 1990s and 2000s, growing communication needs could be met more quickly and more cost effectively by the new mobile technology.

The fixed-line incumbent operators were traditionally run as part of the state-owned post and telecommunication service. In most of our markets of operation, the incumbent operator remains controlled by the government. Typically, the incumbent infrastructure is obsolete and has not been developed further to deliver broadband services to a level akin to what can be found in Europe and other developed markets, although Telkom South Africa has embarked on a fibre and next-generation network upgrade programme over the last few years. Mobile operators tend to use incumbent or other alternative networks for channelling long-distance and international backhaul traffic. In many emerging markets, the quality and reach of the incumbent networks are limited, and, therefore mobile operators are building their own fibre networks to direct and efficiently manage their own traffic. For MTN, this self-provisioning is of particular relevance in South Africa and Nigeria, where we have invested significantly in our own fibre deployments. In 2015, 1,469km of long-distance fibre was rolled out, which served to connect a total of 1,164 sites to fibre, enabling better quality data network across operations. Improving quality and throughput in homes and fixed locations through the rollout of fibre-to-the-home in South Africa, Nigeria, Ghana and Iran is a key focus in 2016.

Alternative independent network operators do exist to fill the void left by the emerging market incumbents. Their overall relevance, however, is small and focused on key markets. Business-focused telecommunication providers may connect business parks and large corporate customers with their own fibre infrastructure. Coaxial cable networks, which are widely established across North America, Europe and parts of Asia, have generally not been deployed in the emerging markets of Africa and the Middle East, as television distribution traditionally relied on free-to-air and satellite services.

The following table sets forth certain market indicators in our largest markets for the year 2015:

South Ivory Africa Nigeria Iran Ghana Syria Coast Cameroon Uganda Sudan Population (m) ...... 55.0 178.7 79.5 26.9 16.6 23.7 23.1 39.9 38.4 Number of households (m) ...... 15.3 38.7 23.8 7.5 3.4 4.4 6.4 8.2 5.7 Mobile Subscribers (m) ...... 90.4 151.1 113.0 35.0 13.3 25.4 19.5 18.1 27.9 % 3G and 4G subscribers ...... 46% 21% 20% 28% 5% 34% 8% 5% 15% Penetration rate (%) ...... 164% 85% 142% 130% 80% 107% 84% 45% 73% Blended ARPU (US$) ...... 7.2 4.9 3.9 3.3 3.3 4.8 3.6 2.4 2.6 Fixed line Telephony subscribers (m) ...... 3.9 0.2 24.8 0.3 3.4 0.3 0.2 0.4 0.1 Telephony penetration of households (%) ...... 25.7% 0.5% 104.2% 3.4% 100.0% 6.3% 3.2% 4.3% 2.1%

132 CONDITIONS OF THE 2022 NOTES The following is the text of the terms and conditions of the 2022 Notes (the Conditions) which (subject to modification and except for the paragraphs in italics) will be endorsed on the Certificates issued in respect of the 2022 Notes: The U.S.$500,000,000 5.373 per cent. Guaranteed Notes due 2022 (the “Notes”, which expression shall in these Conditions, unless the context otherwise requires, include any further notes issued pursuant to Condition 16 and forming a single series with the Notes) of MTN (Mauritius) Investments Limited (the “Issuer”) are issued subject to and with the benefit of an Agency Agreement dated 13 October 2016 (such agreement as amended and/or supplemented and/or restated from time to time, the “Agency Agreement”) made between the Issuer, MTN Group Limited (“MTN Group”), Mobile Telephone Networks Holdings Limited, MTN International (Mauritius) Limited, MTN International Proprietary Limited and Mobile Telephone Networks Proprietary Limited as guarantors (together with MTN Group, the “Guarantors”), Citigroup Global Markets Deutschland AG as registrar (the “Registrar”) and Citibank, N.A., London Branch as fiscal agent and principal paying agent (the “Fiscal Agent” and, together with any other paying agents appointed in respect of the Notes from time to time, the “Paying Agents” and the Fiscal Agent, the Registrar and the other Paying Agents together being referred to as the “Agents”). The holders of the Notes are entitled to the benefit of a Deed of Covenant (the “Deed of Covenant”) and a Deed Poll (the “Deed Poll”), each dated 13 October 2016 and made by the Issuer. The originals of the Deed of Covenant and the Deed Poll are held by the Fiscal Agent on behalf of the Noteholders (as defined below) at its specified office. The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Agency Agreement. Copies of the Agency Agreement are available for inspection during normal business hours by the Noteholders at the specified office of each of the Paying Agents. The Noteholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement, the Deed of Covenant and the Deed Poll applicable to them. References in these Conditions to the Fiscal Agent, the Registrar, the Paying Agents and the Agents shall include any successor appointed under the Agency Agreement. The owners shown in the records of Euroclear Bank SA/NV (“Euroclear”), Clearstream Banking S.A. (“Clearstream, Luxembourg”) and The Depository Trust Company (“DTC”) of book-entry interests in Notes are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement, the Deed of Covenant and the Deed Poll applicable to them.

1. FORM, DENOMINATION AND TITLE 1.1 Form and Denomination The Notes are issued in registered form in amounts of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof (referred to as the “principal amount” of a Note). A note certificate (each a “Certificate”) will be issued to each Noteholder in respect of its registered holding of Notes. Each Certificate will be numbered serially with an identifying number which will be recorded on the relevant Certificate and in the register of Noteholders which the Issuer will procure to be kept by the Registrar and the exact copy of each such register which will be maintained by the Issuer at its registered office (together the “Register”). The Notes are not issuable in bearer form.

1.2 Title Title to the Notes passes only by registration in the Register. The holder of any Note will (except as ordered by a court of competent jurisdiction or as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be liable for so treating the holder. In these Conditions “Noteholder” and (in relation to a Note) “holder” means the person in whose name a Note is registered in the Register. For a description of the procedures for transferring title to book-entry interests in the Notes, see “Book- Entry Clearance Systems”.

2. TRANSFERS OF NOTES AND ISSUE OF CERTIFICATES 2.1 Transfers A Note may, subject to Condition 2.4, be transferred in whole or in part by depositing the Certificate issued in respect of that Note, with the form of transfer on the back duly completed and signed, at the specified office of the Registrar or any of the other Agents.

133 For a description of certain restrictions on transfers of interests in the Notes, see “Transfer Restrictions”.

2.2 Delivery of new Certificates Each new Certificate to be issued upon transfer of Notes pursuant to Condition 2.1 will, within five business days of receipt by the Registrar or the relevant Agent of the duly completed form of transfer endorsed on the relevant Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Note to the address specified in the form of transfer. For the purposes of this Condition, “business day” shall mean a day on which banks are open for business in the city in which the specified office of the Agent with whom a Certificate is deposited in connection with a transfer is located. Except in the limited circumstances described in “The Global Certificates—Registration of Title”, owners of interests in the Notes will not be entitled to receive physical delivery of Certificates. Issues of Certificates upon transfer of Notes are subject to compliance by the transferor and transferee with the certification procedures described above and in the Agency Agreement and compliance with the legends placed on the Notes as described in “Transfer Restrictions”. Where some but not all of the Notes in respect of which a Certificate is issued are to be transferred a new Certificate in respect of the Notes not so transferred will, within five business days of receipt by the Registrar or the relevant Agent of the original Certificate, be mailed by uninsured mail at the risk of the holder of the Notes not so transferred to the address of such holder appearing on the Register or as specified in the form of transfer.

2.3 Formalities free of charge Registration of a transfer of Notes will be effected without charge by or on behalf of the Issuer or any Agent but upon payment by the Noteholder (or the giving of such indemnity as the Issuer or any Agent may reasonably require) in respect of any tax or other governmental charges which may be imposed in relation to such transfer.

2.4 Closed Periods No Noteholder may require the transfer of a Note to be registered (a) during the period of 15 days ending on (and including) the due date for any payment of principal or interest on that Note, or (b) after any such Note has been called for redemption.

2.5 Regulations All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerning transfer of Notes scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Registrar. A copy of the current regulations will be mailed (free of charge) by the Registrar to any Noteholder who requests one.

3. STATUS OF THE NOTES The Notes are direct, unconditional, unsubordinated and (subject to the provisions of Condition 5) unsecured obligations of the Issuer and (subject as provided above) rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights.

4. GUARANTEE 4.1 Guarantee The payment of the principal and interest in respect of the Notes has been unconditionally and irrevocably guaranteed by the Guarantors under a deed of guarantee (the “Guarantee”) dated 13 October 2016 and executed by the Guarantors.

4.2 Status of the Guarantee The obligations of each Guarantor under the Guarantee constitute direct, unconditional, unsubordinated and (subject to the provisions of Condition 5) unsecured obligations of the relevant Guarantor and (subject as

134 provided above) rank and will rank pari passu with all other outstanding unsecured and unsubordinated obligations of the relevant Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights. The original of the Guarantee is held by the Fiscal Agent on behalf of, and copies are available for inspection by, the Noteholders at its specified office.

5. COVENANTS 5.1 Negative Pledges So long as any of the Notes remains outstanding (as defined in the Agency Agreement): (a) the Issuer will ensure that no Relevant Indebtedness (as defined below) or Sukuk Obligation (as defined below) will be secured by any mortgage, charge, lien, pledge or other security interest (each a “Security Interest”) upon, or with respect to, any of the present or future business, undertaking, assets or revenues (including any uncalled capital) of the Issuer or any of its Material Subsidiaries (as defined below) other than a Permitted Security Interest (as defined below), unless the Issuer, in the case of the creation of a Security Interest, before or at the same time and, in any other case, promptly, takes any and all action necessary to ensure that: (i) all amounts payable by it under the Notes are secured by the Security Interest equally and rateably with the Relevant Indebtedness or Sukuk Obligation, as applicable; or (ii) such other Security Interest or other arrangement (whether or not it includes the giving of a Security Interest) is provided as is approved by an Extraordinary Resolution (which is defined in the Agency Agreement as a resolution duly passed by a majority of not less than three-fourths of the votes cast) of the Noteholders; and (b) each Guarantor will ensure that no Relevant Indebtedness or Sukuk Obligation will be secured by any Security Interest upon, or with respect to, any of the present or future business, undertaking, assets or revenues (including any uncalled capital) of that Guarantor or any of its Material Subsidiaries other than a Permitted Security Interest, unless the relevant Guarantor, in the case of the creation of the Security Interest, before or at the same time and, in any other case, promptly, takes any and all action necessary to ensure that: (i) all amounts payable by it under the Guarantee are secured by the Security Interest equally and rateably with the Relevant Indebtedness or Sukuk Obligation, as applicable; or (ii) such other Security Interest or other arrangement (whether or not it includes the giving of a Security Interest) is provided as is approved by an Extraordinary Resolution of the Noteholders.

5.2 Interpretation For the purposes of these Conditions: (a) “Material Subsidiary” means at any time a Subsidiary of MTN Group: (i) whose gross assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) or whose pre-tax profits (consolidated in the case of a Subsidiary which itself has Subsidiaries) or whose turnover (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent in each case (or, in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited consolidated accounts of MTN Group relate, are equal to) not less than 10 per cent. of the consolidated gross assets, consolidated pre-tax profits or consolidated turnover, as applicable, of MTN Group and its Subsidiaries, all as calculated respectively by reference to the then latest audited accounts (consolidated or, as the case may be, unconsolidated) of such Subsidiary and the then latest audited consolidated accounts of MTN Group, provided that in the case of a Subsidiary of MTN Group acquired after the end of the financial period to which the then latest audited consolidated accounts of MTN Group relate, the reference to the then latest audited consolidated accounts of the MTN Group for the purposes of the calculation above shall, until consolidated accounts for the financial period in which the acquisition is made have been prepared and audited as aforesaid, be deemed to be a reference to such first-mentioned accounts as if such Subsidiary had been shown in such accounts by reference to its then latest relevant audited accounts, adjusted as deemed appropriate by MTN Group;

135 (ii) to which is transferred the whole or substantially the whole of the undertaking and assets of a Subsidiary of MTN Group which immediately prior to such transfer is a Material Subsidiary, provided that the transferor Subsidiary shall upon such transfer forthwith cease to be a Material Subsidiary and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to this subparagraph (ii) on the date on which the consolidated accounts of MTN Group for the financial period current at the date of such transfer have been prepared and audited as aforesaid but so that such transferor Subsidiary or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (i) above or, prior to or after such date, by virtue of any other applicable provision of this definition; or (iii) to which is transferred an undertaking or assets which, taken together with the undertaking or assets of the transferee Subsidiary, generated (or, in the case of the transferee Subsidiary being acquired after the end of the financial period to which the then latest audited consolidated accounts of MTN Group relate, generate turnover or pre-tax profits equal to) not less than 10 per cent. of the consolidated turnover or pre-tax profits, as applicable, or represent (or, in the case aforesaid, are equal to) not less than 10 per cent. of the consolidated gross assets, of MTN Group, all as calculated as referred to in subparagraph (i) above, provided that the transferor Subsidiary (if a Material Subsidiary) shall upon such transfer forthwith cease to be a Material Subsidiary unless immediately following such transfer its undertaking and assets generate (or, in the case aforesaid, generate turnover or pre-tax profits equal to) not less than 10 per cent. of the consolidated turnover or pre-tax profits, as applicable, or its assets represent (or, in the case aforesaid, are equal to) not less than 10 per cent. of the consolidated gross assets, of MTN Group, all as calculated as referred to in subparagraph (i) above, and the transferee Subsidiary shall cease to be a Material Subsidiary pursuant to this subparagraph (iii) on the date on which the consolidated accounts of MTN Group for the financial period current at the date of such transfer have been prepared and audited but so that such transferor Subsidiary or such transferee Subsidiary may be a Material Subsidiary on or at any time after the date on which such consolidated accounts have been prepared and audited as aforesaid by virtue of the provisions of subparagraph (i) above or, prior to or after such date, by virtue of any other applicable provision of this definition, all as more particularly defined in the Agency Agreement. A report by two Authorised Signatories (as defined in the Agency Agreement) of MTN Group that in their opinion a Subsidiary is or is not or was or was not at any particular time or throughout any specified period a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on all parties; (b) “Permitted Security Interest” means (i) any Security Interest created or outstanding with the approval of an Extraordinary Resolution of the Noteholders; (ii) any Security Interest securing Relevant Indebtedness or a Sukuk Obligation of a person existing at the time that such person is merged into, or consolidated with, the Issuer, any Guarantor or any Subsidiary, provided that such Security Interest was not created in contemplation of, and the principal amount secured has not increased in contemplation of or since, such merger or consolidation; (iii) any Security Interest existing on any property or assets prior to the acquisition thereof by the Issuer or any Guarantor or any Subsidiary, provided that such Security Interest was not created in contemplation of, and the principal amount secured has not increased in contemplation of or since, such acquisition; or (iv) any renewal of or substitution for any Security Interest permitted by any of the subparagraphs (i) to (iii) (inclusive) of this definition, provided that with respect to any such Security Interest (A) the principal amount secured has not increased and (B) the Security Interest has not been extended to any additional assets (other than the proceeds of such assets and, provided the aggregate book value of all assets the subject of the relevant Security Interest immediately following the relevant renewal or substitution does not exceed the aggregate book value of all assets the subject of the relevant Security Interest immediately prior to the relevant renewal or substitution, any replacement assets); (c) “Relevant Indebtedness” means (i) any present or future indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stock or other securities which are for the time being quoted, listed or ordinarily dealt in on any stock exchange, over-the-counter or other securities market and (ii) any guarantee or indemnity of any such indebtedness;

136 (d) “Subsidiary” means, in relation to the Issuer or any Guarantor, any company (i) in which the Issuer or as the case may be, the relevant Guarantor holds a majority of the voting rights or (ii) of which the Issuer or, as the case may be, the relevant Guarantor has the right to appoint or remove a majority of the board of directors or (iii) of which the Issuer or, as the case may be, the relevant Guarantor controls a majority of the voting rights, and includes any company which is a Subsidiary of a Subsidiary of the Issuer or, as the case may be, the relevant Guarantor; and (e) “Sukuk Obligation” means any undertaking or other obligation to pay any money given in connection with the issue of trust certificates or other securities issued in connection with any Islamic financing whether or not in return for consideration of any kind, which trust certificates or other securities are for the time being quoted, listed or ordinarily dealt in on any stock exchange, over-the-counter or other securities market.

5.3 Undertaking in respect of MTN Treasury Limited MTN Group undertakes (i) to procure that MTN Treasury Limited will not (other than as a guarantor in respect of (i) the US$750,000,000 4.755 per cent. Guaranteed Notes due 11 November 2024, (ii) the US$1,000,000,000 revolving credit facility dated 28 March 2014, (iii) the ZAR2,000,000,000 credit facility with Sumitomo Mitsui Banking Corporation Europe Limited dated 30 May 2014, and (iv) the ZAR3,000,000,000 credit facility with The Standard Bank of South Africa Limited dated 15 December 2014 (but excluding, in each case, any refinancing or replacement of any such facility or notes)) be an obligor, as borrower or guarantor, in respect of any Indebtedness for Borrowed Money of MTN Group or any of its Subsidiaries, and (ii) that it will not transfer, and will procure that no Subsidiary of MTN Group will transfer, any undertaking or assets to MTN Treasury Limited.

6. INTEREST 6.1 Interest Rate and Interest Payment Dates The Notes bear interest on their outstanding principal amount from and including 13 October 2016 at the rate of 5.373 per cent. per annum, payable semi-annually in arrear on 13 February and 13 August in each year (each an “Interest Payment Date”). The first payment (representing a short first coupon) for the period from and including 13 October 2016 to but excluding 13 February 2017 and amounting to U.S.$17.91 per U.S.$1,000 principal amount of Notes shall be made on 13 February 2017. The second payment (representing a full six months’ interest and amounting to U.S.$26.87 per U.S.$1,000 in principal amount of Notes) shall be made on 13 August 2017.

6.2 Interest Accrual Each Note will cease to bear interest from and including its due date for redemption unless, upon due surrender of the Certificate representing such Note, payment of the principal in respect of the Note is improperly withheld or refused or unless default is otherwise made in respect of payment. In such event, interest will continue to accrue at the rate referred to in Condition 6.1 until whichever is the earlier of: (a) the date on which all amounts due in respect of such Note have been paid; and (b) five days after the date on which the full amount of the moneys payable in respect of such Notes up to that fifth day has been received by the Fiscal Agent or the Registrar, as the case may be, and notice to that effect has been given to the Noteholders in accordance with Condition 13.

6.3 Calculation of Broken Interest When interest is required to be calculated in respect of a period of less than a full six months, it shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed on the basis of a month of 30 days.

7. PAYMENTS 7.1 Payments in respect of Notes Payment of principal and interest will be made by transfer to the registered account of the Noteholder. Payments of principal and payments of interest due otherwise than on an Interest Payment Date will only be made against surrender of the relevant Certificate at the specified office of any of the Agents. Interest on Notes due on an Interest Payment Date will be paid to the holder shown on the Register at the close of business on the date (the record date) being the fifteenth day before the due date for the payment of interest.

137 For the purposes of this Condition, a Noteholder’s “registered account” means the U.S. dollar account maintained by or on behalf of it with a bank that processes payments in U.S. dollars, details of which appear on the Register at the close of business, in the case of principal and interest due otherwise than on an Interest Payment Date, on the second Business Day (as defined in Condition 7.4 below) before the due date for payment and, in the case of interest due on an interest Payment Date, on the relevant record date.

7.2 Payments subject to Applicable Laws Payments in respect of principal and interest on the Notes are subject in all cases to any fiscal or other laws and regulations applicable in the place of payment, but without prejudice to the provisions of Condition 9.

7.3 No commissions No commissions or expenses shall be charged to the Noteholders in respect of any payments made in accordance with this Condition.

7.4 Payment on Business Days Where payment is to be made by transfer to a registered account, payment instructions (for value the due date or, if that is not a Business Day, for value the first following day which is a Business Day) will be initiated on the Business Day preceding the due date for payment or, in the case of a payment of principal or a payment of interest due otherwise than on an Interest Payment Date, if later, on the Business Day on which the relevant Certificate is surrendered at the specified office of an Agent. Noteholders will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due date is not a Business Day, if the Noteholder is late in surrendering its Certificate (if required to do so). In these Conditions, “Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are open for business in London and New York City and, in the case of presentation of a Certificate, in the place in which the Certificate is presented.

7.5 Partial Payments If the amount of principal or interest which is due on the Notes is not paid in full, the Registrar will annotate the Register with a record of the amount of principal or interest in fact paid.

7.6 Agents The names of the initial Agents and their initial specified offices are set out at the end of these Conditions. The Issuer and the Guarantors reserve the right at any time to vary or terminate the appointment of any Agent and to appoint additional or other Agents provided that: (a) there will at all times be a Fiscal Agent; (b) so long as the notes are listed on any stock exchange or admitted to listing by any other relevant authority, there will at all times be a Paying Agent (which may be the Fiscal Agent) having a specified office in such place as may be required by the rules and regulations of the relevant stock exchange of such other relevant authority; and (C) there will at all times be a Registrar. Notice of any termination or appointment and of any changes in specified offices shall be given to the Noteholders promptly by the Issuer in accordance with Condition 13.

8. REDEMPTION AND PURCHASE 8.1 Redemption at Maturity Unless previously redeemed or purchased and cancelled as provided below, the Issuer will redeem the Notes at their principal amount on 13 February 2022.

138 8.2 Redemption at the Option of the Issuer (a) The Issuer may at its option at any time, having given not less than 30 nor more than 60 days’ notice to the Noteholders in accordance with Condition 13 (which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all the Notes, but not some only, at the “Make-Whole Redemption Price”. (b) For the purposes of these Conditions: (i) “Make Whole Redemption Price” means in respect of each Note, the greater of (a) 100 per cent. of the principal amount of the Notes and (b) the sum of the present values of the Remaining Scheduled Payments discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of 12 months of 30 days each) at the U.S. Treasury Rate plus a spread of 50 basis points, together with accrued interest on the principal amount of the Notes to the date of redemption, all as determined by the Determination Agent; (ii) “U.S. Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity (computed as of the third business day immediately preceding that redemption date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date. (iii) “Comparable Treasury Issue” means the United States Treasury security or securities selected by the Determination Agent that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes; (iv) “Comparable Treasury Price” means, with respect to any redemption date, the average of three Reference Treasury Dealer Quotations for the redemption date; (v) “Reference Treasury Dealer” means each of the three nationally recognised firms selected by the Determination Agent that are primary U.S. Government securities dealers; (vi) “Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Determination Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Determination Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time on the third Business Day immediately preceding such redemption date; (vii) “Remaining Scheduled Payments” means, with respect to the Notes, the remaining scheduled payments of the principal thereof and interest thereon that would be due after the related redemption date but for such redemption, provided, however, that if that redemption date is not an Interest Payment Date, the amount of the next succeeding scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to the redemption date; and (viii) “Determination Agent” means an investment bank or financial institution of international standing selected by the Issuer.

8.3 Redemption for Taxation Reasons If: (a) as a result of any change in, or amendment to, the laws or regulations of a Relevant Jurisdiction (as defined in Condition 9), or any change in the application or official interpretation of the laws or regulations of a Relevant Jurisdiction, which change or amendment becomes effective after 11 October 2016, on the next Interest Payment Date either (i) the Issuer would be required to pay additional amounts as provided or referred to in Condition 9 or (ii) the Guarantors would be unable for reasons outside their control to procure payment by the Issuer and in making payment themselves would each be required to pay such additional amounts; and (b) the requirement cannot be avoided by the Issuer or, as the case may be, the Guarantors taking reasonable measures available to it or them, the Issuer may at its option, having given not less than 30 nor more than 60 days’ notice to the Noteholders in accordance with Condition 13 (which notice shall be irrevocable), redeem all the Notes, but not some only, at any time at their principal amount together with interest (if any) accrued to (but excluding) the date of redemption. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer

139 shall deliver to the Fiscal Agent (i) a certificate signed by two Authorised Signatories of the Issuer or, as the case may be, the Guarantors stating that the requirement referred to in (a) above will apply on the next Interest Payment Date and cannot be avoided by the Issuer or, as the case may be, the Guarantors taking reasonable measures available to it or them and (ii) an opinion or opinions of independent legal advisers of recognised standing to the effect that the Issuer or, as the case may be, each Guarantor has or will become obliged to pay such additional amounts as a result of the change or amendment.

8.4 Purchases The Issuer, each Guarantor or any of MTN Group’s other Subsidiaries may at any time purchase Notes in any manner and at any price. Such Notes may be held, reissued, resold or, at the option of the Issuer, surrendered to any Agent for cancellation.

8.5 Cancellations All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer, a Guarantor or any of MTN Group’s other Subsidiaries may be cancelled or held and resold.

8.6 Notices Final Upon the expiry of any notice as is referred to in Condition 8.2 or Condition 8.3 above the Issuer shall be bound to redeem the Notes to which the notice refers in accordance with the terms of such Condition.

9. TAXATION 9.1 Payment without Withholding All payments in respect of the Notes by or on behalf of the Issuer or any Guarantor shall be made free and clear of, and without withholding or deduction for, or on account of, any present or future taxes, duties, levies, assessments or governmental charges (including related interest and penalties) of whatever nature (“Taxes”) imposed, assessed or levied by or on behalf of any of the Relevant Jurisdictions, unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer or, as the case may be, the Guarantors will pay such additional amounts as may be necessary in order that the net amounts received by the Noteholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes in the absence of the withholding or deduction; except that no additional amounts shall be payable in relation to any payment in respect of any Note: (a) held by or on behalf of a holder who is liable to the Taxes in respect of the Note by reason of his having some connection with any Relevant Jurisdiction other than the mere holding of the Note; or (b) in respect of which the certificate representing it is presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been entitled to additional amounts on presenting the same for payment on the last day of the period of 30 days assuming that day to have been a Business Day (as defined in Condition 7).

9.2 Interpretation In these Conditions: (a) “Relevant Date” means, with respect to any payment, the date on which such payment first becomes due but, if the full amount of the money payable has not been received by the Fiscal Agent on or before the due date, it means the date on which, the full amount of the money having been so received, notice to that effect has been duly given to the Noteholders by the Issuer in accordance with Condition 13; and (b) “Relevant Jurisdiction” means (i) in the case of payments by the Issuer or MTN International (Mauritius) Limited in its capacity as a Guarantor, Mauritius or any political subdivision or any authority thereof or therein having power to tax, or (ii) in the case of payments by any Guarantor (other than MTN International (Mauritius) Limited), the Republic of South Africa or any political subdivision or any authority thereof or therein having power to tax, or in either case any other jurisdiction or any political subdivision or any authority thereof or therein having power to tax to which the Issuer or any Guarantor, as the case may be, becomes subject in respect of payments made by it of principal and interest on the Notes.

140 9.3 Additional Amounts Any reference in these Conditions to any amounts in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable under this Condition.

10. PRESCRIPTION Claims in respect of principal and interest will become prescribed and become void unless made within 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date, as defined in Condition 9.

11. EVENTS OF DEFAULT 11.1 Events of Default The holder of any Note may give notice to the Issuer that the Note is, and it shall accordingly forthwith become, immediately due and repayable at its principal amount, together with interest accrued to the date of repayment, if any of the following events (“Events of Default”) shall have occurred and be continuing: (a) if default is made in the payment of any principal or interest due in respect of the Notes or any of them and the default continues for a period of five days in the case of principal or ten days in the case of interest; or (b) if the Issuer or any Guarantor fails to perform or observe any of its other obligations under these Conditions or the Guarantee and (except in any case where the failure is incapable of remedy, when no continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days following the service by any Noteholder on the Issuer or the relevant Guarantor (as the case may be) of notice requiring the same to be remedied; or (c) if (i) any Indebtedness for Borrowed Money (as defined below) of the Issuer, any Guarantor or any Material Subsidiary becomes capable of being declared due and repayable prematurely by reason of an event of default (however described); (ii) the Issuer, any Guarantor or any Material Subsidiary fails to make any payment in respect of any Indebtedness for Borrowed Money on the due date for payment as extended by any originally applicable grace period; (iii) any security given by the Issuer, any Guarantor or any Material Subsidiary for any Indebtedness for Borrowed Money becomes enforceable; or (iv) default is made by the Issuer, any Guarantor or any Material Subsidiary in making any payment due under any guarantee and/or indemnity given by it in relation to any Indebtedness for Borrowed Money of any other person; provided that no event described in this Condition 11.1(c) shall constitute an Event of Default unless the relevant amount of Indebtedness for Borrowed Money or other relative liability due and unpaid, either alone or when aggregated (without duplication) with other amounts of Indebtedness for Borrowed Money and/or other liabilities due and unpaid relative to all (if any) other events specified in (i) to (iv) above, amounts to at least U.S.$75,000,000 (or its equivalent in any other currency (on the basis of the middle spot rate for the relevant currency against the US dollar as quoted by any leading bank on the day on which this paragraph operates)); or (d) if one or more judgments or orders or arbitration awards is rendered against any part of the property, assets or revenues of the Issuer, any Guarantor or any Material Subsidiary, and is not discharged or stayed within 30 days, and provided further that the aggregate value of all such judgments, orders and awards amounts to at least U.S.$75,000,000 (or its equivalent in any other currency (on the basis of the middle spot rate for the relevant currency against the US dollar as quoted by any leading bank on the day on which this paragraph operates)); or (e) if any order is made by any competent court or resolution is passed for the winding up or dissolution of the Issuer, any Guarantor or any Material Subsidiary, save in connection with a Permitted Reorganisation; or (f) if the Issuer or any Guarantor ceases or threatens to cease to carry on the whole or a substantial part of its business or any Material Subsidiary ceases or threatens to cease to carry on the whole or substantially all of its business, save in connection with a Permitted Reorganisation, or the Issuer, any Guarantor or any Material Subsidiary stops or threatens to stop payment of, or is unable to, or admits inability to, pay, its debts (or any class of its debts) as they fall due or is deemed unable to pay its debts pursuant to or for the purposes of any applicable law, or is adjudicated or found bankrupt or insolvent; or

141 (g) if (i) proceedings are initiated against the Issuer, any Guarantor or any Material Subsidiary under any applicable liquidation, insolvency, composition, reorganisation, business rescue or other similar laws or an application is made (or documents filed with a court) for the appointment of an administrative or other receiver, manager, administrator, business rescue practitioner or other similar official, or an administrative or other receiver, manager, administrator, business rescue practitioner or other similar official is appointed, in relation to the Issuer, any Guarantor or any Material Subsidiary or, as the case may be, in relation to the whole or any material part of the undertaking or assets of any of them or an encumbrancer takes possession of the whole or any material part of the undertaking or assets of any of them, or a distress, execution, attachment, sequestration, business rescue or other judicial or court process is levied, enforced upon, sued out or put in force against the whole or any material part of the undertaking or assets of any of them, and (ii) in any such case (other than the appointment of an administrator) unless initiated by the relevant company, is not discharged within 30 days; or (h) if the Issuer, any Guarantor or any Material Subsidiary (or their respective directors or shareholders) initiates or consents to judicial proceedings relating to itself under any applicable liquidation, insolvency, composition, reorganisation, business rescue or other similar laws (including the obtaining of a moratorium) or makes a conveyance or assignment for the benefit of, or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors), save in connection with a Permitted Reorganisation; or (i) if the Guarantee ceases to be, or is claimed by any Guarantor not to be, in full force and effect; or (j) if the Issuer ceases to be a subsidiary wholly-owned and controlled, directly or indirectly, by MTN Group; or (k) if any event occurs which under the laws of a Relevant Jurisdiction (as defined in Condition 9.2) or any other applicable jurisdiction has an analogous effect to any of the events referred to in paragraphs (e) to (h) of this Condition 11.1.

11.2 Interpretation For the purposes of this Condition 11: (a) “Indebtedness for Borrowed Money” means any indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stock or other securities or any borrowed money or any liability under or in respect of any acceptance or acceptance credit; and (b) “Permitted Reorganisation” means (i) any disposal by any Subsidiary of the Issuer or any Guarantor of substantially all of its business, undertaking or assets to the Issuer or any Guarantor or any other Subsidiary of the Issuer or any Guarantor; (ii) any amalgamation, consolidation or merger of a Subsidiary with (A) the Issuer or any Guarantor (provided that the Issuer (in the case of the former) or any Guarantor (in the case of the latter) is the surviving entity of such amalgamation, consolidation or merger); or (B) any other Subsidiary of the Issuer or any Guarantor; or (iii) any amalgamation, consolidation, restructuring, merger or reorganisation on terms approved by an Extraordinary Resolution of Noteholders.

12. REPLACEMENT OF CERTIFICATES If any Certificate is lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Registrar upon payment by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.

13. NOTICES 13.1 Notices to the Noteholders All notices to the Noteholders will be valid if mailed to them at their respective addresses in the Register. The Issuer shall also ensure that notices are duly given or published in a manner which complies with the rules and regulations of any stock exchange or other relevant authority on which the Notes are for the time being listed. Any notice shall be deemed to have been given on the day after being so mailed or on the date of publication or, if so published more than once or on different dates, on the date of the first publication.

142 13.2 Notices from the Noteholders Notices to be given by any Noteholder shall be in writing and given by lodging the same, together with the relevant Certificate, with the Fiscal Agent or, if the Certificates are held in a clearing system, may be given through the clearing system in accordance with its standard rules and procedures.

14. MEETINGS OF NOTEHOLDERS AND MODIFICATION 14.1 Meetings of Noteholders The Agency Agreement contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the modification by Extraordinary Resolution of any of these Conditions or the Guarantee or any of the provisions of the Agency Agreement. The quorum at any meeting for passing an Extraordinary Resolution will be one or more persons present holding or representing more than 50 per cent. in principal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons present whatever the principal amount of the Notes held or represented by him or them, except that at any meeting the business of which includes the modification of certain of these Conditions or certain provisions of the Guarantee the necessary quorum for passing an Extraordinary Resolution will be one or more persons present holding or representing not less than two-thirds, or at any adjourned meeting not less than one-third, of the principal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders will be binding on all Noteholders, whether or not they are present at the meeting. The Agency Agreement provides that (i) a resolution in writing signed by or on behalf of the holders of not less than 75 per cent. in principal amount of the Notes for the time being outstanding and (ii) consent given by way of electronic consents (in a form satisfactory to the Fiscal Agent) through the relevant Clearing System(s) (as defined in the Agency Agreement) by or on behalf of the holders of not less than 75 per cent. in principal amount of the Notes for the time being outstanding shall in each case take effect as if it were an Extraordinary Resolution, and shall be binding on all of the Noteholders, whether or not signed by them (in the case of any resolution in writing) or an electronic consent was submitted by them (in the case of any consent given by way of electronic consents). Any resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

14.2 Modification The Fiscal Agent may agree, without the consent of the Noteholders, to any modification of any of these Conditions, the Guarantee or any of the provisions of the Agency Agreement for the purpose of curing any ambiguity or of curing, correcting or supplementing any manifest or proven error or any other defective provision contained herein or therein. Any modification shall be binding on the Noteholders and, unless the Fiscal Agent agrees otherwise, any modification shall be notified by the Issuer to the Noteholders as soon as practicable thereafter in accordance with Condition 13.

15. SUBSTITUTION OF THE ISSUER 15.1 The Issuer may, without the consent of the Noteholders be replaced and substituted by any Guarantor or any other company of which 100 per cent. of the shares or other equity interests (as the case may be) carrying the right to vote are directly or indirectly owned by one or more of the Guarantors as principal debtor (in such capacity, the “Substituted Debtor”) in respect of the Notes provided that: (a) a deed poll and such other documents (if any) shall be executed by the Substituted Debtor, the Issuer, the Guarantors and the Agents as may be necessary to give full effect to the substitution (together the “Documents”) and (without limiting the generality of the foregoing) pursuant to which the Substituted Debtor shall undertake in favour of the Noteholders to be bound by these Conditions and the provisions of the Agency Agreement, the Deed of Covenant and the Deed Poll as fully as if the Substituted Debtor had been named in the Notes, the Agency Agreement, the Deed of Covenant and the Deed Poll as the principal debtor in respect of the Notes in place of the Issuer (or any previous substitute) and pursuant to which the Guarantors shall unconditionally and irrevocably guarantee (the “New Guarantee”) in favour of each Noteholder the payment of all sums payable by the Substituted Debtor as such principal debtor on the same terms mutatis mutandis as the Guarantee; (b) without prejudice to the generality of Condition 15.1(a), where the Substituted Debtor is incorporated, domiciled or resident for taxation purposes in a territory other than Mauritius, the Documents shall

143 contain a covenant by the Substituted Debtor and/or such other provisions as may be necessary to ensure that each Noteholder has the benefit of a covenant in terms corresponding to the provisions of Condition 9 with the substitution in Condition 9.2(b) for the references to Mauritius in respect of the Issuer with references to the territory in which the Substituted Debtor is incorporated, domiciled and/or resident for taxation purposes; (c) the Documents shall contain a warranty and representation by the Substituted Debtor and the Guarantors that the Substituted Debtor and the Guarantors have obtained all necessary governmental and regulatory approvals and consents for such substitution and for the giving by the Guarantors of the New Guarantee in respect of the obligations of the Substituted Debtor on the same terms mutatis mutandis as the Guarantee, that each of the Substituted Debtor and the Guarantors has obtained all necessary governmental and regulatory approvals and consents for the performance by each of the Substituted Debtor and the Guarantors of its obligations under the Documents and that all such approvals and consents are in full force and effect; (d) each stock exchange which has the Notes listed thereon shall have confirmed that following the proposed substitution of the Substituted Debtor the Notes would continue to be listed on such stock exchange; (e) the Issuer shall have delivered or procured the delivery to the Fiscal Agent a copy of a legal opinion addressed to the Issuer, the Substituted Debtor and the Guarantors from a leading firm of lawyers in the country of incorporation of the Substituted Debtor, to the effect that the Documents constitute legal, valid and binding obligations of the Substituted Debtor, such opinion(s) to be dated not more than seven days prior to the date of substitution of the Substituted Debtor for the Issuer and to be available for inspection by Noteholders at the specified office of the Fiscal Agent; (f) the Guarantors shall have delivered or procured the delivery to the Fiscal Agent a copy of a legal opinion addressed to the Issuer, the Substituted Debtor and the Guarantors from each of a leading firm of Mauritian lawyers acting for the Guarantors, a leading firm of South African lawyers acting for the Guarantors and a leading firm of English lawyers acting for the Guarantors in each case to the effect that the Documents (including the New Guarantee given by the Guarantors in respect of the Substituted Debtor) constitute legal, valid and binding obligations of the Guarantors, such opinion to be dated not more than seven days prior to the date of substitution of the Substituted Debtor for the Issuer and to be available for inspection by Noteholders at the specified office of the Fiscal Agent; (g) the Substituted Debtor shall have appointed a process agent in England to receive service of process on its behalf in relation to any legal action or proceedings arising out of or in connection with the Notes or the Documents; (h) there is no outstanding Events of Default in respect of the Notes; (i) any credit rating assigned to the Notes will remain the same or be improved when the Substituted Debtor replaces and substitutes the Issuer in respect of the Notes; and (j) that all consents and approvals of any court, government department or other regulatory body in Mauritius, South Africa and the country of incorporation of the Substituted Debtor required for the substitution have been obtained and are unconditional and in full force and effect. 15.2 Upon the execution of the Documents as referred to in Condition 15.1 above, the Substituted Debtor shall be deemed to be named in the Notes as the principal debtor in place of the Issuer (or of any previous substitute under these provisions) and the Notes shall thereupon be deemed to be amended to give effect to the substitution. The execution of the Documents shall operate to release the Issuer (or such previous substitute as aforesaid) from all of its obligations in respect of the Notes. 15.3 The Documents shall be deposited with and held by the Fiscal Agent for so long as any Notes remain outstanding and for so long as any claim made against the Substituted Debtor or the Guarantors by any Noteholder in relation to the Notes or the Documents shall not have been finally adjudicated, settled or discharged. The Substituted Debtor and the Guarantors shall acknowledge in the Documents the right of every Noteholder to the production of the Documents for the enforcement of any of the Notes or the Documents. 15.4 Not later than 15 Business Days after the execution of the Documents, the Substituted Debtor shall give notice thereof to the Noteholders in accordance with Condition 13.

144 16. FURTHER ISSUES The Issuer may from time to time without the consent of the Noteholders create and issue further notes, having terms and conditions the same as those of the Notes, or the same except for the amount of the first payment of interest, which may be consolidated and form a single series with the outstanding Notes, provided, however, that such further notes will be fungible with the Notes for United States federal income tax purposes.

17. GOVERNING LAW AND SUBMISSION TO JURISDICTION 17.1 Governing Law The Agency Agreement, the Guarantee, the Deed of Covenant, the Deed Poll and the Notes, and any non- contractual obligations arising out of or in connection with the Agency Agreement, the Guarantee, the Deed of Covenant, the Deed Poll and the Notes, are governed by, and will be construed in accordance with, English law.

17.2 Jurisdiction of English courts The Issuer and the Guarantors have irrevocably agreed for the benefit of the Noteholders that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Notes and any non-contractual obligations arising out of or in connection with the Notes, and accordingly have submitted to the exclusive jurisdiction of the English courts. The Issuer and the Guarantors have, to the extent permitted by law, waived any objection to the courts of England on the grounds that they are an inconvenient or inappropriate forum. To the extent permitted by law, the Noteholders may take any suit, action or proceeding arising out of or in connection with the Notes (including any suit, action or proceeding relating to any non-contractual obligations arising out of or in connection with the Notes) (together referred to as “Proceedings”) against the Issuer or any Guarantor in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions.

17.3 Appointment of Process Agent The Issuer hereby irrevocably and unconditionally appoints Law Debenture Corporate Services Limited at its registered office, for the time being at Fifth Floor, 100 Wood Street, London EC2V 7EX, as its agent for service of process in England in respect of any Proceedings and undertakes that in the event of such agent ceasing so to act it will appoint another person as its agent for that purpose.

17.4 Other Documents Each of the Issuer and the Guarantors has in the Agency Agreement, the Deed of Covenant, the Deed Poll and the Guarantee submitted to the jurisdiction of the English courts and appointed an agent in England for service of process, in terms substantially similar to those set out above.

18. RIGHTS OF THIRD PARTIES No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Note, but this does not affect any right or remedy of any person which exists or is available apart from that Act.

145 CONDITIONS OF THE 2026 NOTES

The terms and conditions of the 2026 Notes will be identical to those described under “Conditions of the 2022 Notes” above, except as follows: (a) the reference in the introductory paragraph to the “U.S.$500,000,000 5.373 per cent. Guaranteed Notes due 2022” shall be replaced by a reference to the “U.S.$500,000,000 6.500 per cent. Guaranteed Notes due 2026” and references to “Notes” shall be construed as references to the 2026 Notes; (b) the reference in Condition 6.1 to “5.373 per cent.” shall be replaced by a reference to “6.500 per cent.”; (c) the reference in Condition 6.1 to “on 13 February and 13 August in each year” shall be replaced by a reference to “on 13 April and 13 October in each year”; (d) the final two sentences in Condition 6.1 shall be replaced by the sentence “The first payment (representing a full six months’ interest and amounting to U.S.$32.50 per U.S.$1,000 in principal amount of Notes) shall be made on 13 April 2017.”; and (e) the reference in Condition 8.1 to “13 February 2022” shall be replaced by a reference to “13 October 2026”.

146 THE GLOBAL CERTIFICATES

The Global Certificates of each Series contain the following provisions which apply to the Notes in respect of which they are issued whilst they are represented by those Global Certificates, some of which modify the effect of the Conditions of such Notes. Terms defined in the Conditions of the relevant Series have the same meaning in paragraphs 1 to 6 below.

1. ACCOUNTHOLDERS For so long as any of the Notes are represented by a Global Certificate, each person (other than another clearing system) who is for the time being shown in the records of DTC or Euroclear or Clearstream, Luxembourg (as the case may be) as the holder of a particular aggregate principal amount of such Notes (each an “Accountholder”) (in which regard any certificate or other document issued by DTC or Euroclear or Clearstream, Luxembourg (as the case may be) as to the aggregate principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes) shall be treated as the holder of such aggregate principal amount of such Notes (and the expression “Noteholders” and references to “holding of Notes” and to “holder of Notes” shall be construed accordingly) for all purposes other than with respect to payments on such Notes, the right to which shall be vested, as against the Issuer and the Guarantors, solely in the nominee for the relevant clearing system (the “Relevant Nominee”) in accordance with and subject to the terms of the relevant Global Certificate. Each Accountholder must look solely to DTC or Euroclear or Clearstream, Luxembourg, as the case may be, for its share of each payment made to the Relevant Nominee.

2. CANCELLATION Cancellation of any Note following its redemption or purchase by the Issuer, any Guarantor or any of MTN Group’s other Subsidiaries will be effected by reduction in the aggregate principal amount of the Notes in the Register and by the annotation of the appropriate schedule to the relevant Global Certificate.

3. PAYMENTS Payments of principal and interest in respect of Notes represented by a Global Certificate will be made upon presentation or, if no further payment falls to be made in respect of the Notes, against presentation and surrender of such Global Certificate to or to the order of the Fiscal Agent or such other Agent as shall have been notified to the holders of the relevant Global Certificate for such purpose.

Distributions of amounts with respect to book-entry interests in the Regulation S Notes held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the Fiscal Agent, to the cash accounts of Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system’s rules and procedures.

Holders of book-entry interests in the Rule 144A Notes held through DTC will receive, to the extent received by the Fiscal Agent, all distribution of amounts with respect to book-entry interests in such Notes from the Fiscal Agent through DTC. Distributions in the United States will be subject to relevant U.S. tax laws and regulations.

A record of each payment made will be endorsed on the appropriate schedule to the relevant Global Certificate by or on behalf of the Fiscal Agent and shall be prima facie evidence that payment has been made.

4. NOTICES So long as the Notes of a Series are represented by a Global Certificate and such Global Certificate is held on behalf of a clearing system, notices to Noteholders of that Series may be given by delivery of the relevant notice to that clearing system for communication by it to entitled Accountholders in substitution for notification as required by Condition 13. Any such notice shall be deemed to have been given to such Noteholders on the day after the day on which such notice is delivered to such clearing system.

Whilst any of the Notes of a Series held by a Noteholder are represented by a Global Certificate in respect of that Series, notices to be given by such Noteholder may be given by such Noteholder (where applicable) through the relevant clearing system’s operational procedures and otherwise in such manner as the Fiscal Agent and the applicable clearing system may approve for this purpose.

147 5. REGISTRATION OF TITLE Registration of title to Notes in a name other than that of the Relevant Nominee will not be permitted unless Euroclear or Clearstream, Luxembourg or DTC, as appropriate, notifies the Issuer and the Guarantors that it is unwilling or unable to continue as a clearing system in connection with a Global Certificate of the relevant Series or, in the case of DTC only, DTC ceases to be a clearing agency registered under the Exchange Act, and in each case a successor clearing system is not appointed by the Issuer and the Guarantors within 90 days after receiving such notice from Euroclear, Clearstream, Luxembourg or DTC or becoming aware that DTC is no longer so registered. In these circumstances title to a Note of such Series may be transferred into the names of holders notified by the Relevant Nominee in accordance with the Conditions of such Series, except that Certificates in respect of Notes of that Series so transferred may not be available until 21 days after the request for transfer is duly made.

The Registrar will not register title to the Notes of a Series in a name other than that of the Relevant Nominee for a period of 15 calendar days preceding the due date for any payment of principal or interest in respect of the Notes of that Series.

If only one of the Global Certificates of a Series (the “Exchanged Global Certificate”) becomes exchangeable for Certificates in accordance with the above paragraphs, transfers of Notes of that Series may not take place between, on the one hand, persons holding Certificates issued in exchange for beneficial interests in the Exchanged Global Certificate and, on the other hand, persons wishing to purchase beneficial interests in the other Global Certificate.

6. TRANSFERS Transfers of book-entry interests in the Notes will be effected through the records of Euroclear, Clearstream, Luxembourg and DTC and their respective participants in accordance with the rules and procedures of Euroclear, Clearstream, Luxembourg and DTC and their respective direct and indirect participants, as more fully described under “Book-Entry Clearance Systems”.

148 BOOK-ENTRY CLEARANCE SYSTEMS

The information set out below is subject to any change in or reinterpretation of the rules, regulations and procedures of each of DTC, Euroclear or Clearstream, Luxembourg currently in effect. The information in this section concerning the Clearing Systems has been obtained from sources that the Issuer believes to be reliable, but none of the Managers takes any responsibility for the accuracy thereof. Investors wishing to use the facilities of the Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of such facilities. None of the Issuer, the Guarantors nor any other party to the Agency Agreement will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the Notes held through the facilities of the Clearing Systems or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

Book-Entry Systems Euroclear and Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg each hold securities for their customers and facilitate the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders. Euroclear and Clearstream, Luxembourg provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg also deal with domestic securities markets in several countries through established depositary and custodial relationships. Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems across which their respective participants may settle trades with each other. Euroclear and Clearstream, Luxembourg customers are worldwide financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear and Clearstream, Luxembourg is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system.

DTC DTC has advised the Issuer that it is a limited purpose trust company organised under the New York Banking Law, a “banking organisation” within the meaning of the New York Banking Law, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to Section 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among its participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerised book-entry changes in participants’ accounts. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly.

Registration and Form Book-entry interests in the Notes of a Series held through Euroclear and Clearstream, Luxembourg will be represented by the Unrestricted Global Certificate registered in the name of a nominee of, and held by, a common depositary for Euroclear and Clearstream, Luxembourg. Book-entry interests in the Notes of a Series held through DTC will be represented by the Restricted Global Certificate registered in the name of Cede & Co., as nominee for DTC, and held by a custodian for DTC. As necessary, the Registrar will adjust the amounts of Notes on the Register for the accounts of Euroclear, Clearstream, Luxembourg and DTC to reflect the amounts of Notes held through Euroclear, Clearstream, Luxembourg and DTC, respectively. Beneficial ownership of book-entry interests in Notes will be held through financial institutions as direct and indirect participants in Euroclear, Clearstream, Luxembourg and DTC.

The aggregate holdings of book-entry interests in the Notes in Euroclear, Clearstream, Luxembourg and DTC will be reflected in the book-entry accounts of each such institution. Euroclear, Clearstream, Luxembourg or DTC, as the case may be, and every other intermediate holder in the chain to the beneficial owner of book-entry interests in the Notes will be responsible for establishing and maintaining accounts for their participants and customers having interests in the book-entry interests in the Notes. The Registrar will be responsible for maintaining a record of the aggregate holdings of Notes registered in the name of a common nominee for Euroclear and Clearstream, Luxembourg, a nominee for DTC and/or, if individual Certificates are issued in the

149 limited circumstances described under “The Global Certificates—Registration of Title”, holders of Notes represented by those individual Certificates. The Fiscal Agent will be responsible for ensuring that payments received by it from the Issuer for holders of book-entry interests in the Notes holding through Euroclear and Clearstream, Luxembourg are credited to Euroclear or Clearstream, Luxembourg, as the case may be, and the Fiscal Agent will also be responsible for ensuring that payments received by the Fiscal Agent from the Issuer for holders of book-entry interests in the Notes holding through DTC are credited to DTC.

The Issuer will not impose any fees in respect of holding the Notes; however, holders of book-entry interests in the Notes may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear, Clearstream, Luxembourg or DTC.

Clearing and Settlement Procedures Initial Settlement Upon their original issue, the Notes of a Series will be in global form represented by the two Global Certificates. Interests in the Notes will be in uncertified book-entry form. Purchasers electing to hold book-entry interests in the Notes through Euroclear and Clearstream, Luxembourg accounts will follow the settlement procedures applicable to conventional Eurobonds. Book-entry interests in the Notes will be credited to Euroclear and Clearstream, Luxembourg participants’ securities clearance accounts on the business day following the date of closing of the Offering (the “Closing Date”) against payment (value the Closing Date). DTC participants acting on behalf of purchasers electing to hold book-entry interests in the Notes through DTC will follow the delivery practices applicable to securities eligible for DTC’s Same Day Funds Settlement system. DTC participants’ securities accounts will be credited with book-entry interests in the Notes following confirmation of receipt of payment to the Issuer on the Closing Date.

Secondary Market Trading Secondary market trades in the Notes will be settled by transfer of title to book-entry interests in the Clearing Systems. Title to such book-entry interests will pass by registration of the transfer within the records of Euroclear, Clearstream, Luxembourg or DTC, as the case may be, in accordance with their respective procedures. Book-entry interests in the Notes may be transferred within Euroclear and within Clearstream, Luxembourg and between Euroclear and Clearstream, Luxembourg in accordance with procedures established for these purposes by Euroclear and Clearstream, Luxembourg. Book-entry interests in the Notes may be transferred within DTC in accordance with procedures established for this purpose by DTC. Transfer of book-entry interests in the Notes between Euroclear or Clearstream, Luxembourg and DTC may be effected in accordance with procedures established for this purpose by Euroclear, Clearstream, Luxembourg and DTC.

General None of Euroclear, Clearstream, Luxembourg or DTC is under any obligation to perform or continue to perform the procedures referred to above, and such procedures may be discontinued at any time. None of the Issuer, the Guarantors, the Fiscal Agent or any of their agents will have any responsibility for the performance by Euroclear, Clearstream, Luxembourg or DTC or their respective participants of their respective obligations under the rules and procedures governing their operations or the arrangements referred to above and none of them will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the Notes represented by Global Certificates or for maintaining, supervising or reviewing any records relating to such beneficial interests.

150 TAXATION

This is a general overview of certain United States Federal, South African and Mauritian income tax considerations in connection with an investment in the Notes. This overview does not address all aspects of United States Federal, South African and Mauritian income tax laws and does not discuss any state or local tax considerations. While this overview is considered to be a correct interpretation of existing laws in force on the date of this Offering Circular, there can be no assurance that those laws or the interpretation of those laws will not change. This overview does not discuss all of the income tax consequences that may be relevant to an investor in light of such investor’s particular circumstances or to investors subject to special rules, such as regulated investment companies, certain financial institutions or insurance companies. Prospective investors are advised to consult their tax advisers with respect to the tax consequences of the purchase, ownership or disposition of the Notes (or the purchase, ownership or disposition of beneficial interests therein) as well as any tax consequences that may arise under the laws of any state, municipality or other taxing jurisdiction. References to “resident” herein refer to tax residents of the United States, South Africa or Mauritius, as applicable, and references to “non-resident” herein refer to persons who are not tax residents of the United States, South Africa or Mauritius, as applicable.

Certain US Federal Income Tax Consequences The following discussion is a summary based on present law of certain US federal income tax considerations relevant to the purchase, ownership and disposition of Notes. This discussion addresses only US Holders (as defined below) who purchase Notes in the Offering at their issue price, hold such Notes as capital assets and use the US dollar as their functional currency. This discussion is not a complete description of all US federal tax considerations relating to the purchase, ownership and disposition of Notes. It does not address the tax treatment of investors subject to special rules, such as financial institutions, dealers, traders that elect to mark-to-market, insurance companies, investors liable for the alternative minimum tax, US expatriates, tax-exempt entities or persons holding Notes as part of a hedge, straddle, conversion or other integrated financial transaction. It does not address the tax treatment of prospective purchasers that hold Notes in connection with a permanent establishment outside of the United States. It also does not consider US federal estate or gift taxes, US state or local tax matters or non-US tax considerations.

For purposes of this discussion, a “US Holder” is a beneficial owner of the Notes that is, for purposes of US federal income taxation, (i) a citizen or individual resident of the United States, (ii) a corporation created or organised under the laws of the United States, any state thereof or the District of Columbia, (iii) a trust subject to the control of a US person and the primary supervision of a US court or (iv) an estate the income of which is subject to US federal income taxation regardless of its source.

The US federal income tax treatment of a partner in a partnership (or any entity treated as a partnership for US federal income tax purposes) that acquires or holds Notes generally will depend upon the status of the partner and the activities of the partnership. A prospective investor that is a partnership for US federal income tax purposes should consult its own tax advisers about the tax consequences for its partners of its acquisition, ownership, or disposition of Notes. This discussion assumes the Notes will be treated as debt for US federal income tax purposes.

Interest Stated interest on the Notes, including tax withheld, if any (and any additional amounts paid in respect of any such withholding taxes), generally will be includible in the gross income of a US Holder in accordance with its regular method of tax accounting. The interest will be ordinary income from sources outside the United States. Subject to applicable limitations, a US Holder may claim a deduction or a foreign tax credit only for tax withheld at the appropriate rate.

If the Notes are issued with original issue discount (“OID”), a US Holder must accrue the OID into income on a constant yield to maturity basis whether or not it receives cash payments and regardless of its method of tax accounting. Generally, the Notes will be issued with OID to the extent that their “stated redemption price at maturity” exceeds their “issue price” by more than a de minimis amount. However, the Notes generally will not have OID if such excess is less than 1/4 of 1% of their stated redemption price at maturity multiplied by the number of complete years to maturity (“de minimis OID”). The issue price of the Notes is the initial offering price at which a substantial amount of the Notes is first sold to the public for cash (excluding sales to underwriters, brokers or similar persons). The stated redemption price at maturity of a Note is the total of all

151 payments due on the Note other than payments of “qualified stated interest”. In general, qualified stated interest is stated interest that is payable unconditionally in cash or in property at least annually at a single fixed rate. Stated interest on the Notes will be qualified stated interest. The OID, if any, will be treated as ordinary income from sources outside of the United States. Prospective purchasers should consult their own tax advisers concerning the application of the OID rules to the Notes.

Interest and any accrued OID will be included in net investment income for purposes of the Medicare tax applicable to certain non-corporate US Holders.

Disposition of a Note A US Holder generally will recognise gain or loss on the sale, redemption or other taxable disposition of a Note in an amount equal to the difference between the amount realised (less any accrued but unpaid interest, which will be taxable as ordinary interest income to the extent not previously included in income) and the US Holder’s adjusted tax basis in the Note. A US Holder’s adjusted tax basis in a Note generally will be the amount paid for the Note, increased by any accrued OID and less any payments other than stated interest previously received by the holder.

Gain or loss on a sale, exchange or other taxable disposition of a Note generally will be US source and will generally be capital gain or loss. Any capital gain or loss will be long term capital gain or loss if the US Holder has held the Note for more than one year. The long term capital gains of non-corporate US Holders may be taxed at lower rates. Deductions for capital losses are subject to limitations.

Gains will be included in net investment income for purposes of the Medicare tax applicable to certain non- corporate US Holders.

Substitution of the Issuer If a Substituted Debtor is substituted for the Issuer, the substitution may depending on the circumstances be treated as an exchange of the Notes for deemed new notes of the Substituted Debtor. In such an event, unless a non-recognition provision applies, a US Holder generally will recognise any gain or loss realised in the deemed exchange in an amount equal to the difference, if any, between (i) the issue price of the deemed new notes (which would be their fair market value assuming the Notes are trading on an established market) and (ii) the US Holder’s adjusted tax basis in the Notes. Any deemed new notes will be issued with OID if the stated principal amount of the new notes received in the deemed exchange exceeds their issue price by as much as 0.25% multiplied by the number of complete years to maturity, as described in the discussion relating to taxation of interest above. Thus, a substitution of the Issuer may cause US Holders to include OID or a greater amount of OID on the Notes where either no OID or a lesser amount of OID was required to be included.

Information Reporting and Backup Withholding Payments of interest, any OID and proceeds from the sale, redemption or other disposition of a Note may be reported to the Internal Revenue Service (“IRS”) unless the US Holder is a corporation or otherwise establishes a basis for exemption. Backup withholding tax may apply to amounts subject to reporting if the US Holder fails to provide an accurate taxpayer identification number and make certain certifications or fails to report all interest and dividends required to be shown on its US federal income tax returns. A US Holder can claim a credit against its US federal income tax liability for the amount of any backup withholding tax and a refund of any excess provided the required information is furnished to the IRS in the time and manner required. Prospective investors should consult their tax advisers as to their qualification for exemption from backup withholding and the procedure for establishing an exemption.

Certain non-corporate US Holders are required to report information with respect to their investment in Notes not held through an account with certain financial institutions to the IRS. Investors who fail to report required information could become subject to substantial penalties. Potential investors are encouraged to consult with their own tax advisers regarding their reporting obligations in respect of their prospective investment in Notes.

Certain South African Tax Considerations The following is a non-exhaustive summary of the South African tax consequences of the acquisition, ownership and disposition of the Notes by South African tax residents and non-residents who are beneficial owners of the Notes. The Issuer is regarded as being tax resident in South Africa.

152 Interest Under current taxation law effective in South Africa a “resident” (as defined in section 1 of the South African Income Tax Act, 1962 (the “Income Tax Act”)) is subject to income tax on worldwide income. Accordingly, any interest received by or accruing to a South African tax resident will be subject to income tax (subject to available deductions, allowances and exemptions).

The taxation of interest is generally governed by section 24J of the Income Tax Act. The Income Tax Act requires a South African tax resident to account for, inter alia, any interest arising from an “instrument” and premium or discount on the issue and/or redemption of such “instrument” as interest. The taxation of such interest is spread over the term of the Notes using a yield-to-maturity or an acceptable alternative methodology, as set out in section 24J of the Income Tax Act, unless the holder is a financial institution registered in terms of section 1 of the South African Financial Markets Act, 2012, the South African Reserve Bank or a registered banking institution (including companies forming part of a banking group), but excluding long term and short term insurance institutions who determine their taxable income in respect of certain financial instruments by including in or deducting from their income, for tax purposes, any fair value adjustments of such instruments required in terms of the IFRS that are recognised in profits or loss.

As the Notes will be denominated in US dollars, the interest accruing to the holders of the Notes must be converted to Rand on the date that the interest is received or accrues for tax purposes, using the exchange rate methodology prescribed in the Income Tax Act.

Holders of Notes who are not tax resident in South Africa are subject to normal tax on interest received or accrued from a source within South Africa. Any such interest is, however, exempt from South African normal tax, unless— (i) that the tax non-resident person is a natural person who was physically present in South Africa for a period exceeding 183 days in aggregate during the twelve-month period preceding the date on which the interest is received or accrues by or to that person; or (ii) the debt from which the interest arises is effectively connected to a permanent establishment of that person in South Africa.

Issue, Sale and Redemption of the Notes The issue, sale and redemption of the Notes are not subject to value-added tax (“VAT”) or any transfer taxes, as they do not constitute “securities” for the purposes of the South African Securities Transfer Tax Act, 2007 and constitute “debt securities” for purposes of the South African Value-Added Tax Act, 1991 (the “VAT Act”). The issue, allotment, drawing, acceptance, endorsement or transfer of ownership of a debt security is exempt from VAT in terms of section 12(a) of VAT Act. Commissions, fees or similar charges raised by a registered vendor for VAT purposes for the facilitation, issue, allotment, drawing, acceptance, endorsement of transfer of ownership of Notes that constitute “debt securities” will, however, be subject to VAT at the standard rate (14 per cent. at the date of initial issuance of the Notes), except where the recipient is a non-resident. The taxable supply of services by a registered vendor rendered to non-residents who are not in South Africa when the services are rendered, are subject to VAT at a zero rate in terms of section 11(2) (l) of the VAT Act.

A sale of the Notes by a South Africa tax resident holder may result in a capital gain or loss if the Notes were held as capital assets or a revenue gain or loss if the Notes were held as trading stock. Any such capital gain or revenue gain will be subject to capital gains tax or income tax, respectively, in the holder’s hands. The gain or loss is determined in accordance with the provisions of the Income Tax Act and any discount or premium on acquisition which has already been treated as interest for income tax purposes, under section 24J of the Income Tax Act will not be taken into account when determining any capital gain or loss. If the Notes are disposed of or redeemed prior to or on maturity, an “adjusted gain on transfer or redemption of an instrument”, or an “adjusted loss on transfer or redemption of an instrument”, as contemplated in section 24J of the Income Tax Act, must be calculated. Any such adjusted gain or adjusted loss is deemed to have been incurred or to have accrued in the year of assessment in which the transfer or redemption occurred. The calculation of the adjusted gain or adjusted loss will take into account, inter alia, all interest which has already been deemed to accrue to the Noteholder over the term that the instrument. Under section 24J(4A) of the Income Tax Act, where an adjusted loss on transfer or redemption of an instrument realised by a holder of a Note includes any amount representing interest that has previously been included in the income of the holder, that amount will qualify as a deduction from the income of the holder during the year of assessment in which the transfer or redemption takes place and will not give rise to

153 a capital loss. To the extent that a Noteholder constitutes a “covered person” (as defined in section 24JB of the Income Tax Act) and section 24JB applies to the Notes, the Noteholder will be taxed in accordance with the provisions of section 24JB of the Act and the capital gains tax provisions would not apply. A sale of Notes by a non-resident holder will only be subject to capital gains tax in South Africa if the Notes are attributable to a permanent establishment of the Noteholder in South Africa. This tax treatment will be subject to the provisions of any applicable tax treaty.

Taxation of Foreign Exchange Gains and Losses As the Notes will be denominated in US dollars, a South African tax resident holder who is (1) a company; (2) a trust carrying on a trade; or (3) a natural person who holds the Notes as trading stock will be required to account for foreign exchange gains and losses on translation and realisation of the Notes in accordance with the provisions of section 24I of the Income Tax Act. Such persons will be required to include in their taxable income any translations and realisations exchange gains and losses on the Notes. No taxable foreign exchange gains or losses will arise for such persons where the Notes are attributable to a permanent establishment outside of South Africa and the functional currency of that permanent establishment is the same as the currency in which the applicable Notes of such a person are denominated.

Persons holding the Notes as capital assets will be required to take currency fluctuations into account in determining the capital gain or loss in respect of the disposal of the Notes in accordance with the provisions of the Eighth Schedule of the Income Tax Act. The manner in which the currency fluctuations have to be taken into account will depend, inter alia, on the currency of the proceeds for the disposal of the Notes.

Withholding Tax Under current taxation law in South Africa, all payments made under the Notes and the Guarantees to resident and non-resident holders of the Notes (other than payments of interest) will generally be made free of withholding or deduction for or on account of any taxes, duties, assessments or governmental charges in South Africa.

Section 50A-50H of the Income Tax Act imposes a withholding tax on South African-sourced interest paid to or for the benefit of a foreign person at a rate of 15% of the amount of interest. However, South African sourced interest that is paid to or for the benefit of a foreign person in respect of any listed debt is exempt from the withholding tax on interest. A “listed debt” is a debt that is listed on a “recognized exchange” as defined in the Income Tax Act. The Notes are listed on a “recognized exchange” and are therefore currently exempt from withholding tax on interest. In the event that the Notes cease to be listed on a “recognized exchange” the rate of withholding tax may be reduced by the application of any double taxation agreements between South Africa and the country of tax residence of the relevant holder of the Notes. In order to benefit from the application of such double taxation agreements non-resident holders of the Notes are required to submit a declaration and undertaking in the prescribed form to the Issuer.

In addition, a foreign person is exempt from the withholding tax on interest if: (i) that foreign person is a natural person who was physical present in South Africa for a period exceeding 183 days in aggregate during the twelve-month period preceding the date on which the interest is paid; or (ii) the debt claim in respect of which that interest is paid is effectively connected with a permanent establishment of that foreign person in South Africa if that foreign person is registered as a South African taxpayer in terms of the Chapter 3 of the South African Tax Administration Act, 2011.

Non-resident holders of the Notes are cautioned to seek independent tax advice in relation to withholding tax imposed on interest payments.

Certain Mauritian Tax Considerations Withholding Tax With respect to any payment of principal made by the Issuer under the Notes or by any Guarantor under the Guarantees, there will be no withholding or deduction for or on account of any taxes in Mauritius nor any other tax implications in Mauritius.

Payments in respect of interest made by the Issuer under the Notes or MTN Mauritius under the Guarantee to a resident (other than a company resident in Mauritius) are subject to a withholding tax under the Income Tax Act

154 1995 (“ITA 95”) at a rate of 15%, subject to such relief as may be available under the provisions of any applicable double taxation treaty or any other exemption which may apply. Any such payments when made to non-residents not carrying on any business in Mauritius by a company holding a GBL 1 out of its foreign source income (as defined below) are exempt from such withholding tax. Accordingly, it is expected that any payments of interest to non-residents not carrying on any business in Mauritius made under the Notes by the Issuer, being a company holding a GBL 1, or under the Guarantees by MTN Mauritius, also being a company holding a GBL 1, will be exempt from any such withholding tax in Mauritius provided such payments are made out of foreign source income. Any payments in respect of interest made under the Guarantees by any Guarantor (other than MTN Mauritius) to a non-resident shall not be subject to any withholding or deduction for or on account of any taxes in Mauritius.

Section 2 of the ITA 95 defines the term ‘foreign source income’ as income which is not derived from Mauritius; and as including, in the case of a corporation holding a GBL 1, income derived from transactions with non-residents as defined in the ITA 95.

Capital gains tax Any gains derived by a company resident in Mauritius from the sale of the Notes held for a period of at least six (6) months prior to the sale by such company will be considered as capital gains and will not be taxable in Mauritius. However, the tax treatment of any gains derived by a company from the sale of Notes held for a period of less than six (6) months will depend on the nature of the business of the company. Accordingly, gains derived by a company from the sale of Notes held for a period of less than six (6) months which are gains from any trade or business carried on by that company, may be taxable in Mauritius at the applicable rate as such gains are considered revenue in nature.

Gains made by any Noteholder who is a physical person or société resident in Mauritius are considered as capital gains and are not subject to income tax or otherwise taxable in Mauritius.

Further, gains made by any Noteholder that is not a resident of Mauritius are considered as capital gains and are not subject to income tax or otherwise taxable in Mauritius.

The proposed financial transactions tax (“FTT”) On 14 February 2013, the European Commission has published a proposal (the “Commission’s Proposal”) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “participating Member States”). However, Estonia has since stated that it will not participate.

The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances.

Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.

However, the FTT proposal remains subject to negotiation between participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate.

Prospective holders of the Notes are advised to seek their own professional advice in relation to the FTT.

155 EXCHANGE CONTROL

The information below is not intended as legal advice and it does not purport to describe all of the considerations that may be relevant to a prospective purchaser of the Notes. Prospective purchasers of the Notes that are not South African residents or emigrants from the Common Monetary Area (as defined below) to South Africa are urged to seek further professional advice in regard to the purchase of Notes.

Exchange controls restrict the export of capital from South Africa, Namibia and the Kingdom of Swaziland and Lesotho (collectively the “Common Monetary Area”). These exchange controls are administered by the Financial Surveillance Department of the South African Reserve Bank (the “SARB”) and regulate transactions involving South African residents. The purpose of exchange controls is to mitigate the decline of foreign capital reserves in South Africa. The Issuer expects that South African exchange controls will continue to operate in the foreseeable future. The Government of South Africa has, however, committed itself to relaxing exchange controls gradually and significant relaxation has occurred in recent years. It is the stated objective of the South African authorities to achieve equality of treatment between South African residents and non-South African residents in relation to inflows and outflows of capital. This gradual approach towards the abolition of exchange controls adopted by the Government of South Africa is designed to allow the economy to adjust more smoothly to the removal of controls that have been in place for a considerable period of time. Furthermore, exchange control requirements are in place under the Exchange Control Regulations, 1961 (the “Exchange Control Regulations”).

No South African residents or offshore subsidiary of a South African resident may subscribe for or purchase any of the Notes or beneficially own or hold any of the Notes unless specific approval has been obtained from the SARB by such persons or such subscription, purchase or beneficial holding or ownership is otherwise permitted under the South African exchange control regulations or the rulings promulgated thereunder (including, without limitation, the rulings issued by the SARB providing for foreign investment allowances applicable to persons who are residents of South Africa under the applicable exchange control laws of South Africa).

The issuing of a guarantee by those Guarantors incorporated in South Africa requires the approval of the SARB. We have obtained the approval of the SARB for the issuance of the guarantee by the Guarantors incorporated in South Africa.

All exchange control restrictions applicable in Mauritius were suspended with effect from 29 July 1994. Thus all funds paid to or by the Issuer, or by MTN Mauritius under the Guarantees, will be excluded from the exchange control regulations.

156 SUBSCRIPTION AND SALE

The Issuer intends to offer the Notes through the Managers and their broker-dealer affiliates, as applicable, named below. Subject to the terms and conditions stated in a subscription agreement (the “Subscription Agreement”) dated 11 October 2016 among the Managers, the Issuer and the Guarantors, each of the Managers has severally agreed to purchase, and the Issuer has agreed to sell to each of the Managers, the principal amount of the Notes of each Series set forth opposite each Manager’s name below.

Principal amount of 2022 Notes (US$) Manager Barclays Bank PLC ...... 100,000,000 Citigroup Global Markets Limited ...... 100,000,000 Merrill Lynch International ...... 100,000,000 The Standard Bank of South Africa Limited ...... 100,000,000 J.P. Morgan Securities plc ...... 20,000,000 Mizuho Securities USA Inc...... 20,000,000 MUFG Securities EMEA plc ...... 20,000,000 SMBC Nikko Capital Markets Limited ...... 20,000,000 Standard Chartered Bank ...... 20,000,000 Total 500,000,000

Principal amount of 2026 Notes (US$) Manager Barclays Bank PLC ...... 100,000,000 Citigroup Global Markets Limited ...... 100,000,000 Merrill Lynch International ...... 100,000,000 The Standard Bank of South Africa Limited ...... 100,000,000 J.P. Morgan Securities plc ...... 20,000,000 Mizuho Securities USA Inc...... 20,000,000 MUFG Securities EMEA plc ...... 20,000,000 SMBC Nikko Capital Markets Limited ...... 20,000,000 Standard Chartered Bank ...... 20,000,000 Total 500,000,000

The Subscription Agreement provides that the obligations of the Managers to purchase the Notes are subject to approval of legal matters by counsel and to other conditions. The offering of the Notes by the Managers is subject to the Managers’ right to reject any order in whole or in part.

The Issuer has been informed that the Managers propose to resell beneficial interests in the Notes of each Series at the offering price in respect of that Series set forth on the cover page of this Offering Circular within the United States to persons reasonably believed to be QIBs in reliance upon Rule 144A, and to persons other than US persons (as defined in Regulation S) in offshore transactions in reliance upon Regulation S. See “Transfer Restrictions”. The prices at which beneficial interests in the Notes are offered may be changed at any time without notice.

Offers and sales of the Notes in the United States will be made by those Managers or their affiliates that are registered broker-dealers under the Exchange Act, or in accordance with Rule 15a-6 thereunder.

The Notes and the Guarantees have not been registered under the Securities Act or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. See “Transfer Restrictions”.

Accordingly, until 40 days after the Closing Date of this Offering (the “Distribution Compliance Period”), an offer or sale of Notes (or beneficial interests therein) within the United States by a dealer that is not participating in this Offering may violate the registration requirements of the Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A.

157 Each Series of Notes will constitute a new class of securities of the Issuer with no established trading market. The Issuer cannot provide any assurances to investors that the prices at which the Notes of that Series (or beneficial interests therein) will sell in the market after this Offering will not be lower than the initial offering price in respect of that Series or that an active trading market for such Notes will develop and continue after this Offering. The Managers have advised the Issuer that they currently intend to make a market in the Notes of each Series. However, they are not obligated to do so, and they may discontinue any market-making activities with respect to the Notes of either or each Series at any time without notice. Applications have been made to admit the Notes to listing on the Official List and to have the Notes admitted to trading on the Main Securities Market. Accordingly, the Issuer cannot provide any assurances to investors as to the liquidity of or the trading market for the Notes.

In connection with the Offering, one or more of the Managers may purchase and sell Notes of each Series (or beneficial interests therein) in the open market. These transactions may include overallotment, syndicate covering transactions and stabilising transactions. Overallotment involves the sale of Notes of a Series (or beneficial interests therein) in excess of the principal amount of Notes of that Series to be purchased by the Managers in this Offering, which creates a short position for the Managers. Covering transactions involve the purchase of the Notes of a Series (or beneficial interests therein) in the open market after the distribution has been completed in order to cover short positions. Stabilising transactions consist of certain bids or purchases of Notes of a Series (or beneficial interests therein) made for the purpose of preventing or retarding a decline in the market price of the Notes of that Series (or beneficial interests therein) while the Offering is in progress. Any of these activities may have the effect of preventing or retarding a decline in the market price of the Notes of a Series (or beneficial interests therein). They may also cause the price of the Notes of a Series (or beneficial interests therein) to be higher than the price that otherwise would exist in the open market in the absence of these transactions. The Managers may conduct these transactions in the over-the-counter market or otherwise. If the Managers commence any of these transactions, they may discontinue them at any time.

The Issuer expects that delivery of interests in the Notes will be made against payment therefor on the Issue Date specified on the cover page of this Offering Circular, which will be the fifth Business Day following the date of pricing of the Notes (this settlement cycle being referred to as T+5). Under Rule 15c6-l of the Exchange Act, trades in the secondary market generally are required to settle in three New York business days, unless the parties to any such trade expressly agree otherwise. Accordingly, investors who wish to trade interests in the Notes on the date of pricing of the Notes or the next New York business day will be required, by virtue of the fact that the Notes initially will settle in T+5, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Investors in the Notes who wish to trade interests in the Notes on the date of pricing of the Notes or the next New York business day should consult their own adviser.

The Managers and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. The Managers or their respective affiliates may have performed investment banking and advisory services for, and had other commercial dealings in the ordinary course of business with, the Issuer, the Guarantors and their respective affiliates from time to time for which they may have received fees, expenses, reimbursements and/or other compensation. The Managers or their respective affiliates may in the future, from time to time, engage in transactions with and perform advisory and other services for the Issuer, the Guarantors and their respective affiliates in the ordinary course of their business for which they may receive customary fees and commissions. Certain of the Managers and/or their respective affiliates have acted and expect in the future to act as a lender to the Issuer, the Guarantors and/or their respective subsidiaries and/or otherwise participate in transactions with the Issuer, the Guarantors and/or their respective subsidiaries.

In the ordinary course of their various business activities, the Managers and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and/or instruments of the Issuer, the Guarantors or their respective affiliates. In addition, certain of the Managers and/or their respective affiliates hedge their credit exposure to the Issuer and the Guarantors pursuant to their customary risk management policies. Typically, such Managers and their affiliates may hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in securities, including potentially the Notes. These hedging activities could have an adverse effect on the future trading prices of the Notes of either or each Series offered

158 hereby. The Managers and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Each of the Issuer and the Guarantors, on a joint and several basis, has agreed to indemnify each Manager against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Managers may be required to make because of those liabilities.

159 SELLING RESTRICTIONS

General No action has been taken by the Issuer or any of the Managers that would, or is intended to, permit a public offer of the Notes, or possession or distribution of this Offering Circular or any other offering or publicity material relating to the Notes in any country or jurisdiction where any such action for that purpose is required. Accordingly, each Manager has undertaken that it will not, directly or indirectly, offer or sell any Notes or have in its possession, distribute or publish any offering circular, prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of Notes by it will be made on the same terms.

For the purpose of the Securities Act 2005 of Mauritius the Issuer will only issue Notes to investors on the condition that they subscribe for a minimum amount of US$200,000 and they are either (i) QIBs in the United States or (ii) qualified investors (as defined in Directive 2003/71/EC, as amended). Accordingly, the Notes will be issued in denominations of US$200,000 and each Manager has represented and agreed that it will not sell any Notes other than to either (i) QIBs in the United States or (ii) qualified investors (as defined in Directive 2003/71/EC, as amended).

United States The Notes and the Guarantees have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, a US person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes and the Guarantees are being offered and sold only (a) to persons other than US persons as defined in Regulation S in offshore transactions in reliance on, and in compliance with, Regulation S and (b) in the United States to a limited number of QIBs as defined in the Securities Act in connection with resales by the Manager, in reliance on, and in compliance with, Rule 144A.

Each Manager has represented and agreed that it has offered and sold, and will offer and sell, the Notes (a) as part of its distribution at any time and (b) otherwise until 40 days after the later of the commencement of the Offering and the Closing Date, only in accordance with Rule 903 of Regulation S or to QIBs pursuant to Rule 144A or any other available exemption from registration under the Securities Act. Accordingly, neither such Manager nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in any directed selling efforts (as defined in Regulation S) with respect to the Notes, and such Manager, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. Each Manager has agreed that, at or prior to confirmation of sale of the Notes (other than a sale pursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Notes from it during the restricted period a confirmation or notice to substantially the following effect:

“The Notes covered hereby have not been registered under the US Securities Act of 1933, as amended (the “Securities Act”), and may not be offered and sold within the United States or to, or for the account or benefit of, US persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offering and the Closing Date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S of the Securities Act.”

In addition, until 40 days after the commencement of the Offering, an offer or sale of Notes within the United States by any dealer (whether or not participating in the offering of the Notes) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A.

South Africa Each Manager has represented, warranted and agreed that it will not offer or sell any Notes or solicit any offers for subscription for or sale of any of the Notes constituting an offer to the public (as such expression is defined in section 95(1)(h) of the South African Companies Act (whether for subscription, purchase or sale) in South Africa, or otherwise sell any Notes, to any person who, or which, is a resident (as defined in the South

160 African Exchange Control Regulations) other than in strict compliance with the South African Exchange Control Regulations in effect from time to time and, without prejudice to the foregoing, that it will take all reasonable measures available to it to ensure that no Note will be purchased by, or sold to, or beneficially held or owned by, any resident other than in strict compliance with the South African Exchange Control Regulations in effect from time to time.

Accordingly, no offer will be made or any Notes sold to any prospective investors in South Africa, other than pursuant to section 96(1) of the South African Companies Act and in compliance with the South African Exchange Control Regulations and any other applicable laws and regulations of South Africa in force from time to time.

This Offering Circular does not, nor is it intended to, constitute a “registered prospectus” (as that term is defined in the South African Companies Act) prepared and registered under the South African Companies Act.

Information made available in this Offering Circular should not be considered as “advice” as defined in the South African Financial Advisory and Intermediary Services Act, 2002.

Mauritius Each Manager has represented, warranted and agreed that it will not offer or sell any Notes in Mauritius.

Neither this Offering Circular, nor any other offering material or information contained herein relating to the offer of the Notes, may be treated as a prospectus for the purpose of the Securities Act 2005 of Mauritius or be released or issued to the public in Mauritius or be used in connection with any such offer. Moreover this Offering Circular does not constitute an offer made to sell the Notes to the public in Mauritius. For the purpose of the Securities Act 2005 of Mauritius, the Notes will only be issued to sophisticated investors (which term means that they subscribe for a minimum amount of US$200,000 and they are either (i) QIBs in the United States or (ii) qualified investors (as defined in Directive 2003/71/EC, as amended)).

United Kingdom Each Manager has represented, warranted and agreed that: (i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or any Guarantor, and (ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

161 TRANSFER RESTRICTIONS

Because the following restrictions will apply with respect to the Notes, purchasers of the Notes are advised to consult legal counsel prior to making an offer, resale, pledge or transfer of any of the Notes. References to Notes in this section should, as appropriate, be deemed to refer to the Notes themselves and/or beneficial interests therein.

The Issuer has not registered the Notes or the Guarantees under the Securities Act or the laws of any state securities commission and, therefore, the Notes and the Guarantees may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes and the Guarantees are being offered and sold only (1) to QIBs, in reliance upon Rule 144A under the Securities Act and (2) to persons other than US persons in offshore transactions in reliance upon Regulation S under the Securities Act.

By its purchase of Notes, each purchaser of Notes will be deemed to have acknowledged, represented and agreed with the Managers, the Issuer and the Guarantors as follows: 1. that the Notes have not been and will not be registered under the Securities Act or any other applicable securities law and that the Notes and the Guarantees are being offered for resale in transactions not requiring registration under the Securities Act or any other securities law, including sales pursuant to Rule 144A under the Securities Act, and, unless so registered, may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act or any other applicable securities law, or pursuant to an exemption therefrom or in a transaction not subject thereto, and in each case in compliance with the conditions for transfer set forth in paragraph (4) below. 2. it is not an “affiliate” (as defined in Rule 144 under the Securities Act) of the Issuer and it is not acting on the Issuer’s or any such affiliate’s behalf and it is either (i) a QIB and is aware that any sale of Notes to it will be made in reliance on Rule 144A and such acquisition will be for its own account or for the account of another QIB or (ii) not a “US person” (as defined in Regulation S under the Securities Act) or purchasing for the account or benefit of a US person (other than a distributor) and it is purchasing Notes in an offshore transaction in accordance with Regulation S under the Securities Act. 3. that none of the Issuer, the Guarantors, the Managers or any person representing the Issuer, any Guarantor or any Manager has made any representation to it with respect to the Issuer, any Guarantor or the offer or sale of any of the Notes, other than the information contained in this Offering Circular, which has been delivered to it and upon which it is relying in making its investment decision with respect to the Notes. It acknowledges that the Managers make no representation or warranty as to the accuracy or completeness of this Offering Circular. It has had access to such financial and other information concerning the Issuer, the Guarantors and the Notes as it has deemed necessary in connection with its decision to purchase the Notes, including an opportunity to ask questions of and request information from the Issuer, the Guarantors and the Managers. 4. if it is a purchaser of the Rule 144A Notes, it is purchasing the Notes for its own account, or for one or more investor accounts for which it is acting as a fiduciary or agent, in each case for investment, and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or any other law. It agrees (or will be deemed to agree) on its own behalf and on behalf of any investor account for which it is purchasing Notes, and each subsequent holder of the Notes by its acceptance thereof will agree, to offer, sell or otherwise transfer such Notes prior to (x), the date which is one year (or such shorter period of time as permitted by Rule 144 under the Securities Act or any successor provision thereunder) after the later of the date of the original issue of the Notes and the last date on which the Issuer or any affiliate of the Issuer was the owner of such Notes (or any predecessor thereto), or (y), such later date, if any, as may be required by applicable law (the “Resale Restriction Termination Date”), only (a) to the Issuer, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) for so long as the Notes are eligible for resale pursuant to Rule 144A, to a person it reasonably believes is a QIB that purchases for its own account or for the account of another QIB to whom it gives notice that the transfer is being made in reliance on Rule 144A, (d) in an offshore transaction in compliance with Rule 903 or 904 of Regulation S under the Securities Act, or (e) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date; however, any resale of the Notes thereafter will continue to need to comply with all applicable laws. It acknowledges that the Issuer reserves the right prior

162 to any offer, sale or other transfer of the Notes pursuant to clause (d) or (e) above, to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Issuer. Each Rule 144A Note will contain a legend substantially in the following form: THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE (OR OF A BENEFICIAL INTEREST HEREIN) BY ITS ACCEPTANCE HEREOF: (a) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (b) AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED THIS NOTE (OR OF A BENEFICIAL INTEREST HEREIN) THAT IT WILL NOT PRIOR TO: (i), THE DATE THAT IS ONE YEAR (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE (OR OF ANY PREDECESSOR OF THIS NOTE) OR THE LAST DAY ON WHICH THE ISSUER OR ANY “AFFILIATE” (AS DEFINED IN RULE 144) OF THE ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE), OR (ii) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE “RESALE RESTRICTION TERMINATION DATE”), OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE (OR A BENEFICIAL INTEREST HEREIN) EXCEPT: (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO PERSONS OTHER THAN US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN COMPLIANCE WITH THE RELEVANT SECURITIES LAWS OF ANY OTHER JURISDICTION, AND (c) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE (OR OF A BENEFICIAL INTEREST HEREIN) IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE ISSUER SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY SATISFACTORY TO THE ISSUER. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER HEREOF AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION”, “UNITED STATES” AND “US PERSON” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. Each Regulation S Note will contain a legend substantially in the following form: THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 5. if it is a purchaser of Regulation S Notes in a sale that occurs outside the United States within the meaning of Regulation S, it acknowledges that until the expiration of the Distribution Compliance Period within the meaning of Rule 903 of Regulation S, any offer or sale of the Notes shall not be made by it to a US person or for the account or benefit of a US person within the meaning of Rule 902 of Regulation S.

163 6. that the Registrar will not be required to accept for registration of transfer any Notes acquired by it, except upon presentation of evidence satisfactory to the Issuer and the Registrar that the restrictions set forth herein have been complied with. 7. that: (a) the Issuer, the Guarantors, the Managers and others will rely upon the truth and accuracy of such investor’s acknowledgements, representations and agreements set forth herein and such investor agrees (or will be deemed to agree) that if any of its acknowledgements, representations or agreements herein cease to be accurate and complete, it will notify the Issuer, the Guarantors and the Managers promptly in writing; and (b) if such investor is acquiring any Notes as fiduciary or agent for one or more investor accounts, such investor represents with respect to each such account that: (i) such investor has sole investment discretion; and (ii) such investor has full power to make the foregoing acknowledgements, representations and agreements on behalf of each such account and that each such investment account is eligible to purchase the Notes. 8. that it will give to each person to whom it transfers the Notes notice of any restrictions on the transfer of the Notes. 9. that no action has been taken in any jurisdiction (including the United States) by the Issuer, the Guarantors or the Managers that would permit a public offering of the Notes or the possession, circulation or distribution of this Offering Circular or any other material relating to the Issuer, the Guarantors or the Notes in any jurisdiction where action for that purpose is required. Consequently, any transfer of the Notes will be subject to the selling restrictions set forth under this “Transfer Restrictions” section and “Selling Restrictions”.

164 COMMERCIAL PAPER REGULATIONS UNDER THE SOUTH AFRICAN BANKS ACT

DISCLOSURE REQUIREMENTS IN TERMS OF PARAGRAPH 3(5) OF THE COMMERCIAL PAPER REGULATIONS PUBLISHED UNDER THE SOUTH AFRICAN BANKS ACT, 1990, AS AMENDED, IN RELATION TO THIS ISSUE OF NOTES

The Issuer is required to make the disclosure set out below pursuant to paragraph 3(5) of the exemption notice published in terms of the South African Banks Act, 1990 (the “Banks Act”) under Government Notice 2172 in Government Gazette 16167 of 14 December 1994 (the “Commercial Paper Regulations”) exempting the designation of certain activities from falling within the meaning of “the business of a bank” (as that term is defined in the Banks Act).

1. Paragraph 3(5)(a) The “ultimate borrower” (as defined in the Commercial Paper Regulations) is the Issuer.

2. Paragraph 3(5)(b) The Issuer is a going concern and can in all circumstances be reasonably expected to meet its commitments under the Notes.

3. Paragraph 3(5)(c) The auditors of the Issuer are PricewaterhouseCoopers Ltd.

4. Paragraph 3(5)(d) As at the date of this issue: (a) the Issuer has Commercial Paper (as defined in the Commercial Paper Regulations) in issue in a total amount of US$750 million; and (b) the Issuer estimates that it may issue US$1.5 billion of Commercial Paper during the current financial year, ending 31 December 2016.

5. Paragraph 3(5)(e) All information that may reasonably be necessary to enable an investor to ascertain the nature of the financial and commercial risk of its investment in the Notes is contained in this Offering Circular.

6. Paragraph 3(5)(f) There has been no material adverse change in the Issuer’s financial position since the date of its last audited financial statements.

7. Paragraph 3(5)(g) The Notes issued will be listed.

8. Paragraph 3(5)(h) The funds to be raised through the issue of the Notes are to be used by the Issuer for its general corporate purposes.

9. Paragraph 3(5)(i) The obligations of the Issuer in respect of the Notes are unsecured.

10. Paragraph 3(5)(j) PricewaterhouseCoopers Ltd., the statutory auditors of the Issuer, have confirmed that their procedures did not reveal anything which indicates that the issue of the Notes will not comply in all respects with the relevant provisions of the Commercial Paper Regulations.

165 LEGAL MATTERS

Certain matters as to English and United States law will be passed upon for the Issuer and the Guarantors by Freshfields Bruckhaus Deringer LLP, certain matters as to South African law will be passed upon for the Issuer and the Guarantors by Webber Wentzel and certain matters as to Mauritian law will be passed upon for the Issuer and the Guarantors by TM&S Gujadhur Chambers. Certain matters as to English and United States law will be passed upon for the Managers by Allen & Overy LLP, certain matters as to South African law will be passed upon for the Managers by Allen & Overy (South Africa) LLP, and certain matters as to Mauritian law will be passed upon for the Managers by BLC Robert & Associates.

166 GENERAL INFORMATION Authorisation The Issuer and the Guarantors have obtained all necessary consents, approvals and authorisations in connection with, as applicable, the issue and performance of the Notes and the Guarantees. The issue of the Notes was duly authorised by a resolution of the board of directors of the Issuer dated 5 August 2016 and shareholder resolutions of the Issuer dated 5 August 2016. The giving of the Guarantees by the Guarantors was duly authorised by (A) resolutions of the board of directors of (i) MTN Group dated 4 August 2016, (ii) MTN Holdings dated 4 August 2016, (iii) MTN International dated 4 August 2016, (iv) MTN Mauritius dated 5 August 2016, and (v) MTN South Africa dated 22 July 2016 and (B) resolutions of the shareholders of (i) MTN Group dated 25 May 2016, (ii) MTN Holdings dated 12 August 2016, (iii) MTN International dated 12 August 2016, (iv) MTN Mauritius dated 5 August 2016 and (v) MTN South Africa dated 15 August 2016.

Listing Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List and to trading on the Main Securities Market. It is expected that admission of the Notes to the Official List and to trading on the Main Securities Market will be granted on or about 13 October 2016, subject only to the issue of the Notes. The estimated total expenses related to the admission of the Notes to trading on the Main Securities Market are US$4,600.

Listing Agent A&L Listing Limited is acting solely in its capacity as listing agent for the Issuer in connection with the Notes and is not itself seeking admission of the Notes to the Official List of the Irish Stock Exchange or to trading on the Main Securities Market for the purposes of the Prospectus Directive.

Clearing Systems The Regulation S Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg. Application has been made for acceptance of the Rule 144A Notes into DTC’s book-entry settlement system. In respect of the 2022 Notes: the ISIN for the Regulation S Notes is XS1503116912 and for the Rule 144A Notes is US55377XAC02. The Common Code for the Regulation S Notes is 150311691 and for the Rule 144A Notes is 150315638. The CUSIP number for the Rule 144A Notes is 55377XAC0. In respect of the 2026 Notes: the ISIN for the Regulation S Notes is XS1493823725 and for the Rule 144A Notes is US55377XAB29. The Common Code for the Regulation S Notes is 149382372 and for the Rule 144A Notes is 149969136. The CUSIP number for the Rule 144A Notes is 55377XAB2.

No significant change There has been no significant change in the financial or trading position of the Issuer, the Guarantors or the Group taken as a whole since 30 June 2016 and there has been no material adverse change in the financial position or prospects of the Issuer, the Guarantors or the Group taken as a whole since 31 December 2015, except with respect to the Nigerian Regulatory Fine. See “Business Description—Litigation, Arbitration and Disputes— Nigerian Regulatory Fine.”

Litigation Except as disclosed on pages 110-112 of this Offering Circular, none of the Issuer, the Guarantors nor any of their respective subsidiaries is or has been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) in the 12 months preceding the date of this document which may have, or have had in the recent past, significant effects on the financial position or profitability of the Issuer, the Guarantors or the Group taken as a whole.

Auditors The auditors of the Group for each of the three financial years ended 31 December 2015, 2014 and 2013 were PricewaterhouseCoopers Inc. (“PwC”) and SizweNtsalubaGobodo Inc. (“SNG”), who also both audited the MTN Group’s annual consolidated financial statements included in this Offering Circular, without qualification. The address of PwC is 2 Eglin Road, Sunninghill 2157, South Africa and the address of SNG is 20 Morris Street East, Woodmead 2191, South Africa. Neither PwC, PricewaterhouseCoopers Ltd., auditors of the Issuer and MTN Mauritius, nor SNG have any material interest in the Issuer or any Guarantor. Each of PwC and SNG is authorised by the Independent Regulatory Board for Auditors to conduct independent audits in South Africa.

167 Documents Until the maturity date of the Notes, copies of the following documents will be available in physical form for inspection for free at the registered office of the Issuer and at the specified office of the Paying Agent for the time being in London: • the articles of association/constitution of each of the Issuer and the Guarantors along with any amendments; • the consolidated, audited financial statements of the Group in respect of the financial years ended 31 December 2015 and 2014, together with the audit reports in connection therewith. MTN Group currently prepares audited consolidated accounts on an annual basis; • the reviewed condensed consolidated interim financial statements of the Group in respect of the six months ended 30 June 2016, together with the review report in connection therewith; • the Deed of Covenant in respect of each Series; • the Deed Poll in respect of each Series; • the Guarantee in respect of each Series; • the Agency Agreement in respect of each Series; and • this Offering Circular.

Documents incorporated by reference No document or content of any website is incorporated by reference in this Offering Circular.

Material Contracts Except as disclosed in this Offering Circular, none of the Issuer and the Guarantors has entered into any material contract outside the ordinary course of its business that could result in the Issuer or any Guarantor being under an obligation or entitlement that is material to its ability to meet its obligations in respect of the Notes or the Guarantee, as applicable.

Language The language of this Offering Circular is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.

Post-issuance information The Issuer does not intend to provide any post-issuance information in relation to this issue of Notes.

168 GLOSSARY 2022 Notes the US$500,000,000 5.373% Guaranteed Notes due 2022 issued hereby 2026 Notes the US$500,000,000 6.500% Guaranteed Notes due 2026 issued hereby 2G second generation wireless telephone technology 3G third generation wireless telephone technology 4G fourth generation wireless telephone technology ARPU Average revenue per customer/unit ATM Automated Teller Machine BCM business continuity management Board the Board of Directors of MTN Group Borrower MTN South Africa C-band a frequency band used in satellite communications Clearing Systems DTC, Euroclear and Clearstream, Luxembourg Closing Date the closing date of the Offering Co-Managers J.P. Morgan Securities plc, Mizuho Securities USA Inc., MUFG Securities EMEA plc, SMBC Nikko Capital Markets Limited and Standard Chartered Bank Common Code a nine digit identification code in respect of the Notes CRA Regulation Regulation (EU) No 1060/2009, as amended Clearstream, Luxembourg Clearstream Banking S.A. Commission’s Proposal the proposal of the European Commission published on 14 February 2013 for a directive for a common FTT in the participating member states CSR corporate social responsibility CUSIP Committee on Uniform Securities Identification Procedures Deed Poll the deed poll dated the Closing Date entered into by the Issuer in respect of each Series, under which it has agreed to comply with the information delivery requirements of Rule 144A(d)(4) under the Securities Act Distribution Compliance Period the period lasting 40 days after the Offering US dollars, US$ and $ United States dollars DTC The Depository Trust Company Dual Carrier HSPA+ an enhanced version of HSPA+ EBITDA profit before depreciation of property, plant and equipment, amortisation of intangible assets, impairment of goodwill, finance income, finance costs, share of results of associates and joint ventures after tax, net monetary gains/losses and income tax expense ECA the Electronic Communications Act, 2005 ECNS electronic communications network services ECS electronic communications services

169 EDGE enhanced data rates for GSM evolution

EDGE Evolution an upgraded version of the EDGE technology

ESMA the European Securities and Markets Authority

EU European Union

EURIBOR Euro Interbank Offer Rate

Euroclear Euroclear Bank SA/NV

Exchange Act the United States Securities Exchange Act of 1934, as amended

Fiscal Agent Citibank N.A., London Branch

FSC the Financial Services Commission of Mauritius

FSMA the Financial Services and Markets Act 2000

FTT financial transactions tax

GBL 1 Category 1 Global Business Licence issued by the FSC

GDP gross domestic product

GHz gigahertz

Global Certificates the two global certificates in registered form representing the Notes

GPRS general packet radio service

Group, we, us, our MTN Group and its consolidated subsidiaries

Group Management the Group’s central management

GSM Global System for Mobile Communications

Guarantees the deeds of guarantee in respect of the 2022 Notes and the 2026 Notes, each to be dated the Issue Date

Guarantors MTN Group Limited, Mobile Telephone Networks Holdings Limited, MTN International (Mauritius) Limited, MTN International Proprietary Limited and Mobile Telephone Networks Proprietary Limited

HSUPA high-speed uplink packet access

HSDPA high-speed downlink packet access

HSPA+ evolved high-speed packet access

ICASA Independent Communications Authority of South Africa

ICT Information and communications technology

IEC International Electrotechnical Commission

I-ECNS an individual ECNS licence

I-ECS an individual ECS licence

IEDC Iran Electronic Development Company

170 IFRS International Financial Reporting Standards, as issued by the International Accounting Standards Board

IFRS 11 IFRS 11 Joint Arrangements

IHS IHS Holdings Limited

Interest Payment Dates in respect of the 2022 Notes: 13 February and 13 August of each year; and in respect of the 2026 Notes: 13 April and 13 October of each year

Irancell Irancell Telecommunication Company Services (PJSC)

Irish Stock Exchange Irish Stock Exchange plc

IRS Internal Revenue Service

ISIN International Securities Identification Number

ISO International Organization for Standardization

ISP internet service provider

Issue Date 13 October 2016

Issuer MTN (Mauritius) Investments Limited

IT information technology

JIBAR Johannesburg Interbank Agreed Rate

Joint Bookrunners Barclays Bank PLC, Citigroup Global Markets Limited, Merrill Lynch International and The Standard Bank of South Africa Limited

King III the King III Code of Corporate Governance

Lender Mobile Telephone Networks Holdings Limited

LIBOR London Interbank Offered Rate

LTE long-term evolution

Main Securities Market the regulated market of the Irish Stock Exchange

Managers The Joint Bookrunners and the Co-Managers

MB megabyte

Mbps megabytes per second

Me2U services that allows subscribers to send and receive airtime to or from each other, either directly from a subscriber’s mobile phone or through a message request

MEIH Middle East Internet Holding

MHz megahertz

MMS multimedia services

MoCT Minister of Communications Technology

Moody’s Moody’s Investors Service Limited

MOU minutes of use

171 MPLS multiprotocol label switching

MTN MTN Group Limited and its subsidiaries

MTN Academy initiatives that provides a standardised approach to employee learning and development

MTN Afrinolly a service that allows subscribers to receive the latest Nollywood movie trailers and music videos to their phone

MTN Auto Top-Up auto top-up services

MTN Group MTN Group Limited

MTN Holdings Mobile Telephone Networks Holdings Limited

MTN International MTN International Proprietary Limited

MTN Magic Voice a service that allows customers to change their voice when making a call

MTN Mauritius MTN International (Mauritius) Limited

MTN Mobile Money a service that offers customers bill payment and money transfer services

MTN Mobile News a service that provides customers with the most up to date local and international news, sports news, entertainment news, fashion news and finance news

MTN Nigeria MTN Nigeria Communications Limited

MTN Opera Mini a service that allows customers in certain markets to access the web from their mobile phones at lower costs and faster speeds

MTN Play a content portal that provides a variety of entertainment and informative services

MTN Prolongation services that allow subscribers to borrow airtime which is then recouped when they next recharge

MTN Pulse a service that offers customers 10MB of free data for seven days after a top-up of a certain amount, as well as reduced call and SMS rates to other MTN Pulse subscribers

MTN South Africa Mobile Telephone Networks Proprietary Limited

MTN Syria MTN Syria (JSC)

MTN Uganda MTN (Uganda) Limited

MTN Virtual services that allow several subscribers to share the same mobile phone with their own personal accounts and without having to swap SIM cards each time

MTN Zone dynamic tariffing services that offer discounted call rates based on available network capacity

MVNOs mobile virtual network operators

NCC the Nigerian Communications Commission

172 NIBOR Nigerian Interbank Offered Rate

Noteholder a holder of Notes

Notes the 2022 Notes and the 2026 Notes

NPA national priority areas

OEM original equipment manufacturer

Offering the offering of the Notes pursuant to Regulation S and Rule 144A

Offering Circular this offering circular

Official List the official list of the Irish Stock Exchange

Order Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005

OTT “over the top” internet-based alternatives to traditional telephony services participating Member States Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia

Plaintiffs Turkcell Iletisim Hizmetleri AS and East Asian Consortium B.V

Prospectus Directive European Union Directive 2003/71/EC as amended (including by Directive 2010/73/EU), and includes any relevant implementing measure in a relevant Member State of the European Economic Area

PwC PricewaterhouseCoopers Inc.

QIBs qualified institutional buyers

Rand or ZAR South African Rand

Rating Agencies S&P and Moody’s

Registers means the registers in respect of the Regulation S Notes and the Rule 144A Notes kept by the Registrar (and Register shall mean either of them)

Registrar Citigroup Global Markets Deutschland AG the Regulation the Call Termination Regulation

Regulation S Regulation S under the Securities Act

Regulation S Notes the Notes issued pursuant to Regulation S

Relative Fair Value Method the relative fair value method of revenue recognition

Resale Restriction Termination Date a date that may be required by applicable law

Residual Method the residual method of revenue recognition

Restricted Global Certificate a Global Certificate representing the Rule 144A Notes

Rm million Rand

173 RSA the New Hampshire Revised Statutes Annotated

Rule 144A Rule 144A under the Securities Act

Rule 144A Notes the Notes issued pursuant to Rule 144A

S&P Standard & Poor’s Credit Market Services Europe Limited

SA Enforcement Act the South African Recognition and Enforcement of Foreign Arbitral Awards Act, 1977

SEC the United States Securities and Exchange Commission

Securities Act the United States Securities Act of 1933, as amended

Series each of the 2022 Notes and the 2026 Notes

SIM subscriber identity module

SME small and medium enterprises

SMS short message service

SNG SizweNtsalubaGobodo Inc.

South African Companies Act the South African Companies Act, 2008

Stabilisation Manager Citigroup Global Markets Limited

Subscription Agreement the subscription agreement dated 11 October 2016 among the Managers, the Issuer and the Guarantors

Taxes any present or future taxes, duties, levies, assessments or governmental charges (including related interest and penalties) of whatever nature

Turkcell Iletisim Hizmetleri AS

UK United Kingdom of Great Britain & Northern Ireland

UMTS Universal Mobile Telecommunications System

UN United Nations

Unrestricted Global Certificate a Global Certificate representing the Regulation S Notes

US United States of America

USAF the Universal Services and Access Fund

VAS value added service

VPN Virtual Private Network

VSAT Very Small Aperture Terminal

WACS West Cable System

WiMax worldwide interoperability for microwave access

174 INDEX TO FINANCIAL STATEMENTS

Page Reviewed condensed consolidated interim financial statements of MTN Group Limited for the six months ended 30 June 2016 Independent auditors’ report on condensed consolidated interim financial statements ...... F-2 Condensed consolidated income statement for the six months ended 30 June 2016 ...... F-3 Condensed consolidated statement of comprehensive income for the six months ended 30 June 2016 ...... F-4 Condensed consolidated statement of financial position at 30 June 2016 ...... F-5 Consolidated statement of changes in equity for the six months ended 30 June 2016 ...... F-6 Condensed consolidated statement of cash flows for the six months ended 30 June 2016 ...... F-7 Notes to the condensed consolidated financial statements for the six months ended 30 June 2016 ..... F-8 Audited consolidated financial statements of MTN Group Limited for the year ended 31 December 2015 Independent auditors’ report to the shareholders of MTN Group Limited for the year ended 31 December 2015 ...... F-16 Group income statement for the year ended 31 December 2015 ...... F-18 Group statement of comprehensive income for the year ended 31 December 2015 ...... F-19 Group statement of financial position at 31 December 2015 ...... F-20 Group statement of changes in equity for the year ended 31 December 2015 ...... F-21 Group statement of cash flows for the year ended 31 December 2015 ...... F-22 Notes to the Group annual financial statements for the year ended 31 December 2015 ...... F-23 Audited consolidated financial statements of MTN Group Limited for the year ended 31 December 2014 Independent auditors’ report to the shareholders of MTN Group Limited for the year ended 31 December 2014 ...... F-125 Group income statement for the year ended 31 December 2014 ...... F-127 Group statement of comprehensive income for the year ended 31 December 2014 ...... F-128 Group statement of financial position at 31 December 2014 ...... F-129 Group statement of changes in equity for the year ended 31 December 2014 ...... F-130 Group statement of cash flows for the year ended 31 December 2014 ...... F-131 Notes to the Group annual financial statements for the year ended 31 December 2014 ...... F-132

F-1 Independent auditors’ review report on condensed consolidated interim financial statements

TO THE SHAREHOLDERS OF MTN GROUP LIMITED We have reviewed the condensed consolidated interim financial statements of MTN Group Limited in the accompanying interim report, which comprise the condensed consolidated statement of financial position as at 30 June 2016 and the related condensed consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the six months then ended, and selected explanatory notes.

Directors’ responsibility for the interim financial statements The directors are responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with the International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility Our responsibility is to express a conclusion on these interim financial statements. We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity (ISRE 2410). ISRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements are not prepared in all material respects in accordance with the applicable financial reporting framework. This standard also requires us to comply with relevant ethical requirements.

A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement. We perform procedures, primarily consisting of making enquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluate the evidence obtained.

The procedures in a review are substantially less than and differ in nature from those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these interim financial statements.

Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements of MTN Group Limited for the six months ended 30 June 2016 are not prepared, in all material respects, in accordance with the International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa.

PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc. Director: JR van Huyssteen Director: SY Lockhat Registered Auditor Registered Auditor Sunninghill Woodmead 4 August 2016 4 August 2016

F-2 Condensed consolidated income statement for the

Six months Six months Financial ended ended year ended 30 June 30 June 31 December 2016 20151 2015 Reviewed Reviewed Audited Note Rm Rm Rm Revenue 79,115 69,304 147,063 Other income 367 411 8,409 Direct network and technology operating costs2 (12,291) (8,327) (18,809) Costs of handsets and other accessories (6,065) (4,449) (10,829) Interconnect and roaming costs (7,358) (6,330) (13,102) Staff costs (4,777) (4,155) (8,587) Selling, distribution and marketing expenses (9,624) (8,439) (18,412) Government and regulatory costs (2,982) (2,835) (5,888) Other operating expenses3 (7,004) (4,505) (11,433) EBITDA before Nigeria regulatory fine 29,381 30,675 68,412 Nigeria regulatory fine 17 (10,499) — (9,287) EBITDA 18,882 30,675 59,125 Depreciation of property, plant and equipment (10,913) (8,905) (19,557) Amortisation of intangible assets (2,174) (1,845) (3,736) Impairment of goodwill 8 (604) — (504) Operating profit 5,191 19,925 35,328 Net finance costs (5,945) (2,319) (3,010) Net monetary gain 919 496 1,348 Share of results of joint ventures and associates after tax 9 (1,692) 2,027 1,226 (Loss)/profit before tax (1,527) 20,129 34,892 Income tax expense (4,726) (6,249) (11,322) (Loss)/profit after tax (6,253) 13,880 23,570 Attributable to: Equity holders of the Company (5,489) 11,900 20,204 Non-controlling interests (764) 1,980 3,366 (6,253) 13,880 23,570 Basic (loss)/earnings per share (cents) 7 (301) 653 1,109 Diluted (loss)/earnings per share (cents) 7 (301) 650 1,106

1 Restated, refer note 16. 2 The increase in direct network and technology operating costs was mainly due to aggressive 3G and LTE network expansion in key markets, higher rent and utilities cost and foreign denominated expenses mainly in Nigeria. 3 Including costs amounting to R1,324 million incurred on professional services relating to the negotiations that led to a reduction of R34 billion in the Nigeria regulatory fine (note 17).

F-3 Condensed consolidated statement of comprehensive income for the

Six months Six months Financial year ended ended ended 30 June 30 June 31 December 2016 2015 2015 Reviewed Reviewed Audited Rm Rm Rm (Loss)/profit after tax (6,253) 13,880 23,570 Other comprehensive (loss)/income after tax: Exchange differences on translating foreign operations including the effect of hyperinflation1 (12,499) (3,273) 22,203 Equity holders of the Company (11,866) (3,181) 21,033 Non-controlling interests (633) (92) 1,170 Net change in fair value of available-for-sale investments1, 2 2,672 —— Equity holders of the Company 2,672 —— Non-controlling interests — ——

Total comprehensive (loss)/income (16,080) 10,607 45,773 Attributable to: Equity holders of the Company (14,683) 8,719 41,237 Non-controlling interests (1,397) 1,888 4,536 (16,080) 10,607 45,773

1 This component of other comprehensive income does not attract any tax and may subsequently be reclassified to profit or loss. 2 The available-for-sale investment relates to the Group’s investment in IHS Holdings Limited (IHS).

F-4 Condensed consolidated statement of financial position as at

30 June 30 June 31 December 2016 2015 2015 Reviewed Reviewed Audited Note Rm Rm Rm Non-current assets 200,447 161,219 218,435 Property, plant and equipment 93,462 85,501 106,702 Intangible assets and goodwill 52,172 37,484 55,887 Investment in joint ventures and associates1 32,169 24,978 35,552 Deferred tax and other non-current assets2 22,644 13,256 20,294 Current assets 82,468 85,269 95,432 Non-current assets held for sale 18 466 3,959 10 82,002 81,310 95,422 Other current assets 12,940 12,292 15,940 Trade and other receivables 41,470 37,003 43,570 Restricted cash 637 1,001 1,735 Cash and cash equivalents 26,955 31,014 34,177 Total assets 282,915 246,488 313,867 Total equity 119,796 127,420 151,838 Attributable to equity holders of the Company 116,669 122,702 146,369 Non-controlling interests 3,127 4,718 5,469 Non-current liabilities 84,000 51,495 72,510 Interest-bearing liabilities 12 64,190 39,511 52,661 Deferred tax and other non-current liabilities 19,810 11,984 19,849 Current liabilities 79,119 67,573 89,519 Non-current liabilities held for sale 18 208 15 — 78,911 67,558 89,519 Interest-bearing liabilities 12 17,757 16,548 22,510 Trade and other payables 43,602 31,896 40,484 Other current liabilities 17,552 19,114 26,525 Total equity and liabilities 282,915 246,488 313,867

1 The decrease in investment in joint ventures and associates since 31 December 2015 is mainly due to the Group’s share of the attributable loss, amounting to R2.5 billion (note 9) and foreign currency translation loss amounting to R3.1 billion from its investment in Nigeria Tower InterCo B.V., offset by its increase in investment of R2,312 million in Africa Internet Holding GmbH (AIH) (note 14) during the period. 2 Other non-current assets include the revaluation of the Group’s Investment in IHS amounting to R2.7 billion. The strengthening of the rand, which is the presentation currency of the Group, against the functional currencies of the Group’s largest operations contributed significantly to the decrease in assets and liabilities since 31 December 2015 which are translated into the Group’s presentation currency at closing rates at the end of the reporting period.

F-5 Condensed consolidated statement of changes in equity for the

Six months Six months Financial year ended ended ended 30 June 30 June 31 December 2016 2015 2015 Reviewed Reviewed Audited Rm Rm Rm Opening balance at 1 January 146,369 128,517 128,517 Total comprehensive (loss)/income (14,683) 8,719 41,237 (Loss)/profit after tax (5,489) 11,900 20,204 Other comprehensive (loss)/income after tax (9,194) (3,181) 21,033 Transactions with shareholders Shares issued ^ ^— Shares cancelled — (^) (^) Decrease in treasury shares (^) —69 Share buy-back — (^) — Share-based payment transactions 130 140 532 Settlement of vested equity rights — — (288) Dividends declared (15,231) (14,697) (23,506) Other movements 84 23 (192) Attributable to equity holders of the Company 116,669 122,702 146,369 Non-controlling interests 3,127 4,718 5,469 Closing balance 119,796 127,420 151,838 Dividends declared during the period (cents per share) 830 800 1,280 Dividends declared after the period end (cents per share) 250 480 830

^ Amount less than R1 million.

F-6 Condensed consolidated statement of cash flows for the

Six months Six months Financial year ended ended ended 30 June 30 June 31 December 2016 20151 2015 Reviewed Reviewed Audited Rm Rm Rm Net cash (used in)/generated from operating activities (436) 1,432 13,122 Cash generated from operations 23,870 26,289 57,598 Dividends paid to equity holders of the Company (15,212) (14,697) (23,506) Dividends paid to non-controlling interests (790) (3,042) (5,777) Dividends received from associates and joint ventures 426 285 577 Other operating activities (8,730) (7,403) (15,770) Net cash used in investing activities (14,209) (14,471) (34,290) Acquisition of property, plant and equipment (10,134) (7,636) (21,612) Acquisition of intangible assets (3,890) (4,194) (10,412) Movement in investments and other investing activities (185) (2,641) (2,266) Net cash from financing activities 13,608 1,558 8,101 Proceeds from borrowings 23,967 9,711 23,384 Repayment of borrowings (10,363) (8,100) (14,802) Other financing activities 4 (53) (481)

Net decrease in cash and cash equivalents (1,037) (11,481) (13,067) Cash and cash equivalents at beginning of the period 34,139 43,072 43,072 Exchange (losses)/gains on cash and cash equivalents (6,272) (787) 3,860 Net monetary gain on cash and cash equivalents 107 134 274 Net cash and cash equivalents at end of the period 26,937 30,938 34,139

1 Restated, refer note 16.

F-7 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

1. INDEPENDENT REVIEW The directors of the Company take full responsibility for the preparation of the condensed consolidated interim financial statements.

The condensed consolidated interim financial statements have been reviewed by our joint independent auditors, PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc., who have expressed an unmodified conclusion. The joint external auditors have performed their review in accordance with International Standard on Review Engagements (ISRE) 2410. Constant currency and other pro forma financial information disclosure have not been reviewed by our joint external auditors.

2. GENERAL INFORMATION MTN Group Limited (the Company) carries on the business of investing in the telecommunications industry through its subsidiary companies, joint ventures and associates.

3. BASIS OF PREPARATION These condensed consolidated interim financial statements for the six months ended 30 June 2016 have been prepared in accordance with International Financial Reporting Standard (IAS 34) Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council (FRSC) and the requirements of the Companies Act of South Africa. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS).

4. PRINCIPAL ACCOUNTING POLICIES The Group has adopted all the new, revised or amended accounting pronouncements as issued by the International Accounting Standards Board (IASB) which were effective for the Group from 1 January 2016, none of which had a material impact on the Group.

The accounting policies applied in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the consolidated financial statements for the year ended 31 December 2015.

5. FINANCIAL INSTRUMENTS The Group has not disclosed the fair values of financial instruments measured at amortised cost except for its loans and borrowings set out below, as their carrying amounts closely approximate their fair values. Other than the equity investment in IHS, there were no financial instruments measured at fair value that were individually material at the end of the current reporting period.

Listed long-term borrowings The Group has listed long-term fixed interest rate senior unsecured notes in issue with a carrying amount of R11,031 million (June 2015: R9,178 million, December 2015: R11,633 million) and a fair value of R10,731 million (June 2015: R9,263 million, December 2015: R10,268 million) at 30 June 2016. The fair value of these instruments is determined by reference to published market values on the relevant exchange.

Loan to Nigeria Tower InterCo B.V. The Group has a loan to Nigeria Tower InterCo B.V. with a carrying amount of R2,877 million (June 2015: R1,092 million, December 2015: R2,704 million) and a fair value of R3,373 million as at 30 June 2016. The fair value of this instrument is determined using a discounted cash flow model. An external borrowing rate for funds advanced to the operating company, which has been adjusted for differences in risk, has been used as a proxy for a market rate.

F-8 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

5. FINANCIAL INSTRUMENTS (continued) Fair value measurement of investments The Group holds an equity investment in IHS at fair value of R11,354 million at 30 June 2016 (June 2015: R7,259 million, December 2015: R9,250 million). The investment is classified as available for sale. The fair value of the investment at 30 June 2016 and 30 June 2015 was determined with reference to recent transactions between market participants and has consequently been transferred from level 3 to level 2 in the fair value hierarchy.

At 31 December 2015, the absence of transactions between market participants resulted in the fair value being determined using models considered to be appropriate by management. The fair value was calculated using an earnings multiple technique and was based on unobservable market inputs including average tower industry earnings multiples of between 10 – 14. Consequently, the investment was categorised within level 3 of the fair value hierarchy. An increase of one in the multiple would have resulted in an increase in the fair value of R792 million and a one decrease in the multiple would have resulted in a decrease in the fair value by R792 million as at 31 December 2015.

6. SEGMENT ANALYSIS The Group has identified reportable segments that are used by the Group executive committee (chief operating decision maker (CODM)) to make key operating decisions, allocate resources and assess performance. The reportable segments are grouped according to their geographic regions/locations.

The Group has changed the composition and presentation of its segment analysis following the announcement of a change in its operational structure subsequent to the 2015 year-end with a view to strengthen operational oversight, leadership, governance and regulatory compliance across the 22 operations in Africa and the Middle East.

The MTN Group is now clustered into the following three regions based on the decision taken: • South and East Africa (SEA) • West and Central Africa (WECA) • Middle East and North Africa (MENA).

Comparative numbers for the segments have been restated accordingly.

Operating results are reported and reviewed regularly by the CODM and include items directly attributable to a segment as well as those that are attributable on a reasonable basis, whether from external transactions or from transactions with other Group segments.

EBITDA (earnings before interest, tax, depreciation, amortisation, goodwill impairment, tower sale profits and the Nigeria regulatory fine) is used as the measure of reporting profit or loss for each segment and has remained unchanged.

F-9 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

6. SEGMENT ANALYSIS (continued) REVENUE Six months Six months Financial year ended ended ended 30 June 30 June 31 December 2016 2015 2015 Reviewed Reviewed Audited Rm Rm Rm SEA 25,156 24,456 51,419 South Africa 19,841 18,882 40,038 Uganda 2,804 2,540 5,148 Other SEA 2,511 3,034 6,233 WECA 46,347 38,296 81,443 Nigeria 28,941 24,649 51,942 Ghana 5,165 3,496 7,903 Cameroon 3,202 2,742 5,806 Ivory Coast 3,751 3,081 6,424 Other WECA 5,288 4,328 9,368 MENA 7,402 6,569 13,766 Syria1 1,068 1,329 2,605 Sudan1 2,345 1,610 3,472 Other MENA 3,989 3,630 7,689 Major joint venture – Iran2 8,324 6,435 13,660 Head office companies and eliminations (27) (111) (275) Hyperinflation impact 237 94 710 Iran revenue exclusion2 (8,324) (6,435) (13,660) 79,115 69,304 147,063

1 Excludes the increase in revenue resulting from hyperinflation accounting of: Syria R103 million (June 2015: R28 million, December 2015: R391 million) and Sudan R134 million (June 2015: R66 million, December 2015: R319 million). 2 Irancell Telecommunication Company Services (PJSC) proportionate revenue forms part of the MENA region but is reported separately in the segment analysis as reviewed by the CODM and excluded from IFRS reported revenue due to equity accounting for joint ventures and excludes the increase in revenue resulting from hyperinflation accounting (June 2015: R271 million and December 2015: R287 million). In 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015.

F-10 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

6. SEGMENT ANALYSIS (continued) EBITDA

Six months Six months Financial year ended ended ended 30 June 30 June 31 December 2016 2015 2015 Reviewed Reviewed Audited Rm Rm Rm SEA 7,213 8,555 16,903 South Africa 5,979 6,724 13,370 Uganda 842 915 1,775 Other SEA 392 916 1,758 WECA 20,574 19,303 38,116 Nigeria 14,421 14,132 27,504 Ghana 2,004 1,387 3,197 Cameroon 1,218 1,036 2,101 Ivory Coast 1,349 1,126 2,195 Other WECA 1,582 1,622 3,119 MENA 2,359 2,051 4,324 Syria1 305 215 460 Sudan1 829 539 1,216 Other MENA 1,225 1,297 2,648 Major joint venture – Iran2 3,139 2,582 5,665 Head office companies and eliminations (873) 365 575 Hyperinflation impact 90 49 231 Nigeria regulatory fine3 (10,499) — (9,287) Tower sale profits3 18 352 8,263 Iran EBITDA exclusion2 (3,139) (2,582) (5,665) EBITDA 18,882 30,675 59,125 Depreciation, amortisation and impairment of goodwill (13,691) (10,750) (23,797) Net finance cost (5,945) (2,319) (3,010) Net monetary gain 919 496 1,348 Share of results of joint ventures and associates after tax (1,692) 2,027 1,226 (Loss)/profit before tax (1,527) 20,129 34,892

1 Excludes the increase in EBITDA resulting from hyperinflation accounting of: Syria R41 million (June 2015: R25 million, December 2015: R106 million) and Sudan R49 million (June 2015: R24 million, December 2015: R125 million). 2 Irancell Telecommunication Company Services (PJSC) proportionate EBITDA forms part of the MENA region but is reported separately in the segment analysis as reviewed by the CODM and excluded from IFRS reported EBITDA due to equity accounting for joint ventures and excludes the increase in EBITDA resulting from hyperinflation accounting (June 2015: R141 million and December 2015: R215 million). During 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015. The Group’s share of results from Irancell Telecommunication Company Services (PJSC) includes expenses resulting from discontinuation of hyperinflation accounting amounting to R1,039 million mainly relating to the subsequent depreciation and amortisation of previously hyper-inflated assets that were historically written up under hyperinflation reporting. 3 Tower sale profit and the expense relating to the regulatory fine imposed by the Nigerian Communications Commission (NCC) are excluded as the CODM reviews segment results on this basis.

F-11 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

7. (LOSS)/EARNINGS PER ORDINARY SHARE Number of ordinary shares in issue

Six months Six months Financial year ended ended ended 30 June 30 June 31 December 2016 2015 2015 Reviewed Reviewed Audited Rm Rm Rm At end of the period (excluding MTN Zakhele and treasury shares1) 1,822,711,720 1,822,473,178 1,822,517,914 Weighted average number of shares Shares for (loss)/earnings per share 1,822,527,498 1,821,338,035 1,822,453,695 Add: Dilutive shares2 – MTN Zakhele shares issued — 7,685,193 3,791,878 – Share schemes — 1,333,429 965,612 Shares for dilutive (loss)/earnings per share 1,822,527,498 1,830,356,657 1,827,211,185 Reconciliation between (loss)/profit attributable to the equity holders of the Company and headline (loss)/earnings (Loss)/profit after tax (5,489) 11,900 20,204 Net (profit)/loss on disposal of property, plant and equipment and intangible assets (IAS 16 and IAS 38) (15) 6 (2) Profit on dilution of investment in joint venture (IAS 28) (277) —— Net impairment loss on property, plant and equipment and intangible assets (IAS 36) 265 27 38 Impairment of goodwill (IAS 36) 604 — 504 Realisation of deferred gain on disposal of non-current assets held for sale (IFRS 5) (18) (13) (30) Profit on disposal of non-current assets held for sale (IFRS 5) — — (8,264) Total tax effect of adjustments 1 — (702) Total non-controlling interest effect of adjustments (2) (6) 1,852 Basic headline (loss)/earnings3 (4,931) 11,914 13,600 (Loss)/earnings per share (cents) – Basic (301) 653 1,109 – Basic headline (271) 654 746 Diluted (loss)/earnings per share (cents) – Diluted (301) 650 1,106 – Diluted headline (271) 651 744

1 Treasury shares of 10,206,255 (June 2015: 10,444,797 and December 2015: 11,844,233) are held by the Group and 11,131,098 (June 2015: 12,575,270; December 2015: 11,131,098) shares are held by MTN Zakhele. Due to the call option over notional vendor finance shares, the MTN Zakhele shares, although legally issued to MTN Zakhele, are not deemed to be issued from a Group perspective. These shares are therefore excluded from this reconciliation. 2 The share options and share rights issued in terms of the Group’s share schemes, performance share plan and the MTN Zakhele transaction would not have a dilutive effect on loss per share for the period ended 30 June 2016 and have therefore not been treated as dilutive. 3 Headline (loss)/earnings is calculated in accordance with circular 2/2015 Headline Earnings as issued by the South African Institute of Chartered Accountants, as required by the JSE Limited.

F-12 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

8. GOODWILL IMPAIRMENT Areeba Guinea S.A. Areeba Guinea S.A. (Conakry) experienced a decline in EBITDA since 2013 and Guinea-Conakry has experienced poor economic performance countrywide. Consequently, a review of the recoverable amount of Conakry was undertaken during the period ended 30 June 2016 subsequent to which an impairment loss amounting to R402 million (June 2015: Rnil, December 2015: R504 million) was recognised. As at 30 June 2016, the goodwill balance relating to Conakry is fully impaired.

Afrihost Based on an agreement concluded by the Group to sell its 50,02% investment in Afrihost Proprietary Limited (Afrihost) for R320 million (note 18), a goodwill impairment loss of R202 million was recognised at 30 June 2016 on the remeasurement of the assets to fair value less cost to sell in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Six months Six months Financial year ended ended ended 30 June 30 June 31 December 2016 2015 2015 Reviewed Reviewed Audited Rm Rm Rm 9. SHARE OF RESULTS OF JOINT VENTURES AND ASSOCIATES AFTER TAX (1,692) 2,027 1,226 Irancell Telecommunication Company Services (PJSC) 936 2,099 1,903 Nigeria Tower InterCo. B.V. (2,463) 63 (545) Others (165) (135) (132)

10. CAPITAL EXPENDITURE INCURRED 13,850 10,869 29,611 11. CONTINGENT LIABILITIES 1,308 287 875 12. INTEREST-BEARING LIABILITIES Bank overdrafts 18 76 38 Current borrowings 17,739 16,472 22,472 Current liabilities 17,757 16,548 22,510 Non-current borrowings 64,190 39,511 52,661 81,947 56,059 75,171

13. ISSUE AND REPAYMENT OF DEBT AND EQUITY SECURITIES During the period under review the following entities raised and repaid significant debt instruments: • MTN Nigeria repaid R3.2 billion (June 2015: R1.3 billion) relating to long-term borrowings. • MTN Mauritius raised R3.5 billion (June 2015: R5.9 billion) in debt. • MTN Mauritius repaid R837 million in debt. • MTN Holdings raised R9.7 billion additional debt relating to syndicated loan facilities, R2 billion (June 2015: R3 billion) relating to general banking facilities and R2 billion in terms of the Domestic Medium Term Programme. • MTN Holdings repaid R800 million (December 2015: R500 million) relating to the syndicated loan facility and R1,2 billion (December 2015: R4.2 billion) relating to general banking facilities. • MTN Uganda raised R1.2 billion relating to the draw down on a syndicated loan facility. • Cameroon raised R775 million relating to the draw down on a syndicated loan facility. • MTN Côte d’Ivoire raised R2.8 billion relating to a syndicated loan facility (December 2015: R1.8 billion relating to short-term borrowings). • MTN Côte d’Ivoire repaid R1.8 billion relating to short-term borrowings and R992 million relating to a syndicated loan facility.

F-13 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

14. BUSINESS COMBINATIONS AND ACQUISITION OF JOINT VENTURES AND OTHER INVESTMENTS Investment in Africa Internet Holding GmbH (AIH) The Group’s investment of R2,312 million in AIH became effective during March 2016. This investment increased the Group’s interest in the joint venture from 33.3% to 41.4%. AIH received additional investments from new investors which became effective during April, May and June 2016. These additional investments diluted the Group’s investment in AIH to 31.28% and resulted in a profit on dilution of R277 million recorded during the current reporting period. The Group retains joint control over AIH.

Travelstart On 22 January 2016, the MTN Group made an investment in TravelLab Global AB (Travelstart) amounting to US$27 million. Travelstart is an online travel agency focused on emerging markets. MTN Group jointly controls Travelstart indirectly through funds managed by its venture capital fund manager, Amadeus Capital Partners.

Altech Autopage subscriber base In March 2016, the Group concluded the acquisition of its Altech Autopage subscriber base from Altron TMT Proprietary Limited for R678 million. The acquisition of the subscriber base will enable the Group to service and interact directly with its customers and will reduce future commission expenditure. The purchase price allocation has been finalised and the fair value of net identifiable assets acquired of R479 million resulted in goodwill of R199 million being recognised.

15. EVENTS AFTER REPORTING PERIOD Dividends declared Dividends declared at the board meeting held on 4 August 2016 amounted to 250 cents per share.

16. RESTATEMENTS 16.1 Reclassification of expenses Following the restatement of expenses disclosed in the income statement for the year ended 31 December 2015, the expense categories included below have also been disclosed separately or reclassified between expense categories for the June 2015 reporting period to present the expenses in more appropriate categories in accordance with the classification in the current period.

Government and regulatory costs Government and regulatory costs that had previously been included in direct network operating costs (R2,534 million) and other operating expenses (R301 million) have now been disclosed as a significant category of expense in the income statement.

Value-added services (VAS) costs VAS costs amounting to R1,091 million were previously included in the costs of handsets and other accessories. Based on the underlying nature of these costs, this has now been reclassified and included in selling, distribution and marketing expenses.

16.2 Reclassification of cash used in investing activities In line with the current year presentation, cash used in acquiring intangible assets of R4,194 million has now been disclosed as a significant item separately from cash used in other investing activities.

17. NIGERIA REGULATORY FINE On 10 June 2016, MTN Nigeria Communication Limited (MTN Nigeria) resolved the matter relating to the previously imposed regulatory fine with the Federal Government of Nigeria (FGN) after the completion of an extensive negotiation process.

F-14 Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2016

17. NIGERIA REGULATORY FINE (continued) In terms of the settlement agreement reached on 10 June 2016, MTN Nigeria has agreed to pay a total cash amount of Naira 330 billion over three years (the equivalent of R25.1 billion1) to the FGN as full and final settlement of the matter.

In addition to the monetary settlement set out above: • MTN Nigeria subscribes to the voluntary observance of the Code of Corporate Governance for the Telecommunications Industry in Nigeria and will ensure compulsory compliance when the said Code is made mandatory for the Telecommunications Industry. • MTN Nigeria undertakes to take immediate steps to ensure the listing of its shares on the Nigerian Stock Exchange as soon as commercially and legally possible after the date of execution of the settlement agreement; and • MTN Nigeria shall always ensure full compliance with its licence terms and conditions as issued by the NCC.

The Naira 50 billion in good faith payment which was paid without prejudice by MTN Nigeria on 24 February 2016 forms part of the monetary component of the settlement. A further payment of Naira 30 billion was made on 24 June 2016 resulting in a remaining cash balance of Naira 250 billion (the equivalent of R12.9 billion2) outstanding at period end.

On 10 June 2016 the nature of the fine changed from a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets to that of a financial liability under IAS 39 Financial Instruments: Recognition and Measurement. As from this date onwards MTN Nigeria was contractually obliged to settle the fine in cash. Consequently, the outstanding balance ceased to be discounted at a pre-tax risk- free rate (in terms of IAS 37) and is instead discounted at MTN Nigeria’s incremental borrowing rate for a liability with similar cash flows (in terms of IAS 39), which approximated 14.71% at the re-measurement date.

Professional services During the period R1,324 million costs were incurred on professional services relating to the negotiations that led to a reduction of R34 billion in the Nigeria regulatory fine. The board has exercised its judgement and approved the quantum of the professional fees incurred taking into account global benchmarks and the value delivered culminating in the final settlement of the Nigeria fine.

18. NON-CURRENT ASSETS HELD FOR SALE During the period under review, the Group concluded an agreement to sell its 50.02% investment in Afrihost for R325 million. The transaction is subject to the fulfillment of applicable conditions relevant to the transaction.

1 Amount translated at the 10 June 2016 rate of R1 = N13.15. 2 Amount translated at the 30 June 2016 closing rate of R1 = N19.33.

F-15 Independent auditors’ report to the shareholders of MTN Group Limited for the year ended 31 December 2015

REPORT ON THE FINANCIAL STATEMENTS We have audited the Group and Company financial statements of MTN Group Limited set out on pages 10 to 145, which comprise the statements of financial position as at 31 December 2015, and the income statement, statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of MTN Group Limited as at 31 December 2015, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

EMPHASIS OF MATTER We draw attention to note 6.3 to the consolidated financial statements which describes the circumstances, uncertainty and current status of the regulatory fine imposed by the Nigerian Communications Commission (NCC) against MTN Nigeria Communications Limited. Our opinion is not qualified in respect of this matter.

OTHER REPORTS REQUIRED BY THE COMPANIES ACT As part of our audit of the consolidated and separate financial statements for the year ended 31 December 2015, we have read the Report of the audit committee, the Certificate by the Company secretary and the Directors’ report, for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

F-16 Independent auditors’ report to the shareholders of MTN Group Limited for the year ended 31 December 2015 (continued)

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc. have been the auditors of MTN Group Limited for 22 years and 13 years, respectively.

PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc. Director: JR van Huyssteen Director: SY Lockhat Registered auditor Registered auditor Sunninghill Woodmead 2 March 2016 2 March 2016

The above auditors’ report is the original auditors’ report that was issued on 2 March 2016 with respect to the Financial Statements for the period ended 31 December 2015. These Financial Statements also contained the Directors’ report, Report of the audit committee, Certificate of MTN Group’s secretary and MTN Group’s separate financial statements. For purposes of this Offering Circular the Directors’ report, Report of the audit committee, Certificate of MTN Group’s secretary and MTN Group’s separate financial statements have been omitted. The page references in the original auditors’ report compare to pages F-18 to F-124 in this Offering Circular in respect of the financial statements.

F-17 Group income statement for the year ended 31 December 2015

2015 20141 Note Rm Rm Revenue 2.2 147,063 146,930 Other income 2.3 8,409 7,928 Direct network and technology operating costs (18,809) (16,354) Costs of handsets and other accessories (10,829) (10,314) Interconnect and roaming (13,102) (13,653) Staff costs 2.4 (8,587) (8,838) Selling, distribution and marketing expenses (18,412) (17,174) Government and regulatory costs (5,888) (5,734) Other operating expenses (11,433) (9,600) EBITDA before Nigeria regulatory fine 68,412 73,191 Nigeria regulatory fine 6.3 (9,287) — EBITDA 59,125 73,191 Depreciation of property, plant and equipment 5.1 (19,557) (18,262) Amortisation of intangible assets 5.2 (3,736) (3,251) Impairment of goodwill 5.2 (504) (2,033) Operating profit 2.4 35,328 49,645 Finance income 2.5 5,442 3,102 Finance costs 2.5 (8,452) (6,770) Net monetary gain 1,348 878 Share of results of associates and joint ventures after tax 9.2 1,226 4,208 Profit before tax 34,892 51,063 Income tax expense 3.1 (11,322) (13,361) Profit after tax 23,570 37,702 Attributable to: Equity holders of the Company 20,204 32,079 Non-controlling interests 3,366 5,623 23,570 37,702 Basic earnings per share (cents) 2.7 1,109 1,752 Diluted earnings per share (cents) 2.7 1,106 1,742

1 Restated, refer to note 1.6.

F-18 Group statement of comprehensive income for the year ended 31 December 2015

2015 2014 Rm Rm Profit after tax 23,570 37,702 Other comprehensive income after tax: Exchange differences on translating foreign operations including the effect of hyperinflation1 22,203 2,968 Attributable to equity holders of the Company 21,033 2,960 Attributable to non-controlling interests 1,170 8 Total comprehensive income for the year 45,773 40,670 Attributable to: Equity holders of the Company 41,237 35,039 Non-controlling interests 4,536 5,631 45,773 40,670

1 This component of other comprehensive income does not attract any tax and may subsequently be reclassified to profit or loss.

F-19 Group statement of financial position at 31 December 2015

2015 2014 Note Rm Rm ASSETS Non-current assets 218,435 163,218 Property, plant and equipment 5.1 106,702 87,546 Intangible assets and goodwill 5.2 55,887 36,618 Investments 7.2 9,969 6,135 Investment in associates and joint ventures 9.2 35,552 25,514 Loans and other non-current receivables 7.3 9,783 6,296 Deferred tax assets 3.2 542 1,109 Current assets 95,432 90,467 Non-current assets held for sale 5.3 10 3,848 95,422 86,619 Inventories 4.1 5,635 3,412 Trade and other receivables 4.2 43,570 32,818 Taxation prepaid 3.3 1,331 564 Current investments 7.4 8,811 5,651 Derivative assets 7.5 163 183 Restricted cash 4.3 1,735 893 Cash and cash equivalents 4.4 34,177 43,098 Total assets 313,867 253,685 EQUITY Ordinary share capital and share premium 8.1 40,248 40,179 Retained earnings 87,526 91,305 Other reserves 8.2 18,595 (2,967) Attributable to equity holders of the Company 146,369 128,517 Non-controlling interests 5,469 4,925 Total equity 151,838 133,442 LIABILITIES Non-current liabilities 72,510 52,613 Borrowings 6.1 52,661 39,470 Deferred tax liabilities 3.2 13,041 11,012 Other non-current liabilities 6.2 2,184 1,585 Provisions 6.3 4,624 546 Current liabilities 89,519 67,630 Trade and other payables 4.5 40,484 33,234 Unearned income 8,519 7,609 Provisions 6.3 7,993 3,414 Taxation liabilities 3.3 10,013 9,562 Borrowings 6.1 22,472 13,783 Derivative liabilities 7.5 — 2 Bank overdrafts 4.4 38 26 Total liabilities 162,029 120,243 Total equity and liabilities 313,867 253,685

F-20 Group statement of changes in equity for the year ended 31 December 2015

Attributable to equity holders of the Company Non- Share Share Retained Other controlling Total capital premium earnings reserves Total interests equity Note Rm Rm Rm Rm Rm Rm Rm Balance at 1 January 2014 * 42,598 79,872 (5,991) 116,479 5,333 121,812 Total comprehensive income — — 32,079 2,960 35,039 5,631 40,670 Profit after tax — — 32,079 — 32,079 5,623 37,702 Other comprehensive income — — — 2,960 2,960 8 2,968 Transactions with shareholders Shares issued during the year * 3 — — 3 — 3 Shares cancelled (*) — — — (*) — (*) Settlement of vested equity rights — — (209) — (209) — (209) Share-based payment transactions — — — 110 110 — 110 Dividends declared 8.3 — — (20,527) — (20,527) (6,176) (26,703) Share buy-back — (2,422) — — (2,422) — (2,422) Other movements — — 90 (46) 44 137 181 Balance at 31 December 2014 * 40,179 91,305 (2,967) 128,517 4,925 133,442 Balance at 1 January 2015 * 40,179 91,305 (2,967) 128,517 4,925 133,442 Total comprehensive income — — 20,204 21,033 41,237 4,536 45,773 Profit after tax — — 20,204 — 20,204 3,366 23,570 Other comprehensive income — — — 21,033 21,033 1,170 22,203 Transactions with shareholders Shares cancelled (*) — — — (*) — (*) Treasury shares *69——69— 69 Settlement of vested equity rights — — (288) — (288) — (288) Share-based payment transactions — — — 532 532 — 532 Dividends declared 8.3 — — (23,506) — (23,506) (4,172) (27,678) Transfer of profit — — (127) 127 — — — Share buy-back (*) — — — (*) — (*) Other movements — — (62) (130) (192) 180 (12) Balance at 31 December 2015 * 40,248 87,526 18,595 146,369 5,469 151,838 Note 8.1 8.1 8.2 * Amounts less than R1 million.

F-21 Group statement of cash flows for the year ended 31 December 2015

2015 2014 Note Rm Rm CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 2.6 57,598 64,628 Finance income received 2,591 2,584 Finance costs paid (4,855) (3,993) Income tax paid 3.3 (13,506) (11,779) Dividends paid to equity holders of the Company (23,506) (20,527) Dividends paid to non-controlling interests (5,777) (4,289) Dividends received from associates 9.2 230 233 Dividends received from joint ventures 347 275 Net cash generated from operating activities 13,122 27,132 CASH FLOWS USED IN INVESTING ACTIVITIES Acquisition of property, plant and equipment (21,612) (19,562) Acquisition of intangible assets (10,412) (3,282) Proceeds from sale of property, plant and equipment and intangible assets 772 541 Proceeds on sale of towers 2.3 6,515 6,465 Increase in investment in joint ventures — (1,524) Increase in non-current investments (3,319) (5,657) Acquisition of businesses, net of cash acquired 9.4 (3,040) (1,634) Loans granted (1,007) (1,007) Increase in investment in insurance cell captives (952) (173) Purchase of bonds, treasury bills and foreign deposits (542) (1,057) (Increase)/decrease in restricted cash (693) 899 Net cash used in investing activities (34,290) (25,991) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of ordinary shares 8.1 — 3 Proceeds from borrowings 23,384 30,603 Repayment of borrowings (14,802) (25,620) Share buy-back1 (173) (2,249) Settlement of vested equity rights (288) (209) Other financing activities (20) 111 Net cash from financing activities 8,101 2,639 Net (decrease)/increase in cash and cash equivalents (13,067) 3,780 Net cash and cash equivalents at beginning of the year 43,072 39,577 Exchange gains/(losses) on cash and cash equivalents 3,860 (182) Net monetary gain/(loss) on cash and cash equivalents 274 (103) Net cash and cash equivalents at end of the year 4.4 34,139 43,072

1 An amount of R173 million relating to the 2014 year was paid in January 2015.

F-22 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS 1.1 Basis of preparation The Group financial statements of MTN Group Limited (the Company) comprise the Company and its subsidiaries and the Group’s interest in associates and joint ventures (together referred to as the “Group” and individually as (“Group entities”). The Group financial statements and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and Interpretations as issued by the IFRS Interpretations Committee (IFRIC), and comply with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council (FRSC), the JSE Listings Requirements and the requirements of the South African Companies Act, No 71 of 2008. The Group and the Company have adopted all new accounting pronouncements that became effective in the current reporting period, none of which had a material impact on the Group or the Company.

The financial statements have been prepared on the historical cost basis adjusted for the effects of inflation where entities operate in hyperinflationary economies and for certain financial instruments and non-current assets held for sale that have been measured at fair value, where applicable.

The Sudanese and Syrian economies have been considered to be hyperinflationary. Accordingly, the results, cash flows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC) have been expressed in terms of the measuring unit current at the reporting date.

Iran ceased being regarded as a hyperinflationary economy during 2015, resulting in hyperinflation accounting relating to Irancell Telecommunication Company Services (PJSC) not being applied from 1 July 2015 onward.

The methods used to measure fair value and the adjustments made to account for the Group’s entities that operate in hyperinflationary economies are discussed further in the accounting policies and in the respective notes.

Amounts are rounded to the nearest million with the exception of earnings per share and the related number of shares (note 2.7), number of ordinary shares (note 8.1), share-based payments (note 8.4) and directors’ emoluments and interests (note 10.2).

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are included in note 1.5.

1.2 Going concern The Group and the Company’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group and the Company should be able to operate within their current funding levels into the foreseeable future.

After making enquiries, the directors have a reasonable expectation that the Company and its subsidiaries have adequate resources to continue in operational existence for the foreseeable future. The financial statements therefore have been prepared on a going concern basis.

1.3 Principal accounting policies1 The principal accounting policies applied in the preparation of these financial statements are set out below and in the related notes to the Group financial statements, and should be read in conjunction with the financial definitions disclosed on pages 144 and 145 of the financial statements. The principal accounting policies applied are consistent with those adopted in the prior year, unless otherwise stated.

1 Where applicable, the principal accounting policies applied in the Company financial statements are consistent with those applied in the Group financial statements.

F-23 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.3 Principal accounting policies (continued) 1.3.1 Consolidation Business combinations The Group accounts for business combinations using the acquisition method when control is obtained by the Group. A business is defined as an integrated set of activities and assets that are capable of being conducted and managed for the purposes of providing a return directly to investors or other owners, members or participants. The consideration transferred is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are recognised in profit or loss. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non- controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. If, after reassessment, the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), such excess is recognised immediately in profit or loss as a bargain purchase gain.

An obligation to pay contingent consideration is classified as either a financial liability or equity based on the respective definitions set out in IAS 32 Financial Instruments: Presentation. The Group classifies any rights to the return of consideration previously transferred as a financial asset. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39 Financial Instruments: Recognition and Measurement, with the corresponding gain or loss recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured after the acquisition date.

Any changes resulting from additional and new information about events and circumstances that existed at the acquisition date and, if known, would have affected the measurement of the amount recognised at that date, are considered to be measurement period adjustments. The Group retrospectively adjusts the amounts recognised for measurement period adjustments. The measurement period ends when the acquirer receives all the information that they were seeking about the facts and circumstances that existed at the acquisition date or learns that information cannot be obtained. The measurement period shall, however, not exceed one year from the acquisition date. To the extent that changes in the fair value relate to post-acquisition events, these changes are recognised in accordance with the IFRS applicable to the specific asset or liability.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Consolidation of subsidiaries The Group financial statements incorporate the financial statements of MTN Group Limited and all its subsidiaries, joint ventures, associates and structured entities (SEs) for the reporting date 31 December 2015 on the basis outlined below.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date that control ceases (disposal date). When assessing whether control exists, the Group considers all existing substantive rights that result in the current ability to direct relevant activities.

F-24 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.3 Principal accounting policies (continued) 1.3.1 Consolidation (continued) All intercompany transactions, balances and unrealised gains/losses on transactions between Group companies are eliminated on consolidation. Unrealised losses are considered an impairment indicator of the asset transferred.

Where necessary, adjustments are made to the financial statements of subsidiaries to align any difference in accounting policies with those of the Group.

The Group does not consolidate entities where it owns more than half of the issued ordinary share capital where the contractual agreements are such that other shareholders have substantive rights that provide authority over the relevant activities of the entities.

The Company accounts for investments in subsidiaries at cost, less accumulated impairment losses.

Non-controlling interest On an acquisition-by-acquisition basis, non-controlling interests in the acquiree may initially be measured either at fair value, or at the non-controlling shareholders’ proportion of the net identifiable assets acquired and liabilities and contingent liabilities assumed.

Non-controlling shareholders are treated as equity participants; therefore, all acquisitions of non-controlling interests or disposals by the Group of its interests in subsidiaries, where control is maintained subsequent to the disposal, are accounted for as equity transactions. Consequently, the difference between the fair value of the consideration transferred and the carrying amount of a non-controlling interest purchased, is recorded in equity. All profits or losses arising as a result of the disposal of interests in subsidiaries to non-controlling shareholders (where control is subsequently maintained) are also recorded in equity.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity.

Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

1.3.2 Foreign currency Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the entity’s functional currency. The Group financial statements are presented in South African rand, which is the functional and presentation currency of the Company.

Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Translation of foreign operations The results, cash flows and financial position of Group entities which are not accounted for as entities operating in hyperinflationary economies and that have a functional currency different from the presentation currency of the Group are translated into the presentation currency as follows: • assets and liabilities are translated at rates of exchange ruling at the reporting date; • specific transactions in equity are translated at rates of exchange ruling at the transaction dates;

F-25 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.3 Principal accounting policies (continued) 1.3.2 Foreign currency (continued) • income and expenditure and cash flow items are translated at weighted average exchange rates for the period or translated at exchange rates at the date of the transaction, where applicable; and • foreign exchange translation differences are recognised as other comprehensive income.

The results, cash flows and financial position of the Group entities which are accounted for as entities operating in hyperinflationary economies and that have functional currencies different from the presentation currency of the Group are translated into the presentation currency of its immediate parent at rates of exchange ruling at the reporting date. As the presentation currency of the Group or that of the immediate parent is that of a non-hyperinflationary economy, comparative amounts are not adjusted for changes in the price level or exchange rates in the current year.

An entity may have a monetary item that is receivable from a foreign operation. An item for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity’s net investment in that foreign operation. On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income as part of the foreign currency translation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate ruling at the reporting date. Exchange differences arising are recognised in other comprehensive income.

The exchange rates relevant to the Group are disclosed in note 7.6.

Disposal of foreign operations On disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the equity holders of the Group are reclassified to profit or loss.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non- controlling interests and are not recognised in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Exchange differences accumulated in equity in respect of a monetary item that is part of the Group’s net investment in a foreign operation, is not reclassified to profit or loss on settlement of the monetary item.

1.3.3 Hyperinflation The financial statements (including comparative amounts) of the Group entities whose functional currencies are the currencies of hyperinflationary economies are adjusted in terms of the measuring unit current at the end of the reporting period.

As the presentation currency of the Group is that of a non-hyperinflationary economy, comparative amounts are not adjusted for changes in the price level or exchange rates in the current year. In the first period of application, the adjustments determined at the beginning of the period are recognised directly in equity as an adjustment to opening retained earnings. In subsequent periods, the prior period adjustments related to components of owners’ equity and differences arising on translation of comparative amounts are accounted for in other comprehensive income.

Items in the statement of financial position not already expressed in terms of the measuring unit current at the reporting period, such as non-monetary items carried at cost or cost less depreciation, are restated by applying a general price index. The restated cost, or cost less depreciation, of each item is determined by applying to its

F-26 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.3 Principal accounting policies (continued) 1.3.3 Hyperinflation (continued) historical cost and accumulated depreciation the change in a general price index from the date of acquisition to the end of the reporting period. An impairment loss is recognised in profit or loss if the restated amount of a non- monetary item exceeds its estimated recoverable amount.

At the beginning of the first period of application, the components of owners’ equity, except retained earnings, are restated by applying a general price index from the dates the components were contributed or otherwise arose. Restated retained earnings are derived from all other amounts in the restated statement of financial position. At the end of the first period and in subsequent periods, all components of owners’ equity are restated by applying a general price index from the beginning of the period or the date of contribution, if later.

All items recognised in the income statement are restated by applying the change in the general price index from the dates when the items of income and expenses were initially earned or incurred.

Gains or losses on the net monetary position are recognised in profit or loss.

All items in the statement of cash flows are expressed in terms of the general price index at the end of the reporting period.

The Sudanese and Syrian economies have been classified as hyperinflationary. Accordingly, the results, cash flows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC), have been expressed in terms of the measuring unit current at the reporting date. For further details, refer to note 1.5.7.

The results, cash flows and financial position of a joint venture, Irancell Telecommunication Company Services (PJSC), has been classified as hyperinflationary since 2013. During the current year, Iran ceased to be hyperinflationary, effective 1 July 2015 and consequently hyperinflationary accounting has not been applied from this date onward. Accordingly, the amounts expressed in terms of the measuring unit current at 30 June 2015 are treated as the basis for the carrying amounts with no further hyperinflation adjustments being passed from 1 July 2015 onwards.

F-27 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.3 Principal accounting policies (continued) 1.3.4 Measurement principles Key assets and liabilities shown in the statement of financial position are measured as follows:

Items included in the statement Items included in the statement of financial position Measurement principle of financial position Measurement principle ASSETS LIABILITIES Non-current assets Non-current liabilities Property, plant and equipment Historical cost, less Borrowings Amortised cost accumulated depreciation and impairment losses Intangible assets Historical cost, less Deferred tax liabilities Undiscounted amount accumulated amortisation measured at the tax rates and impairment losses that have been enacted and are expected to apply to the period when the liability is Investments Amortised cost/fair value settled Goodwill Historical cost, less Provisions Present value of the best impairment losses estimate of the settlement amount Investment in associates and Cost adjusted for share of joint ventures movements in net assets Loans receivable Amortised cost Deferred tax assets Undiscounted amount measured at the tax rates that have been enacted and are expected to apply to the period when the asset is realised Current assets Current liabilities Non-current assets held for Lower of carrying amount Trade and other payables Amortised cost sale and fair value less costs to sell Inventories Lower of cost and net Derivative liabilities Fair value realisable value Trade receivables Amortised cost Unearned income Nominal value Provisions Present value of the best estimate of the settlement amount Taxation liabilities Amount expected to be paid to tax authorities, using tax rates that have been enacted or substantively enacted at the reporting date Taxation prepaid Amount expected to be Borrowings Amortised cost recovered from tax authorities, using tax rates that have been enacted or substantively enacted at the reporting date Current investments Amortised cost/fair value Derivative assets Fair value Bank overdrafts Amortised cost Restricted cash Amortised cost Cash and cash equivalents Amortised cost

F-28 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.4 New accounting pronouncements The pronouncements listed below will be effective in future reporting periods and are considered significant to the Group. The Group has elected not to early adopt the new pronouncements. It is expected that the Group will adopt the new pronouncements on their effective dates in accordance with the requirements of the pronouncements.

Topic Key requirements Effective date IFRS 16 The International Accounting Standards Board (IASB) issued IFRS 16 1 January 2019 Leases Leases in January 2016. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, the customer (lessee) and the supplier (lessor). IFRS 16 replaces the previous leases standard, IAS 17 Leases, and related interpretations. The model reflects that, at the start of a lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. In response to concerns expressed about the cost and complexity to apply the requirements to large volumes of small assets, the IASB decided not to require a lessee to recognise assets and liabilities for short-term leases (less than 12 months), and leases for which the underlying asset is of low value. A lessee measures lease liabilities at the present value of future lease payments. A lessee measures lease assets, initially at the same amount as lease liabilities, and also includes costs directly related to entering into the lease. Lease assets are amortised in a similar way to other assets such as property, plant and equipment. This approach will result in a more faithful representation of a lessee’s assets and liabilities and, together with enhanced disclosures, will provide greater transparency of a lessee’s financial leverage and capital employed. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. One of the implications of the new standard is that there will be a change to key financial ratios derived from a lessee’s assets and liabilities (for example, leverage and performance ratios). It is expected that the accounting treatment for lease contracts applicable to the Group, such as tower and other infrastructure leases will be impacted by the new standard. This will result in an increase in lease liabilities and right of use assets in the statement of financial position with a corresponding reduction in operating lease expenses and an increase in depreciation and finance costs in the income statement. IFRS 15 IFRS 15 replaces the two main revenue recognition standards, IAS 18 1 January 2018 Revenue Revenue and IAS 11 Construction Contracts and their related from Contracts interpretations. with Customers IFRS 15 provides a single control-based revenue recognition model and clarifies the principles for recognising revenue from contracts with customers. The core principle is that an entity should recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Revenue is recognised when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service.

F-29 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.4 New accounting pronouncements (continued) Topic Key requirements Effective date IFRS 15 IFRS 15 also includes a cohesive set of disclosure requirements that will Revenue from result in an entity providing users of financial statements with Contracts comprehensive information about the nature, amount, timing and with Customers uncertainty of revenue and cash flows arising from the entity’s contracts (continued) with customers. IFRS 15 will be applied retrospectively subject to the application of the transitional provisions. The impact on the financial statements has not yet been fully determined but it is expected to result in a change in: • the measurement of revenue to adjust for the effects of the time value of money; and • the timing of the recognition of subscriber acquisition costs such as agent’s commission which will be recognised when the related performance obligations are satisfied. The Group’s current accounting policy is to expense such costs when incurred. Refer to Annexure 2 for the Group’s latest unaudited impact assessment in relation to IFRS 15. IFRS 9 IFRS 9 replaces IAS 39 Financial Instruments: Recognition 1 January 2018 Financial and Measurement. It retains but simplifies the mixed measurement model Instruments and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income. IFRS 9 also replaces the rule-based hedge accounting requirements in IAS 39. It requires an economic relationship between the hedged item and hedging instrument and for the “hedged ratio” to be the same as the one management actually uses for risk management purposes. IFRS 9 includes an expected credit loss model for calculating impairment on financial assets. This replaces the incurred loss model used under IAS 39. The adoption of IFRS 9 is not expected to change the measurement of the Group’s financial assets and liabilities significantly, but will require a review of the current classification of financial assets and liabilities. Any changes in classification will be applied retrospectively. The hedge accounting requirements will be applied prospectively and are not expected to have a significant impact on the financial results of the Group. The impact of an expected credit loss model on the financial statements has not yet been fully determined. Refer to Annexure 2 for the Group’s latest unaudited impact assessment on its financial results of the application of the expected credit loss model.

1.5 Critical accounting judgements, estimates and assumptions The Group makes judgements, estimates and assumptions concerning the future when preparing the consolidated financial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the

F-30 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.5 Critical accounting judgements, estimates and assumptions (continued) estimates are revised and in any future periods affected. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

The “Critical accounting judgements, estimates and assumptions” note should be read in conjunction with the “Principal accounting policies” disclosed in note 1.3.

1.5.1 Provisions The Group exercises judgement in determining the expected cash outflows related to its provisions. Judgement is necessary in determining the timing of the outflow as well as quantifying the possible range of the cash outflows that may occur.

The present value of the Group’s provisions is based on management’s best estimate of the future cash outflows expected to be required to settle the obligations, discounted using appropriate pre-tax discount rates that reflect the current market assessment of the time value of money and the risks specific to each provision.

The Nigerian Communications Commission (NCC) imposed a fine on MTN Nigeria that related to the timing of the disconnection of subscribers. The Group provided R9.3 billion based on management’s judgement. The ultimate resolution of the imposed fine may be different to the amount provided. Additional information on provisions is disclosed in note 6.3.

1.5.2 Impairment of goodwill The Group tests goodwill for impairment on an annual basis, in accordance with the accounting policy disclosed in note 5.2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations are performed internally by the Group and require the use of estimates and assumptions.

The input factors most sensitive to change are management estimates of future cash flows based on budgets and forecasts, growth rates and discount rates. Further detail on these assumptions has been disclosed in note 5.2. The Group has performed a sensitivity analysis by varying these input factors by a reasonably possible margin and assessing whether the changes in input factors result in any of the goodwill allocated to appropriate cash- generating units being impaired. Goodwill impairment in the current year amounted to R504 million (2014: R2,033 million), refer to note 5.2.

1.5.3 Sale of tower assets The Group applies judgement and follows the guidance in IFRS 3 Business Combinations to determine whether the sale of tower assets constitutes the sale of a business or an asset.

The Group determined that its tower assets in Nigeria, which were sold in two tranches during the current and prior years (note 2.3), were an integrated set of activities capable of being conducted and managed for the purpose of providing a return and therefore constituted the sale of businesses. In exercising its judgement, the Group considered the following: • the transfer of assets resulted in the transfer of employees that are key to the inputs and processes being transferred; • the sale agreements provide for the transfer of all substantial assets required to operate the tower business, including related tower rights, site maintenance agreements, tenant leases and inventory; • the processes involved in the tower businesses such as site management systems and site maintenance programmes, were transferred along with the assets; and • the tower assets are able to produce outputs through the management and leasing of sites to other parties.

F-31 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.5 Critical accounting judgements, estimates and assumptions (continued) 1.5.4 Income taxes The Group is subject to income taxes in numerous jurisdictions. As a result, significant judgement is required in determining the Group’s provision for income taxes. There are numerous calculations and transactions for which the ultimate tax position is uncertain during the ordinary course of business. The Group recognises tax liabilities for anticipated tax issues based on estimates of whether additional taxes will be payable. Where payment is possible but not probable, the tax exposure is disclosed as a contingent liability, refer to note 6.8. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact current and deferred tax in the period in which such determination is made.

Deferred tax assets Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deferred tax assets can be utilised. When recognising deferred tax assets, the Group exercises judgement in determining whether sufficient taxable profits will be available; this is done by assessing the future financial performance of the underlying Group entities to which the deferred tax assets relate. The Group’s deferred tax assets for the current year amounted to R542 million (2014: R1,109 million), refer to note 3.2.

1.5.5 Determining whether an arrangement contains a lease The Group applies the principles of IFRIC 4 Determining whether an Arrangement contains a Lease in order to assess whether its arrangements constitute or contain leases. The requirements to be met in order to conclude that an arrangement constitutes or contains a lease are as follows: • the provision of a service in terms of the arrangement should be dependent on the use of one or more specific assets; and • the arrangement must convey a right to use these assets.

All other arrangements that do not constitute or contain leases are treated as service level agreements; the costs are expensed as incurred.

For the purpose of applying IFRIC 4 on tower space lease arrangements, the Group considers the tower asset as a whole in assessing whether the arrangement contains a lease. This is consistent with the guidance on determining a component of an asset in IAS 16 Property, Plant and Equipment. The Group has resolved that an arrangement contains a lease as defined in IAS 17 Leases where the arrangement provides an exclusive right to use specific tower space which is more than an insignificant part of the tower asset.

1.5.6 Determining whether an arrangement qualifies as an operating lease or a finance lease The Group applies its principal accounting policies for leases to account for arrangements which constitute or contain leases and follows the guidance of IAS 17 to determine the classification of leases as either operating or finance leases.

During the current and prior year, the Group entered into sale and leaseback transactions with IHS that resulted in the sale of its mobile network towers in Nigeria, refer to note 2.3.

The critical elements that the Group considered with respect to the classification of the lease transaction were: • whether the lease terms are for the major part of the economic life of the tower assets; and • whether at inception of the leases, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the tower assets.

The Group estimated that the lease term of the tower assets is not for a major part of the economic life of the tower assets, taking into account the non-cancellable period for which the Group has contracted, and any options to renew such period where it is reasonably certain that the Group will exercise the option.

F-32 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.5 Critical accounting judgements, estimates and assumptions (continued) 1.5.6 Determining whether an arrangement qualifies as an operating lease or a finance lease (continued) The minimum lease payments were determined by separating the payments required by the lease arrangements into those pertaining to the lease and those pertaining to other elements such as services and cost of inputs on the basis of their relative fair values. Management exercised judgement in estimating the fair value of the other elements by reference to comparable cost structures of the Group and other independent tower operators. The discount rate used in calculating the present value of the minimum lease payments reflects the rate of interest MTN Nigeria Communications Limited would incur in borrowing the funds necessary to purchase similar assets.

The fair value of the tower assets was determined by reference to the amounts at which the tower assets were sold which represents the prices at which the assets could be sold in an orderly transaction between market participants under current market conditions. The Group determined that the present value of the minimum lease payments did not equal substantially all of the fair value of the underlying tower assets.

Following the Group’s assessment, the leaseback transactions were classified as operating leases.

1.5.7 Hyperinflation The Group exercises significant judgement in determining the onset of hyperinflation in countries in which it operates and whether the functional currency of its subsidiaries, associates or joint ventures is the currency of a hyperinflationary economy.

Various characteristics of the economic environment of each country are taken into account. These characteristics include, but are not limited to, whether: • the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency; • prices are quoted in a relatively stable foreign currency; • sales or purchase prices take expected losses of purchasing power during a short credit period into account; • interest rates, wages and prices are linked to a price index; and • the cumulative inflation rate over three years is approaching, or exceeds, 100%.

Management exercises judgement as to when a restatement of the financial statements of a Group entity becomes necessary. Following management’s assessment, the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC), have been accounted for as entities operating in hyperinflationary economies. The results, cash flows and financial positions of MTN Sudan Company Limited and MTN Syria (JSC) have been expressed in terms of the measuring units current at the reporting date.

Iranian economy The decreasing inflation rates and other factors related to the characteristics of the economic environment in Iran have indicated that the economy ceased to be hyperinflationary, effective for financial periods ending 31 December 2015. Accordingly, the amounts expressed in terms of the measuring unit current at 30 June 2015 are treated as the basis for the carrying amounts with no further hyperinflation adjustments being passed from 1 July 2015 onwards. Refer to note 9.2.

The general price indices used in adjusting the results, cash flows and financial position of the Group’s subsidiaries are set out below:

MTN Sudan Company Limited The general price index used as published by the International Monetary Fund is as follows:

General Inflation price rate Date Base year index (%) 31 December 2015 2007 541 15.5

F-33 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.5 Critical accounting judgements, estimates and assumptions (continued) 1.5.7 Hyperinflation (continued) The cumulative inflation rate over three years as at 31 December 2015 is 106.6%. The average adjustment factor used for 2015 was 1.16.

MTN Syria (JSC) Reliable inflation data could not be obtained on the inflation rate in Syria. The general price index set out below was calculated by reference to the change in the United States dollar: Syrian pound exchange rate.

General Inflation price rate Date Base year index (%) 31 December 2015 2014 170 70

The cumulative inflation rate over three years as at 31 December 2015 is 289.2%. The average adjustment factor used for 2015 was 1.39.

The impact of adjusting the Group’s results for the effects of hyperinflation is set out below:

2015 2014 Rm Rm Income statement Increase in revenue 710 776 Increase in EBITDA 231 241 Net monetary gain 1,348 878 (Decrease)/increase in share of results of associates and joint ventures after tax1 (1,768) 529 (Decrease) in profit after tax2 (758) (612)

1 Including share of net monetary gain amounting to R390 million (2014: R927 million). 2 Including goodwill impairment for the 2014 year relating to MTN Sudan Company Limited (note 5.2).

1.6 Restatements 1.6.1 Reclassification of expenses Following a review of expenses disclosed in the Group income statement for the year ended 31 December 2014, the expenses detailed below have been disclosed separately or reclassified between expense categories to present the expenses in accordance with the classification in the current year.

Government and regulatory costs Government and regulatory costs that had previously been included in direct network operating costs and other operating expenses which comprises: government revenue share, regulatory fees and levies and spectrum fees, have been disclosed as a significant separate category of expense in the income statement.

Value-added services (VAS) costs VAS costs were previously included in the costs of handsets and other accessories. Based on the underlying nature of these costs, they were reclassified and included in selling, distribution and marketing expenses.

F-34 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.6 Restatements (continued) 1.6.1 Reclassification of expenses (continued) The impact of these reclassifications as disclosed in the financial statements for the year ended 31 December 2014 is provided below:

Group income statement

31 December 2014 Previously reported Adjustments Restated Rm Rm Rm Expenses Direct network and technology operating costs (21,604) 5,250 (16,354) Costs of handsets and other accessories (11,957) 1,643 (10,314) Selling, distribution and marketing expenses (15,531) (1,643) (17,174) Government and regulatory costs — (5,734) (5,734) Other operating expenses (10,084) 484 (9,600)

1.6.2 Reclassification of revenue During the current year, an amount of R1,293 million in respect of 2014 was reclassified from data revenue to airtime and subscription revenue to accurately reflect the respective categories of revenue year-on-year (refer to note 2.2).

Group income statement

31 December 2014 Previously reported Adjustments Restated Rm Rm Rm Revenue Airtime and subscription 88,347 1,293 89,640 Data 27,478 (1,293) 26,185

1.6.3 Reclassification of foreign exchange gains and losses The Group manages its risk to foreign exchange exposure on a net basis and consequently in the current year the foreign exchange gains and losses previously disclosed on a gross basis and included in the relevant finance income or finance cost line is now disclosed on a net basis (refer to note 2.5).

The impact of the reclassification as disclosed in the financial statements for the year ended 31 December 2014 is provided below:

Group income statement

31 December 2014 Previously reported Adjustments Restated Rm Rm Rm Finance income 6,772 (3,670) 3,102 Finance cost (10,440) 3,670 (6,770)

F-35 Notes to the Group financial statements for the year ended 31 December 2015

1 ACCOUNTING FRAMEWORK AND CRITICAL JUDGEMENTS (continued) 1.6 Restatements (continued) 1.6.4 Restatement of goodwill disclosed per operation The Group restated its previously disclosed allocation of goodwill for a number of its operations. The restatement relates to a gain realised on a foreign currency hedge on initial acquisition of these operations. The gain was previously disclosed within the “other” category of goodwill. In addition, goodwill relating to the South African businesses acquired have been moved from the “other” category to be included within Mobile Telephone Networks Proprietary Limited (South Africa). The re-allocation adjusted the goodwill of the individual operations as follows:

31 December 2014 Previously reported Adjustments Restated Rm Rm Rm Scancom Limited (MTN Ghana) 6,957 (949) 6,008 MTN Sudan Company Limited 784 (340) 444 MTN Yemen 3,338 (455) 2,883 MTN Afghanistan Limited 1,645 (224) 1,421 MTN Syria (JSC) 146 (20) 126 MTN Cyprus Limited 841 (115) 726 Spacetel Benin SA 1,331 (181) 1,150 Areeba Guinea S.A. 918 (125) 793 Lonestar Communications Corporation LLC (Liberia) 332 (45) 287 Mobile Telephone Networks Proprietary Limited (South Africa)2 525 1,762 2,287 Other 584 841 668 MTN Zambia — 298 298 Spacetel Guinea-Bissau SA — 310 310 17,401 — 17,401

1 Includes reduction from gain on foreign currency hedge and increase from re-allocations. 2 Includes MTN South Africa and other South African based subsidiaries.

2 RESULTS OF OPERATIONS 2.1 Operating segments The Group has identified reportable segments that are used by the Group executive committee (chief operating decision maker (CODM)) to make key operating decisions, allocate resources and assess performance. The reportable segments are geographically differentiated regions and are grouped by their relative size.

The Group’s principal activities include the provision of network IT services, local, national and international telecommunications services; broadband and internet products and services; and converged fixed/mobile products and services.

Operating results are reported and reviewed regularly by the Group executive committee and include items directly attributable to a segment as well as those that can be attributed on a reasonable basis, whether from external transactions or from transactions with other Group segments.

Unallocated items mainly comprise corporate expenses which do not directly relate to the operating activities of the segments or which cannot be re-allocated on a reasonable basis. Segment results are determined before any adjustment for non-controlling interests.

F-36 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.1 Operating segments (continued) EBITDA is used as the measure of reporting profit or loss of each segment.

Revenue contribution Revenue contribution (%)1 (%)1

South Africa – 25 South Africa – 25 2015 Nigeria – 32 2014 Nigeria – 34 Iran – 9 Iran – 7 Ghana – 5 Ghana – 5 Syria – 2 Syria – 2 Cameroon – 4 Cameroon – 4 Ivory Coast – 4 Ivory Coast – 4 Uganda – 3 Uganda – 3 Sudan – 2 Sudan – 2 Small opco cluster – 14 Small opco cluster – 14

EBITDA contribution EBITDA contribution 1,2 (%) (%)1,2

South Africa – 21 South Africa – 18 2015 Nigeria – 42 2014 Nigeria – 46 Iran – 9 Iran – 7 Ghana – 5 Ghana – 4 Syria – 1 Syria – 1 Cameroon – 3 Cameroon – 4 Ivory Coast – 3 Ivory Coast – 4 Uganda – 3 Uganda – 3 Sudan – 2 Sudan – 1 Small opco cluster – 11 Small opco cluster – 12

1 Including Iran, excluding adjustments for hyperinflation and head office companies. 2 Excludes adjustments for profit on tower sales and the regulatory fine in Nigeria (refer note 6.3).

F-37 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.1 Operating segments (continued)

Large opco cluster Adjustments to IFRS Major Head office Profit Small joint companies on Nigeria Adjustments South Ivory opco venture and tower regulatory for Africa Nigeria Ghana Cameroon Coast Uganda Syria1 Sudan1 cluster – Iran1 eliminations2 Iran3 sales fine hyperinflation Consolidated Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm 2015 Revenue 40,038 51,942 7,903 5,806 6,424 5,148 2,605 3,472 23,290 13,660 (275) (13,660) – 710 147,063 EBITDA 13,370 27,504 3,197 2,101 2,195 1,775 460 1,216 7,525 5,665 575 (5,665) 8,263 (9,287) 231 59,125 Depreciation and amortisation (23,293) Impairment of goodwill (504) Net finance costs (3,010) Net monetary gain 1,348 Share of results of associates and joint ventures after tax 1,226 Profit before tax 34,892 EBITDA margin (%) 33.4 53.0 40.5 36.2 34.2 34.5 17.7 35.0 32.3 41.5 40.2 F-38 Capital expenditure4 10,948 4,993 1,831 1,911 833 951 974 819 4,368 4,180 1,571 (4,180) – 412 29,611 Capex/revenue (%) 27.3 9.6 23.2 32.9 13.0 18.5 37.4 23.6 18.8 30.6 20.1 2014 Revenue 38,922 53,995 7,149 6,194 6,418 5,289 3,449 2,701 22,385 11,631 (348) (11,631) – 776 146,930 EBITDA 12,509 31,620 2,674 2,651 2,475 2,074 651 914 8,083 4,982 1,869 (4,982) 7,430 – 241 73,191 Depreciation and amortisation (21,513) Impairment of goodwill (2,033) Net finance costs (3,668) Net monetary gain 878 Share of profit/(loss) of associates and joint ventures after tax 4,208 Profit before tax 51,063 EBITDA margin (%) 32.1 58.6 37.4 42.8 38.6 39.2 18.9 33.8 36.1 42.8 49.8 Capital expenditure4 5,676 8,375 1,400 862 1,185 667 357 1,392 3,888 3,112 1,440 (3,112) – 164 25,406 Capex/revenue (%) 14.6 15.5 19.6 13.9 18.5 12.6 10.4 51.5 17.4 26.8 17.3

1 Excludes adjustments for hyperinflation. 2 Head office companies and eliminations consist mainly of the Group’s central financing activities, management fees and dividends received from segments as well as intersegment eliminations. 3 Irancell Telecommunication Company Services (PJSC) proportionate results are included in the segment analysis as reviewed by the CODM and excluded from IFRS reported results due to equity accounting for joint ventures. 4 Capital expenditure comprises additions to property, plant and equipment, software and capital work in progress.

The Group is domiciled in South Africa. Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.2 Revenue Revenue is measured at the fair value of the consideration received or receivable from the sale of goods and services in the ordinary course of the Group’s activities. Revenue is presented net of indirect taxes, estimated returns and trade discounts.

Revenue from the sale of goods and the rendering of services is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue, and associated costs incurred or to be incurred, can be measured reliably. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.

Postpaid products typically include the sale of a handset, activation fee and a service contract; and prepaid products include a subscriber identification module (SIM) card and airtime.

Multiple element (or bundled) arrangements are divided into separate units of accounting, and revenue is recognised through the application of the relative fair value method, resulting in the proportionate allocation of any discount to all elements in the bundle.

The Group operates loyalty programmes in certain entities where customers accumulate points for purchases made, which entitle them to discounts on future purchases. The reward points are recognised as a separately identifiable component of the initial sale transaction by allocating the consideration received or receivable between the reward points and the other components of the sale such that the reward points are initially recognised as deferred income at their fair value. Revenue from the reward points is recognised when the points are redeemed. Breakage (forfeiture of points) is recognised when redemption becomes remote.

The main categories of revenue and the bases of recognition are as follows:

Airtime and subscription, data and SMS • airtime, data and SMS: revenue is recognised on the usage basis commencing on the date of activation; • subscription: revenue is recognised over the period that enables a customer to access network services; • connection fees: revenue is recognised on the date of activation of a new SIM card; and • SIM kits: revenue is recognised on the date of sale.

The terms and conditions of postpaid bundled airtime products may allow for the carryover of unused value or minutes. The revenue related to the unused value or minutes is deferred and recognised when utilised by the customer or on termination of the contract. Breakage (forfeiture of unused value or minutes) is recognised when the unused value or minutes expire or when usage thereof becomes remote.

Revenue received on prepaid contracts is deferred and recognised when services are utilised by the customer or on termination of the customer relationship. Breakage is recognised when the prepaid credit expires or when utilisation thereof becomes remote.

Interconnect/roaming Interconnect/roaming revenue is recognised on a usage basis, unless it is not probable on the transaction date that the interconnect revenue will be received, in which case interconnect revenue is recognised only when the cash is received or where a right of set-off exists with interconnect parties in settling outstanding amounts.

F-39 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.2 Revenue (continued) Mobile telephones and accessories Revenue on the sale of mobile telephones and accessories to third parties are recognised only when risks and rewards of ownership are transferred to the buyer. 2015 2014 (%) (%)

Airtime and subscription Airtime and subscription (57) (61) Roaming (1) Roaming (1) Data (23) Data (18) SMS (3) SMS (3) Interconnect (10) Interconnect (10) Mobile telephones and Mobile telephones and accessories (5) accessories (5) Other (1) Other (2)

2015 2014 Rm Rm Airtime and subscription 83,922 89,6401 Roaming 1,524 1,510 Data 34,057 26,1851 SMS 4,121 4,552 Interconnect 14,763 15,009 Mobile telephones and accessories 6,985 7,890 Other 1,691 2,144 147,063 146,930

The Group’s unearned income at the end of the year amounts to R8,519 million (2014: R7,609 million). 1 Restatement, refer to note 1.6.2. 2.3 Other income Other income is recognised when the risks and rewards of ownership of the assets are transferred to the buyer. 2015 2014 Rm Rm Profit on tower sales – Nigeria 8,233 7,329 Sale proceeds 6,515 5,406 Contingent consideration (19) 327 Fair value of retained interest in Nigeria Tower InterCo B.V. and equity derivative 4,888 4,309 Carrying amount of assets and related liabilities disposed (3,151) (2,713) Profit on tower sales – other subsidiaries — 70 Sale proceeds — 1,059 Carrying amount of assets and related liabilities disposed — (962) Warranty provision and consultancy cost — (27) Total profit on tower sales 8,233 7,399 Realisation of deferred gain on Ghana tower sale1 30 31 Realisation of deferred gain on asset swap for investment in BICS2 — 364 Other 146 134 8,409 7,928

1 In 2011, Scancom Limited (MTN Ghana) concluded a transaction with American Tower Company (ATC), which involved the sale of MTN Ghana’s base transceiver station (BTS) sites to Ghana Tower InterCo B.V. which is an associate of the Group. Profit was eliminated to the extent of the Group’s interest in the associate. Such unrealised profit is realised by the Group as the underlying assets are depreciated by the associate. 2 The deferred gain arose on the contribution of various assets from MTN Dubai, MTN International Carrier Services and Uniglobe in exchange for a 20% investment in the associate, Belgacom International Carrier Services (BICS) (note 9.2). This gain was deferred and is being amortised over a five-year period. The deferred gain was fully amortised during 2014.

F-40 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.3 Other income (continued) As part of the Group’s strategy to monetise its investment in tower infrastructure, the Group sold 8,850 of its mobile network towers in MTN Nigeria Communications Limited, in two tranches to INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V. As a result, IHS obtained a 49% interest in Nigeria Tower InterCo B.V., with the remaining 51% interest held by the Group (note 9.2). Nigeria Tower InterCo B.V. has been classified as an associate of the Group.

The first tranche of the tower sales closed on 24 December 2014 and involved the sale of 4,154 mobile network towers by MTN Nigeria Communications Limited to INT Towers Limited for a cash consideration of US$451 million and the Group recognising its equity interest in Nigeria Tower InterCo B.V. amounting to US$370 million. A receivable amounting to US$29 million was initially recognised based on management’s estimate of the contingent consideration receivable. This was reduced during the current financial year by US$1.6 million.

The second tranche of the tower sales closed on 1 July 2015 and involved the sale of 4,696 mobile network towers by MTN Nigeria Communications Limited to INT Towers Limited for a cash consideration of US$533 million and the Group recognising an additional equity interest in Nigeria Tower InterCo B.V. amounting to US$405 million.

MTN Nigeria Communications Limited is the anchor tenant on commercial terms on the towers for an initial period of 10 years. The transactions resulted in sale and leaseback transactions classified as operating leases (note 1.5.6).

The Group also concluded transactions with IHS in which IHS acquired 550 mobile network towers from MTN Rwandacell Limited for US$48 million and 748 towers from MTN (Zambia) Limited for US$57 million during 2014. IHS is a 100% shareholder of the tower companies set up in each country to manage the towers and other passive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited are the anchor tenants on commercial terms of the towers for an initial term of 10 years. The transactions resulted in sale and leaseback transactions classified as operating leases (note 1.5.6).

2.4 Operating profit Employee benefits Short-term employee benefits Remuneration to employees in respect of services rendered during a reporting period is expensed in that reporting period. A liability is recognised for accumulated leave when there is a present legal or constructive obligation as a result of past service rendered by employees.

A liability for unvested short-term benefits is recognised when there is no realistic alternative other than to settle the liability, and at least one of the following conditions is met: • there is a formal plan and the amounts to be paid can be reliably estimated; or • achievement of previously agreed bonus criteria has created a valid expectation by employees that they will receive a bonus and the amount can be reliably estimated.

Post-employment benefits Defined contribution plans Group companies operate various defined contribution plans. Contributions to defined contribution plans in respect of services rendered during a period are recognised as an employee benefit expense as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Share-based payment transactions The Group operates a number of share incentive schemes. For further details, refer to note 8.4.

F-41 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.4 Operating profit (continued) Termination benefits Termination benefits may be payable when an employee’s employment is terminated before the normal retirement date due to retrenchment or whenever an employee accepts voluntary redundancy in exchange for these benefits.

The Group recognises termination benefits at the earlier of the following dates: • when the Group can no longer withdraw the offer of those benefits; and • when the Group recognises costs for a restructuring that is within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets that includes the payment of termination benefits.

In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the reporting date are discounted to their present value.

2015 2014 Rm Rm Staff costs (8,587) (8,838) Salaries and wages (6,698) (7,109) Post-employment benefits (363) (405) Share options granted to directors and employees (note 8.4) (179) (110) Training (223) (244) Other (1,124) (970) The following disclosable items have been included in arriving at operating profit: Auditors’ remuneration (130) (129) Audit fees (107) (104) Fees for other services (15) (14) Expenses (8) (11) Emoluments to directors and prescribed officers (note 10.1) (187) (154) Operating lease rentals (8,692) (4,413) Property and network sites (8,601) (4,312) Equipment and vehicles (91) (101) Loss on disposal of property, plant and equipment and intangible assets (8) (69) Impairment loss on property, plant and equipment (note 5.1) (77) (634) Impairment loss on other intangible assets (note 5.2) — (74) (Write-down)/reversal of write-down of inventories (note 4.1) (669) 94 Impairment of trade receivables (note 4.2) (1,151) (286) Reversal of impairment of non-current receivables (note 7.3) — 230

2.5 Finance income and finance costs Finance income Finance income comprises interest income on funds invested, changes in the fair value of financial assets at fair value through profit or loss, net foreign exchange gains and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs Finance costs comprise interest expenses on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, net foreign exchange losses and any losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss

F-42 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.5 Finance income and finance costs (continued) using the effective interest method, unless the borrowing costs are directly attributable to the acquisition, construction or production of qualifying assets, in which case the directly attributable borrowing costs are capitalised.

2015 20142 Rm Rm Interest income on loans and receivables 2,173 789 Interest income on bank deposits 3,269 2,313 Finance income 5,442 3,102 Interest expense on financial liabilities measured at amortised cost (6,981) (5,669) Net foreign exchange losses1 (1,471) (1,101) Finance costs (8,452) (6,770) Net finance costs recognised in profit or loss (3,010) (3,668)

1 The foreign exchange gains and losses have been determined on an instrument-by-instrument basis. 2 Foreign exchange gains and losses have been disclosed on a net basis (refer to note 1.6.3).

2.6 Cash generated from operations

2015 2014 Rm Rm Profit before tax 34,892 51,063 Adjusted for: Finance costs (note 2.5) 8,452 6,770 Finance income (note 2.5) (5,442) (3,102) Depreciation of property, plant and equipment (note 5.1) 19,557 18,262 Amortisation of intangible assets (note 5.2) 3,736 3,251 Loss on disposal of property, plant and equipment and intangible assets (note 2.4) 8 69 Loss on disposal of joint venture — 15 Share of results of associates and joint ventures after tax (note 9.2) (1,226) (4,208) Increase in provisions 9,681 140 Write-down of/(reversal of write-down) inventories (note 4.1) 669 (94) Impairment of goodwill (note 5.2) 504 2,033 Impairment loss on other intangible assets (note 5.2) — 74 Impairment loss on property, plant and equipment (note 5.1) 77 634 Impairment of trade receivables (note 4.2) 1,151 286 Reversal of impairment of non-current receivables (note 7.3) — (230) Profit on sale of towers (note 2.3) (8,233) (7,399) Realisation of previously deferred profit on Ghana tower sale (note 2.3) (30) (31) Realisation of deferred gain on asset swap (note 2.3) — (364) Equity-settled share-based payment transactions (note 2.4) 179 110 Net monetary gain (1,348) (878) Other 192 (35) 62,819 66,366 Changes in working capital (5,221) (1,738) Increase in inventories (2,333) (65) (Decrease)/increase in unearned income (75) 654 Increase in receivables and prepayments (4,591) (1,926) Increase/(decrease) in trade and other payables 1,778 (401) Cash generated from operations 57,598 64,628

F-43 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.7 Earnings per ordinary share Basic earnings per share Earnings per share is calculated using the weighted average number of ordinary shares in issue during the period and is based on the profit after tax attributable to ordinary shareholders. For the purpose of calculating earnings per share, treasury shares are deducted from the number of ordinary shares in issue.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares and is based on the net profit attributable to ordinary shareholders, adjusted for the after-tax dilutive effect. The Company has dilutive potential ordinary shares which comprise share options and share rights issued in terms of the Group’s share schemes, performance share plan and the MTN Zakhele transaction.

For the share options and share rights the number of shares issued for value is calculated by determining the number of the Company’s shares that would be required at fair value to settle the monetary value of the rights, after taking into account the unamortised share-based payment value. A calculation is further done to determine the bonus element. This is calculated as the difference between the total number of potential ordinary shares in issue and the number of shares to be issued for value. For the purposes of this calculation the average annual market share price of the Company is used.

Headline earnings per share Headline earnings per share is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as required by Circular 2/2015 issued by the South African Institute of Chartered Accountants (SAICA).

In terms of the MTN Zakhele BBBEE transaction, the Group issued notional vendor financing shares to MTN Zakhele at par value (note 8.1). The Group has a call option over these shares. As these shares are potentially dilutive shares, these are included in the diluted earnings per share calculation. A calculation is done at each reporting period to determine the number of shares that could have been acquired at fair value.

2015 2014 ’000 ’000 Weighted average number of shares (excluding treasury shares) 1,822,454 1,831,196 Adjusted for: – Share options – MTN Zakhele 3,792 7,193 – Share appreciation rights 413 715 – Performance share plan 552 2,150 Weighted average number of shares for calculation of diluted earnings per share 1,827,211 1,841,254

Refer to note 8.1 for a reconciliation of total shares in issue.

F-44 Notes to the Group financial statements for the year ended 31 December 2015

2 RESULTS OF OPERATIONS (continued) 2.7 Earnings per ordinary share (continued) Reconciliation between net profit attributable to the equity holders of the Company and headline earnings:

2015 2014 Gross Net1 Gross Net1 Rm Rm Rm Rm Profit after tax 20,204 32,079 Adjusted for: Net (profit)/loss on disposal of property, plant and equipment and intangible assets (IAS 16 and IAS 38) (2)2 5 69 63 Impairment of goodwill (IAS 36) 504 504 2,033 2,033 Net impairment loss of impairment of property, plant and equipment (IAS 36) 382 29 708 565 Loss on disposal of joint venture (IAS 28) —— 15 15 Realisation of deferred gain (IAS 28) ——(364) (364) Profit on disposal of non-current assets held for sale (IFRS 5) (8,264)3 (7,112) (7,399) (6,237) Realisation of deferred gain on disposal of non-current assets held for sale (IFRS 5) (30) (30) (31) (31) Headline earnings 13,600 28,123

2015 2014 Earnings per ordinary share (cents) – Basic earnings 1,109 1,752 – Basic headline earnings 746 1,536 – Diluted earnings 1,106 1,742 – Diluted headline earnings 744 1,527

1 Amounts are measured after taking into account non-controlling interests and tax. 2 Including net loss on disposal and net impairment loss on property, plant and equipment and intangible assets from joint ventures. 3 Non-controlling interest amounting to R1,858 million (2014: R1,586 million).

Headline earnings is calculated in accordance with Circular 2/2015 Headline Earnings as issued by the South African Institute of Chartered Accountants, as required by the JSE Limited.

3 TAXATION 3.1 Income tax expense The tax expense for the period comprises current, deferred and withholding tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity. For these items the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current tax Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the reporting date in the countries where the Company and its subsidiaries operate and generate taxable income, and any adjustment to tax payable in respect of previous years. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax Deferred tax is recognised using the liability method, providing for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements for financial

F-45 Notes to the Group financial statements for the year ended 31 December 2015

3 TAXATION (continued) 3.1 Income tax expense (continued) reporting purposes. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction (other than a business combination) that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is measured at tax rates (and laws) that have been enacted or substantively enacted at the reporting date and are expected to apply to temporary differences when they reverse.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures where the timing of the reversal of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

A deferred tax asset is recognised for unused tax losses or deductible temporary differences only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, deferred tax relating to these subsidiaries is recognised using the liability method, providing for temporary differences arising between the tax bases of assets and liabilities and their restated carrying amounts.

Withholding tax Withholding tax is payable at different rates varying between 0% and 25% on amounts paid to the Group companies by their subsidiaries as dividends and management fees.

2015 2014 Rm Rm Analysis of income tax expense for the year Normal tax (10,241) (13,027) Current year (11,021) (13,226) Adjustments in respect of the prior year 780 199 Deferred tax (note 3.2) 530 1,400 Current year 1,329 1,466 Adjustments in respect of the prior year (799) (66) Capital gains tax — (1) Foreign income and withholding taxes (1,611) (1,733) (11,322) (13,361)

The table below explains the differences between the expected tax expense on continuing operations, at the South African statutory rate of 28% and the Group’s total tax expense for each year.

The Group’s effective tax rate is reconciled to the South African statutory rate as follows:

2015 2014 %% Tax rate reconciliation Tax at statutory tax rate 28.00 28.00 Expenses not allowed 11.89 1.86 Effect of different tax rates in other countries (0.16) 0.60 Income not subject to tax (11.16) (4.51) Share of results of associates and joint ventures (0.99) (2.31) Foreign income and withholding taxes 4.62 3.39 Other 0.25 (0.86) Effective tax rate 32.45 26.17

F-46 Notes to the Group financial statements for the year ended 31 December 2015

3 TAXATION (continued) 3.1 Income tax expense (continued) The following are the corporate tax rates applicable to the various jurisdictions in which the Group operates:

Corporate tax rate 2015 2014 Country % % Afghanistan 20 20 Benin1 30 30 Cameroon 33 38.5 Congo1 30 30 Côte d’Ivoire 30 30 Cyprus 12.5 12.5 Ethiopia 30.0 30.0 Ghana 25 25 Guinea-Bissau 25 25 Guinea 35 35 Kenya 30 30 Liberia 25 25 Monaco 0–33 0–33 Namibia 33 33 Netherlands 25 25 Nigeria 30 30 Rwanda 30 30 South Africa 28 28 South Sudan 20 20 Sudan2 2.5 2.5 Syria 14.0 14.0 Uganda 30 30 Yemen 50 50 Zambia 35 35

1 The entity has been granted a tax holiday at 31 December 2015. 2 The entity was granted a tax holiday until March 2015. From April 2015 corporate tax of 2.5% on net revenues became applicable.

3.2 Deferred taxes Deferred tax is accounted for in accordance with the accounting policy disclosed in note 3.1.

Recognised Exchange Recognised Exchange 1 January in profit and other 31 December in profit and other 2014 or loss movements1 2014 or loss movements1 Rm Rm Rm Rm Rm Rm Rm Provisions 1,074 (127) 13 960 (368) 178 770 Tax loss carried forward 587 (248) (30) 309 83 (40) 352 Arising due to fair value adjustments on business combinations/ revaluations (46) 45 23 22 5 (1,191) (1,164) Working capital allowances 22 549 — 571 (374) (35) 162 Tax allowances in excess of depreciation (13,006) 805 418 (11,783) 1,359 (1,944) (12,368) Other temporary differences (57) 376 (301) 18 (175) (94) (251) Net deferred tax liability (11,426) 1,400 123 (9,903) 530 (3,126) (12,499) Comprising: Deferred tax assets 2,044 1,109 542 Deferred tax liabilities (13,470) (11,012) (13,041) (11,426) (9,903) (12,499)

1 Including the effect of hyperinflation.

F-47 Notes to the Group financial statements for the year ended 31 December 2015

3 TAXATION (continued) 3.2 Deferred taxes (continued) Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.

There were no deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax asset has been recognised in the statement of financial position in the current or prior year.

3.3 Income tax paid

2015 2014 Rm Rm At beginning of the year (8,998) (6,671) Amount recognised in profit or loss (note 3.1) (11,322) (13,361) Deferred tax charge (note 3.2) (530) (1,400) Effect of movements in exchange rates (1,626) 343 Net monetary gain — 12 Other 288 300 At end of the year 8,682 8,998 Taxation prepaid (1,331) (564) Taxation liabilities 10,013 9,562 Total tax paid (13,506) (11,779)

4 WORKING CAPITAL 4.1 Inventories Inventories mainly comprise handsets, SIM cards, accessories held for sale and consumable items.

Inventories are measured at the lower of cost and net realisable value. The cost of inventory is determined using the weighted average method. Cost comprises direct materials and where applicable, overheads that have been incurred in bringing the inventories to their present location and condition, excluding borrowing costs. Net realisable value represents the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, inventories relating to these subsidiaries are measured at the lower of the restated cost and net realisable value.

2015 2014 Rm Rm Finished goods (handsets, SIM cards and accessories) – at cost 6,766 3,775 Consumables 59 100 Less: Write-down to net realisable value (1,190) (463) 5,635 3,412

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its inventories amounting to R47 million (2014: R39 million) (note 6.1).

F-48 Notes to the Group financial statements for the year ended 31 December 2015

4 WORKING CAPITAL (continued) 4.1 Inventories (continued) Reconciliation of write-down of inventory

At Exchange beginning and other At end of the year Additions1 Reversals1 Utilised movements of the year Rm Rm Rm Rm Rm Rm 2015 Movement in write down (463) (688) 19 33 (91) (1,190) 2014 Movement in write down (571) (7) 101 10 4 (463)

1 A write-down on inventories of R669 million (2014: R94 million reversal of write down) was recognised in the current year. This amount is included in other operating expenses in profit or loss (note 2.4).

4.2 Trade and other receivables Trade receivables are amounts due from customers for merchandise sold or services rendered in the ordinary course of business; and are accounted for as loans and receivables in accordance with the accounting policy disclosed in note 7.1.

Prepayments and other receivables are stated at their nominal values.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, prepayments relating to these subsidiaries are restated by applying the change in the general price indices from the date of payment to the current reporting date.

2015 2014 Rm Rm Trade receivables 22,764 17,253 Less: Allowance for impairment of trade receivables (note 7.1.4) (3,459) (2,514) Net trade receivables 19,305 14,739 Loan to Irancell Telecommunication Company Services (PJSC)1 7,042 5,120 Receivable from Irancell Telecommunication Company Services (PJSC)2 8,158 5,640 Prepayments and other receivables3 4,484 2,961 Sundry debtors and advances4 4,581 4,358 43,570 32,818

1 The loan to Irancell Telecommunication Company Services (PJSC) attracts interest at LIBOR +4% per annum which is capitalised against the loan. The loan and capitalised interest were payable in 2015. In January 2016 financial sanctions were lifted and payment is expected in the foreseeable future. The recoverability of the loan was assessed at the reporting date and was found not to be impaired. 2 With effect from 25 August 2015, MTN Mauritius and Irancell agreed for the unpaid dividends to bear interest at 8% per annum. In addition and with effect from 1 October 2015, MTN Mauritius and Irancell converted R2,078 million of the unpaid dividend into a loan to provide short-term funding to Irancell. This loan is repayable on 30 September 2017 and bears interest at 12% per annum. 3 Prepayments and other receivables include prepayments for Base Transceiver Station (BTS) sites and other property leases. 4 Sundry debtors and advances include advances to suppliers.

An impairment loss of R1,151 million (2014: R286 million) was incurred in the current year. This amount is included in other operating expenses in profit or loss (note 2.4).

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its trade and other receivables amounting to R1,672 million (2014: R1,427 million) (note 6.1).

The Group does not hold any collateral for trade and other receivables.

The Group’s exposure to credit and currency risk relating to trade and other receivables is disclosed in note 7.1.

F-49 Notes to the Group financial statements for the year ended 31 December 2015

4 WORKING CAPITAL (continued) 4.3 Restricted cash Restricted cash comprises short-term deposits that are not highly liquid and are accounted for as loans and receivables in accordance with the accounting policy disclosed in note 7.1.

2015 2014 Rm Rm Restricted cash deposits 1,735 893

Restricted cash deposits includes amounts of R271 million (2014: R331 million) and R1,259 million (2014: R257 million) relating to the Syrian and Nigerian operations respectively, which are not available for use by the Group. In respect of Syria, this was due to exchange control regulations and a lack of foreign currency in the country. The restricted cash balance is considered to represent excess cash not required for payment of Syrian pound denominated liabilities.

Other restricted cash deposits (mainly relating to MTN Nigeria) consist of monies placed on deposit with banks to secure letters of credit, which were undrawn and not freely available at the reporting date.

4.4 Cash and cash equivalents Cash and cash equivalents are accounted for as loans and receivables and bank overdrafts are accounted for as financial liabilities in accordance with the accounting policy disclosed in note 7.1.

Cash and cash equivalents comprise cash on hand and deposits held on call, all of which are available for use by the Group. Bank overdrafts are included within current liabilities on the statement of financial position, unless the Group has a current legally enforceable right to set off the amounts and intends to settle on a net basis, or realise the asset and settle the liability simultaneously, in which case it is netted off against cash and cash equivalents on the statement of financial position.

For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:

2015 2014 Rm Rm Cash at bank and on hand 34,177 43,098 Bank overdrafts (38) (26) Net cash and cash equivalents 34,139 43,072

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its cash and cash equivalents amounting to R1,155 million (2014: R876 million) (refer to note 6.1).

4.5 Trade and other payables Trade payables, sundry creditors and accrued expenses are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers; they are accounted for as financial liabilities in accordance with the accounting policy disclosed in note 7.1.

Other payables are stated at their nominal values.

2015 2014 Rm Rm Trade payables 12,430 11,187 Sundry creditors 1,940 2,728 Accrued expenses 21,837 15,711 Other payables 4,277 3,608 40,484 33,234

F-50 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS 5.1 Property, plant and equipment Property, plant and equipment are measured at historical cost less accumulated depreciation and impairment losses. Property, plant and equipment acquired through business combinations are initially shown at fair value (based on replacement cost) and are subsequently carried at the initially determined fair value less accumulated depreciation and impairment losses.

Property, plant and equipment under construction (capital work in progress) are measured at initial cost and depreciation commences from the date the assets are transferred to an appropriate category of property, plant and equipment, i.e. when commissioned and ready for their intended use. Purchased software that is integral to the functionality of the related equipment is capitalised as part of the equipment. The Group capitalises general and specific borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are expensed in profit or loss.

The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Refer to provisions (note 6.3) for further information about the recognised decommissioning provision and the significant accounting judgements, estimates and assumptions made.

In circumstances whereby the Group enters into an exchange transaction, the Group determines whether such an exchange has commercial substance. Property, plant and equipment acquired in an exchange transaction is measured at fair value unless the exchange transaction lacks commercial substance or the fair value of neither the asset received nor the asset given up is reliably measurable. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up. Any consideration paid or payable is included in the cost of the asset received. Property, plant and equipment received for no consideration is accounted for at zero value.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, property, plant and equipment relating to these subsidiaries are restated by applying the change in the general price indices from the date of acquisition to the current reporting date.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Depreciation is calculated on a straight-line basis to write off the cost of the assets to their residual values over their estimated useful lives. Depreciation relating to the property, plant and equipment of MTN Sudan Company Limited and MTN Syria (JSC) is based on the restated amounts, which have been adjusted for the effects of hyperinflation.

Useful lives and residual values are reviewed on an annual basis and the effect of any changes in estimate is accounted for on a prospective basis.

In determining residual values, the Group uses historical sales and management’s best estimate based on market prices of similar items.

Useful lives of property, plant and equipment are based on management estimates and take into account historical experience with similar assets, the expected usage of the asset, physical wear and tear, technical or commercial obsolescence and legal restrictions on the use of the assets.

F-51 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.1 Property, plant and equipment (continued) The estimated useful lives of property, plant and equipment are as follows:

2015 2014 Years Years Buildings – owned 5–50 5–50 Buildings – leased¹ 1–20 1–20 Network infrastructure 2–20 2–20 Information systems equipment 1–10 1–10 Furniture and fittings 3–15 3–15 Leasehold improvements¹ 2–15 2–15 Office equipment 2–12 2–12 Motor vehicles 3–10 3–10

1 Shorter of lease term and useful life.

Land is not depreciated. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the expected term of the relevant lease.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. Repairs and maintenance costs are included in profit or loss during the financial period in which they are incurred. The gain or loss arising on the disposal or retirement of an asset is included in profit or loss.

Impairment An impairment loss is recognised in profit or loss if the carrying amount of an asset or a cash-generating unit exceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together into cash-generating units. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Goodwill arising from business combinations is allocated to CGUs or the group of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss is subsequently reversed only to the extent that the asset or cash-generating unit’s carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised. A reversal of an impairment loss is recognised immediately in profit or loss.

F-52 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.1 Property, plant and equipment (continued) The Group annually reviews the carrying amounts of its property, plant and equipment in order to determine whether there is any indication of impairment. If any such indication exists, the recoverable amounts of the assets are estimated in order to determine the extent, if any, of the impairment loss

Information systems, Capital furniture work in Land and Leasehold Network and office progress/ buildings1 improvements infrastructure equipment other Vehicles2 Total Rm Rm Rm Rm Rm Rm Rm Carrying amount at 1 January 2014 6,343 1,122 70,851 3,839 10,125 623 92,903 Additions 380 196 7,539 1,287 12,604 148 22,154 Disposals — (3) (172) (25) (179) (40) (419) Re-allocations3 250 18 4,883 453 (11,711) 30 (6,077) Depreciation for the year (476) (195) (15,659) (1,570) (171) (191) (18,262) Impairment loss — — (471) — (163) — (634) Other movements — 8 (741) (73) (340) — (1,146) Effect of movements in exchange rates4 (74) (13) (983) (43) 149 (9) (973) Carrying amount at 31 December 2014 6,423 1,133 65,247 3,868 10,314 561 87,546 Comprising: Cost 8,642 2,725 134,639 10,968 11,017 1,225 169,216 Accumulated depreciation and impairment losses (2,219) (1,592) (69,392) (7,100) (703) (664) (81,670) 6,423 1,133 65,247 3,868 10,314 561 87,546 Carrying amount at 1 January 2015 6,423 1,133 65,247 3,868 10,314 561 87,546 Additions 465 177 8,802 1,484 14,700 123 25,751 Disposals — (2) (328) (20) (68) (16) (434) Re-allocations3 124 311 14,099 519 (14,193) (4) 856 Depreciation for the year (412) (328) (16,489) (1,849) (285) (194) (19,557) Impairment loss — — (77) — — — (77) Other movements (5) 26 425 (300) (49) (2) 95 Effect of movements in exchange rates4 443 116 9,108 520 2,264 71 12,522 Carrying amount at 31 December 2015 7,038 1,433 80,787 4,222 12,683 539 106,702 Comprising: Cost 9,966 3,612 173,833 13,746 13,952 1,361 216,470 Accumulated depreciation and impairment losses (2,928) (2,179) (93,046) (9,524) (1,269) (822) (109,768) 7,038 1,433 80,787 4,222 12,683 539 106,702

1 Included in land and buildings are leased assets with a carrying amount of R162 million (2014: R179 million). 2 Included in vehicles are leased assets with a carrying amount of R80 million (2014: R48 million). 3 Re-allocations include an amount of R208 million (2014: R5,966 million) relating to network infrastructure re-allocated to non-current assets held for sale (note 5.3). 4 Includes the effect of hyperinflation.

F-53 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.1 Property, plant and equipment (continued) 5.1.1 Impairment loss The following entities recognised impairment losses/(reversals) during the year:

2015 2014 Rm Rm Scancom Limited (Ghana) (13) 329 MTN Nigeria Communications Limited 46 133 Mobile Telephone Network Proprietary Limited (South Africa) 39 169 Areeba Guinea S.A. 5 3 77 634

5.1.2 Leased property, plant and equipment The Group leases various premises and sites which have varying terms, escalation clauses and renewal rights.

Finance lease commitments are disclosed in note 6.6.

5.1.3 Capital work in progress There are various capital work-in-progress projects under way within the Group, a summary of which is set out below:

2015 2014 Rm Rm Mobile Telephone Networks Proprietary Limited (South Africa) 1,266 766 Scancom Limited (Ghana) 185 990 MTN Sudan Company Limited 1,402 961 MTN Nigeria Communications Limited 1,184 987 MTN Afghanistan Limited 165 195 Areeba Guinea S.A. 308 100 MTN Côte d’Ivoire S.A. 81 303 MTN Uganda Limited — 313 MTN (Dubai) Limited 234 68 MTN Yemen 285 209 MTN South Sudan Limited 69 391 MTN Syria (JSC) 1,451 513 MTN Congo S.A. 356 274 MTN Cameroon Limited 412 115 Lonestar Communications Corporation LLC 222 130 Other 362 304 7,982 6,619

5.1.4 Changes in estimates During the year, Scancom Ltd (MTN Ghana) revised the useful lives of its network infrastructure and information systems from five to 14 years to three to 20 years and four to five years to three to five years, respectively. This resulted in an increase in the depreciation charge of R246 million and R35 million respectively, for the current and future years. In 2014, MTN Afghanistan Limited revised the useful life of its network infrastructure from 10 to 6.5 years. This resulted in an increase of R86 million in the depreciation charge for the current and future years.

F-54 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.1 Property, plant and equipment (continued) 5.1.5 Encumbrances Borrowings are secured by various categories of property, plant and equipment with the following carrying amounts (note 6.1):

2015 2014 Rm Rm Scancom Limited (Ghana) 6,510 5,600 MTN Sudan Company Limited 5,140 4,030 MTN Congo S.A. 18 27 11,668 9,657

5.2 Intangible assets and goodwill Goodwill Goodwill is measured at cost less accumulated impairment losses and is not amortised but tested for impairment annually.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, goodwill relating to these subsidiaries is restated by applying the change in the general price indices from the date of acquisition to the current reporting date.

Goodwill arising on the acquisition of subsidiaries is included in intangible assets. Goodwill arising on the acquisition of an associate or joint venture is included in “investment in associates and joint ventures”, and is tested for impairment as part of the overall balance.

Gains or losses on the disposal of an entity include the carrying amount of goodwill allocated to the entity sold.

The Group annually reviews the carrying amounts of intangible assets with indefinite useful lives for impairments. The recoverable amounts of the assets are estimated in order to determine the extent, if any, of the impairment loss.

Intangible assets with finite useful lives The Group’s intangible assets with finite useful lives are as follows: • licences; • customer relationships; • computer software; and • other intangible assets.

Intangible assets with finite useful lives are measured at historical cost less accumulated amortisation and impairment losses. Intangible assets acquired through business combinations are initially shown at fair value and are subsequently carried at the initially determined fair value less accumulated amortisation and impairment losses. The initial cost incurred in respect of licences is capitalised. Contingent licence fees are expensed as they are incurred.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, intangible assets relating to these subsidiaries are restated by applying the change in the general price indices from the date of acquisition to the current reporting date.

Amortisation is calculated on a straight-line basis to write off the cost of intangible assets over their estimated useful lives. Amortisation relating to MTN Sudan Company Limited and MTN Syria (JSC) is based on the restated amounts, which have been adjusted for the effects of hyperinflation.

F-55 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.2 Intangible assets and goodwill (continued) Useful lives are reviewed on an annual basis with the effects of any changes in estimate accounted for on a prospective basis. The residual values of intangible assets are assumed to be zero.

The basis for determining the useful lives for the various categories of intangible assets is as follows:

Licences The useful lives of licences are determined primarily with reference to the unexpired licence period.

Customer relationships The useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to factors such as customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life.

Software The useful life is determined with reference to the licence term of the computer software. For unique software products controlled by the Group, the useful life is based on historical experience with similar assets as well as anticipation of future events such as technological changes, which may impact the useful life.

Other intangible assets Useful lives of other intangible assets are based on management’s estimates and take into account historical experience as well as future events which may impact the useful lives.

The estimated useful lives of intangible assets with finite useful lives are as follows:

2015 2014 Years Years Licences 3–20 3–20 Customer relationships 5–10 5–10 Software 3–6 3–6 Other intangible assets 3–10 3–10

The gain or loss arising on the disposal or retirement of an intangible asset is included in profit or loss.

Costs associated with maintaining intangible assets are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable intangible assets controlled by the Group, and that will probably generate economic benefits, are capitalised when all criteria for capitalisation are met.

Expenditure that enhances or extends the performance of intangible assets beyond their original specifications is recognised as a capital improvement and added to the original cost of the assets. Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Determination of fair values The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trademark being owned.

The fair values of all other intangible assets acquired in a business combination applicable to the Group are based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

F-56 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.2 Intangible assets and goodwill (continued) Impairment An impairment loss is recognised in profit or loss if the carrying amount of an asset or a cash-generating unit exceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together into cash-generating units. The recoverable amount of an asset or cash-generating unit is the higher of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss is subsequently reversed only to the extent that the asset or cash-generating unit’s carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised. A reversal of an impairment loss is recognised immediately in profit or loss. An impairment loss in respect of goodwill is not reversed.

F-57 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.2 Intangible assets and goodwill (continued) Other Capital Customer intangible work-in- Goodwill Licences relationships Software1 assets progress Total Rm Rm Rm Rm Rm Rm Rm Carrying amount at 1 January 2014 24,160 5,629 — 6,459 271 1,232 37,751 Additions2 844 71 816 2,144 247 1,108 5,230 Disposals — — — (204) — — (204) Re-allocations — 210 — 2,197 — (2,296) 111 Amortisation for the year — (882) (31) (2,320) (18) — (3,251) Impairment loss (2,033) — — (74) — — (2,107) Other movements — — 11 (1) (9) — 1 Effect of movements in exchange rates3 (746) (26) (5) (137) — 1 (913) Carrying amount at 31 December 2014 22,225 5,002 791 8,064 491 45 36,618 Comprising: Cost 24,258 13,841 5,212 17,023 1,134 45 61,513 Accumulated amortisation and impairment losses (2,033) (8,839) (4,421) (8,959) (643) — (24,895) 22,225 5,002 791 8,064 491 45 36,618 Carrying amount at 1 January 2015 22,225 5,002 791 8,064 491 45 36,618 Additions2 — 8,948 3 2,860 4 1,000 12,815 Acquisitions through business combinations (note 9.4) 742 3,752 — — — — 4,494 Disposals — (163) — (87) — — (250) Re-allocations — 217 — (498) — (783) (1,064) Amortisation for the year — (1,136) (150) (2,439) (11) — (3,736) Impairment loss (504) — — — — — (504) Other movements 456 2 — (299) — 4 163 Effect of movements in exchange rates3 4,312 2,478 20 568 — (27) 7,351 Carrying amount at 31 December 2015 27,231 19,100 664 8,169 484 239 55,887 Comprising: Cost 29,768 29,512 5,360 17,992 1,137 239 84,008 Accumulated amortisation and impairment losses (2,537) (10,412) (4,696) (9,823) (653) — (28,121) 27,231 19,100 664 8,169 484 239 55,887

1 Included in software are leased assets with a carrying amount of R742 million (2014: R733 million). 2 Included in additions are capitalised borrowing costs of R43 million (2014: R45 million). The capitalisation rate for the year was 8.6% (2014: 8.6%). 3 Includes the effect of hyperinflation.

F-58 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.2 Intangible assets and goodwill (continued) 5.2.1 Goodwill A summary of the goodwill allocation and related assumptions applied for impairment testing purposes are presented below:

2015 2014 Growth Discount Carrying Growth Discount Carrying rate rate amount rate rate amount % % Rm % % Rm1 MTN Côte d’Ivoire S.A. 3.0 18.2 3,064 2.5 12.2 2,599 Scancom Limited (MTN Ghana) 7.4 21.9 6,905 7.5 19.5 6,008 MTN Sudan Company Limited 5.2 23.7 1,190 10.0 32.6 444 MTN Yemen 8.0 34.2 4,018 7.1 26.2 2,883 MTN Afghanistan Limited 5.0 19.2 1,656 5.0 19.2 1,421 MTN Uganda Limited 5.0 18.5 743 5.0 17.2 676 MTN Congo S.A. 2.5 14.2 1,035 2.7 11.6 860 MTN Syria (JSC) 6.0 29.0 249 6.5 25.7 126 MTN Cyprus Limited 1.9 11.6 902 2.0 9.9 726 Spacetel Benin SA 2.8 15.2 1,388 2.8 14.2 1,150 Areeba Guinea S.A. 5.0 27.2 490 5.9 17.0 793 Mobile Telephone Networks Proprietary Limited (South Africa) 5.5 16.3 2,287 5.9 13.4 2,287 Afrihost Proprietary Limited 5.5 16.3 319 5.9 13.4 319 Lonestar Communications Corporation LLC (Liberia) 6.4 16.4 400 5.0 16.4 287 MTN Rwandacell 5.0 16.0 449 5.0 14.6 370 MTN Nigeria Communications Limited (Visafone) 7.0 20.6 742 —— — MTN Zambia 5.0 12.9 231 5.0 17.8 298 Spacetel Guinea-Bissau SA 3.0 11.2 375 2.0 13.4 310 Other 788 668 Total 27,231 22,225 1 Restated, refer to note 1.6.4.

Goodwill is tested annually for impairment. The recoverable amounts of CGUs were determined based on value- in-use calculations. The calculations mainly used cash flow projections based on financial budgets approved by management covering a three to 10-year period. Management is confident that projections covering periods longer than three years are appropriate based on the long-term nature of the Group’s infrastructure and operating model. Cash flows beyond the above period were extrapolated using the estimated growth rates as mentioned above.

The following key assumptions were used for the value-in-use calculations: • growth rates: the Group used steady growth rates to extrapolate revenues beyond the budget period cash flows. The growth rates were consistent with publicly available information relating to long-term average growth rates for each of the markets in which the respective CGU operated. The average growth rates used ranged from 1.9% to 8.0% (2014 2.0% to 10.0%); and • discount rates: discount rates ranged from 11.2% to 34.2% (2014: 9.9% to 32.6%). Discount rates used reflect both time value of money and other specific risks relating to the relevant CGU.

Goodwill impairment During the year, an impairment loss amounting to R504 million (2014: R2,033 million) was recognised relating to Areeba Guinea S.A. which forms part of the small opco cluster segment (2014: MTN Sudan Company Limited).

F-59 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued)

5.2.2 Encumbrances Borrowings are secured by intangible assets of Scancom Limited (MTN Ghana) with a carrying amount of R391 million (2014: R539 million) (note 6.1).

5.2.3 Licences

Granted/ Licence agreements Type renewed Term Mobile Telephone Networks ECS licence 15/01/2009 15 years Proprietary Limited (South Africa) ECNS licence 15/01/2009 20 years 900MHz 1,800MHz 1/01/2010 Renewable annually 3G MTN Uganda Limited 900MHz 15/04/1998 20 years 1,800MHz MTN Rwandacell Limited GSM 01/07/2008 13 years SNO 30/06/2006 15 years MTN Zambia Limited 900MHz 1,800MHz 23/09/2010 15 years 2,100MHz MTN Nigeria Communications 1,800MHz 03/11/2015 5 years Limited 900MHz 3G spectrum licence 01/05/2007 15 years Unified access licence (including 01/09/2006 15 years international gateway) WACS 01/01/2010 20 years WiMax 3.5GHz spectrum 2007 Renewable annually Digital Terrestrial TV 12/08/2015 10 years broadcasting licence 800MHz 01/01/2015 10 years Microwave spectrum 8GHz – 26GHz 2001 Renewable annually Scancom Limited (MTN Ghana) 900MHz 02/12/2004 15 years 1,800MHz 3G 23/01/2009 15 years International Gateway1 08/11/2014 5 years Fixed access service of unified 06/07/2015 4 years access Mobile Telephone Networks 2G Cameroon Limited 3G 15/02/2015 15 years 4G MTN Côte d’Ivoire S.A. 900MHz 02/04/1996 20 years 1,800MHz WiMax 2.5 – 3.5GHz 31/07/2002 20 years 3G/UMTS 1.9/2.1GHz 31/05/2012 10 years Universal networks 04/01/20162 17 years Spacetel Benin SA 900MHz 19/10/2007 25 years 1,800MHz Universal licence 19/03/2012 20 years

1 Licence renewal confirmed in 2015. 2 Licence operational in 2015.

F-60 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.2 Intangible assets and goodwill (continued) 5.2.3 Licences (continued)

Granted/ Licence agreements Type renewed Term

Areeba Guinea S.A. 900MHz 31/08/2005 18 years 1,800MHz 3G 14/08/2013 10 years WiMax 04/08/2014 5 years MTN Congo S.A. 900MHz 25/11/2011 15 years 1,800MHz 25/11/2011 15 years International gateway 05/02/2002 15 years Optical fibre licence 02/04/2010 15 years 3G 25/11/2011 17 years 2G 25/11/2011 15 years International gateway by optical fibre 03/06/2013 10 years Lonestar Communications Universal Telecommunication 04/08/2015 15 years Corporation LLC (Liberia) licence Spacetel Guinea-Bissau SA 900MHz 23/05/2014 10 years 1,800MHz 3G 4G 17/07/2015 10 years MTN Syria (JSC) 900MHz 29/06/2002 15 years 1,800MHz 22/03/2007 10 years 3G 29/04/2009 8 years ISP 2009 Renewable annually Freehold licence 01/01/2015 20 years MTN Sudan Company Limited 2G + 3G Transmission VSAT gateway 25/10/2003 20 years VSAT hub VSAT terminal MTN Afghanistan Limited 3G unified licence 01/07/2012 15 years MTN Yemen 900MHz1 31/07/2000 15 years 1,800MHz 17/02/2008 MTN Cyprus Limited 900MHz 1,800MHz 01/12/2003 20 years 4G (LTE) 2,100MHz 1 Renewal application lodged. Licence fees are accrued for a monthly basis.

During the year, the Group concluded negotiations on behalf of Lonestar Communications Corporation LLC (Liberia) for a universal licence. This resulted in the termination of the 900MHz, 1,800MHz, WiMax and 3G licences and the acquisition of a Universal Telecom licence with a term of 15 years with effect from 4 August 2015.

5.2.4 Events after reporting period Scancom Limited (MTN Ghana) acquisition of licence During December 2015, Scancom Limited (MTN Ghana) was successful in its bid to obtain a 15-year 4G/LTE licence in the 800MHz spectrum band for an amount of US$67.5 million. 10% of the purchase consideration was

F-61 Notes to the Group financial statements for the year ended 31 December 2015

5 INFRASTRUCTURE INVESTMENTS (continued) 5.2 Intangible assets and goodwill (continued) 5.2.4 Events after reporting period (continued) settled before year end as part of the bidding process with the remainder settled on 27 January 2016, following which time the National Communications Authority provided MTN Ghana with provisional authorisation pending issuance of the licence.

5.3 Non-current assets held for sale Non-current assets (or disposal groups) are classified as held for sale when their carrying amount will be recovered principally through sale rather than use.

The asset or disposal group must be available for immediate sale in its present condition and the sale should be highly probable, with an active programme to find a buyer and the appropriate level of management approving the sale. Immediately before classification as held for sale, all assets and liabilities are remeasured in accordance with the Group’s accounting policies.

Non-current assets (or disposal groups) held for sale are measured at the lower of the carrying amount and fair value less incremental directly attributable cost to sell and are not depreciated.

Gains or losses recognised on initial classification as held for sale and subsequent remeasurements are recognised in profit or loss, regardless of whether the assets were previously measured at revalued amounts.

2015 2014 Rm Rm Balance at beginning of the year 3,848 1,281 Additions 255 6,899 Re-allocations from property, plant and equipment 208 5,966 Other additions 47 933 Disposals (3,151) (3,675) Effect of movements in exchange rates (942) (657) Balance at end of the year 10 3,848

The assets held for sale at 31 December 2015 relate to vehicles that MTN Nigeria Communications Limited has plans to dispose of.

The Group sold its mobile network towers in MTN Nigeria Communications Limited in two tranches to INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V.

The first tranche of the tower sale closed on 24 December 2014 and involved the sale of 4,154 mobile network towers by MTN Nigeria Communications Limited to INT Towers Limited. The second tranche of the tower sales involved the sale of 4,696 mobile network towers and closed on 1 July 2015 (note 2.3).

The Group concluded transactions with IHS in which IHS acquired 550 mobile network towers from MTN Rwandacell Limited for US$48 million and 748 mobile network towers from MTN (Zambia) Limited for US$57 million during the prior year. IHS is a 100% shareholder of the tower companies set up in each country to manage the towers and other passive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited will be the anchor tenants on commercial terms on the towers for an initial term of 10 years.

6 FINANCING STRUCTURE AND COMMITMENTS 6.1 Borrowings Borrowings are accounted for as financial liabilities in accordance with the accounting policy disclosed in note 7.1.

Fees paid on the establishment of loan facilities are recognised as transaction costs and capitalised to the extent that it is probable that some or all of the facility will be drawn down. When the draw down is made, the

F-62 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.1 Borrowings (continued) transaction costs are amortised to profit or loss using the effective interest method. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Details of the Group’s significant unsecured borrowings are provided below:

Nominal 2015 2014 Denominated interest Interest Rm Rm currency (%)* payment Final maturity Unsecured MTN Holdings Proprietary Limited 15,829 13,139 4,517 4,506 ZAR1,2 7.9 Quarterly February 2016 3,105 — ZAR1,2 7.9 Semi-annual December 2017 2,268 2,767 ZAR2,3 8.0 Quarterly June 2016 1,309 2,618 ZAR4,5 10.1 Semi-annual July 2017 1,996 1,994 ZAR2,6 7.7 Quarterly May 2017 — 1,003 ZAR2,3 7.1 — Loan repaid during the year 2,634 251 ZAR5,7 7.2 Monthly January 2016 MTN Nigeria Communications Limited 26,153 24,673 19,474 17,697 NGN1,2 18.8 Annual November 2019 3,026 2,904 US$1,2 3.7 Semi-annual April 2019 2,540 1,351 US$2,5,8 1.7 Semi-annual August 2019 — 1,009 US$5,8 1.7 — Loan repaid during the year 1,113 915 US$2,9 3.9 Semi-annual December 2019 — 381 US$5,8 1.4 — Loan repaid during the year — 291 US$5,8 3.3 — Loan repaid during the year — 65 US$2,8 1.1 — Loan repaid during the year — 60 US$2,8 3.0 — Loan repaid during the year MTN International Mauritius Limited 10,364 — US$2,3 1.4 Quarterly November 2019 MTN (Mauritius) Investments Limited 11,633 8,686 US$5,10 4.8 Semi-annual November 2024 1 Syndicated term loan facility 2 Variable interest rate 3 Revolving credit facility 4 Domestic medium-term notes 5 Fixed interest rate 6 Bilateral term loan facility 7 General bank facility 8 Export credit facility 9 Vendor finance facility 10 Senior unsecured notes 11 Bank borrowings 12 Bridge finance * Contractual interest rates on loans as at 31 December 2015.

F-63 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.1 Borrowings (continued) Nominal 2015 2014 Denominated interest Interest Rm Rm currency (%)* payment Final maturity MTN Zambia Limited 1,251 1,362 723 688 US$2,11 3.9 Semi-annual June 2019 528 674 ZMK1,2 21.5 Semi-annual January 2016 Spacetel Benin SA 1,075 945 753 664 XOF1,5 7.3 Semi-annual May 2020 322 281 XOF5,6 7.5 Semi-annual September 2019 MTN Côte d’Ivoire S.A. 2,838 745 — 426 XOF5,11 3.9 — Loan repaid during the year — 319 XOF5,11 4.0 — Loan repaid during the year 502 — XOF5,6 4.0 Quarterly January 2016 377 — XOF5,11 4.0 Semi-annual April 2016 75 — XOF5,11 6.0 Quarterly February 2016 1,884 — XOF5,12 5.0 Bi-monthly February 2016 MTN Cyprus Limited 1,092 254 830 1 EUR2,6 5.5 Semi-annual September 2020 262 253 EUR2,6 5.6 Quarterly October 2020 Mobile Telephone Networks 769 134 XAF1,5 4.3 Semi-annual September 2020 Cameroon Limited Other unsecured borrowings 501 550 Total unsecured borrowings 71,505 50,488

1 Syndicated term loan facility 2 Variable interest rate 3 Revolving credit facility 4 Domestic medium-term notes 5 Fixed interest rate 6 Bilateral term loan facility 7 General bank facility 8 Export credit facility 9 Vendor finance facility 10 Senior unsecured notes 11 Bank borrowings 12 Bridge finance * Contractual interest rates on loans as at 31 December 2015.

F-64 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.1 Borrowings (continued) Details of the Group’s significant secured borrowings are provided below:

Nominal 2015 2014 Denominated interest Interest Security/ Rm Rm currency (%)* payment Final maturity collateral Secured MTN Sudan Company Limited 2,435 1,933 1,216 817 EUR2,9 6.0 Quarterly June 2020 Pledge of network and capital work-in- progress assets 714 506 US$2,5,9 10.0 Quarterly September 2017 Pledge of network and capital work-in- progress assets 505 588 EUR2,9 3.5 Semi-annual December 2019 Pledge of network and capital work-in- progress assets — 22 US$5,11 10.0 — Loan repaid Deposit equivalent during the year to 140% of the loan MTN Afghanistan Limited — 138 — 32 US$2,6 5.5 — Loan repaid Pledge of shares during the year — 106 US$2,6 5.5 — Loan repaid Pledge of shares during the year Scancom Limited (MTN Ghana) 1,175 646 826 211 GHS1,2 25.5 Semi-annual May 2017 Floating charge on Company assets 349 435 US$1,2 3.5 Semi-annual May 2017 Floating charge on Company assets Other secured borrowings 18 48 Total secured borrowings 3,628 2,765 Total unsecured borrowings 71,505 50,488 Total borrowings 75,133 53,253

1 Syndicated term loan facility 2 Variable interest rate 3 Revolving credit facility 4 Domestic medium-term notes 5 Fixed interest rate 6 Bilateral term loan facility 7 General bank facility 8 Export credit facility 9 Vendor finance facility 10 Senior unsecured notes 11 Bank borrowings 12 Bridge finance * Contractual interest rates on loans as at 31 December 2015.

F-65 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.1 Borrowings (continued)

2015 2014 Rm Rm The classification of the Group’s borrowings is as follows: Current 22,472 13,783 Non-current 52,661 39,470 75,133 53,253 The carrying amounts of the Group’s borrowings are denominated in the following currencies: Nigerian naira 19,474 17,697 United States dollar 30,462 17,722 South African rand 15,829 13,139 Euro 2,813 1,659 Benin Communauté Financière Africaine franc 1,075 945 Côte d’Ivoire Communauté Financière Africaine franc 2,838 745 Zambian kwacha 528 674 Congo-Brazzaville Communauté Financière Africaine franc 175 306 Cameroon Communauté Financière Africaine franc 769 134 Other currencies 1,170 232 75,133 53,253 The Group has the following undrawn committed facilities: Floating rate 19,043 25,282 Fixed rate 9,560 7,561 28,603 32,843

6.1.1 Events after reporting period Facilities During January and February 2016, additional loan facilities amounting to R14.9 billion were obtained by MTN Holdings. These facilities are expected to mature in the next five years.

Additionally, facilities amounting to R2.6 billion have been refinanced for a further period of three to six months.

During January 2016, a loan amounting to R481 million payable by MTN Zambia Limited was refinanced for a further three months.

6.2 Other non-current liabilities Finance leases are accounted for in accordance with the accounting policy disclosed in note 6.6, deferred income is accounted for in accordance with the policy disclosed in note 2.2 and other liabilities are accounted for in accordance with the accounting policy disclosed in note 7.1.

2015 2014 Rm Rm Finance lease obligations (note 6.6) 711 696 Deferred income 527 542 Licence renewal liability 495 — Other 451 347 2,184 1,585

F-66 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.3 Provisions A provision is recognised when there is a present legal or constructive obligation as a result of a past event for which it is more likely than not that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A provision to pay a levy is not recognised until the obligating event specified in the legislation occurs, even if there is no realistic opportunity to avoid the obligation. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expected outflow of resources required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.

At Net Exchange At end beginning monetary and other of the of the year Additions Reversals Utilised loss movements1 year Rm Rm Rm Rm Rm Rm Rm 2015 Non-current Decommissioning provision 229 45 — (12) — 31 293 Licence obligations 137 — — — — (60) 77 Nigeria provision for regulatory fine — 4,104 — — — — 4,104 Other provisions 180 143 (29) (33) 27 (138) 150 546 4,292 (29) (45) 27 (167) 4,624 Current Bonus provision 754 735 (91) (722) — 114 790 Decommissioning provision 21 — (19) — — 4 6 Nigeria provision for regulatory fine — 5,183 — — — — 5,183 Licence obligations 74 — — (40) — 60 94 Other provisions 2,565 620 (997) (327) — 59 1,920 3,414 6,538 (1,107) (1,089) — 237 7,993

1 Includes the effect of hyperinflation.

At Net Exchange At end beginning monetary and other of the of the year Additions Reversals Utilised gain movements1 year Rm Rm Rm Rm Rm Rm Rm 2014 Non-current Decommissioning provision 186 107 (34) (30) — — 229 Licence obligations — 137 — — — — 137 Other provisions 171 91 (43) (16) (38) 15 180 357 335 (77) (46) (38) 15 546 Current Bonus provision 763 861 (100) (761) — (9) 754 Decommissioning provision 84 3 (74) (1) — 9 21 Licence obligations 257 — (183) — — — 74 Other provisions 3,533 442 (1,065) (340) — (5) 2,565 4,637 1,306 (1,422) (1,102) — (5) 3,414

1 Includes the effect of hyperinflation.

F-67 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.3 Provisions (continued) Bonus provision The bonus provision consists of a performance-based bonus, which is determined by reference to the overall Company performance with regard to a set of predetermined key performance measures. Bonuses are payable annually after the Group annual results have been approved.

Decommissioning provision This provision relates to the estimate of the cost of dismantling and removing an item of property, plant and equipment and restoring the site on which the item was located to its original condition. The Group provides for the anticipated costs associated with the restoration of leasehold property to its original condition at inception of the lease, including removal of items included in property, plant and equipment that are erected on leased land.

The Group only recognises these decommissioning costs for the proportion of its overall number of sites for which it expects decommissioning to take place. The expected percentage has been based on actual experience in the respective operations.

Licence obligations The licence obligations provision represents the estimated costs to be incurred in fulfilling the Universal Services Obligation (USO) in South Africa. USOs are governed by the Electronic Communications Act.

Nigeria provision for regulatory fine During October 2015, the Nigerian Communications Commission (NCC) imposed a fine of N1.04 trillion (R80.7 billion1) on MTN Nigeria Communications Limited (MTN Nigeria). This fine relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September 2015 and is based on a fine of N200,000 for each unregistered subscriber. Subsequently, during December 2015, the NCC revised the amount to N780 billion (R60.6 billion1).

MTN Nigeria, acting on external legal advice, has resolved that the manner of the imposition of the fine and the quantum thereof is not in accordance with the NCC’s powers under the Nigerian Communications Act, 2003 and therefore believes there to be valid grounds upon which to challenge the fine. Accordingly, MTN Nigeria followed due process and instructed its lawyers to proceed with an action in the Federal High Court in Lagos seeking the appropriate reliefs.

On 22 January 2016, the judge adjourned the matter to 18 March 2016, in order to enable the parties to try to settle the matter.

Pursuant to the ongoing engagement with the Nigerian authorities, MTN Nigeria on 24 February 2016 made an agreed-without-prejudice good-faith payment of N50 billion (R3.9 billion2) to the Federal Government of Nigeria on the basis that this will be applied towards a settlement, when one is eventually, hopefully, arrived at. In an effort to achieve an amicable settlement, MTN has agreed to withdraw the matter from the Federal High Court in Lagos.

In arriving at an appropriate provision at 31 December 2015, management has applied its judgement resulting in a provision being recorded as required in accordance with IFRS, amounting to N119.6 billion (R9.3 billion1).

In light of the engagement with the Nigerian authorities, the Group has provided limited disclosure relating to the provision in accordance with IFRS.

Other provisions The Group is involved in various regulatory and indirect tax matters specific to the respective jurisdictions in which the Group operates. These matters may not necessarily be resolved in a manner that is favourable to the Group. The Group has therefore recognised provisions in respect of these matters based on estimates and the probability of an outflow of economic benefits and should not be construed as an admission of legal liability. 1 Amounts translated at the closing rate at year end of R1 = N12.88. 2 Translated at the 24 February 2016 closing rate of R1 = N12.76.

F-68 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.4 Capital commitments Commitments for the acquisition of property, plant and equipment and software:

2015 2014 Rm Rm Capital expenditure authorised not yet incurred at the reporting date is as follows: – Contracted 12,501 10,034 – Not contracted 18,313 19,659 Total commitments for property, plant and equipment and software 30,814 29,693

Capital expenditure will be funded from operating cash flows, existing borrowing facilities and where necessary by raising additional facilities.

6.5 Operating lease commitments Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

Sub-lease income is recognised in profit or loss on a straight-line basis over the term of the lease.

In all significant operating lease arrangements in place during the year, the Group acted as the lessee.

Sale and leaseback In sale and leaseback transactions that result in operating leases, where it is clear that the transaction is priced at fair value, any profit or loss is recognised on the effective date of the sale transaction. If the sale price is below fair value, any profit or loss is recognised on the effective date of the sale transaction except that, if a loss is compensated for by future lease payments at below market price, it is deferred and amortised in proportion to the lease payments over the period during which the asset is expected to be used. If the sale price is above fair value, the excess over fair value is deferred and amortised over the period for which the asset is expected to be used.

If the fair value, at the time of a sale and leaseback transaction, is less than the carrying amount of the asset, a loss equal to the amount of the difference between the carrying amount and fair value is recognised immediately in profit or loss.

The Group leases various premises and sites under non-cancellable/cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. Penalties are chargeable on certain leases should they be cancelled before the end of the agreement.

2015 2014 Rm Rm The future aggregate minimum lease payments under non-cancellable operating lease arrangements are as follows: Not later than one year 7,373 4,280 Later than one year and no later than five years 30,363 16,203 Later than five years 30,696 13,973 68,432 34,456

6.6 Finance lease commitments Assets held under finance leases are capitalised at the lower of the fair value of the leased asset and the estimated present value of the minimum lease payments at the inception of the lease. The corresponding liability to the lessor, net of finance charges, is included in the statement of financial position under other non-current/current liabilities. Each lease payment is allocated between the liability and finance charges. Finance charges, which

F-69 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.6 Finance lease commitments (continued) represent the difference between the total lease commitments and fair value of the assets acquired, are charged to profit or loss over the term of the relevant lease so as to produce a constant periodic rate of interest on the remaining balance of the obligation for each accounting period.

In all significant finance lease arrangements in place during the period, the Group acted as the lessee.

Sale and leaseback In sale and leaseback transactions that result in finance leases, any excess of sale proceeds over the carrying amount is deferred and amortised over the lease term.

At the reporting date, the Group had outstanding commitments under non-cancellable finance leases which fall due as follows:

Minimum Future lease finance Present payments charges value Rm Rm Rm 2015 Current Not later than one year 100 (35) 65 Non-current (note 6.2) 945 (234) 711 Later than one year and no later than five years 419 (135) 284 Later than five years 526 (99) 427 1,045 (269) 776

Minimum Future lease finance Present payments charges value Rm Rm Rm 2014 Current Not later than one year 143 (36) 107 Non-current (note 6.2) 921 (225) 696 Later than one year and no later than five years 395 (135) 260 Later than five years 526 (90) 436 1,064 (261) 803

6.7 Commercial commitments Incentives for handset upgrades The Group’s present policy is to pay incentives to service providers (SPs) for handset upgrades. These upgrades are only payable once the subscribers have completed a 21-month period with the SP since the initial commencement of their contract or previous upgrade and the eligible subscribers have exercised their rights to receive upgrades for new postpaid contracts with minimum terms. The value of the obligation may vary depending on the prevailing business rules at the time of the upgrade. The total number of eligible subscribers who had not yet exercised their right to upgrade at 31 December 2015 was 1,233,652 (2014: 1,555,033) and the estimated commitment in respect of these incentives amounts to R972 million (2014: R841 million).

6.8 Contingent liabilities The Group does not recognise contingent liabilities in the statement of financial position until future events indicate that it is probable that an outflow of resources will take place and a reliable estimate can be made, at which time a provision is raised.

F-70 Notes to the Group financial statements for the year ended 31 December 2015

6 FINANCING STRUCTURE AND COMMITMENTS (continued) 6.8 Contingent liabilities (continued) 2015 2014 Rm Rm Contingent liabilities 875 932 Licence fee and regulatory matters — 598 Litigation and other matters 865 323 Other 10 11

Litigation and other matters Uncertain tax exposures in various tax jurisdictions where the Group operates.

7 FINANCIAL RISK 7.1 Financial risk management and financial instruments Accounting for financial instruments Financial assets and liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instruments.

All financial assets and liabilities are initially measured at fair value, including transaction costs, except for those classified as at fair value through profit or loss which are initially measured at fair value excluding transaction costs. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial assets are recognised (derecognised) on the date the Group commits to purchase (sell) the instruments (trade date accounting).

Financial assets and liabilities are classified as current if expected to be realised or settled within 12 months; if not, they are classified as non-current.

Offsetting financial instruments Offsetting of financial assets and liabilities is applied when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The net amount is reported in the statement of financial position.

Financial instrument classification The Group classifies its financial instruments into the following categories: • financial assets at fair value through profit or loss; • loans and receivables; • held-to-maturity investments; • available-for-sale; • financial liabilities at fair value through profit or loss; and • financial liabilities at amortised cost.

The classification is dependent on the purpose for which the financial instruments were acquired. Management determines the classification of financial instruments at initial recognition.

Financial instruments comprise investments in equity and debt securities, loans receivable, trade and other receivables (excluding prepayments), investments in self-insurance cell captives, cash and cash equivalents, restricted cash, borrowings, other non-current liabilities (excluding provisions), bank overdrafts, derivatives and trade and other payables.

F-71 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) Subsequent measurement Subsequent to initial recognition, financial instruments are measured as described below.

Financial assets at fair value through profit or loss Financial instruments at fair value through profit or loss are subsequently measured at fair value and changes therein are recognised in profit or loss. Derivatives are also categorised as held for trading unless they are designated as hedging instruments.

Loans and receivables The Group’s loans and receivables comprise loans and other receivables, certain of its current investments, trade and other receivables (excluding prepayments), restricted cash and cash and cash equivalents. Loans and receivables are subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Held-to-maturity investments Held-to-maturity investments are subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Available-for-sale Available-for-sale financial assets are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. Available-for-sale financial assets are subsequently measured at fair value and changes therein, other than impairment losses and foreign currency differences on debt instruments, are recognised in other comprehensive income.

Financial liabilities Financial liabilities comprise trade and other payables, bank overdrafts, borrowings, derivative liabilities and other non-current liabilities (excluding provisions).

All financial liabilities, excluding derivative liabilities, are subsequently measured at amortised cost using the effective interest method. Derivative liabilities are subsequently measured at fair value and changes therein are recognised in profit or loss.

Derecognition Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligations specified in the contracts are discharged, cancelled or expire.

Substantial modification A substantial modification of the terms of an existing debt instrument or part of it is accounted for as an extinguishment of the original debt instrument and the recognition of a new debt instrument.

F-72 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) Impairment The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. A financial asset or group of financial assets is impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and its recoverable amount, being the present value of the estimated future cash flows discounted at the original effective interest rate. When a loan or receivable is impaired, the Group reduces the carrying amount to its recoverable amount, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables is recognised using the effective interest rate. Significant financial assets are tested for impairment on an individual basis. The financial assets that are not impaired or are not individually significant are collectively assessed for impairment in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.

Impairment of trade receivables An impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that the trade receivable is impaired.

The carrying amount of the trade receivable is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited to profit or loss.

Gains or losses arising on modification of debt instruments Gains or losses arising from the modification of the terms of a debt instrument are recognised immediately in profit or loss where the modification does not result in the derecognition of the existing instrument.

Risk management Introduction The Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk and market risk (foreign exchange, interest rate and price risk). This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

F-73 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) Risk profile The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments, such as forward exchange contracts and interest rate swaps to hedge certain exposures, but as a matter of principle, the Group does not enter into derivative contracts for speculative purposes. The Group does not apply hedge accounting.

Risk management is carried out under policies approved by the board of directors of the Group and of relevant subsidiaries. The MTN Group executive committee identifies, evaluates and hedges financial risks in co-operation with the Group’s operating units. The board provides written principles for overall risk management, as well as for specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments, and investing excess liquidity.

7.1.1 Categories of financial instruments

Assets Liabilities Fair value Fair value through through Total Loans and profit or Held-to- Available- Amortised profit or carrying receivables loss1 maturity for-sale cost loss1 amount Rm Rm Rm Rm Rm Rm Rm 2015 Non-current financial assets Loans and non-current receivables 8,269 — — — — — 8,269 Investments — — 262 9,707 — — 9,969 Current financial assets Trade and other receivables 38,587 — — — — — 38,587 Current investments 802 1,187 6,822 — — — 8,811 Derivative assets — 163 — — — — 163 Restricted cash 1,735 — — — — — 1,735 Cash and cash equivalents 34,177 — — — — — 34,177 83,570 1,350 7,084 9,707 — — 101,711 Non-current financial liabilities Borrowings — — — — 52,661 — 52,661 Other non-current liabilities — — — — 1,514 — 1,514 Current financial liabilities Trade and other payables — — — — 37,957 — 37,957 Borrowings — — — — 22,472 — 22,472 Bank overdrafts — — — — 38 — 38 — — — — 114,642 — 114,642

1 All financial instruments at fair value through profit or loss are held for trading.

F-74 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.1 Categories of financial instruments (continued)

Assets Liabilities Fair value Fair value through through Total Loans and profit or Held-to- Available- Amortised profit or carrying receivables loss1 maturity for-sale cost loss1 amount Rm Rm Rm Rm Rm Rm Rm 2014 Non-current financial assets Loans and other non-current receivables 5,277 — — — — — 5,277 Investments — — 223 5,912 — — 6,135 Current financial assets Trade and other receivables 29,655 — — — — — 29,655 Current investments 1,276 906 3,469 — — — 5,651 Derivative assets — 183 — — — — 183 Restricted cash 893 — — — — — 893 Cash and cash equivalents 43,098 — — — — — 43,098 80,199 1,089 3,692 5,912 — — 90,892 Non-current financial liabilities Borrowings — — — — 39,470 — 39,470 Other non-current liabilities — — — — 1,016 — 1,016 Current financial liabilities Trade and other payables — — — — 31,208 — 31,208 Borrowings — — — — 13,783 — 13,783 Derivative liabilities — — — — — 2 2 Bank overdrafts — — — — 26 — 26 — — — 85,503 2 85,505

1 All financial instruments at fair value through profit or loss are held for trading.

7.1.2 Financial assets and liabilities subject to offsetting The following table presents the Group’s financial assets and liabilities that are subject to offsetting:

Gross Amount Net amount offset amount Rm Rm Rm 2015 Current financial assets Trade and other receivables 4,320 (826) 3,494 Current financial liabilities Trade and other payables 858 (826) 32 2014 Current financial assets Trade and other receivables 3,130 (987) 2,143 Current financial liabilities Trade and other payables 1,920 (987) 933

The amounts subject to offsetting include interconnect receivables and payables and sundry receivables and payables.

7.1.3 Fair value estimation A number of the Group’s accounting policies and disclosures require the measurement of fair values.

F-75 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.3 Fair value estimation (continued) The table on the next page presents the Group’s assets and liabilities that are measured at fair value. The classification into different levels is based on the extent that quoted prices are used in the calculation of fair value and the levels have been defined as follows: • level 1: fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities; • level 2: fair value based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); or • level 3: fair value based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The following table presents the fair value measurement hierarchy of the Group’s assets and liabilities:

Level 1 Level 2 Level 3 Total Rm Rm Rm Rm 2015 Current financial assets Investments — — 9,707 9,707 Investment in cell captives — — 1,187 1,187 Derivative assets — 163 — 163 Total assets — 163 10,894 11,057 2014 Current financial assets Investments — 5,912 — 5,912 Investments in cell captives — — 906 906 Derivative assets 42 141 — 183 Total assets 42 6,053 906 7,001 Current financial liabilities Derivative liabilities — 2 — 2

Valuation methods and assumptions The following methods and assumptions were used to estimate the fair values:

Unquoted ordinary shares – The fair values of the unquoted ordinary shares have been estimated using a discounted cash flow and earnings multiple model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, the discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for these unquoted equity investments.

Derivatives – The Group enters into derivative financial instruments with various counterparties. Interest rate swaps, foreign exchange contracts and equity derivatives are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies and interest rate curves.

Investment in insurance cell captives – The fair value of the investment in cell captives is determined based on the net asset value of the cell captive at the reporting date.

Loans and receivables and financial liabilities at amortised cost – The carrying value of current receivables and liabilities measured at amortised cost approximates their fair value.

F-76 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.3 Fair value estimation (continued) For the majority of the non-current receivables and liabilities measured at amortised cost, their fair values are also not significantly different to their carrying values.

The listed long-term fixed interest rate senior unsecured notes in issue with a carrying amount of R11,633 million (2014: R8,686 million) have a fair value of R10,268 million (2014: R8,686 million) at 31 December 2015. The fair value of this instrument is determined by reference to published market values on the relevant exchange. This instrument is classified as a level one instrument in the fair value hierarchy.

Valuation techniques and significant unobservable inputs The significant unobservable inputs used in the fair value measurements categorised within level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis are as shown below:

Significant Valuation unobservable Sensitivity of the input Type technique inputs Range to the fair value Available-for-sale financial assets – Earnings Average tower 2015: 10-14 1 multiple (2014: unquoted ordinary shares multiples industry earnings 2014: 12-14 1 multiple) increase would multiple result in an increase in the fair value of R792 million (2014: R434 million), and 1 multiple decrease would result in a decrease in the fair value of R792 million (2014: R434 million).

Reconciliation of level 3 financial assets The table below sets out the reconciliation of financial assets that are measured at fair value based on inputs that are not based on observable market data (level 3):

Cell captives Rm Balance at 1 January 2014 691 Contributions paid 563 Claims received (390) Gain recognised in profit or loss (unrealised) 42 Balance at 31 December 2014 906 Balance at 1 January 2015 906 Contributions paid 965 Claims received (13) Loss recognised in profit or loss (unrealised) (671) Balance at 31 December 2015 1,187

Investments Rm Balance at 1 January 2015 — Transfers from level 21 5,912 Acquisitions 1,410 Foreign exchange differences 2,385 Balance at 31 December 2015 9,707

1 The fair value of investments was previously determined with reference to recent transactions between market participants. The absence of recent transactions resulted in the fair value being determined using models considered to be appropriate by management, consequently investments have been transferred from level 2 to level 3 of the fair value hierarchy. The Group considers transfers between fair value hierarchy levels to have occurred at the beginning of the reporting period.

F-77 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.4 Credit risk Credit risk, or the risk of financial loss to the Group due to customers or counterparties not meeting their contractual obligations, is managed through the application of credit approvals, limits and monitoring procedures.

The Group’s maximum exposure to credit risk is represented by the carrying amount of the financial assets that are exposed to credit risk.

The Group considers its maximum exposure per class, without taking into account any collateral and financial guarantees, to be as follows:

2015 2014 Rm Rm Loans and other non-current receivables 8,269 5,277 Investments 262 223 Trade and other receivables 38,587 29,655 Current investments 8,811 5,651 Derivative assets 163 183 Restricted cash 1,735 893 Cash and cash equivalents 34,177 43,098 92,004 84,980

Cash and cash equivalents and current investments The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate values of transactions concluded are spread among approved financial institutions. The Group actively seeks to limit the amount of credit exposure to any one financial institution and credit exposure is controlled by counterparty limits that are reviewed and approved by the credit risk department.

The operations in Nigeria, Dubai and South Africa (including head office entities) hold their cash balances in financial institutions with a rating range from B- to AAA.

Given these credit ratings, management does not expect any counterparty to fail to meet its obligations.

Trade receivables The Group has no significant concentrations of credit risk, due to its wide spread of customers across various operations and dispersion across geographical locations. The Group has policies in place to ensure that retail sales of products and services are made to customers with an appropriate credit history.

F-78 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.4 Credit risk (continued) The recoverability of interconnect receivables in certain international operations is uncertain; however, this is actively managed within acceptable limits and has been incorporated in the assessment of an appropriate revenue recognition policy (note 2.2) and the impairment of trade receivables where applicable. In addition, in certain countries there exists a right of set-off with interconnect parties to assist in settling outstanding amounts.

Ageing and impairment analysis

2015 2015 2015 2014 2014 2014 Rm Rm Rm Rm Rm Rm Gross Impaired Net Gross Impaired Net Fully performing trade receivables 13,478 — 13,478 12,994 — 12,994 Interconnect receivables 1,922 — 1,922 2,165 — 2,165 Contract receivables 1,863 — 1,863 3,826 — 3,826 Other receivables 9,693 — 9,693 7,003 — 7,003 Past due trade receivables 9,286 (3,459) 5,827 4,259 (2,514) 1,745 Interconnect receivables 4,180 (1,437) 2,743 1,352 (752) 600 0 to 3 months 1,047 — 1,047 234 (1) 233 3 to 6 months 841 (3) 838 103 — 103 6 to 9 months 454 (187) 267 54 — 54 9 to 12 months 1,838 (1,247) 591 961 (751) 210 Contract receivables 3,330 (1,524) 1,806 2,195 (1,344) 851 0 to 3 months 1,373 (219) 1,154 674 (243) 431 3 to 6 months 653 (471) 182 592 (454) 138 6 to 9 months 149 (17) 132 183 (48) 135 9 to 12 months 1,155 (817) 338 746 (599) 147 Other receivables 1,776 (498) 1,278 712 (418) 294 0 to 3 months 644 (126) 518 102 (4) 98 3 to 6 months 236 (65) 171 137 (27) 110 6 to 9 months 149 — 149 210 (126) 84 9 to 12 months 747 (307) 440 263 (261) 2 Total 22,764 (3,459) 19,305 17,253 (2,514) 14,739

Total past due per significant operation

Inter- connect Contract Other receivables receivables receivables Total Rm Rm Rm Rm 2015 MTN South Africa 157 1,129 196 1,482 MTN Nigeria 1,729 587 171 2,487 MTN Côte d’Ivoire 277 379 516 1,172 MTN Yemen 464 165 48 677 MTN Cameroon 185 264 — 449 MTN Benin 193 16 152 361 Other operations 1,175 790 693 2,658 4,180 3,330 1,776 9,286 2014 MTN South Africa 59 850 80 989 MTN Nigeria 839 327 26 1,192 Other operations 454 1,018 606 2,078 1,352 2,195 712 4,259

F-79 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.4 Credit risk (continued) Allowance for impairment of trade receivables

Exchange At Net differences beginning monetary and other At end of the year Additions1 Reversals1 Utilised gain movements2 of the year Rm Rm Rm Rm Rm Rm Rm 2015 Allowance for impairment of trade receivables (2,514) (1,200) 49 485 45 (324) (3,459) 2014 Allowance for impairment of trade receivables (2,679) (650) 364 443 43 (35) (2,514)

1 A net impairment loss of R1,151 million (2014: R286 million) was recognised during the year. This amount is included in other operating expenses in profit or loss (note 2.4). 2 Including the effect of hyperinflation.

The Group does not hold any collateral for trade receivables.

Loans and other non-current receivables The recoverability of all loans were assessed at reporting date and were not found to be impaired.

An impairment reversal of R230 million in respect of non-current interconnect receivables was recognised in 2014. The impairment analysis is set out below and on the next page: Gross Impaired Net Rm Rm Rm 2015 Non-current interconnect receivables 405 — 405 2014 Non-current interconnect receivables 355 — 355

Exchange At differences beginning and other At end of the year Additions Reversals Utilised movements of the year Rm Rm Rm Rm Rm Rm 2015 Allowance for impairment on non-current interconnect receivables ————— — 2014 Allowance for impairment on non-current interconnect receivables (223) — 230 — (7) —

7.1.5 Liquidity risk Liquidity risk is the risk that an entity in the Group will be unable to meet its obligations as they become due.

The Group’s approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet its liabilities when due under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group ensures it has sufficient cash on demand (currently the Group is maintaining a positive cash position) or access to facilities to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

F-80 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.5 Liquidity risk (continued) The following liquid resources are available:

2015 2014 Rm Rm Trade and other receivables 38,587 18,895 Current investments 1,989 2,182 Cash and cash equivalents, net of overdrafts 34,139 43,072 74,715 64,149

The Group’s undrawn borrowing facilities are disclosed in note 6.1.

During the year, currency constraints in Nigeria caused loan repayment delays by MTN Nigeria amounting to R991 million on loans denominated in US dollar. The defaults resulting from the delays were remedied before year end.

The following are the contractual cash flows of financial liabilities:

More More Payable than one than More More within month three than one than two one but not months year years month exceeding but not but not but not More Carrying or on three exceeding exceeding exceeding than five amount Total demand months one year two years five years years Rm Rm Rm Rm Rm Rm Rm Rm 2015 Borrowings 75,133 83,298 4,079 8,010 14,012 17,567 28,064 11,566 Other non-current liabilities 1,514 1,524 —— — 373 462 689 Trade and other payables 37,957 37,957 23,160 10,352 4,445 ——— Bank overdrafts 38 38 38 ————— 114,642 122,817 27,277 18,362 18,457 17,940 28,526 12,255 2014 Borrowings 53,253 68,775 442 3,227 14,510 14,288 25,537 10,771 Other non-current liabilities 1,016 1,273 — — — 134 323 816 Trade and other payables 31,208 31,208 14,873 9,760 6,575 — — — Derivative liabilities 2 2 — — 2 — — — Bank overdrafts 26 26 26 ————— 85,505 101,284 15,341 12,987 21,087 14,422 25,860 11,587

7.1.6 Market risk Market risk is the risk that changes in market prices (such as, interest rates and foreign currencies) will affect the Group’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

7.1.6.1 Interest rate risk Interest rate risk is the risk that arises on an interest-bearing asset or liability, due to variability of interest rates.

Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents, restricted cash, trade and other receivables/payables, loans receivable/payable, bank overdrafts and other non-current liabilities. The interest rates applicable to these financial instruments are a combination of floating and fixed rates in line with those currently available in the market.

F-81 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.6 Market risk (continued) The Group’s interest rate risk arises from the repricing of the Group’s forward cover and floating rate debt, incremental funding or new borrowings, the refinancing of existing borrowings and the magnitude of the significant cash balances which exist.

Debt in the South African entities, MTN (Mauritius) Investment Limited and all holding companies (including MTN (Dubai) Limited and MTN International (Mauritius) Limited) is managed on an optimal fixed versus floating interest rate basis, in line with the approved Group treasury policy. Significant cash balances are also considered in the fixed versus floating interest rate exposure mix.

Debt in the majority of the Group’s non-South African operations is at floating interest rates. This is due to the underdeveloped and expensive nature of derivative products in these financial markets. The Group continues to monitor developments which may create opportunities as these markets evolve in order that each underlying operation can be aligned with the Group Treasury Policy.

The Group makes use of various products including interest rate derivatives and other appropriate hedging tools as a way to manage these risks; however, derivative instruments may only be used to hedge existing exposures.

Profile At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

2015 2014 Fixed rate Variable rate Fixed rate Variable rate instruments instruments instruments instruments Rm Rm Rm Rm Non-current financial assets Loans and other non-current receivables 6,040 1,253 3,071 905 Investments 262 — 223 — Current financial assets Trade and other receivables 136 16,235 74 5,988 Current investments 7,624 — 4,745 — Restricted cash 498 276 155 366 Cash and cash equivalents 18,731 5,874 20,788 7,395 33,291 23,638 29,056 14,654 Non-current financial liabilities Borrowings 15,785 36,938 11,947 27,523 Other non-current liabilities 1,202 279 693 298 Current financial liabilities Trade and other payables 1,536 945 107 54 Borrowings 3,852 18,295 4,220 9,563 Bank overdrafts —38—26 22,375 56,495 16,967 37,464

Sensitivity analysis The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss of an instantaneous increase or decrease of 1% (100 basis points) in market interest rates, from the rate applicable at 31 December, for each class of financial instrument with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in the following market interest rates: JIBAR, LIBOR, NIBOR, Prime, EURIBOR and money market rates. Changes in market interest rates affect the interest income or expense of floating rate financial instruments. Changes in market interest rates only affect profit or loss in relation to financial instruments with fixed interest rates if these financial instruments are subsequently measured at their fair value.

F-82 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.6 Market risk (continued) A change in the above market interest rates at the reporting date would have increased/(decreased) profit before tax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis as was used for 2014.

2015 2014 (Decrease)/increase in profit before tax (Decrease)/increase in profit before tax Upward Downward Upward Downward Change in change in change in Change in change in change in interest rate interest rate interest rate interest rate interest rate interest rate % Rm Rm % Rm Rm JIBAR 1 (118.3) 118.3 1 (102.7) 102.7 LIBOR 1 28.9 (28.9) 1 1.4 (1.4) Three-month LIBOR 1 (0.0) 0.0 1 (0.8) 0.8 NIBOR 1 (194.7) 194.7 1 (174.9) 174.9 EURIBOR 1 (25.8) 25.8 1 (14.3) 14.3 Money market 1 14.5 (14.5) 1 22.8 (22.8) Prime 1 25.5 (25.5) 1—— Other 1 (20.4) 20.4 1 40.4 (40.4)

7.1.6.2 Currency risk Currency risk is the exposure to exchange rate fluctuations that have an impact on cash flows and financing activities.

The Group operates internationally and is exposed to currency risk arising from various currency exposures. Refer to the table below for the Group’s exposure to foreign currency risk based on notional amounts. Currency risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The Group is also exposed to translation risk as holding companies do not report in the same currencies as operating entities.

Where possible, entities in the Group use forward contracts to hedge their actual exposure to foreign currency. Refer to note 7.5 for the Group’s outstanding foreign exchange contracts. The Group’s Nigerian subsidiary manages foreign currency risk on major foreign purchases by placing foreign currency on deposit as security against letters of credit when each order is placed.

The Group has foreign subsidiaries whose assets are exposed to foreign currency translation risk, which is managed primarily through borrowings denominated in the relevant foreign currencies to the extent that such funding is available on reasonable terms in the local capital markets.

F-83 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.6 Market risk (continued) Foreign currency exposure Included in the Group statement of financial position are the following amounts denominated in currencies other than the functional currency of the reporting entities:

2015 2014 Rm Rm Assets Non-current assets – United States dollar 419 318 – CFA franc 261 — – Iranian rial 2,128 — 2,808 318 Current assets – United States dollar 6,421 9,169 – Euro 1,435 2,477 – Iranian rial 9,592 5,640 – British pound sterling 3 — – South African rand 16 29 17,467 17,315 Total assets 20,275 17,633 Liabilities Non-current liabilities – United States dollar 27,677 14,651 – Euro 1,059 1,135 28,736 15,786 Current liabilities – United States dollar 8,853 8,375 – Euro 2,304 1,043 – South African rand 7 57 – Ugandan shilling 75 — – British pound sterling 9 6 – Botswana pula — 2 11,248 9,483 Total liabilities 39,984 25,269

Sensitivity analysis The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss and equity of an instantaneous 10% strengthening or weakening in the rand against all other currencies, from the rate applicable at 31 December, for each class of financial instrument with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice, market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in foreign exchange rates in respect of the US dollar, euro, Iranian rial and Nigerian naira. This analysis considers the impact of changes in foreign exchange rates on profit, excluding foreign exchange translation differences resulting from the translation of Group entities that have functional currencies different from the presentation currency, into the Group’s presentation currency which are recognised in the foreign currency translation reserve.

F-84 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.6 Market risk (continued) A change in the foreign exchange rates to which the Group is exposed at the reporting date would have increased/ (decreased) profit before tax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis as applied in 2014.

(Decrease)/increase in profit before tax Change in Weakening Strengthening exchange in functional in functional rate currency currency Denominated: Functional currency % Rm Rm 2015 US$:ZAR 10 (1,256.4) 1,256.4 US$:SYP 10 (105.8) 105.8 US$:SDG 10 (136.9) 136.9 US$:SSP 10 (73.9) 73.9 US$:NGN 10 (861.7) 861.7 EUR:SDG 10 (222.1) 222.1 EUR:US$ 10 9.8 (9.8) US$:GNF 10 (63.2) 63.2 US$:ZMK 10 (37.1) 37.1 IRR:ZAR 10 1,028.6 (1,028.6) 2014 US$:ZAR 10 (144.8) 144.8 US$:SYP 10 (42.8) 42.8 US$:SDG 10 (109.2) 109.2 US$:SSP 10 (265.5) 265.5 US$:NGN 10 (492.0) 492.0 EUR:SDG 10 (160.5) 160.5 EUR:US$ 10 (28.1) 28.1 US$:GNF 10 (155.3) 155.3 US$:ZMK 10 (63.4) 63.4 IRR:ZAR 10 564.0 (564.0)

7.1.6.3 Price risk The Group is exposed to equity price risk, which arises from available-for-sale investments (see note 7.2).

Refer to note 7.1.3 for disclosure of the sensitivity of the fair values of the investments to a change in the inputs used to determine their fair values. Other comprehensive income (before tax) will be affected by the amounts disclosed in respect of these investments in note 7.1.3.

The sensitivity analysis presented in the prior year assumed a 10% change in the market value of the investment. The basis on which the sensitivity analysis is presented in the current year has changed. The absence of recent market transactions resulted in a change in the valuation technique applied to determine the fair value.

7.1.7 Capital management The Group’s policy is to maximise borrowings at an operating company level, on a non-recourse basis, within an acceptable level of debt for the maturity of the local company.

Equity funding for existing operations or new acquisitions is raised centrally, first from excess cash and then from new borrowings while retaining an acceptable level of debt for the consolidated Group. Where funding is

F-85 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.1 Financial risk management and financial instruments (continued) 7.1.7 Capital management (continued) not available to the operation locally or in specific circumstances where it is more efficient to do so, funding is sourced centrally and on-lent. The Group’s policy is to borrow using a mixture of long-term and short-term capital market issues and borrowing facilities from the local and international capital markets as well as multilateral organisations together with cash generated to meet anticipated funding requirements.

Management regularly monitors and reviews the following: net debt : EBITDA, net debt : equity and net interest : EBITDA. Net debt is defined as borrowings and bank overdrafts less cash and cash equivalents, restricted cash and current investments (excluding investments in cell captives). Equity approximates share capital and reserves. Net interest comprises of finance costs less finance income and EBITDA is defined as earnings before interest, tax, depreciation, amortisation and goodwill impairment/losses.

The Group’s net debt : EBITDA, net debt : equity and net interest : EBITDA at the end of the year are set out below:

2015 2014 Net debt: EBITDA Borrowings and bank overdrafts (Rm) 75,171 53,279 Less: Cash and cash equivalents, restricted cash and current investments (Rm) (43,536) (48,736) Net debt (Rm) 31,635 4,543 EBITDA (Rm) 59,125 73,191 Net debt/EBITDA ratio 0.54 0.1 Net debt: total equity Net debt (Rm) 31,635 4,543 Total equity (Rm) 151,838 133,442 Net debt/total equity (%) 20.8 3.4 Net interest: EBITDA Net finance costs (Rm) (3,010) (3,668) EBITDA (Rm) 59,125 73,191 Net interest/EBITDA (%) (5.1) (5.0)

7.2 Investments Investments consist of held-to-maturity and available-for-sale financial assets that are accounted for in accordance with the accounting policy disclosed in note 7.1.

2015 2014 Rm Rm Held-to-maturity financial assets Treasury bills and bonds with fixed rates of 5.8% to 6.3% (2014: 5.9% to 6.3% and maturity dates between 2018 and 2019 (2014: 2018 and 2019)1 262 223 Available-for-sale financial assets Investment in IHS 9,250 5,773 Unlisted equity investment 457 139 9,969 6,135

1 Denominated in Côte d’Ivoire Communauté Financière Africaine franc.

The recoverability of the investments was assessed at the reporting date and was found not to be impaired.

7.3 Loans and other non-current receivables Loans and other non-current receivables are accounted for as loans and receivables in accordance with the accounting policy disclosed in note 7.1.

F-86 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.3 Loans and other non-current receivables (continued) Prepayments include costs paid relating to subsequent financial years and are stated at nominal value.

2015 2014 Rm Rm Irancell Telecommunications Services Company (PJSC)1 2,128 — Loan to Uganda Tower InterCo B.V.2 1,159 887 Loan to Ghana Tower InterCo B.V.3 1,109 2,023 Loan to Nigeria Tower InterCo B.V.4 2,704 1,039 Non-current interconnect receivables 405 355 Other non-current receivables 1,216 973 Non-current prepayments 1,062 1,019 9,783 6,296

1 The loan to Irancell attracts interest at 12% per annum. The loan is repayable in a bullet payment on 30 September 2017 (note 4.2). 2 The loan to Uganda Tower InterCo B.V. attracts interest at LIBOR +5.3% per annum. The loan is repayable in 2019. 3 The loan to Ghana Tower InterCo B.V. attracts interest at a fixed interest rate of 21.87% per annum. The loan is repayable in 2019. 4 The loan to Nigeria Tower InterCo B.V. attracts interest at a fixed interest rate of 10% per annum subject to review, and is repayable in 2024.

The recoverability of the loans was assessed at the reporting date and was found not to be impaired.

No impairment was recognised in the current year. An impairment reversal of R230 million in respect of non- current interconnect receivables was recognised in 2014 (note 2.4).

7.4 Current investments Current investments consist of loans and receivables, financial assets held at fair value and held-to-maturity financial assets that are accounted for in accordance with the accounting policy disclosed in note 7.1.

2015 2014 Rm Rm Loans and receivables Foreign currency fixed deposits with fixed interest rates of 3.5% to 4.3% (2014: 2.0% to 2.8%)1 428 1,098 Commercial paper with fixed interest rates of 13.5% to 13.6%2 374 — Foreign currency fixed deposits with fixed interest rates of 2.0%1 — 178 802 1,276 Financial assets held at fair value through profit or loss Investment in insurance cell captives – Guardrisk (note 7.1.3) 1,187 906 Held-to-maturity financial assets Treasury bills with fixed interest rates of 12.9% to 15.8% (2014: 10.8% to 14.5%) and maturity dates between January and July 2016 (2014: January and December 2015)2 6,822 3,469 Total current investments 8,811 5,651

1 Denominated in United States dollar. 2 Denominated in Nigerian naira.

No allowance for impairment has been recognised as at the reporting date as all investments are considered to be fully performing.

There were no significant disposals of held-to-maturity financial assets during 2015 and 2014.

7.5 Derivatives The Group uses derivative financial instruments, such as forward exchange contracts and interest rate swaps, to hedge its foreign currency risks, and interest rate risks, respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

F-87 Notes to the Group financial statements for the year ended 31 December 2015

7 FINANCIAL RISK (continued) 7.5 Derivatives (continued) All gains and losses from changes in the fair value of derivatives are recognised immediately in profit or loss.

All remaining derivatives are accounted for in accordance with the accounting policy disclosed in note 7.1.

2015 2014 Rm Rm Derivatives held for trading Current assets Forward exchange contracts 163 49 Equity derivative — 134 163 183 Current liabilities Floating-to-fixed interest rate swap — (2) — (2) Gains accounted for directly in profit or loss 141 23 Notional principal amount (US$ forward exchange contracts) 2,789 3,837 Notional principal amount (EUR forward exchange contracts) — 83 Notional principal amount (US$ interest rate swap) — 672

7.6 Exchange rates to South African rand Closing rates Average rates 2015 2014 2015 2014 United States dollar US$ 0.06 0.09 0.08 0.09 Uganda shilling UGX 217.67 239.02 253.16 240.06 Rwanda franc RWF 47.84 58.02 55.33 63.12 Cameroon Communauté Financière Africaine franc XAF 39.02 46.94 46.67 45.77 Nigerian naira NGN 12.88 15.93 15.63 15.27 Iranian rial1 IRR 1,947.05 2,341.99 2,265.98 2,389.54 Botswana pula BWP 0.73 0.82 0.80 0.83 Côte d’Ivoire Communauté Financière Africaine franc CFA 39.81 46.94 47.00 45.81 Congo-Brazzaville Communauté Financière Africaine franc XAF 39.81 46.94 46.56 45.81 Zambian kwacha ZMK 0.71 0.55 0.65 0.57 Swaziland lilangeni E 1.00 1.00 1.00 1.00 Afghanistan afghani AFN 4.42 5.05 4.81 5.31 Euro EUR 0.06 0.07 0.07 0.07 Ghanaian cedi GHS 0.25 0.28 0.30 0.27 Benin Communauté Financière Africaine franc XOF 39.81 46.94 47.10 45.71 Guinean franc GNF 502.98 612.70 579.71 643.39 Sudanese pound1 SDG 0.39 0.52 0.47 0.53 Syrian pound1 SYP 21.76 17.15 21.64 15.43 Guinea-Bissau Communauté Financière Africaine franc XOF 39.81 46.94 47.34 45.97 Yemen rial YER 13.89 18.62 17.80 19.93 Ethiopian birr ETB 1.36 1.74 1.64 1.79

1 The financial results. positions and cash flows of foreign operations trading in hyperinflationary economies are translated as set out in note 1.3.3. Iran ceased to be hyperinflationary with effect from 1 July 2015.

F-88 Notes to the Group financial statements for the year ended 31 December 2015

8 EQUITY STRUCTURE 8.1 Ordinary share capital and share premium Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of new ordinary shares or share options are recognised in equity as a deduction (net of tax) from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental external costs (net of tax), is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

2015 2014 Number Number Ordinary share capital (par value of 0.01 cents) of shares of shares Authorised 2,500,000,000 2,500,000,000 Issued (fully paid up) 1,845,493,245 1,848,355,889 In issue at beginning of the year 1,848,355,889 1,873,278,848 Options exercised and allotted — 72,170 Strike price R27.00 — 8,340 R40.50 — 63,830 MTN Zakhele shares cancelled and delisted4 (2,862,644) (2,657,377) Treasury shares cancelled — (22,337,752) In issue at end of the year 1,845,493,245 1,848,355,889 Shares cancelled but not delisted at year end2 (1,444,172) — Options – MTN Zakhele transaction1 (11,131,098) (14,492,564) Treasury shares2 (10,400,061) (11,649,825) In issue at end of the year – excluding MTN Zakhele transaction and treasury shares3 1,822,517,914 1,822,213,500

1 Due to the call option over the notional vendor finance shares, these shares, although legally issued to MTN Zakhele, are not deemed to be issued in terms of IFRS and are shown as such in the share capital reconciliation. 2 Treasury shares held by the Company and MTN Holdings Proprietary Limited. 3 There are no restrictions, rights or preferences including restrictions on dividend distributions attached to these shares. 4 Included in shares cancelled are 945,350 shares acquired in 2014 and cancelled in the current year.

2015 2014 Rm Rm Share capital Balance at beginning of the year * * Options exercised — * Shares cancelled (*) (*) Share buy-back (*) — Balance at end of the year * * Share premium Balance at beginning of the year 40,179 42,598 Options exercised — 3 Share buy-back — (2,422) Decrease in treasury shares 69 — Balance at end of the year 40,248 40,179

* Amounts less than R1 million.

F-89 Notes to the Group financial statements for the year ended 31 December 2015

8 EQUITY STRUCTURE (continued) 8.1 Ordinary share capital and share premium (continued) MTN Zakhele transaction The Group concluded its broad-based black economic empowerment (BBBEE) transaction “MTN Zakhele” during October 2010. This was done through a separate unconsolidated structured entity, MTN Zakhele (RF) Limited (MTN Zakhele). The transaction is designed to provide long-term, sustainable benefits to all BBBEE participants and will run for a period of six years.

MTN Zakhele acquired 75,363,138 of the Company’s shares at a price of R107,46 per share. The acquisition of 45,368,186 shares was funded using equity raised from the allotment of MTN Zakhele shares totalling R1,618 million, third-party preference share funding of R2,160 million and a donation of R1,294 million (equal to 12,045,412 shares) received from the Group. The Company also issued 29,994,952 notional vendor finance shares (NVF shares) at par value to MTN Zakhele amounting to approximately R3,214 million. A total of 18,863,854 (2014: 14,557,038) of these shares were cancelled and delivered back to the Group as at 31 December 2015.

The total cost of this transaction for the Group was R2,973 million which was recognised as a once-off charge in profit or loss in 2010. This charge included the once-off share-based payment transaction charges for NVF of R1,382 million, the employee share option plan of R171 million and the donation of R1,294 million. Transaction costs amounted to R126 million.

The MTN Zakhele shares started trading on an over the counter platform (managed by an independent party) from November 2013 onwards, on which date MTN Holdings Proprietary Limited provided a guarantee in favour of the funders to MTN Zakhele. The guarantee expires on extinguishment of funding in MTN Zakhele, which is estimated at three years. On 16 October 2015, MTN Zakhele ceased operating its trading platform. On 5 November 2015, MTN Zakhele listed its shares on the Empowerment segment of the JSE’s Main Board. MTN Holdings Proprietary Limited subsequently expanded the guarantee in favour of the funders of MTN Zakhele, less amounts actually recovered by third parties, for all possible losses incurred by the funders as a result of the JSE listing.

MTN Zakhele’s sole business is holding shares in the Group and administering the associated funding of these shares. Its success is therefore dependent on the success of the Group as well as the ongoing receipt of dividends from the Group to service and repay debt.

MTN has not provided any additional funding or liquidity to MTN Zakhele and there is no intention to do so at 31 December 2015.

Notional Vendor Finance (NVF) shares The Group has a call option over the NVF shares. The fair value of the call option is R721 million (2014: R1,593 million) and was determined using a Monte Carlo valuation model.

The significant inputs into the Monte Carlo valuation model were as follows:

2015 2014 Share price (R) 132.89 221,41 NVF balance (Rm) 612 1,220 NVF shares (number) 11,131,098 14,492,564 Volatility (%) 37.98 25.47 Dividend yield (%) 11.26 6.14 Expected option life (years) 1 2 Annual risk-free rate (%) 7.4 6.7

F-90 8 EQUITY STRUCTURE (continued) 8.1 Ordinary share capital and share premium (continued)

2015 2014 Rm Rm A reconciliation of the NVF balance is provided below: Balance at beginning of the year 1,220 1,685 Interest accrued 81 117 Settlement (689) (582) Balance at end of the year 612 1,220

In terms of the NVF arrangement, the notional funding provided by the MTN Group earns notional interest at 85% of the prime rate per annum.

MTN Zakhele settled R689 million (2014: R582 million) of the NVF funding in 2015 via acquiring 3,361,466 (2014: 2,537,561) of the Company’s shares in the open market and delivering an equivalent number of shares, initially issued by the Company to MTN Zakhele, back to the Company. During the year, MTN Group Limited cancelled all of these shares delivered by MTN Zakhele. 1,444,172 (2014: 945,350) of these shares have not been delisted at year end, and are held as treasury shares.

Third-party preference share funding obtained by MTN Zakhele A reconciliation of the third-party preference share funding obtained by MTN Zakhele to purchase shares of the Company is provided below:

2015 2014 Rm Rm Class A cumulative redeemable non-participating preference shares Balance at beginning of the year 3,182 3,176 Accrued interest paid (211) (202) Interest accrued at effective interest rate 218 208 Balance at end of the year 3,189 3,182

The Class A preference shares are held by Newshelf 1041 Proprietary Limited. Voluntary redemption can be effected before the redemption date. The Class A preference shares are redeemable on 24 November 2016. However, mandatory redemption must be made out of available cash after three years and one day from the issue date, subject to a cash waterfall. Interest is required to be paid on 30 April of each year, following the receipt of the annual dividend from the Group.

The payment obligation accrues interest at a rate of 71% of the prime rate per annum.

Preference share refinancing During 2013, the directors of MTN Zakhele sought to find a cheaper source of funding in order to reduce the NVF. The entity made a subsequent issue of 1,700,000 Class A preference shares at an issue price of R1,000 on 1 August 2013. The subsequent issue of the Class A preference share is held by Newshelf 1041 Proprietary Limited. The dividend rate in the floating period which came to effect on 1 May 2013 was reduced from 77% of prime to 71% of prime from the subscription date (1 August 2013). Interest is required to be paid on 30 April and 30 September of each year. No such issue was made in the current year or in the prior year.

Dividends paid to MTN Zakhele Dividends paid by the Company to MTN Zakhele amounted to R965 million (2014: R837 million) for the year.

The dividend income earned on the MTN shares held by MTN Zakhele is required to firstly, pay permitted operational fees, costs, expenses and tax liabilities and thereafter, to meet the dividend obligations to the third-party funders.

F-91 Notes to the Group financial statements for the year ended 31 December 2015

8 EQUITY STRUCTURE (continued) 8.1 Ordinary share capital and share premium (continued)

Share buy-back In the current year, MTN Holdings Proprietary Limited did not acquire any shares. During 2014, 10,704,475 shares in the Company were acquired at an average price of R226.24 per share, inclusive of transaction costs, on the JSE Limited. The total amount paid to acquire the shares in 2014, inclusive of transaction costs, was R2,422 million. The shares are fully paid shares and are held as treasury shares.

The Group’s objective in terms of buy-backs is to enhance shareholder value over time and improve the capital structure of the Group.

8.2 Other reserves

2015 2014 Rm Rm Balance at beginning of the year (2,967) (5,991) Share-based payment transactions 532 110 Exchange differences on translating foreign operations 21,033 2,960 Transfer from retained earnings 127 — Other (130) (46) Balance at end of the year 18,595 (2,967) Consisting of: Contingency reserve (as required by insurance regulations)1 4 4 Statutory reserve (as required by Rwanda and Congo-Brazzaville legislation)2 211 211 Transactions with non-controlling interests3 (11,396) (11,396) Share-based payment transactions4 3,046 2,514 Foreign currency translation reserve5 26,823 5,791 Other (93) (91) 18,595 (2,967)

1 A contingency reserve has been created in terms of the Short-term Insurance Act, 1988. Transfers to the contingency reserve are treated as an appropriation of income, and the balance of the reserve is disclosed in the statement of financial position as a non-distributable reserve, forming part of shareholders’ funds. On dissolution of the structured entities to which these reserves relate, they will become available for distribution. 2 A statutory reserve has been created in terms of local legislation. Transfers to the statutory reserve are treated as an appropriation of income, and the balance of the reserve is disclosed in the statement of financial position as a non-distributable reserve, forming part of the shareholders’ funds. 3 Non-controlling shareholders are treated as equity participants and, therefore, all acquisitions of non-controlling interests or disposals by the Group of its interests in subsidiary companies where control is maintained subsequent to the disposal are accounted for as equity transactions. Consequently, the difference between the fair value of the consideration transferred and the carrying amount of a non-controlling interest purchased is recorded in equity. All profits or losses arising as a result of the disposal of interests in subsidiaries to non-controlling shareholders, where control is maintained subsequent to the disposal, are also recorded in equity. 4 Refer to the accounting policy in note 8.4 with regards to equity-settled share-based payments. 5 Refer to the translation and disposal of foreign operations sections in accounting policy 1.3.2 Foreign currency. The devaluation of the rand, which is the presentation currency of the Group, against the functional currencies of the Group’s largest operations, contributed significantly to the increase in the carrying amounts of assets and liabilities reflected in the Statement of Financial Position which are translated into the Group’s presentation currency at closing rates at the end of the reporting period.

F-92 Notes to the Group financial statements for the year ended 31 December 2015

8 EQUITY STRUCTURE (continued) 8.3 Dividends Dividends declared to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s directors.

2015 2014 Cents 2015 Cents 2014 per share Rm per share Rm Dividends paid Final dividend paid in respect of the prior year 800 14,6982 665 12,3022 Interim dividend paid in respect of the current year 480 8,8082 445 8,2252 23,506 20,527 Dividends declared Approved after the reporting date and not recognised as a liability 8301 15,2192 800 14,694

1 Declared at the board meeting on 2 March 2016. 2 Excluding dividends on 10,400,061 (2014: 10,704,475) treasury shares.

8.4 Share-based payments Equity-settled share-based payments The schemes described below are accounted for as equity-settled share-based payments to employees. Equity- settled share-based payments are measured at fair value (excluding the effect of service or non-market-based vesting conditions) at the grant date. The fair value is measured using a stochastic model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations where applicable. The fair value determined at the grant date of the equity-settled share-based options or rights is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity, based on the Group’s estimate of the shares that will eventually vest. The expense is adjusted to reflect the actual number of options and share rights for which the related service and non-market-based vesting conditions are met.

Where employees exercise options or share rights in terms of the rules and regulations of the schemes, new shares are issued to participants as beneficial owners. The directors procure a listing of these shares on the JSE Limited, the securities exchange on which the Company’s shares are listed. In terms of the Share Option Scheme participants entitled to share options pay a consideration equal to the option price when the options are exercised. The nominal value of shares issued is credited to share capital and the difference between the nominal value and the option price is credited to share premium. Settlement of the performance share plan (PSP) awards are done through the acquisition of shares in the open market and the subsequent delivery to participants.

The MTN Group share options, share appreciation rights and share rights schemes and performance share plan The Group operates a number of equity-settled share-based payment schemes for the benefit of eligible employees, including executive directors, in accordance with the schemes’ rules. The schemes are designed to retain and recognise the contributions of executive directors and eligible employees and to provide additional incentives to contribute to the Group’s continued growth.

The performance share plan is the active scheme which superseded the share option scheme, the share appreciation rights and the share rights scheme. The superseded schemes will be wound up once all unvested and/or unexercised awards previously made have run their remaining course.

The vesting periods under the share rights scheme, share option scheme and share appreciation rights scheme are as follows: 20%, 20%, 30% and 30% on the anniversary of the second, third, fourth and fifth years, respectively, after the grant date. The strike price for these schemes is determined as the closing market price for the MTN Group Limited shares on the day prior to the date of allocation. Unexercised options and rights lapse 10 years from the date of grant and are forfeited if the employee leaves the Group before they vest.

The vesting period for the performance share plan is three years and the awards vest in full based on set performance targets.

F-93 Notes to the Group financial statements for the year ended 31 December 2015

8 EQUITY STRUCTURE (continued) 8.4 Share-based payments (continued) The total number of shares which may be allocated for the purposes of the schemes shall not exceed 5% of the total issued ordinary share capital of the Company, being 92,274,662 shares as approved by shareholders in 2001.

MTN Group share options No new options were granted in the current or prior year and no expense was recognised as the above options vested in prior periods. During the current year, no share options were exercised (2014: 63,830 share options exercised).

This share option scheme has been superseded by the introduction of the Group share appreciation rights schemes described below.

MTN Group Share Appreciation Rights Scheme and Share Rights Scheme (the rights schemes) The Share Appreciation Rights Scheme was implemented on 31 May 2006, and superseded the share option scheme.

On 26 August 2008, the board approved the Share Rights Scheme, which superseded the Share Appreciation Rights Scheme. Both the rights schemes operate under the same provisions with the exception that the share rights scheme was extended to allow participation by junior managers.

Share rights under the rights schemes are granted to eligible employees by the relevant employer subsidiary company. Exercised rights are equity-settled whereby the relevant subsidiary purchases the required MTN shares in the open market.

Details of the outstanding share appreciation rights are as follows:

Number Number Strike outstanding at Forfeited Exercised outstanding at price 31 December during during 31 December R 2014 2015 2015 2015 Offer date 31 May 2006 56.83 186,200 — (59,440) 126,760 21 November 2006 71.00 46,500 — (700) 45,800 22 June 2007 96.00 12,240 — — 12,240 19 March 2008 126.99 191,801 — (901) 190,900 Total 436,741 — (61,041) 375,700

Details of the outstanding share rights are as follows:

Number Number Strike outstanding at Forfeited Exercised outstanding at price 31 December during during 31 December R 2014 2015 2015 2015 Offer date 1 September 2008 118.64 197,706 (3,900) (56,416) 137,390 28 June 2010 107.49 701,430 (3,100) (295,690) 402,640 Total 899,136 (7,000) (352,106) 540,030

The share rights and share appreciation rights outstanding at the end of the year have a weighted average remaining contractual life of three years (2014: four years).

There were no new grants during the 2015 or 2014 financial year.

MTN performance share plan (PSP) During prior financial years the Group granted eligible employees share rights under the PSP, established in 2010. The rights were granted to employees on level 3, 4, 5 and 6. The PSP was established in order to attract,

F-94 Notes to the Group financial statements for the year ended 31 December 2015

8 EQUITY STRUCTURE (continued) 8.4 Share-based payments (continued) retain and reward selected employees who are able to contribute to the business of the employer companies and to stimulate their personal involvement thereby encouraging their continued service and encouraging them to advance the interests of the relevant employer company and the Group in general.

The share rights vest after three years from date of grant. The following performance conditions must be fulfilled to qualify for the percentage of the shares granted as stated in the table below:

Proportion of grant Employee Employee level 3 – 4 level 5 – 6 % % Vesting conditions for shares granted Total shareholder return 37.5 50.0 Adjusted free cash flow growth 37.5 50.0 Individual retention (guaranteed, subject to remaining on the PSP for the duration of the award fulfilment period) 25.0 —

For the total shareholder return vesting condition, vesting is based on a sliding scale that ranges from 25% vesting at the median to 100% vesting at the 75 percentile of the performance of a comparable group of companies listed on the JSE. For the adjusted free cash flow vesting condition, vesting is based on a sliding scale between 11% and 19% compound annual growth in the adjusted free cash flow, for all grants prior to 2014. The sliding scale has been revised by the board of directors to between 6% and 10% compound annual growth in the adjusted free cash flow, for all grants made in 2014 and thereafter. The individual return retention condition is guaranteed subject to the employee remaining employed by the Group for the duration of the vesting period.

Details of the outstanding equity-settled performance share plan rights are as follows:

Number Number outstanding at Exercised outstanding at 31 December during 31 December 2014 Offered Forfeited 2015 2015 Offer date 29 December 2011 1,145,581 — (304,414) (841,167) — 28 December 2012 1,556,933 — (278,450) — 1,278,483 20 December 2013 2,090,403 — (458,030) — 1,632,373 19 December 2014 2,291,800 — (487,162) — 1,804,638 Total 7,084,717 — (1,528,056) (841,167) 4,715,494

A valuation has been prepared using a stochastic model to determine the fair value of the performance share plan and the expense to be recognised for share rights granted during the prior year. No new grants were made during the year.

The range of inputs into the stochastic model used for rights granted during the prior year was as follows:

2014 Share price 221.41 Expected life 3 years Risk-free rate 6.48% to 6.85% Expected volatility 20.63% to 21.26% Dividend yield 4.66%

The risk-free rate was estimated using the implied yield on SA zero-coupon government bonds.

Volatility was estimated using the weekly closing share price and the dividend yield was estimated by using a one-year moving average of the dividend yield at valuation date.

2015 2014 Rm Rm Expense arising from equity-settled share-based payment transactions (note 2.4) 179 110

F-95 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION 9.1 Interest in subsidiaries and joint ventures

MTN Group

HOLDING COMPANIES MANAGEMENT SERVICES

Mobile Telephone Networks MTN International MTN Group Management Holdings Proprietary Limited Proprietary Limited Services Proprietary Limited South Africa South Africa South Africa 100% 100% 100% HOLDING COMPANY TELECOMMUNICATION/ISP TELECOMMUNICATIONS/ISP MTN International (Mauritius) Swazi MTN Limited 1 MTN Business Limited Mauritius Swaziland Solutions Botswana MTN Business MTN Business 100% Proprietary Limited Limited (Kenya) Kenya Limited 30% Botswana Kenya Kenya 80% 70% 70% HOLDING COMPANIES

Satalite Data MTN Business Deci Networks Mauritius Solutions Namibia Cell Place Econet Investments Mobile Proprietary Limited Proprietary Limited Proprietary Limited Cotel Holdings Wireless Citizens Proprietary Botswana Mauritius Namibia South Africa Limited Limited Limited1 Limited 100% 100% 100% Zambia Mauritius Botswana Mauritius 100% 82,8% 33,3% 100% Mobile Telephone MTN Business iTalk Cellular Networks Proprietary Solutions TELECOMMUNICATIONS/ISP Proprietary Limited Limited Proprietary Limited South Africa South Africa South Africa Mobile Telephone 100% 100% 100% Networks Cameroon MTN Network Afnet Limited Solutions Limited Côte d’Ivoire4 MTN Network Cameroon Cameroon Solutions Afrihost Proprietary MTN Media Holdings 70% 70% 58,83% Proprietary Limited Limited2 Proprietary Limited South Africa South Africa South Africa6 MTN Nigeria 100% 50,2% 100% Arobase MTN Côte d’Ivoire S.A. Communications Côte d’Ivoire4 Côte d’Ivoire4 Limited PROPERTY Nigeria 58,83% 58,83% 78,83% Aconcagua 11 Proprietary MTN Propco Limited Proprietary Limited South Africa South Africa XS Broadband MTN Uganda MTN (Zambia) Limited Limited Limited 100% 100% Nigeria Uganda Zambia 78,83% 96% 86% ELECTRONIC SERVICES Irancell Mascom Telecommunication Africa Internet Wireless Botswana Company Services Holding GmbH1 Berlin Proprietary Limited1 (PJSC)1 MTN Publicom Limited Uganda 33,3% Botswana Iran 53,1% 49% 96%

Visafone MTN Rwandacell MTN Congo S.A. Communications Limited Republic of Limited5 Rwanda the Congo Nigeria 80% 100% 78,83%

ELECTRONIC SERVICES

Electronic Funds MTN Mobile Money Limited Transfer Operations Zambia Nigeria Limited 86% 50%

STRUCTURED ENTITY 1 Joint venture. 2 Subsidiary acquired during 2014 (see note 9.4.2). Munyati Buffalo MTN (Mauritius) 3 Subsidiary incorporated during 2014. Zambia Limited Investment Limited3 4 Effective shareholding of 66,8% (see note 9.3). Zambia Mauritius 5 Subsidiary acquired during the year (see note 9.4) indirectly held through MTN Nigeria. 6 100% 100% Subsidiary incorporated during 2015.

There were no changes in the effective holding in any of the Group’s subsidiaries during the year unless otherwise indicated.

F-96 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.1 Interest in subsidiaries and joint ventures (continued)

MTN Group

HOLDING COMPANY

MTN (Dubai) Limited 100%

HOLDING COMPANIES PROCUREMENT

Investcom Investcom Global Trading Global Sourcing Telecommunications Easy Dial Consortium Company LLC Company LLC Guinea (Conakry) Holding S.A. International Limited Limited UAE UAE British Virgin Islands British Virgin Islands British Virgin Islands 100% 100% 99% 99% 99% Telecom Sourcing MTN Investments MTN SEA Shared Investcom Mobile Investcom Services FZ-LLC Limited Services Limited Investcom Mobile Communications Telecommunications Benin Limited Limited Afghanistan Limited UAE UAE Uganda British Virgin Islands British Virgin Islands British Virgin Islands 100% 100% 100% 99% 100% 100% MANAGEMENT SERVICES MTN NIC MTN (Netherlands) MTN (Netherlands) BV BV Co-Op UA Inteltec Offshore SAL Netherlands Netherlands Netherlands Lebanon 99,8%99,8 100% 100% 100% INTERNATIONAL BUSINESS Galactic Engineering Vernis Projects SA Associates SA Starcom Global Interserve Overseas Limited Limited Panama Panama British Virgin Islands British Virgin Islands 99% 78% 100% 89% ELECTRONIC SERVICES Fourteenth Avenue Investcom Global Investment Holding Servico SAL Limited Limited Lebanon International Digital Services Middle East Internet 1 1 British Virgin Islands UAE Middle East Limited (IME) Holding S.A.R.L UAE Luxemburg 99% 100% 99,97% 50% 50% MTN Nigeria Towers Investcom SPV B.V. Telecommunications Yemen Limited Netherlands British Virgin Islands

100% 100%

TELECOMMUNICATIONS/ISP

Lonestar MTN Afghanistan MTN South Sudan MTN Sudan Communications MTN Cyprus Limited Corporation LLC Limited Limited Company Limited Cyprus Afghanistan South Sudan Sudan Liberia 60% 100% 100% 100% 85%

Spacetel Guinea- MTN Syria (JSC) Scancom Limited Areeba Guinea S.A. Spacetel Benin SA Bissau S.A. Syria Ghana Guinea Benin Guinea-Bissau

97,7% 100% 75% 75% 75%

Easynet Search MTN ICT Services MTN Yemen Limited PLC Yemen Ghana Ethiopia

82,8% 99,6% 99,9%

F-97 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures Associates and joint ventures are accounted for using the equity method and are recognised initially at cost. The Group’s investment in associates and joint ventures includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group’s share of post- acquisition accumulated profits or losses of associated companies and joint ventures in the carrying amount of the investments, which are generally determined from their latest audited annual financial statements or management accounts and the annual profit attributable to the Group is recognised in profit or loss. The Group’s share of any post-acquisition movement in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

Where an associate or joint venture’s functional currency is the currency of a hyperinflationary economy, the results and financial position of the associate or joint venture are restated in order to calculate the Group’s share of net assets and profit or loss.

The carrying amount of the Group’s investments in associates and joint ventures is reduced to recognise any potential impairment in the value of individual investments. When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless the Group has an obligation, issued guarantees or made payments on behalf of the associate or joint venture.

Dilution gains or losses arising on investments in associates and joint ventures are recognised in profit or loss. If the ownership interests in an associate or joint venture is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss. Profits or losses resulting from upstream and downstream transactions between the Group and its associates and joint ventures are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the associates and joint ventures. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Adjustments have been made where necessary to bring the accounting policies of the associates and joint ventures in line with those of the Group.

2015 2014 Rm Rm Investment in associates 12,624 5,975 Investment in joint ventures 22,928 19,539 Total investment in associates and joint ventures 35,552 25,514 Share of results of associates after tax (493) (127) Share of results of joint ventures after tax 1,719 4,335 Total share of results of associates and joint ventures after tax 1,226 4,208 Share of results of associates after tax comprises: Share of results of associates after tax (493) (28) Amortisation of customer relationships – BICS — (146) (493) (174) Unwind of deferred tax on customer relationships – BICS — 47 (493) (127)

Investment in associates Significant judgement: Existence of significant influence The Group together with another shareholder, hold the shares in Nigeria Tower InterCo B.V., Uganda Tower InterCo B.V. and Ghana Tower InterCo B.V. The other shareholder has substantive rights that give it power over the relevant activities of these entities. However, the Group participates in the significant financial and operating decisions and consequently it has determined that it has significant influence over these entities, resulting in them being classified as associates of the Group.

F-98 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) Unless otherwise stated, the Group’s associates’ countries of incorporation are also their principal place of operation.

The Group has the following effective interest in associates:

Effective % interest in issued ordinary share capital Country of Associate Principal activity incorporation 2015 2014 Belgacom International Carrier Services SA Telecommunications Belgium 20 20 (BICS) Nigeria Tower InterCo B.V. Management of Netherlands 51 51 telecommunication infrastructure Uganda Tower InterCo B.V. Management of Netherlands 49 49 telecommunication infrastructure Ghana Tower InterCo B.V. Management of Netherlands 49 49 telecommunication infrastructure Number Portability Proprietary Limited Porting South Africa 20 20 Content Connect Africa Proprietary Limited Telecommunications South Africa 36 36

Belgacom International Uganda Ghana Nigeria Carrier Tower Tower Tower Services InterCo InterCo InterCo SA (BICS) B.V. B.V.2 B.V.1 Other Total Rm Rm Rm Rm Rm Rm 2014 Balance at beginning of the year 1,786 304 — — 5 2,095 Additions — 46 — 4,178 — 4,224 Other income (note 2.3) — — 31 — — 31 Share of results after tax including amortisation of customer relationships 112 (221) — (64) (1) (174) Dividend income (233) — — — — (233) Other equity movements — — (31) — — (31) Effect of movements in exchange rates (4) 34 — 34 (1) 63 Balance at end of the year 1,661 163 — 4,148 3 5,975 2015 Balance at beginning of the year 1,661 163 — 4,148 3 5,975 Additions — 217 1,342 4,962 — 6,521 Other income (note 2.3) — — 30 — — 30 Share of results after tax 216 (301) 136 (545) 1 (493) Dividend income (230) — — — — (230) Other equity movements — — (30) — — (30) Effect of movements in exchange rates 342 (31) (1,478) 2,017 1 851 Balance at end of the year 1,989 48 — 10,582 5 12,624

1 The Group sold its mobile network towers in MTN Nigeria Communications Limited to INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V. The tower sales resulted in IHS obtaining a 49% interest in Nigeria Tower InterCo B.V. and the Group obtaining an equity interest of US$775 million (note 2.3). 2 The Group accounted for the conversion of a portion of its loan to Ghana Tower InterCo B.V. into equity for an amount of R1.3 billion.

F-99 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) Summarised financial information of associates Set out below is the summarised financial information of each associate that is material to the Group. The summarised financial information is adjusted to reflect adjustments made by the Group when applying the equity method, including fair value adjustments at acquisition and modifications for differences in accounting policy.

Belgacom International Carrier Services SA Uganda Tower (BICS) InterCo B.V. 2015 2014 2015 2014 Rm Rm Rm Rm Summarised statement of financial position Total assets 14,609 12,652 3,083 2,597 Non-current assets 2,575 2,441 2,609 2,308 Current assets 12,034 10,211 474 289 Total liabilities 10,982 9,195 2,986 2,264 Non-current liabilities 170 139 2,395 1,767 Current liabilities 10,812 9,056 591 497 Net assets 3,627 3,457 97 333 % ownership interest held 20 20 49 49 Interest in associate excluding goodwill 725 691 48 163 Goodwill 1,264 970 — — Balance at end of the year 1,989 1,661 48 163 Summarised income statement Revenue 22,547 22,784 716 608 EBITDA 2,241 1,944 196 109 Profit/(loss) before tax 1,827 908 (614) (450) Income tax expense (747) (348) — — Profit/(loss) after tax 1,080 560 (614) (450) % ownership interest held 20 20 49 49 Share of results of associates after tax 216 112 (301) (221)

F-100 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued)

Nigeria Tower Ghana Tower InterCo B.V. InterCo B.V. 2015 2014 2015 2014 Rm Rm Rm Rm Summarised statement of financial position Total assets 23,353 10,152 3,124 2,248 Non-current assets 23,353 9,627 1,237 1,047 Current assets — 525 1,887 1,201 Total liabilities 2,604 2,019 3,310 4,817 Non-current liabilities 2,480 2,005 2,150 4,124 Current liabilities 124 14 1,160 693

Net assets 20,749 8,133 (186) (2,569) % ownership interest held 51 51 49 49 Interest in associate 10,582 4,148 (91) (1,259) Accumulated unrecognised share of losses from associate — — — 9821 Accumulated unrecognised share of other comprehensive income from associate — — 911 2771 Balance at end of the year 10,582 4,148 — — Summarised income statement Revenue — — 1,203 1,053 EBITDA (1,069) (125) 570 445 (Loss)/profit before tax (1,069) (125) 303 (1,227) Income tax expense — — (25) 33 (Loss)/profit after tax (1,069) ( 125) 278 (1,194) % ownership interest held 51 51 49 49 Share of results after tax (545) (64) 136 (585)2 Unrecognised share of losses from associate — — — 585 Share of results of associates after tax (545) (64) 136 —

1 Translated at rates of exchange ruling at the reporting date. 2 Includes amortisation of customer relationships.

There are no significant contingent liabilities relating to the Group’s interests in these associates at the end of the current or prior year.

Classification of significant joint arrangements Joint arrangements are all arrangements where two or more parties contractually agree to share control of the arrangement, which only exists when decisions about the relevant activities require unanimous consent of the parties sharing control. Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The Group exercises judgement in determining the classification of its joint arrangements. The Group’s joint arrangements provide the Group and the other parties to the agreements with rights to the net assets of the entities. The Group has joint control over these arrangements as, under the contractual arrangements, unanimous consent is required for all decisions made with regards to the relevant activities. Judgement has been applied in determining that the following entities should be classified as joint ventures of the Group: • Irancell Telecommunication Company Services (PJSC) (49%). • Mascom Wireless Botswana Proprietary Limited (Mascom) (53.11%). • Middle East Internet Holding S.A.R.L (MEIH) (50%).

F-101 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) • Africa Internet Holding GmbH (AIH) (33.3%). • International Digital Services Middle East Limited (iME) (50%).

Investment in joint ventures The Group has the following effective interests in joint ventures:

Effective % interest in issued ordinary share capital Country of Joint venture Principal activity incorporation 2015 2014 Irancell Telecommunication Company Services Network operator Iran 49 49 (PJSC) Mascom Wireless Botswana Proprietary Network operator Botswana 53.1 53.1 Limited Swazi MTN Limited Network operator Swaziland 30 30 Deci Investments Proprietary Limited Holding company Botswana 33.3 33.3 Middle East Internet Holding S.A.R.L (MEIH)1 Telecommunications Luxembourg 50 50 Africa Internet Holding GmbH (AIH)2 Telecommunications Berlin 33.3 33.3 International Digital Services Middle East Telecommunications Dubai 50 — Limited (iME)3 1 The entity operates in various countries across the Middle East. 2 The entity operates in various countries across Africa. 3 The entity operates in Iran.

The joint ventures listed above are unlisted and their countries of incorporation are also their principal place of operation unless otherwise indicated.

The Iranian economy was previously classified as hyperinflationary. Iran ceased being regarded as a hyperinflationary economy during 2015, resulting in hyperinflation accounting relating to Irancell Telecommunication Company Services (PJSC) not being applied from 1 July 2015 onward. The amounts expressed in measuring unit current at 30 June 2015 are treated as the basis for the carrying amounts of Irancell going forward.

General Inflation Base price rate year index (%) 31 December 2013 2011 187 19.69 31 December 2014 2011 224 20.00 30 June 2015 2011 247 14.00

The cumulative inflation rate over three years as at 30 June 2015 was 63.74% (31 December 2014: 102.80%).

The average adjustment factor used for 2015 was 1.09 (2014: 1.11).

All joint ventures have a year end consistent with that of the Company with the exception of Irancell Telecommunication Company Services (PJSC) that has a year end of 21 December, in line with statutory requirements in Iran.

F-102 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) Inter- national Irancell Middle Digital Telecom- Mascom Africa East Services munication Wireless Internet Internet Middle Company Botswana Holding Holding East Services Proprietary GmbH S.A.R.L Limited (PJSC) Limited (AIH) (MEIH) (iME) Other Total Rm Rm Rm Rm Rm Rm Rm 2014 Balance at beginning of the year 8,830 1,396 — — — 322 10,548 Additions — — 2,453 1,773 — — 4,226 Share of results after tax 4,113 250 (94) (30) — 96 4,335 Dividend income (2,400) (243) — — — (71) (2,714) Other equity movements — (87) — — — — (87) Other comprehensive income and effect of movements in exchange rates including the effect of hyperinflation1 3,433 13 (106) (105) — (4) 3,231 Balance at end of the year 13,976 1,329 2,253 1,638 — 343 19,539 2015 Balance at beginning of the year 13,976 1,329 2,253 1,638 — 343 19,539 Share of results after tax 1,903 345 (418) (129) (78) 96 1,719 Dividend income (2,513) (231) — — — (116) (2,860) Other comprehensive income and effect of movements in exchange rates including the effect of hyperinflation1 3,908 (92) 432 (364) 656 (10) 4,530 Balance at end of the year 17,274 1,351 2,267 1,145 578 313 22,928

1 Refer to note 1.3.3 for the Group’s accounting policy with regard to those entities whose functional currency is the currency of a hyper- inflationary economy.

F-103 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) Summarised financial information of joint ventures Set out below is the summarised financial information of each joint venture that is material to the Group. The summarised financial information is adjusted to reflect adjustments made by the Group when applying the equity method including fair value adjustments at acquisition and modifications for differences in accounting policy.

Irancell Telecommunication Mascom Wireless Company Services Africa Internet Botswana Proprietary (PJSC) Holding GmbH (AIH)1 Limited 2015 2014 2015 2014 2015 2014 Rm Rm Rm Rm Rm Rm Summarised statement of financial position ASSETS Non-current assets 52,921 35,184 1,856 44 1,393 1,050 Property, plant and equipment 44,096 28,221 120 38 1,172 903 Intangible assets 8,706 6,955 5 5 219 128 Loans and other non-current receivables 12 8 1,731 1 1 1 Investment in associate 107 — — — — — Deferred tax assets — ——1 18 Current assets 28,946 25,925 1,405 3,586 349 679 Inventories 106 141 142 109 8 10 Trade and other receivables 8,778 11,856 255 3,116 154 108 Restricted cash 206 1,345 — — — — Cash and cash equivalents 19,856 12,583 616 329 187 561 Other current assets — — 392 32 — —

Total assets 81,867 61,109 3,261 3,630 1,742 1,729 LIABILITIES Non-current liabilities 9,757 4,193 16 13 189 301 Borrowings 2,117 — 14 — — 121 Deferred tax liabilities 7,304 3,951 1 — 120 109 Provisions 333 242 — — — — Other non-current liabilities 3 — 1 13 69 71 Current liabilities 37,057 28,575 808 336 654 381 Trade and other payables 26,044 20,034 440 223 484 337 Unearned income 1,760 1,507 6 — — — Provisions 291 183 29 16 — — Taxation liabilities 1,903 1,714 333 74 33 4 Borrowings 7,059 5,137 — 15 137 40 Other current liabilities — — — 8 — —

Total liabilities 46,814 32,768 824 349 843 682 Net assets 35,053 28,341 2,437 3,281 899 1,047 Non-controlling interests – deficit in net assets — — 450 268 — — Total net assets 35,053 28,341 2,887 3,549 899 1,047 % ownership interest held 49 49 33.3 33.3 53.1 53.1 Interest in joint venture excluding goodwill 17,176 13,887 961 1,183 477 556 Adjustment up to 31 December — — (101) (42) — — Goodwill 98 89 1,407 1,112 874 773 Balance at end of the year 17,274 13,976 2,267 2,253 1,351 1,329

1 Summarised financial information presented with regard to the Group’s interest in AIH is as per the latest available management accounts at 30 September. Preparation of financial statements at 31 December by AIH was impracticable. Appropriate adjustments have been made to the Group’s interest and share of results for the effects of significant transactions and events that occurred for the three months up to the reporting date.

F-104 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) Irancell Telecommunication Mascom Wireless Company Services Africa Internet Botswana Proprietary (PJSC) Holding GmbH (AIH)1 Limited 2015 2014 2015 2014 2015 2014 Rm Rm Rm Rm Rm Rm Summarised income statement Revenue 28,463 27,113 2,150 383 1,779 1,578 Other income — 119 — — — — Operating expenses (17,338) (15,480) (4,198) (888) (734) (763) EBITDA 11,125 11,752 (2,048) (505) 1,045 815 Depreciation of property, plant and equipment (4,707) (4,300) — — (138) (131) Amortisation of intangible assets (1,174) (955) — — (97) (90) Operating profit/(loss) 5,244 6,497 (2,048) (505) 810 594 Finance income 3,003 2,459 — 224 15 15 Finance costs (1,601) (692) — (1) (11) (13) Net monetary gain 797 1,892 — — — — Profit/(loss) before tax 7,443 10,156 (2,048) (282) 814 596 Income tax expense (3,560) (1,763) — — (165) (125) Profit/(loss) after tax 3,883 8,393 (2,048) (282) 649 471 Non-controlling interests — — (794) — — — Profit/(loss) attributable to equity holders of the Company 3,883 8,393 (1,254) (282) 649 471 % ownership interest held 49 49 33.3 33.3 53.1 53.1 Share of results of joint ventures after tax 1,903 4,113 (418) (94) 345 250

A receivable of R8,158 million (2014: R5,640 million) from Irancell Telecommunication Company Services (PJSC) has not been received by the Group as at 31 December 2015 but is still considered recoverable, as the financial sanctions in Iran have been lifted.

During 2014, the Group acquired a 50% interest in Middle East Internet Holding S.A.R.L (MEIH), a joint venture, for EUR120 million consisting of a EUR40 million cash payment and EUR80 million contingent consideration. The net fair values of the joint venture’s assets and liabilities were provisional at the end of 2014. The net fair values of the assets and liabilities were finalised during 2015 and no material changes to the previously reported results were required. MEIH is unlisted and has a year end consistent with that of the Group.

During the year, the Group formed iME by moving EUR40 million, being the Iranian business interests previously held in MEIH to the newly formed entity. There was no resulting change in the total investment held prior to and subsequent to the restructure.

During 2014, the Group acquired a 33.3% interest in Africa Internet Holding GmbH (AIH) for EUR168 million. Millicom International Cellular SA (Millicom) initially also agreed to acquire 33.3% of the shares in AIH, but held a back-out right in terms of which it was entitled to cancel a portion of its take-up of these shares. Millicom exercised this back-out right on 8 May 2015. MTN and Rocket Internet SE, the two other shareholders in AIH, held an additional investment right which entitled them to take up these shares released under Millicom’s back- out right. MTN exercised its right to take up half of these shares on 10 July 2015. Subsequently, other agreements subject to conditions precedent were entered into between the shareholders resulting in the implementation of the back-out right and the additional investment rights not yet being effective at 31 December 2015. Consequently, MTN’s interest in AIH at year end remains 33.3%. 1 Summarised financial information presented with regard to the Group’s interest in AIH is as per the latest available management accounts at 30 September. Preparation of financial statements at 31 December by AIH was impracticable. Appropriate adjustments have been made to the Group’s interest and share of results for the effects of significant transactions and events that occurred for the three months up to the reporting date.

F-105 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) Events after reporting period The Group committed a further EUR135 million investment in AIH, the ultimate parent company of Jumia. The investment forms part of a wider capital funding to AIH. The funds will enable it to leverage the significant growth of Jumia and to capitalise on the significant opportunities in Africa. This investment will increase MTN Group’s interest in the joint venture from 33.3% to 41.4%. The transaction is subject to customary closing procedures.

Summarised financial information was not presented with regards to the Group’s interest in MEIH in 2014, as the entity was in its start-up phase and preparation of financial statements at the Group reporting date was impracticable. Appropriate adjustments were made to the Group’s interest and share of results for the effects of significant transactions and events that occurred up to the reporting date.

International Middle East Digital Services Internet Middle East Holdings S.A.R.L Limited (iME)1 2015 2015 Rm Rm Summarised statement of financial position ASSETS Non-current assets 679 457 Current assets 489 39 Total assets 1,168 496 LIABILITIES Current liabilities 90 18 Total liabilities 90 18 Net assets 1,078 478 Non-controlling interest – deficit in net assets 16 — Total net assets 1,094 478 % ownership interest held 50 50 Interest in joint venture excluding goodwill 547 239 Adjustment up to 31 December2 (39) (20) Goodwill 637 359 Balance at end of the year 1,145 578 Summarised income statement Revenue 126 38 Operating expenses (383) (194) EBITDA and loss after tax (257) (156) % ownership interest held 50 50 Share of results after tax (129) (78)

1 No comparative information disclosed as IME was incorporated during the current year. 2 Summarised financial information presented with regard to the Group’s interest in MEIH and iME is as per the latest available management accounts at 30 September. Preparation of the financial statements at 31 December by MEIH and iME was impracticable. Appropriate adjustments have been made to the Group’s interest and share of results for the effects of significant transactions and events that occurred for the three months up to the reporting date .

F-106 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.2 Investment in associates and joint ventures (continued) Commercial commitments Irancell Telecommunication Company Services (PJSC) The investment in Irancell is subject to a number of sovereign, regulatory and commercial risks, which could result in the Group failing to realise full market value of its investment should it be required to dispose of any portion thereof. In this regard, 21% of Irancell is required to be offered to members of the Iranian public within approximately three years from the date of the licence. Such offering could have a proportional dilutory effect on the Company’s 49% shareholding, effectively reducing its shareholding by 10.3% to 38.7%. Local management together with the shareholders continue to engage the regulator on this matter.

2015 2014 Rm Rm Capital commitments Share of capital commitments of joint ventures for the acquisition of property, plant and equipment and software – Contracted 3,077 3,153 – Authorised but not contracted 1,046 1,064 4,123 4,217 Operating lease commitments The Group’s share of future aggregate minimum lease payments under non-cancellable operating lease arrangements are as follows: Not later than one year 24 16 24 16

Contingent liabilities relating to joint ventures There are no significant contingent liabilities relating to the Group’s interests in its joint ventures.

Licences Licences awarded to the joint ventures are set out below:

Granted/ Licence agreements Type renewed Term Irancell Telecommunication Company 2G 07/09/2006 15 years Services (PJSC) Wimax1 28/02/2009 6 years 3G 17/08/2014 7 years LTE 23/08/2015 6 years Mascom Wireless Botswana 900MHz 1,800MHz 13/06/2013 15 years 2,100MHz Swazi MTN Limited 900MHz 28/11/2008 10 years 1,800MHz 2,100MHz 26/09/2011 7 years 1 Renewal application lodged.

Events after reporting period Investment in TravelLab Global AB (Travelstart) On 22 January 2016, MTN Group made an investment amounting to US$30 million in Travelstart. Travelstart is an online travel agency focused on emerging markets. MTN Group jointly controls Travelstart, indirectly through a fund managed by its venture capital fund manager Amadeus Capital Partners.

F-107 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.3 Changes in shareholding Changes in shareholding of subsidiaries are transactions that result in increases or reductions in the interest held in a subsidiary of the Group, but which do not result in a loss of control and are accounted for as transactions with non-controlling shareholders as disclosed in note 1.3.1.

9.3.1 Current year changes in shareholding 9.3.1.1 MTN Côte d’Ivoire SA New licence requirements in Ivory Coast require that 15% of the share capital of MTN Côte d’Ivoire SA be held by an Ivorian citizen. On 21 May 2015, MTN Mauritius disposed of 8% of its interest in MTN Côte d’Ivoire SA to Teyliom Global Capital Limited (TGCL), a fellow subsidiary of an entity which already holds a 7% interest in MTN Côte d’Ivoire SA. MTN Dubai advanced an interest-bearing loan to TGCL in order to effect the purchase. The loan is repayable in 20 years’ time, and is secured by the 8% holding in MTN Côte d’Ivoire SA. The transaction was subject to certain conditions subsequent at agreement signature date, consequently although the shares were legally sold at that date, the transaction was only effective on 15 December 2015 for accounting purposes. At a Group level, it is viewed that an option was granted to TGCL, consequently neither the loan to TGCL nor the disposal of the 8% interest is recognised. As a result, the legal ownership percentage and the accounting ownership percentage differs by 8% at 31 December 2015. The option resulted in the recognition of an IFRS 2 charge at a Group level. This charge was capitalised as part of the licence cost as it is considered to be a cost which is directly attributed to the cost of acquiring this licence.

9.3.2 Prior year changes in shareholding The were no transactions with non-controlling shareholders or changes in shareholding of any of the Group’s subsidiaries during 2014.

9.4 Business combinations 9.4.1 Current year business combinations 9.4.1.1 Visafone Communications Limited On 31 December 2015, MTN Nigeria acquired 100% of the share capital of Visafone Communications Limited (Visafone) for R3.432 million. As a result, the Group obtained control of Visafone. Control over Visafone will enable the Group to improve the quality of broadband services for its subscribers. The acquisition seeks to leverage resources for service enhancement and reflects the Group’s concerted efforts to deepen the growth and roll-out of broadband services across Nigeria.

Visafone contributed no revenues and net profit to the Group for the period ended 31 December 2015 as the business was acquired on the last day of the year. The consolidated pro forma revenue and profit for the year ended 31 December 2015 as though the acquisition had occurred on 1 January 2015 cannot be disclosed as the audited financial statements of Visafone for the year ended 31 December 2015 are not yet available.

The following table summarises the consideration transferred by the Group, the fair value of assets acquired and liabilities assumed at the acquisition date:

2015 Rm Consideration transferred Cash outflow on acquisition 3,040 Retention amount 392 Cash outflow 3,432

F-108 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.4 Business combinations (continued) 9.4.1 Current year business combinations (continued) Retention amount The retention amount represents an amount deposited into an escrow account by the Group as agreed by the parties to the acquisition, to be utilised for the satisfaction of outstanding liabilities, the shareholder debt, warranty claims and termination payments arising from the termination of supplier contracts in respect of the acquisition. The Group did not assume any liabilities, other than deferred tax, from the acquisition of Visafone. The retention amount is disclosed as restricted cash as at 31 December 2015.

2015 Rm Assets acquired Intangible assets 3,752 Liabilities assumed Deferred tax liabilities (1,062) Total identifiable net assets 2,690 Total consideration paid 3,432 Net identifiable assets acquired (2,690) Goodwill 742

The composition of goodwill will be analysed on finalisation of the business combination accounting.

Measurement of fair values The valuation techniques applied in measuring the fair value of material assets acquired are as follows:

Asset acquired Valuation technique Intangible assets Market approach or comparable transaction method was used which estimates the fair value of a licence by referring to the purchase prices paid for similar licences across different markets.

The fair values of the acquired identifiable assets have been determined on a provisional basis, pending receipt of the final valuations for the assets.

9.4.2 Prior year business combinations 9.4.2.1 Afrihost Proprietary Limited In November 2014, the Group acquired 50% plus one share of the share capital of Afrihost Proprietary Limited (Afrihost) for R408 million. As a result, the Group obtained control of Afrihost. Afrihost was acquired to enable the Group to drive their accelerated SME strategy and provide scale for the Group’s virtual market, content and cloud offering.

The Group elected to measure the non-controlling interest in the acquiree at the proportionate share of its interest in the acquiree’s identifiable net assets.

F-109 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.4 Business combinations (continued) 9.4.2 Prior year business combinations (continued) The fair values of the identifiable assets and liabilities as at the date of acquisition were:

2014 Rm Consideration transferred Cash 408 Cash in subsidiary acquired (20) Cash outflow on acquisition 388 Assets acquired 383 Property, plant and equipment 44 Intangible assets 307 Deferred tax assets 2 Inventories 1 Trade and other receivables 9 Cash and cash equivalents 20 Liabilities assumed 204 Deferred tax liabilities 86 Other non-current liabilities 7 Trade and other payables 109 Taxation payable 2

Total identifiable net assets 179 Total consideration paid 408 Non-controlling interest in Afrihost Proprietary Limited 90 Net identifiable assets acquired (179) Goodwill 319

The net assets recognised in the 31 December 2014 financial statements were based on a provisional assessment. The amounts were finalised during 2015, and no material changes to the previously reported results were required.

9.4.2.2 Nashua Mobile subscriber base During November 2014, the Group acquired its Nashua Mobile subscriber base from Nashua Mobile Proprietary Limited for R1,246 million. The subscriber base was acquired to enable the Group to consolidate the Mobile Telephone Networks Proprietary Limited postpaid subscriber base in one entity and own the relationship with the subscribers.

F-110 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.4 Business combinations (continued) 9.4.2 Prior year business combinations (continued) The fair values of the identifiable assets and liabilities as at the date of acquisition were:

2014 Rm Consideration transferred Cash outflow on acquisition 1,246 Assets acquired 926 Intangible assets 732 Loans and other non-current receivables 194 Liabilities assumed 205 Deferred tax liabilities 205

Total identifiable net assets 721 Total consideration paid 1,246 Net identifiable assets (721) Goodwill 525

The net assets recognised in the 31 December 2014 financial statements were based on a provisional assessment. The amounts were finalised during 2015, and no material changes to the previously reported results were required.

9.4.3 Business combinations subsequent to reporting period 9.4.3.1 Altech Autopage subscriber base On 11 February 2016, the Group acquired its Altech Autopage subscriber base from Altron TMT Proprietary Limited for R670 million, including contingent consideration of R30 million payable to MTN. The acquisition of the subscriber base will enable the Group to service and interact directly with its customers and will reduce the related commission expense.

The fair values of the identifiable assets and liabilities as at the date of acquisition were:

Rm Consideration transferred Cash 670 Contingent consideration (30) Total consideration transferred 640

Contingent consideration The contingent consideration arrangement requires an adjustment to the purchase price based on the size and financial quality of the base as at the effective date.

F-111 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.4 Business combinations (continued) 9.4.3 Business combinations subsequent to reporting period (continued) Recognised amounts of identifiable assets acquired and liabilities assumed:

Assets acquired 595 Intangible assets 425 Loans and other non-current receivables 170 Liabilities assumed 167 Deferred tax liabilities 167 Total identifiable net assets 428 Total consideration 640 Net identifiable assets (428) Goodwill 212

The goodwill of R212 million comprises the fair value of expected synergies arising from acquisition.

Measurement of fair value The valuation techniques applied in measuring the fair value of material assets acquired are as follows:

Asset acquired Valuation technique Intangible assets Multi-period excess earnings method Receivables Present value of expected cash flows

Given the limited period between the acquisition date and the authorisation date of the financial statements, management has not yet completed the purchase price allocation and the fair values of the acquired identifiable assets as well as the contingent consideration have been determined on a provisional basis, pending receipt of the final valuations for the assets.

9.5 Joint operations In respect of its interest in joint operations, the Group recognises in its financial statements its share of the assets held jointly, classified according to the nature of the assets, any liabilities that it has incurred, its share of any liabilities incurred jointly with the other joint operators in relation to the joint operation, any income from the sale or use of its share of the output of the joint operation, together with its share of any expenses incurred by the joint operation and any expenses that it has incurred in respect of its interest in the joint operation.

When the Group acquires an interest in a joint operation in which the activity of the joint operation constitutes a business, identifiable assets acquired and liabilities assumed are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised in profit or loss. Goodwill is measured as the excess of the sum of the consideration transferred over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed.

When the Group increases its interest in a joint operation in which the activity of the joint operation constitutes a business, by acquiring an additional interest in the joint operation, the Group’s previously held interests in the joint operation are not remeasured if the joint operator retains joint control.

The Group has entered into agreements with several other companies to construct high capacity fibre-optic submarine cable systems.

F-112 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.5 Joint operations (continued) The Group has the following interests in jointly controlled operations:

Ownership interest held 2015 2014 %% Joint operation Europe India Gateway Submarine Cable System 7.12 7.09 West Africa Cable System 11.06 11.45 Eassy Cable System 16.26 16.26 Africa Coast to Europe Cable System 8.67 —

During the year, the Group entered into a new agreement to construct a high capacity fibre-optic submarine cable system, named Africa Coast to Europe Cable System. The cost to the Group amounts to US$51.6 million.

The following table presents, on a condensed basis, the Group’s share of assets and liabilities, revenue and expenses of the jointly controlled operations which are included in the consolidated statement of financial position and income statement:

2015 2014 Rm Rm Revenue 35 21 Expenses (299) (212) Total assets 3,133 1,977 Total liabilities (excluding unearned income) (129) (124) Unearned income (161) (132)

9.6 Interest in subsidiaries The subsidiaries in which MTN Group Limited has direct and indirect interests are set out in note 9.1. A summary of the Group’s subsidiaries with material non-controlling interests is presented below:

Non-controlling interests Principal place of 2015 2014 business Rm Rm Subsidiary MTN Nigeria Communications Limited Nigeria 2,365 2,306 MTN Côte d’Ivoire S.A. Côte d’Ivoire 1,284 971 Spacetel Benin SA Benin 392 346 Mobile Telephone Networks Cameroon Limited Cameroon 469 450 Other 959 852 5,469 4,925

F-113 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.6 Interest in subsidiaries (continued) Set out on the next page is the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. Unless otherwise stated, the Group’s subsidiaries’ countries of incorporation are also their principal place of operation. The summarised financial information presented is before intercompany eliminations.

MTN Nigeria MTN Communications Limited Côte d’Ivoire S.A. 2015 2014 2015 2014 % ownership interest held by non-controlling interests 21.17 21.17 33.172 33.172 Rm Rm Rm Rm Summarised statement of financial position Non-current assets1 47,026 35,423 8,420 4,818 Current assets 30,011 25,267 2,126 1,676 Total assets 77,037 60,690 10,546 6,494 Non-current liabilities 31,871 27,541 871 302 Current liabilities 33,993 22,256 5,804 3,264 Total liabilities 65,864 49,797 6,675 3,566 Summarised income statement Revenue 51,942 53,995 6,424 6,418 EBITDA 18,180 31,620 2,195 2,475 Profit before tax 7,221 19,184 1,283 1,704 Income tax expense (4,264) (5,360) (313) (587) Profit after tax 2,957 13,824 970 1,117 Profit attributable to non-controlling interests 626 2,927 322 371 Dividends paid to non-controlling interests 1,328 3,366 373 341 Summarised statement of cash flows Net cash generated from operating activities 13,065 11,226 486 1,195 Net cash used in investing activities (8,929) (7,078) (2,247) (1,158) Net cash (used in)/from financing activities (4,188) (49) 1,865 (286) Net (decrease)/increase in cash and cash equivalents (52) 4,099 104 (249) Net cash and cash equivalents at beginning of the year 13,032 9,513 437 707 Exchange gains/(loss) on cash and cash equivalents 2,597 (580) (111) (21) Net cash and cash equivalents at end of the year 15,577 13,032 430 437

1 Excludes goodwill on consolidation of subsidiaries. 2 The non-controlling interests hold 41.17% of the issued ordinary share capital of MTN Côte d’Ivoire S.A. However, the effective ownership for accounting purposes is 33.17% due to outstanding funding provided by the Group to the non-controlling interests to acquire ordinary share capital in MTN Côte d’Ivoire (see note 9.3.1.1).

F-114 Notes to the Group financial statements for the year ended 31 December 2015

9 GROUP COMPOSITION (continued) 9.6 Interest in subsidiaries (continued) Mobile Telephone Networks Cameroon Spacetel Benin SA Limited 2015 2014 2015 2014 % ownership interest held by non-controlling interests 25 25 201 201 Rm Rm Rm Rm Summarised statement of financial position Non-current assets2 2,470 2,204 6,228 2,629 Current assets 2,388 1,424 1,782 4,058 Total assets 4,858 3,628 8,010 6,687 Non-current liabilities 1,039 683 983 200 Current liabilities 2,250 1,562 4,682 4,235 Total liabilities 3,289 2,245 5,665 4,435 Summarised income statement Revenue 3,633 3,316 5,806 6,194 EBITDA 1,280 1,380 2,101 2,651 Profit before tax 791 878 1,212 1,905 Income tax expense 1 1 (635) (852) Profit after tax 792 879 577 1,053 Profit attributable to non-controlling interests 198 220 115 211 Dividends paid to non-controlling interests 263 173 175 365 Summarised statement of cash flows Net cash generated from operating activities 21 961 276 1,105 Net cash used in investing activities (121) (264) (3,165) (608) Net cash (used in)/from financing activities (30) (204) 537 (272) Net (decrease)/increase in cash and cash equivalents (130) 493 (2,352) 225 Net cash and cash equivalents at beginning of the year 927 467 2,971 2,857 Exchange gains/(losses) on cash and cash equivalents 173 (33) 25 (111) Net cash and cash equivalents at end of the year 970 927 644 2,971

1 The non-controlling interests hold 30% of the issued ordinary share capital of Mobile Telephone Networks Cameroon. However, the effective ownership for accounting purposes is 20% due to outstanding funding provided by the Group to the non-controlling interests to acquire ordinary share capital in Mobile Telephone Networks Cameroon. 2 Excludes goodwill on consolidation of subsidiaries.

F-115 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES 10.1 Related party transactions Related party transactions constitute the transfer of resources, services or obligations between the Group and a party related to the Group, regardless of whether a price is charged. For the purposes of defining related party transactions with key management, key management has been defined as directors and the Group’s executive committee and includes close members of their families and entities controlled or jointly controlled by these individuals.

2015 2014 Rm Rm Key management compensation Salaries and other short-term employee benefits 97 77 Post-employment benefits 8 7 Other benefits 26 8 Bonuses 2 62 Compensation for loss of office 54 — Total 187 154

Details of directors’ remuneration are disclosed in note 10.2 of the financial statements.

Subsidiaries Details of investments in subsidiaries are disclosed in note 9.1 of the financial statements.

Changes in shareholding There were no transactions with non-controlling shareholders or changes in shareholding in any of the Group’s subsidiaries during the current and prior years (see note 9.3).

Joint ventures Details of the Group’s investments in and share of results and dividend income from its joint ventures are disclosed in note 9.2 of the financial statements.

Details of other transactions and balances with joint ventures are set out below:

Net balance receivable/ Net income for the year (payable) 2015 2014 2015 2014 Rm Rm Rm Rm Swazi MTN Limited 50 6 101 36 Mascom Wireless Botswana Proprietary Limited 1 2 8 — Irancell Telecommunication Company Services (PJSC) 713 212 17,988 11,070 Middle East Internet Holding S.A.R.L (MEIH) — — (672) (1,115) African Internet Holding GmbH (AIH) — — (100) (1,592) International Digital Services Middle East Holding GmbH (iME) — (334)

Associates Details of the Group’s investments in and share of results and dividend income from its associates are disclosed in note 9.2 of the financial statements.

F-116 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.1 Related party transactions (continued) Details of other transactions and balances with associates are set out below:

Net income for the year Net balance receivable 2015 2014 2015 2014 Rm Rm Rm Rm Belgacom International Carrier Services SA 331 386 112 141 Ghana Tower InterCo B.V. 177 159 1,112 2,025 Uganda Tower InterCo B.V. 50 44 1,162 889 Nigeria Tower InterCo B.V. 166 — 2,900 1,039

Transactions between members of the Group Scancom Limited (MTN Ghana) entered into operating lease agreements with Ghana Tower InterCo B.V. The operating lease commitments amount to R8,353 million at 31 December 2015 (2014: R2,762 million). The rental amounts escalate every year by inflation and the initial term is 10 years, followed by four times five-year renewal periods.

MTN Uganda Limited entered into operating lease agreements with Uganda Tower InterCo B.V. The operating lease commitments amount to R3,109 million (2014: R2,364 million) at 31 December 2015. The rental amounts escalate every year by inflation and the initial term is 10 years, followed by four times five-year renewal periods.

MTN Nigeria Communications Limited entered into operating lease agreements with INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V. The operating lease commitments amounted to R42,616 million (2014: R17,843 million) at 31 December 2015. The initial term is 10 years, followed by four times five-year renewal periods.

Shareholders The principal shareholders of the Company are disclosed in Annexure 1, which is unaudited.

10.2 Emoluments, equity compensation and dealings in ordinary shares Directors’ emoluments and related payments

Post- Compensation Date employment Other for loss Share 2015 appointed Salaries benefits benefits* of office Sub-total gains** Total R000 R000 R000 R000± R000 R000 R000 Executive directors RS Dabengwa^ 1/10/2001 8,426 1,080 2,882 23,664 36,052 4,529 40,581 BD Goschen 22/07/2013 7,567 970 292 — 8,829 427 9,256 PF Nhleko^^ 9/11/2015 5,000 — — — 5,000 — 5,000 Total 20,993 2,050 3,174 23,664 49,881 4,956 54,837

* Includes medical aid and unemployment insurance fund. ** Pre-tax gains on share-based payments. ^ Resigned 9/11/2015. ^^ Fees paid to Captrust Investments Proprietary Limited. ± Compensation for loss of office comprises notice pay and a restraint of trade.

F-117 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.2 Emoluments, equity compensation and dealings in ordinary shares (continued) Date Special Strategy Ad hoc appointed Retainer# Attendance# board session work Total R000 R000 R000 R000 R000 R000 Non-executive directors PF Nhleko^ 28/05/2013 1,976 1,021 60 371 57 3,485 KC Ramon@ 1/06/2014 322 661 52 154 96 1,285 KP Kalyan 13/06/2006 343 602 40 154 8 1,147 AT Mikati*† 18/07/2006 1,181 1,126 181 241 384 3,113 MJN Njeke 13/06/2006 331 442 56 106 20 955 JHN Strydom 11/03/2004 309 585 60 154 41 1,149 AF van Biljon 1/11/2002 212 480 60 154 73 979 J van Rooyen 18/07/2006 369 827 60 106 108 1,470 MLD Marole 1/01/2010 332 681 60 154 8 1,235 NP Mageza 1/01/2010 403 743 40 106 20 1,312 A Harper* 1/01/2010 1,215 1,358 181 241 104 3,099 F Titi± 1/07/2012 260 397 52 154 — 863 S Kheradpir^^^^* 8/07/2015 425 675 26 239 — 1,365 Total 7,678 9,598 928 2,334 919 21,457

* Fees have been paid in euro. † Fees are paid to M1 Limited. ^^^^ Appointed 8/07/2015. ± Resigned 31/12/2015. # Retainer and attendance fees include fees for board and committee representation and meetings. @ Fees paid to Anglogold Ashanti Limited. ^ Fourth quarter fees paid to Captrust Investments Proprietary Limited.

Post- Date employment Other Share 2014 appointed Salaries benefits benefits* Bonuses Sub-total gains** Total R000 R000 R000 R000 R000 R000 R000 Executive directors RS Dabengwa 1/10/2001 9,334 1,197 858 13,257 24,646 3,482 28,128 BD Goschen 22/07/2013 5,567 714 286 6,777 13,344 — 13,344 Total 14,901 1,911 1,144 20,034 37,990 3,482 41,472

* Includes medical aid and unemployment insurance fund. ** Pre-tax gains on share-based payments.

Date Special Strategy Ad hoc appointed Retainer# Attendance# projects session work Total R000 R000 R000 R000 R000 R000 Non-executive directors PF Nhleko 28/05/2013 1,084 608 92 183 — 1,967 KC Ramon^ 1/06/2014 123 187 — 96 21 427 KP Kalyan 13/06/2006 332 487 97 96 — 1,012 AT Mikati*† 18/07/2006 1,163 707 111 219 97 2,297 MJN Njeke 13/06/2006 311 388 20 96 — 815 JHN Strydom 11/03/2004 299 459 20 96 42 916 AF van Biljon 1/11/2002 312 401 68 96 63 940 J van Rooyen 18/07/2006 364 533 90 96 21 1,104 MLD Marole 1/01/2010 310 775 21 96 — 1,202 NP Mageza 1/01/2010 361 566 42 96 20 1,085 A Harper* 1/01/2010 1,177 852 — 219 — 2,248 F Titi 1/07/2012 253 352 — 48 — 653 Total 6,089 6,315 561 1,437 264 14,666

* Fees have been paid in euro. † Fees are paid to M1 Limited. # Retainer and attendance fees include fees for board and committee representation and meetings. ^ Fourth quarter fees paid to Anglogold Ashanti Limited.

F-118 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.2 Emoluments, equity compensation and dealings in ordinary shares (continued) Prescribed officers’ emoluments and related payments

Post- Compensation employment Other for loss Share 2015 Salaries benefits benefits of office Bonuses Sub-total gains Total R000 R000 R000 R000 R000 R000 R000 R000 Prescribed officers JA Desai 9,490 949 2,586 — — 13,025 295 13,320 PD Norman 4,473 573 60 — — 5,106 1,465 6,571 A Farroukh1 5,444 544 555 — — 6,543 2,208 8,751 SA Fakie2 331 44 1,209 — — 1,584 755 2,339 KW Pienaar3 4,831 619 10,965 — — 16,415 982 17,397 P Verkade4 1,021 102 21 — — 1,144 345 1,489 Z Bulbulia5 3,691 473 785 13,254@ 1,475 19,678 621 20,299 M Ikpoki5 6,603 754 2,274 17,260# — 26,891 — 26,891 MD Fleischer 5,044 647 123 — — 5,814 — 5,814 M Nyati 3,644 467 3,326 — 634 8,071 — 8,071 H Singh6 508 65 129 — — 702 — 702 S Sooklal7 4,006 514 88 — — 4,608 — 4,608 A Fernandez8 5,503 550 88 — — 6,141 — 6,141 Total 54,589 6,301 22,209 30,514 2,109 115,722 6,671 122,393

1 Resigned on 31/07/2015. 2 Retired on 16/02/2015. 3 Retired on 31/12/2015. 4 Contract ended on 31/03/2015. 5 Mutual separation on 31/12/2015. 6 Appointed on 1/11/2015. 7 Appointed on 1/02/2015. 8 Appointed on 1/04/2015. @ Compensation for loss of office comprises severance, restraint of trade and gratuity pay. # Severance, leave and lifestyle benefits.

Post- employment Other Share 2014 Salaries benefits benefits Bonuses Sub-total gains Total R000 R000 R000 R000 R000 R000 R000 Prescribed officers JA Desai 7,865 786 2,230 9,217 20,098 1,460 21,558 PD Norman 4,233 543 256 3,634 8,666 1,179 9,845 A Farroukh 7,747 775 942 6,573 16,037 1,440 17,477 SA Fakie 3,161 412 402 2,991 6,966 911 7,877 KW Pienaar 4,570 586 363 5,309 10,828 1,018 11,846 P Verkade 4,144 414 1,067 3,515 9,140 — 9,140 Z Bulbulia 3,527 452 286 858 5,123 598 5,721 M Ikpoki 6,505 586 1,896 4,440 13,427 — 13,427 M Fleischer^ 4,433 568 40 4,271 9,312 — 9,312 M Nyati^^ 871 112 18 837 1,838 — 1,838 Total 47,056 5,234 7,500 41,645 101,435 6,606 108,041

^ Appointed 1/02/2014. ^^ Appointed 1/10/2014.

F-119 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.2 Emoluments, equity compensation and dealings in ordinary shares (continued) Equity compensation benefits for executive directors and directors of major subsidiaries in respect of the share appreciation rights and share rights schemes

Number Number outstanding outstanding Strike at Exercise at price Vesting 31 December Exercised Exercise price 31 December Offer date R date 2014 2015 date R 2015 RS Dabengwa* 31/05/2006 56.83 30/11/2008 13,920 — —— 13,920 31/05/2006 56.83 30/11/2009 26,440 — —— 26,440 31/05/2006 56.83 30/11/2010 40,440 — —— 40,440 21/11/2006 71.00 21/11/2008 8,680 — —— 8,680 21/11/2006 71.00 21/11/2009 8,680 — —— 8,680 21/11/2006 71.00 21/11/2010 13,020 — —— 13,020 21/11/2006 71.00 21/11/2011 13,020 — —— 13,020 19/03/2008 126.99 19/03/2010 14,440 — —— 14,440 19/03/2008 126.99 19/03/2011 14,440 — —— 14,440 19/03/2008 126.99 19/03/2012 21,660 — —— 21,660 19/03/2008 126.99 19/03/2013 21,660 — —— 21,660 Total 196,400 — ——196,400

* Resigned 9/11/2015.

BD Goschen 19/03/2008 126.99 19/03/2010 12,260 — —— 12,260 19/03/2008 126.99 19/03/2011 12,260 — —— 12,260 19/03/2008 126.99 19/03/2012 18,390 — —— 18,390 19/03/2008 126.99 19/03/2013 18,390 — —— 18,390 Total 61,300 — —— 61,300 F Moolman 19/03/2008 126.99 19/03/2010 10,200 — —— 10,200 19/03/2008 126.99 19/03/2011 10,200 — —— 10,200 19/03/2008 126.99 19/03/2012 15,300 — —— 15,300 19/03/2008 126.99 19/03/2013 15,300 — —— 15,300 Total 51,000 — —— 51,000

F-120 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.2 Emoluments, equity compensation and dealings in ordinary shares (continued) Equity compensation benefits for executive directors, prescribed officers, Company secretary of the MTN Group and directors of major subsidiaries in respect of the performance share plan

Number Number outstanding outstanding at Exercise at Vesting 31 December Exercise price 31 December Offer date date 2014 Exercised Forfeited date R 2015 RS Dabengwa* 29/12/2011 29/12/2014 111,600 (21,985) (89,615) 17/03/2015 218.62 — 28/12/2012 28/12/2015 94,600 — (94,600) — — — 20/12/2013 19/12/2016 87,800 — (87,800) — — — 19/12/2014 18/12/2017 83,100 — (83,100) — — — Total 377,100 (21,985) (355,115) — — —

* Resigned 9/11/2015.

BD Goschen 29/12/2011 29/12/2014 22,300 (4,393) (17,907) 17/03/2015 218.62 — 28/12/2012 28/12/2015 26,500 — — — — 26,500 20/12/2013 19/12/2016 43,700 — — — — 43,700 19/12/2014 18/12/2017 54,700 — — — — 54,700 Total 147,200 (4,393) (17,907) — — 124,900 PD Norman 29/12/2011 29/12/2014 36,100 (7,112) (28,988) 17/03/2015 218.62 — 28/12/2012 28/12/2015 30,600 — — — — 30,600 20/12/2013 19/12/2016 28,400 — — — — 28,400 19/12/2014 18/12/2017 27,000 — — — — 27,000 Total 122,100 (7,112) (28,988) — — 86,000 Z Bulbulia^ 29/12/2011 29/12/2014 15,300 (3,014) (12,286) 17/03/2015 218.62 — 28/12/2012 28/12/2015 15,500 — — — — 15,500 20/12/2013 19/12/2016 24,500 — (7,914) — — 16,586 19/12/2014 18/12/2017 22,200 — (14,544) — — 7,656 Total 77,500 (3,014) (34,744) — — 39,742

^ Mutual separation on 31/12/2015.

KW Pienaar# 29/12/2011 29/12/2014 24,200 (4,767) (19,433) 17/03/2015 218.62 — 28/12/2012 28/12/2015 33,000 — — — — 33,000 20/12/2013 19/12/2016 30,600 — (9,884) — — 20,716 19/12/2014 18/12/2017 29,100 — (19,064) — — 10,036 Total 116,900 (4,767) (48,381) — — 63,752

# Retired on 31/12/2015.

F-121 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.2 Emoluments, equity compensation and dealings in ordinary shares (continued)

Number Number outstanding outstanding at Exercise at Vesting 31 December Exercise price 31 December Offer date date 2014 Exercised Forfeited date R 2015 M Nyati 19/12/2014 18/12/2017 21,900 — — — — 21,900 Total 21,900 — — — — 21,900 JA Desai 29/12/2011 29/12/2014 43,600 (8,589) (35,011) 17/03/2015 218.62 — 28/12/2012 28/12/2015 41,400 — — — — 41,400 20/12/2013 19/12/2016 44,400 — — — — 44,400 19/12/2014 18/12/2017 44,500 — — — — 44,500 Total 173,900 (8,589) (35,011) — — 130,300 M Ikpoki* 20/12/2013 19/12/2016 36,900 — (14,619) — — 22,281 19/12/2014 18/12/2017 37,400 — (24,502) — — 12,898 Total 74,300 — (39,121) — — 35,179

* Mutual separation on 31/12/2015. A Farroukh^ 29/12/2011 29/12/2014 42,900 (8,451) (34,449) 17/03/2015 218.62 — 28/12/2012 28/12/2015 40,800 — (40,800) — — — 20/12/2013 19/12/2016 43,800 — (43,800) — — — 19/12/2014 18/12/2017 43,900 — (43,900) — — — Total 171,400 (8,451) (162,949) — — —

^ Resigned on 31/07/2015.

M Fleischer 19/12/2014 18/12/2017 30,400 — — — — 30,400 Total 30,400 — — — — 30,400 F Moolman 29/12/2011 29/12/2014 15,200 (2,994) (12,206) 17/03/2015 218.62 — 28/12/2012 28/12/2015 14,600 — — — — 14,600 20/12/2013 19/12/2016 15,700 — — — — 15,700 19/12/2014 18/12/2017 15,700 — — — — 15,700 Total 61,200 (2,994) (12,206) — — 46,000 SB Mtshali 29/12/2011 29/12/2014 9,005 (3,582) (5,423) 17/03/2015 218.62 — 28/12/2012 28/12/2015 6,400 — — — — 6,400 20/12/2013 19/12/2016 6,000 — — — — 6,000 19/12/2014 18/12/2017 5,800 — — — — 5,800 Total 27,205 (3,582) (5,423) — — 18,200 SA Fakie^^ 29/12/2011 29/12/2014 18,609 (3,666) (14,943) 17/03/2015 218.62 — Total 18,609 (3,666) (14,943) — — —

^^ Retired on 16/02/2015.

F-122 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.2 Emoluments, equity compensation and dealings in ordinary shares (continued)

Number Number outstanding outstanding at Exercise at Vesting 31 December Exercise price 31 December Offer date date 2014 Exercised Forfeited date R 2015 S Ntsele± 29/12/2011 29/12/2014 6,800 (2,705) (4,095) 17/03/2015 218.62 — 28/12/2012 28/12/2015 4,500 — — — — 4,500 20/12/2013 19/12/2016 5,300 — — — — 5,300 19/12/2014 18/12/2017 5,000 — — — — 5,000 Total 21,600 (2,705) (4,095) — — 14,800

± Appointed 1/04/2015.

Directors, prescribed officers, Company secretary of the MTN Group and directors and company secretaries of major subsidiaries’ shareholding and dealings in ordinary shares

December December 2015 2014 Beneficial RS Dabengwa^ 1,473,552 1,473,552 Direct NP Mageza 400 400 Indirect PD Norman#* 300,970 300,970 Direct MJN Njeke 10 10 Direct BD Goschen#* 44,393 40,000 Direct KW Pienaar#@ 455,261 455,261 Direct S Ntsele# 4,000 — Direct KC Ramon 3,244 — Direct KC Ramon 9,901 — Indirect KP Kalyan 1,373 — Direct Total 2,293,104 2,270,193

^ Resigned 9/11/2015. * Prescribed officer. # Major subsidiary director. @ Retired 31/12/2015.

Subsequent to the year end there were no changes in the directors’ beneficial interest in MTN Group.

Directors, prescribed officers, Company secretary of the MTN Group and directors and company secretaries of major subsidiaries relating to MTN Zakhele

F-123 Notes to the Group financial statements for the year ended 31 December 2015

10 RELATED PARTIES (continued) 10.2 Emoluments, equity compensation and dealings in ordinary shares (continued)

The following persons, being directors of MTN Group Limited and its major subsidiaries and the company secretary were allocated the following number of MTN Zakhele shares which has a shareholding in MTN Group Limited shares:

Nature of Beneficiary interest Shares PF Nhleko Direct beneficial 2,010,700 KP Kalyan Direct beneficial 27,700 MLD Marole Direct beneficial 15,700 MJN Njeke Direct beneficial 6,700 NP Mageza Indirect beneficial 51,420 SB Mtshali Indirect beneficial 6,500 CWN Molope Direct beneficial 1,000 F Titi* Indirect beneficial 15,500 SA Fakie** Direct beneficial 1,000 Total 2,136,220

* Resigned 31/12/2015. ** Retired 16/02/2015.

Subsequent to the year end there were no changes in the directors’ beneficial interest in MTN Zakhele.

F-124 Independent auditors’ report to the shareholders of MTN Group Limited for the year ended 31 December 2014

We have audited the consolidated annual financial statements and separate annual financial statements of MTN Group Limited, which comprise the consolidated and separate statements of financial position as at 31 December 2014, the consolidated income statement and the consolidated and separate statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of principal accounting policies and other explanatory information on pages 10 to 143.

DIRECTORS’ RESPONSIBILITY FOR THE ANNUAL FINANCIAL STATEMENTS The Company’s directors are responsible for the preparation and fair presentation of these consolidated and separate annual financial statements in accordance with IFRS and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of the consolidated and separate annual financial statements that are free from material misstatements, whether due to fraud or error.

AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated and separate annual financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the annual financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the annual financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the annual financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION In our opinion, the consolidated and separate annual financial statements present fairly, in all material respects, the consolidated and separate financial position of MTN Group Limited as at 31 December 2014, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with IFRS and the requirements of the Companies Act of South Africa.

F-125 Independent auditors’ report to the shareholders of MTN Group Limited for the year ended 31 December 2014 (continued)

OTHER REPORTS REQUIRED BY THE COMPANIES ACT As part of our audit of the consolidated and separate annual financial statements for the year ended 31 December 2014, we have read the directors’ report, the report of the audit committee and the certificate by the company secretary for the purpose of identifying whether there are material inconsistencies between these reports and the audited annual financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate annual financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc. Director: JR van Huyssteen Director: SY Lockhat Registered auditor Registered auditor Sunninghill Woodmead 3 March 2015 3 March 2015

The above auditors’ report is the original auditors’ report that was issued on 3 March 2015 with respect to the Financial Statements for the period ended 31 December 2014. These Financial Statements also contained the Directors’ report, Report of the audit committee, Certificate of MTN Group’s secretary and MTN Group’s separate financial statements. For purposes of this Offering Circular the Directors’ report, Report of the audit committee, Certificate of MTN Group’s secretary and MTN Group’s separate financial statements have been omitted. The page references in the original auditors’ report compare to pages F-127 to F-229 in this Offering Circular in respect of the financial statements.

F-126 Group income statement for the year ended 31 December 2014

2014 20131 Note Rm Rm Revenue 4 146,930 137,270 Other income 5 7,928 1,327 Direct network operating costs (21,604) (18,299) Costs of handsets and other accessories (11,957) (10,744) Interconnect and roaming (13,653) (13,816) Staff costs 6 (8,838) (8,670) Selling, distribution and marketing expenses (15,531) (16,362) Other operating expenses (10,084) (10,276) EBITDA 73,191 60,430 Depreciation of property, plant and equipment 11 (18,262) (16,458) Amortisation of intangible assets 12 (3,251) (2,820) Impairment of goodwill 12 (2,033) — Operating profit 6 49,645 41,152 Finance income 7 6,772 11,422 Finance costs 7 (10,440) (12,656) Net monetary gain 878 — Share of results of associates and joint ventures after tax 14 4,208 3,431 Profit before tax 51,063 43,349 Income tax expense 8 (13,361) (12,487) Profit after tax 37,702 30,862 Attributable to: Equity holders of the Company 32,079 26,751 Non-controlling interests 5,623 4,111 37,702 30,862 Basic earnings per share (cents) 9 1,752 1,460 Diluted earnings per share (cents) 9 1,742 1,452

1 Restated, refer to note 48.

F-127 Group statement of comprehensive income for the year ended 31 December 2014

2014 20131 Rm Rm Profit after tax 37,702 30,862 Other comprehensive income after tax: Exchange differences on translating foreign operations including the effect of hyperinflation2 2,968 11,078 Attributable to equity holders of the Company 2,960 10,179 Attributable to non-controlling interests 8 899 Total comprehensive income for the year 40,670 41,940 Attributable to: Equity holders of the Company 35,039 36,930 Non-controlling interests 5,631 5,010 40,670 41,940

1 Restated, refer to note 48. 2 This component of other comprehensive income does not attract any tax and may subsequently be reclassified to profit or loss.

F-128 Group statement of financial position at 31 December 2014

2014 20131 20131 December December January Note Rm Rm Rm ASSETS Non-current assets 163,218 153,083 127,365 Property, plant and equipment 11 87,546 92,903 73,905 Intangible assets and goodwill 12 36,618 37,751 32,594 Investments 13 6,135 111 — Investment in associates and joint ventures 14 25,514 12,643 10,208 Loans and other non-current receivables 15 6,296 7,631 9,367 Deferred tax assets 16 1,109 2,044 1,291 Current assets 90,467 76,573 56,465 Non-current assets held for sale 17 3,848 1,281 1,373 86,619 75,292 55,092 Inventories 18 3,412 3,226 2,547 Trade and other receivables 19 32,818 24,821 17,234 Taxation prepaid 31 564 859 555 Current investments 20 5,651 4,542 6,585 Derivative assets 21 183 22 191 Restricted cash 22 893 2,222 5,272 Cash and cash equivalents 23 43,098 39,600 22,708 Total assets 253,685 229,656 183,830 EQUITY Ordinary share capital and share premium 24 40,179 42,598 42,593 Retained earnings 91,305 79,872 69,389 Other reserves 25 (2,967) (5,991) (15,834) Attributable to equity holders of the Company 128,517 116,479 96,148 Non-controlling interests 4,925 5,333 3,881 Total equity 133,442 121,812 100,029 LIABILITIES Non-current liabilities 52,613 49,860 33,327 Borrowings 26 39,470 34,664 21,322 Deferred tax liabilities 16 11,012 13,470 9,325 Other non-current liabilities 27 1,585 1,369 2,262 Provisions 28 546 357 416 Derivative liabilities — —2 Current liabilities 67,630 57,984 50,474 Trade and other payables 29 33,234 27,449 22,157 Unearned income 7,609 7,004 6,604 Provisions 28 3,414 4,637 3,931 Taxation liabilities 31 9,562 7,530 6,790 Borrowings 26 13,783 11,338 10,593 Derivative liabilities 21 2 314 Put option liability — — 216 Bank overdrafts 23 26 23 169 Total liabilities 120,243 107,844 83,801 Total equity and liabilities 253,685 229,656 183,830

1 Restated, refer to note 48.

F-129 Group statement of changes in equity for the year ended 31 December 2014

Attributable to equity holders of the Company Non- Share Share Retained Other controlling Total capital premium earnings reserves Total interests equity Note Rm Rm Rm Rm Rm Rm Rm Balance at 1 January 2013 * 42,593 67,810 (15,834) 94,569 3,881 98,450 Restatement for voluntary change in accounting policy 48 — — 1,579 — 1,579 — 1,579 Restated balance at 1 January 2013 * 42,593 69,389 (15,834) 96,148 3,881 100,029 Shares issued during the year * 5 — — 5 — 5 Shares cancelled (*) — — — (*) — (*) Transactions with non-controlling interests 41 — — — (495) (495) (138) (633) Share-based payment transactions — — — 215 215 — 215 Total comprehensive income — — 26,751 10,179 36,930 5,010 41,940 Profit after tax — — 26,751 — 26,751 4,111 30,862 Other comprehensive income — — — 10,179 10,179 899 11,078 Dividends declared 10 — — (16,210) — (16,210) (3,608) (19,818) Other movements — — (58) (56) (114) 188 74 Balance at 31 December 2013 * 42,598 79,872 (5,991) 116,479 5,333 121,812 Balance at 1 January 2014 * 42,598 79,872 (5,991) 116,479 5,333 121,812 Shares issued during the year * 3— — 3— 3 Shares cancelled (*) — — — (*) — (*) Settlement of vested equity rights — — (209) — (209) — (209) Share-based payment transactions — — — 110 110 — 110 Total comprehensive income — — 32,079 2,960 35,039 5,631 40,670 Profit after tax — — 32,079 — 32,079 5,623 37,702 Other comprehensive income — — — 2,960 2,960 8 2,968 Dividends declared 10 — — (20,527) — (20,527) (6,176) (26,703) Share buy-back — (2,422) — — (2,422) — (2,422) Other movements — — 90 (46) 44 137 181 Balance at 31 December 2014 * 40,179 91,305 (2,967) 128,517 4,925 133,442 Note 24 24 25 * Amounts less than R1 million.

F-130 Group statement of cash flows for the year ended 31 December 2014

2014 2013 Note Rm Rm CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 30 64,628 59,708 Finance income received 2,584 1,752 Finance costs paid (3,993) (3,947) Income tax paid 31 (11,779) (11,184) Dividends paid to equity holders of the Company (20,527) (16,187) Dividends paid to non-controlling interests (4,289) (3,571) Dividends received from associates 14 233 220 Dividends received from joint ventures 275 234 Net cash generated from operating activities 27,132 27,025 CASH FLOWS USED IN INVESTING ACTIVITIES Acquisition of property, plant and equipment (19,562) (24,568) – to maintain operations (33) (99) – to expand operations (19,529) (24,469) Acquisition of intangible assets (3,282) (3,586) Proceeds from sale of property, plant and equipment and intangible assets 541 106 Proceeds on sale of towers 6,465 2,378 Increase in investment in joint ventures (1,524) — Increase in non-current investments (5,657) (128) Acquisition of businesses, net of cash acquired 42 (1,634) (47) Loans granted (1,007) (64) Increase in investment in associates — (69) Increase in investment in insurance cell captives (173) (628) (Investments in)/proceeds from bonds, treasury bills and foreign deposits (1,057) 3,423 Decrease in restricted cash 899 3,348 Net cash used in investing activities (25,991) (19,835) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of ordinary shares 24 3 5 Net cash outflows from changes in shareholding 41.3 — (881) Proceeds from borrowings 30,603 33,279 Repayment of borrowings (25,620) (25,951) Share buy-back1 (2,249) — Settlement of vested equity rights (209) — Other financing activities 111 (188) Net cash from financing activities 2,639 6,264 Net increase in cash and cash equivalents 3,780 13,454 Net cash and cash equivalents at beginning of the year 39,577 22,539 Exchange (losses)/gains on cash and cash equivalents (182) 3,584 Net monetary loss on cash and cash equivalents (103) — Net cash and cash equivalents at end of the year 23 43,072 39,577

1 An amount of R173 million was paid in January 2015.

F-131 Notes to the Group annual financial statements for the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES 1.1 Basis of preparation The consolidated and separate annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and Interpretations as issued by the IFRS Interpretations Committee (IFRIC), and comply with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, financial pronouncements as issued by the Financial Reporting Standards Council (FRSC), the JSE Listings Requirements and the requirements of the South African Companies Act, No 71 of 2008. The Group and the Company have adopted all new accounting pronouncements that became effective in the current reporting period, none of which had a material impact on the Group or the Company.

The annual financial statements have been prepared on the historical cost basis adjusted for the effects of inflation where entities operate in hyperinflationary economies and for certain financial instruments that have been measured at fair value.

The Sudanese, Syrian and Iranian economies have been considered to be hyperinflationary. Accordingly, the results, cash flows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC) and the Group’s joint venture, Irancell Telecommunication Company Services (PJSC), have been expressed in terms of the measuring unit current at the reporting date.

The methods used to measure fair value and the adjustments made to account for the Group’s entities that operate in hyperinflationary economies are discussed further in the accounting policies and in the respective notes.

Amounts are rounded to the nearest million with the exception of earnings per share and the related number of shares (note 9), number of ordinary shares (note 24) and share-based payments (note 44).

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated and separate annual financial statements are included in note 2.

1.2 Going concern The Group and Company’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group and Company should be able to operate within their current funding levels into the foreseeable future. After making enquiries, the directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. The Group and Company therefore continue to adopt the going-concern basis in preparing the annual financial statements.

1.3 Principal accounting policies1 The principal accounting policies applied in the preparation of these consolidated annual financial statements are set out below and in the related notes to the Group annual financial statements, and should be read in conjunction with the financial definitions disclosed on pages 142 and 143 of the annual financial statements. The principal accounting policies applied are consistent with those adopted in the prior year, except as set out under “Voluntary change in accounting policy” below.

1 The principal accounting policies applied in the Company annual financial statements are consistent with those applied in the Group annual financial statements.

F-132 Notes to the Group annual financial statements for the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued) 1.3 Principal accounting policies (continued) Voluntary change in accounting policy IAS 18 Revenue Previously, the Group accounted for arrangements with multiple deliverables (i.e. multiple element revenue arrangements) by dividing these arrangements into separate units of accounting and recognising revenue through the application of the residual value method.

During the year under review, the Group resolved to change its accounting policy in recognising revenue relating to these arrangements from applying the residual value method to the relative fair value method. This change was effected by the Group on a voluntary basis.

Previously under the residual value method, fair value was ascribed to each of the undelivered elements (typically the service contract) and any consideration remaining (after reducing the total consideration of the arrangement with the fair value of the undelivered elements) was allocated to the delivered element(s) in the transaction (typically the handset). This resulted in limited amounts of revenue being allocated to the elements delivered upfront (i.e. the handset). Under the relative fair value method, the consideration received or receivable is allocated to each of the elements (delivered and undelivered) according to the relative fair value of the elements included in the arrangement.

The Group believes that the change results in more relevant and reliable information being presented in respect of revenue recognised in relation to multiple element revenue arrangements, as revenue is now being recognised in relation to each of the elements delivered and to be delivered based on the relative fair value of the elements in relation to the total consideration received or receivable. The new accounting policy also results in an improved correlation between the recognition of revenue and associated costs and also aligns the Group’s policy more closely with the requirements of IFRS 15 Revenue from Contracts with Customers which is effective for periods commencing on 1 January 2017.

As required in terms of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the change in accounting policy was applied retrospectively which resulted in an increase in revenue, other operating and income tax expenses, trade and other receivables, non-current loans and other receivables, equity and deferred tax liabilities in prior years. The impact on the Group’s financial results and position is disclosed in note 48.

1.3.1 Consolidation of subsidiaries The Group annual financial statements incorporate the financial statements of MTN Group Limited and all its subsidiaries, joint ventures, associates and structured entities (SEs) for the reporting date 31 December 2014 on the basis outlined below.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date that control ceases (disposal date). All intercompany transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated on consolidation. Unrealised losses are considered an impairment indicator of the asset transferred.

The acquisition method is used to account for the acquisition of subsidiaries by the Group. The consideration transferred is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are recognised in profit or loss. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non- controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and liabilities

F-133 Notes to the Group annual financial statements for the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued) 1.3 Principal accounting policies (continued) 1.3.1 Consolidation of subsidiaries (continued) assumed. If, after re-assessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), such excess is recognised immediately in profit or loss as a bargain purchase gain.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred.

Changes in the fair value of a contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Those that do not qualify are accounted for based on the classification of the contingent consideration. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39 Financial Instruments: Recognition and Measurement, with the corresponding gain or loss recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from an interest in the acquiree prior to the acquisition date that have been previously recognised in other comprehensive income, are reclassified to profit or loss where such treatment would be appropriate if that interest was disposed of.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.

The Company accounts for investments in subsidiaries at cost, less accumulated impairment losses.

On an acquisition-by-acquisition basis, non-controlling interests in the acquiree may initially be measured either at fair value or at the non-controlling shareholders’ proportion of the net fair value of the identifiable assets acquired and liabilities and contingent liabilities assumed.

Non-controlling shareholders are treated as equity participants; therefore, all acquisitions of non-controlling interests or disposals by the Group of its interests in subsidiaries, where control is maintained subsequent to the disposal, are accounted for as equity transactions. Consequently, the difference between the fair value of the consideration transferred and the carrying amount of a non-controlling interest purchased, is recorded in equity. All profits or losses arising as a result of the disposal of interests in subsidiaries to non-controlling shareholders (where control is subsequently maintained) are also recorded in equity.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity.

Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

F-134 Notes to the Group annual financial statements for the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued) 1.3 Principal accounting policies (continued) 1.3.2 Foreign currency Functional and presentation currency Items included in the annual financial statements of each entity in the Group are measured using the entity’s functional currency. The Group annual financial statements are presented in South African rand, which is the functional and presentation currency of the parent company.

Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Translation of foreign operations The results, cash flows and financial position of Group entities which are not accounted for as entities operating in hyperinflationary economies and that have a functional currency different from the presentation currency of the Group are translated into the presentation currency as follows: • assets and liabilities are translated at rates of exchange ruling at the reporting date; • specific transactions in equity are translated at rates of exchange ruling at the transaction dates; • income, expenditure and cash flow items are translated at weighted average exchange rates for the period; and • foreign exchange translation differences are recognised as other comprehensive income.

The results, cash flows and financial position of Group entities which are accounted for as entities operating in hyperinflationary economies and that have functional currencies different from the presentation currency of the Group are translated into the presentation currency of its immediate parent at rates of exchange ruling at the reporting date. As the presentation currency of the Group or that of the immediate parent is that of a non- hyperinflationary economy, comparative amounts are not adjusted for changes in the price level or exchange rates in the current year.

An entity may have a monetary item that is receivable from or payable to a foreign operation. An item for which settlement is neither planned nor likely to occur in the foreseeable future is, in substance, a part of the entity’s net investment in that foreign operation. On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income as part of the foreign currency translation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate ruling at the reporting date. Exchange differences arising are recognised in other comprehensive income.

The exchange rates relevant to the Group are disclosed in note 38.

Disposal of foreign operations On disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the equity holders of the Group are reclassified to profit or loss.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non- controlling interests and are not recognised in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

F-135 Notes to the Group annual financial statements for the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued) 1.3 Principal accounting policies (continued) 1.3.2 Foreign currency (continued) Exchange differences accumulated in equity in respect of a monetary item that is part of the Group’s net investment in a foreign operation, is not reclassified to profit or loss on settlement of the monetary item.

1.3.3 Hyperinflation The financial statements (including comparative amounts) of Group entities, whose functional currencies are the currencies of hyperinflationary economies, are adjusted in terms of the measuring unit current at the end of the reporting period.

As the presentation currency of the Group is that of a non-hyperinflationary economy, comparative amounts are not adjusted for changes in the price level or exchange rates in the current year. In the first period of application, the adjustments determined at the beginning of the period are recognised directly in equity as an adjustment to opening retained earnings. In subsequent periods, the prior period adjustments related to components of owners’ equity and differences arising on translation of comparative amounts are accounted for in other comprehensive income.

Items in the statement of financial position not already expressed in terms of the measuring unit current at the reporting period, such as non-monetary items carried at cost or cost less depreciation, are restated by applying a general price index. The restated cost, or cost less depreciation, of each item is determined by applying to its historical cost and accumulated depreciation the change in a general price index from the date of acquisition to the end of the reporting period. An impairment loss is recognised in profit or loss if the restated amount of a non-monetary item exceeds its estimated recoverable amount.

At the beginning of the first period of application, the components of owners’ equity, except retained earnings, are restated by applying a general price index from the dates the components were contributed or otherwise arose. Restated retained earnings are derived from all other amounts in the restated statement of financial position. At the end of the first period and in subsequent periods, all components of owners’ equity are restated by applying a general price index from the beginning of the period or the date of contribution, if later.

All items recognised in the income statement are restated by applying the change in the general price index from the dates when the items of income and expenses were initially earned or incurred.

Gains or losses on the net monetary position are recognised in profit or loss.

All items in the statement of cash flows are expressed in terms of the general price index at the end of the reporting period.

The Sudanese and Syrian economies have been classified as hyperinflationary. Accordingly, the results, cash flows and financial position of the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC), have been expressed in terms of the measuring unit current at the reporting date.

The results, cash flows and financial position of a joint venture, Irancell Telecommunication Company Services (PJSC), that operates in a hyperinflationary economy have also been expressed in terms of the measuring unit current at the reporting date. For further details, refer to note 14.

F-136 Notes to the Group annual financial statements for the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued) 1.3 Principal accounting policies (continued) 1.3.4 Measurement principles Key assets and liabilities shown in the consolidated statement of financial position are measured as follows: Items included in the statement Items included in the statement of financial position Measurement principle of financial position Measurement principle Assets Liabilities Non-current assets Non-current liabilities Property, plant and equipment Historical cost, less Borrowings Amortised cost accumulated depreciation and impairment losses Intangible assets Historical cost, less Deferred tax liabilities Undiscounted amount accumulated amortisation measured at the tax rates and impairment losses that have been enacted and are expected to apply to the period when the liability is settled Goodwill Historical cost, less Provisions Present value of settlement impairment losses amount Investments Amortised cost/fair value Finance lease obligations Amortised cost Investment in associates and Pro rata value of Derivative liabilities Fair value joint ventures investment’s equity plus goodwill Loans receivable Amortised cost Prepayments Nominal value Deferred tax assets Undiscounted amount measured at the tax rates that have been enacted and are expected to apply to the period when the asset is realised Current assets Current liabilities Non-current assets held for Lower of carrying amount Trade payables Amortised cost sale and fair value less costs to sell Inventories Lower of cost and net Other payables Nominal value realisable value Unearned income Nominal value Trade receivables Amortised cost Provisions Present value of settlement amount Prepayments Nominal value Taxation liabilities Amount expected to be paid to tax authorities, using tax rates that have been enacted or substantively enacted at the reporting date Sundry debtors and advances Amortised cost Borrowings Amortised cost Taxation prepaid Amount expected to be Derivative liabilities Fair value recovered from tax authorities, using tax rates that have been enacted or substantively enacted at the reporting date Current investments Amortised cost/fair value Bank overdrafts Amortised cost Derivative assets Fair value Restricted cash Amortised cost Cash and cash equivalents Amortised cost

F-137 Notes to the Group annual financial statements for the year ended 31 December 2014

1 BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued) 1.4 New accounting pronouncements The pronouncements listed below will be effective in future reporting periods and are considered significant to the Group. The Group has elected not to early adopt the new pronouncements. It is expected that the Group will adopt the new pronouncements on their effective dates in accordance with the requirements of the pronouncements.

Topic Key requirement Effective date IFRS 15 IFRS 15 replaces the two main revenue recognition standards, IAS 18 and 1 January 2017 Revenue from IAS 11 Construction Contracts and their related interpretations. Contracts with Customers IFRS 15 provides a single control-based revenue recognition model and clarifies the principles for recognising revenue from contracts with customers. The core principle is that an entity should recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. Revenue is recognised when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. IFRS 15 also includes a cohesive set of disclosure requirements that will result in an entity providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. IFRS 15 will be applied retrospectively subject to the application of the transitional provisions. The impact on the annual financial statements has not yet been fully determined but it is expected to result in a change in: • the measurement of revenue to adjust for the effects of the time value of money; and • the timing of the recognition of subscriber acquisition costs such as agent’s commission which will be recognised when the related performance obligations are satisfied. The Group’s current accounting policy is to expense such costs when incurred. Refer to Annexure 2 for the Group’s full unaudited preliminary assessment on the impact of IFRS 15. IFRS 9 IFRS 9 replaces IAS 39. It retains but simplifies the mixed measurement 1 January 2018 Financial model and establishes three primary measurement categories for financial Instruments assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income. IFRS 9 also replaces the rule-based hedge accounting requirements in IAS 39. It requires an economic relationship between the hedged item and hedging instrument and for the “hedged ratio” to be the same as the one management actually uses for risk management purposes. IFRS 9 includes an expected credit loss model for calculating impairment on financial assets. This replaces the incurred loss model used under IAS 39. The adoption of IFRS 9 is not expected to change the measurement of the Group’s financial assets and liabilities significantly, but will require a review of the current classification of financial assets and liabilities. Any changes in classification will be applied retrospectively. The hedge accounting requirements are not expected to have a significant impact on the financial results of the Group. The impact of an expected credit loss model on the annual financial statements has not yet been fully determined. Refer to Annexure 2 for the Group’s preliminary unaudited assessment on its financial results from the application of the expected credit loss model.

F-138 Notes to the Group annual financial statements for the year ended 31 December 2014

2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS1 The Group makes judgements, estimates and assumptions concerning the future when preparing the consolidated annual financial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

The “Critical accounting judgements, estimates and assumptions” note should be read in conjunction with the “Principal accounting policies” disclosed in note 1.

2.1 Impairment of goodwill The Group tests goodwill for impairment on an annual basis, in accordance with the accounting policy disclosed in note 12. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations are performed internally by the Group and require the use of estimates and assumptions.

The input factors most sensitive to change are management’s estimates of future cash flows based on budgets and forecasts, growth rates and discount rates. Further detail on these assumptions has been disclosed in note 12. The Group has performed a sensitivity analysis by varying these input factors by a reasonably possible margin and assessing whether the changes in input factors result in any of the goodwill allocated to appropriate cash- generating units being impaired. Goodwill impairment in the current year amounted to R2,033 million (2013: Rnil), refer to note 12.

2.2 Impairment of trade and other non-current receivables The Group determines impairment of trade and other non-current receivables when objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the receivables. Management exercises significant judgement in assessing the impact of adverse indicators and events on the recoverability of receivables using the indicators disclosed in the accounting policy in note 43.

The impairment loss is determined as the difference between the carrying amount of the receivables and the present value of their estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the receivables’ original effective interest rate. In the current year, an impairment charge of R286 million (2013: R743 million2) and an impairment reversal of R230 million (2013: R223 million charge) were recognised on trade receivables and non-current receivables respectively (note 6).

2.3 Connection incentives and subscriber acquisition costs Connection incentives paid to service providers are expensed by the Group in the period incurred. Service providers utilise the incentives received from the Group to fund a variety of administrative costs and/or to provide incentives to maintain/sign up customers on behalf of the Group, at their own discretion. The portion of the incentive used by the respective service providers as an incentive to retain/acquire existing/new subscribers on behalf of the Group is capitalised only to the extent that it is reliably measurable (prepaid discount). In accordance with the Conceptual Framework under IFRS, the Group has resolved not to capitalise these fees due to the portion of incentives utilised to retain/acquire subscribers on behalf of the Group by the respective independent service providers not being reliably measurable.

In accordance with the recognition criteria in IAS 38 Intangible Assets, the Group has also resolved not to capitalise commissions paid to dealers, utilised to acquire new subscribers, as intangible assets (subscriber acquisition cost), due to the portion utilised to acquire subscribers on behalf of the Group not being reliably measurable.

1 The critical accounting judgements, estimates and assumptions applied in the Company annual financial statements are consistent with those applied in the Group annual financial statements. 2 Restated, refer to note 48.

F-139 Notes to the Group annual financial statements for the year ended 31 December 2014

2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 2.4 Interconnect revenue recognition Due to the receipt of interconnect revenue in certain operations not being certain at transaction date, the Group has resolved only to recognise interconnect revenue relating to these operations as the cash is received or where a right of set-off exists with interconnect parties in settling outstanding amounts.

2.5 Sale of tower assets The Group applies judgement and follows the guidance in IFRS 3 Business Combinations to determine whether the sale of tower assets constitutes the sale of a business or an asset.

The Group determined that its tower assets in Nigeria which were sold during the year (note 5) were an integrated set of activities capable of being conducted and managed for the purpose of providing a return and therefore constituted a sale of a business. In exercising its judgement, the Group considered the following: • the transfer of assets resulted in the transfer of employees that are key to the inputs and processes being transferred; • the sale agreement provides for the transfer of all substantial assets required to operate the tower business including related tower rights, site maintenance agreements, tenant leases and inventory; • the processes involved in the tower business, such as site management systems and site maintenance programmes, were transferred along with the assets; and • the tower assets are able to produce outputs through the management and leasing of sites to other parties.

2.6 Income taxes The Group is subject to income taxes in numerous jurisdictions. As a result, significant judgement is required in determining the Group’s provision for income taxes. There are numerous calculations and transactions for which the ultimate tax position is uncertain during the ordinary course of business. The Group recognises tax liabilities for anticipated tax issues based on estimates of whether additional taxes will be payable. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact current and deferred tax in the period in which such determination is made.

Deferred tax assets Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deferred tax assets can be utilised. When recognising deferred tax assets, the Group exercises judgement in determining whether sufficient taxable profits will be available; this is done by assessing the future financial performance of the underlying Group entities to which the deferred tax assets relate. The Group’s deferred tax assets for the current year amounted to R1,109 million (2013: R2,044 million), refer to note 16.

2.7 Property, plant and equipment Property, plant and equipment represent a significant proportion of the Group’s asset base. Therefore, the judgements made in determining their estimated useful lives and residual values are critical to the Group’s financial position and performance. Useful lives and residual values are reviewed on an annual basis with the effects of any changes in estimates accounted for on a prospective basis.

In determining residual values, the Group uses historical sales and management’s best estimates based on market prices of similar items.

Useful lives of property, plant and equipment are based on management’s estimates and take into account historical experience with similar assets, the expected usage of the asset, physical wear and tear, technical or commercial obsolescence and legal restrictions on the use of the assets.

F-140 Notes to the Group annual financial statements for the year ended 31 December 2014

2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 2.7 Property, plant and equipment (continued) The estimated useful lives of property, plant and equipment are as follows:

2014 2013 Years Years Buildings – owned 5–50 5–50 Buildings – leased1 1–20 1–20 Network infrastructure 2–20 2–20 Information systems equipment 1–10 1–10 Furniture and fittings 3–15 3–15 Leasehold improvements1 2–15 2–15 Office equipment 2–12 2–12 Motor vehicles 3–10 3–10 1 Shorter of lease term and useful life.

2.8 Intangible assets with finite useful lives The relative size of the Group’s intangible assets with finite useful lives makes the judgements surrounding their estimated useful lives and residual values critical to the Group’s financial position and performance. Useful lives are reviewed on an annual basis with the effects of any changes in estimate accounted for on a prospective basis. The residual values of intangible assets are assumed to be zero.

The basis for determining the useful lives for the various categories of intangible assets is as follows:

Licences The useful lives of licences are determined primarily with reference to the unexpired licence period.

Customer relationships The useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to factors such as customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life.

Software The useful life is determined with reference to the licence term of the computer software. For unique software products controlled by the Group, the useful life is based on historical experience with similar assets as well as anticipation of future events such as technological changes, which may impact the useful life.

Other intangible assets Useful lives of other intangible assets are based on management’s estimates and take into account historical experience as well as future events which may impact the useful lives.

The estimated useful lives of intangible assets with finite useful lives are as follows:

2014 2013 Years Years Licences 3–20 3–20 Customer relationships 5–10 5–10 Software 3–6 3–6 Other intangible assets 3–10 3–10

F-141 Notes to the Group annual financial statements for the year ended 31 December 2014

2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 2.9 Classification of significant joint arrangements Joint arrangements are all arrangements where two or more parties contractually agree to share control of the arrangement, which only exists when decisions about the relevant activities require unanimous consent of the parties sharing control. Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The Group exercises judgement in determining the classification of its joint arrangements.

Irancell Telecommunication Company Services (PJSC) The Group holds an effective interest of 49% in the issued ordinary share capital of Irancell Telecommunication Company Services (PJSC). Under the contractual agreement unanimous consent is required for all key activities. The entity has therefore been classified as a joint venture of the Group.

Mascom Wireless Botswana Proprietary Limited The Group holds an effective interest of 53.11% in the issued ordinary share capital of Mascom Wireless Botswana Proprietary Limited (Mascom). The joint arrangement provides the Group and the other parties to the agreement with rights to the net assets of the entity. The Group has joint control over this arrangement as under the contractual agreement, no party has the right to control the managing company unilaterally. The entity has therefore been classified as a joint venture of the Group.

Middle East Internet Holding The Group holds an effective interest of 50% in the issued ordinary share capital of Middle East Internet Holding (MEIH). The joint arrangement provides the Group and the other parties to the agreement with rights to the net assets of the entity. Under the contractual agreement unanimous consent is required for all decisions made with regard to the relevant activities of MEIH. The entity has therefore been classified as a joint venture of the Group.

Africa Internet Holding The Group holds an effective interest of 33.3% in Africa Internet Holding (AIH). The joint arrangement provides the Group and the other parties to the agreement with rights to the net assets of the entity. Under the contractual agreement unanimous consent is required for all key activities. The entity has therefore been classified as a joint venture of the Group.

2.10 Provisions The Group exercises judgement in determining the expected cash outflows related to its provisions. Judgement is necessary in determining the timing of outflow as well as quantifying the possible range of the financial settlements that may occur.

The present value of the Group’s provisions is based on management’s best estimate of the future cash outflows expected to be required to settle the obligations, discounted using appropriate pre-tax discount rates that reflect the current market assessment of the time value of money and the risks specific to each provision. Additional information on provisions is disclosed in note 28.

2.11 Restricted cash The Group exercises judgement in determining the appropriate treatment of restricted cash. The judgement exercised takes into account the severity of exchange control regulations, the availability of foreign currency in the operations affected and the purpose for which the funds will be used. The Group has determined that an amount of R331 million (2013: R1,633 million) relating to its Syrian operation should be treated as restricted cash, refer to note 22.

F-142 Notes to the Group annual financial statements for the year ended 31 December 2014

2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 2.12 Determining whether an arrangement contains a lease The Group applies the principles of IFRIC 4 Determining whether an Arrangement contains a Lease in order to assess whether its arrangements constitute or contain leases. The requirements to be met in order to conclude that an arrangement constitutes or contains a lease are as follows: • the provision of a service in terms of the arrangement should be dependent on the use of one or more specific assets; and • the arrangement must convey a right to use these assets.

All other arrangements that do not constitute or contain leases are treated as service level agreements; the costs are expensed as incurred.

For the purpose of applying IFRIC 4 on tower space lease arrangements, the Group considers the tower asset as a whole in assessing whether the arrangement contains a lease. This is consistent with the guidance on determining a component of an asset in IAS 16 Property, Plant and Equipment. The Group has resolved that an arrangement contains a lease as defined in IAS 17 Leases where the arrangement provides an exclusive right to use specific tower space which is more than an insignificant part of the tower asset.

2.13 Determining whether an arrangement qualifies as an operating lease or a finance lease The Group applies its principal accounting policies for leases to account for arrangements which constitute or contain leases and follows the guidance of IAS 17 to determine the classification of leases as either operating or finance leases.

During the year, the Group entered into a sale and lease back transaction with IHS that resulted in the sale of a portion of its mobile network towers in Nigeria, refer to note 5.

The critical elements that the Group considered with respect to the classification of the lease transaction were: • whether the lease term is for the major part of the economic life of the tower assets; and • whether at inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the tower assets.

The Group estimated that the lease term of the tower assets is not for a major part of the economic life of the tower assets, taking into account the non-cancellable period for which the Group has contracted, and any options to renew such period where it is reasonably certain that the Group will exercise the option.

The minimum lease payments were determined by separating the payments required by the lease arrangements into those pertaining to the lease and those pertaining to other elements such as services and cost of inputs on the basis of their relative fair values. Management exercised judgement in estimating the fair value of the other elements by reference to comparable cost structures of the Group and other independent tower operators. The discount rate used in calculating the present value of the minimum lease payments reflects the rate of interest MTN Nigeria Communications Limited would incur in borrowing the funds necessary to purchase similar assets.

The fair value of the tower assets was determined by reference to the value at which the tower assets were sold which represents the amount at which the tower assets could be exchanged between knowledgeable, willing parties in an arm’s-length transaction. The Group resolved that the present value of the minimum lease payments did not equal substantially all of the fair value of the underlying tower assets.

Following the Group’s assessment, the leaseback transaction was classified as an operating lease.

2.14 Non-consolidation of entities in which the Group holds more than 50% The Group has resolved not to consolidate entities where it owns more than half of the issued ordinary share capital where the contractual agreements are such that other shareholders have substantive rights that provide authority over the day-to-day activities of the entities.

F-143 Notes to the Group annual financial statements for the year ended 31 December 2014

2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 2.15 Hyperinflation The Group exercises significant judgement in determining the onset of hyperinflation in countries in which it operates and whether the functional currency of its subsidiaries, associates or joint ventures is the currency of a hyperinflationary economy.

Various characteristics of the economic environment of each country are taken into account. These characteristics include, but are not limited to, whether: • the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency; • prices are quoted in a relatively stable foreign currency; • sales or purchase prices take expected losses of purchasing power during a short credit period into account; • interest rates, wages and prices are linked to a price index; and • the cumulative inflation rate over three years is approaching, or exceeds, 100%.

Management exercises judgement as to when a restatement of the financial statements of a Group entity becomes necessary. Following management’s assessment, the Group’s subsidiaries, MTN Sudan Company Limited and MTN Syria (JSC) and Irancell Telecommunication Company Services (PJSC), a joint venture of the Group, have been accounted for as entities operating in hyperinflationary economies. The results, cash flows and financial positions of MTN Sudan Company Limited and MTN Syria (JSC) have been expressed in terms of the measuring units current at the reporting date and the results and financial position of Irancell Telecommunication Company Services (PJSC) have been adjusted in order to calculate the Group’s share of its net assets and profit or loss (note 14).

The general price indices used in adjusting the results, cash flows and financial position of the Group’s subsidiaries are set out below:

MTN Sudan Company Limited The general price index used as published by the International Monetary Fund is as follows:

General Inflation price rate Date Base year index (%) 31 December 2014 2007 480 28.7

The cumulative inflation rate over three years as at 31 December 2014 is 163.8%. The average adjustment factor used for 2014 was 1.16.

MTN Syria (JSC) Reliable inflation data could not be obtained on the inflation rate in Syria. The general price index set out below was calculated by reference to the change in the United States dollar: Syrian pound exchange rate.

General Inflation price rate Date Base year index (%) 31 December 2014 2013 138 37.7

The cumulative inflation rate over three years as at 31 December 2014 is 265.7%.

The average adjustment factor used for 2014 was 1.32.

F-144 Notes to the Group annual financial statements for the year ended 31 December 2014

2 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 2.15 Hyperinflation (continued) The impact of adjusting the Group’s results for the effects of hyperinflation is set out below:

2014 2013 Income statement Rm Rm Increase in revenue 776 — Increase in EBITDA 241 — Net monetary gain 878 — Increase in share of results of associates and joint ventures after tax1 529 318 (Decrease)/increase in profit after tax2 (612) 318 1 Including share of net monetary gain amounting to R927 million (2013: R627 million). 2 Including goodwill impairment for the year relating to MTN Sudan Company Limited (note 12).

3 OPERATING SEGMENTS The Group has identified reportable segments that are used by the Group executive committee (chief operating decision maker) to make key operating decisions, allocate resources and assess performance. The reportable segments are geographically differentiated regions and are grouped by their relative size.

The Group’s principal activities include the provision of network IT services, local, national and international telecommunications services; broadband and internet products and services; and converged fixed/mobile products and services.

Operating results are reported and reviewed regularly by the Group executive committee and include items directly attributable to a segment as well as those that can be attributed on a reasonable basis, whether from external transactions or from transactions with other Group segments.

Unallocated items mainly comprise corporate expenses which do not directly relate to the operating activities of the segments or which cannot be re-allocated on a reasonable basis. Segment results are determined before any adjustment for non-controlling interests.

EBITDA is used as a measure of reporting profit or loss for each segment.

During the year under review, the Group executive committee resolved to review segment results on a basis excluding profits realised in respect of the sale of towers during the respective financial year. In addition, Irancell Telecommunication Company Services (PJSC), which previously formed part of the large opco cluster in terms of the segmental presentation of financial results, is now presented to the Group executive committee on a stand- alone basis and not as part of the large opco cluster any longer. Due to the change in the segment information presented to the CODM during the current financial year, the comparatives were adjusted accordingly.

1 1,2 Revenue contribution (%) 2014 2013 EBITDA contribution (%) 2014 2013

South Africa 25 27 South Africa 18 22 Nigeria 34 33 Nigeria 46 45 Iran 7 6 Iran 7 6 Ghana 5 6 Ghana 4 5 Syria 2 2 Syria 1 1 Cameroon 4 4 Cameroon 4 3 Ivory Coast 4 4 Ivory Coast 4 3 Uganda 3 3 Uganda 3 3 Sudan 2 2 Sudan 1 1 Small opco cluster 14 13 Small opco cluster 12 11

1 Includes Iran, excludes adjustments for hyperinflation and head office companies. 2 Excludes adjustments for profit on tower sales.

F-145 Notes to the Group annual financial statements for the year ended 31 December 2014

3 OPERATING SEGMENTS (continued)

Large opco cluster Adjustments to IFRS Small Major Head office Profit on Adjustments South Ivory opco joint venture companies and tower for hyper- Africa Nigeria Ghana Cameroon Coast Uganda Syria1 Sudan1 cluster – Iran1 eliminations2 Iran3 sales inflation Consolidated Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm 2014 Revenue 38,922 53,995 7,149 6,194 6,418 5,289 3,449 2,701 22,385 11,631 (348) (11,631) — 776 146,930 EBITDA 12,509 31,620 2,674 2,651 2,475 2,074 651 914 8,083 4,982 1,869 (4,982) 7,430 241 73,191 Depreciation and amortisation (21,513) Impairment of goodwill (2,033) Net finance costs (3,668) Net monetary gain 878 Share of results of associates and joint ventures after tax 4,208 Profit before tax 51,063 EBITDA margin (%) 32.1 58.6 37.4 42.8 38.6 39.2 18.9 33.8 36.1 42.8 49.8 F-146 Capital expenditure4 5,676 8,375 1,400 862 1,185 667 357 1,392 3,888 3,112 1,440 (3,112) — 164 25,406 Capex/revenue (%) 14.6 15.5 19.6 13.9 18.5 12.6 10.4 51.5 17.4 26.8 17.3 20135 Revenue 40,482 48,159 8,269 5,204 5,480 4,467 3,229 2,496 19,804 9,514 (320) (9,514) — 137,270 EBITDA 14,067 29,235 3,102 2,215 2,239 1,603 561 792 6,732 4,075 (1,084) (4,075) 968 60,430 Depreciation and amortisation (19,278) Net finance costs (1,234) Share of results of associates and joint ventures after tax 3,431 Profit before tax 43,349 EBITDA margin (%) 34.7 60.7 37.5 42.6 40.9 35.9 17.4 31.7 34.0 42.8 44.0 Capital expenditure4 5,835 14,298 1,690 768 830 553 892 1,072 3,809 1,758 417 (1,758) — 30,164 Capex/revenue (%) 14.4 29.7 20.4 14.8 15.1 12.4 27.6 43.0 19.2 18.5 22.0

1 Excludes adjustments for hyperinflation. 2 Head office companies and eliminations consist mainly of the Group’s central financing activities, management fees and dividends received from segments as well as intersegment eliminations. 3 Irancell Telecommunication Company Services (PJSC) proportionate results are included in the segment analysis as reviewed by the CODM and excluded from IFRS reported results due to equity accounting for joint ventures. 4 Capital expenditure comprises additions to property, plant and equipment, software and intangible capital work-in-progress. 5 Restated, refer to note 48.

The Group is domiciled in South Africa. Notes to the Group annual financial statements for the year ended 31 December 2014

4 REVENUE Revenue is measured at the fair value of the consideration received or receivable from the sale of goods and services in the ordinary course of the Group’s activities. Revenue is presented net of indirect taxes, estimated returns and trade discounts.

Revenue from the sale of goods and the rendering of services is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue, and associated costs incurred or to be incurred, can be measured reliably. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.

Postpaid products typically include the sale of a handset, activation fee and a service contract; and prepaid products include a subscriber identification module (SIM) card and airtime.

Multiple element (or bundled) arrangements are divided into separate units of accounting, and revenue is recognised through the application of the relative fair value method, resulting in the proportionate allocation of any discount to all elements in the bundle.

The Group operates loyalty programmes in certain entities where customers accumulate points for purchases made, which entitle them to discounts on future purchases. The reward points are recognised as a separately identifiable component of the initial sale transaction by allocating the consideration received or receivable between the reward points and the other components of the sale such that the reward points are initially recognised as deferred income at their fair value. Revenue from the reward points is recognised when the points are redeemed. Breakage (forfeiture of points) is recognised when redemption becomes remote.

The main categories of revenue and the bases of recognition are as follows:

Airtime and subscription, data and SMS • airtime, data and SMS: revenue is recognised on the usage basis commencing on the date of activation; • connection fees: revenue is recognised on the date of activation of a new SIM card; and • SIM kits: revenue is recognised on the date of sale.

The terms and conditions of postpaid bundled airtime products may allow for the carryover of unused value or minutes. The revenue related to the unused value or minutes is deferred and recognised when utilised by the customer or on termination of the contract. Breakage (forfeiture of unused value or minutes) is recognised when the unused value or minutes expire or when usage thereof becomes remote.

Revenue received on prepaid contracts is deferred and recognised when services are utilised by the customer or on termination of the customer relationship. Breakage is recognised when the prepaid credit expires or when utilisation thereof becomes remote.

Interconnect/roaming Interconnect/roaming revenue is recognised on a usage basis, unless it is not probable on the transaction date that the interconnect revenue will be received, in which case interconnect revenue is recognised only when the cash is received or where a right of set-off exists with interconnect parties in settling outstanding amounts.

F-147 Notes to the Group annual financial statements for the year ended 31 December 2014

4 REVENUE (continued) Mobile telephones and accessories Revenue on the sale of mobile telephones and accessories to third parties is recognised only when risks and rewards of ownership are transferred to the buyer. 2014 (%) 2013 (%)

Airtime and subscription 60 Airtime and subscription 62 Roaming 1 Roaming 1 Data 19 Data 15 SMS 3 SMS 4 Interconnect 10 Interconnect 11 Mobile telephones and Mobile telephones and accessories 5 accessories 6 Other 2 Other 1

2014 20131 Rm Rm Airtime and subscription 88,347 85,464 Roaming 1,510 1,292 Data 27,478 20,504 SMS 4,552 5,364 Interconnect 15,009 15,367 Mobile telephones and accessories 7,890 7,541 Other 2,144 1,738 146,930 137,270

1 Restated, refer to note 48.

The Group’s unearned income at the end of the year amounts to R7 609 million (2013: R7 004 million).

5 OTHER INCOME Other income is recognised when the risks and rewards of ownership of the assets are transferred to the buyer.

2014 2013 Rm Rm Profit on tower sales – Nigeria 7,329 — Sale proceeds 5,406 — Contingent consideration 327 — Fair value of retained interest in Nigeria Tower InterCo B.V. and equity derivative 4,309 — Carrying amount of assets and related liabilities disposed (2,713) — Profit on tower sales – other subsidiaries 70 930 Sale proceeds 1,059 2,536 Carrying amount of assets and related liabilities disposed (962) (1,416) Warranty provision and consultancy cost (27) (190) Total profit on tower sales 7,399 930 Realisation of deferred gain on Ghana tower sale1 31 38 Realisation of deferred gain on asset swap for investment in BICS2 364 357 Other 134 2 7,928 1,327

1 In 2011, Scancom Limited (MTN Ghana) concluded a transaction with American Tower Company (ATC), which involved the sale of MTN Ghana’s base transceiver station (BTS) sites to TowerCo Ghana which is an associate of the Group. Profit was eliminated to the extent of the Group’s interest in the associate. Such unrealised profit is realised by the Group as the underlying assets are depreciated by the associate. 2 The deferred gain arose on the contribution of various assets from MTN Dubai, MTN International Carrier Services and Uniglobe, in exchange for a 20% investment in the associate, Belgacom International Carrier Services (BICS) (note 14). This gain was deferred and is being amortised over a five-year period. The deferred gain was fully amortised during the year.

F-148 Notes to the Group annual financial statements for the year ended 31 December 2014

5 OTHER INCOME (continued) As part of the Group’s strategy to monetise its investment in tower infrastructure, the Group entered into a transaction with IHS which involves the sale of 9,132 of its mobile network towers in MTN Nigeria Communications Limited, in two tranches to INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V. The transaction resulted in IHS obtaining a 49% interest in Nigeria Tower InterCo B.V., with the remaining 51% interest held by the Group (note 14). Nigeria Tower InterCo B.V. has been classified as an associate of the Group.

The first tranche of the tower sale closed on 24 December 2014 which involved the sale of 4,154 mobile network towers by MTN Nigeria Communications Limited to INT Towers Limited for a cash consideration of US$451 million and the Group recognising its equity interest in Nigeria Tower InterCo B.V. amounting to US$370 million. A receivable amounting to US$29 million has been recognised based on management’s estimate of the contingent consideration receivable.

MTN Nigeria Communications Limited will be the anchor tenant on commercial terms on the towers for an initial period of 10 years. The transaction resulted in a sale and leaseback transaction classified as an operating lease (note 2.13).

The second tranche of the transaction is expected to close in the second quarter of 2015 subject to customary closing conditions.

In addition, the Group also concluded transactions with IHS in which IHS acquired 550 mobile network towers from MTN Rwandacell Limited for US$48 million and 748 towers from MTN (Zambia) Limited for US$57 million during the year. IHS is a 100% shareholder of the tower companies set up in each country to manage the towers and other passive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited are the anchor tenants on commercial terms of the towers for an initial term of 10 years. The transactions resulted in sale and leaseback transactions classified as operating leases.

In 2013, MTN Côte d’Ivoire S.A. and Mobile Telephone Networks Cameroon Limited concluded transactions with IHS in which IHS acquired 911 mobile network towers from MTN Côte d’Ivoire S.A. for US$141 million and 820 towers from Mobile Telephone Networks Cameroon Limited for US$143 million. IHS is a 100% shareholder of the tower companies set up in each country to manage the towers and other passive infrastructure. The transactions resulted in sale and leaseback transactions classified as operating leases.

6 OPERATING PROFIT Connection incentives Connection incentives are expensed in the period in which they are incurred.

Employee benefits Remuneration to employees in respect of services rendered during a reporting period is expensed in that reporting period. A liability is recognised for accumulated leave when there is a present legal or constructive obligation as a result of past service rendered by employees.

A liability for unvested short-term benefits is recognised when there is no realistic alternative other than to settle the liability, and at least one of the following conditions is met: • there is a formal plan and the amounts to be paid are determined before the time of issuing the annual financial statements; or • achievement of previously agreed bonus criteria has created a valid expectation by employees that they will receive a bonus and the amount can be determined before the time of issuing the annual financial statements.

F-149 Notes to the Group annual financial statements for the year ended 31 December 2014

6 OPERATING PROFIT (continued) Post-employment benefits Defined contribution plans Group companies operate various defined contribution plans. Contributions to defined contribution plans in respect of services rendered during a period are recognised as an employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Share-based payment transactions The Group operates a number of share incentive schemes. For further details refer to note 44.

Termination benefits Termination benefits may be payable when an employee’s employment is terminated before the normal retirement date due to death or retrenchment or whenever an employee accepts voluntary redundancy in exchange for these benefits.

The Group recognises termination benefits at the earlier of the following dates: • when the Group can no longer withdraw the offer of those benefits; and • when the Group recognises costs for a restructuring that is within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets that includes the payment of termination benefits.

In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the reporting date are discounted to their present value.

2014 2013 Rm Rm Staff costs (8,838) (8,670) Salaries and wages (7,109) (6,709) Post-employment benefits (405) (381) Share options granted to directors and employees (110) (215) Training (244) (293) Other (970) (1,072) The following disclosable items have been included in arriving at operating profit: Auditors’ remuneration (129) (125) Audit fees (104) (105) Fees for other services (14) (10) Expenses (11) (10) Emoluments to directors and prescribed officers (note 40) (154) (149) Operating lease rentals (4,413) (3,373) Property (4,312) (3,063) Equipment and vehicles (101) (310) Loss on disposal of property, plant and equipment and intangible assets (69) (42) Impairment loss on property, plant and equipment (note 11) (634) (7) Reversal of impairment charge on property, plant and equipment (note 11) — 35 Impairment loss on other intangible assets (note 12) (74) — Reversal of write-down/(write-down charge) of inventories (note 18) 94 (64) Impairment of trade receivables (note 19) (286) (743)1 Reversal of impairment/(impairment) of non-current receivables (note 15) 230 (223) 1 Restated, refer to note 48.

F-150 Notes to the Group annual financial statements for the year ended 31 December 2014

7 FINANCE INCOME AND FINANCE COSTS Finance income Finance income comprises interest income on funds invested, changes in the fair value of financial assets at fair value through profit or loss, foreign exchange gains and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs Finance costs comprise interest expenses on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, foreign exchange losses and any losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using the effective interest method, unless the borrowing costs are directly attributable to the acquisition, construction or production of qualifying assets, in which case the directly attributable borrowing costs are capitalised.

2014 2013 Rm Rm Interest income on loans and receivables 789 653 Interest income on bank deposits 2,313 1,706 Foreign exchange gains1 3,670 9,063 Finance income 6,772 11,422 Interest expense on financial liabilities measured at amortised cost (5,669) (4,659) Foreign exchange losses1 (4,771) (7,997) Finance costs (10,440) (12,656) Net finance costs recognised in profit or loss (3,668) (1,234)

1 The foreign exchange gains and losses have been determined on an instrument-by-instrument basis.

8 INCOME TAX EXPENSE The tax expense for the period comprises current, deferred and withholding tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity. For these items the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current tax Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the reporting date in the countries where the Company and its subsidiaries operate and generate taxable income, and any adjustment to tax payable in respect of previous years. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.

Deferred tax Deferred tax is recognised using the liability method, providing for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated annual financial statements for financial reporting purposes. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction (other than a business combination) that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is measured at tax rates (and laws) that have been enacted or substantively enacted at the reporting date and are expected to apply to temporary differences when they reverse.

Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures except for deferred tax liabilities where the timing of the reversal of the temporary differences is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

F-151 Notes to the Group annual financial statements for the year ended 31 December 2014

8 INCOME TAX EXPENSE (continued) A deferred tax asset is recognised for unused tax losses or deductible temporary differences only to the extent that it is probable that future taxable profit will be available, against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, deferred tax relating to these subsidiaries is recognised using the liability method, providing for temporary differences arising between the tax bases of assets and liabilities and their restated carrying amounts.

Withholding tax Withholding tax is payable at different rates varying between 0% and 20% on amounts paid to the Group by its subsidiaries as dividends and management fees.

2014 20131 Rm Rm Analysis of income tax expense for the year Normal tax (13,027) (8,974) Current year (13,226) (9,106) Adjustments in respect of the prior year 199 132 Deferred tax (note 16) 1,400 (2,192) Current year 1,466 (2,453) Adjustments in respect of the prior year (66) 261 Capital gains tax (1) 1 Foreign income and withholding taxes (1,733) (1,322) (13,361) (12,487)

1 Restated, refer to note 48.

The table below explains the differences between the expected tax expense on continuing operations, at the South African statutory rate of 28%, and the Group’s total tax expense for each year.

The Group’s effective tax rate is reconciled to the South African statutory rate as follows:

2014 20131 %% Tax rate reconciliation Tax at statutory tax rate 28.00 28.00 Expenses not allowed 1.86 1.32 Effect of different tax rates in other countries 0.60 1.30 Income not subject to tax (4.51) (1.32) Share of results of associates and joint ventures (2.31) (2.22) Foreign income and withholding taxes 3.39 3.05 Other (0.86) (1.32) Effective tax rate 26.17 28.81

1 Restated, refer to note 48.

F-152 Notes to the Group annual financial statements for the year ended 31 December 2014

8 INCOME TAX EXPENSE (continued) The following are the corporate tax rates applicable to the various jurisdictions in which the Group operates:

Corporate tax rate 2014 2013 Country %% Afghanistan 20 20 Benin1 30 30 Cameroon 38.5 38.5 Congo1 30 30 Côte d’Ivoire 30 30 Cyprus 12.5 12.5 Ethiopia 30 30 Ghana 25 25 Guinea 35 35 Guinea-Bissau 25 25 Kenya 30 30 Liberia 25 25 Monaco 0–33 0–33 Namibia 33 33 Netherlands 25 25 Nigeria 30 30 Rwanda 30 30 South Africa 28 28 South Sudan 20 20 Sudan1 2.5 2.5 Syria 14.7 14.7 Uganda 30 30 Yemen 50 50 Zambia 35 35 1 The entity has been granted a tax holiday at 31 December 2014.

9 EARNINGS PER ORDINARY SHARE Basic earnings per share Earnings per share is calculated using the weighted average number of ordinary shares in issue during the period and is based on the net profit attributable to ordinary shareholders. For the purpose of calculating earnings per share, treasury shares are deducted from the number of ordinary shares in issue.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares and is based on the net profit attributable to ordinary shareholders, adjusted for the after-tax dilutive effect. The Company has dilutive potential ordinary shares which comprise share options and share rights issued in terms of the Group’s share schemes, performance share plan and the MTN Zakhele transaction.

For the share options and share rights, a calculation is done to determine the number of the Company’s shares that would be required at fair value to settle the monetary value of the rights, after taking into account the unamortised share-based payment value. For the purposes of this calculation the average annual market share price of the Company is used.

Headline earnings per share Headline earnings per share is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as required by Circular 2/2013 issued by the South African Institute of Chartered Accountants (SAICA).

F-153 Notes to the Group annual financial statements for the year ended 31 December 2014

9 EARNINGS PER ORDINARY SHARE (continued) In terms of the MTN Zakhele B-BBEE transaction, the Group issued notional vendor financing shares to MTN Zakhele at par value (note 24). The Group has a call option over these shares. As these shares are potentially dilutive shares, these are included in the diluted earnings per share calculation. A calculation is done at each reporting period to determine the number of shares that could have been acquired at fair value.

2014 2013 ’000 ’000 Weighted average number of shares (excluding treasury shares) 1,831,196 1,832,730 Adjusted for: – Share options – MTN Zakhele 7,193 6,741 – Share options — 50 – Share appreciation rights 715 985 – Performance share plan 2,150 1,953 Weighted average number of shares for calculation of diluted earnings per share 1,841,254 1,842,459 Refer to note 24 for a reconciliation of total shares in issue. Reconciliation between net profit attributable to the equity holders of the Company and headline earnings:

2014 20131 Rm Rm Rm Rm Gross Net2 Gross Net2 Profit after tax 32,079 26,751 Adjusted for: Net loss on disposal of property, plant and equipment and intangible assets (IAS 16 and IAS 38) 69 63 453 34 Impairment of goodwill (IAS 36) 2,033 2,033 —— Net impairment loss/(reversal of impairment) of property, plant and equipment and intangible assets (IAS 36) 708 565 (28) (20) Loss on disposal of investment in joint venture (IAS 28) 15 15 —— Realisation of deferred gain (IAS 28) (364) (364) (357) (357) Profit on disposal of non-current assets held for sale (IFRS 5) (7,399) (6,237) (930) (510) Realisation of deferred gain on disposal of non-current assets held for sale (IFRS 5) (31) (31) (38) (38) Headline earnings 28,123 25,860

2014 20131 Earnings per ordinary share (cents) – Basic earnings 1,752 1,460 – Basic headline earnings 1,536 1,411 – Diluted earnings 1,742 1,452 – Diluted headline earnings 1,527 1,404 1 Restated, refer to note 48. 2 Amounts are measured after taking into account non-controlling interests and tax. 3 Including profit on disposal of property, plant and equipment from joint ventures. Headline earnings is calculated in accordance with Circular 2/2013 Headline Earnings as issued by SAICA at the request of the JSE Limited.

F-154 Notes to the Group annual financial statements for the year ended 31 December 2014

10 DIVIDEND Dividends distributed to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s directors.

2014 2013 Cents Cents Dividends paid per share Rm per share Rm Final dividend paid in respect of the prior year 665 12,3022 503 9,3622 Interim dividend paid in respect of the current year 445 8,2252 370 6,8482 20,527 16,210 Dividends declared Approved after the reporting date and not recognised as a liability 8001 14,6942 665 12,3022

1 Declared at the board meeting on 3 March 2015. 2 Excluding dividends on 10,704,475 (2013: 22,337,752) treasury shares.

11 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are measured at historical cost less accumulated depreciation and impairment losses. Property, plant and equipment acquired through business combinations are initially shown at fair value (based on replacement cost) and are subsequently carried at the initially determined fair value less accumulated depreciation and impairment losses.

Property, plant and equipment under construction (capital work-in-progress) are measured at initial cost and depreciation commences from the date the assets are transferred to an appropriate category of property, plant and equipment, i.e. when commissioned and ready for their intended use. Purchased software that is integral to the functionality of the related equipment is capitalised as part of the equipment. The Group capitalises general and specific borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are expensed in profit or loss.

In circumstances whereby the Group enters into an exchange transaction, the Group determines whether such an exchange has commercial substance. Property, plant and equipment acquired in an exchange transaction is measured at fair value unless the exchange transaction lacks commercial substance or the fair value of neither the asset received nor the asset given up is reliably measurable. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up. Any consideration paid or payable is included in the cost of the asset received. Property, plant and equipment received for no consideration is accounted for at zero value.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, property, plant and equipment relating to these subsidiaries are restated by applying the change in the general price indices from the date of acquisition to the current reporting date.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Depreciation is calculated on a straight-line basis to write off the cost of the assets to their residual values over their estimated useful lives. Depreciation relating to the property, plant and equipment of MTN Sudan Company Limited and MTN Syria (JSC) is based on the restated amounts, which have been adjusted for the effects of hyperinflation.

Useful lives and residual values are reviewed on an annual basis and the effect of any changes in estimate is accounted for on a prospective basis. For a summary of useful lives, refer to note 2.

Land is not depreciated. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the expected term of the relevant lease.

F-155 Notes to the Group annual financial statements for the year ended 31 December 2014

11 PROPERTY, PLANT AND EQUIPMENT (continued) Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. Repairs and maintenance costs are included in profit or loss during the financial period in which they are incurred.

The gain or loss arising on the disposal or retirement of an asset is included in profit or loss.

Impairment An impairment loss is recognised in profit or loss if the carrying amount of an asset or a cash-generating unit exceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together into cash-generating units. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Goodwill arising from business combinations is allocated to CGUs or the group of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss is subsequently reversed only to the extent that the asset or cash-generating unit’s carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised. A reversal of an impairment loss is recognised immediately in profit or loss. An impairment loss in respect of goodwill is not reversed.

Property, plant and equipment with finite useful lives The Group annually reviews the carrying amounts of its property, plant and equipment and intangible assets with finite useful lives in order to determine whether there is any indication of impairment. If any such indication exists, the recoverable amounts of the assets are estimated in order to determine the extent, if any, of the impairment loss.

F-156 Notes to the Group annual financial statements for the year ended 31 December 2014

11 PROPERTY, PLANT AND EQUIPMENT (continued)

Information systems, Capital furniture work-in- Land and Leasehold Network and office progress/ buildings1 improvements infrastructure equipment other Vehicles2 Total Rm Rm Rm Rm Rm Rm Rm Carrying amount at 1 January 2013 5,540 1,072 53,157 3,266 10,438 432 73,905 Additions 581 181 12,332 1,496 11,966 248 26,804 Disposals (23) (4) (644) (23) — (20) (714) Reallocations3 240 3 12,104 96 (13,799) 50 (1,306) Depreciation for the year (425) (199) (14,190) (1,341) (126) (177) (16,458) Impairment loss — — (7) — — — (7) Reversal of impairment loss — — 32 — 3 — 35 Other movements 57 (42) 33 (173) (131) — (256) Effect of movements in exchange rates 373 111 8,034 518 1,774 90 10,900 Carrying amount at 31 December 2013 6,343 1,122 70,851 3,839 10,125 623 92,903 Comprising: Cost 8,221 2,515 137,128 9,866 10,481 1,376 169,587 Accumulated depreciation and impairment losses (1,878) (1,393) (66,277) (6,027) (356) (753) (76,684) 6,343 1,122 70,851 3,839 10,125 623 92,903 Carrying amount at 1 January 2014 6,343 1,122 70,851 3,839 10,125 623 92,903 Additions 380 196 7,539 1,287 12,604 148 22,154 Disposals — (3) (172) (25) (179) (40) (419) Reallocations3 250 18 4,883 453 (11,711) 30 (6,077) Depreciation for the year (476) (195) (15,659) (1,570) (171) (191) (18,262) Impairment loss — — (471) — (163) — (634) Other movements — 8 (741) (73) (340) — (1,146) Effect of movements in exchange rates4 (74) (13) (983) (43) 149 (9) (973) Carrying amount at 31 December 2014 6,423 1,133 65,247 3,868 10,314 561 87,546 Comprising: Cost 8,642 2,725 134,639 10,968 11,017 1,225 169,216 Accumulated depreciation and impairment losses (2,219) (1,592) (69,392) (7,100) (703) (664) (81,670) 6,423 1,133 65,247 3,868 10,314 561 87,546

1 Included in land and buildings are leased assets with a carrying amount of R179 million (2013: R180 million). 2 Included in vehicles are leased assets with a carrying amount of R48 million (2013: R82 million). 3 Reallocations include an amount of R5,966 million (2013: R1,265 million) relating to network infrastructure reallocated to non-current assets held for sale (note 17). 4 Includes the effect of hyperinflation.

F-157 Notes to the Group annual financial statements for the year ended 31 December 2014

11 PROPERTY, PLANT AND EQUIPMENT (continued) 11.1 Impairment loss The following entities recognised impairment losses amounting to R634 million during the year:

2014 Rm Scancom Limited (MTN Ghana) 329 MTN Nigeria Communications Limited 133 Mobile Telephone Networks Proprietary Limited (South Africa) 169 Areeba Guinea S.A. 3 634

In 2013, MTN Nigeria Communications Limited reversed a portion of its previously recognised impairment losses amounting to R32 million.

11.2 Leased property, plant and equipment The Group leases various premises and sites which have varying terms, escalation clauses and renewal rights.

Finance lease commitments are disclosed in note 36.

11.3 Capital work-in-progress There are various capital work-in-progress projects under way within the Group, a summary thereof is set out below:

2014 2013 Rm Rm Mobile Telephone Networks Proprietary Limited (South Africa) 766 385 Scancom Limited (MTN Ghana) 990 661 MTN Sudan Company Limited 961 117 MTN Nigeria Communications Limited 987 1,276 MTN Afghanistan Limited 195 295 Areeba Guinea S.A. 100 175 MTN Côte d’Ivoire S.A. 303 95 MTN Uganda Limited 313 263 MTN (Dubai) Limited 68 243 MTN Yemen 209 240 MTN South Sudan Limited 391 601 MTN Syria (JSC) 513 467 MTN Congo S.A. 274 301 MTN Cameroon Limited 115 271 Lonestar Communications Corporation LLC 130 421 Other 304 194 6,619 5,111

1 Previously included in “Other”.

11.4 Changes in estimates During the year, MTN Afghanistan Limited revised the useful life of its network infrastructure from 10 to 6.5 years. This resulted in an increase of R86 million in the depreciation charge for the current and future years.

In 2013, MTN Uganda Limited revised the useful life of its network equipment from 12 to 10 years. MTN Syria (JSC) revised the useful life of its motor vehicles and other fixed assets from 5 to 4 years. This resulted in an increase of R40 million and R104 million in the depreciation charge, respectively.

F-158 Notes to the Group annual financial statements for the year ended 31 December 2014

11 PROPERTY, PLANT AND EQUIPMENT (continued) 11.5 Encumbrances Borrowings are secured by various categories of property, plant and equipment with the following carrying amounts (note 26):

2014 2013 Rm Rm Scancom Limited (MTN Ghana) 5,600 6,087 MTN Sudan Company Limited 4,030 3,027 MTN Congo S.A. 27 — MTN Uganda Limited — 2,568 MTN Rwandacell Limited — 1,419 MTN Côte d’Ivoire S.A. — 127 9,657 13,228

12 INTANGIBLE ASSETS AND GOODWILL Intangible assets with an indefinite useful life Goodwill is measured at cost less accumulated impairment losses and is not amortised but annually tested for impairment.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, goodwill relating to these subsidiaries is restated by applying the change in the general price indices from the date of acquisition to the current reporting date.

Goodwill arising on the acquisition of subsidiaries is included in intangible assets. Goodwill arising on the acquisition of an associate or joint venture is included in “investment in associates and joint ventures” and is tested for impairment as part of the overall balance.

Gains or losses on the disposal of an entity include the carrying amount of goodwill allocated to the entity sold.

Intangible assets with finite useful lives The Group’s intangible assets with finite useful lives are as follows: • licences; • customer relationships; • computer software; and • other intangible assets.

Intangible assets with finite useful lives are measured at historical cost less accumulated amortisation and impairment losses. Intangible assets acquired through business combinations are initially shown at fair value and are subsequently carried at the initially determined fair value less accumulated amortisation and impairment losses. The initial cost incurred in respect of licences is capitalised. Contingent licence fees are expensed as they are incurred.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, intangible assets relating to these subsidiaries are restated by applying the change in the general price indices from the date of acquisition to the current reporting date.

Amortisation is calculated on a straight-line basis to write off the cost of intangible assets over their estimated useful lives. Amortisation relating to MTN Sudan Company Limited and MTN Syria (JSC) is based on the restated amounts, which have been adjusted for the effects of hyperinflation. For a summary of useful lives, refer to note 2.

F-159 Notes to the Group annual financial statements for the year ended 31 December 2014

12 INTANGIBLE ASSETS AND GOODWILL (continued) The gain or loss arising on the disposal or retirement of an intangible asset is included in profit or loss.

Costs associated with maintaining intangible assets are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable intangible assets controlled by the Group, and that will probably generate economic benefits, are capitalised when all the criteria for capitalisation are met.

Expenditure that enhances or extends the performance of intangible assets beyond their original specifications is recognised as a capital improvement and added to the original cost of the assets. Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Determination of fair values The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that are part of creating the related cash flows.

The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trademark being owned.

The fair values of all other intangible assets acquired in a business combination applicable to the Group are based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

Impairment An impairment loss is recognised in profit or loss if the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable amount. For the purpose of impairment testing, assets are grouped together into cash-generating units. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss is subsequently reversed only to the extent that the asset or cash-generating unit’s carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised. A reversal of an impairment loss is recognised immediately in profit or loss. An impairment loss in respect of goodwill is not reversed.

F-160 Notes to the Group annual financial statements for the year ended 31 December 2014

12 INTANGIBLE ASSETS AND GOODWILL (continued)

Other Capital Customer intangible work-in- Goodwill Licences relationships Software1 assets progress Total Rm Rm Rm Rm Rm Rm Rm Carrying amount at 1 January 2013 21,320 5,318 — 5,592 364 — 32,594 Additions — 139 — 1,991 — 1,369 3,499 Disposals — — — (9) — — (9) Re-allocations — 85 — 255 4 (303) 41 Amortisation for the year — (829) — (1,895) (96) — (2,820) Other movements — (50) — 36 (33) 148 101 Effect of movements in exchange rates 2,840 966 — 489 32 18 4,345 Carrying amount at 31 December 2013 24,160 5,629 — 6,459 271 1,232 37,751 Comprising: Cost 24,160 13,624 4,408 13,480 1,119 1,232 58,023 Accumulated amortisation and impairment losses — (7,995) (4,408) (7,021) (848) — (20,272) 24,160 5,629 — 6,459 271 1,232 37,751 Carrying amount at 1 January 2014 24,160 5,629 — 6,459 271 1,232 37,751 Additions 844 71 816 2,144 247 1,108 5,230 Disposals — — — (204) — — (204) Re-allocations — 210 — 2,197 — (2,296) 111 Amortisation for the year — (882) (31) (2,320) (18) — (3,251) Impairment loss (2,033) — — (74) — — (2,107) Other movements — — 11 (1) (9) — 1 Effect of movements in exchange rates2 (746) (26) (5) (137) — 1 (913) Carrying amount at 31 December 2014 22,225 5,002 791 8,064 491 45 36,618 Comprising: Cost 24,258 13,841 5,212 17,023 1,134 45 61,513 Accumulated amortisation and impairment losses (2,033) (8,839) (4,421) (8,959) (643) — (24,895) 22,225 5,002 791 8,064 491 45 36,618

1 Included in software are leased assets with a carrying amount of R733 million (2013: R670 million). 2 Includes the effect of hyperinflation.

F-161 Notes to the Group annual financial statements for the year ended 31 December 2014

12 INTANGIBLE ASSETS AND GOODWILL (continued) 12.1 Goodwill A summary of the goodwill allocation and related assumptions applied for impairment testing purposes are presented below:

2014 2013 Growth Discount Growth Discount rate rate rate rate % %Rm% %Rm MTN Côte d’Ivoire S.A. 2.5 12.2 2,599 2.5 13.1 2,697 Scancom Limited (MTN Ghana) 7.5 19.5 6,957 7.0 17.9 8,760 MTN Sudan Company Limited 10.0 32.6 784 10.0 28.4 2,385 MTN Yemen 7.1 26.2 3,338 7.5 36.1 3,040 MTN Afghanistan Limited 5.0 19.2 1,645 5.0 17.0 1,560 MTN Uganda Limited 5.0 17.2 676 5.0 16.1 674 MTN Congo S.A. 2.7 11.6 860 2.6 12.4 892 MTN Syria (JSC) 6.5 25.7 146 6.7 29.2 183 MTN Cyprus Limited 2.0 9.9 841 1.8 12.8 873 Spacetel Benin SA 2.8 14.2 1,331 2.8 11.2 1,381 Areeba Guinea S.A. 5.9 17.0 918 6.0 21.7 860 Mobile Telephone Network Proprietary Limited (South Africa) 5.9 13.4 525 —— — Afrihost Proprietary Limited 5.9 13.4 319 —— — Lonestar Communications Corporation LLC (Liberia)1 5.0 16.4 332 5.0 12.4 303 MTN Rwandacell1 5.0 14.6 370 5.0 13.3 336 Other 584 216 Total 22,225 24,160

1 Previously included in “Other”.

Goodwill is tested annually for impairment. The recoverable amounts of CGUs were determined based on value- in-use calculations. The calculations mainly used cash flow projections based on financial budgets approved by management covering a 3 to 10-year period. Management is confident that projections covering periods longer than five years are appropriate based on the long-term nature of the Group’s infrastructure and operating model. Cash flows beyond the above period were extrapolated using the estimated growth rates measured below. The following key assumptions were used for the value-in-use calculations: • growth rates: the Group used steady growth rates to extrapolate revenues beyond the budget period cash flows. The growth rates were consistent with publicly available information relating to long-term average growth rates for each of the markets in which the respective CGU operated. The average growth rates used ranged from 2.0% to 10.0% (2013: 1.8% to 10.0%); and • discount rates: discount rates ranged from 9.9% to 32.6% (2013: 11.2% to 36.1%). Discount rates used reflect specific risks relating to the relevant CGU.

Goodwill impairment During the year, an impairment loss amounting to R2,033 million (2013: Rnil) was recognised relating to MTN Sudan Company Limited.

Individually material intangible assets Other than goodwill, network licences and software, there were no items of intangible assets that were individually material at the end of the current or prior year.

12.2 Encumbrances Borrowings are secured by intangible assets of Scancom Limited (MTN Ghana) with a carrying amount of R539 million (2013: R560 million).

F-162 Notes to the Group annual financial statements for the year ended 31 December 2014

12 INTANGIBLE ASSETS AND GOODWILL (continued) 12.3 Licences

Granted/ Licence agreements Type renewed Term Mobile Telephone Networks ECS licence 15/01/2009 15 years Proprietary Limited (South Africa) ECNS licence 15/01/2009 20 years 900MHz 1,800MHz 1/01/2010 Renewable annually 3G MTN Uganda Limited 900MHz 15/04/1998 20 years 1,800MHz MTN Rwandacell Limited GSM 1/07/2008 13 years SNO 30/06/2006 15 years MTN Zambia Limited 900MHz 1,800MHz 23/09/2010 15 years 2,100MHz MTN Nigeria Communications 1,800MHz 9/02/2001 15 years Limited 3G spectrum licence 1/05/2007 15 years Unified access licence (including 1/09/2006 15 years international gateway) WACS 1/01/2010 20 years WiMax 3.5GHz spectrum 2007 Renewable annually Microwave spectrum 2001 Renewable annually 8GHz – 26GHz Scancom Limited (MTN Ghana) 900MHz 2/12/2004 15 years 1,800MHz 3G 23/01/2009 15 years Mobile Telephone Network 900MHz1 15/02/2000 15 years Cameroon Limited First category network for internet 31/03/2006 10 years access and VPN MTN Côte d’Ivoire S.A. 900MHz 2/04/1996 20 years 1,800MHz WiMax 2.5 – 3.5GHz 31/07/2002 20 years 3G/UMTS 1.9/2.1GHz 31/05/2012 10 years Spacetel Benin SA 900MHz 19/10/2007 25 years 1,800MHz Universal licence 19/03/2012 20 years Areeba Guinea S.A. 900MHz 31/08/2005 18 years 1,800MHz WiMax1 4/06/2009 5 years 3G 14/08/2013 10 years MTN Congo S.A. 900MHz 25/11/2011 15 years 1,800MHz 25/11/2011 15 years International gateway 5/02/2002 15 years Optical fibre licence 2/04/2010 15 years 3G 25/11/2011 17 years 2G 25/11/2011 15 years International gateway by 3/06/2013 10 years optical fibre

F-163 Notes to the Group annual financial statements for the year ended 31 December 2014

12 INTANGIBLE ASSETS AND GOODWILL (continued) 12.3 Licences (continued)

Granted/ Licence agreements Type renewed Term Lonestar Communications 900MHz Corporation LLC (Liberia) 1,800MHz 24/03/2009 15 years WiMax 3G 19/02/2013 10 years Spacetel Guinea-Bissau SA 1,800MHz 900MHz 23/05/2014 10 years MTN Syria (JSC)1 900MHz 29/06/2002 15 years 1,800MHz 22/03/2007 10 years 3G 29/04/2009 8 years ISP 2009 Renewable annually MTN Sudan Company Limited Frequency 2G + 3G Transmission VSAT gateway 25/10/2003 20 years VSAT hub VSAT terminal MTN Afghanistan Limited 3G unified licence 1/07/2012 15 years MTN Yemen 900MHz 31/07/2000 15 years 1,800MHz 17/02/2008 15 years MTN Cyprus Limited 900MHz 1,800MHz 1/12/2003 20 years 4G (LTE) 2 100MHz 1 Renewal application lodged.

13 INVESTMENTS Investments consist of held-to-maturity and available-for-sale financial assets that are accounted for in accordance with the accounting policy disclosed in note 43.

2014 2013 Rm Rm Held-to-maturity financial assets Treasury bills with a fixed interest rate of 6,3% (2013: 6,3%) which mature in 20181 107 111 Bonds with a fixed interest rate of 5,8% which mature in 20191 116 — Available-for-sale Investment in IHS 5,773 — Unlisted equity investment 139 — 6,135 111

1 Denominated in Côte d’Ivoire Communauté Financière Africaine franc.

The recoverability of the investments was assessed at the reporting date and was found not to be impaired.

There were no held-to-maturity or available-for-sale financial assets disposed of in 2013 or in 2014.

F-164 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES Associates and joint ventures are accounted for using the equity method and are recognised initially at cost. The Group’s investment in associates and joint ventures include goodwill identified on acquisition net of any accumulated impairment losses. The consolidated annual financial statements include the Group’s share of post- acquisition accumulated profits or losses of associated companies and joint ventures in the carrying amount of the investments, which are generally determined from their latest audited annual financial statements or management accounts and the annual profit attributable to the Group is recognised in profit or loss. The Group’s share of any post-acquisition movement in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

Where an associate or joint venture’s functional currency is the currency of a hyperinflationary economy, the results and financial position of the associate or joint venture are restated in order to calculate the Group’s share of net assets and profit or loss.

The carrying amount of the Group’s investments in associates and joint ventures is reduced to recognise any potential impairment in the value of individual investments. When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint venture, the Group does not recognise further losses, unless the Group has an obligation, issued guarantees or made payments on behalf of the associate or joint venture.

Dilution gains or losses arising on investments in associates and joint ventures are recognised in profit or loss. If the ownership interests in an associate or joint venture is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss. Profits or losses resulting from upstream and downstream transactions between the Group and its associates and joint ventures are recognised in the Group’s annual financial statements only to the extent of unrelated investors’ interests in the associates and joint ventures. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Accounting policies of associates and joint ventures have been changed where necessary to align them with the policies of the Group. 2014 2013 Rm Rm Investment in associates 5,975 2,095 Investment in joint ventures 19,539 10,548 Total investment in associates and joint ventures 25,514 12,643 Share of results of associates after tax (127) 23 Share of results of joint ventures after tax 4,335 3,408 Total share of results of associates and joint ventures after tax 4,208 3,431 Share of results of associates after tax comprises: Share of results of associates after tax (28) 120 Amortisation of customer relationships – BICS (146) (150) (174) (30) Unwind of deferred tax on customer relationships – BICS 47 53 (127) 23

Investment in associates Unless otherwise stated, the Group’s associates’ countries of incorporation are also their principal place of operation.

F-165 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued) The Group has the following effective interests in associates:

Effective % interest in issued Country of ordinary share capital Associate Principal activity incorporation 2014 2013 Belgacom International Carrier Belgium 20 20 Services SA (BICS) Telecommunications Nigeria Tower InterCo B.V. Management of Netherlands 51 — telecommunication infrastructure Uganda Tower InterCo B.V. Management of Netherlands 49 49 telecommunication infrastructure Ghana Tower InterCo B.V. Management of Netherlands 49 49 telecommunication infrastructure Number Portability Proprietary Limited Porting South Africa 20 20 Content Connect Africa Proprietary Limited Telecommunications South Africa 36 —

Belgacom International Carrier Uganda Ghana Nigeria Services Tower Tower Tower SA (BICS) InterCo B.V. InterCo B.V. InterCo B.V.1 Other Total Rm Rm Rm Rm Rm Rm 2013 Balance at beginning of the year 1,493 270 — — 2 1,765 Additions — 69 — — — 69 Other income (note 5) — — 38 — — 38 Share of results after tax including amortisation of customer relationships 44 (77) — — 3 (30) Dividend income (220) — — — — (220) Other equity movements — (45) (38) — — (83) Effect of movements in exchange rates 469 87 — — — 556 Balance at end of the year 1,786 304 — — 5 2,095 2014 Balance at beginning of the year 1,786 304 — — 5 2,095 Additions — 46 — 4,178 — 4,224 Other income (note 5) — — 31 — — 31 Share of results after tax including amortisation of customer relationships 112 (221) — (64) (1) (174) Dividend income (233) — — — — (233) Other equity movements — — (31) — — (31) Effect of movements in exchange rates (4) 34 — 34 (1) 63 Balance at end of the year 1,661 163 — 4,148 3 5,975

1 During the year, the Group entered into a transaction with IHS in which it sold its mobile network towers in MTN Nigeria Communications Limited to INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V. The transaction resulted in IHS obtaining a 49% interest in Nigeria Tower InterCo B.V. and the Group increasing its equity interest by US$370 million (note 5).

F-166 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued) Summarised financial information of associates Set out below is the summarised financial information of each associate that is material to the Group. The summarised financial information is adjusted to reflect adjustments made by the Group when applying the equity method as required by IFRS 12 Disclosure of Interests In Other Entities.

Belgacom International Carrier Services SA Uganda Tower (BICS) InterCo B.V. 2014 2013 2014 2013 Rm Rm Rm Rm Summarised statement of financial position Total assets 12,652 12,918 2,597 2,406 Non-current assets 2,441 3,386 2,308 2,190 Current assets 10,211 9,532 289 216 Total liabilities 9,195 8,629 2,264 1,785 Non-current liabilities 139 99 1,767 1,459 Current liabilities 9,056 8,530 497 326 Net assets 3,457 4,289 333 621 % ownership interest held 20 20 49 49 Interest in associate excluding goodwill 691 858 163 304 Goodwill 970 928 — — Balance at end of the year 1,661 1,786 163 304 Summarised income statement Revenue 22,784 21,279 608 474 EBITDA 1,944 1,798 109 42 Profit before tax 908 500 (450) (156) Income tax expense (348) (283) — — Profit/(loss) after tax 560 217 (450) (156) % ownership interest held 20 20 49 49 Share of results of associates after tax including amortisation of customer relationships 112 44 (221) (77)

F-167 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)

Nigeria Tower Ghana Tower InterCo B.V. InterCo B.V. 2014 2013 2014 2013 Rm Rm Rm Rm Summarised statement of financial position Total assets 10,152 — 2,248 3,169 Non-current assets 9,627 — 1,047 2,001 Current assets 525 — 1,201 1,168 Total liabilities 2,019 — 4,817 4,185 Non-current liabilities 2,005 — 4,124 3,557 Current liabilities 14 — 693 628 Net assets 8,133 — (2,569) (1,016) % ownership interest held 51 — 49 49 Interest in associate excluding goodwill 4,148 — (1,259) (498) Unrecognised share of losses from associate — — 9821 3311 Unrecognised share of other comprehensive losses from associate — — 2771 1671 Balance at end of the year 4,148 — — — Summarised income statement Revenue — — 1,053 893 EBITDA (125) — 445 367 Loss before tax (125) — (1,227) (879) Income tax expense — — 33 260 Loss after tax (125) — (1,194) (619) % ownership interest held 51 — 49 49 Share of results after tax including amortisation of customer relationships (64) — (585) (303) Unrecognised share of losses from associate — — 585 303 Share of results of associates after tax (64) — — —

1 Translated at rates of exchange ruling at the reporting date.

There are no significant contingent liabilities relating to the Group’s interests in these associates at the end of the current or prior year.

Investment in joint ventures The Group has the following effective interests in joint ventures:

Effective % Country of interest in issued Joint venture Principal activity incorporation ordinary share capital 2014 2013 Irancell Telecommunication Company Services (PJSC) Network operator Iran 49 49 Mascom Wireless Botswana Proprietary Limited Network operator Botswana 53.1 53.1 Swazi MTN Limited Network operator Swaziland 30 30 MTN Mobile Money Holdings Proprietary Limited Wireless banking services South Africa — 50 Deci Investments Holding company Botswana 33.3 33.3 Middle East Internet Holding S.A.R.L (MEIH)1 Telecommunications Luxemburg 50 — Africa Internet Holding GmbH (AIH)2 Telecommunications Berlin 33.3 — 1 The entity operates in various countries across the Middle East. 2 The entity operates in various countries across Africa.

F-168 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued) The joint ventures listed above are unlisted and their countries of incorporation are also their principal place of operation unless otherwise indicated.

During the year the Group acquired a 50% interest in Middle East Internet Holding S.A.R.L (MEIH), a joint venture, for EUR120 million consisting of a EUR40 million cash payment and EUR80 million contingent consideration, and a 33.3% interest in Africa Internet Holding GmbH (AIH) for EUR168 million.

The net fair values of the joint ventures’ assets and liabilities at acquisition date are provisional and will be finalised in 2015.

The economy of Iran has been classified as hyperinflationary. As a result, the Group’s joint venture in Iran has been accounted for as an entity operating in a hyperinflationary economy. The results for the period ended 31 December 2014 and 2013 and financial position at 31 December 2014 and 2013 of the joint venture have been restated in order to calculate the Group’s share of its net assets and profit or loss. The general price index used as published by the IMF is set out below:

General Inflation price rate Base year index % 31 December 2014 2011 224 20.00 31 December 2013 2011 187 19.69

The cumulative inflation rate over three years as at 31 December 2014 is 102.80%.

The average adjustment factor used for 2014 was 1.11 (2013: 1.09).

All joint ventures have year ends consistent with that of the Company with the exception of Irancell Telecommunication Company Services (PJSC) that has a year end of 21 December, in line with statutory requirements in Iran.

Irancell Mascom Telecommunication Wireless Africa Company Botswana Internet Services Proprietary Holding (PJSC) Limited GmbH (AIH) Other Total Rm Rm Rm Rm Rm 2013 Balance at beginning of the year 1,543 1,039 — 298 2,880 Hyperinflation adjustment1 5,563 — — — 5,563 Share of results after tax 3,115 237 — 56 3,408 Dividend income (1,391) — — (61) (1,452) Other comprehensive income and effect of movements in exchange rates — 120 — 29 149 Balance at end of the year 8,830 1,396 — 322 10,548 2014 Balance at beginning of the year 8,830 1,396 — 322 10,548 Additions — — 2,453 1,773 4,226 Share of results after tax 4,113 250 (94) 66 4,335 Dividend income (2,400) (243) — (71) (2,714) Other equity movements — (87) — — (87) Other comprehensive income and effect of movements in exchange rates including the effect of hyperinflation1 3,433 13 (106) (109) 3,231 Balance at end of the year 13,976 1,329 2,253 1,981 19,539

1 Refer to note 1.3.3 for the Group’s accounting policy with regards to those entities whose functional currency is the currency of a hyperinflationary economy.

F-169 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued) Summarised financial information of joint ventures Set out below is the summarised financial information of each joint venture that is material to the Group. The summarised financial information is adjusted to reflect adjustments made by the Group when applying the equity method.

Irancell Telecommunication Africa Internet Mascom Wireless Botswana Company Services (PJSC) Holding GmbH Proprietary Limited 2014 2013 2014 2013 2014 2013 Rm Rm Rm Rm Rm Rm Summarised statement of financial position ASSETS Non-current assets 35,184 27,657 44 — 1,050 875 Property, plant and equipment 28,221 21,020 38 — 903 726 Intangible assets 6,955 2,702 5 — 128 133 Loans and other non-current receivables 8 3,935 1 — 1 — Deferred tax assets — — — — 18 16 Current assets 25,925 14,591 3,586 — 679 1,086 Inventories 141 76 109 — 10 6 Trade and other receivables 11,856 3,238 3,116 — 108 772 Restricted cash 1,345 253 — — — — Cash and cash equivalents 12,583 11,024 329 — 561 308 Other current assets — — 32 — — — Total assets 61,109 42,248 3,630 — 1,729 1,961 LIABILITIES Non-current liabilities 4,193 3,360 13 — 301 428 Borrowings — — — — 121 240 Deferred tax liabilities 3,951 2,788 — — 109 103 Provisions 242 548 — — — — Other non-current liabilities — 24 13 — 71 85 Current liabilities 28,575 20,895 336 — 381 345 Trade and other payables 20,034 13,444 223 — 337 329 Unearned income 1,507 1,450 — — — — Provisions 183 185 16 — — — Taxation liabilities 1,714 1,332 74 — 4 16 Borrowings 5,137 4,484 15 — 40 — Other current liabilities — — 8 — — — Total liabilities 32,768 24,255 349 — 682 773 Net assets 28,341 17,993 3,281 — 1,047 1,188 Non-controlling interests- deficit in net assets — — 268 — — — Total net assets 28,341 17,993 3,549 — 1,047 1,188 % ownership interest held 49 49 33.3 — 53.1 53.1 Interest in joint venture excluding goodwill 13,887 8,816 1,183 — 556 631 Adjustment up to 31 December 20141 — — (42) — — — Goodwill 89 14 1,112 — 773 765 Balance at end of the year 13,976 8,830 2,253 — 1,329 1,396

1 Summarised financial information presented above with regards to the Group’s interest in AIH is as per the latest available management accounts at 30 September 2014. Preparation of the financial statements at 31 December 2014 by AIH was impracticable. Appropriate adjustments have been made to the Group’s interest and share of results for the effects of significant transactions and events that occurred for the three months up to the reporting date.

F-170 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)

Irancell Telecommunication Africa Internet Mascom Wireless Botswana Company Services (PJSC) Holding GmbH Proprietary Limited 2014 2013 2014 2013 2014 2013 Rm Rm Rm Rm Rm Rm Summarised income statement Revenue 27,113 22,916 383 — 1,578 1,483 Other income 119 — — — — — Operating expenses (15,480) (13,090) (888) — (763) (721) EBITDA 11,752 9,826 (505) — 815 762 Depreciation of property, plant and equipment (4,300) (3,438) — — (131) (179) Amortisation of intangible assets (955) (645) — — (90) (10) Operating profit/(loss) 6,497 5,743 (505) — 594 573 Finance income 2,459 1,452 224 — 15 17 Finance costs (692) (587) (1) — (13) (19) Net monetary gain 1,892 1,280 — — — — Profit/(loss) before tax 10,156 7,888 (282) — 596 571 Income tax expense (1,763) (1,531) — — (125) (125) Profit/(loss) after tax 8,393 6,357 (282) — 471 446 % ownership interest held 49 49 33.3 — 53.1 53.1 Share of results after tax 4,113 3,115 (94) — 250 237

Summarised financial information has not been presented with regards to the Group’s interest in MEIH as the entity is in its start-up phase and preparation of financial statements at the Group reporting date was impracticable. Appropriate adjustments have been made to the Group’s interest and share of results for the effects of significant transactions and events that occurred up to the reporting date.

Cash and cash equivalents and other funds relating to Irancell Telecommunication Company Services (PJSC) are subject to sanctions, but is available for use within the Iranian operation. Dividends receivable of R5,640 million (2013: R3,110 million) declared by Irancell Telecommunication Company Services (PJSC) have not been received by the Group as at 31 December 2014 but are still considered recoverable. The Group continues to explore acceptable channels that are compliant with ongoing sanctions for repatriation of these funds.

Commitments relating to joint ventures Commercial commitments Irancell Telecommunication Company Services (PJSC) The investment in Irancell is subject to a number of sovereign, regulatory and commercial risks, which could result in the Group failing to realise full market value of its investment should it be required to dispose of any portion thereof. In this regard, 21% of Irancell is required to be offered to members of the Iranian public within approximately three years from the date of the licence. Such offering could have a proportional dilutory effect on the Company’s 49% shareholding, effectively reducing its shareholding by 10.3% to 38.7%. Local management together with the shareholders continue to engage the regulator on this matter.

F-171 Notes to the Group annual financial statements for the year ended 31 December 2014

14 INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)

2014 2013 Rm Rm Capital commitments Share of capital expenditure of joint ventures for the acquisition of property, plant and equipment and software not yet incurred at the reporting date is as follows: – Contracted 3,153 1,653 – Authorised but not contracted 1,064 1,610 4,217 3,263 Operating lease commitments The Group’s share of future aggregate minimum lease payments under non-cancellable operating lease arrangements are as follows: Not later than one year 16 — 16 —

Contingent liabilities relating to joint ventures There are no significant contingent liabilities relating to the Group’s interests in its joint ventures.

Licences Licences awarded to the joint ventures are set out below:

Granted/ Licence agreements Type renewed Term Irancell Telecommunication Company 2G 07/09/2006 15 years Services (PJSC) WiMax1 28/02/2009 6 years 3G 17/08/2014 7 years Mascom Wireless Botswana 900MHz 1,800MHz 13/06/2013 15 years 2,100MHz Swazi MTN Limited 900MHz 1,800MHz 28/11/2008 10 years 2,100MHz 26/09/2011 7 years 1 Renewal application lodged.

15 LOANS AND OTHER NON-CURRENT RECEIVABLES Loans and other non-current receivables are accounted for as loans and receivables in accordance with the accounting policy disclosed in note 43.

2014 20131 Rm Rm Loan to Uganda Tower InterCo B.V.2 887 704 Loan to Ghana Tower InterCo B.V.3 2,023 1,688 Loan to Nigeria Tower InterCo B.V.4 1,039 — Non-current interconnect receivables 355 203 Other non-current receivables 973 2,398 Non-current prepayments and advances 1,019 2,638 6,296 7,631

1 Restated, refer to note 48. 2 The loan to Uganda Tower InterCo B.V. attracts interest at LIBOR +5.3% per annum. The loan is repayable in 2019. 3 The loan to Ghana Tower InterCo B.V. attracts interest at a fixed interest rate of 9.0% per annum. The loan is repayable in 2016. 4 The loan to Nigeria Tower InterCo B.V. attracts interest at a fixed interest rate of 10.0% per annum subject to review, and is repayable in 2024.

F-172 Notes to the Group annual financial statements for the year ended 31 December 2014

15 LOANS AND OTHER NON-CURRENT RECEIVABLES (continued) The recoverability of the loans was assessed at the reporting date and was found not to be impaired.

An impairment reversal of R230 million (2013: R223 million charge) in respect of non-current interconnect receivables was recognised in 2014 (note 6).

16 DEFERRED TAXES Deferred tax is accounted for in accordance with the accounting policy disclosed in note 8.

Recognised Exchange Recognised Exchange 1 January in profit and other 31 December in profit and other 31 December 20131 or loss movements 20131 or loss movements2 2014 Rm Rm Rm Rm Rm Rm Rm Provisions 952 301 (179) 1,074 (127) 13 960 Tax loss carried forward 30 540 17 587 (248) (30) 309 Arising due to fair value adjustments on business combinations/ revaluations (250) (23) 227 (46) 45 23 22 Working capital allowances 209 (188) 1 22 549 — 571 Tax allowances in excess of depreciation (8,579) (3,124) (1,303) (13,006) 805 418 (11,783) Other temporary differences (396) 302 37 (57) 376 (301) 18 Net deferred tax liability (8,034) (2,192) (1,200) (11,426) 1,400 123 (9,903) Comprising: Deferred tax assets 1,291 2,044 1,109 Deferred tax liabilities (9,325) (13,470) (11,012) (8,034) (11,426) (9,903)

1 Restated, refer to note 48. 2 Includes the effect of hyperinflation.

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.

There were no deductible temporary differences, unused tax losses or unused tax credits for which no deferred tax asset has been recognised in the statement of financial position in the current or prior year.

17 NON-CURRENT ASSETS HELD FOR SALE Non-current assets (or disposal groups) are classified as non-current assets held for sale and are stated at the lower of their carrying amounts and fair value less costs to sell when their carrying amounts are to be recovered principally through sale rather than continued use and the sale is considered to be highly probable.

2014 2013 Rm Rm Balance at beginning of the year 1,281 1,373 Additions 6,899 1,265 Re-allocations from property, plant and equipment 5,966 1,265 Other additions 933 — Disposals (3,675) (1,416) Effect of movements in exchange rates (657) 59 Balance at end of the year 3,848 1,281

F-173 Notes to the Group annual financial statements for the year ended 31 December 2014

17 NON-CURRENT ASSETS HELD FOR SALE (continued) The Group entered into a transaction with IHS which involves the sale of its mobile network towers in MTN Nigeria Communications Limited in two tranches to INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V.

The first tranche of the tower sale closed on 24 December 2014 which involved the sale of 4,154 mobile network towers by MTN Nigeria Communications Limited to INT Towers Limited (note 5).

The second tranche of the transaction involves approximately 4,978 mobile network towers and is expected to close in the second quarter of 2015 subject to customary closing conditions. The carrying value of the mobile towers to be sold has been included in non-current assets held for sale.

In addition, the Group concluded transactions with IHS in which IHS acquired 550 mobile network towers from MTN Rwandacell Limited for US$48 million and 748 mobile network towers from MTN (Zambia) Limited for US$57 million during the year. IHS is a 100% shareholder of the tower companies set up in each country to manage the towers and other passive infrastructure. MTN Rwandacell Limited and MTN (Zambia) Limited will be the anchor tenants on commercial terms on the towers for an initial term of 10 years.

18 INVENTORIES Inventories mainly comprises handsets, SIM cards, accessories held for sale and consumable items.

Inventories are measured at the lower of cost and net realisable value. The cost of inventory is determined using the weighted average method. Cost comprises direct materials and, where applicable, overheads that have been incurred in bringing the inventories to their present location and condition, excluding borrowing costs. Net realisable value represents the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, inventories relating to these subsidiaries are measured at the lower of restated cost and net realisable value.

2014 2013 Rm Rm Finished goods (handsets, SIM cards and accessories) – at cost 3,775 3,746 Consumables 100 51 Less: Write-down to net realisable value (463) (571) 3,412 3,226 The following subsidiaries have secured facilities through the pledge of their inventories (note 26): Scancom Limited (MTN Ghana) 39 64 MTN Uganda Limited — 33 39 97

Reconciliation of write-down of inventory

At beginning Exchange At end of of the year Additions1 Reversals1 Utilised movements the year Rm Rm Rm Rm Rm Rm 2014 Movement in write-down (571) (7) 101 10 4 (463) 2013 Movement in write-down (469) (95) 31 1 (39) (571)

1 A reversal of impairment charges on inventories of R94 million (2013: R64 million write-down) was recognised in the current year. This amount is included in other operating expenses in profit or loss (note 6).

F-174 Notes to the Group annual financial statements for the year ended 31 December 2014

19 TRADE AND OTHER RECEIVABLES Trade receivables are amounts due from customers for merchandise sold or services rendered in the ordinary course of business; and are accounted for as loans and receivables in accordance with the accounting policy disclosed in note 43.

Prepayments and other receivables are stated at their nominal values.

As the functional currencies of MTN Sudan Company Limited and MTN Syria (JSC) are currencies of hyperinflationary economies, prepayments relating to these subsidiaries are restated by applying the change in the general price indices from the date of payment to the current reporting date.

2014 20131 Rm Rm Trade receivables 17,253 15,020 Less: Allowance for impairment of trade receivables (note 43.4) (2,514) (2,679) Net trade receivables 14,739 12,341 Loan to Irancell Telecommunication Company Services (PJSC)2 5,120 4,468 Dividend receivable from Irancell Telecommunication Company Services (PJSC)2 5,640 3,110 Prepayments and other receivables3 2,961 2,943 Sundry debtors and advances4 4,358 1,959 32,818 24,821

1 Restated, refer to note 48. 2 The loan to Irancell Telecommunication Company Services (PJSC) attracts interest at Libor +4% per annum which is capitalised against the loan. The loan and capitalised interest were payable in 2014; however, due to sanctions imposed on Iran, this loan and dividends declared remain unpaid. The Group continues to explore acceptable channels that are compliant with ongoing sanctions for repatriation of these funds. The recoverability of these funds was assessed at the reporting date and was found not to be impaired. 3 Prepayments and other receivables include prepayments for base transceiver station (BTS) sites and other property leases. 4 Sundry debtors and advances include advances to suppliers.

An impairment loss of R286 million (2013: R743 million1) was incurred in the current year. This amount is included in other operating expenses in profit or loss (note 6).

Scancom Limited (MTN Ghana) has secured facilities through the pledge of its trade and other receivables amounting to R1,427 million (2013: R949 million).

The Group does not hold any collateral for trade and other receivables.

The Group’s exposure to credit and currency risk relating to trade and other receivables is disclosed in note 43.

20 CURRENT INVESTMENTS Current investments consist of loans and receivables, financial assets held at fair value and held-to-maturity financial assets that are accounted for in accordance with the accounting policy disclosed in note 43.

2014 2013 Rm Rm Loans and receivables Foreign currency fixed deposits with fixed interest rates of 2.0% – 2.8% (2013: 1.1% – 2.5%)1 1,098 1,283 Foreign currency fixed deposits with a fixed interest rate of 2.0%1 178 — 1,276 1,283 Financial assets held at fair value Investment in insurance cell captives (note 43.3) 906 691 Held-to-maturity financial assets Treasury bills with fixed interest rates of 10.8% – 14.5% (2013: 11.6% – 12.4%) and maturity dates between January and December 2015 (2013: January and April 2014)2 3,469 2,568 Total current investments 5,651 4,542

1 Denominated in United States dollar. 2 Denominated in Nigerian naira.

F-175 Notes to the Group annual financial statements for the year ended 31 December 2014

20 CURRENT INVESTMENTS (continued) No provision for impairment has been raised as at the reporting date as all investments are considered to be fully performing.

There were no disposals of held-to-maturity financial assets in 2013 or in 2014.

21 DERIVATIVES Derivatives are accounted for in accordance with the accounting policy disclosed in note 43.

2014 2013 Rm Rm Derivatives held for trading Current assets Forward exchange contracts 49 20 Floating-to-fixed interest rate swap — 2 Equity derivative 134 — 183 22 Current liabilities Floating-to-fixed interest rate swap (2) (3) 181 19 Gains/(losses) accounted for directly in profit or loss 23 (29) Notional principal amount (US$ forward exchange contracts) 3,837 305 Notional principal amount (EUR forward exchange contracts) 83 29 Notional principal amount (US$ interest rate swap) 672 152

22 RESTRICTED CASH Restricted cash comprises short-term deposits that are not highly liquid and are accounted for as loans and receivables in accordance with the accounting policy disclosed in note 43.

2014 2013 Rm Rm Restricted cash deposits 893 2,222

Restricted cash deposits include an amount of R331 million (2013: R1 633 million) relating to the Syrian operations which is not available for use by the Group due to exchange control regulations and a lack of foreign currency in Syria. The cash balance is considered to represent excess cash not required for payment of Syrian pound denominated liabilities.

Other restricted cash deposits consist of monies placed on deposit with banks to secure letters of credit, which were undrawn and not freely available at the reporting date.

23 NET CASH AND CASH EQUIVALENTS Cash and cash equivalents are accounted for as loans and receivables and bank overdrafts are accounted for as financial liabilities in accordance with the accounting policy disclosed in note 43.

Cash and cash equivalents comprise cash on hand and deposits held on call, all of which are available for use by the Group. Bank overdrafts are included within current liabilities on the statement of financial position, unless the Group has a legally enforceable right to set off the amounts and intends to settle on a net basis, or realise the asset and settle the liability simultaneously, in which case it is netted off against cash and cash equivalents on the statement of financial position.

F-176 Notes to the Group annual financial statements for the year ended 31 December 2014

23 NET CASH AND CASH EQUIVALENTS (continued) For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:

2014 2013 Rm Rm Cash at bank and on hand 43,098 39,600 Bank overdrafts (26) (23) 43,072 39,577

The following subsidiaries have secured facilities through the pledge of their cash and cash equivalents (note 26):

2014 2013 Rm Rm Scancom Limited (MTN Ghana) 876 1,325 MTN Sudan Company Limited — 29 MTN Uganda Limited — 628 876 1,982

24 ORDINARY SHARE CAPITAL AND SHARE PREMIUM Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of new ordinary shares or share options are recognised in equity as a deduction (net of tax) from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental external costs (net of tax), is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or re-issued. Where such ordinary shares are subsequently re-issued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

Number of shares 2014 2013 Ordinary share capital (par value of 0.01 cents) Authorised 2,500,000,000 2,500,000,000 Issued (fully paid up) 1,848,355,889 1,873,278,848 In issue at beginning of the year 1,873,278,848 1,883,484,324 Options exercised and allotted 72,170 173,160 Strike price R27.00 8,3405 169,850 R40.50 63,830 3,310 MTN Zakhele shares cancelled (2,657,377) (10,378,636) Treasury shares cancelled (22,337,752) — In issue at end of the year 1,848,355,889 1,873,278,848 Shares cancelled but not delisted at year end1 — (1,065,166) Options – MTN Zakhele transaction2 (14,492,564) (17,030,125) Treasury shares3 (11,649,825) (22,337,752) In issue at end of the year – excluding MTN Zakhele transaction and treasury shares4 1,822,213,500 1,832,845,805

1 These shares were delisted on 2 January 2014. 2 Due to the call option over the notional vendor finance shares, these shares, although legally issued to MTN Zakhele, are not deemed to be issued in terms of IFRS and are shown as such in the share capital reconciliation. 3 Treasury shares held by the Company and MTN Holdings Proprietary Limited. 4 There are no restrictions, rights and preferences including restrictions on dividend distributions attached to these shares. 5 8,340 share options exercised and allotted in 2013 were listed in 2014.

F-177 Notes to the Group annual financial statements for the year ended 31 December 2014

24 ORDINARY SHARE CAPITAL AND SHARE PREMIUM (continued)

2014 2013 Rm Rm Share capital Balance at beginning of the year * * Options exercised * * Shares cancelled (*) (*) Balance at end of the year * * Share premium Balance at beginning of the year 42,598 42,593 Options exercised 3 5 Share buy-back (2,422) — Balance at end of the year 40,179 42,598

* Amounts less than R1 million.

MTN Zakhele transaction The Group concluded its broad-based black economic empowerment (B-BBEE) transaction “MTN Zakhele” during October 2010. This was done through a separate unconsolidated structured entity, MTN Zakhele (RF) Limited (MTN Zakhele). The transaction is designed to provide long-term, sustainable benefits to all B-BBEE participants and will run for a period of six years.

MTN Zakhele acquired 75,363,138 of the Company’s shares at a price of R107.46 per share. The acquisition of 45,368,186 shares was funded using equity raised from the allotment of MTN Zakhele shares totalling R1,618 million, third-party preference share funding of R2,160 million and a donation of R1,294 million (equal to 12,045,412 shares) received from the Group. The Company also issued 29,994,952 notional vendor finance shares (NVF shares) at par value to MTN Zakhele amounting to approximately R3,214 million. A total of 14,557,038 (2013: 12,964,827) of these shares were cancelled and delivered back to the Group as at 31 December 2014. An additional 945,350 shares were delivered back to the Group, and cancelled after year end. These shares were treated as treasury shares as at 31 December 2014.

The total cost of this transaction for the Group was R2,973 million which was recognised as a once-off charge in profit or loss in 2010. This charge included the once-off share-based payment transaction charges for NVF of R1,382 million, the employee share option plan of R171 million and the donation of R1,294 million. Transaction costs amounted to R126 million.

The MTN Zakhele shares started trading on an over the counter platform (managed by an independent party) from 22 November 2013 onwards, on which date, MTN Holdings Proprietary Limited provided a guarantee in favour of the funders to MTN Zakhele. The guarantee expires on extinguishment of funding in MTN Zakhele, which is estimated at three years. The guarantee is provided for potential claims arising out of losses suffered as a result of operating the share trading platform.

MTN Zakhele’s sole business is holding shares in the Group and administering the associated funding of these shares. Its success is therefore dependent on the success of the Group as well as the ongoing receipt of dividends from the Group to service and repay debt.

MTN has not provided any additional funding or liquidity to MTN Zakhele and there is no intention to do so at 31 December 2014.

Notional vendor finance (NVF) shares The Group has a call option over the NVF shares. The fair value of the call option is R1,593 million (2013: R1,463 million) and was determined using a Monte Carlo valuation model.

F-178 Notes to the Group annual financial statements for the year ended 31 December 2014

24 ORDINARY SHARE CAPITAL AND SHARE PREMIUM (continued) The significant inputs into the Monte Carlo valuation model were as follows:

2014 2013 Share price (R) 221.41 217.02 NVF balance (Rm) 1,220 1,685 NVF shares (number) 14,492,564 17,030,125 Volatility (%) 25.47 26.28 Dividend yield (%) 6.14 5.37 Expected option life (years) 2 3 Annual risk-free rate (%) 6.7 6.6

Rm Rm A reconciliation of the NVF balance is provided below: Balance at beginning of the year 1,685 3,525 Interest accrued 117 216 Settlement (582) (2,056) Balance at end of the year 1,220 1,685

In terms of the NVF arrangement, the notional funding provided by the MTN Group earns notional interest at 85% of the prime rate per annum.

MTN Zakhele settled R582 million (2013: R2,056 million) of the NVF in 2014 via acquiring 2,537,561 (2013: 11,443,802) of the Company’s shares in the open market and delivering an equivalent number of shares, initially issued by the Company to MTN Zakhele, back to the Company. MTN Group Limited cancelled 1,592,211 of these shares delivered by MTN Zakhele and 945,350 was held as treasury shares, cancelled subsequent to year end.

Third-party preference share funding acquired by MTN Zakhele A reconciliation of the third-party preference share funding obtained by MTN Zakhele to purchase shares of the Company is provided below:

2014 2013 Rm Rm Class A cumulative redeemable non-participating preference shares Balance at beginning of the year 3,176 1,492 Issued — 1,700 Accrued interest paid (202) (153) Interest accrued at effective interest rate 208 137 Balance at end of the year 3,182 3,176

The Class A preference shares are held by Newshelf 1041 Proprietary Limited. Voluntary redemption can be effected before the redemption date. The Class A preference shares are redeemable on 24 November 2016; however, mandatory redemption must be made out of available cash after three years and one day from the issue date, subject to a cash waterfall. Interest is required to be paid on 30 April of each year, following the receipt of the annual dividend from the Group.

The payment obligation accrues interest at a rate of 71% of the prime rate per annum.

Preference shares refinancing In the prior year, the directors of MTN Zakhele sought to find a cheaper source of funding in order to reduce the NVF. The entity made a subsequent issue of 1,700,000 Class A preference shares at an issue price of R1,000 on 1 August 2013. The subsequent issue of the Class A preference share is held by Newshelf 1041 Proprietary Limited. The dividend rate in the floating period which came to effect on 1 May 2013 was reduced from 77% of prime to 71% of prime from the subscription date (1 August 2013). Interest is required to be paid on 30 April and 30 September of each year. No such issue was made in the current year.

F-179 Notes to the Group annual financial statements for the year ended 31 December 2014

24 ORDINARY SHARE CAPITAL AND SHARE PREMIUM (continued) Dividends paid to MTN Zakhele Dividends paid by the Company to MTN Zakhele amounted to R837 million (2013: R658 million) for the year.

The dividend income earned on the MTN shares held by MTN Zakhele is required to firstly, pay permitted operational fees, costs, expenses and tax liabilities and thereafter, to meet the dividend obligations to the third- party funders.

Share buy-back In the current year, MTN Holdings Proprietary Limited acquired 10,704,475 shares at an average price of R226.24 per share, inclusive of transaction costs, in the Company on the JSE Limited. The total amount paid to acquire the shares, inclusive of transaction costs, was R2,422 million. The shares are fully paid shares and are held as treasury shares.

The Group’s objective in terms of the buy-back is to enhance shareholder value over time and improve the capital structure of the Group.

25 OTHER RESERVES

2014 2013 Rm Rm Balance at beginning of the year (5,991) (15,834) Transactions with non-controlling interests — (495) Share-based payment transactions 110 215 Exchange differences on translating foreign operations 2,960 10,179 Other (46) (56) Balance at end of the year (2,967) (5,991) Consisting of: Contingency reserve (as required by insurance regulations)1 4 4 Statutory reserve (as required by Rwanda and Congo-Brazzaville legislation)2 211 211 Transactions with non-controlling interests3 (11,396) (11,396) Share-based payment transactions4 2,514 2,404 Foreign currency translation reserve5 5,791 2,831 Other (91) (45) (2,967) (5,991)

1 A contingency reserve has been created in terms of the Short-Term Insurance Act, 1988. Transfers to the contingency reserve are treated as an appropriation of income, and the balance of the reserve is disclosed in the statement of financial position as a non-distributable reserve, forming part of shareholders’ funds. On dissolution of the structured entities to which these reserves relate, they will become available for distribution. 2 A statutory reserve has been created in terms of local legislation. Transfers to the statutory reserve are treated as an appropriation of income, and the balance of the reserve is disclosed in the statement of financial position as a non-distributable reserve, forming part of the shareholders’ funds. 3 Non-controlling shareholders are treated as equity participants and, therefore, all acquisitions of non-controlling interests or disposals by the Group of its interests in subsidiary companies where control is maintained subsequent to the disposal are accounted for as equity transactions. Consequently, the difference between the fair value of the consideration transferred and the carrying amount of a non- controlling interest purchased is recorded in equity. All profits or losses arising as a result of the disposal of interests in subsidiaries to non-controlling shareholders, where control is maintained subsequent to the disposal, are also recorded in equity. 4 Refer to the accounting policy in note 44 with regards to equity-settled share-based payments. 5 Refer to the translation and disposal of foreign operations sections in accounting policy 1.3.2 Foreign currency.

F-180 Notes to the Group annual financial statements for the year ended 31 December 2014

26 BORROWINGS Borrowings are accounted for as financial liabilities in accordance with the accounting policy disclosed in note 43. Fees paid on the establishment of loan facilities are recognised as transaction costs and capitalised to the extent that it is probable that some or all of the facility will be drawn down. When the draw down is made, the transaction costs are amortised to profit or loss using the effective interest method. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Details of the Group’s significant unsecured borrowings are provided below:

2014 2013 Denominated Nominal Rm Rm currency interest* % Repayment details Unsecured MTN Holdings Proprietary Limited 13,139 12,886 4,506 4,482 ZAR1,2 7.4 Quarterly. Final repayment: December 2015 2,767 751 ZAR2,3 7.6 Quarterly. Final repayment: June 2016 2,618 3,953 ZAR4,5 9.4 – 10.2 Semi-annual. Final repayment: July 2015 – July 2017 1,994 — ZAR2,6 7.2 Quarterly. Final repayment: May 2017 1,003 — ZAR2,3 7.1 Quarterly. Final repayment: March 2015 251 — ZAR5,7 6.5 Monthly. Final repayment: January 2015 — 1,096 ZAR5,8 5.5 Loan repaid during the year — 1,000 ZAR2,6 7.1 Loan repaid during the year — 1,604 ZAR5,7 5.6 – 5.7 Loan repaid during the year MTN Nigeria Communications Limited 24,673 24,757 17,697 18,515 NGN1,2 15.0 Annual. Final repayment: November 2019 2,904 2,932 US$1,2 3.2 Semi-annual. Final repayment: April 2019 1,351 1,031 US$2,9 1.3 Semi-annual. Final repayment: August 2019 1,009 — US$5,9 1.7 Semi-annual. Final repayment: June 2015 915 373 US$2,10 3.4 Semi-annual. Final repayment: December 2019 381 796 US$5,9 1.4 Semi-annual. Final repayment: December 2015 291 825 US$5,9 3.3 Semi-annual. Final repayment: December 2015 65 152 US$2,9 1.1 Semi-annual. Final repayment: December 2015 60 133 US$2,9 3.0 Semi-annual. Final repayment: June 2015 MTN (Mauritius) Semi-annual. Final repayment: Investments Limited 8,686 — US$5,11 4.8 November 2024 1 Syndicated term loan facility 2 Variable interest rate 3 Revolving credit facility 4 Domestic medium-term notes 5 Fixed interest rate 6 Bilateral term loan facility 7 General bank facility 8 Commercial paper 9 Export credit facility 10 Vendor finance facility

F-181 Notes to the Group annual financial statements for the year ended 31 December 2014

26 BORROWINGS (continued) 11 Senior unsecured notes 12 Bank borrowings * Nominal interest rates are the contractual interest rates on loans as at 31 December 2014.

Details of the Group’s significant unsecured borrowings are provided below:

Nominal 2014 2013 Denominated interest* Rm Rm currency % Repayment details MTN (Zambia) Limited 1,362 1,495 688 340 US$2,12 3.8 Semi-annual. Final repayment: June 2019 674 — ZMK1,2 19.5 Semi-annual. Final repayment: January 2016 — 1,155 ZMK1,2 13.4 Loan repaid during the year Spacetel Benin SA 945 1,186 664 965 XOF1,5 7.8 Semi-annual. Final repayment: March 2017 281 — XOF5,6 7.5 Semi-annual. Final repayment: September 2019 — 221 XOF1,5 8.3 Loan repaid during the year MTN Côte d’Ivoire S.A. 745 1,114 426 — XOF5,12 3.9 Semi-annual. Final repayment: May 2015 319 — XOF5,12 4.0 Semi-annual. Final repayment: May 2015 — 8 XOF5,6 8.3 Loan repaid during the year — 442 XOF5,12 4.0 Loan repaid during the year — 442 XOF5,12 4.8 Loan repaid during the year — 222 XOF5,12 4.8 Loan repaid during the year Other unsecured borrowings 938 1,428 Total unsecured borrowings 50,488 42,866

* Nominal interest rates are the contractual interest rates on loans as at 31 December 2014.

F-182 Notes to the Group annual financial statements for the year ended 31 December 2014

26 BORROWINGS (continued) Details of the Group’s significant secured borrowings are provided below:

Nominal 2014 2013 Denominated interest* Rm Rm currency % Repayment details Security/collateral Secured MTN Sudan Company Limited 1,933 1,872 817 815 EUR2, 10 6.0 Quarterly. Final Pledge of network repayment: and capital work- June 2020 in-progress assets 506 697 US$5, 10 10.0 Quarterly. Final Pledge of network repayment: and capital work- December 2016 in-progress assets 588 339 EUR2, 10 5.0 Semi-annual. Final Pledge of network repayment: and capital work- December 2019 in-progress assets 22 21 US$5, 12 10.0 Repayment: Deposit equivalent July 2015 to 140% of the loan MTN Uganda Limited — 184 — 131 UGX1, 2 13.7 Loan repaid during the year — 53 US$1, 2 4.4 Loan repaid during the year MTN Afghanistan Limited 138 294 32 69 US$2, 6 5.5 Quarterly. Final Pledge of shares repayment: September 2015 106 225 US$2, 6 5.5 Quarterly. Final Pledge of shares repayment: September 2015 1 Syndicated term loan facility 2 Variable interest rate 3 Revolving credit facility 4 Domestic medium-term notes 5 Fixed interest rate 6 Bilateral term loan facility 7 General bank facility 8 Commercial paper 9 Export credit facility 10 Vendor finance facility 11 Senior unsecured notes 12 Bank borrowings * Nominal interest rates are the contractual interest rates on loans as at 31 December 2014.

Nominal 2014 2013 Denominated interest* Rm Rm currency % Repayment details Security/collateral Scancom Limited (MTN Ghana) 646 621 211 77 GHS1,2 26.4 Semi-annual. Final Floating charge on repayment: May 2017 company assets — 22 GHS2,3 19.3 Loan repaid during the year 435 522 US$1,2 3.7 Semi-annual. Final Floating charge on repayment: May 2017 company assets Other secured borrowings 48 165 Total secured borrowings 2,765 3,136 Total unsecured borrowings 50,488 42,866 Total borrowings 53,253 46,002

* Nominal interest rates are the contractual rates on loans as at 31 December 2014.

F-183 Notes to the Group annual financial statements for the year ended 31 December 2014

26 BORROWINGS (continued)

2014 2013 Rm Rm The classification of the Group’s borrowings is as follows: Current 13,783 11,338 Non-current 39,470 34,664 53,253 46,002 The carrying amounts of the Group’s borrowings are denominated in the following currencies: Nigerian naira 17,697 18,515 United States dollar 17,722 8,496 South African rand 13,139 12,886 Euro 1,659 1,454 Benin Communauté Financière Africaine franc 945 1,186 Côte d’Ivoire Communauté Financière Africaine franc 745 1,155 Zambian kwacha 674 1,155 Congo-Brazzaville Communauté Financière Africaine franc 306 487 Cameroon Communauté Financière Africaine franc 134 418 Various currencies 232 250 53,253 46,002 The Group has the following undrawn committed facilities: Floating rate 25,282 34,785 Fixed rate 7,561 8,766 32,843 43,551

27 OTHER NON-CURRENT LIABILITIES Finance leases are accounted for in accordance with the accounting policy disclosed in note 36 and other liabilities are accounted for in accordance with the accounting policy disclosed in note 43.

2014 2013 Rm Rm Finance lease obligations (note 36) 696 756 Deferred gain on asset swap1 — 358 Deferred income 542 1282 Other 347 485 1,585 1,727 Less: current portion of deferred gain on asset swap — (358) 1,585 1,369

1 The deferred gain arose on the contribution of various assets from MTN (Dubai) Limited, MTN International Carrier Services and Uniglobe in exchange for a 20% investment in the associate, Belgacom International Carrier Services SA (BICS) (note 5). This gain was deferred and is being amortised over a five-year period, which is the period of the commitment to use the international gateway of BICS (note 14). The deferred gain was fully amortised during the year. 2 Previously included in “Other”.

28 PROVISIONS A provision is recognised when there is a present legal or constructive obligation as a result of a past event for which it is more likely than not that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A provision to pay a levy is not recognised until the obligating event specified in the legislation occurs, even if there is no realistic opportunity to avoid the obligation. Provisions are not recognised for future operating losses.

F-184 Notes to the Group annual financial statements for the year ended 31 December 2014

28 PROVISIONS (continued) Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expected outflow of resources required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.

Onerous contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract or the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with the contract.

At Net Exchange At end beginning monetary and other of the of the year Additions Reversals Utilised gain movements1 year Rm Rm Rm Rm Rm Rm Rm 2014 Non-current Decommissioning provision 186 107 (34) (30) — — 229 Licence obligations — 137 — — — — 137 Other provisions 171 91 (43) (16) (38) 15 180 357 335 (77) (46) (38) 15 546 Current Bonus provision 763 861 (100) (761) — (9) 754 Decommissioning provision 84 3 (74) (1) — 9 21 Licence obligations 257 — (183) — — — 74 Other provisions 3,533 442 (1,065) (340) — (5) 2,565 4,637 1,306 (1,422) (1,102) — (5) 3,414

1 Includes the effect of hyperinflation.

At Exchange At end beginning and other of the of the year Additions Reversals Utilised movements year Rm Rm Rm Rm Rm Rm 2013 Non-current Decommissioning provision 158 33 (49) (15) 59 186 Other provisions 258 92 (14) (5) (160) 171 416 125 (63) (20) (101) 357 Current Bonus provision 760 788 (105) (915) 235 763 Decommissioning provision 79 32 (1) — (26) 84 Licence obligations 257 — — — — 257 Other provisions 2,835 1,190 (357) (260) 125 3,533 3,931 2,010 (463) (1,175) 334 4,637

Bonus provision The bonus provision consists of a performance-based bonus, which is determined by reference to the overall Company performance with regard to a set of predetermined key performance measures. Bonuses are payable annually after the Group annual results have been approved.

F-185 Notes to the Group annual financial statements for the year ended 31 December 2014

28 PROVISIONS (continued) Decommissioning provision This provision relates to the estimate of the cost of dismantling and removing an item of property, plant and equipment and restoring the site on which the item was located to its original condition. The Group provides for the anticipated costs associated with the restoration of leasehold property to its original condition at inception of the lease, including removal of items included in plant and equipment that are erected on leased land.

The Group only recognises these decommissioning costs for the proportion of its overall number of sites for which it expects decommissioning to take place. The expected percentage has been based on actual experience in the respective operations.

Licence obligations The licence obligation provision represents the estimated costs to be incurred in fulfilling the Universal Services Obligation (USO) in South Africa. USOs are governed by the Electronic Communications Act.

Other provisions The Group is involved in various regulatory and tax matters specific to the respective jurisdictions in which the Group operates. These matters may not necessarily be resolved in a manner that is favourable to the Group. The Group has therefore recognised provisions in respect of these matters based on estimates and the probability of an outflow of economic benefits and should not be construed as an admission of legal liability.

29 TRADE AND OTHER PAYABLES Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers; they are accounted for as financial liabilities in accordance with the accounting policy disclosed in note 43.

Other payables are stated at their nominal values.

2014 2013 Rm Rm Trade payables 11,187 7,451 Sundry creditors 2,728 1,254 Accrued expenses 15,711 15,502 Current portion of deferred gain (note 27) — 358 Other payables 3,608 2,884 33,234 27,449

F-186 Notes to the Group annual financial statements for the year ended 31 December 2014

30 CASH GENERATED FROM OPERATIONS

2014 20131 Rm Rm Profit before tax 51,063 43,349 Adjusted for: Finance costs (note 7) 10,440 12,656 Finance income (note 7) (6,772) (11,422) Depreciation of property, plant and equipment (note 11) 18,262 16,458 Amortisation of intangible assets (note 12) 3,251 2,820 Loss on disposal of property, plant and equipment and intangible assets (note 6) 69 42 Loss on disposal of joint venture 15 — Share of results of associates and joint ventures after tax (note 14) (4,208) (3,431) Increase in provisions 140 1,437 (Reversal of write-down)/write-down of inventories (note 18) (94) 64 Impairment of goodwill (note 12) 2,033 — Impairment loss on intangible assets (note 12) 74 — Impairment loss on property, plant and equipment (note 11) 634 7 Reversal of impairment charge on property, plant and equipment (note 11) — (35) Impairment of trade receivables (note 19) 286 743 (Reversal of impairment)/impairment of non-current receivable (note 15) (230) 223 Profit on sale of towers (note 5) (7,399) (930) Realisation of previously deferred profit on Ghana tower sale (note 5) (31) (38) Realisation of deferred gain on asset swap (note 5) (364) (357) Equity-settled share-based payment transactions (note 6) 110 215 Net monetary gain (878) — Other (35) 166 66,366 61,967 Changes in working capital (1,738) (2,259) Increase in inventories (65) (627) Increase/(decrease) in unearned income 654 (183) Increase in receivables and prepayments (1,926) (1,827) (Decrease)/increase in trade and other payables (401) 378 Cash generated from operations 64,628 59,708

31 INCOME TAX PAID

At beginning of the year (6,671) (6,235) Amount recognised in profit or loss (note 8) (13,361) (12,487) Deferred tax charge (note 8) (1,400) 2,192 Effect of movements in exchange rates 343 (1,497) Net monetary gain 12 — Other 300 172 At end of the year 8,998 6,671 Taxation prepaid (564) (859) Taxation liabilities 9,562 7,530 Total tax paid (11,779) (11,184)

1 Restated, refer to note 48.

F-187 Notes to the Group annual financial statements for the year ended 31 December 2014

32 CONTINGENT LIABILITIES The Group does not recognise contingent liabilities in the statement of financial position until future events indicate that it is probable that an outflow of resources will take place and a reliable estimate can be made, at which time a provision is raised.

2014 2013 Rm Rm Contingent liabilities 932 1,023 Licence fee and regulatory matters 598 502 Litigation and other matters 323 521 Other 11 —

33 COMMERCIAL COMMITMENTS Incentives for handset upgrades The Group’s present policy is to pay incentives to Service Providers (SPs) for handset upgrades. These upgrades are only payable once the subscribers have completed a 21-month period with the SP since the initial commencement of their contract or previous upgrade and the eligible subscribers have exercised their rights to receive upgrades for new postpaid contracts with minimum terms. The value of the obligation may vary depending on the prevailing business rules at the time of the upgrade. The total number of eligible subscribers who had not yet exercised their right to upgrade at 31 December 2014 was 1,555,033 (2013: 1,268,708) and the estimated commitment in respect of these incentives amounts to R841 million (2013: R859 million).

34 CAPITAL COMMITMENTS Commitments for the acquisition of property, plant and equipment and software:

2014 2013 Rm Rm Capital expenditure not yet incurred at the reporting date is as follows: – Contracted 10,034 11,260 – Authorised but not contracted 19,659 14,891 Total commitments for property, plant and equipment and software 29,693 26,151

Capital expenditure will be funded from operating cash flows, existing borrowing facilities and where necessary by raising additional facilities.

35 OPERATING LEASE COMMITMENTS Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.

Sub-lease income is recognised in profit or loss on a straight-line basis over the term of the lease.

In all significant operating lease arrangements in place during the year, the Group acted as the lessee.

Sale and leaseback In sale and leaseback transactions that result in operating leases, where it is clear that the transaction is priced at fair value, any profit or loss is recognised on the effective date of the sale transaction. If the sale price is below fair value, any profit or loss is recognised on the effective date of the sale transaction except that, if a loss is compensated for by future lease payments at below market price, it is deferred and amortised in proportion to the lease payments over the period during which the asset is expected to be used. If the sale price is above fair value, the excess over fair value is deferred and amortised over the period for which the asset is expected to be used.

F-188 Notes to the Group annual financial statements for the year ended 31 December 2014

35 OPERATING LEASE COMMITMENTS (continued) If the fair value, at the time of a sale and leaseback transaction, is less than the carrying amount of the asset, a loss equal to the amount of the difference between the carrying amount and fair value is recognised immediately in profit or loss.

The Group leases various premises and sites under non-cancellable/cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. Penalties are chargeable on certain leases should they be cancelled before the end of the agreement.

2014 20131 Rm Rm The future aggregate minimum lease payments under non-cancellable operating lease arrangements are as follows: Not later than one year 4,280 2,326 Later than one year and no later than five years 16,203 7,572 Later than five years 13,973 6,117 34,456 16,015

1 Restated, refer to note 49.

36 FINANCE LEASE COMMITMENTS Assets held under finance leases are capitalised at the lower of the fair value of the leased asset and the estimated present value of the minimum lease payments at the inception of the lease. The corresponding liability to the lessor, net of finance charges, is included in the statement of financial position under other non-current/current liabilities. Each lease payment is allocated between the liability and finance charges. Finance charges, which represent the difference between the total lease commitments and fair value of the assets acquired, are charged to profit or loss over the term of the relevant lease so as to produce a constant periodic rate of interest on the remaining balance of the obligation for each accounting period.

In all significant finance lease arrangements in place during the period, the Group acted as the lessee.

Sale and leaseback In sale and leaseback transactions that result in finance leases, any excess of sale proceeds over the carrying amount is deferred and amortised over the lease term.

At the reporting date, the Group had outstanding commitments under non-cancellable finance leases which fall due as follows:

Minimum Future lease finance Present payments charges value Rm Rm Rm 2014 Current Not later than one year 143 (36) 107 Non-current (note 27) 921 (225) 696 Later than one year and no later than five years 395 (135) 260 Later than five years 526 (90) 436 1,064 (261) 803 2013 Current Not later than one year 195 (91) 104 Non-current (note 27) 1,088 (332) 756 Later than one year and no later than five years 471 (183) 288 Later than five years 617 (149) 468 1,283 (423) 860

F-189 Notes to the Group annual financial statements for the year ended 31 December 2014

37 JOINT OPERATIONS In respect of its interest in joint operations, the Group recognises in its financial statements its share of the assets held jointly, classified according to the nature of the assets, any liabilities that it has incurred, its share of any liabilities incurred jointly with the other joint operators in relation to the joint operation, any income from the sale or use of its share of the output of the joint operation, together with its share of any expenses incurred by the joint operation and any expenses that it has incurred in respect of its interest in the joint operation.

When the Group acquires an interest in a joint operation in which the activity of the joint operation constitutes a business, identifiable assets acquired and liabilities assumed are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised in profit or loss. Goodwill is measured as the excess of the sum of the consideration transferred over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed.

When the Group increases its interest in a joint operation in which the activity of the joint operation constitutes a business, by acquiring an additional interest in the joint operation, the Group’s previously held interests in the joint operation are not remeasured if the joint operator retains joint control.

The Group has entered into agreements with several other companies to construct high-capacity fibre-optic submarine cable systems.

The Group has the following interests in jointly controlled operations:

Ownership interest held 2014 2013 %% Joint operation Europe India Gateway Submarine Cable System 7.09 7.09 West Africa Cable System 11.45 11.78 EASSy Cable System 16.26 15.31

The following table presents, on a condensed basis, the Group’s share of assets and liabilities, revenue and expenses of the jointly controlled operations which are included in the consolidated statement of financial position and income statement:

2014 2013 Rm Rm Revenue 21 199 Expenses (212) (201) Total assets 1,977 1,827 Total liabilities (excluding unearned income) (124) (114) Unearned income (132) (132)

F-190 Notes to the Group annual financial statements for the year ended 31 December 2014

38 EXCHANGE RATES TO SOUTH AFRICAN RAND

Closing rates Average rates 2014 2013 2014 2013 United States dollar US$ 0.09 0.10 0.09 0.10 Uganda shilling UGX 239.02 239.81 240.06 264.66 Rwanda franc RWF 58.02 63.90 63.12 67.01 Cameroon Communauté Financière Africaine franc XAF 46.94 45.23 45.77 51.96 Nigerian naira NGN 15.93 15.23 15.27 16.46 Iranian rial1 IRR 2,341.99 2,355.94 2,389.54 2,554.14 Botswana pula BWP 0.82 0.83 0.83 0.87 Côte d’Ivoire Communauté Financière Africaine franc CFA 46.94 45.23 45.81 51.50 Congo-Brazzaville Communauté Financière Africaine franc XAF 46.94 45.23 45.81 51.96 Zambian kwacha ZMK 0.55 0.53 0.57 0.55 Swaziland lilangeni E 1.00 1.00 1.00 1.00 Lebanese pound LBP 130.77 142.82 135.05 157.10 Afghanistan afghani AFN 5.05 5.33 5.31 5.72 Euro EUR 0.07 0.07 0.07 0.08 Ghanaian cedi GHS 0.28 0.22 0.27 0.21 Benin Communauté Financière Africaine franc XOF 46.94 45.23 45.71 51.44 Guinean franc GNF 612.70 654.29 643.39 705.86 Sudanese pound1 SDG 0.52 0.54 0.53 0.50 Syrian pound1 SYP 17.15 13.67 15.43 13.57 Guinea-Bissau Communauté Financière Africaine franc XOF 46.94 45.23 45.97 51.64 Yemen rial YER 18.62 20.44 19.93 22.39 Ethiopian birr ETB 1.74 1.81 1.79 1.86 1 The financial results, positions and cash flows of foreign operations trading in hyperinflationary economies are translated as set out in note 1.3.2.

39 EVENTS AFTER THE REPORTING PERIOD Syria freehold licence MTN Syria (JSC) operated under a contractual service arrangement granted and controlled by the Syrian Telecommunication Establishment (STE). The contract known as Build, Operate and Transfer (BOT) provided for revenue sharing between MTN Syria (JSC) and the STE and required the handing over of the network to the STE at the end of the licence period. Subsequent to the reporting period, the Group concluded its negotiations with the STE for a freehold licence. This resulted in the termination of the BOT contract and acquisition of a freehold licence with a term of 20 years with effect from 1 January 2015. The initial licence fee of SYP25 billion was funded through cash balances maintained within the local operation.

F-191 Notes to the Group annual financial statements for the year ended 31 December 2014

40 RELATED PARTY TRANSACTIONS Related party transactions constitute the transfer of resources, services or obligations between the Group and a party related to the Group, regardless of whether a price is charged. For the purposes of defining related party transactions with key management, key management has been defined as directors and the Group’s executive committee and includes close members of their families and entities controlled or jointly controlled by these individuals.

2014 2013 Rm Rm Key management compensation Salaries and other short-term employee benefits 77 69 Post-employment benefits 7 6 Other benefits 8 15 Bonuses 62 59 Total 154 149

Details of directors’ remuneration are disclosed in note 46 of the annual financial statements.

Subsidiaries Details of investments in subsidiaries are disclosed in note 47 of the annual financial statements.

Changes in shareholding There were no transactions with non-controlling shareholders or changes in shareholding in any of the Group’s subsidiaries during the year.

The following changes in shareholding transactions took place in 2013 (note 41): • The Group increased its shareholding in MTN Cyprus Limited from 50% to 100% for R690 million. • The Group sold 0.84% of its shareholding in MTN Côte d’Ivoire S.A. for R57 million. • The non-controlling shareholders of MTN Afghanistan Limited sold their shareholding of 9.1% to MTN (Dubai) Limited for R248 million in terms of a put option.

Joint ventures Details of the Group’s investments in and share of results and dividend income from its joint ventures are disclosed in note 14 of the annual financial statements.

Details of other transactions and balances with joint ventures are set out below.

Net income for the year Net balance receivable/(payable) 2014 2013 2014 2013 Rm Rm Rm Rm Swazi MTN Limited 6 40 36 42 Mascom Wireless Botswana Proprietary Limited 2 3 — 2 Irancell Telecommunication Company Services (PJSC) 212 184 11,070 7,810 Middle East Internet Holding S.A.R.L (MEIH) — — (1,115) — African Internet Holding GmbH (AIH) — — (1,592) —

Associates Details of the Group’s investments in and share of results and dividend income from its associates are disclosed in note 14 of the annual financial statements.

F-192 Notes to the Group annual financial statements for the year ended 31 December 2014

40 RELATED PARTY TRANSACTIONS (continued) Details of other transactions and balances with associates are set out below.

Net income for the year Net balance receivable 2014 2013 2014 2013 Rm Rm Rm Rm Belgacom International Carrier Services SA (BICS) 386 460 141 125 Ghana Tower InterCo B.V. 159 131 2,025 1,689 Uganda Tower InterCo B.V. 44 38 889 705 Nigeria Tower InterCo B.V. — — 1,039 —

Scancom Limited (MTN Ghana) entered into operating lease agreements with Ghana Tower InterCo B.V. The operating lease commitments amounted to R2,762 million at 31 December 2014 (2013: R3,516 million1). The rental amounts escalate every year by inflation and the initial term is 10 years, followed by four times five-year renewal periods.

MTN Uganda Limited entered into operating lease agreements with Uganda Tower InterCo B.V. The operating lease commitments amounted to R2,364 million at 31 December 2014 (2013: R2,411 million). The rental amounts escalate every year by inflation and the initial term is 10 years, followed by four times five-year renewal periods.

MTN Nigeria Communications Limited entered into operating lease agreements with INT Towers Limited, a wholly owned subsidiary of Nigeria Tower InterCo B.V. The operating lease commitments amounted to R17,843 million at 31 December 2014. The initial term of the lease agreements is 10 years, followed by four times five-year renewal periods. 1 Restated, refer to note 49.

Shareholders The principal shareholders of the Company are disclosed in Annexure 1 which is unaudited.

41 CHANGES IN SHAREHOLDING Changes in shareholding of subsidiaries are transactions that result in increases or reductions in the interest held in a subsidiary of the Group and are accounted for as transactions with non-controlling shareholders as disclosed in note 1.3.1.

41.1 Current year changes in shareholding There were no transactions with non-controlling shareholders or changes in shareholding in any of the Group’s subsidiaries during the year.

41.2 Prior year changes in shareholding 41.2.1 MTN Cyprus Limited The Group increased its shareholding in MTN Cyprus Limited from 50% to 100% for R690 million.

The impact on equity arising from the acquisition was as follows:

Carrying amount on acquisition date Rm Purchase consideration (690) Net asset value acquired 163 Difference included in equity on consolidation (527)

F-193 Notes to the Group annual financial statements for the year ended 31 December 2014

41 CHANGES IN SHAREHOLDING (continued) 41.2 Prior year changes in shareholding (continued) 41.2.2 MTN Côte d’Ivoire S.A. The Group sold 0.84% of its shareholding in MTN Côte d’Ivoire S.A. for R57 million.

The impact on equity arising from the disposal was as follows:

Carrying amount on disposal date Rm Consideration received 57 Net asset value disposed (25) Difference included in equity on consolidation 32

41.2.3 MTN Afghanistan Limited The International Finance Corporation (IFC) exercised its put option and sold its non-controlling interest of 9.1% in MTN Afghanistan to MTN (Dubai) Limited for R248 million. MTN Afghanistan Limited is now a wholly owned subsidiary of MTN (Dubai) Limited.

41.3 Net cash flows relating to changes in shareholdings

2014 2013 Rm Rm Changes in shareholding of subsidiaries Consideration for acquisition of shares from non-controlling interests – MTN Cyprus Limited — (690) Proceeds from sale of shares to non-controlling interests – MTN Côte d’Ivoire S.A. — 57 Consideration for the settlement of put option – MTN Afghanistan Limited — (248) — (881)

42 BUSINESS COMBINATIONS 42.1 Current year business combinations 42.1.1 Afrihost Proprietary Limited In November 2014, the Group acquired 50% plus one share of the share capital of Afrihost Proprietary Limited for R408 million. As a result, the Group obtained control of Afrihost Proprietary Limited. Control over Afrihost Proprietary Limited will enable the Group to drive its accelerated SME strategy and provide scale for the Group’s virtual market, content and cloud offering.

Since acquisition, the entity contributed revenue of R55 million and profit of R4 million to the Group’s results. If the acquisition had occurred on 1 January 2014, management estimates that the Group’s revenue and profit for the year would have increased by R512 million and reduced by R6 million, respectively. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on date of acquisition would have been the same if the acquisition had occurred on 1 January 2014.

F-194 Notes to the Group annual financial statements for the year ended 31 December 2014

42 BUSINESS COMBINATIONS (continued) 42.1 Current year business combinations (continued) 42.1.1 Afrihost Proprietary Limited (continued) The following table summarises the consideration transferred by the Group, the fair value of assets acquired, liabilities assumed and the non-controlling interest at the acquisition date.

2014 Rm Consideration transferred Cash 408 Cash in subsidiary acquired (20) Cash outflow on acquisition 388 Assets acquired 383 Property, plant and equipment 44 Intangible assets 307 Deferred tax assets 2 Inventories 1 Trade and other receivables 9 Cash and cash equivalents 20 Liabilities assumed 204 Deferred tax liabilities 86 Other non-current liabilities 7 Trade and other payables 109 Taxation payable 2 Total identifiable net assets 179 Goodwill Total consideration paid 408 Non-controlling interest in Afrihost Proprietary Limited 90 Net identifiable assets acquired (179) 319

Measurement of fair values The valuation techniques applied in measuring the fair value of material assets acquired are as follows:

Assets acquired Valuation technique Property, plant and equipment Replacement cost Intangible assets Multi-period excess earnings method and royalty payments avoided Trade receivables Discounted cash flow method Inventories Replacement cost

The fair value of the acquired identifiable assets has been determined on a provisional basis in terms of IFRS 3.

42.1.2 Nashua subscriber base During November 2014, the Group acquired its Nashua Mobile subscriber base from Nashua Mobile Proprietary Limited for R1,246 million. The acquisition of the subscriber base will enable the Group to consolidate the Mobile Telephone Networks Proprietary Limited postpaid subscriber base in one entity and own the relationship with the subscribers.

Since acquisition to 31 December 2014, the subscriber base contributed revenue of R120 million and profit of R113 million to the Group’s results. If the acquisition had occurred on 1 January 2014, management estimates that the Group’s revenue and profit for the year would have increased by R1,276 million and R1,202 million

F-195 Notes to the Group annual financial statements for the year ended 31 December 2014

42 BUSINESS COMBINATIONS (continued) 42.1 Current year business combinations (continued) 42.1.2 Nashua subscriber base (continued) respectively. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2014.

The following table summarises the consideration transferred by the Group, the fair value of assets acquired and liabilities assumed at the acquisition date.

2014 Rm Consideration transferred Cash outflow on acquisition 1,246 Assets acquired 926 Intangible assets 732 Loans and other non-current receivables 194 Liabilities assumed Deferred tax liabilities 205 Total identifiable net assets 721 Goodwill Total consideration paid 1,246 Net identifiable assets acquired (721) 525

Measurement of fair values The valuation techniques applied in measuring the fair value of material assets acquired are as follows:

Assets acquired Valuation technique Intangible assets Multi-period excess earnings method and royalty payments avoided Loans and other non-current receivables Discounted cash flow method

The fair values of the acquired identifiable assets have been determined on a provisional basis in terms of IFRS 3.

42.2 Prior year business combinations During 2013, the Group increased its shareholding in Satalite Data Networks Limited from 60% to 100% for R47 million. The entity was previously a joint venture of the Group.

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS Accounting for financial instruments Financial assets and liabilities are recognised in the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instruments.

All financial assets and liabilities are initially measured at fair value, including transaction costs, except for those classified as being at fair value through profit or loss, which are initially measured at fair value excluding transaction costs. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial assets are recognised (derecognised) on the date the Group commits to purchase (sell) the instruments (trade date accounting).

F-196 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) Financial assets and liabilities are classified as current if expected to be realised or settled within 12 months; if not, they are classified as non-current.

Offsetting financial instruments Offsetting of financial assets and liabilities is applied when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The net amount is reported in the statement of financial position.

Financial instrument classification The Group classifies its financial instruments into the following categories: • financial assets at fair value through profit or loss; • loans and receivables; • held-to-maturity investments; • available-for-sale; • financial liabilities at fair value through profit or loss; and • financial liabilities at amortised cost.

The classification is dependent on the purpose for which the financial instruments were acquired. Management determines the classification of financial instruments at initial recognition.

Financial instruments comprise investments in equity and debt securities, loans receivable, trade and other receivables (excluding prepayments), investments in self-insurance cell captives, cash and cash equivalents, restricted cash, borrowings, other non-current liabilities (excluding provisions), bank overdrafts, derivatives and trade and other payables.

Subsequent measurement Subsequent to initial recognition, financial instruments are measured as described below.

Financial assets at fair value through profit or loss Financial instruments at fair value through profit or loss are subsequently measured at fair value and changes therein are recognised in profit or loss. Derivatives are also categorised as held for trading unless they are designated as hedging instruments.

Loans and other non-current receivables The Group’s loans and receivables comprise loans and other receivables, certain of its investments, trade and other receivables (excluding prepayments), restricted cash and cash and cash equivalents. Loans and receivables are subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Held-to-maturity investments Held-to-maturity investments are subsequently measured at amortised cost using the effective-interest method, less any impairment losses.

Available-for-sale Available-for-sale assets are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period. Available-for-sale financial assets are subsequently measured at fair value and changes therein are recognised in other comprehensive income.

F-197 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) Financial liabilities Financial liabilities comprise trade and other payables, bank overdrafts, borrowings, derivative liabilities and other non-current liabilities (excluding provisions).

All financial liabilities, excluding derivative liabilities, are subsequently measured at amortised cost using the effective-interest method. Derivative liabilities are subsequently measured at fair value and changes therein are recognised in profit or loss.

Derecognition Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligations specified in the contracts are discharged, cancelled or expire.

Impairment The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. A financial asset or group of financial assets is impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and its recoverable amount, being the present value of the estimated future cash flows discounted at the original effective interest rate.

When a loan or receivable is impaired, the Group reduces the carrying amount to its recoverable amount, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables is recognised using the effective interest rate.

Significant financial assets are tested for impairment on an individual basis. The financial assets that are not impaired or are not individually significant are collectively assessed for impairment in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised.

Impairment of trade receivables An impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial re-organisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired.

The carrying amount of the trade receivable is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited to profit or loss.

F-198 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) Risk management Introduction The Group has exposure to the following risks from its use of financial instruments: credit risk, liquidity risk and market risk (foreign exchange and interest rate risk). This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated annual financial statements.

Risk profile The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments, such as forward exchange contracts and interest rate swaps, to hedge certain exposures, but as a matter of principle the Group does not enter into derivative contracts for speculative purposes. The Group does not apply hedge accounting.

Risk management is carried out under policies approved by the board of directors of the Group and of relevant subsidiaries. The MTN Group executive committee identifies, evaluates and hedges financial risks in co- operation with the Group’s operating units. The board provides written principles for overall risk management, as well as for specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and investing excess liquidity.

43.1 Categories of financial instruments

Assets Liabilities Fair value Fair value through through Total Loans and profit or Held-to- Available- Amortised profit or carrying receivables loss1 maturity for-sale cost loss1 amount Rm Rm Rm Rm Rm Rm Rm 2014 Non-current financial assets Loans and other non-current receivables 5,277 — — — — — 5,277 Investments — — 223 5,912 — — 6,135 Current financial assets Trade and other receivables 29,655 — — — — — 29,655 Current investments 1,276 906 3,469 — — — 5,651 Derivative assets — 183 — — — — 183 Restricted cash 893 — — — — — 893 Cash and cash equivalents 43,098 — — — — — 43,098 80,199 1,089 3,692 5,912 — — 90,892 Non-current financial liabilities Borrowings — — — — 39,470 — 39,470 Other non-current liabilities — — — — 1,016 — 1,016 Current financial liabilities Trade and other payables — — — — 31,208 — 31,208 Borrowings — — — — 13,783 — 13,783 Derivative liabilities ———— — 2 2 Bank overdrafts — — — — 26 — 26 — — — — 85,503 2 85,505

1 All financial instruments at fair value through profit or loss are held for trading.

F-199 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.1 Categories of financial instruments (continued)

Assets Liabilities Fair value Fair value through through Total Loans and profit or Held-to- Available- Amortised profit or carrying receivables loss1 maturity for-sale cost loss1 amount Rm Rm Rm Rm Rm Rm Rm 20132 Non-current financial assets Loans and other non-current receivables 4,993 — — — — — 4,993 Investments — — 111 — — — 111 Current financial assets Trade and other receivables 21,710 — — — — — 21,710 Current investments 1,283 691 2,568 — — — 4,542 Derivative assets — 22 — — — — 22 Restricted cash 2,222 — — — — — 2,222 Cash and cash equivalents 39,600 — — — — — 39,600 69,808 713 2,679 — — — 73,200 Non-current financial liabilities Borrowings — — — — 34,664 — 34,664 Other non-current liabilities — — — — 1,093 — 1,093 Current financial liabilities Trade and other payables — — — — 25,354 — 25,354 Borrowings — — — — 11,338 — 11,338 Derivative liabilities — — — — — 3 3 Bank overdrafts — — — — 23 — 23 — — — — 72,472 3 72,475

1 All financial instruments at fair value through profit or loss are held for trading. 2 Restated, refer to note 48.

43.2 Financial assets and liabilities subject to offsetting The following table presents the Group’s financial assets and liabilities that are subject to offsetting:

Gross Amount Net amount offset amount Rm Rm Rm 2014 Current financial assets Trade and other receivables 3,130 (987) 2,143 Current financial liabilities Trade and other payables 1,920 (987) 933 2013 Current financial assets Trade and other receivables 3,826 (1,238) 2,588 Current financial liabilities Trade and other payables 2,798 (1,238) 1,560

F-200 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.3 Fair value estimation The table below presents the Group’s assets and liabilities that are measured at fair value. The classification into different levels is based on the extent that quoted prices are used in the calculation of fair value and the levels have been defined as follows: • level 1: fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities; • level 2: fair value based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); or • level 3: fair value based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The following table presents the Group’s assets and liabilities that are measured at fair value:

Level 1 Level 2 Level 3 Total Rm Rm Rm Rm 2014 Current financial assets Investments — 5,912 — 5,912 Current investments — — 906 906 Derivative assets 42 141 — 183 Total assets 42 6,053 906 7,001 Current financial liabilities Derivative liabilities —2—2

Level 1 Level 2 Level 3 Total Rm Rm Rm Rm 2013 Current financial assets Current investments — — 691 691 Derivative assets 20 2 — 22 Total assets 20 2 691 713 Current financial liabilities Derivative liabilities — 3 — 3

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include: • the fair value of forward foreign exchange contracts is determined using forward exchange rates at the reporting date; • quoted market prices or dealer quotes for similar instruments;

F-201 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.3 Fair value estimation (continued) • the fair value of interest rate swaps is calculated as the present value of estimated future cash flows based on observable yield curves; and • other techniques, such as discounted cash flow analysis, are used to determine fair value of the remaining financial instruments.

Reconciliation of level 3 financial assets The table below sets out the reconciliation of financial assets that are measured at fair value based on inputs that are not based on observable market data (level 3):

Rm Balance at 1 January 2013 — Reclassification of investment in insurance cell captives1 557 Contributions paid to insurance cell captives 281 Claims received from cell captives (177) Gain recognised in profit or loss 30 Balance at 31 December 2013 691 Balance at 1 January 2014 691 Contributions paid to insurance cell captives 563 Claims received from cell captives (390) Gain recognised in profit or loss 42 Balance at 31 December 2014 906

1 The Group invested in insurance cell captives created by Guardrisk, whereby Guardrisk’s insurance licence was extended for use for the insurance of the Group’s own assets (first-party cells). The Group previously considered the insurance cells to be separate portions of an entity subject to consolidation under IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities (effective for periods prior to 1 January 2013). With the adoption of IFRS 10 Consolidated Financial Statements, the Group concluded that the cell captive structures did not satisfy the criteria of IFRS 10 to be regarded “deemed separate entities” and are accordingly not subject to consolidation. The cell captive arrangements have therefore been accounted for as financial assets receivable from these cells.

The effect on profit or loss of a reasonable possible change in assumptions used in determining the fair value of current investments is negligible.

43.4 Credit risk Credit risk, or the risk of financial loss to the Group due to customers or counterparties not meeting their contractual obligations, is managed through the application of credit approvals, limits and monitoring procedures.

The Group’s maximum exposure to credit risk is represented by the carrying amount of the financial assets that are exposed to credit risk.

The Group considers its maximum exposure per class, without taking into account any collateral and financial guarantees, to be as follows:

2014 20132 Rm Rm Loans and other non-current receivables 5,277 4,993 Investments 223 111 Trade and other receivables 29,655 21,710 Current investments 5,651 4,542 Derivative assets 183 22 Restricted cash 893 2,222 Cash and cash equivalents 43,098 39,600 84,980 73,200

2 Restated, refer to note 48.

F-202 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.4 Credit risk (continued) Cash and cash equivalents and current investments The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate values of transactions concluded are spread among approved financial institutions. The Group actively seeks to limit the amount of credit exposure to any one financial institution and credit exposure is controlled by counterparty limits that are reviewed and approved by the credit risk department.

The operations in Nigeria, Dubai and South Africa (including head office entities) hold their cash balances in financial institutions with a rating range from B- to AA+.

Given these credit ratings, management does not expect any counterparty to fail to meet its obligations.

Trade receivables The Group has no significant concentrations of credit risk, due to its widespread customer base across various operations and dispersion across geographical locations. The Group has policies in place to ensure that retail sales of products and services are made to customers with an appropriate credit history.

The recoverability of interconnect receivables in certain international operations is uncertain; however, this is actively managed within acceptable limits and has been incorporated in the assessment of an appropriate revenue recognition policy (note 4) and the impairment of trade receivables, where applicable. In addition, in certain countries there exists a right of set-off with interconnect parties to assist in settling outstanding amounts.

Ageing and impairment analysis

2014 2014 2014 20131 20131 20131 Rm Rm Rm Rm Rm Rm Gross Impaired Net Gross Impaired Net Fully performing trade receivables 12,994 — 12,994 9,750 — 9,750 Interconnect receivables 2,165 — 2,165 1,701 — 1,701 Contract receivables 3,826 — 3,826 2,1312 — 2,1312 Other receivables 7,003 — 7,003 5,9182 — 5,9182 Past due trade receivables 4,259 (2,514) 1,745 5,270 (2,679) 2,591 Interconnect receivables 1,352 (752) 600 1,666 (1,033) 633 0 to 3 months 234 (1) 233 232 (1) 231 3 to 6 months 103 — 103 130 (38) 92 6 to 9 months 54 — 54 120 (25) 95 9 to 12 months 961 (751) 210 1,184 (969) 215 Contract receivables 2,195 (1,344) 851 2,599 (1,287) 1,312 0 to 3 months 674 (243) 431 900 (77) 823 3 to 6 months 592 (454) 138 503 (266) 237 6 to 9 months 183 (48) 135 407 (243) 164 9 to 12 months 746 (599) 147 789 (701) 88 Other receivables 712 (418) 294 1,005 (359) 646 0 to 3 months 102 (4) 98 141 (2) 139 3 to 6 months 137 (27) 110 77 (7) 70 6 to 9 months 210 (126) 84 533 (201) 332 9 to 12 months 263 (261) 2 254 (149) 105 Total 17,253 (2,514) 14,739 15,020 (2,679) 12,341

1 Restated, refer to note 48. 2 An amount of R4 billion relating to retail contracts was reclassified from contract receivables to other receivables.

F-203 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.4 Credit risk (continued) Total past due per significant operation

Interconnect Contract Other receivables receivables receivables Total Rm Rm Rm Rm 2014 MTN South Africa 59 850 80 989 MTN Nigeria Communications Limited 839 327 26 1,192 Other operations 454 1,018 606 2,078 1,352 2,195 712 4,259 2013 MTN South Africa 177 1,017 334 1,528 MTN Nigeria Communications Limited 766 502 19 1,287 Other operations 723 1,080 652 2,455 1,666 2,599 1,005 5,270

Provision for impairment of trade receivables

Exchange At Net differences beginning monetary and other At end of the year Additions2 Reversals2 Utilised gain movements3 of the year Rm Rm Rm Rm Rm Rm Rm 2014 Provision for impairment of trade receivables (2,679) (650) 364 443 43 (35) (2,514) 20131 Provision for impairment of trade receivables (1,925) (831) 88 192 — (203) (2,679)

1 Restated, refer to note 48. 2 A net impairment charge of R286 million (2013: R743 million) was recognised during the year. This amount is included in other operating expenses in profit or loss (note 6). 3 Includes the effect of hyperinflation.

The Group does not hold any collateral for trade receivables.

Loans and other non-current receivables The recoverability of all loans was assessed at reporting date and none were found to be impaired.

An impairment reversal of R230 million (2013: R223 million charge) in respect of non-current interconnect receivables was recognised in 2014. The impairment analysis is set out below:

Gross Impaired Net Rm Rm Rm 2014 Non-current interconnect receivables 355 — 355 2013 Non-current interconnect receivables 426 (223) 203

F-204 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.4 Credit risk (continued)

Exchange At differences beginning and other At end of the year Additions Reversals Utilised movements of the year Rm Rm Rm Rm Rm Rm 2014 Provision for impairment on non-current interconnect receivables (223) — 230 — (7) — 2013 Provision for impairment on non-current interconnect receivables — (223) — — — (223)

43.5 Liquidity risk Liquidity risk is the risk that an entity in the Group will be unable to meet its obligations as they become due.

The Group’s approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet its liabilities when due under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group ensures it has sufficient cash on demand (currently the Group is maintaining a positive cash position) or access to facilities to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

The following liquid resources are available:

2014 2013 Rm Rm Trade and other receivables 18,895 14,1321 Current investments 2,182 1,974 Cash and cash equivalents, net of overdrafts 43,072 39,577 64,149 55,683

1 Restated, refer to note 48.

The Group’s undrawn borrowing facilities are disclosed in note 26.

F-205 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.5 Liquidity risk (continued) The following are the contractual cash flows of financial liabilities:

More than More Payable one than More More within month three than than two one but not months one year years but month exceeding but not but not not More Carrying or on three exceeding exceeding exceeding than five amount Total demand months one year two years five years years Rm Rm Rm Rm Rm Rm Rm Rm 2014 Borrowings 53,253 68,775 442 3,227 14,510 14,288 25,537 10,771 Other non-current liabilities 1,016 1,273 — — — 134 323 816 Trade and other payables 31,208 31,208 14,873 9,760 6,575 — — — Derivative liabilities 22——2——— Bank overdrafts 262626————— 85,505 101,284 15,341 12,987 21,087 14,422 25,860 11,587 2013 Borrowings 46,002 61,491 3,517 3,492 8,294 14,693 26,005 5,490 Other non-current liabilities 1,093 1,453 — — — 225 260 968 Trade and other payables 25,354 25,354 13,868 9,118 2,368 — — — Derivative liabilities 3 3 — 3 — — — — Bank overdrafts 23 23 23 ————— 72,475 88,324 17,408 12,613 10,662 14,918 26,265 6,458

43.6 Market risk Market risk is the risk that changes in market prices (interest rate and currency risk) will affect the Group’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

43.6.1 Interest rate risk Interest rate risk is the risk borne by an interest-bearing asset or liability, due to variability of interest rates.

Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents, restricted cash, current investments, trade and other receivables/payables, loans receivable/payable, bank overdrafts and other non-current liabilities. The interest rates applicable to these financial instruments are a combination of floating and fixed rates in line with those currently available in the market.

The Group’s interest rate risk arises from the repricing of the Group’s forward cover and floating rate debt, incremental funding or new borrowings, the refinancing of existing borrowings and the magnitude of the significant cash balances that exist.

Debt in the South African entities and all holding companies (including MTN (Dubai) Limited and MTN International (Mauritius) Limited is managed on an optimal fixed versus floating interest rate basis, in line with the approved Group Treasury Policy. Significant cash balances are also considered in the fixed versus floating interest rate exposure mix.

Debt in the majority of the Group’s non-South African operations is at floating interest rates. This is due to the underdeveloped and expensive nature of derivative products in these financial markets. The Group continues to monitor developments which may create opportunities as these markets evolve in order that each underlying operation can be aligned with the Group Treasury Policy.

F-206 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.6 Market risk (continued) 43.6.1 Interest rate risk (continued) The Group makes use of various products, including interest rate derivatives and other appropriate hedging tools, as a way to manage these risks; however, derivative instruments may be used only to hedge existing exposures.

Profile At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was as follows:

2014 2013 Variable Variable Fixed rate rate Fixed rate rate instruments instruments instruments instruments Rm Rm Rm Rm Non-current financial assets Loans and other non-current receivables 3,071 905 1,736 856 Investments 223 — 111 — Current financial assets Trade and other receivables 74 5,988 123 5,255 Current investments 4,745 — 3,851 — Restricted cash 155 366 189 1,663 Cash and cash equivalents 20,788 7,395 25,729 7,252 29,056 14,654 31,739 15,026 Non-current financial liabilities Borrowings 11,947 27,523 4,850 29,772 Other non-current liabilities 693 298 723 347 Current financial liabilities Trade and other payables 107 54 128 69 Borrowings 4,220 9,563 7,623 3,715 Bank overdrafts —2612 11 16,967 37,464 13,336 33,914

Sensitivity analysis The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss of an instantaneous increase or decrease of 1% (100 basis points) in market interest rates, from the rate applicable at 31 December, for each class of financial instrument with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in the following market interest rates: JIBAR, LIBOR, NIBOR and EURIBOR, money market rates and prime rates. Changes in market interest rates affect the interest income or expense of floating rate financial instruments. Changes in market interest rates only affect profit or loss in relation to financial instruments with fixed interest rates if these financial instruments are recognised at their fair value.

F-207 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.6 Market risk (continued) 43.6.1 Interest rate risk (continued) A change in the above market interest rates at the reporting date would have increased/(decreased) profit before tax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis as was used for 2013.

2014 2013 (Decrease)/increase in profit before tax (Decrease)/increase in profit before tax Upward Downward Upward Downward Change in change in change in Change in change in change in interest rate interest rate interest rate interest rate interest rate interest rate % Rm Rm % Rm Rm JIBAR 1 (102.7) 102.7 1 (62.5) 62.5 LIBOR 1 1.4 (1.4) 1 (187.3) 187.3 Three-month LIBOR 1 (0.8) 0.8 1 (3.6) 3.6 NIBOR 1 (174.9) 174.9 1—— EURIBOR 1 (14.3) 14.3 1 (10.2) 10.2 Money market 1 22.8 (22.8) 1 31.1 (31.1) Prime 1——1 (1.3) 1.3 Other 1 40.4 (40.4) 1 44.9 (44.9)

43.6.3 Currency risk Currency risk is the exposure to exchange rate fluctuations that have an impact on cash flows and financing activities.

The Group operates internationally and is exposed to currency risk arising from various currency exposures. Refer to the table that follows for the Group’s exposure to foreign currency risk based on notional amounts. Currency risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency. The Group is also exposed to translation risk as holding companies do not report in the same currencies as operating entities.

Where possible, entities in the Group use forward contracts to hedge their actual exposure to foreign currency. Refer to note 21 for the Group’s outstanding foreign exchange contracts. The Group’s Nigerian subsidiary manages foreign currency risk on major foreign purchases by placing foreign currency on deposit as security against Letters of Credit (LCs) when each order is placed.

The Group has foreign subsidiaries whose assets are exposed to foreign currency translation risk, which is managed primarily through borrowings denominated in the relevant foreign currencies to the extent that such funding is available on reasonable terms in the local capital markets.

F-208 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.6 Market risk (continued) 43.6.3 Currency risk (continued) Foreign currency exposure Included in the Group statement of financial position are the following amounts denominated in currencies other than the functional currency of the reporting entities:

2014 2013 Rm Rm ASSETS Non-current assets – United States dollar 318 203 318 203 Current assets – United States dollar 9,169 6,935 – Euro 2,477 1,406 – Iranian rial 5,640 3,110 – South African rand 29 13 17,315 11,464 Total assets 17,633 11,667 LIABILITIES Non-current liabilities – United States dollar 14,651 5,832 – Euro 1,135 540 15,786 6,372 Current liabilities – United States dollar 8,375 6,624 – Euro 1,043 1,332 – South African rand 57 32 – British pound sterling 6 3 – Botswana pula 2 4 9,483 7,995 Total liabilities 25,269 14,367

Sensitivity analysis The Group has used a sensitivity analysis technique that measures the estimated change to profit or loss and equity of an instantaneous 10% strengthening or weakening in the rand against all other currencies, from the rate applicable at 31 December, for each class of financial instrument, with all other variables remaining constant. This analysis is for illustrative purposes only, as in practice, market rates rarely change in isolation.

The Group is mainly exposed to fluctuations in foreign exchange rates in respect of the US dollar, Euro and Iranian rial. This analysis considers the impact of changes in foreign exchange rates on profit, excluding foreign exchange translation differences resulting from the translation of Group entities that have functional currencies different from the presentation currency, into the Group’s presentation currency (and recognised in the foreign currency translation reserve).

F-209 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.6 Market risk (continued) 43.6.3 Currency risk (continued) A change in the foreign exchange rates to which the Group is exposed at the reporting date would have increased/ (decreased) profit before tax by the amounts shown below.

The analysis has been performed on the basis of the change occurring at the start of the reporting period and assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis as applied in 2013.

Increase/(decrease) in profit before tax Weakening Strengthening Change in in functional in functional exchange rate currency currency Denominated:functional currency % Rm Rm 2014 US$:ZAR 10 (144.8) 144.8 US$:SYP 10 (42.8) 42.8 US$:SDG 10 (109.2) 109.2 US$:SSP 10 (265.5) 265.5 US$:NGN 10 (492.0) 492.0 EUR:SDG 10 (160.5) 160.5 EUR:US$ 10 (28.1) 28.1 US$:GNF 10 (155.3) 155.3 US$:ZMK 10 (63.4) 63.4 IRR:ZAR 10 564.0 (564.0) 2013 US$:ZAR 10 365.8 (365.8) US$:SYP 10 (80.2) 80.2 US$:SDG 10 (91.5) 91.5 US$:SSP 10 (181.3) 181.3 US$:NGN 10 (627.3) 627.3 EUR:SDG 10 (121.3) 121.3 EUR:US$ 10 59.0 (59.0) US$:GNF 10 (109.5) 109.5 US$:ZMK 10 (151.5) 151.5 IRR:ZAR 10 311.0 (311.0)

43.6.4 Price risk Price risk is the risk that a decline in the value of assets adversely impacts on the profitability of the Group. The Group is not directly exposed to commodity price risk. The Group is exposed to material equity securities price risk on its investments in available-for-sale financial assets held at 31 December 2014 (note 13). The Group had no exposure to equity securities price risk at 31 December 2013.

Sensitivity analysis The estimated change in other comprehensive income of an instantaneous 10% appreciation or depreciation of the market value to which the Group is exposed at the reporting date would have increased/(decreased) other comprehensive income before tax by the amounts shown below:

2014 Increase/(decrease) in other comprehensive income before tax Appreciation Depreciation in market in market value value Rm Rm Available-for-sale financial assets 591 (591)

F-210 Notes to the Group annual financial statements for the year ended 31 December 2014

43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued) 43.7 Capital risk management The Group’s policy is to maximise borrowings at an operating company level, on a non-recourse basis, within an acceptable level of debt for the maturity of the local company.

Equity funding for existing operations or new acquisitions is raised centrally, first from excess cash and then from new borrowings while retaining an acceptable level of debt for the consolidated Group. Where funding is not available to the operation locally or in specific circumstances where it is more efficient to do so, funding is sourced centrally and on-lent. The Group’s policy is to borrow using a mixture of long-term and short-term capital market issues and borrowing facilities from local and international capital markets as well as multilateral organisations together with cash generated, to meet anticipated funding requirements.

The board of directors has approved three key debt protection ratios at a consolidated level, being net debt:EBITDA, net debt:equity and net interest:EBITDA. Net debt is defined as borrowings and bank overdrafts less cash and cash equivalents, restricted cash and current investments (excluding investments in cell captives). Equity approximates share capital and reserves. Net interest comprises finance charges less finance income and EBITDA is defined as earnings before interest, tax, depreciation, amortisation and goodwill impairment.

These internal ratios establish levels of debt that the Group should not exceed other than for relatively short periods of time and are shared with the Group’s debt rating agencies, being Moody’s and Fitch. The Group’s net debt:EBITDA, net debt:equity and net interest:EBITDA ratios at the end of the year are set out below:

2014 2013 Net debt:EBITDA Borrowings and bank overdrafts (Rm) 53,279 46,025 Less: Cash and cash equivalents, restricted cash and current investments (Rm) (48,736) (45,673) Net debt (Rm) 4,543 352 EBITDA (Rm) 73,191 60,4301 Net debt/EBITDA ratio 0.1 0.0 Net debt: total equity Net debt (Rm) 4,543 352 Total equity (Rm) 133,442 121,8121 Net debt/total equity (%) 3.4 0.3 Net interest:EBITDA Net finance costs (Rm) (3,668) (1,234) EBITDA (Rm) 73,191 60,4301 Net interest/EBITDA (%) (5.0) (2.0)1

1 Restated, refer to note 48.

44 SHARE-BASED PAYMENTS Equity-settled share-based payments The schemes described below are accounted for as equity-settled share-based payments to employees. Equity- settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the grant date. The fair value is measured using a stochastic model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations where applicable. The fair value determined at the grant date of the equity-settled share-based options or rights is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest. The expense is adjusted to reflect the actual number of options and share rights for which the related service and non-market-based vesting conditions are met.

Where employees exercise options or share rights in terms of the rules and regulations of the schemes, new shares are issued to participants as beneficial owners. The directors procure a listing of these shares on the JSE

F-211 Notes to the Group annual financial statements for the year ended 31 December 2014

44 SHARE-BASED PAYMENTS (continued) Limited, the securities exchange on which the Company’s shares are listed. In terms of the share option scheme participants entitled to share options pay a consideration equal to the option price when the options are exercised. The nominal value of shares issued is credited to share capital and the difference between the nominal value and the option price is credited to share premium. Settlement of Performance Share Plan (PSP) awards is done through the acquisition of shares on the open market and the subsequent delivery to participants.

The MTN Group share options, share appreciation rights and share rights schemes and performance share plan The Group operates a number of equity-settled share-based payment schemes for the benefit of eligible employees, including executive directors, in accordance with the schemes’ rules. The schemes are designed to retain and recognise the contributions of executive directors and eligible employees and to provide additional incentives to contribute to the Group’s continued growth.

The performance share plan is the active scheme which superseded the share option scheme, the share appreciation rights and the share rights scheme. The superseded schemes will be wound up once all unvested and/or unexercised awards previously made have run their remaining course.

The vesting periods under the share rights scheme, share option scheme and share appreciation rights scheme are as follows: 20%, 20%, 30% and 30% on the anniversary of the second, third, fourth and fifth years respectively, after the grant date. The strike price for these schemes is determined as the closing market price for MTN Group Limited shares on the day prior to the date of allocation. Unexercised options and rights lapse 10 years from the date of grant and are forfeited if the employee leaves the Group before they vest.

The vesting period for the performance share plan is three years and the awards vest in full based on set performance targets.

The total number of shares which may be allocated for the purposes of the schemes shall not exceed 5% of the total issued ordinary share capital of the Company, being 91,110,675 shares (2013: 91,642,290) (excluding Zakhele transaction and treasury shares) as approved by shareholders in 2001.

MTN Group share options Details of the outstanding share options under this scheme are as follows:

Number Number outstanding outstanding Strike at Forfeited Exercised at price 31 December during during 31 December Offer date R 2013 2014 2014 2014 1 December 2004 40.50 63,830 — (63,830) — Total 63,830 — (63,830) —

No new options were granted in the current or prior year and no expense was recognised as the above options vested in prior periods.

This share option scheme has been superseded by the introduction of the Group share appreciation rights schemes described below.

MTN Group Share Appreciation Rights Scheme and Share Rights Scheme (the rights schemes) The Share Appreciation Rights Scheme was implemented on 31 May 2006, and superseded the share option scheme.

On 26 August 2008, the board approved the share rights scheme, which superseded the share appreciation rights scheme. Both the rights schemes operate under the same provisions with the exception that the share rights scheme was extended to allow participation by junior managers.

F-212 Notes to the Group annual financial statements for the year ended 31 December 2014

44 SHARE-BASED PAYMENTS (continued) Share rights under the rights schemes are granted to eligible employees by the relevant employer subsidiary company.

Exercised rights are equity-settled whereby the relevant subsidiary purchases the required MTN shares in the open market.

Details of the outstanding share appreciation rights are as follows:

Number Number outstanding outstanding at Forfeited Exercised at Strike 31 December during during 31 December Offer date price R 2013 2014 2014 2014 31 May 2006 56.83 209,810 — (23,610) 186,200 21 November 2006 71.00 127,430 — (80,930) 46,500 22 June 2007 96.00 41,600 — (29,360) 12,240 19 March 2008 126.99 226,611 — (34,810) 191,801 Total 605,451 — (168,710) 436,741 Details of the outstanding share rights are as follows:

Number Number outstanding outstanding at Forfeited Exercised at Strike 31 December during during 31 December Offer date price R 2013 2014 2014 2014 1 September 2008 118.64 432,170 — (234,464) 197,706 28 June 2010 107.49 1,358,947 (31,290) (626,227) 701,430 Total 1,791,117 (31,290) (860,691) 899,136

The share rights and share appreciation rights outstanding at the end of the year have a weighted average remaining contractual life of four years (2013: five years).

There were no new grants during the 2013 or 2014 financial year.

MTN performance share plan (PSP) During the 2013 and 2014 financial years, the Group granted eligible employees share rights under the PSP, established in 2010. The rights were granted to employees on level 3 – 4 and 5 – 6. The PSP was established in order to attract, retain and reward selected employees who are able to contribute to the business of the employer companies and to stimulate their personal involvement thereby encouraging their continued service and encouraging them to advance the interests of the relevant employer company and the Group in general.

The share rights vest after three years from date of grant. The following performance conditions must be fulfilled to qualify for the percentage of the shares granted as stated in the table below:

Proportion of grant Employee Employee level 3 – 4 level 5 – 6 Vesting conditions for shares granted % % Total shareholder return 37.5 50.0 Adjusted free cash flow 37.5 50.0 Individual retention (guaranteed, subject to remaining on the PSP for the duration of the award fulfilment period) 25.0 —

For the total shareholder return vesting condition, vesting is based on a sliding scale that ranges from 25% vesting at the median to 100% vesting at the 75 percentile of the performance of a comparable group of companies listed on the JSE. For the adjusted free cash flow vesting condition, vesting is based on a sliding scale between 11% – 19% compound annual growth in the adjusted free cash flow, for all grants prior to 2014. The

F-213 Notes to the Group annual financial statements for the year ended 31 December 2014

44 SHARE-BASED PAYMENTS (continued) sliding scale has been revised by the board of directors to between 6% – 10% compound annual growth in the adjusted free cash flow, for all grants made in 2014 and thereafter. The individual retention condition is guaranteed subject to the employee remaining employed by the Group for the duration of the vesting period.

Details of the outstanding equity-settled performance share plan are as follows:

Number Number outstanding outstanding at Offered Forfeited Exercised at 31 December during during during 31 December Offer date 2013 2014 2014 2014 2014 29 June 2011 1,330,426 — (1,009,306) (321,120) — 29 December 2011 1,195,293 — (49,712) — 1,145,581 28 December 2012 1,733,727 — (176,794) — 1,556,933 20 December 2013 2,427,307 — (336,904) — 2,090,403 19 December 2014 — 2,292,700 (900) — 2,291,800 Total 6,686,753 2,292,700 (1,573,616) (321,120) 7,084,717

A valuation has been prepared using a stochastic model to determine the fair value of the performance share plan and the expense to be recognised for share rights granted during the year.

The range of inputs into the stochastic model used for rights granted during the year was as follows:

2014 2013 Share price 221.41 207.02 Expected life 3 years 3 years Risk-free rate 6.48% – 6.85% 5.61% – 6.57% Expected volatility 20.63% – 21.26% 24.63% – 22.15% Dividend yield 4.66% 4.60%

The risk-free rate was estimated using the implied yield on SA zero-coupon government bonds.

Volatility was estimated using the weekly closing share price and the dividend yield was estimated by using a one-year moving average of the dividend yield at valuation date.

2014 2013 Rm Rm Expense arising from equity-settled share-based payment transactions (note 6) 110 215

45 INTEREST IN SUBSIDIARIES The subsidiaries in which MTN Group Limited has direct and indirect interests in are set out in note 47.

A summary of the Group’s subsidiaries with material non-controlling interests is presented below.

Non-controlling interests Principal place of 2014 2013 Subsidiary business Rm Rm MTN Nigeria Communications Limited Nigeria 2,306 2,795 MTN Côte d’Ivoire S.A. Côte d’Ivoire 971 955 Spacetel Benin SA Benin 346 305 Mobile Telephone Networks Cameroon Limited Cameroon 450 627 Other 852 651 4,925 5,333

Set out below and on the next page is the summarised financial information for each subsidiary that has non- controlling interests that are material to the Group. Unless otherwise stated, the Group’s subsidiaries’ countries of incorporation are also their principal place of operation. The summarised financial information presented is before intercompany eliminations.

F-214 Notes to the Group annual financial statements for the year ended 31 December 2014

45 INTEREST IN SUBSIDIARIES (continued)

MTN Nigeria Communications Limited MTN Côte d’Ivoire S.A. 2014 2013 2014 2013 % ownership interest held by non-controlling interests 21.17 21.17 33.17 33.17

Rm Rm Rm Rm Summarised statement of financial position Non-current assets1 35,423 47,020 4,818 4,540 Current assets 25,267 16,226 1,676 1,887 Total assets 60,690 63,246 6,494 6,427 Non-current liabilities 27,541 30,937 302 248 Current liabilities 22,256 19,107 3,264 3,300 Total liabilities 49,797 50,044 3,566 3,548 Summarised income statement Revenue 53,995 48,159 6,418 5,480 EBITDA 31,620 29,235 2,475 2,8132 Profit before tax 19,184 18,862 1,704 2,165 Income tax expense (5,360) (5,707) (587) (447) Profit after tax 13,824 13,155 1,117 1,718 Profit attributable to non-controlling interests 2,927 2,785 371 568 Dividends paid to non-controlling interests 3,366 2,378 341 667

1 Excludes goodwill on consolidation of subsidiaries. 2 Includes profit on sale of towers.

MTN Nigeria Communications Limited MTN Côte d’Ivoire S.A. 2014 2013 2014 2013 Rm Rm Rm Rm Summarised statement of cash flows Net cash generated from/(used in) operating activities 11,226 11,037 1,195 (578) Net cash (used in)/from investing activities (7,078) (12,799) (1,158) 377 Net cash (used in)/from financing activities (49) 8,517 (286) 293 Net increase/(decrease) in cash and cash equivalents 4,099 6,755 (249) 92 Net cash and cash equivalents at beginning of the year 9,513 1,939 707 489 Exchange (losses)/gains on cash and cash equivalents (580) 819 (21) 126 Net cash and cash equivalents at end of the year 13,032 9,513 437 707

F-215 Notes to the Group annual financial statements for the year ended 31 December 2014

45 INTEREST IN SUBSIDIARIES (continued)

Mobile Telephone Networks Spacetel Benin SA Cameroon Limited 2014 2013 2014 2013 % ownership interest held by non-controlling interests 25 25 201 201

Rm Rm Rm Rm Summarised statement of financial position Non-current assets2 2,204 2,473 2,629 2,707 Current assets 1,424 782 4,058 3,747 Total assets 3,628 3,255 6,687 6,454 Non-current liabilities 683 694 200 154 Current liabilities 1,562 1,342 4,235 3,168 Total liabilities 2,245 2,036 4,435 3,322 Summarised income statement Revenue 3,316 2,659 6,194 5,204 EBITDA 1,380 1,065 2,651 2,5503 Profit before tax 878 592 1,905 1,875 Income tax expense 1 1 (852) (545) Profit after tax 879 593 1,053 1,330 Profit attributable to non-controlling interests 220 148 211 266 Dividends paid to non-controlling interests 173 113 365 173

1 The non-controlling interests hold 30% of the issued ordinary share capital of Mobile Telephone Networks Cameroon Limited; however, the effective ownership for accounting purposes is 20% due to outstanding funding provided by the Group to the non-controlling interests to acquire ordinary share capital in Mobile Telephone Networks Cameroon Limited. 2 Excludes goodwill on consolidation of subsidiaries. 3 Includes profit on sale of towers. Mobile Telephone Networks Spacetel Benin SA Cameroon Limited 2014 2013 2014 2013 Rm Rm Rm Rm Summarised statement of cash flows Net cash generated from operating activities 961 544 1,105 609 Net cash (used in)/from investing activities (264) (428) (608) 549 Net cash used in financing activities (204) (195) (272) (243) Net increase/(decrease) in cash and cash equivalents 493 (79) 225 915 Net cash and cash equivalents at beginning of the year 467 428 2,857 1,359 Exchange (losses)/gains on cash and cash equivalents (33) 118 (111) 583 Net cash and cash equivalents at end of the year 927 467 2,971 2,857

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES 46.1 Directors’ emoluments and related payments

Post- employment Other Share Date Salaries benefits benefits* Bonuses Sub-total gains** Total 2014 appointed R000 R000 R000 R000 R000 R000 R000 Executive directors RS Dabengwa 01/10/01 9,334 1,197 858 13,257 24,646 3,482 28,128 BD Goschen 22/07/13 5,567 714 286 6,777 13,344 — 13,344 Total 14,901 1,911 1,144 20,034 37,990 3,482 41,472

* Includes medical aid and unemployment insurance fund. ** Pre-tax gains and post-brokerage cost on share appreciation rights scheme and share rights plan.

F-216 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.1 Directors’ emoluments and related payments (continued)

Special Strategy Ad hoc Date Retainer# Attendance# projects session work Total appointed R000 R000 R000 R000 R000 R000 Non-executive directors PF Nhleko 28/05/13 1,084 608 92 183 — 1,967 KC Ramon^ 01/06/14 123 187 — 96 21 427 KP Kalyan 13/06/06 332 487 97 96 — 1,012 AT Mikati*† 18/07/06 1,163 707 111 219 97 2,297 MJN Njeke 13/06/06 311 388 20 96 — 815 JHN Strydom 11/03/04 299 459 20 96 42 916 AF van Biljon 01/11/02 312 401 68 96 63 940 J van Rooyen 18/07/06 364 533 90 96 21 1,104 MLD Marole 01/01/10 310 775 21 96 — 1,202 NP Mageza 01/01/10 361 566 42 96 20 1,085 A Harper* 01/01/10 1,177 852 — 219 — 2,248 F Titi 01/07/12 253 352 — 48 — 653 Total 6,089 6,315 561 1,437 264 14,666

* Fees have been paid in Euro. † Fees are paid to M1 Limited. # Retainer and attendance fees include fees for board and committee representation and meetings. ^ 4th quarter fees paid to Anglogold Ashanti Limited.

Post- employment Other Share Date Salaries benefits benefits* Bonuses Sub-total gains** Total 2013 appointed R000 R000 R000 R000 R000 R000 R000 Executive directors RS Dabengwa 01/10/01 8,913 1,143 2,621 16,163 28,840 19,237 48,077 NI Patel† 27/11/09 3,081 395 2,856 — 6,332 1,223 7,555 BD Goschen 22/07/13 2,336 292 37 3,661 6,326 — 6,326 Total 14,330 1,830 5,514 19,824 41,498 20,460 61,958

* Includes medical aid and unemployment insurance fund. ** Pre-tax gains and post-brokerage cost on share appreciation rights scheme and share rights plan. † Resigned 21 July 2013.

F-217 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.1 Directors’ emoluments and related payments (continued)

Special Special Ad hoc Date Retainer# Attendance# board projects work Total appointed R000 R000 R000 R000 R000 R000 Non-executive directors MC Ramaphosa^ 01/10/01 412 191 248 — — 851 PF Nhleko^^ 28/05/13 624 218 284 175 — 1,301 KP Kalyan 13/06/06 316 348 226 132 — 1,022 AT Mikati*† 18/07/06 1,054 578 657 339 10 2,638 MJN Njeke 13/06/06 296 282 268 111 — 957 JHN Strydom 11/03/04 296 324 289 132 51 1,092 AF van Biljon 01/11/02 298 304 268 169 10 1,049 J van Rooyen 18/07/06 370 440 268 209 — 1,287 MLD Marole 01/01/10 285 325 268 112 — 990 NP Mageza 01/01/10 339 410 222 189 — 1,160 A Harper* 01/01/10 1,083 593 557 291 10 2,534 F Titi 01/07/12 231 243 246 150 — 870 Total 5,604 4,256 3,801 2,009 81 15,751

^ Resigned 28 May 2013. ^^ Appointed 28 May 2013. * Fees have been paid in Euro. † Fees are paid to M1 Limited. # Retainer and attendance fees include fees for board and committee representation and meetings.

46.2 Prescribed officers’ emoluments and related payments

Post- employment Other Share Salaries benefits benefits Bonuses Sub-total gains Total 2014 R000 R000 R000 R000 R000 R000 R000 Prescribed officers JA Desai 7,865 786 2,230 9,217 20,098 1,460 21,558 PD Norman 4,233 543 256 3,634 8,666 1,179 9,845 A Farroukh 7,747 775 942 6,573 16,037 1,440 17,477 SA Fakie 3,161 412 402 2,991 6,966 911 7,877 KW Pienaar 4,570 586 363 5,309 10,828 1,018 11,846 P Verkade 4,144 414 1,067 3,515 9,140 — 9,140 Z Bulbulia 3,527 452 286 858 5,123 598 5,721 M Ikpoki 6,505 586 1,896 4,440 13,427 — 13,427 M Fleischer^ 4,433 568 40 4,271 9,312 — 9,312 M Nyati^^ 871 112 18 837 1,838 — 1,838 Total 47,056 5,234 7,500 41,645 101,435 6,606 108,041

^ Appointed 1 February 2014. ^^ Appointed 1 October 2014.

F-218 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.2 Prescribed officers’ emoluments and related payments (continued)

Post- employment Other Share Salaries benefits benefits Bonuses Sub-total gains Total 2013 R000 R000 R000 R000 R000 R000 R000 Prescribed officers JA Desai 6,957 790 1,791 10,178 19,716 — 19,716 PD Norman 4,041 518 251 4,501 9,311 — 9,311 C de Faria^ 517 52 2,353 — 2,922 — 2,922 A Farroukh 6,853 685 932 6,982 15,452 — 15,452 KL Shuenyane^^ 1,946 249 869 — 3,064 — 3,064 SA Fakie 3,013 400 142 4,171 7,726 3,530 11,256 KW Pienaar 4,356 558 210 3,637 8,761 — 8,761 BD Goschen 3,310 274 65 3,528 7,177 — 7,177 P Verkade* 3,402 340 794 3,763 8,299 — 8,299 Z Bulbulia** 2,057 264 419 — 2,740 4,925 7,665 M Ikpoki*** 2,603 201 1,053 2,411 6,268 3,032 9,300 Total 39,055 4,331 8,879 39,171 91,436 11,487 102,923

^ Retired 31 January 2013. ^^ Resigned 30 June 2013. * Appointed 1 February 2013. ** Appointed 1 June 2013. *** Appointed 24 July 2013.

46.3 Equity compensation benefits for executive directors and directors of major subsidiaries in respect of the share appreciation rights and share rights schemes

Number Number outstanding outstanding Strike at Exercise at price Vesting 31 December Exercised Exercise price 31 December Offer date R date 2013 2014 date R 2014 RS Dabengwa 31/5/2006 56.83 30/11/2008 13,920 — ——13,920 31/5/2006 56.83 30/11/2009 26,440 — ——26,440 31/5/2006 56.83 30/11/2010 40,440 — ——40,440 21/11/2006 71.00 21/11/2008 8,680 — —— 8,680 21/11/2006 71.00 21/11/2009 8,680 — —— 8,680 21/11/2006 71.00 21/11/2010 13,020 — ——13,020 21/11/2006 71.00 21/11/2011 13,020 — ——13,020 19/3/2008 126.99 19/03/2010 14,440 — ——14,440 19/3/2008 126.99 19/03/2011 14,440 — ——14,440 19/3/2008 126.99 19/03/2012 21,660 — ——21,660 19/3/2008 126.99 19/03/2013 21,660 — ——21,660 Total 196,400 — 196,400 AR Bing* 31/5/2006 56.83 30/11/2010 4,860 (4,860) 18/03/2014 211.97 — 21/11/2006 71.00 21/11/2010 960 (960) 18/03/2014 211.97 — 21/11/2006 71.00 21/11/2011 960 (960) 18/03/2014 211.97 — 22/6/2007 96.00 22/6/2011 6,330 (6,330) 18/03/2014 211.97 — 22/6/2007 R96.00 22/6/2012 6,330 (6,330) 18/03/2014 211.97 — Total 19,440 (19,440) —

* Retrenched 31 August 2014.

F-219 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.3 Equity compensation benefits for executive directors and directors of major subsidiaries in respect of the share appreciation rights and share rights schemes (continued)

Number Number outstanding outstanding Strike at at price Vesting 31 December Exercised Exercise Exercise 31 December Offer date R date 2013 2014 date price R 2014 BD Goschen 19/03/2008 126.99 19/03/2010 12,260 — ——12,260 19/03/2008 126.99 19/03/2011 12,260 — ——12,260 19/03/2008 126.99 19/03/2012 18,390 — ——18,390 19/03/2008 126.99 19/03/2013 18,390 — ——18,390 Total 61,300 — 61,300 P Sibiya 28/06/2010 107.49 28/06/2011 5,800 (5,800) 19/05/2014 224.10 — 28/06/2010 107.49 28/06/2012 5,800 (5,800) 19/05/2014 224.10 — 28/06/2010 107.49 28/06/2013 8,700 (8,700) 19/05/2014 224.10 — 28/06/2010 107.49 28/06/2014 8,700 (8,700) 11/08/2014 234.44 — Total 29,000 (29,000) — F Moolman^ 19/03/2008 126.99 19/03/2010 10,200 — ——10,200 19/03/2008 126.99 19/03/2011 10,200 — ——10,200 19/03/2008 126.99 19/03/2012 15,300 — ——15,300 19/03/2008 126.99 19/03/2013 15,300 — ——15,300 Total 51,000 — 51,000

^ Appointed 1 August 2014.

46.4 Equity compensation benefits for executive directors, prescribed officers and directors of major subsidiaries in respect of the performance share plan

Number outstanding Exercise at Vesting Exercised Forfeited Exercise price 31 December Offer date date Offered 2014 2014 date R 2014 PD Norman 29/06/2011 31/12/2013 36,500 (5,931) (30,569) 25/03/2014 198.80 — 29/12/2011 29/12/2014 36,100 —— ——36,100 28/12/2012 28/12/2015 30,600 —— ——30,600 20/12/2013 19/12/2016 28,400 —— ——28,400 19/12/2014 18/12/2017 27,000 —— ——27,000 Total 158,600 (5,931) (30,569) 122,100 Z Bulbulia 29/06/2011 31/12/2013 18,500 (3,006) (15,494) 25/03/2014 198.80 — 29/12/2011 29/12/2014 15,300 —— ——15,300 28/12/2012 28/12/2015 15,500 —— ——15,500 20/12/2013 19/12/2016 24,500 —— ——24,500 19/12/2014 18/12/2017 22,200 —— ——22,200 Total 96,000 (3,006) (15,494) 77,500

F-220 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.4 Equity compensation benefits for executive directors, prescribed officers and directors of major subsidiaries in respect of the performance share plan (continued)

Number outstanding Exercise at Vesting Exercised Forfeited Exercise price 31 December Offer date date Offered 2014 2014 date R 2014 RS Dabengwa 29/06/2011 13/06/2006 107,800 (17,517) (90,283) 25/03/2014 198.80 — 29/12/2011 18/07/2006 111,600 —— ——111,600 28/12/2012 13/06/2006 94,600 —— ——94,600 20/12/2013 11/03/2004 87,800 —— ——87,800 19/12/2014 01/11/2002 83,100 —— ——83,100 Total 484,900 (17,517) (90,283) 377,100 KW Pienaar 29/06/2011 01/01/2010 31,500 (5,119) (26,381) 25/03/2014 198.80 — 29/12/2011 01/01/2010 24,200 —— ——24,200 28/12/2012 01/07/2012 33,000 —— ——33,000 20/12/2013 19/12/2016 30,600 —— ——30,600 19/12/2014 18/12/2017 29,100 —— ——29,100 Total 148,400 (5,119) (26,381) 116,900 AR Bing* 29/06/2011 31/12/2013 20,600 (3,347) (17,253) 25/03/2014 198.80 — 29/12/2011 29/12/2014 15,600 —— ——15,600 28/12/2012 28/12/2015 14,900 —— ——14,900 20/12/2013 19/12/2016 16,000 —— ——16,000 Total 67,100 (3,347) (17,253) 46,500 SA Fakie 29/06/2011 31/12/2013 28,200 (4,582) (23,618) 25/03/2014 198.80 — 29/12/2011 29/12/2014 18,609 —— ——18,609 Total 46,809 (4,582) (23,618) 18,609 BD Goschen 29/12/2011 29/12/2014 22,300 —— ——22,300 28/12/2012 28/12/2015 26,500 —— ——26,500 20/12/2013 19/12/2016 43,700 —— ——43,700 19/12/2014 18/12/2017 54,700 —— ——54,700 Total 147,200 — — 147,200 A Farroukh 29/06/2011 31/12/2013 44,600 (7,247) (37,353) 25/03/2014 198.80 — 29/12/2011 29/12/2014 42,900 —— ——42,900 28/12/2012 28/12/2015 40,800 —— ——40,800 20/12/2013 19/12/2016 43,800 —— ——43,800 19/12/2014 18/12/2017 43,900 —— ——43,900 Total 216,000 (7,247) (37,353) 171,400

* Retrenched 31 August 2014.

F-221 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.4 Equity compensation benefits for executive directors, prescribed officers and directors of major subsidiaries in respect of the performance share plan (continued)

Number outstanding Exercise at Vesting Exercised Forfeited Exercise price 31 December Offer date date Offered 2014 2014 date R 2014 JA Desai 29/06/2011 31/12/2013 45,200 (7,345) (37,855) 25/03/2014 198.80 — 29/12/2011 29/12/2014 43,600 —— ——43,600 28/12/2012 28/12/2015 41,400 —— ——41,400 20/12/2013 19/12/2016 44,400 —— ——44,400 19/12/2014 18/12/2017 44,500 —— ——44,500 Total 219,100 (7,345) (37,855) 173,900 SB Mtshali^ 29/06/2011 31/12/2013 6,500 (2,417) (4,083) 25/03/2014 198.80 — 29/12/2011 29/12/2014 9,005 —— —— 9,005 28/12/2012 28/12/2015 6,400 —— —— 6,400 20/12/2013 19/12/2016 6,000 —— —— 6,000 19/12/2014 18/12/2017 5,800 —— —— 5,800 Total 33,705 (2,417) (4,083) 27,205 MML Mokoka^^† 29/06/2011 31/12/2013 5,300 (1,971) (3,329) 25/03/2014 198.80 — 29/12/2011 29/12/2014 6,400 —— —— 6,400 28/12/2012 28/12/2015 5,800 —— —— 5,800 20/12/2013 19/12/2016 5,500 —— —— 5,500 Total 23,000 (1,971) (3,329) 17,700 M Ikpoki 20/12/2013 19/12/2016 39,600 —— ——39,600 19/12/2014 18/12/2017 37,400 —— ——37,400 Total 77,000 — — 77,000 P Sibiya 20/12/2013 19/12/2016 14,700 —— ——14,700 19/12/2014 18/12/2017 15,700 —— ——15,700 Total 30,400 — — 30,400

^ Group secretary. ^^ Company secretary. † Retrenched 30 September 2014.

F-222 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.4 Equity compensation benefits for executive directors, prescribed officers and directors of major subsidiaries in respect of the performance share plan (continued)

Number outstanding Exercise at Vesting Exercised Forfeited Exercise price 31 December Offer date date Offered 2014 2014 date R 2014 P Verkade 29/11/2011 31/06/2014 15,900 ———— 15,900 28/12/2012 28/12/2015 13,200 ———— 13,200 20/12/2013 19/12/2016 25,400 ———— 25,400 Total 54,500 — — 54,500 M Fleischer# 19/12/2014 18/12/2017 30,400 ———— 30,400 Total 30,400 — — 30,400 M Nyati+ 19/12/2014 18/12/2017 21,900 ———— 21,900 Total 21,900 — — 21,900 F Moolman* 29/12/2011 29/12/2014 15,200 ———— 15,200 28/12/2012 28/12/2015 14,600 ———— 14,600 20/12/2013 19/12/2016 15,700 ———— 15,700 19/12/2014 18/12/2017 15,700 ———— 15,700 Total 61,200 — — 61,200

# Appointed 1 February 2014. + Appointed 1 October 2014. * Appointed 1 August 2014.

46.5 Directors, prescribed officers, company secretary of the MTN Group and directors and company secretaries of major subsidiaries shareholding and dealings in ordinary shares

December December 2014 2013 Beneficial RS Dabengwa 1,473,552 1,473,552 Direct NP Mageza 400 400 Indirect PD Norman#* 300,970 266,002 Direct KL Shuenyane — 1,640 Direct MJN Njeke 10 10 Direct BD Goschen*# 40,000 40,000 Direct KW Pienaar* 455,261 455,261 Direct AR Bing^ — 136,836 Direct Total 2,270,193 2,373,701

* Prescribed officer. # Major subsidiary director. ^ Retrenched 31 August 2014.

F-223 Notes to the Group annual financial statements for the year ended 31 December 2014

46 EMOLUMENTS, EQUITY COMPENSATION BENEFITS AND DEALINGS IN ORDINARY SHARES (continued) 46.6 Directors, prescribed officers, company secretary of the MTN Group and directors and company secretaries of major subsidiaries relating to MTN Zakhele The following persons, being directors of MTN Group Limited and its major subsidiaries, and the company secretary were allocated the following number of MTN Zakhele shares. MTN Zakhele has a shareholding in MTN Group Limited shares.

Nature of Beneficiary interest Shares PF Nhleko Direct beneficial 2,010,700 KP Kalyan Direct beneficial 27,700 MLD Marole Direct beneficial 15,700 MJN Njeke Direct beneficial 6,700 NP Mageza Indirect beneficial 51,420 SB Mtshali Indirect beneficial 6,500 F Jakoet Direct beneficial 30,700 CWN Molope Direct beneficial 1,000 F Titi Indirect beneficial 15,500 SA Fakie Direct beneficial 1,000 Total 2,166,920

F-224 [This page is intentionally left blank]

F-225 Notes to the Group annual financial statements for the year ended 31 December 2014

47 INTERESTS IN SUBSIDIARIES AND JOINT VENTURES MTN Group

HOLDING COMPANIES MANAGEMENT SERVICES

Mobile Telephone Networks MTN International MTN Group Management Holdings Proprietary Limited Proprietary Limited Services Proprietary Limited South Africa South Africa South Africa 100% 100% 100% HOLDING COMPANY

TELECOMMUNICATIONS/ISP MTN International (Mauritius) Limited MTN Business Mauritius Solutions Botswana MTN Business MTN Business 100% Proprietary Limited Limited (Kenya) Kenya Limited Botswana Kenya Kenya` HOLDING COMPANIES 80% 70% 70% Deci Satalite Data MTN Business Econet Investments Mobile Networks Mauritius Solutions Namibia Cell Place Cotel Holdings Wireless Citizens Proprietary Botswana Proprietary Limited Proprietary Limited Proprietary Limited Limited Limited Limited1 Limited Mauritius Namibia South Africa Zambia Mauritius Botswana Mauritius 100% 100% 100% 100% 82,8% 33,3% 100%

Mobile Telephone MTN Business TELECOMMUNICATIONS/ISP iTalk Cellular Networks Proprietary Solutions Proprietary Limited Limited Proprietary Limited Mobile Telephone South Africa South Africa South Africa Networks Cameroon MTN Network Afnet Solutions Limited 100% 100% 100% Limited Côte d’Ivoire Cameroon Cameroon

MTN Network MTN Business 70% 70% 66,83% Solutions Solutions Limited Proprietary Limited (Zambia)2 Swazi MTN Limited1 MTN Nigeria South Africa Zambia Swaziland Arobase MTN Côte d’Ivoire S.A. Communications 100% 80% 30% Côte d’Ivoire Côte d’Ivoire Limited Nigeria 66,83% 66,83% 78,83% Afrihost Proprietary Limited3 South Africa XS Broadband MTN Uganda MTN (Zambia) Limited Limited Limited 50,2% Nigeria Uganda Zambia 78,83% 96% 86% PROPERTY Irancell Aconcagua 11 Proprietary MTN Propco Mascom Telecommunication Limited Proprietary Limited Wireless Botswana Company Services 1 South Africa South Africa Proprietary Limited1 (PJSC) MTN Publicom Limited Botswana Iran Uganda 100% 100% 53,1% 49% 96%

DORMANT MTN Rwandacell MTN Congo S.A. Limited Republic of MTN Service Provider Rwanda the Congo Proprietary Limited Satalite Data Networks South Africa Proprietary Limited 80% 100% 100% 100% ELECTRONIC SERVICES ELECTRONIC SERVICES Electronic Funds MTN Mobile Money Middle East Internet Transfer Operations 1 Africa Internet Limited Holding Nigeria Limited Holding GmbH1 Berlin Zambia Luxemburg Nigeria 86% 50% 50% 33,3% STRUCTURED ENTITY

1 Joint venture. Munyati Buffalo MTN (Mauritius) 4 2.The operation has been restructured in 2014 and forms part of MTN Zambia Limited Investment Limited Zambia Mauritius (Zambia) Limited. 3 Subsidiary acquired during the year (note 42). 100% 100% 4 Subsidiary incorporated during the year. There were no changes in the effective holding in any of the Group’s subsidiaries during the year unless otherwise indicated.

F-226 Notes to the Group annual financial statements for the year ended 31 December 2014

47 INTERESTS IN SUBSIDIARIES AND JOINT VENTURES (continued) MTN Group

HOLDING COMPANY

MTN (Dubai) Limited 100%

HOLDING COMPANIES PROCUREMENT

Investcom Investcom Global Trading Global Sourcing Telecommunications Consortium Company LLC Company LLC Easy Dial Guinea (Conakry) Holding S.A. International Limited Limited UAE UAE British Virgin Islands British Virgin Islands British Virgin Islands 100% 100% 99% 99% 99% Telecom Sourcing MTN Investments MTN SEA Shared Investcom Mobile Investcom Services FZ-LLC Limited Services Limited1 Investcom Mobile Communications Telecommunications Benin Limited Limited Afghanistan Limited UAE UAE Uganda British Virgin Islands British Virgin Islands British Virgin Islands 100% 100% 100% 99% 100% 100% DORMANT MTN NIC MTN (Netherlands) MTN (Netherlands) BV BV Co-Op UA Spacetel Investom International Netherlands Netherlands Netherlands International Limited Limited United Kingdom British Virgin Islands

100% 100% 100% 100% 99%

Galactic Engineering Vernis Projects SA Associates SA Starcom Global MANAGEMENT SERVICES Limited Panama Panama British Virgin Islands Inteltec Offshore SAL Lebanon 78% 100% 89% 99,8%99,8

Fourteenth Avenue INTERNATIONAL BUSINESS Investcom Global Investment Holding Servico SAL Limited Limited Lebanon UAE Interserve Overseas Limited British Virgin Islands British Virgin Islands 99% 100% 99,97% 99%

MTN Nigeria Towers Investcom SPV B.V. Telecommunications Yemen Limited Netherlands British Virgin Islands

100% 100% TELECOMMUNICATIONS/ISP

Lonestar MTN Afghanistan MTN South Sudan MTN Sudan Communications MTN Cyprus Limited Corporation LLC Limited Limited Company Limited Cyprus Afghanistan South Sudan Sudan Liberia

60% 100% 100% 100% 85%

Spacetel Guinea- MTN Syria (JSC) Scancom Limited Areeba Guinea S.A. Spacetel Benin SA Bissau S.A. Syria Ghana Guinea Benin Guinea-Bissau

97,7% 100% 75% 75% 75%

Easynet Search MTN ICT Services MTN Yemen Limited PLC Yemen Ghana Ethiopia

82,8% 99,6% 99,9%

1 The shared services hub has been restructured in 2014 and forms part of MTN Uganda Limited.

F-227 Notes to the Group annual financial statements for the year ended 31 December 2014

48 RESTATEMENTS Voluntary change in accounting policy Previously, the Group accounted for arrangements with multiple deliverables (i.e. multiple element revenue arrangements) by dividing these arrangements into separate units of accounting and recognising revenue through the application of the residual value method.

During the period under review, the Group resolved to change its accounting policy in recognising revenue relating to these arrangements from applying the residual value method to the relative fair value method. This change was effected by the Group on a voluntary basis.

Under the relative fair value method, the consideration received or receivable is allocated to each of the elements (delivered and undelivered) according to the relative fair value of the elements included in the arrangement.

The use of the relative fair value method results in more relevant and reliable information being presented in respect of revenue recognised in relation to multiple element revenue arrangements, as revenue is now being recognised in relation to each of the elements delivered and to be delivered based on the relative fair value of the elements in relation to the total consideration received. In addition, there is an improved correlation between the recognition of revenue and associated costs and a closer alignment of the Group’s policy with the requirements of IFRS 15 Revenue from Contracts with Customers, which is effective for periods commencing on 1 January 2017.

The impact of the voluntary change in accounting policy on the Group’s financial results is disclosed below:

Group income statement

31 December 2013 Adjustments for change Previously in accounting reported policy Restated Rm Rm Rm Revenue 136,495 775 137,270 Other operating expenses (10,143) (133) (10,276) EBITDA 59,788 642 60,430 Operating profit 40,510 642 41,152 Profit before tax 42,707 642 43,349 Income tax expense (12,307) (180) (12,487) Profit after tax 30,400 462 30,862 Profit attributable to equity holders of the Company 26,289 462 26,751 Headline earnings 25,398 462 25,860 Earnings per share (cents) – Basic earnings 1,434 26 1,460 – Diluted earnings 1,427 25 1,452 Headline earnings per share (cents) – Basic headline earnings 1,386 25 1,411 – Diluted headline earnings 1,378 26 1,404

F-228 Notes to the Group annual financial statements for the year ended 31 December 2014

48 RESTATEMENTS (continued) Group statement of financial position

31 December 2013 1 January 2013 Adjustments Adjustments for for change in change in Previously accounting Previously accounting reported policy Restated reported policy Restated Rm Rm Rm Rm Rm Rm ASSETS Non-current assets 150,910 2,173 153,083 125,7621 1,603 127,365 Adjusted for: Loans and other non-current receivables 5,458 2,173 7,631 7,764 1,603 9,367 Current assets 75,911 662 76,573 55,875 590 56,465 Adjusted for: Trade and other receivables 24,159 662 24,821 16,644 590 17,234 Total assets 226,821 2,835 229,656 181,637 2,193 183,830 EQUITY Total equity 119,771 2,041 121,812 98,4501 1,579 100,029 Adjusted for: Retained earnings 77,831 2,041 79,872 67,8101 1,579 69,389 LIABILITIES Non-current liabilities 49,066 794 49,860 32,713 614 33,327 Adjusted for: Deferred tax liabilities 12,676 794 13,470 8,711 614 9,325 Current liabilities 57,984 — 57,984 50,474 — 50,474 Total liabilities 107,050 794 107,844 83,187 614 83,801 Total equity and liabilities 226,821 2,835 229,656 181,6371 2,193 183,830

1 Including restatement of investment in associates and joint ventures for impact of hyperinflation at 1 January 2013.

49 RECLASSIFICATION OF OPERATING LEASE COMMITMENTS IAS 17 requires a lessee to disclose the total minimum lease payments under non-cancellable operating leases. This refers to any lease payments that are unavoidable in the future, reflecting the least net cost of fulfilling or exiting from the lease contract.

Following a review of the underlying contracts, certain operating lease commitments that were previously identified and disclosed as cancellable have been reclassified as non-cancellable as at 31 December 2013. This has resulted in reclassification adjustments in the disclosure of non-cancellable operating lease commitments (note 35), as set out below.

31 December 2013 Previously reported Adjustments Restated Rm Rm Rm The future aggregate minimum lease payments under non-cancellable operating lease arrangements are as follows: Not later than one year 417 1,909 2,326 Later than one year and not later than five years 220 7,352 7,572 Later than five years 1 6,116 6,117 638 15,377 16,015

As a result, the operating lease commitments of Scancom Limited (MTN Ghana) to Ghana Tower InterCo B.V. have also been restated (note 40).

F-229 THE ISSUER

MTN (MAURITIUS) INVESTMENTS LIMITED 1st Floor, Anglo-Mauritius House Intendance Street Port Louis Mauritius

THE GUARANTORS

MTN Group Limited Mobile Telephone Networks MTN International 216 14th Avenue Holdings Limited (Mauritius) Limited Fairland 216 14th Avenue 1st Floor, Anglo-Mauritius House Roodepoort, 2195 Fairland Intendance Street South Africa Roodepoort, 2195 Port Louis South Africa Mauritius

MTN International Proprietary Mobile Telephone Networks Limited Proprietary Limited 216 14th Avenue 216 14th Avenue Fairland Fairland Roodepoort, 2195 Roodepoort, 2195 South Africa South Africa

FISCAL AGENT, PRINCIPAL PAYING AGENT AND TRANSFER AGENT

Citibank N.A., London Branch 13th Floor, Citigroup Centre Canada Square London E14 5LB

REGISTRAR

Citigroup Global Markets Deutschland AG Reuterweg 16 Frankfurt 60323 Germany

LEGAL ADVISERS

To the Issuer as to To the Issuer as to To the Issuer as to English and United States law South African law Mauritius law

Freshfields Bruckhaus Deringer Webber Wentzel TM&S Gujadhur Chambers LLP 90 Rivonia Road River Court 65 Fleet Street Sandton St. Denis Street London EC4Y 1HS Johannesburg 2196 Port Louis United Kingdom South Africa Mauritius

To the Managers as to To the Managers To the Managers English and United States law as to South African law as to Mauritian law

Allen & Overy LLP Allen & Overy (South Africa) LLP BLC Robert & Associates One Bishops Square 6th Floor, 90 Grayston Drive 2nd Floor London E1 6AD Sandton The Axis United Kingdom Johannesburg 2196 26 Bank Street South Africa Cybercity Ebene 72201 Mauritius AUDITORS OF THE ISSUER AND MTN INTERNATIONAL (MAURITIUS) LIMITED PricewaterhouseCoopers Ltd. 18 Cyber City Ebène 72201 Mauritius

AUDITORS OF MOBILE TELEPHONE NETWORKS PROPRIETARY LIMITED PricewaterhouseCoopers Inc. 2 Eglin Road Sunninghill 2157 South Africa

AUDITORS OF MOBILE TELEPHONE NETWORKS HOLDINGS LIMITED AND MTN INTERNATIONAL PROPRIETARY LIMITED SizweNtsalubaGobodo Inc. 20 Morris Street East Woodmead 2191 South Africa

AUDITORS OF MTN GROUP LIMITED PricewaterhouseCoopers Inc. SizweNtsalubaGobodo Inc. 2 Eglin Road 20 Morris Street East Sunninghill 2157 Woodmead 2191 South Africa South Africa

LISTING AGENT A&L Listing Limited IFSC, North Wall Quay Dublin 1 Ireland

JOINT BOOKRUNNERS Barclays Bank PLC Citigroup Global Markets Limited Merrill Lynch International 5 The North Colonnade Citigroup Centre 2 King Edward Street Canary Wharf Canada Square London EC1A 1HQ London E14 4BB Canary Wharf United Kingdom United Kingdom London E14 5LB United Kingdom

The Standard Bank of South Africa Limited 3rd Floor, East Wing 30 Baker Street Rosebank Johannesburg 2196 South Africa

CO-MANAGERS J.P. Morgan Securities plc Mizuho Securities USA Inc. MUFG Securities EMEA plc 25 Bank Street 320 Park Avenue, 12th Floor Ropemaker Place Canary Wharf New York, NY 10022 25 Ropemaker Street London E14 5JP United States of America London EC2Y 9AJ United Kingdom United Kingdom SMBC Nikko Capital Markets Limited Standard Chartered Bank One New Change 1 Basinghall Avenue London EC4M 9AF London EC2V 5DD United Kingdom United Kingdom Printed by Donnelley Financial Solutions 422539