Chairman's report

DEAR STAKEHOLDER

The securing of new GSM mobile licences, a strong operational performance and a solid growth in subscriber numbers, makes it a pleasure to review MTN’s past nine months. We acquired interests in operations in Côte d‘Ivoire, Zambia, Botswana, the Republic of Congo (Brazzaville), and expanded to the Middle East through our interest in the Iranian greenfield opportunity. On 2 May 2006 the MTN Group announced an offer to acquire the entire share capital of Investcom LLC. This transaction is still subject to approval by the MTN shareholders and the fulfillment of certain regulatory preconditions. If successfully consumated the acquisition of Investcom LLC will expand the Group’s footprint by an additional 10 countries primarily in Africa and the Middle East.

MTN’s payoff line, Everywhere You Go, was launched uniformly across our operations during April 2005. This, together with the sponsorship of the recent MTN Africa Cup of Nations in Egypt, greatly elevated the prominence of our brand and focused our image across the continent. MTN is now synonymous with innovation, communication, and entrepreneurship.

Subscriber numbers continue to grow strongly, lifted primarily by organic growth and acquisitive growth, positioning MTN as a leading emerging market player with over 23,2 million customers on the African continent. As with any extremely competitive consumer market, market share remains a function of customer service. We emphasise customer centricity by providing a level of service that sets us apart.


FINANCIAL AND OPERATIONAL HIGHLIGHTS

MTN’s year-end has changed to 31 December and so we report on a nine-month period, from 1 April 2005. During the period, MTN performed strongly, with consolidated revenue at R27,2 billion and adjusted headline earnings per share of 338,2 cents for the nine months, marginally down from R29 billion and 366 cents respectively for the previous 12 months.


INDUSTRY DEVELOPMENTS

MTN operates in a highly regulated sector that is increasingly being liberalised. This poses certain challenges but also presents opportunities.

Particular legislative developments during the year in South Africa relate to the Electronic Communications Bill, the licensing of a second national fixed-line operator and the ongoing enquiry into pricing structures in the mobile communications industry. MTN fully supports legislation aimed at free-market competition in the best interests of consumers. This support extends to working closely with the regulatory authorities in developing appropriate legislation to achieve these objectives, and participating in industry bodies to develop codes of practice to support national goals.

In terms of our licence conditions in many of our operations, improving access to telecommunications is a near-term goal that we are incrementally achieving through the installation of public payphones, engaging in franchise opportunities and supporting entrepreneurs in developing their own telecommunications businesses. Tailoring products to suit the requirements of every market segment is also an important facet of the goal of improved access. Telecommunications is a vibrant, developing and growing sector. Correctly priced and appropriately regulated, it can enhance the quality of life of millions of people. It is, therefore, important that the cost of complying with regulation does not detract from the creation of affordable access.

Other regulatory developments, more specific to the country of operation, are detailed in the review of operations.

CORPORATE GOVERNANCE

The MTN Group has adopted an overarching approach to corporate governance by benchmarking itself against global standards and implementing robust corporate governance structures in every operation to ensure impeccable governance standards.

The recommendations and requirements of the King II Report on Corporate Governance and the requirements of the JSE are an integral part of our corporate governance. We believe good governance results in disciplined business management, pervasive ethical standards and ultimately sustainable profitability across the organisation.

The MTN Group has transformed into a multinational company, with an ever diversifying revenue and profit base. Shareholders will be requested to approve the appointment of Ms K Kalyan, Dr CO Kolade, Mr MJN Njeke, Dr M Ramphele, Sheik A Sharbatley and Mr PL Woicke as directors of the MTN Group on 13 June 2006. These appointments are expected to further strengthen and diversify the composition of the Board.


SUSTAINABLE DEVELOPMENT

In recent years, MTN has published separate reports on financial and non-financial performance. This year, we present an integrated triple bottomline report that spans our economic, social and environmental achievements, challenges and targets. All sustainable development initiatives are, however, guided by the Group policy. We highlight achievements of each operation in the operational review.

Maintaining the balance between our financial performance and social responsibility in 11 countries is a measured management indicator. In all operations, we aim to adhere to industry best practices in sustainable development.

This is reflected in our management practices relating to our own people, their working environment and personal development. We seek to ensure that our business has the pool of management skills necessary for future growth, contribute to the quality of life of the communities from which we draw our business and conserve the natural heritage for future generations.

Africa’s developmental challenges and capacity constraints are well known. As a major corporate on the continent, our commitment to addressing those challenges and alleviating those constraints is as much a factor in our business as erecting the individual masts that create our network. Long-term commercial success and sustainable development are, for us, simply flip sides of the same coin.

During the period, we received much recognition and several awards for our performance and reporting. While hugely encouraging, these fuel our determination to achieve even more, make a real difference, and give life to our promise that MTN is truly Everywhere You Go.


APPRECIATION

The MTN Group today is a vastly different organisation to what it was in 1994. However, the passion that characterised those early days – the determination to expand, innovate and lead – remains a hallmark of our Group. We are a much larger organisation, with operations far afield, yet we remain a community. The skill and commitment of our management teams and staff and the loyalty of our customers and business partners are all ingredients of our success for which we are truly grateful.

I thank my fellow Board members for their counsel.

Cyril Ramaphosa
Chairman
22 March 2006