Notes to the summary Group financial statements

The summarised Group financial statements have been derived from the audited Group financial statements. The directors of the Company take full responsibility for the preparation of the summarised Group financial statements and that the financial information has been correctly derived and are consistent in all material respects with the underlying audited Group financial statements. The summarised Group financial statements for the year ended 31 December 2023 have been audited by Ernst & Young  Inc., who have expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the Group financial statements from which the summarised Group financial statements were derived. A copy of the auditor’s report on the Group financial statements is available for inspection at the Company’s registered office or can be downloaded from the Company’s website www.mtn.com/investors/financial reporting/annualresults, together with the financial statements identified in the auditor’s report.

The Group is a leading pan-African mobile operator that provides a diverse range of voice, data, digital, fintech, wholesale and enterprise services.

The summarised Group financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for summarised financial statements and the requirements of the Companies Act, 71 of 2008 applicable to summarised financial statements. The summarised financial statements were prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee (APC) and the Financial Pronouncements as issued by the Financial Reporting Standard Council (FRSC), and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.

The summarised Group financial statements should be read in conjunction with the Group financial statements for the year ended 31 December 2023, which have been prepared in accordance with IFRS. A copy of the full set of the audited group financial statements is available for inspection from the Company Secretary at the registered office of the Company or can be downloaded from the Company’s website: www.mtn.com/investors/financial-reporting/annual-results.

The accounting policies applied in the preparation of the Group financial statements from which the summarised Group financial statements are derived, are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements except as described below.

A number of amendments to accounting pronouncements are effective from 1 January 2023 , but they do not have a material effect on the Group’s summarised financial statements.

5.1 Deferred tax

Source of estimation uncertainty

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences (as applicable) to the extent that it is probable that future taxable profits will be available against which the deferred tax assets can be used. The Group is required to make significant estimates in assessing whether future taxable profits will be available.

Future taxable profits are determined based on business plans for individual subsidiaries in the Group and the probable reversal of taxable temporary differences in the future. 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. Such reductions are reversed when the probability of future taxable profits improves. The Group’s recognised deferred tax assets for the current year amounted to R10 223 million (2022: R6 571 million).

The Group has deductible temporary differences and unused assessed losses of R20 837 million (2022: R16 138 million) for which no deferred tax asset has been recognised as at 31 December 2023, as well as an unrecognised deferred tax asset of R801 million (2022: R728 million) relating to foreign tax credits.

MTN Mauritius recognised a deferred tax asset of R4 386 million (2022: R4 386 million) mainly resulting from an assessed loss.

The Group considered the following factors in assessing whether it is probable that MTN Mauritius will have future taxable profits available against which the deferred tax asset can be used:

• It is unlikely that the circumstances that resulted in MTN Mauritius incurring assessed losses will continue in the medium term.
• Interest expense and foreign exchange exposures will reduce as MTN Mauritius repays its US$ denominated intercompany debt. The repayments are currently scheduled to occur in 2024 and 2026.
• Technical service fees from subsidiaries are expected to increase as contracts for central services with Group companies are formalised.

Based on current business plans and stress scenarios, the Group expects to utilise the deferred tax asset in the next 10 to 12 years (2022: 10 to 13 years).

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. The impacts of hyperinflation disclosed for Irancell have been proportioned for the Group’s shareholding.

The economy of Ghana was assessed to be hyperinflationary effective 1 January 2023, and hyperinflation accounting was applied for the current financial year end. Upon first application of hyperinflation, net prior period gains of R26 799 million were recognised directly in equity. The uplift of the assets on initial adoption resulted in the net asset value of MTN Ghana exceeding its estimated recoverable amount. As a result of this, the initial adjustment was capped at the recoverable amount. If the initial uplift had not been capped, the related increase in opening equity would have been R30 718 million.

The three-year cumulative inflation in South Sudan for 2023 is below 100%, indicating that the economy has ceased to be hyperinflationary with effect from 1 July 2023. Accordingly, the amounts expressed in terms of the measuring unit current at 30 June 2023 are treated as the basis for the carrying amounts with no further hyperinflation adjustments being passed from 1 July 2023 onwards.

The impact of hyperinflation on the segment analysis is as follows:

The Group has identified reportable segments that are used by the Group Executive Committee (the Chief Operating Decision Maker (CODM)) to make key operating decisions, allocate resources and assess performance. The reportable segments are largely grouped according to their geographic locations and reporting lines to the CODM.

The Group’s underlying operations are clustered as follows:

• South Africa.
• Nigeria.
• South and East Africa (SEA).
• West and Central Africa (WECA).
• Middle East and North Africa (MENA).

South Africa and Nigeria comprise the segment information for the South African and Nigerian cellular network services providers respectively.

The SEA, WECA, and MENA clusters comprise segment information for operations in those regions which are also network services providers in the Group.

Operating results are reported and reviewed regularly by the CODM and include items directly attributable to a segment as well as those that are attributed on a reasonable basis, whether from external transactions or from transactions with other Group segments.

A key performance measure of reporting profit for the Group is CODM EBITDA. CODM EBITDA is defined as earnings before finance income, finance costs, foreign exchange gains or losses, tax, depreciation, and amortisation, and is also presented before recognising the following items:

• Impairment of goodwill and investment in joint venture.
• Net monetary gain resulting from the application of hyperinflation.
• Share of results of associates and joint ventures after tax (note 9).
• Hyperinflation (note 6).
• Impairment loss on remeasurement of non-current asset held for sale.
• Gain on sale of towers.
• Impairment loss on assets.

Irancell’s proportionate results are included in the segment analysis as reviewed by the CODM and excluded from reported proportionate results for revenue, CODM EBITDA and capital expenditure due to equity accounting for joint ventures. The results of Irancell in the segments analysis exclude the impact of hyperinflation accounting.

Nigeria currency devaluation

During the 2023 financial year, the Naira devalued from NGN461 as at 31 December 2022 to NGN907 as at 31 December 2023 against the US$ and foreign exchange losses of NGN740 billion (R20 975 million) were recognised in MTN Nigeria. The foreign exchange losses are largely unrealised losses and relate mainly to the revaluation of the dollar component of tower lease liabilities and unsettled letters of credit for dollar denominated capital acquisitions.

Irancell loan and receivable

On 20 September 2019, the US Treasury Department’s Office of Foreign Assets Control (OFAC) designated the CBI as being subject to sanctions. Sanctions imposed on the CBI creates a secondary sanctions risk for MTN if the CBI allocates foreign currency to an MTN entity for the purposes of repatriating the receivable and/or loan.

Considering the continued uncertainty of when the sanctions will be lifted, the Group has classified R3 152 million (2022: R5 009 million) of the outstanding receivables as non-current as the settlement is neither planned nor likely to occur in the foreseeable future. There was a decrease in the balance due to the change in the applicable exchange rates, refer to note 16. The balance has been presented as part of investment in associates and joint ventures.

¹ Restated, refer to note 19 for details on the restatement.

11.1 Financial assets and financial liabilities at amortised cost

The carrying value of current receivables and liabilities measured at amortised cost approximates their fair value.

Listed long-term borrowings

The Group has listed long-term fixed interest rate senior unsecured notes in issue which were issued in prior years, with a carrying amount of R 1 776 million at 31 December 2023 (2022: R7 703 million) and a fair value of R 1 767 million (2022: R7 480 million). The notes are listed on the Irish bond market and the fair values of these instruments are determined by reference to quoted prices in this market. The market for these bonds is not considered to be liquid and consequently the fair value measurement is categorised within level 2 of the fair value hierarchy.

11.2 Financial instruments measured at fair value

IHS Group listed equity investment

The fair values of financial instruments measured at fair value are determined as follows:

Included in investments in the statement of financial position is an equity investment in IHS Group at fair value of R7 158 million (2022: R8 930 million). The fair value of the investment is determined by reference to published price quotations on the New York Stock Exchange. The share price of IHS Group was US$4.60 (2022: US$6.15) on the last trading day of the year. The fair value of this investment is categorised within level 1 of the fair value hierarchy.

A fair value decrease (translated at average exchange rate) of R2 689 million (2022: R10 908 million) has been recognised for the year. On 21 March 2024, the IHS Group share price was US$3.39, equating to a decrease in the fair value of R1 722 million subsequent to 31 December 2023.

11.3 Financial instruments measured at fair value

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):

11.4 Capital management

Management regularly monitors and reviews covenant ratios. In terms of the banking facilities, the Group is required to comply with financial covenants. These financial covenants differ based on the contractual terms of each facility and incorporate both IFRS and non-IFRS financial measures. In the current year, MTN Guinea-Bissau breached a loan covenant as result of negative EBITDA performance. No formal waiver has been provided by lender, and as a result the full outstanding balance of R171 million has been classified as current and is disclosed as part of the non-current assets held for sale. The Group has complied with all other externally imposed loan covenants during the current financial year.

¹ Bank overdrafts are included in other current and tax liabilities in the summary statement of financial position.

During the year under review, the following entities raised and repaid significant debt instruments:

Uncertain tax exposures

The Group operates in numerous tax jurisdictions and the Group’s interpretation and application of the various tax rules applied in direct and indirect tax filings may result in disputes between the Group and the relevant tax authority. The outcome of such disputes may not be favourable to the Group. At 31 December 2023, there were a number of tax disputes ongoing in various of the Group’s operating entities. Following a tax court ruling in MTN International Mauritius’ favour, the contingent liability relating to a transfer pricing IP matter has been removed for the 2023 period.

Legal and regulatory matters

The Group is involved in various legal and regulatory matters, the outcome of which may not be favourable to the Group and none of which are considered individually material.

The Group has applied its judgement and has recognised liabilities based on whether additional amounts will be payable and has included contingent liabilities where economic outflows are considered possible but not probable.

Irancell

During the 2018 financial year, the CBI clarified that all future dividends can be expected to be repatriated at the SANA rate. Consequently, the Group equity accounts the results and translates any receivables from Irancell at the SANA rate from August 2018.

Certain historical receivables were translated at the stronger CBI exchange rate in accordance with the prior government approved capital investment incentive under FIPPA. During the 2023 financial year, the Iranian government introduced a tiered SANA rate and it is no longer considered likely that the Group will be able to repatriate these historical receivable balances at the stronger CBI exchange rate. As a result, all receivables with Irancell are translated at the SANA rate in 2023.

Nigeria

In prior financial years, the Group changed its reference rate for MTN Nigeria from the CBN rate to the Nigeria Autonomous Foreign Exchange (NAFEX) rate due to the paucity and absence of a unified foreign exchange price for the Nigerian naira. During the 2023 financial year, the NAFEM rate became the relevant reference rate for the closing Nigerian naira spot rate and, as a result, the Group transitioned from the NAFEX to NAFEM rate during the last quarter of 2023.

Net investment hedges

The Group hedges a designated portion of its dollar net assets in MTN Dubai for foreign currency exposure arising between the US$ and ZAR as part of the Group’s risk management objectives. The Group designated external borrowings denominated in US$ held by MTN (Mauritius) Investments Limited. For the period of the hedge relationship, foreign exchange movements on these hedging instruments are recognised in OCI as part of the foreign currency translation reserve (FCTR), offsetting the exchange differences recognised in OCI, arising on translation of the designated dollar net assets of MTN Dubai to ZAR. The cumulative foreign exchange movement recognised in OCI will only be reclassified to profit or loss upon loss of control of MTN Dubai. There was no hedge ineffectiveness recognised in profit or loss during the current or prior year.

17.1 MTN Afghanistan

On 20 June 2022, the Group received a binding offer for the sale of MTN Afghanistan for a consideration of approximately US$25 million (R457 million¹ ) on a discounted basis. MTN Dubai and MINT Trading Middle East Limited (a 100% subsidiary of M1 Group Limited) have subsequently signed a sale and purchase agreement on 10 March 2023, which is subject to conditions precedent. During the second half of 2023, the transaction received conditional regulatory approval to proceed, pending the submission of relevant documentation to the Afghanistan Regulatory Authority. Accordingly, MTN Afghanistan’s assets and liabilities have been presented as held for sale.

An impairment loss of R900 million has been recognised in profit or loss after writing down the carrying amount of the disposal group to its fair value less costs to sell. MTN Afghanistan is presented as part of the MENA cluster in the segment information (note 7). On disposal of MTN Afghanistan, accumulated foreign currency translation reserve (FCTR) gains will be reclassified to profit and loss. As at 31 December 2023, MTN Afghanistan’s accumulated FCTR gain was R657 million.

The sale was concluded on 21 February 2024. The delay on concluding the sale was due to the pending final regulatory approval, among other conditions precedent.

¹ Translated at the closing exchange at 31 December 2023 of US$1 = R18.2698.

MTN Afghanistan

The carrying amounts of assets and liabilities that have been reclassified to non-current assets held for sale as at 31 December 2023 were:

17.2 MTN Guinea-Bissau and MTN Guinea-Conakry

On 26 October 2023, the Group received a binding offer for the sale of both MTN Guinea-Bissau and MTN Guinea-Conakry for a consideration of US$1 for each of the companies. MTN Group and Telecel Group (Telecel) have subsequently signed a sale and purchase agreement on 15 December 2023, which is subject to conditions precedent. Accordingly, the assets and liabilities of both MTN Guinea-Bissau and MTN Guinea-Conakry have been presented as held for sale. As a result of the net liability positions for MTN Guinea-Bissau and MTN Guinea-Conakry on classification as held for sale, there was no further impairment on measuring at the lower of carrying amount and fair value less costs to sell.

MTN Guinea‑Bissau and MTN Guinea‑Conakry are presented as part of the WECA cluster in the segment information (note 2.1). On disposal of MTN Guinea-Bissau and MTN Guinea‑Conakry, accumulated foreign currency translation reserve (FCTR) gains and losses will be reclassified to profit and loss. As at 31 December 2023, MTN Guinea‑Bissau’s accumulated FCTR gain was R277 million and MTN Guinea‑Conakry’s accumulated FCTR loss was R1 691 million.

The carrying amounts of assets and liabilities that have been reclassified to non-current assets held for sale as at 31 December 2023 were:

17.3 MTN Nigeria

During 2023, the Group elected a scrip dividend from MTN Nigeria and received approval from the Securities and Exchange Commission, increasing the Group’s effective shareholding from 75.69% to 76.27%. The scrip dividend was accounted for as a change in shareholding on issuance of the shares and the Group recognised the related loss of R1 531 million in equity as a transaction with non-controlling interest. The amount recognised in equity, includes R440 million for the related withholding tax.

17.4 MTN Ghana

During 2023, the Group disposed of shares in MTN Ghana to Ghanaian citizens as part of the Group’s localisation strategy. The Group also elected to take a scrip dividend from MTN Ghana. These transactions had a net result of decreasing the Group’s effective shareholding from 84.28% to 81.04%.

The proceeds from the localisation, net of taxes and transaction costs amounted to US$42 milllion (R780 million¹ ). R715 million has been received to date in cash. This resulted in a net loss of R511 million that was recognised in equity as transaction with non-controlling interest.

The scrip dividend was accounted for as a change in shareholding on issuance of the shares and the Group recognised the related loss of R284 million in equity as a transaction with non-controlling interest. The amount recognised in equity includes R155 million for the related withholding tax.

¹ Translated at the effective date of the sale. Cash proceeds per the statement of cash flows are translated at the spot rate on the date of receipt of the proceeds.

MTN SA entered into an agreement with IHS Group to sell its tower infrastructure (comprising approximately 5 700 tower sites) and power assets; cede related agreements including land lease agreements (on which the towers are constructed) to IHS Group; and lease back space on the towers which it would sell. The related conditions precedent were fulfilled and the transaction became effective on 30 May 2022.

The transaction was accounted for as a sale and leaseback transaction in terms of IFRS 16 for the year ended 31 December 2022. The remaining land leases transferred to IHS Group is derecognised as they are legally ceded to IHS Group and the related gain or loss on derecognition is accounted for as part of the overall gain or loss on the disposal group.

The remaining land leases are presented as held for sale:

The Group adopted IFRS 16 Leases retrospectively from 1 January 2019, resulting in the recognition of right-of-use assets and lease liabilities. MTN Nigeria’s leases include network infrastructure relating to tower space, of which the lease consideration comprises of a combination of Naira based lease payments and a portion of the lease consideration that is indexed to United States Dollar (US$), but invoiced and paid in Naira.

MTN Nigeria identified that the US$ portion of the lease liabilities had not been correctly remeasured for changes in exchange rates. As part of this review, MTN Nigeria also identified that significant changes in facts and circumstances relating to whether MTN Nigeria would exercise renewal options were not taken into account in determining the related lease term.

19.1 Quantification of prior period error

The restatement had no impact on cash flows.

The impact of the restatement on the prior period results is as follows (all related notes and affected financial risk management disclosures will also be restated):

Dividends declared

Dividends declared at the board meeting held on 22 March 2024 amounted to 330 cents per share.

MTN Afghanistan

The Group signed a sales and purchase agreement to sell its entire investment in MTN Afghanistan. The related assets and liabilities were classified as non-current assets held for sale up until the effective date of the sale. Subsequent to year end, the transaction closed on 21 February 2024 and has been reported as a non-adjusting after reporting period.

MTN Fintech and Mastercard

The Group signed definitive agreements on 5 February 2024 with Mastercard for a minority investment of up to US$200 million into MTN Fintech at a valuation of US$5.2 billion. The transaction will be accounted for as a transaction with non-controlling interests, with any gain or loss recognised in equity on closing.

Nigeria currency devaluation

Following the end of the reporting period the Naira devalued from NGN907 against US$ at 31 December 2023 to NGN1 595 at 29 February 2024. MTN Nigeria’s exposure to US$ amounted to US$1 650 million (R30 157 million) at 31 December 2023. The MTN Nigeria revenue contributed 34% to the total Group revenue in the current period. The translation of the Naira to ZAR has been affected by the weakening of the Naira exchange rate.