5 November 2002 Public hearing: Consumer issues relating to cellular

1. 5 November 2002Public hearing: Consumer issues relating to cellular Phuthuma Nhleko CEO: MTN Group Ltd Sifiso Dabengwa MD: MTN (Pty) Ltd

2. A. MTN Group Ltd B. Focus on customer services C. Decreasing trend in cellular tariffs D. Network performance E. In summary F. The way forward - MTN Recommendations Contents

3. A. MTN GROUP LTD • Name change on 14 October 2002 • MTN Group common bond/vision within group companies • MTN Group Ltd - holding company with 3 divisions • Mobile Telephone Networks (South Africa) • MTN International • Strategic investment division • MTN Group provides a varied basket of communications services in 6 countries across Africa • African multinational in tune with the communications needs of the 21st century

4. MTN’s Other Networks(Total Pop = 202m, 30% of the continent’s population) 23m 120m 8m 16m 40m 1m

5. MTN OPERATION Cumulative Investment TOTAL TELEDENSITY MTN’S CONTRIBUTION MTN SOUTH AFRICA $1,4 Billion 32% 27% MTN UGANDA $ 95 Million 1.78% 52.9% MTN RWANDACELL $ 35 Million 1.06% 71% MTN SWAZILAND $ 35 Million 9% 55% MTN CAMEROON $ 100 Million 3.18% 41.4% MTN NIGERIA $ 480 Million as at 31 March 2002 0.83% 29.9% MTN’s Impact in Africa (Teledensity)

6. MTN’s contributions to fiscus and economy 1995 - 2001 Licence fee R100m Annual NOI licence fee R 883m Annual Spectrum fee R42.7m Taxes R2bn JEDP R22bn Corporate Social Investment R80m__ Total R25.2bn Contributions to the SA economy

7. MTN SA vision Measuring customer satisfaction Taking complaints seriously Customer care facilities B. Focus on customer services

8. VISION To be the industry leader through customer intimacy First for customer service Deliver above average returns South Africa’s most admired brand Employer of choice MTN South Africa

9. MTN South Africa subscriber numbers

10. Customer Satisfaction Index (CSI) Measured by Proactive (independent company) Computer Assisted Telephonic Interviewing 1 500 randomly picked subscribers interviewed quarterly Respondents asked to rate services on 10 point scale, converted to a percentage Continues process to improve customer satisfaction Independent survey shows MTN customer satisfaction performance more than 85% Measuring customer satisfaction

11. Formal structure for dealing with customer complaints Complaints Management Process Root Cause Analysis Process MTN employs more than 1 000 customer service agents Ongoing assessment of all our customer facing process Continuous process re-engineering Three call centers Gauteng KZN (recent addition) Limpopo (recent addition) Complaints are important

12. 24 hour, 7 day available customer care facilities Problem resolution Information provision on handsets, products & services Complaints management Billing and account inquiries Service activation Directory enquiries Emergency services Customer care facilities

13. MTN tariffs have decreased in real terms over time Annual tariff increases Tariffs in context MTN - average prepaid prices Internal input costs External input costs Macro economic conditions influence foreign & local investor confidence Tariffs versus services SA mobile market compares favourably C. Decreasing trend in cellular tariffs

14. MTN tariffs decreased in real terms

15. Annual tariff increases approved by ICASA Increase in tariff basket no more than year on year CPI CPI linked to inflation Actual increases below CPI Annual tariff increases

16. Tariffs should not be looked at in isolation, but should be seen in the context of Total customer satisfaction - cost, quality & coverage area Total cost of ownership - handsets, line rental & airtime Basket of services available Capital invested Tariffs are cost based but also reflect market dynamics Investor/shareholder expectations Competition & regulation Customer expectations & affordability Tariffs in context

17. Network costs Service Provider discounts Connection incentives COS (mobile phones & SIM cards) Opex: Salaries & staff costs Site build leases Leased transmission costs (Telkom) Maintenance Marketing costs Sales costs Travel Training Internal input costs (more controllable)

18. Licence fees (up-front & annual) Spectrum fees (e.g. 1800) Interconnect rates Rates & taxes Roaming costs Universal service obligations Contributions to USF Emergency centres & free emergency calls Devaluation of the Rand against the US$ & € Cost of handsets Compliance with regulatory requirements (not only telecommunications) External input costs (less controllable)

19. Mobile information value added services have become numerous and varied 50 ICE consumer services eg: Ringtone & logo Voice chat ICE man menu SABC competitions 10 MTN branded VAS services eg: Directions Legal assist Tax assist Wake up call Computicket Tariffs versus services

20. Comparison to tariffs with OECD OECD basket of consumer mobile phone charges - August 2000 The South African market compares favourably with those of other equivalent economies, with significantly lower barriers to entry and tariffs than most emerging economies. USD SA assumes business time package, 25min per month each on peak and off peak. OECD basket assumes 50min per month *Source: OECD Cellular mobile pricing structures and trends, May 2000

21. Network coverage Network quality External influences on network quality RF interference problems MTN SA subscriber numbers Overview - network quality D. Network performance

22. MTN Coverage (October 2002) Country Area - 1 225 020 km2 Total Coverage - 885 666.85 km2 Land Coverage - 794 104.71 km2 (70% of land) Sea Coverage - 91 562.14km2 Total Population - 44 million Population Covered - 39 724 548 (96% of pop) 70% of land area covered. 96% of the population. 4000 sites.

23. Mobile penetration by country Merrill Lynch Wireless Matrix - 1Q02 - 7 June 2002

24. Network quality Licence obligation “at least 2% grade of service”

25. Busy hour drop call rate Drop call rate reduced by 233% over 9 years. (25% per year)

26. Busy hour Radio Congestion Congestion sustained for last 18 months at 0.2%. (90% lower than license requirement)

27. Site acquisition is becoming increasingly difficult Lack of infrastructure Electricity - Eskom can’t always supply in rural areas Transmission - obliged to use Telkom fixed links Access - access roads in deep rural and hilly/mountainous areas prohibitively expensive Interconnection - Suitable Points of Interconnect not always available from Telkom Spectrum costs & availability 900 MHz allocation inadequate given size of subscriber base Need for 1800 MHz but prohibitively expensive & still used by others Continuous rise in network & equipment costs as R depreciates against US$ & € Handset quality (grey products & illegal imports) External influences impacting on network quality, no of dropped calls, interference & congestion

28. Various external RF interferers Cellular jamming devices Cordless phones Remote security video cameras Mobile pay point systems Various still to be identified (in hand with ICASA) Shielding by large structures e.g. trucks Difficult and time consuming to trace MTN has no legal right to shut interferers down Report interference problems to ICASA Lengthy process ICASA under staffed in many areas – could take up to 6 months or more to resolve cases ICASA depend on legal system to gain access to sites – court orders etc. Low percentage of reported cases resolved to date Control on importation of illegal equipment very difficult Expensive test equipment required to perform interference investigations RFInterference Problems

29. Overview - Network quality Network quality key performance indicators

30. Tariffs & handset costs have decreased in real terms while the range of applications & solutions have increased MTN network quality & coverage is world class Customer satisfaction is of paramount importance to MTN Operational success despite challenges E. In summary

31. Industry standards & benchmarking by ICASA Consumer protection regulations Strengthen ICASA - capacity & financial Enhance consumer awareness with all constituencies eg: Telecommunications operators ICASA DoC Develop a national legislative framework to alleviate excessive site approval constraints Accelerate ICT strategy implementation in especially local manufacturing F. The way forward - Recommendations

32. Mobile “the African solution”