MTN : FY 23 Tax Report

MTN Group Limited

Tax Report for the year ended 31 December 2023

Leading digital solutions for Africa's's progress

Welcome to our 2023 Tax Report

Our purpose is to enable the benefits of a modern connected life for everyone

Inside this report

01 Our reporting suite

02 Who we are and where we come from

04 Where we are going

05 Where we operate and how we performed

06 Salient features

07 Group Chief Financial Officer's foreword

08 Economic contribution (business, social and governance)

09 Taxing in uncertain times and increased legislation

11 MTN's approach to tax

13 Continuous improvement on tax governance and transparency

15 Total tax contributed in our markets

19 Our effective tax rates

22 Administration

Our reporting suite

Our Tax Report is supplemented by a number of reports that provide a comprehensive view of MTN's performance and prospects covering financial, risk management and environmental, social and governance (ESG) aspects. These reports go beyond traditional financial reporting by integrating sustainability and non-financial information.

Integrated Report

Financial reporting

Our primary communication to stakeholders aims to help them make informed assessments of our performance and prospects, strategic direction and the value we create through our activities. It provides a forward looking perspective on MTN's financial and non-financial performance, encompassing strategy, risks and opportunities, targets and governance.

Sustainability reporting

The following suite of reports provides information on MTN's strategy and performance related to sustainability issues with potential impact on our organisation, society and the environment. The reports detail MTN's environmental and social policies, governance, strategies, risks and opportunities. The reports also provide detailed performance data on a wide range of ESG metrics and targets. MTN's sustainability disclosures are structured and informed by the voluntary Global Reporting Initiative (GRI) Standards (2021) and the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards (IFRS S1 and IFRS S2), which have fully integrated the Task Force on Climate-Related Financial Disclosures (TCFD) guidance. The reports detail MTN's policies, governance strategies, risks and opportunities relating to sustainability considerations.

These reports include an analysis of the Group's financial results, a five-year review, and MTN's approach to handling uncertain tax positions. They provide insight for current and prospective investors, employees, creditors, analysts and other stakeholders. They disclose details of MTN's income statement, financial position, cash flows, performance per share, as well as key non-financial information.

AFR

Annual Financial	Annual Financial	Tax Report	Five-Year Review
Results	Statements

Information for shareholders

			CR
Sustainability Report	ESG Data Booklet	Transparency Report	Climate Report

Regulatory and reporting frameworks used:

Companies		B-BBEE
Act		Act
Amended	IR
Financial	ESG Matrix
Sector Code	INTEGRATED	for Mobile
(FSC)	REPORTING

The Notice of AGM and form of proxy give information to shareholders who want to participate in the Group's Annual General Meeting (AGM).

Notice of AGM

King IV Assessment Report

This provides a summary of the application of the King IVTM principles by MTN Group Limited and Mobile Telephone Networks Holdings Limited.

Tax Report 2023 01

Who we are and where we come from

30 years

of value creation

1994

After securing one of South Africa's two 'national cellular radio telephony service' licences in September 1993, MTN began building a network in January, eight months after the state-owned competitor. Within six months the two were on par. Launched commercial operations on 1 June.

	1995		1996
	Coverage race with				Launched prepaid solution
	competitor intensified,				'Pay As You Go' in October,
	with MTN committing				dramatically opening up the
	R1.2bn in capital				market. With no contracts and
	expenditure.				no credit checks, even those
					without bank accounts could
					now have cellphones.
					Offered SMS (a text message
					of 160 characters) for the first
					time.



1997

Began our international expansion.

Introduced SIM-only packages.

1998

Created MTN International in February.

Acquired licences in Uganda, Rwanda and Swaziland, HM King Mswati III making the first cellular call in the kingdom, on his birthday.

Became the first cellular network in Africa to get ISO 14001 rating for environmental management and ISO 9002 for customer service.

1999

Reached 2m subscriber mark in South Africa.

Network quality tests confirmed that MTN was best in SA.

2000

Launched the 'Call Me' concept and 'MyChoice TopUp'.

Acquired Camtel Mobile in Cameroon, rebranding it MTN Cameroon.

Became first in Africa to launch High Speed Circuit Switched Data technology (allowing data transfer at up to six times the normal rate).

2001

Won a licence in January in Nigeria, which at the time had just 700 000 fixed and 22 500 cellular lines for its 120m people. Launched commercial services in August.

Launched MTN SA Foundation to manage social investment projects. Foundation inaugurated by former President Nelson Mandela.

2003

Group subscribers topped 7m - a 42% year-on-year increase.

Reached 1m active subscribers in Nigeria.

Launched MTN special greeting Y'ello

2004

Revenue of R29bn

- a 21% increase.

MTN International contribution to turnover topped 35% (from 18.9% in 2002).

2005

Bought 49% of Irancell.

Bought 44% of Mascom in Botswana.

Acquired licence in

Côte d'Ivoire.

Bought 100% of Libertis in

Congo-Brazzaville.

Completed purchase of Telecel in Zambia.

Became one of first operators in Africa to offer 3G.

2006

Shareholders approved purchase of Dubai-based Investcom in US$5.5bn deal, expanding MTN's presence across Africa and the Middle East to 21 countries from 11.

Pledged US$65m for 2010 FIFA World Cup, making MTN the only African global sponsor.

Launched employee volunteer programme 21 days of Y'ello Care.

2002

Changed name to MTN Group Ltd from M-Cell Ltd

Became the first operator in Africa to offer General Packet Radio Services (GPRS).

MTN Nigeria subscribers hit

500 000 in the year after launch.

2007 

Revenue up 42% to

R73bn.

Subscriber

numbers

topped 54m.

Tax Report 2023 02

Who we are and where we come from continued

2008 2009

2010

2011

2012

2013

Subscriber base reached 91m, up 48% from the previous year.

Revenue rose 40% to R102bn.

Subscribers topped 116m, grew market share in all but one of 21 operations.

Launched MTN

Mobile Money in Ghana and Côte d'Ivoire.

2010 FIFA World Cup in

South Africa.

At R8.1bn, MTN Zakhele transaction was the biggest broad-based black economic empowerment (B-BBEE) deal in SA telecoms.

Reached 164m subscribers.

Established Group Social and Ethics Committee.

Civil unrest in several markets and difficulties in repatriating cash.

The launch of the US$650m West Africa Cable System, increasing broadband capacity. MTN was its biggest investor.

Unveiled a new vision:

To lead the delivery of a bold new Digital World.



MTN Nigeria disconnected 3.2m as part of subscriber registration process.

R30bn capital expenditure (capex) included 4 400 3G sites and 5 161 2G sites.

2014

Voted the most

valuable and most

admired brand in Africa, for the first time.

Mobile Money (MoMo) subscribers up 50%.

2015

The Nigerian Communications Commission (NCC) imposed US$5.2bn fine on MTN Nigeria for not meeting the deadline to disconnect unregistered SIMs; 6.7m disconnections in Nigeria.

MTN Nigeria acquired 4G spectrum.

2016

Negotiated down to

US$1bn the MTN Nigeria fine for not disconnecting SIMs by deadline.

In Nigeria, MTN was classified as a "dominant operator".

2017

Launched BRIGHT strategy.

• Best customer experience
• Returns and efficiency focus
• Ignite commercial performance
• Growth through data and digital • Hearts and minds
• Technology excellence

Articulated our belief that everyone deserves the benefits of a modern connected life.

2018

Listed MTN Ghana.

Greater focus on fintech and digital

opportunities.

Launched CHASE framework to boost lower-income rural access to the internet.



2019

Listed MTN Nigeria.

Recorded US$96bn in mobile financial transactions - 9 200 per minute

Launched in 12 markets

2020

COVID-19 - MTN reported 10 staff deaths and launched the global staff emergency fund.

10% of staff were in the office.

Launched #WearItForMe campaign and Y'ello Hope with a R1.2bn value.

2021

Listed MTN

Rwanda and MTN Uganda

Launched the Ambition 2025 strategy.

Donated US$25m to AU's COVID-19 vaccination programme for health workers.

Launched #OneMorePush campaign.

Exited Yemen and Syria.

2022

We refreshed our brand Total subscribers topped

289m, with 137m active data users as usage rose by a third.

Economic value add up at R149bn from R119bn.

2023



Named #1 African brand doing good for people and the planet, with leading sustainability perceptions value.

Tax Report 2023 03

Where we are going

Our purpose is to enable the benefits of a modern connected life for everyone

MTN is a pan-African digital operator providing a range of critical voice, data, fintech, digital, enterprise and wholesale services to around 295 million customers in 19 markets. Our purpose is embodied in our belief statement that everyone deserves the benefits of a modern connected life. Our strategic intent is leading digital solutions for Africa's progress.

MTN Group Limited is a publicly owned entity whose shares are traded on the JSE. At the end of 2023 our market capitalisation was approximately R209 billion (US$11.4 billion). Subsidiaries MTN Nigeria, MTN Ghana, MTN Uganda and MTN Rwanda are listed on the Nigerian Exchange Ltd, the Ghana Stock Exchange, the Uganda Securities Exchange and the Rwanda Stock Exchange, respectively.

Ambition 2025: Leading digital solutions for Africa's progress

Build the largest and most valuable platforms

Drive industry- leading connectivity operations

Create shared value

Accelerate portfolio transformation

Enabled by our values:

Lead with Care

Collaborate with Agility

Act with Inclusion

Can-dowith Integrity

Serve with Respect

Creating value for all

We create value for our stakeholders across our footprint by living our purpose and belief as well as progressing our strategic intent

MTN achieved an

10.9%^

reduction in Scope 1 and 2 emissions from base-year emissions (excluding MTN SA whose performance is impacted by the IHS transaction)

^Reflects quarter 4 adjustments.

28%

women in leadership

Enabled internet

access to

150m

(2022: 137m)

active data users

Maintained female

representation at

40%

Facilitated financial

inclusion to

72ms

(2022: 69m)

active MoMo users

Empowered

17 569

MTNers

Extended digital

inclusion to

36m

(2022: 22m)

ayoba users

Connected

295m

(2022: 289m)

subscribers

Provided broadband coverage to

89.2%

(2022: 88%)

of the population

Added economic value of

~R159bn

(2022: R149bn)

across our markets

Tax Report 2023 04

Where we operate and how we performed

Our geographic footprint is expansive, stretching over 19 markets on two continents and connecting 295 million customers. This represents the reach and scope of where we create value, organised into our operations in South Africa, Nigeria and our Markets (SEA, WECA and MENA). These are managed through robust operational and governance oversight, which underpins our pan-African growth strategy.

Our portfolio	(MTN Group effective
at 31 December 2023		shareholding)
MTN South Africa		100.0%
MTN Nigeria ▲		76.3%
SEA
MTN Uganda ▲		83.1%
MTN Rwanda ▲		80.0%
MTN Zambia ▲		89.8%
MTN South Sudan		100.0%
Mascom BotswanaΔ		53.1%
MTN eSwatiniΔ		30.0%
WECA
MTN Ghana ▲#		81.0%
MTN Cameroon		80.0%
MTN Côte d'Ivoire		66.8%
MTN Benin		75.0%
MTN Guinea-Conakry		75.0%
MTN Congo-Brazzaville	100.0%

Our financial performance

Our financial performance

+13.5%* to	+23.0%* to
R210.1bn	R84.0bn
service revenue	data revenue

EBITDAˆ contribution

EBITDA contribution

+21.8%* to	By geography (%)
R21.0bn

fintech revenue

 South Africa	20.7
 Nigeria	41.1
 SEA	11.7
 WECA	25.9
 MENA	2.0
 Bayobab	1.3
 Head offices	(2.9)
and eliminations

Service revenue contribution

Service revenue contribution

LonestarCell (MTN Liberia)	60.0%
MTN Guinea-Bissau	100.0%
MENA
MTN Sudan	85.0%
MTN Afghanistan ■	100.0%
MTN IrancellΔ	49.0%
Associates, joint ventures (JVs) and
other investments
aYo	50.0%
IHS Group	25.7%
Iran Internet GroupΔ	29.5%
Middle East Internet HoldingΔ	50.0%

• Localisations.

• Exiting in an orderly manner over the medium term. Δ Equity accounted.
  # Legal ownership is 77.3%.

+9.8%* to R90.4bn

EBITDA

18.6%

capex intensity

R41.1bn

capex (ex-leases)

By geography (%)

 South Africa	20.4
 Nigeria	35.9
 SEA	11.0
 WECA	27.7
 MENA	3.0
● Bayobab	5.6
● Head offices	(3.5)

By services (%)

 Voice	39.4
 Data	39.8
 Digital	1.7
 Fintech	10.0
 SMS	2.4
 Wholesale	4.2
 Other	2.4

Tax Report 2023 05

Salient features

Group total tax contribution	Group revenue	Product taxes
R61.7bn	R221.1bn	R32.0bn
(2022: R54.8bn)*	(2022: R207.0bn)	(2022: R27.5bn)
(2021: R47.3bn)*	(2021: R181.7bn)	(2021: R22.7bn)

• Restatement of 2022 and 2021 Group TTC numbers was due to a change as a result of prior year adjustments.

Product taxes include customs duties, excise duties VAT, other indirect taxes and withholding taxes from some of foreign supplier purchases borne by MTN, and vat refunds and withholding taxes collected for foreign sales.

An increase to Group revenue and product taxes paid compared to prior year.

Profit taxes include corporate income tax (CIT) and education tax borne by MTN and dividend taxes borne and collected by MTN.

Reported Group profit		Reported Group effective
before tax		tax rate2
R11.8bn	65.86%
(2022: R40.9bn1)	(2022: 41.66%3)
(2021: R28.8bn)	(2021: 41.03%)
Normalised Group profit		Normalised Group effective
before tax		tax rate
R18.2bn4		39.50%6
(2022: R42.7bn5)		(2022: 37.60%7)
(2021: R33.3bn)		(2021: 35.46%)

1. Restated, refer to note 11 of the 2023 Group Annual Financial Statements for details on the restatement.
2. Reported Group effective tax rate (GETR) is Reported Group income tax expense divided by Reported Group profit before tax. Please refer to the GETR reconciliation section for explanation of the variances to the Group standard income tax rate of 27% and variance comparison to prior year.
3. Restated, refer to note 11 of the 2023 Group Annual Financial Statements for details on the restatement.
4. Normalised Group profit before tax represents Group profit before tax as reported excluding extraordinary and once-off items like: Impairment of goodwill and assets and investment in JVs (2023: R0.047bn); unrecognised deferred tax assets in Nigeria (2023: R0.1bn); Translation adjustment due to Naira devaluation (2023: R0.7bn); Hyperinflation (2023: R4.7bn).
5. Normalised Group profit before tax based on the restated reported Group profit before tax.
6. The normalised GETR reflects the Group's effective tax rate under normal/regular operational circumstances of the MTN business by removing extraordinary or items relating to once-off circumstances of the business. It is calculated by dividing the Group normalised income tax expense number by the normalised Group profit before tax. For detailed year-on-year variance analysis please refer to the normalised GETR reconciliation in the report.
7. This is the restated normalised GETR. The restated normalised GETR is calculated by adjusting the restated Group reported income tax expense number (mainly for Reassessment of recoverability of Deferred Tax asset) (2022: -R1.2bn); CIT rate change (2022: -R0.2bn); other tax provisions (2022: -R0.4bn) and then dividing by the adjusted Group profit before tax. Please refer to the detailed normalised Group GETR reconciliation in the report for the breakdown of the restated normalised GETR.

Profit taxes

R16.6bn

(2022: R16.0bn)

(2021: R11.3bn)

A slight increase in profit taxes compared to prior year due to an increase in dividends paid - R6.0 billion (2022: R5.4 billion) thus an increase in dividend taxes. The reversal of deferred tax credits from tax losses and payment of additional minimum taxes in several of our markets where we incurred organic losses also increased our corporate tax paid.

Tax Report 2023 06

Group Chief Financial Officer's foreword

Three decades of building resilience and trust

Tsholofelo Molefe CA(SA)

Group Chief Financial Officer

Dear stakeholders

In June 2024, we at MTN Group will mark 30 years in the business: three decades of connecting people and driving digital and financial inclusion. The business's growth and development in this time would not have been possible without the trust and support of our many stakeholders, for which we remain grateful.

One of the ways in which we build public trust is by being transparent about our tax affairs, including through publishing this Tax Report.

In the pages that follow, we detail our overall economic contribution across our markets beyond just the corporate taxes we pay; the evolving tax environment across the world and in Africa; MTN's approach to tax; our tax governance; and finally, we give the Group's TTC by market, as well as the GETR.

In 2023, our TTC amounted to R61.7 billion LA , representing payments made by the MTN Group to all spheres of governments.

These taxes include corporate tax, indirect taxes, operating licence fees, payroll taxes, property rates, dividend taxes and withholding taxes. These represent significant contributions to the fiscus of the jurisdictions in which we operate: these contributions are used to grow and enhance economic development in our various markets.

We are very pleased to play our part in supporting Africa's progress, and giving Africans hope, dignity and opportunity.

Beyond the continent's borders, the tax landscape continues to evolve. In 2023, there was notable progress in the two-pillar reform to international tax rules to address challenges related to globalisation and digitalisation. Many countries adopted the Global Anti-Base Erosion (GloBE) model rules and in our home base of South Africa, in early 2024, the tax authorities announced plans to introduce the Pillar Two rules. The proposal is to introduce these rules for years of assessment starting on or after 1 January 2024.

Ahead of this change, we at MTN Group performed a preliminary assessment of our potential exposure in relation to the Pillar Two legislation once it comes into effect. Based on the outcome of this assessment, we do not anticipate a material top-up tax impact for the MTN Group in any of the jurisdictions in which we operate.

Appreciation

We acknowledge the growing interest in our tax affairs that comes from many different stakeholders - ranging from governments, regulators, national tax authorities, investors, to employees and civil society. We hope that this Tax Report assists you all in better understanding the contribution we make, and the value we create, across multiple jurisdictions.

We thank you for your interest and look forward to engaging with you in the year ahead.

Tsholofelo Molefe CA(SA)

Group Chief Financial Officer

29 April 2024

Tax Report 2023 07

Economic contribution (business, social and governance)

As one of the largest mobile operators in our markets, we acknowledge that our activities have significant implications for the communities in the regions in which we operate. It is vital that we understand exactly who is affected by our activities so that we can ensure their interests are promoted when strategic business decisions are made. MTN has identified the following as our most material stakeholders: government; regulators and policymakers; civil society; investment community; subscribers/customers; and MTNers.

Value distribution

Our activities drive economic value within each of the jurisdictions in which we operate. This value is distributed to our stakeholders in a multitude of ways only some of which are measurable. This includes:

Business

During 2023, MTN spent R161.2 billion (2022: R147.2 billion

in 2021: R125.0 billion) with suppliers and contractors.

We deployed R63.6 billion to support the focused execution of our Ambition 2025 strategy (2022: R54.1 billion and 2021: R39.4 billion). MTN South Africa's share of capex amounted to R15.7 billion (2022: R15.3 billion in 2021: R10.4 billion); MTN Nigeria's capex amounted to R16.8 billion (2022: R19.1 billion and 2021: R14.9 billion), WECA region capex amounted to R21.1 billion (2022: R8.6 billion and 2021: R7.5 billion), SEA region capex amounted to R6.1 billion (2022: R6.5 billion and 2021: R3.6 billion), MENA region capex amounted to R1.0 billion (2022: R1.7 billion and 2021: R1.0 billion), Bayobab and Head Office's capex amounted to R1.7 billion (2022: R2.1 billion and 2021: R1.8 billion), and hyperinflation on capex R1.2 billion (2022: R0.8 billion and 2021: R0.2 billion). In the period, we rolled out 3319 3G (2022: 3 498 3G), 5356 4G (2022: 7 993 4G) and 2251 5G

(2022: 1 570 5G) sites.

For 2024 we targeting capex of R45 to R49 billion in 2024 (in line with IFRS 16) (2023 plan was: R37.5 billion).

Social

Employees

In 2023, MTN had a 0.61% increase in employees amounting to 17 569 (2022: 17 462 in 2021: 16 390) representing 7212 (2022: 6 547) from SEA region, 5 621 (2022: 6 231) from WECA region, 3 092 (2021: 3 137) from MENA region and 1 716 (2022: 1 547) from Head Office, Business Solutions and Nationalities represented across workforce. We spent

R15.1 billion in staff costs (2022: R12.7 billion and 2021: R11.7 billion). A increase of 15.63%. People taxes contributed R3.7 billion (2022: R3.2 billion and 2021: R2.5 billion).

In the year, we invested R307 million in employee learning and development (2022: R280 million and 2021: R190 million). up by 9.64%. Employees are actively encouraged to look for opportunities to continuously improve their capabilities and skills through extensive training available digitally, face-to-face and from other sources supplied by the MTN Academy, or from external accredited and reputable organisations.

For details on MTN people and their remuneration please

refer to pages 102 to 146 of the 2023 .

Corporate social investment

MTN is committed to leveraging our core capabilities to enable the socioeconomic development of the communities within which we operate, underpinned by our core belief that everyone deserves the benefits of a modern, connected life. MTN's corporate social investment (CSI) strategy aligns to this belief by focusing its core initiatives on Digital skills for digital jobs. This allows MTN to address the digital skills shortage in Africa while simultaneously creating opportunities for economic growth through ICT-enabled programmes, including our flagship MTN Skills Academy platform. A secondary focus area aligns to the National Priority Areas (NPA) of the respective countries in which we operate, as well as disaster relief projects in times of crisis. Through these ICT-enabled and NPA programmes, we continue to serve and support the communities in which we operate, growing our impact year-on-year, as seen below.

In 2023, MTN's generic corporate social investment totalled R220 million (2022: R251 million and 2021: R159 million ). This investment impacted the lives of 3.6 million (2022: 5.36 million and 2021: 9.9 million) members of our communities,

2.9 million (2022: 4.8 million) of which were youth, as the largest and most impacted population group across our

markets. And 126.2 million (2022: 2.5 million and 2021: 3.2 million) women and young girls were empowered. Our programmes allowed young people to engage in activities to grow their knowledge, access education, learn new skills, and develop through a diverse range of uplifting activities. For details on MTN corporate social investment activities and how we gave back to the communities in our markets, please

refer to pages 30 to 44 and 51 to 58 of the 2023 . Our contribution to this initiative is shown in the GETR reconciliation under the 'Total tax contribution and effective tax rates' section of this report.

Governance

Governance of tax activities was fortified during 2023 as Opcos adopted and localised our updated Group tax policy.

Owing to complex tax legislation, regulatory requirements and increased focus from revenue authorities on protecting their tax revenues, MTN has developed a systematic approach to tax manage tax obligations and mitigate tax risk. This involves managing and monitoring tax obligations across various business functions and departments, systems and processes within the Group.

The primary risks associated with MTN's tax practices include speculative assessments, reputational risks and compliance risks. These are effectively managed and mitigated through the application of our tax risk management framework. For more details on our risk management framework refer to MTN's approach to tax section of this report.

And for more on our tax contribution to our markets refer to the total tax contributed section of this report.

Tax Report 2023 08