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Sustainability review - Contents

Social performance

Social performance

Employees

Our continued success depends on the social and economic well-being and development of our employees and the application of their skills and talents in the business. As our customer base expanded during the past period, both through the introduction of new services as well as our acquisition of new operations, the Group’s focus has been on capacity building. Strong emphasis has been placed on ongoing succession planning and skills development as well as the integration of all new operations. This includes the standardisation of processes across the Group.

Two additional key focus areas for the Group have been customer centricity at every point of contact and becoming the least-cost operator. Both focus areas must be enabled through effective employee management. The Group has introduced a number of employee-motivated initiatives to enhance our people’s potential to grow as future leaders and responsible individuals – in terms of their interaction with customers, other employees and community participation. Among these is the Y’ello Stars initiative, an employee recognition programme aimed at embedding employee recognition into the culture of the organisation. The programme is informed by feedback from employees on how they wish to be recognised for their efforts. Y’ello Stars winners are selected in four categories from each operation and will be invited to the 2006 gala event (to become an annual event) to receive their awards. The four categories are: Competence, Star Performance, Customer Service and Living our Values. An overall winner for each category will be announced at the event.

Culture

The Group has been actively promoting a shift in the organisational culture to become increasingly more customer centric. However, we also recognise that to be focused on the customer, we must empower our employees.

To further understand the thoughts, ideas and issues facing our employees, we conduct an annual Groupwide culture survey. The most recent survey was conducted in October 2005 and covered 7 100 staff with a 56% response rate. The survey captures the personal opinions and organisational perspectives of employees.

Survey questions were structured in 12 categories, including: employee diversity, customer focus, values, recognition and reward. We compared survey responses against last year’s responses as well as similar survey results from global telecoms and high-performing companies. Some of the strengths identified were:

  • Top management does a good job at clearly stating objectives, establishing priorities, making decisions, providing leadership and communicating with employees
  • Supervisors do a good job of building teamwork
  • MTN performs well in matching pay to performance
  • MTN compares well with global telecoms and high performers with regard to the quality of its products

The survey also identified areas for improvement. These centered on pay levels, respect, promotional prospects, work-life balance and concerns relating to the quality of customer service. Perceptions of pay levels did not compare well to other organisations or among the Group’s operating units.

In response to the detailed results of the survey, we have engaged in high-level communications with employees in each country. We are also in the process of co-ordinating road shows to deliver the results to employees in each operation and to gather further information in support of the results as well as suggestions on how to improve on them. We recognise that any plans for improving employee well-being, skills and morale in any of the operations will need to follow Group policy guidelines.

To date, we have completed the roll out of the programme to senior levels of our organisation in South Africa and Swaziland and will be rolling it out to other operations as well as additional levels of our South African operation in the coming year.

The total payroll spend across the Group is summarised in the table below:

  South Africa
Rm
Nigeria
Rm
Cameroon
Rm
Uganda
Rm
Rwanda
Rm
Swaziland
Rm
Dec 2005 (9 months) 689 328 51 50 19 21
Mar 2005 (12 months) 993 298 67 67 30 20
Mar 2004 (12 months) 764 241 51 56 23 21

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Conditions of employment

MTN aims to attract top-quality employees and understands the need to create work conditions that both promote and retain these individuals. We have developed a performance-based culture that identifies, develops and rewards employees for their work and loyalty. We have also implemented a standardised performance management system across the Group. A staff shareholder scheme has been introduced in our South African operation and longterm incentives are being extended to all operations.

We have disciplinary procedures in place that include guidelines on dealing with bribery and corruption as well as whistle-blowing procedures. These are monitored by the internal audit functions. While we have no formal agreement with any recognised trade unions, we are committed to freedom of association and collective bargaining. To this end, we promote consistent and open dialogue with our employees.

Remuneration

Remuneration philosophy

MTN recognises that we compete in both the consumer market as well as the talent market, and that we need a brand that addresses both markets. We have therefore formulated an integrated employee value proposition (EVP) that consists of features and benefits. MTN’s EVP uniquely positions the company for a specific target market – the talent market.

The company understands that for the reward philosophy to be truly effective, it needs to fit both the needs of the company as well as its people. MTN subscribes to the “total rewards” approach, which means understanding the person in a business context. The company is cognisant of the fact that each employee’s work experiences are different from each other. Therefore, our approach to total rewards addresses a variety of employees’ needs, aspirations and expectations, while being almost singular in its focus on positioning total rewards as an effective motivator of those behaviours that will lead to our continued business success.

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Remuneration structure

The Group remunerates executive directors, senior management and staff on a guaranteed package basis. In addition, incentives, both short term and long term, are provided to ensure alignment of both the executive directors’ and the Group’s objectives.

The guaranteed package of executive directors, senior management and staff consists of a flexible component and benefits. The flexible component may be structured in accordance with the specific requirements of the position and may include, apart from a basic salary, a travel allowance or a notional company car.

Benefits include the company’s contributions to a defined contribution retirement fund and to a medical scheme. The guaranteed package less the company contributions to benefit funds is subjected to an annual review, taking into consideration internal equity and external competitiveness.

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Short-term incentive scheme

Performance bonuses for executive directors, senior management and staff are linked to operational and financial value drivers of business performance against budget for individual operations and the MTN Group as a whole. These value drivers are determined by the board every year for the next financial year. Each executive director’s performance bonus is conditional on the achievement of their specific value drivers and key performance indicators, which are structured to retain a balance between the performance of entities for which they are directly responsible, and that of the Group. To align incentive awards with the performance to which they relate, bonuses as disclosed in the directors’ report reflect the amounts accrued in respect of each year and not the amounts paid in that year. The bonuses are approved by the Group Nominations, Remuneration and Human Resources Committee, after independent verification, and approved by the board.

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Long-term incentive scheme

Objective

The scheme encourages an alignment between the individual interests of senior MTN employees and that of the long-term MTN Group success and allows for significant upside potential over the medium to long term and is therefore a compelling retention mechanism. The scheme provides an opportunity for the eligible employee to share in the value enhancement of the Group and thereby give an eligible employee an incentive to invest their energy, creativity and dynamism in their daily work.

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MTN share incentive scheme

All eligible employees in South Africa participate in the MTN Group Limited Share Incentive Scheme. Eligible employees include employees classified as senior managers and higher.

• Element 1 financial achievement (percentage) multiplied by
• Element 2 value driver achievement (percentage) multiplied by
• Element 3 on-target bonus percentage (percentage) multiplied by
• Year-to-date salary   (rand amount)  

The measurements of each of these elements are restricted within parameters representing both a minimum achievable target and a capped ceiling.

Allocations are based on percentages and multiples of the employee’s guaranteed package less company contributions to medical aid. Employees not participating in the share incentive scheme participate in a super bonus scheme.

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MTN notional share option scheme

In accordance with the objectives of the Group, a notional share option scheme has been introduced within the various operations of the Group (excluding South Africa). The purpose of this scheme is to promote alignment between the interests of the various operations and the Group.

In accordance with the allocation principles of South Africa, allocations are based on percentages and multiples of the employee’s guaranteed package less company contributions to medical aid. Employees not participating in the notional share option scheme participate in a super bonus scheme.

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LifeStyle Benefits

The MTN Executive LifeStyle Benefits policy offers (in addition to the noted benefits and schemes) the following lifestyle benefits:

  • Overseas business travel
  • Financial advice
  • Club membership

The policy takes cognisance of the specific lifestyles and circumstances of MTN Group executives and general managers and makes provision to adequately cater for some of the demands of their lifestyles and circumstances.

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Net employment creation

During the past period 1 320 new staff members were employed by the Group, 299 from organic growth and 1 021 from acquisitions. The percentage of staff turnover in the year was 2,2%. Our target for the coming year is 5% to 7%.

  9 months
Dec 2005
%
12 months
Mar 2005
%
Permanent employees 80 75
Contractors 19 23
Expatriates 1 2

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Training and development

MTN is committed to the training and development of its employees. We work with employees to identify career development opportunities and conduct a quarterly succession planning review. The training offered by the Group includes management and business development, telecommunications technical skills training, IT development and support, project management and customer care.

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Employment equity in South Africa

MTN is committed to employment equity in South Africa, where issues of employment fairness and employee benefits are legislated. The Group institutionalises this commitment through employment equity plans and targets that comply fully with the Employment Equity Act of 1998. Our employee equity performance in the past period improved in both management and operational staff levels. We achieved 42,6% and 73,4%, up from 37% and 68% respectively as at 31 March 2005. A numerical record of the Group’s employment equity performance in South Africa is detailed on page 85.

A further challenge during the reporting period has been the limited increase in overall headcount and low staff turnover. The Group has elected to achieve compliance with the Act through resignations, retirements and the creation of new positions.

Succession planning is in place to assist with employment equity drives within the organisation. Our updated employment equity plan was submitted to government in October 2005. We have also considered and addressed remuneration inequalities as far as possible and have given special consideration to people with disabilities. In addition, we recognise the importance of promoting women within the organisation.

Approximately two thirds of our training is focused on the needs of previously disadvantaged employees and we have a comprehensive bursary programme in place for MTN employees’ family members. In addition to our standard training programmes, we administer a talent initiative comprising approximately 45 employees who form part of a mentorship programme in which their career paths are considered and they are selected to “shadow” senior employees.

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Employee mobility and expatriates

The Group is moving away from the tendency to view employees as either local or expatriate. Instead, we are promoting the concept of MTN people, which views MTN employees as individuals who have opportunities to work in various operations.

The emphasis, however, is always on the transfer and development of skills at a local level. This priority is underscored by the Group’s commitment to training and development, standardised performance management practices across the Group and well co-ordinated succession planning initiatives. MTN is encouraging global thinking and local action by promoting the mobility of employees through the repatriation of people; both within the context of African countries and people of African descent from other parts of the world. For instance, the newly appointed Chief Technical Officer of the Nigerian operation has been repatriated from the US. While she brings skills gained on another continent, we encourage local continental staff to move and spread their skills within the Group. Hence, our expatriates are not all South Africans moving northward, but include whole groupings of employees moving in between territories.

In future, this trend will help to integrate employees and employee cultures in new foreign operations. Recent acquisitions in foreign territories pose the specific challenge of overcoming language and cultural barriers – for instance, on the Frenchspeaking west coast of Africa and the Middle East. MTN follows a process of staffing up and integrating employees into the Group following acquisitions. The move to repatriate and mobilise whole groupings of employees will assist in speeding up future staff integration processes.

  South Africa Nigeria Cameroon Uganda Rwanda Swaziland
Dec
2005
Mar
2005
Dec
2005
Mar
2005
Dec
2005
Mar
2005
Dec
2005
Mar
2005
Dec
2005
Mar
2005
Dec
2005
Mar
2005
Training spend (Rm) 23,0 37,6 29,5 29,1 2,8 6,5 2,3 3,5 0,7 0,9 1,2 1,1
As a % of total payroll 3,4 4,5 9,0 9,8 5,5 9,7 4,6 5,2 3,7 3,0 5,7 5,5

Key data on employee mobility is shown below.

  Expats as % of total Number of expats
  Dec
2005
Mar
2005
Dec
2005
Mar
2005
Nigeria 3 5 56 86
Cameroon 1 3 6 12
Uganda 2 2 8 8
Rwanda 1 1 2 1
Swaziland 1 - 1 -

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HIV/AIDS

MTN recognises the potential effects of HIV/AIDS on its employees and their families as well as on the wider communities. The Group’s policy on HIV/AIDS is available on the MTN website at www.mtn.co.za. The policy guides employees on important issues such as prevention of the disease; elimination of unfair discrimination in the workplace of those who may be infected; assisting infected employees to obtain care and support; and generally fostering a spirit of openness, support and co-operation within MTN on the spread of the disease.

Each operation localises the Group policy on HIV/AIDS to align with local conditions and cultural dynamics. While the costs of the disease to the organisation are not formally known, mortality rates do not currently impact operational productivity in any of our operations.

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Health and safety

MTN is committed to the proactive management of health and safety throughout the Group. We have a comprehensive health and safety policy, which is available on the MTN website.

During the past year, we began the process of integrating our health and safety risks into our electronic enterprise-wide risk management system to enable better identification and mitigation of these risks.

Our main health and safety risks are associated with routine base station maintenance activities such as working on towers and long-distance driving. To address these specific risks, all engineers have to obtain the correct equipment (such as hard hat and boots) and undergo abseiling training for certification. Additional training, such as fire fighting and first aid, is offered where appropriate. In addition, health and safety procedures are extended to contractors and specific requirements are included in their contracts. The challenge for the coming year is to extend health and safety procedures to all new operations and to provide assistance in implementing and monitoring their progress.

MTN is confident that the South African operation will receive OHSAS 18000 accreditation during 2006. All operations will be aiming for this certification over time. There were no fatalities during the past period.

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Corporate social investment - MTN Foundation

The Group conducts its CSI – and mobilises its socioeconomic development objectives – through the MTN Foundation, now in its fourth year in South Africa. Though the Foundation was first launched in South Africa, with the local foundation acting as a catalyst for the other operations, the Group has placed a strong emphasis on the alignment of its local strategies with those of its regional operations. Consequently, the Group has aligned its CSI programme throughout its operations, with each operation now managing its own regionalised Foundation or CSI programmes.

The MTN board continues to mandate each operation to allocate up to 1% of profit after tax to facilitate its CSI programmes. The operations, responsive to the priorities and social contexts of their specific regions, localise their CSI programmes accordingly.

Although not all operations have launched formal Foundations, they maintain deliberate CSI programmes to uplift the communities in which they operate. MTN Cameroon launched its Foundation in February 2006, it has already been fully constituted, with a board of patrons appointed.

The table below reflects our progress in meeting employment equity targets in South Africa for the period:

  Board members Group executives Genenral managers Management and consultants General staff
Dec
2005
Mar
2005
Mar
2004
Dec
2005
Mar
2005
Mar
2004
Dec
2005
Mar
2005
Mar
2004
Dec
2005
Mar
2005
Mar
2004
Dec
2005
Mar
2005
Mar
2004
Black – Number 5 5 6 8 10 19 20 17 16 146 136 106 1 099 906 1315
Black – % of total 42 42 46 50 58 53 51 44 42 41 40 35 86 82 68
Women – Number 3 3 3 2 3 4 10 7 8 100 91 77 722 630 852
Women – % of total 25 25 23 13 17 24 25 17 22 28 27 25 56 57 44

*Table includes statistics from all MTN Group South Africa based entities

MTN Nigeria launched its Foundation in May 2005. While other operations do not currently have formalised foundations, their CSI programmes adhere to the MTN Group Foundation’s codes of practice, which include: aligning with social development priorities; following global sustainability practices; engaging civil society priorities; and aligning programmes to the Group’s overall business objectives, values, policies and guidelines.

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Measuring success

We measure the success of our CSI programmes in four ways:

By looking at the number of people affected and the

number and nature of communities reached

  • By considering to what extent we have attracted additional partners to invest in a particular programme or project
  • By considering how soon, and to what extent, the project will become – and remain – sustainable when we ultimately end our own practical contribution
  • By taking account of the value CSI programmes add to MTN’s overall business

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Philosophy of partnerships

We are aware of the extent to which local governments and municipalities are to be consulted and involved in local projects – particularly community and rural initiatives. We therefore take great care in partnering with appropriate regional authorities to approve and promote CSI projects. On several occasions, South Africa’s former president, Nelson Mandela, and several key cabinet ministers launched projects. These goodwill acts not only affirm that we are adding value to people’s lives but also confirm their confidence in our ability to change people’s lives for the better and make a positive, sustainable impact.

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Lessons learned

A principal lesson learned from our most recent series of stakeholder engagements is that despite the significant progress we have made, we still need to develop a more strategic approach to our CSI projects. One of our most material successes in recent years has been the introduction of computers and internet access in several schools in our countries of operation. The most important factor has been our ability to identify an appropriate partner agency, or agencies, to manage the projects. These partners are responsible for identifying several suitable schools for the introduction of a computer laboratory. They consider the following key criteria:

  • The availability of adequate learning facilities such as a classroom
  • Access to a reliable source of electricity (or adequate back-up system) in the facility
  • The availability of reliable air-conditioning
  • Adequate security to protect the computers and the learners who will be using the computers, particularly after hours
  • The existence of a well-managed parent-teacher association (PTA): this includes the capacity of the PTA and school governing bodies to raise a portion of the project’s costs and its ability to manage the ongoing maintenance of the computer laboratory

In most cases, our partners have fared well in recommending potential School Connect project recipients, and overseeing the development of computer laboratories at schools selected by the MTN Foundation. However, a recent review of our project has identified at least two schools that have been unable to reap the benefits of the School Connect project after only a few months of operation due to factors such as technical malfunction and their infrastructure being hit by lightning. In such cases, warranties and guarantees provide for replacement of default equipment. It has, nonetheless, become clear that we need to implement more stringent mechanisms to monitor the ongoing success of our CSI initiatives.

In future, we hope to report back to our stakeholders that all our projects are operating all the time by developing appropriate systems to track our return on corporate social investment (ROCSI), just as we would monitor other returns on investments (ROI).

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Responsible use of cellular phones

In support of responsible driving

Holding a mobile phone against any part of the body while driving has been prohibited since 1 August 2000. In South Africa, MTN is a key provider of current research and information on the safe and responsible use of mobile phones to the South African Cellular Telecommunication Association (SACTA). During the past period MTN, in collaboration with SACTA, has contributed to the generation and distribution of documentation to stakeholders regarding the safe and responsible use of mobile phones. MTN encourages subscribers to put their safety first and nowhere more so than while behind the wheel of a motor vehicle. MTN offers subscribers the following guidelines when using a mobile phone while driving:

  • Use a mobile hands-free kit or car kit device while talking and driving
  • Check that the hands-free set is on and working before starting to drive
  • Ensure the hands-free set is securely mounted and not detachable while driving
  • Understand all the features of the mobile phone, particularly speed/voice dial and redial function
  • Only dial when the vehicle is stationary
  • Tell the person on the line that you are driving or suspend the call in heavy traffic or harsh weather
  • Refrain from note-taking or searching for numbers while driving – rather bring the vehicle to a halt, although not in an emergency lane or on a freeway
  • Instead of writing down information or telephone numbers, request these details in SMS form for later use

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Corporate social investmentCorporate social investment: performance highlights

Healthcare:

HIV/AIDS

  • In 2005, MTN South Africa launched a 26-episode programme on national television, called “Beat It”, dealing primarily with HIV/AIDS-related media content. The programme is typically flighted twice a week, reaching an audience in excess of 350 000 young viewers. Each episode deals with additional themes of health, education and enterprise development.
  • As part of its HIV/AIDS job creation programme, MTN South Africa selected 24 HIV-positive individuals and others affected by the disease to be trained in basic business skills by agencies accredited by MTN. In the North-West Province, four young people living with HIV/AIDS are currently generating income from MTN payphone initiatives.
  • MTN Cameroon, in collaboration with the Red Cross, has embarked on a programme of training first-aid workers and sensitisation on HIV/AIDS issues.
  • MTN Rwanda has offered two toll-free lines to the National Commission in charge of fighting HIV/AIDS in the territory. The company has also donated cash to women living with HIV/AIDS.

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Educational:

Schools connectivity programme

  • In 2005, MTN South Africa added 35 media centres to the existing 110 centres. By the end of 2005, 145 000 South African learners and educators had already directly benefited from the project and MTN has to date partnered with all nine provincial education departments on the programme.
  • In Cameroon, the newly launched MTN Foundation’s school connectivity programme had registered 10 schools by the end of 2005, with approximately 25 000 students as beneficiaries.
  • MTN Nigeria, in partnership with Schoolnet, has equipped 24 schools in six states with an average of 21 computers, services, VSAT internet connectivity, teaching aid software and hands-on teacher training. The project has directly impacted 49 524 learners and 2 412 teachers. Phase three commenced in October 2005 and will benefit 13 additional schools.

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Cultural:

MTN art collection

  • In 2005, MTN participated in the groundbreaking find of Shilakoe artworks.
  • MTN received a record number of entries – 75 schools – in its MTN School Art Awards in 2005.
  • The Dumile Feni Retrospective posthumous exhibition was a historical showcasing of some 300 artworks by exiled legend Dumile Feni, the majority of which were unknown to the public. This exhibition toured seven South African cities.

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Technological:

MTN ScienCentres

  • MTN’s ScienCentres hosted National Science Week 2005 as well as activities associated with themed months on Antarctica, biodiversity, African origins and astronomy, sponsored by the Department of Science and Technology.
  • The MTN ScienCentre participated in the fourth Science Centre World Congress in Brazil in 2005.
  • The MTN ScienCentre in Cape Town assisted government in setting up three additional science centres that are operated by government and other corporates.

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Entrepreneurial:

ICTs and rural entrepreneurship programme

  • MTN South Africa established 18 ICT centres during 2005 as part of its ICTs and rural entrepreneurship project, launched in August 2005. The project aims to establish 50 business centres throughout the country to benefit approximately 1 500 rural women entrepreneurs over the next three years.

Community upliftment projects

  • While MTN Uganda has not officially established a Foundation, the operation maintains a host of deliberate social responsibility programmes that aim to enhance the quality of life for local communities. In the past year, these initiatives have included collaborative low-cost housing projects – such as the joint project with Habitat for Humanity, which to date has resulted in building 20 low-cost houses in rural communities
  • MTN Uganda has actively promoted educational programmes, and has become a NEPAD partner by supporting the launch of the first e-school in Uganda
  • MTN Nigeria’s “phone ladies” project has to date empowered 167 women in over 30 communities across Nigeria. Phase two of the project is set to benefit a minimum of 220 women
  • MTN Rwanda has invested USD50 000 in adopting a baby mountain gorilla for five years. This is part of an initiative by the Rwanda Parks and Tourism Board to raise money for gorilla conservation projects. Along similar lines, the company is sponsoring an “adopt a tree” project

Maintaining the theme:

Bridging the digital divide

All MTN foundations’ programmes embrace, in some form, the common theme of “bridging the digital divide”. It is the reason we operate in this market and our programmes have to clearly reflect this objective. The multimedia centres, school connectivity programmes as well as the technological and entrepreneurial programmes, fulfil the educational and entrepreneurial development components, while the healthcare and social upliftment programmes emphasise the need to ensure there is a long-term market, aware and intact, to do business with in future. Our CSI priorities have not changed significantly over the past five years, except that we have begun to place more emphasis on our vision of national and regional development.

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