Safaricom Plc · NSEKE:SCOM
Safaricom — H1 FY2023 Earnings Presentation
37 slides from Safaricom's earnings presentation, Nov 11, 2022
Slide 1: Safaricom PLC HY23 Investor Presentation
Safaricom PLC HY23 Investor Presentation 11 November 2022 th
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or its contents. This presentation does not
Slide 3: Operating Context | Challenging Macroeconomic Environment
Operating Context| Challenging Macroeconomic Environment Consumer price index (CPI) vs Inflation rates in Kenya* Macroeconomic 8.3 8.5 9.2 Highest in 5 Years 7.1 7.9 Rising inflation, shrinking consumer 6.9 6.5 6.5 126.7 5.8 5.7 5.6 125.6 wallet 5.4 5.1 124.2 125.1 123.1 Currency depreciation 120.1
Slide 4: Our refreshed way of thinking about our business and society
…..Our refreshed way of thinking about our business, and our relationship with society ….A renewed sense of inspiration and hope to do what is right by lifting others and making the future better for everyone despite these trying times… 4
Slide 5: Commitment to Our Purpose | Transforming Lives
Commitment to Our Purpose| Transforming Lives We remain committed in creating shared value guided by… True Value Assessment* Our Purpose Transforming Lives Impact on Society Economic value added 10.4x more than profit KShs 393Bn through generated Operations and taxes Our Vision 8% 9% To be a purpose
Slide 6: Our Impact | Environment, Social and Governance focus
Our Impact |Environment, Social and Governance focus Environment Social Governance • Over 1Mn tree planting for • Diversity and inclusion: • Board Diversity: carbon offset programme - 49%: 51% Male/Female Gender Male 64%; Female 36% ongoing ratio, 3.0% of workforce PwDs, 35.6% Women in senior • 85%
Slide 7: The Pamoja Tuungane Campaign
Safaricom is Rallying a Private Sector Response to the Prolonged Drought in Kenya Total Cash Donations; KShs 104Mn • Safaricom PLC & M-PESA Foundation; Bonga Points worth KShs 20.1Mn Donations KShs 100Mn • KCB Foundation; KShs 2.5Mn KShs 8.0Mn in Kind by Naivas, Quick • Huawei; KShs 1.0Mn donated by
Slide 8: Consumer & Enterprise Segments | Driving Relevant Products and Services
Consumer & Enterprise Segments| Driving Relevant Products and Services Reduced Fuliza pricing by Driving affordability for mobile Digital content services upto 50% for the daily fee data, -31.7% price reduction enhancing personalized for transactions upto KShs resulting in usage growth of viewing, f
Slide 9: 5G | Commercially Launched After Months of Successful Piloting
5G| Commercially Launched After Months of Successful Piloting Our 5G Spectrum 35 5G Sites in 5 Towns 60MHz 65MHz 2600 band (5G & 4G LTE* & TDD*) 3500 band Expanding to 200 Upto Sites by March 2023 100 Speeds offered Mbps •High speeds •Low latency Our 5G offering: •5G WiFi •Fixed Wireless Access •Rel
Slide 10: Our Strategy | On Track to Deliver Our FY23 Strategic Focus
Our Strategy| On Track to Deliver Our FY23 Strategic Focus Purpose Transforming lives Vision To be a purpose-led Technology Company Transformation Goal A digital-first, insights-led organization that enables platforms and ecosystem partnerships Deepen Customer Engagement & Experience FY23 Focus; Acc
Slide 11: Performance Against our Strategy
Performance Against our Strategy Market shares Network M-PESA • 65.8% Market Share • 4G Everywhere- 97% Coverage • Reduced Fuliza pricing by upto • 66.1% Voice traffic • Commercially launched 5G 50%, with no daily fee upto • 90.3% SMS share services with 35 sites 3 days • 34.3% Fixed Data • M-PESA c
Slide 12: Ethiopia Update
ETHIOPIA UPDATE (Safaricom
Slide 13: Ethiopia | Our Opportunity to Transform Lives for a Digital Future
Ethiopia| Our Opportunity to Transform Lives for a Digital Future Large population Over 75Mn >115Mn of population below the age of 25 years High affinity of Data usage over 3.7Mn 99% of all payments are done in Cash* Monthly active TikTok users Large cash based economy large bank branches and ATM ne
Slide 14: Ethiopia | Commercial Operations Launched on 6th October 2022
Ethiopia| Commercial Operations Launched on 6 October 2022 th Our learning experience from 16 cities launched the 16 cities Addis Ababa Debre Birhan • Validated consumer demand with 20k average daily 6th October 17th September Dessie customers onboarded after Addis Ababa launch Kombolcha 25th Octobe
Slide 15: Ethiopia | Transforming Lives for a Digital Future
Ethiopia| Transforming Lives for a Digital Future What we launched Network roll out • Prepay products- Data, Voice, SMS • Digital EKYC process 561 Active 2G/3G/4G sites 2 Live data centers • State of the art outsourced call centre • Branded range of Safaricom devices – 2G, 4G Feature phone, 4G Smart
Slide 16: Ethiopia | Our Value Proposition
Ethiopia| Our Value Proposition Simplified Device Best Biometric products and affordability technology- registration price point and availability 4G Wide and Best data accessible Focus on network distribution (Subject to license Purpose network award) 16
Slide 17: HY23 Group Financial Performance
HY23 Group Financial Performance 17
Slide 18: HY23 Performance | Slowdown Attributed to Macro Backdrop & Ethiopia Start-up Losses
HY23 Performance | Slowdown Attributed to Macro Backdrop & Ethiopia Start-up Losses Service HY23 HY23 HY23 Net HY23 Revenue KShs 144.8Bn EBITDA KShs 80.1Bn EBIT KShs 58.4Bn Income KShs 37.6Bn Safaricom Kenya Performance +4.6% YoY +3.1% YoY +0.3% YoY +0.6% YoY +5.0% YoY* +3.4% YoY * +0.8% YoY * +1.3%
Slide 19: Productivity & Efficiency | Responding to Macroeconomic Challenges
Productivity & Efficiency| Responding to Macroeconomic Challenges Our Productivity Pillars Leveraging on Big Our Cost Saving Achievements Data & Analytics (KShs) to; In order Operating model transformation to; FY21 FY22 Predict customer pain H1: 3.9Bn points and address them H1: 2.3Bn Smart procurem
Slide 20: The Numbers in Details
THE NUMBERS IN DETAILS 20
Slide 21: Service Revenue | Growth Supported by M-PESA and Mobile Data
Service Revenue| Growth Supported by M-PESA and Mobile Data Contribution to Service Revenue Growth (KShs Bn) Interconnect Revenue Impacted Evolution of Service Revenue Profile Largely Due to MTR Revision Others 11.2% FTTH 1.5% 4.5 2.7 0.9 0.3 144.8 Fixed 138.4 Enterprise (1.6) (0.5) 18.0% 3.40 2.5%
Slide 22: M-PESA | Slowdown During an Election Year
M-PESA| Slowdown During an Election Year, Growth Normalizing to Pre-COVID-19 Levels M-PESA Revenue (KShs Bn) Contribution to M-PESA growth 56.9 45.8% Business Payments, +12.3% YoY 55.4 C2B, +7.9% B2C, +10.7% B2B, +109.1% LNM, +28.9% 2.6ppts 52.3 18.4% 8.7% Global Payments, +23.2% YoY Remittances (IM
Slide 23: M-PESA | Sustained Momentum Driven by Increased Usage
M-PESA| Sustained Momentum Driven by Increased Usage M-PESA Value & Volume +32.0% YoY 18.1 Chargeable Transactions Per One Month Active Customers 15.8 +32.0% YoY 13.7 H1 FY23 22.4 9.6 H2 FY22 21.2 8.5 7.3 H1 FY22 19.3 M-PESA Value (KShs Trn) M-PESA Volume (Bn) H1 FY22 H2 FY22 H1 FY23 M-PESA Chargeab
Slide 24: M-PESA Apps | Two-sided Ecosystem Powering Digital Lifestyles
M-PESA Apps | Two-sided Ecosystem Powering Digital Lifestyles and E-Commerce Consumer Super App Business Super App +6.3Mn 38.9 >500k 85.1% Downloads, Transactions per Downloads Activity rate 18.1% Activity month per active Rate customer +1.0Mn >224.9Mn Monthly 118.8k >23.6Mn Transactions Transaction
Slide 25: Mobile Data | Double Digit Growth Driven by Increased Usage
Mobile Data| Double Digit Growth Driven by Increased Usage Mobile Data Performance Latent Potential for Growth Remains 26.3 24.8 23.6 16.0% 13.0% +10.7% YoY 11.3% 10.0% 18.5 19.2 +13.6% YoY 17.3 +24.8% YoY 7.9% 13.1 12.5 +23.7% YoY 12.1 11.5 11.0 6.3% 9.7 7.7 8.4 10.0 6.8 8.0 6.8 H1 FY22 H2 FY22 H1
Slide 26: Fixed Service | Accelerated Connections and Customer Acquisition
Fixed Service| Accelerated Connections and Customer Acquisition Drive Revenue Growth Fixed Service Revenue FTTH 166.0 173.2 23.0% 153.4 21.1% 2,320 6.8 2,308 5.7 5.5 2,292 15.7% 63.9% 52.9% 54.8% H1 FY22 H2 FY22 H1 FY23 Closing Customers ('000's) ARPU*** (KShs) Conversion Rate (%) H1 FY22 H2 FY22 H1
Slide 27: Voice & Messaging | Driving Affordability
Voice & Messaging| Driving Affordability Voice Revenue Rate per Min Voice Customers 5.6% 41.8 41.5 1.50 -2.6% 3.2% 28.4 1.42 3.1% 39.9 27.1 Voice -1.4% -20.8% 1.41 0.9% 26.7 -3.8% -1.6% H1 FY22 H2 FY22 H1 FY23 H1 FY22 H2 FY22 H1 FY23 H1 FY22 H2 FY22 H1 FY23 Voice Revenue (KShs Bn) % YoY Rate per Min
Slide 28: New Growth Areas | Scalable Businesses Gaining Momentum
New Growth Areas| Scalable Businesses Gaining Momentum New Growth Areas Revenue (KShs Bn) 0.66 +191.1% +57.9% +414.8% +23.7% YoY YoY YoY YoY 0.35 0.33 0.32 0.26 0.23 0.22 0.06 ICT Revenue IOT Revenue Digifarm Revenue Content Revenue HY22 HY23 28
Slide 29: Ethiopia Performance | Key Business Metrics Since Launch
Ethiopia Performance| Key Business Metrics Since Launch One month active customers 711 180k as at 31 Oct Average MBs Total Customers onboarded of use per active Data as at 30 Sep 2022 Voice 591k customers for Oct 2022 740k as at 31 Oct 2022 with Data 407k 20k daily average since launch KShs 9.1Mn 30
Slide 30: Group Net Income | Slowdown from Ethiopia Startup Costs
Group Net Income| Slowdown from Ethiopia Startup Costs 1.39 0.18 4.29 (1.89) 40.58 39.21 (2.22) (0.39) 37.55 (3.03) 33.47 2.98 +3.5% (5.77) YoY (1.29) +0.6% YoY** -10.0% YoY** HY22 Improved Net Finance Share of Operating Depreciation Taxation HY23 Ethiopia HY23 Ethiopia Ethiopia Minority HY23 Net In
Slide 31: Overall HY23 Group Performance
Overall HY23 Group Performance Safaricom Kenya Safaricom Ethiopia Safaricom Group Safaricom Kenya Safaricom Ethiopia Safaricom Group (KShs Mn) (KShs Mn) (KShs Mn) % YoY % YoY % YoY (KShs Mn) Service Revenue 144,816.4 9.1 144,825.4 4.6% 100.0% 4.6% Total Revenue 153,332.1 98.3 153,430.3 4.8% 100.0% 4
Slide 32: CAPEX | Diversified Investment to Unlock Potential in New Growth Areas
CAPEX| Diversified Investment to Unlock Potential in New Growth Areas HY23 Capex Split Kenya Ethiopia Sites 2.6%, Operations, Operations, 3.5% IT Capex IT Capex 12.8% 24.7% 29.0% Radio Access Transmission 13.8% 49.2% Radio Access 5.8% +5.9ppts 12.4% 15.8% Core 20.7% Kenya Ethiopia Fixed 9.8% Network
Slide 33: Ethiopia | Funding and Medium Term Outlook
Ethiopia| Funding and Medium Term Outlook Funding sources EBITDA break-even Capex Investment • Equity in Y4 • Vendor financing • Third party financing (DFI, EBITDA Margin Y10 est. at Local Banks) 5YR Plan; around 40% USD 1.5-2.0Bn Total Funding by; Y1-Y2; Enablers • Shareholders* USD 247Mn Y1-Y2; US
Slide 34: Looking Ahead
LOOKING AHEAD (Safaricom
Slide 35: H2 FY23 Outlook
H2 FY23 Outlook Risks Opportunities • Inflationary pressure, shrinking consumer wallet • Currency depreciation • Accelerate merchant acquisition and • MTR impact lending Kenya • Chipset shortage • Driving targeted customer Business • Impact of smartphone tax, slowing down value propositions smartpho
Slide 36: FY23 Guidance | Revision to Reflect Unveiling Macro-economic Challenges
FY23 Guidance| Revision to Reflect Unveiling Macro-economic Challenges Kenya Ethiopia Group EBIT EBIT EBIT 112-115Bn (25-22)Bn 87-93Bn Initial CAPEX Initial CAPEX Initial CAPEX Guidance 40-43Bn Guidance 60-65Bn Guidance 100-108Bn EBIT EBIT EBIT 120-123Bn (33-30)Bn 87-93Bn CAPEX CAPEX CAPEX 40-43Bn 6
Slide 37: Tuingane: Let's Go Beyond
TUINGANE Let’s Go Beyond Simple * Transparent * Honest FOR YOU