Safaricom Plc · NSEKE:SCOM
Safaricom — FY2019 Earnings Presentation
32 slides from Safaricom's earnings presentation, May 3, 2019
Slide 1: Safaricom PLC 2019 Full Year Results Presentation
Safaricom PLC 2019 Full Year Results Presentation 3 May 2019 rd
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: Brighter Macro Outlook
BRIGHTER MACRO OUTLOOK OPERATING ENVIRONMENT REMAINS TOUGH HEADWINDS: • Regulatory risk • Pressure on consumer wallet due to increased taxes • Changing competitive landscape • Delayed rains ACHIEVEMENTS: • Solid growth • Sustained network investments • Sustained contribution to the society • Increas
Slide 4: Our Commitment: True to Our Purpose
OUR COMMITMENT TRUE TO OUR PURPOSE Innovations Partnerships Communities O4
Slide 5: People, Purpose: Impact on Society
PEOPLE, PURPOSE IMPACT ON SOCIETY 65k+ mothers benefitted Close to 900k direct & from Maternal and indirect jobs created Child Health Programme. INVESTMENT IN 266 women benefitted COMMUNITIES Water supplied to from Fistula surgeries 20k+ people THROUGH STRATEGIC PARTNERSHIPS Fulfilling 500 160 children
Slide 6: Sustaining Customer Growth
SUSTAINING CUSTOMER GROWTH ‘NAWE KILA WAKATI’ (ALWAYS WITH YOU) OUTCOMES ACTIONS • Regained leadership as the most trusted company • Repriced data bundles • Customer growth tripled CHALLENGES • Absorbed taxes for bundles in H2 compared to H1 • Stricter governance on • Shrinking of the premium servic
Slide 7: M-PESA: Enhancing Customer Engagements
M-PESA ENHANCING CUSTOMER ENGAGEMENTS • Capacity upgrade to 1,200 transactions per second • +2.1m active customers 10.2% YoY • +10k agents 6.7% YoY • +22k active merchants 21.6% YoY 07
Slide 8: M-PESA: Enriching the Ecosystem
M-PESA ENRICHING THE ECOSYSTEM M-PESA GLOBAL PayPal - 11k+ customers transact monthly. LENDING (FULIZA) PAYMENTS Google Playstore - over 5.2k apps purchased monthly. • Revolutionising credit Western Union – Customers can send • Value chain extension for over • Mobile money overdraft facility 130K en
Slide 9: Empowering Businesses: Digital Partner of Choice
EMPOWERING BUSINESSES: DIGITAL PARTNER OF CHOICE OPPORTUNITIES ACTIONS • Improve existing products and • Differentiators overlay new solutions (Fixed over LTE, Business Wi-Fi, Digital services) • Enhance customer experience • Digital platforms • Customer acquisition and retention • Bespoke vertical
Slide 10: Enhancing Digital Experience
ENHANCING DIGITAL EXPERIENCE DRIVING EFFICIENCY CUSTOMER CARE: • Chat bot: 102k unique users • My Safaricom App: 700k+ daily users DISTRIBUTION: • USSD: 4.9M+ daily users • Digitising distribution & sales force automation PEOPLE • Voice Biometrics: (200K outlets registered) 1.5m+ enrolment • Persona
Slide 11: Connecting People to People, Knowledge and Opportunities
CONNECTING PEOPLE TO PEOPLE, KNOWLEDGE AND OPPORTUNITIES ENABLERS Fibre 3G 4G Homes Passed Over 6,700km 93% coverage 57% coverage Close to 300k From 5,000km FY18 from 86% FY 18 from 35% FY 18 From 140k FY18 SERVICES Self service Internet of Cloud VoLTE channels things 11
Slide 12: Powering Digital Lifestyles
POWERING DIGITAL LIFESTYLES KENYA’S BEST 4G+ NETWORK Best 4G+ Network for Social Education Gaming Video Entertainment HD Video Calls Enablers Most Affordable Nearly doubling Launch of VoLTE for 4G Smartphones 4G sites to 5k HD Voice and Video Calls Every town in Kenya 80% of the Homes passed with (6
Slide 13: Earnings Outperform Guidance
EARNINGS OUTPERFORM GUIDANCE EBIT Capex Achieved FY 19 Guidance KShs 85-89Bn KShs 89.6Bn FY 19 Guidance KShs 35-38Bn Achieved KShs 37.3Bn Guidance and performance is reported on an IAS 18 basis and therefore does not reflect the adoption of IFRS 15. 13
Slide 14: The Numbers
THE NUMBERS *Following the modified retrospective adoption of IFRS 15 - Revenue from Contracts with Customers on 1 April 2018, the Group’s results for the year ended 31 March 2019 are on an IFRS 15 basis, whereas the results for the year ended 31 March 2018 are (as previously reported) on an IAS 18 b
Slide 15: Key Financials
KEY FINANCIALS SUSTAINED MOMENTUM ON EPS GROWTH AND FREE CASH FLOW 7.0% YoY 13.1% YoY 14.7% YoY 13.9% YoY Service Revenue EBIT EPS Free Cashflow KShs 240.3Bn FY 19 KShs 89.6Bn FY 19 KShs 1.58 FY 19 KShs 63.1Bn FY 19 KShs 224.5Bn FY 18 KShs 79.3Bn FY 18 KShs 1.38 FY 18 KShs 55.4Bn FY 18 15
Slide 16: Customer Focus
CUSTOMER FOCUS STRONG RECOVERY IN CUSTOMER GROWTH 2.3 Contribution from customers *ARPU Service Revenue 0.4 HY 19 FY 19 HY 19 3.1% 4.6% 7.7% Customer Net Additions (m) + = FY 19 5.2% 1.8% 7.0% 31.8 million 90 day active customers (+ 7.7% YoY) *ARPU based on 30 day active customers 16
Slide 17: Service Revenue
SERVICE REVENUE STRONG MOMENTUM IN GROWTH DRIVEN BY M-PESA Contribution to Service Revenue Growth (KShs Bn) Evolution of Revenue Profile 1.5 (0.2) 240.3 2.3 12.1 Fixed Others Data 5.8% Fixed 2.1% Data Others Mobile 224.5 Data 3.4% 5.4% 11.9% Mobile Data 16.1% Voice Voice FY 16 Outgoing Outgoing 47.1%
Slide 18: M-PESA
M-PESA P2P AND NEW BUSINESS DRIVES GROWTH Contribution to M-PESA Growth IMT 79.2% YoY: C2B +25.5% YoY 0.6ppts New Business Money transfer, Paypal, B2C +18.2% YoY P2P 7.1ppts 7.1ppts 5.8ppts LNM +40.9% YoY 7.5ppts +26.9% Payments +23.3% 0.7ppts B2B +4.4% YoY YoY 25.3% YoY: YoY 19.2% Savings and Lendi
Slide 19: M-PESA: Increasing Velocity in the Ecosystem
M-PESA INCREASING VELOCITY IN THE ECO-SYSTEM Opportunity to Drive Penetration and Usage Opportunity for Relevant Use Cases 21.1% 23.2% CAGR CAGR 12.2 18.0% 12.2 10.9% 11.0 22.6 9.6 7.4 13.0% 13.3% 16.6 7.4 FY 16 FY 17 FY 18 FY 19 Withdrawals Volume growth YoY Chargeable Transactions FY 16 FY 19 FY16
Slide 20: Mobile Data
MOBILE DATA PRICE RATIONALISATION IMPACTS GROWTH Mobile Data Revenue (KShs Bn) Data Monetisation 6.4% 727.6 24.0% YoY 0.42 YoY 421.0 HY2 18.8Bn 19.2Bn 0.24 172.9 175.7 HY1 17.5Bn 19.5Bn FY 18 FY 19 FY 18 FY 19 FY 18 FY 19 FY 18 FY 19 Revenue per megabyte usage per customer *ARPU (30 Day Active Custo
Slide 21: Fixed Service
FIXED SERVICE CONNECTIONS DRIVE REVENUE FTTH FTTB Fixed Service Revenue (KShs Bn) 38.0% 6.5% 34.0% YoY FY 19 8.2 6.8k 297.9k 6.4k +22.7% YoY 23.9% YoY FY 18 6.7 142.1k 107.8k 2.4k 48.6k 2.0k FY 18 FY 19 Ready Buildings Customer Links Homes Passed Homes Connected FY 18 FY 19 Penetration FTTH ARPU 2.7
Slide 22: EBIT
EBIT STRONG PERFORMANCE DRIVEN BY REVENUE GROWTH AND COST OPTIMISATION Service Revenue FY 19 EBIT (KShs Bn) and EBIT (KShs Bn) 240.3 15.0 (0.1) (1.8) (1.8) 224.5 (1.0) 89.6 79.3 89.6 79.3 33.9% 35.8% FY 18 FY 19 FY 18 Contribution Nopex Payroll Depreciation Other FY 19 Revenues EBIT EBIT Margin Marg
Slide 23: Cashflow and Capex
CASHFLOW AND CAPEX IMPROVED FINANCIAL STRENGTH DESPITE CONTINUED INVESTMENTS 124.9 (0.01) (44.1) Cash Flow Cash from (KShs Bn) Operations (KShs Bn) 63.1 (37.3) 55.4 37.3 (27.5) 36.4 %% (8.0) 2.1 0.4 20.0 0.1 9.5 FY 18 FY 19 FY 18 EBITDA Net Debt Dividends Capex Tax Paid Short Term Working Net Intere
Slide 24: FY20 Guidance
FY 20 GUIDANCE EBIT Capex FY 20 Guidance From KShs 89.0Bn KShs 93-97Bn KShs 37.3Bn From FY 20 Guidance KShs 36-39Bn Our guidance for 2020 reflects the adoption of the IFRS 15 and IFRS 16 accounting standards and excludes M&A and spectrum. 24
Slide 25: FY Proposed Dividends
FY 19 PROPOSED DIVIDENDS FY 19 FY 18 KShs 44.07Bn KShs 50.08Bn 1.10 DPS 1.25 DPS 13.4% YoY Growth 13.6% YoY Growth 25
Slide 26: FY Proposed Special Dividends
FY 19 PROPOSED SPECIAL DIVIDENDS KShs 24.84Bn 0.62 DPS 26
Slide 27: Safaricom Twaweza
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Slide 28: Appendices
Appendices *Following the modified retrospective adoption of IFRS 15 - Revenue from Contracts with Customers on 1 April 2018, the Group’s results for the year ended 31 March 2019 are on an IFRS 15 basis, whereas the results for the year ended 31 March 2018 are (as previously reported) on an IAS 18 ba
Slide 29: Statement of Income | Key Highlights
Statement of Income I Key Highlights FY 19 FY 19 FY 18 YoY% KShs Bn IFRS 15 IAS 18 IAS 18 IAS 18 basis Voice revenue (Outgoing and Incoming) 95.80 95.94 95.64 0.3% Messaging revenue 19.61 17.50 17.72 (1.3%) Mobile data revenue 36.27 38.69 36.36 6.4% Fixed service revenue 8.10 8.19 6.67 22.7% M-PESA
Slide 30: Statement of Income | Service Revenue to Contribution Margin
Statement of Income I Service Revenue to Contribution Margin FY 19 FY 19 FY 18 YoY% KShs Bn IFRS 15 IAS 18 IAS 18 IAS 18 basis Service Revenue 239.77 240.30 224.54 7.0% Handset and other revenue 9.45 9.58 8.98 6.7% Construction revenue 0.60 0.60 0.20 >100.0% Other Income 0.46 0.46 0.51 (8.9%) Total
Slide 31: Statement of Income | Contribution Margin to Net Income
Statement of Income I Contribution Margin to Net Income FY 19 FY 19 FY 18 YoY% KShs Bn IFRS 15 IAS 18 IAS 18 IAS 18 basis Contribution margin 177.89 178.53 163.47 9.2% Operating costs (53.65) (53.65) (50.61) 5.8% Forex Loss on trading activities 0.06 0.06 (0.03) (<100.0%) EBITDA 124.30 124.94 112.83
Slide 32: Free Cashflow | Key Movements
Free Cashflow I Key Movements FY 19 FY 19 FY18 YoY% KShs Bn IFRS 15 IAS 18 IAS 18 IAS 18 basis Cashflow Trading cashflow (EBITDA) 124.30 124.94 112.83 10.7% Movement in inventory (0.17) (0.17) (0.23) (26.1%) Movement in receivables (2.10) (2.04) 1.95 (<100.0%) Movement in payables 2.20 2.14 2.77 (22.7%