Safaricom Plc · NSEKE:SCOM
Safaricom — FY2023 Earnings Presentation
49 slides from Safaricom's earnings presentation, May 11, 2023
Slide 1: Safaricom PLC FY23 Investor Presentation
Safaricom PLC FY23 Investor Presentation 11 May 2023 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: Business Overview; Purpose & Strategy
BUSINESS OVERVIEW; PURPOSE & STRATEGY PETER NDEGWA, CHIEF EXECUTIVE OFFICER 3
Slide 4: Operating Environment: Navigating a Complex Operating Context in Kenya
OPERATING ENVIRONMENT | Navigating a Complex Operating Context in Kenya Macro-Economic Regulatory Customer Insights • High inflation (food, energy costs) • Mobile Termination Rates (MTR) reduction • Consumer seeking more value and • Currency depreciation and tight liquidity • Fiscal pressure (increa
Slide 5: Our Purpose Strategy: Embedding Purpose at the Core of our Business
OUR PURPOSE STRATEGY | Embedding Purpose at the Core of our Business Transforming lives Vision To be a purpose-led Technology Company Our Mission To Embed Purpose at the Core of our Business Growth The Pillars Shared Value Planet Responsible Business Our people & the world around us Our Promise Depl
Slide 6: Our Impact: A purpose driven Company
OUR IMPACT | A purpose driven Company Our SDG Guiding Framework FINANCIAL PLANET CONNECTIVITY INCLUSION 1.3Mn trees grown 97%, 4G population 12k direct and coverage at 84%* in Kenya indirect livelihoods with M-PESA directly 20.3Mn Smartphones impacting 32.6Mn lives Targeting 5Mn trees on our Network
Slide 7: Purpose: Transforming the Lives of our Communities
PURPOSE | Transforming the Lives of our Communities Drought response Tree Growing Program KShs 350Mn donations by Safaricom PLC and the Safaricom 5 million tree growing initiative in partnership with Kenya Forest & M-PESA Foundations Services (KFS) to offset 26% of our carbon emissions KShs 12.9Mn B
Slide 8: Purpose: Embedding ESG Framework in our Operations
PURPOSE | Embedding ESG Framework in our Operations Environment (E) Social (S) Governance (G) 1.3Mn trees grown impacting 12k Diversity & Inclusion; Board Diversity: 55% Male, direct and indirect livelihoods, 3.0% of all staff are PWDs 45% Female 1300 ha of degraded land restored 40% female at senio
Slide 9: Our Business Strategy: Mid Way to Delivery of 5-Year Strategy
OUR BUSINESS STRATEGY | Mid Way to the Delivery of Our 5-YR Strategy to FY25 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 & Experien
Slide 10: Our 5YR Strategy: Key Achievements in the Execution Cycle
OUR 5YR STRATEGY | Key Achievements in the Execution Cycle FY22 Focus FY23 Focus FY21 To accelerate new 5 YR Vision Launched our 5YR To establish a To be a purpose-led Strategy in Sep 2020 customer-obsessed, growth areas Technology company by digital-first organisation delivering superior 2025 custo
Slide 11: Cementing Safaricom as the Technology Innovation Hub in Kenya
Cementing Safaricom as the Technology Innovation Hub in Kenya M-PESA Go Merchant M-PESA GlobalPay Enhanced customer For Teens (10-17yrs) Interoperability; 205 5G Sites covering Virtual Visa card experiences Launch; Nov 2022 Paybill/Buy Goods 23 out of 47 Counties ZURI Launch; July 2022 Launch; June
Slide 12: Driving Value to Help our Customers Cope With the Tough Macros
Driving Value to Help our Customers Cope With the Tough Macros ZERO CHARGES SECURED CONNECTIVITY FULIZA WITHDRAWAL FREEDOM VIA CONSOLIDATION SWEET SPOT ACCESSIBLE PRICES FOR MERCHANT PAYMENTS FOR BUSINESS 12
Slide 13: Leveraging Lifestyle for Holistic Customer Propositions
Leveraging Lifestyle for Holistic Customer Propositions & Communication CONVENIENCE FOR TRAVELLERS WORLD CUP WITH SHOWMAX EASE OF MANAGING BUSINESS GLOBAL CONVENIENCE 13
Slide 14: Government Enablement: Technology Partner of Choice for Government
GOVERNMENT ENABLEMENT | Technnology Partner of Choice for Government Hustler Fund Women Enterprise MyCounty Other Phase 1 Fund App Partnerships Launched Launched Supporting county Fertilizer distribution 30th November 2022 2nd March 2023 governments in digitising 2.0Mn bags distributed to their serv
Slide 15: Kenya Business: Strong Execution in a Challenging Macro Environment
KENYA BUSINESS | Strong Execution in a Challenging Macro Environment New Growth Market Customer** Network Areas Share* +102.8% YoY 65.6% #1 Brand love Coverage; 2G/3G/4G; 97% IoT & Cloud revenue adding Overall Subscriber share KShs 1.8Bn in revenue 78% Network satisfaction score 5G Sites (205 sites
Slide 16: Productivity: Driving Sustainable Operations
PRODUCTIVITY | Driving Sustainable Operations And Whilst By To Delivering Funding Mitigating new Protect More growth Emerging Margins & Value to areas Risks Profitability Customers Reduction of Geographical expansion into MTR reduction by 41% Maximizing benefits M-PESA prices by Ethiopia and acceler
Slide 17: Ethiopia Update
Ta ETHIOPIA UPDATE
Slide 18: Ethiopia: Market Context & Opportunity
ETHIOPIA | Market Context & Opportunity Opportunity Population 63Mn (+18yrs) 13.5Mn (14-18yrs) 22% Urban 78% Rural 119Mn 35% Financially Included 57% Mobile Penetration $4.2Bn Annual Inward Remittance 10K Large Enterprises 240k Small & Micro Enterprises Source – Ethiopian Diaspora Agency(Fiscal year
Slide 19: Ethiopia: Operating Environment
ETHIOPIA | Operating Environment Macro economic Regulatory Political environment progress GDP - Growth in 2023 expected to be 6.2% compared to average of 9.1% (2011- Ethio telecom Privatization – 45% of Tigray - Northern Ethiopia Region, 2020) Ethio telecom privatization was announced Tigray has ope
Slide 20: Our Ethiopia Strategy: Further Ahead Together
OUR ETHIOPIA STRATEGY | Further Ahead Together Purpose Transforming Lives for a Digital Future Vision Loved and Innovative Brand Brand Promise Further Ahead Together Customer obsessed Trust & Respect Values Earn Customer Loyalty Get it done, Together Create the Future Experiment, Learn Fast Transfor
Slide 21: Ethiopia: Progress Since Launch on 6th October 2022
ETHIOPIA | Progress Since Launch on 6th October 2022 Customer Network Distribution & Brand Customer Value Devices Onboarding Customer Care Proposition Over 5k acquisition Rolled out 114 exclusive >90% brand Acquisition offer Range of locations equipped branded distributor awareness in focused on Dat
Slide 22: Ethiopia: Performance Highlights
ETHIOPIA | Performance Highlights 3.0Mn 2.1Mn Population 22 Gross adds 90-day active customers FY24 Target; 10Mn Coverage Cities covered 22% Mobile Data Voice Usage 114 24 Distributor Customer Penetration 67% of 90-day 55.4 mins/customer/month Data Usage Distributor shops active customer base 1.5GB/
Slide 23: Ethiopia: Key Learnings
ETHIOPIA | Key Learnings Network rollout Distribution Grid availability Accelerate contiguous network Scale distribution aligned to network coverage expansion Power shortages/availability coverage focused on key challenges economic and population focusing on quality customer clusters acquisition Cus
Slide 24: Ethiopia: Launching M-PESA in Ethiopia
ETHIOPIA | Launching M-PESA in Ethiopia Investment License License award in 1 Fee USD 150Mn paid May 2023 2 Commercial and Commercial Launch 3 technical readiness in Q2 4 underway 24
Slide 25: Performance Highlights
PERFORMANCE HIGHLIGHTS 25
Slide 26: FY23 Performance: Earnings in line with Guidance
FY23 Performance | Earnings in line with Guidance EBIT CAPEX EBIT CAPEX KShs 85.0Bn KShs 106.4Bn KShs 116.3Bn KShs 40.4Bn -22.1% YoY +113.7% YoY +1.8% YoY +2.7% YoY* +2.6% YoY KShs 91.7Bn** KShs 96.1Bn** -16.0% YoY +93.1% YoY FY23 Guidance 112 - 115Bn 40 - 43Bn 87 - 93Bn 100 - 108Bn KShs Safaricom G
Slide 27: Financial Performance
FINANCIAL PERFORMANCE DILIP PAL, CHIEF FINANCE OFFICER 27
Slide 28: Service Revenue: Resilient Performance underpinned by M-PESA and Mobile Data
SERVICE REVENUE | Resilient Performance underpinned by M-PESA and Mobile Data Growth Evolution of Service Revenue Profiles Contribution to Service Revenue Growth (KShs Bn) Others 10.9% FTTH 1.5% 9.5 5.2 1.5 0.7 295.2 2.0 297.2 Fixed 281.1 (2.3) (0.5) Enterprise 2.5% M-PESA 38.3% Mobile data +5.0% 17
Slide 29: M-PESA: Improved Growth Momentum in H2
M-PESA | Improved Growth Momentum in H2 Contribution to M-PESA Growth (KShs Bn) 0.4 0.1 117.2 3.2 M-PESA Revenue (KShs Bn) 5.8 107.7 30.7 29.6 12.2% 11.2% 28.5 28.4 9.2% +8.8% YoY 27.4 6.3% 5.8% Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 M-PESA Revenue (KShs Bn) YoY Growth (%) FY22 Personal Payments Bu
Slide 30: M-PESA: Sustained Momentum Driven by Increased Usage in H2
M-PESA | Sustained Momentum Driven by Increased Usage in H2 ARPU & Chargeable Transactions per one-month M- PESA Value & Volume active customers +21.4% 18.1 17.8 YoY 24.6 FY23 315.4 15.8 +33.5% 309.9 YoY FY23 11.4 22.4 9.6 8.5 21.2 307.1 H2 FY22 H1 FY23 H2 FY23 M-PESA Value (Trn) M-PESA Volume (Bn)
Slide 31: M-PESA Apps: Super Apps Powering Digital Lifestyles and e-Commerce
M-PESA APPs | Super Apps Powering Digital Lifestyles and e-Commerce +7.4 Mn >500k Downloads Downloads 34.1 251.6k 1.2 Mn Transactions Active 85.1% Monthly per month per Merchants Activity active active using the rate customers customer app KShs 658.2 >51.2Mn KShs 6.7 Bn Consumer >489.1 Mn Mn Revenue
Slide 32: Mobile Data: Double Digit Growth Driven by Increased Usage
MOBILE DATA | Double Digit Growth Driven by Increased Usage Mobile Data Revenue (KShs Bn) Increased usage as 4G traffic continues to grow 27.3 24.8 26.3 +10.0 YoY% 19.2 20.3 11.3% 10.0% 18.5 +8.5% YoY +20.6% YoY 10.0% 12.5 13.1 13.5 +14.7%YoY 12.1 13.2 8.0 11.0 6.8 6.6 7.7 8.4 8.9 2.7 3.4 3.8 H2 FY2
Slide 33: Fixed Service: Robust Performance Driven by Connections
Fixed Service | Robust Performance Driven by Connections Fixed Service Revenue FTTH 23.0% 2,350 6.7 166.0 173.2 195.7 6.8 15.7% 2,320 17.3% 2,292 52.9% 54.8% 59.2% 5.7 H2 FY22 H1 FY23 H2 FY23 Closing customers ('000's) ARPU (KShs) Conversion Rate (%)*** H2 FY22 H1 FY23 H2 FY23 Fixed Enterprise 12.3
Slide 34: Voice & Messaging: Strong H2 Performance Driven by Growth in Usage
VOICE & MESSAGING | Strong H2 Performance Driven by Growth in Usage Voice Messaging 41.8 5.9 255.9 45.4 50.7 241.5 42.0 250.2 41.0 Revenue 39.9 5.0 5.4 18.9% -7.7% -1.4% -3.8% -1.7% -22.0% H2 FY22 H1 FY23 H2 FY23 H2 FY22 H1 FY23 H2 FY23 Voice Revenue (KShs Bn) ARPU* YoY Growth (%) Messaging Revenue
Slide 35: New Growth Areas: Broadening our Scope to Seize New Opportunities
New Growth Areas | Broadening our Scope to Seize New Opportunities Revenue (KShs Bn) Customers 1.51 2,102 1.1 +58.4% YoY +49.9% YoY 0.95 +23.6% 1,496 1,402 YoY 0.8 0.7 1,210 +48.8% +149.8% +61.0% YoY YoY YoY 0.5 0.5 +11.7% YoY 0.4 +49.8% 603 YoY 540 526 351 Cloud & ICT IOT Revenue Content Revenue M-
Slide 36: Ethiopia Performance: Customer & Usage Numbers
Ethiopia Performance | Customer & Usage Numbers Voice Data Messaging Customers Customers Customers 90-Day active Customers 2.0Mn 1.4Mn 0.7Mn 55.4 1.5 GB 10.8 Minutes of Use per per chargeable SMS per User Usage SAFARICOM Subscriber Outgoing customer 6.8 8.1 10.1 ETHIOPIA NUMBERS days of active usage
Slide 37: Ethiopia Performance: Revenue & ARPU
Ethiopia Performance | Revenue & ARPU Service Revenue KShs 0.6Bn Messaging Voice Revenue Revenue* KShs 0.1Bn Data Revenue Revenue Total Revenue KShs 0.4Bn KShs 3.9Mn KShs 1.8Bn Service ARPU KShs 2.11 ARPU KShs 78.0 KShs 21.31 KShs 76.18 Conversion of Ethiopian Birr (ETB) to KShs at an average exchan
Slide 38: Group Hyperinflationary Reporting
Group Hyperinflationary Reporting P&L Impact Basis • Hyperinflationary monetary gain of KShs 10.4Bn • Impact at Net Income of KShs 3.5Bn 3-Yr cumulative inflation • There is no impact on Safaricom PLC dividend payout rate >100% The consumer price indexes (CPI) over the years is shown below; Consumer
Slide 39: 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 as at FY23 by; 2YR Actual Enablers USD 544.3Mn Shareho
Slide 40: Group Net Income: Impacted by Expected Ethiopia Start-up Costs
Group Net Income | Impacted by Expected Ethiopia Performance Start-up Costs 2.8 0.5 9.7 (3.5) 81.2 77.0 (4.2) (1.1) 74.5 10.4 62.3 (6.7) 4.5 (27.1) +5.5% +3.0% -10.6% YoY YoY YoY FY22 Improved Net Finance Share Operating Depreciation Taxation FY23 Ethiopia FY23 Ethiopia Movement in Hyperinflationary
Slide 41: Overall FY23 Group Performance
Overall FY23 Group Performance Safaricom Kenya Safaricom Ethiopia Safaricom Group Safaricom Kenya Safaricom Group (KShs Mn) (KShs Mn) (KShs Mn) % YoY % YoY (KShs Mn) Service Revenue 295,181.4 562.4 295,692.3 5.0% 5.2% Total Revenue 309,121.8 1,834.5 310,904.8 3.7% 4.3% Operating costs (53,608.0) (19
Slide 42: Financial KPIs: Stable Margins Despite a Tough Macro Environment
FINANCIAL KPIs | Stable Margins Despite a Tough Macro and Regulatory Environment FY19 FY20 FY21 FY22 FY23 Contribution Margin % 71.2% 70.8% 68.5% 68.5% 69.9% EBITDA Margin % 49.8% 52.7% 51.0% 50.0% 51.9% EBIT Margin % 35.6% 38.7% 36.5% 36.6% 37.6% OPEX Intensity 21.5% 18.2% 17.5% 18.5% 17.5% CAPEX I
Slide 43: Capex: Accelerated Capex Spend to Support New Growth Areas
CAPEX | Accelerated Capex Spend to Support Investment in New Growth Areas Capex Split - Kenya Capex Split - Ethiopia Operations, 2.6% Operations, 3.2% IT Capex, 10.5% Radio Access, 28.0% IT Capex, 28.9% Transmission, 12.6% Radio Access, 58.1% Core Network, 4.9% Fixed Network, 13.8% Transmission, 9.3
Slide 44: FY23 Proposed Dividends
FY23 Proposed Dividends | Consistently Delivering Value to Our Investors EPS/Dividend Yield Trend FY22 FY22 FY23 FY23 Interim Final Interim Proposed Dividend Dividend Dividend Dividend 1.84 6.6% 1.71 1.74 1.56 1.55 5.3% 4.5% 4.2% 3.8% KShs 25.64 Bn KShs 30.04 Bn KShs 23.24 Bn KShs 24.84 Bn KShs 0.64
Slide 45: Looking Ahead
LOOKING AHEAD
Slide 46: FY24 Focus: Scaling Technology Solutions
FY24 FOCUS | Scaling Technology Solutions Accelerate new growth areas e.g. IoT, ICT, Cloud, Content, Fixed Business, Next Financial Services (Insurance, Wealth Management, Payments) Strengthen execution capabilities to Deliver top Government Projects deploy customer solutions (Route to (#1 partner o
Slide 47: FY24 Guidance: Safaricom Kenya, Ethiopia & Group
FY24 GUIDANCE | Safaricom Kenya, Ethiopia & Group All numbers are in KShs Kenya Ethiopia* Group EBIT EBIT EBIT 117 - 120Bn (42 - 39)Bn 75 - 81Bn CAPEX CAPEX CAPEX 42 - 45Bn 40 - 45Bn 82 - 90Bn EBIT ▪ Launch of M-PESA in Q2 FY24, Mobile customers target of 10Mn 90-day customers, MTR Rate assumed at E
Slide 48: Corporate Information and Upcoming Updates
Corporate Information Registrars Upcoming Updates Image Registrars Limited 5th Floor, Absa Plaza, Loita Street P.O. Box 928-00100, Nairobi AGM Telephone: +254 709 170 000 28th July 2023 Email: Info@image.co.ke Website: www.image.co.ke HY24 Results 9th November 2023 Registered Office Safaricom House,
Slide 49: Thank You
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