Safaricom Plc · NSEKE:SCOM
Safaricom — FY2013 Earnings Presentation
31 slides from Safaricom's earnings presentation
Slide 1: Safaricom Ltd FY 2013 Presentation
Safaricom Ltd FY 2013 Presentation
Slide 2: Disclaimer
2 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 no
Slide 3: Contents
3 Contents FY 2013 Highlights FY 2013 Financial Review Strategic Focus and Guidance
Slide 4: FY 2013 Highlights
4 FY 2013 Highlights • Strong commercial and financial performance across all segments and metrics • Continued investment and innovation in network and services • Best Network in Kenya program progressing well • Nationwide metro fibre network build begun • M-Shwari launched to enable access to micro
Slide 5: Delivering on key financial metrics
5 Delivering on key financial metrics TOTAL REVENUE +16% to Kshs 124.3bn VOICE REVENUE +13% to Kshs 77.7bn NON-VOICE REVENUE +29% to Kshs 40.4bn (SMS, DATA and M-PESA) EBITDA +31% to Kshs 49.2bn NET PROFIT BEFORE TAX +47% to Kshs 25.5bn FREE CASH FLOW +55% to Kshs 14.5bn PROPOSED DIVIDEND PER SHARE
Slide 6: Contents
6 Contents FY 2013 Highlights FY 2013 Financial Review Strategic Focus and Guidance
Slide 7: Delivering on strategy: Strong financial results
7 Delivering on strategy: Strong financial results Total Revenue EBITDA Net Income Free Cash Flow Kshs. Billion Kshs. Billion Kshs. Billion Kshs. Billion +16.2% +31.2% +38.9% +55.2% 124.29 49.18 17.54 107.00 14.51 37.50 12.63 9.35 FY12 FY13 FY12 FY13 FY12 FY13 FY12 FY13 Increased usage for all 16% g
Slide 8: Strong revenue growth in the year
8 Strong revenue growth in the year FY13 Revenue • 16% growth in total revenue; with growth Kshs. Billion across all service revenue streams 16.2% 124.29 • Customer base now 19.4m customers 107.00 94.83 (19.1m in FY 2012) following disconnection 83.96 of 1.4m customers who did not meet the new custo
Slide 9: Service revenues: Growth across all products
9 Service revenues: Growth across all products 120 2.11 6.31 1.37 21.84 100 5.22 0.84 0.08 4.54 16.87 10.13 80 2.89 Fixed data revenue 11.78 7.56 7.77 5.19 7.54 Mobile broadband revenue 60 M-PESA revenue SMS revenue 40 77.66 68.96 Voice revenue 63.5 64.58 20 0 FY10 FY11 FY12 FY13
Slide 10: Lowest retail prices & MTR rate in sub-Saharan Africa
10 Lowest retail prices & MTR rate in sub-Saharan Africa Country Prepay Retail MTR Country Prepay Retail MTR Price per Minute Price per Minute Kenya $0.04 $0.02 Burkina Faso $0.16 $0.10 Angola $0.04 Cote D'ivoire $0.17 $0.06 Ghana $0.06 $0.02 Malawi $0.17 $0.08 Rwanda $0.08 $0.07 Botswana $0.18 $0.0
Slide 11: Voice: Growth momentum sustained
11 Voice: Growth momentum sustained Voice Revenue Kshs. Billion • 13% growth in voice revenue 12.6% 77.66 68.96 • Promoting brand recognition and customer 64.58 63.50 loyalty o Revitalization of the brand o Variety of promotions aimed at retention FY10 FY11 FY12 FY13 • Improved distribution Customer
Slide 12: Strong growth in Non-Voice service revenues
12 Strong growth in Non-Voice service revenues • Non-Voice revenue grew 29% - now 33% of total revenue Non-Voice Revenue Kshs. Billion 29.3% • Driven by increased customers and increased 40.39 usage. Revenue growth of: 31.23 24.70 • M-PESA +29% 15.72 • SMS +30% • Mobile data +21% FY10 FY11 FY12 FY13
Slide 13: M-PESA: Major Non-Voice revenue driver
13 M-PESA: Major Non-Voice revenue driver M-PESA Revenue • 29.5% growth in M-PESA revenue, driven by Kshs. Billion 29.5% • Increase in 30 day active users to 10.5m 21.84 • Increase in number of transactions 16.87 11.78 • Contributes 18% of total revenue 7.56 • 26,000 M-PESA agents added in the year;
Slide 14: Data: Customers and usage drive growth
14 Data: Customers and usage drive growth Mobile Data & Fixed Service Revenue • 28% growth in mobile data and fixed service Kshs. Billion revenue 27.8% • 30 day active mobile data users grew 57% to 8.42 7.1m – now 37% of our customer base 6.59 5.37 • Usage per customer increased by 1%, while price p
Slide 15: Sustained ARPU growth
15 Sustained ARPU growth Voice SMS M-PESA Mobile Broadband Service ARPU Kshs. Kshs. Kshs. Kshs. Kshs. 337 44 117 507 319 462 102 36 96 90 FY12 FY13 FY12 FY13 FY12 FY13 FY12 FY13 FY12 FY13 Loyal customer New SMS Increased in active Reduced pricing 10% increase base benefiting bundles customers dilute
Slide 16: Direct cost control improves contribution margin
16 Direct cost control improves contribution margin FY Direct Costs FY Direct Costs Breakdown Kshs. billion Kshs. billion 124.29 (6.70) (17.40) 43.5 46.3 37.2 28.5 (5.31) (5.37) FY10 FY11 FY12 FY13 (11.48) • 6% increase in direct costs , compared 106.91 to a 16% increase in total revenue • Contribut
Slide 17: Focus on operating cost initiatives continues
17 Focus on operating cost initiatives continues FY OPEX Kshs. billion • Operating costs as a % total of revenue 35 23% 23% 24% 26% declined to 23% of total revenue 23% 30 • 11% increase in operating costs versus a 16% 21% increase in revenue 25 • Operating cost saving initiatives focus on 16% 20 •
Slide 18: Strong growth in EBITDA
18 Strong growth in EBITDA H1/H2 EBITDA Kshs. Billion 30 26.9 25 22.7 22.3 20.1 20 18.8 16.5 16.9 14.8 15 10 5 0 H1 FY10 H2 FY10 H1 FY11 H2 FY11 H1 FY12 H2 FY12 H1 FY13 H2 FY13 • 31% growth in FY EBITDA to Kshs 49.2bn • FY EBITDA margin improves 4.5 ppt to 39.6% • 2nd half EBITDA traditionally stron
Slide 19: Largest & Fastest Network in Kenya
19 Largest & Fastest Network in Kenya CAPEX Base Stations Kshs. Billion 2905 30 27% 30% 2690 24% 2501 25 25% 21% 2162 20% 20 20% 1604 15 15% 1439 25.48 25.28 24.88 1140 10 10% 17.44 607 5 5% 140 193 187 203 0 0% FY10 FY11 FY12 FY13 FY10 FY11 FY12 FY13 CAPEX CAPEX Intensity Total (inc 2G) 3G Wimax Ca
Slide 20: Improved cash generation
20 Improved cash generation FY Free Cash Flow FY Net Debt Kshs. billion 49.18 Kshs. billion (1.45) (5.98) 8.23 12.00 (15.00) (24.88) 14.51 5.23 (2.44) 0.08 EBITDA Interest Tax paid Capex Working Other Free cash paid capital capital flow mvmts • Improved Free Cash Flow from Kshs 9.35bn in • Kshs 8bn
Slide 21: Key Financials
21 Key Financials: FY 12 FY 13 VARIANCE H2 FY12 H2 FY13 VARIANCE Voice revenue 68.96 77.66 12.6% 37.47 40.24 7.4% Messaging revenue 7.77 10.13 30.4% 4.12 5.86 42.2% Mobile data revenue 5.22 6.31 20.9% 4.15 3.34 -19.5% Fixed service revenue 1.37 2.11 54.0% 0.74 1.10 48.6% M-Pesa revenue 16.87 21.84 2
Slide 22: Contents
22 Contents FY 2013 Highlights FY 2013 Financial Review Strategic Focus and Guidance
Slide 23: Strategy Overview
23 Strategy Overview Our focus for the next 12 months is to: • Deliver the Best Network in Kenya program • Grow Mobile and Fixed Data • Deepen financial inclusion • Retain and reward our loyal customer base • Encourage further innovation
Slide 24: Deliver the Best Network in Kenya
24 Deliver the Best Network in Kenya What we have achieved: • Modernization of 80% of the planned cell sites complete • Call drops have reduced by 25% • Network downtime reduced by 66% to below 20 min per week Top priority items in pipeline: • Complete network modernization in 6 key cities • Increas
Slide 25: Grow Mobile and Fixed Data
25 Grow Mobile and Fixed Data What we have achieved: • Increased data customers by 57% to 7.1m • Increased the number of 3G devices on the network to 2.3m, of which 1.2m are smartphones • Introduced Sambaza Internet • Data bundles purchase via M-PESA Top priority items in pipeline: • Lay fibre to ou
Slide 26: Deepen financial inclusion using M-PESA
26 Deepen financial inclusion using M-PESA What we have achieved: • Recruited 26,000 new M-PESA agents in the year • Increased the 30 day active customer base to 10.5m • Improved system availability substantially • Launched M-Shwari, currently 1.2m active customers Top priority items in pipeline: •
Slide 27: Retain market leadership
27 Retain market leadership Subscriber market share-Dec 2012 Voice traffic market share-Dec 2012 10.5% 8.6% 8.1% 1.4% 12.5% 16.9% 64.5% 77.5% Safaricom Airtel Orange Yu Essar Safaricom Airtel Orange Yu Essar Mobile Data market share-Dec 2012 SMS market share-Dec 2012 9.1% 6.7% 1.2% 0.6% 4.5% 93.7% 1
Slide 28: Encourage further innovation
28 Encourage further innovation What we have achieved: • Launched M-Shwari to provide interest bearing deposits and micro-loans • Launched m-health, e-learning and m-agriculture services • Launched m-Kopa solar lighting : pay as you go • Launched the Safaricom AppStar competition to drive and reward
Slide 29: FY 2014 Guidance
29 FY 2014 Guidance Free Cash Flow: Expected to be in the range of Kshs 15.5 bn to Kshs 17.5bn
Slide 30: FY 2013 Highlights
30 FY 2013 Highlights • Strong commercial and financial performance across all segments and metrics • Continued investment and innovation in network and services • Best Network in Kenya program progressing well • Nationwide metro fibre network build begun • M-Shwari launched to enable access to micr
Slide 31: Q&A
Q&A