Safaricom Plc · NSEKE:SCOM
Safaricom — H1 FY2011 Earnings Presentation
29 slides from Safaricom's earnings presentation, Nov 10, 2010
Slide 1: Half-Year Results Presentation
Half-Year Results Presentation 10th November, 2010
Slide 2: Our Vision & Strategy
2 Our Vision & Strategy Data growth through infrastructural investment Consolidate Fixed & Mobile Data Growth Increase Wimax Coverage & Product innovation Increase M-PESA Penetration Expansion of M-PESA services Increase product offering under M-PESA Stimulate voice revenue growth Sustain Voice Reve
Slide 3: Half-Year Key Highlights
3 Half-Year Key Highlights • Expansion of 3G network • Tests ongoing on LTE DATA • Acquisition of 2 additional Wimax providers • Introduction of innovative products on our Data offering • Phenomenal growth of users to 13.5 million as at September 2010 • Over 80% of our subscribers registered for M-P
Slide 4: Performance Highlights – H1 10 v H1 11
4 Performance Highlights – HI 10 v H1 11 16.71mn Kshs. 47.11 bn Kshs. 18.83bn Kshs. 7.63bn Kshs. 0.19 15.2% 15.9% 13.8% 15.1% 14.9% 100.% Net Customers Turnover EBITDA Income EPS
Slide 5: Regulatory Environment
5 Regulatory Environment 1. Mobile Termination Rates: Reduced by 50% to Kshs. 2.21. • Has led to aggressive reduction in pricing • However, Interconnect revenues contribute to <5% of total revenues 2. Kenya Information & Communications Regulations 2010 • Aligned to international best practice 3. Sub
Slide 6: A Growing Market
6 A Growing Market Mobile Penetration Across Africa (%) in September 2010 Zimbabwe Zambia Uganda Tunisia Tanzania Sudan • Safaricom operates in the world’s South Africa fastest growing mobile market with a Somalia diversity of consumer needs Réunion Rwanda Nigeria • SIM penetration in Kenya > 50% as
Slide 7: The Market Leader
7 The Market Leader March 2010 September 2010 Source: CCK • The No.1 Mobile Service provider in Kenya with the largest and most advanced network coverage • 15.2% increase in number of customers to 16.71 million with 0.92 million net additions between April-September 2010
Slide 8: Towards Total Communication
Towards Total Communication
Slide 9: Going beyond the conventional
9 Going beyond the conventional Safaricom has transitioned from being a pure voice player to a total communication provider. • Voice • Fixed Data – Wimax, Fibre Optic • Mobile broadband • Mobile Money transfer & Mobile-Banking • Handsets, Laptops, Modems • LTE
Slide 10: Its not all about Voice
10 Its not all about Voice Through value added services and products we ensure customer satisfaction and retention • M-PESA • Bonga Points • New generation SIM cards • Evolving to 4G technology (under trial) • Low cost recharge vouchers
Slide 11: Data for all
11 Data for all Aiding data penetration by • Providing affordable data rates & bundles • Aggressive selling of affordable data enabled devices • Financing partnerships with financial institutions • Promotions on data enabled devices Stimulate usage by • Attractive promotions • Continuous customer ed
Slide 12: Data Penetration
12 Data Penetration * Penetration is based on Safaricom subscribers • Data continues to gain momentum with 3.61 million users in Sept. 2010 • Safaricom effectively serves 9% of Kenya's population • Data penetration now stands at 21.61% (based on Safaricom subscribers) • Increase of data customers by
Slide 13: Capital Expenditure: Expanding our Network
13 Capital Expenditure:-Expanding our Network Base Stations Network growth from 1,972 sites in Sept 09, to 2,282 sites in Sept 10 Metropolitan towns in Kenya now covered by 3G network Technical trials of LTE technology ongoing
Slide 14: M-PESA: So much more
14 M-PESA: So much more M-PESA is now used for • Secure money transfer • Airtime purchase • Utility bill payments • Bulk cash payments • International money transfer • ATM withdrawals • Dividend payment • Social/Charitable collections • M-KESHO • Purchase of goods
Slide 15: M-PESA: Purely Phenomenal
15 M-PESA: Purely Phenomenal M-PESA Customers/Agents 16,000,000 25,000 14,000,000 S 20,000 U 12,000,000 B A S 10,000,000 15,000 G C E R 8,000,000 N I 10,000 T B 6,000,000 S E R 4,000,000 S 5,000 2,000,000 0 - Users Agents M-PESA continues to experience strong growth in users (13.5 million in Sept. 2
Slide 16: FINANCIALS
FINANCIALS
Slide 17: Strong Operational Performance
17 Strong Operational Performance EBITDA/EBITDA Margin Kshs. Billion / % 15.9% 13.8% 40.0% Net Income/ Margin Kshs. Billion / % 14.3% 15.1% 16.3% 16.2%
Slide 18: Strong Operational Performance
18 Strong Operational Performance 14.9% 167% Shareholder Funds Gearing vs Net/EBITDA Kshs. Billion Times 15.8%
Slide 19: KPIs: Strong Revenue Growth
19 KPIs: Strong Revenue Growth YoY Revenues Analysis Data Revenue Breakdown Kshs. Billions Kshs. Billions / % of Revenue 47.1 43.2 11.20 40.66 36.1 8.52 7.20 5.38 3.72 • Non-voice revenue increased by 71.1% • Broadband data services (68.5% increase) contributing to 33.1% of total revenue • M-PESA (6
Slide 20: KPIs: Robust ARPU
20 KPIs: Robust ARPU M-PESA DATA VOICE Blended ARPU Kshs. Kshs. Kshs. Kshs. • Even with increase in M-PESA and Data customers, M-PESA ARPU and Data ARPU have increased by 6% and 1.1% respectively • Voice ARPU declined as a result of tariff reduction and dilutive impact of new subscribers who tend to
Slide 21: KPIs: Expanding EBITDA & Margins
21 KPIs: Expanding EBITDA & Margins YoY EBITDA Revenue/EBITDA Analysis (21.62) (6.66) • Strong EBITDA growth of 13.8% to Kshs.18.83bn • OPEX and SG&A costs grew by 17.3% from Kshs.16.55bn in Sept. 2009 reflecting an EBITDA margin of 40%
Slide 22: Stable Cost Structure: OPEX & SG&A
22 Stable Cost Structure: OPEX & SG&A OPEX & SG&A Breakdown Kshs. Billions • 14.6% increase in OPEX • Increased Commissions and Acquisition costs by 14.2 % • Network costs increased by 2.8% • 27.2% increase in SG&A • Increased Payroll and personnel costs by 23.7% • Increased Marketing costs by 49.7%
Slide 23: Capital Expenditure: Investing for the Future
23 Capital Expenditure:-Investing for the Future CAPEX- H1 2010 CAPEX- H1 2011 • Capex intensity increased to 21.2% (16.2% in Sept. 2009) • Gross Capex investment increased by 52% to Ksh. 10.01bn. • Capital expenditure expected to continue at a high level in these key investment areas • Upgrade of e
Slide 24: The Future
The Future
Slide 25: Safaricom: Well positioned in a Growing Sector
25 Safaricom: Well positioned in a Growing Sector Telecoms Industry in Safaricom Safaricom’s Emerging Markets Penetration • Linked to 2 undersea cables Data market opportunity • Acquisitions & Strategic partnerships 9.33% of population • Innovative and affordable data offerings • Increase in product
Slide 26: Our Future: Still Number 1
26 Our Future:- Still Number 1 Customer • Provide superior customer care service • Anticipate future needs of our customers Focus • Deliver innovative products and services Data • Increase data penetration and usage • Network expansion • Diversification M-PESA • Expansion of functionality and servic
Slide 27: The telecoms industry in Kenya is ever growing
The telecoms industry in Kenya is ever growing; presenting enormous opportunities for expansion and innovation Safaricom is well placed to capitalize on these opportunities We are Number 1 and we shall continue to be Number 1
Slide 28: Q&A
Q &A <Safaricd m
Slide 29: THANK YOU
Niko na’, Safaricom