Safaricom Plc · NSEKE:SCOM
Safaricom — H1 FY2025 Earnings Presentation
56 slides from Safaricom's earnings presentation, Nov 7, 2024
Slide 1: HY25 Investor Presentation
HY25 INVESTOR PRESENTATION 7th November 2024
Slide 2: Dr. Peter Ndegwa, Chief Executive Officer
DR. PETER NDEGWA, CHIEF EXECUTIVE OFFICER
Slide 3: Safaricom @24: Twenty Four Years of Transforming Lives
SAFARICOM @24 | Twenty Four Years of Transforming Lives 24 Years, Pamoja Asante As we celebrate 24 years of connecting Kenyans, I want to extend my heartfelt gratitude to each and every one of you, our dedicated staff. Your Passion, hard work, and commitment have made Safaricom what it is today. Fro
Slide 4: Kenya Operating Environment: Improving Macros but Fragile
KENYA OPERATING ENVIRONMENT | Improving Macros but Fragile Operating Environment Macro Tailwinds & Headwinds Regulatory & Industry Customer Insights Tailwinds • Mobile Termination Rate reduction Tailwinds • Resilient GDP growth; +4.6% in Q2 2024 • Increased taxation • Declining food prices • Declini
Slide 5: Sustainability Report: Pioneer on ESG and SDG
13 SUSTAINABILITY REPORT | We Continue to be a Pioneer on ESG and SDG Agenda th Leveraging Partnerships Accelerating Digital Pioneering Sustainable to Drive Inclusion Inclusion Financing and Sustainable Development 05
Slide 6: Our Purpose: Driving Societal Value Through Sustainable Financing
OUR PURPOSE | Driving Societal Value Through Sustainable Financing True Value Assessment (FY24)* Impact on Society Environmental 16 times the profit externalities Partnering for ESG generated in FY24 of KShs 0.9Bn Success KShs 63.0Bn 16.0% Cumulative Value Cumulative Valueadd add • Obtained an addit
Slide 7: Delivering on Our Commitment to Transform Lives in Kenya
OUR PURPOSE | Delivering on our Commitment to Transform Lives in Kenya Through the; HY25 2.6Mn Investing 47 3.5Bn In all Highlights; Lives Impacted KShs Counties In various projects in; Economic Environment water Disaster Education Health Empowerment & livelihoods Response HY25 Key Initiatives; Laun
Slide 8: Our Brand: Impact on Culture, Sports & Arts
OUR BRAND | Transformative Impact on Kenyans’ Passion Points in Culture, Sports & Arts Tech Enabler of Sports Tech for Good Safaricom Chapa Dimba Athletics Making of a Star Ndoto Zetu Documentary Series Philanthropic initiative by • The Tournament that swept the • 2024 Team Kenya Olympics Safaricom
Slide 9: Our Strategy: Great Execution Driving Commercial Momentum
OUR STRATEGY | Great Execution Driving Commercial Momentum FY25 focus is to embed customer-first tech capabilities in order to be Africa’s leading purpose-led technology company Consumer Business Financial Services Business Enterprise & Fixed Business Safaricom Ethiopia • Leveraging AI, big data and
Slide 10: 24 Years of Commitment to Customer Data Privacy
OUR BRAND | 24 Years of Unwavering Commitment to Customer Data Privacy Awarded the ISO 27701 Privacy Information Recertified and awarded the highest level of the Management System certificate following a rigorous Payment Card Industry Data Security Standard review undertaken by British Standards Ins
Slide 11: Digitization Partner of Choice for Public Sector
DIGITIZING KENYA | Digitization Partner of Choice for Public Sector Digitization Health Deepening Financial Agri-input Subsidy Ecosystem in Kenya Inclusion Programme • Development of Integrated Healthcare • Inua Jamii - Government Cash Transfer • 5.5Mn Farmers Information Technology System (IHTS wal
Slide 12: Consumer Business: Growing the Core Through Customer-centric Actions
CONSUMER BUSINESS | Growing the Core Through Customer-centric Actions Enhanced integrated Customer segmentation Enhanced access to value propositions driving engagement affordable content 12
Slide 13: Financial Services: Building a Sustainable Fintech Ecosystem
FINANCIAL SERVICES | Building a Sustainable Fintech Ecosystem Strengthening Our Core, Driving Innovation Through Expanding Our Reach Strategic Partnerships • Growing our distribution; • Credit market place; Pochi customers at 869k, +115% YoY, Merchant Overdraft product, Fuliza - limit refreshes and
Slide 14: Enterprise Business: Powering Growth & Innovation
ENTERPRISE BUSINESS | Powering Growth & Innovation for Businesses Safaricom Grow Customer Integrated for Business Segmentation Propositions • Launched "Grow with Safaricom Business" initiative, • We have revamped how we engage our • Strengthened demand for network security and focused on empowering
Slide 15: Fixed Business: Enhancing Customer Experience
FIXED BUSINESS | Enhancing Customer Experience and Driving Value Enhanced Customer 5G internet for Accelerating Fibre Experience business Roll-out Advanced exceptional speeds and Revolutionizing digital experience Deepening home connections to value to businesses for productivity with fast data spee
Slide 16: Safaricom Ethiopia Update
S/AFARICGOM ETAIOPIA UPDATE Safaricom
Slide 17: Ethiopia FX Reforms: Navigating Short-term Hurdles
ETHIOPIA FX REFORMS | Navigating Short-term Hurdles, for Long-term gains Macro Environment Regulatory/Industry Political/Security Resilient Fundamentals Ongoing Efforts to Level the Playing Field Stable but Fragile • Easing Inflation; 17.5% in Sep 2024 • Mobile Termination Rate reduction • Stablizin
Slide 18: Ethiopia: Transcending Our Purpose Beyond Borders
ETHIOPIA | Transcending our Purpose Beyond Borders Empowering Education Solidarity Response (building digital capacity of education institutions (responding to natural calamities and and supporting students with school supplies) request for intervention from stakeholders) • Donated laptops, routers
Slide 19: Ethiopia: Accelerating Commercial Momentum Two Years Since Launch
ETHIOPIA | Accelerating Commercial Momentum Two Years Since Launch 6.1Mn, +47.3% YoY 4.9Mn, +112.1% YoY 6.6GB, +119.4% YoY 90-day Active Customers 90-day Active Data Customers per Mobile Data User Customers KShs10.9Bn Value 8.3Mn, +616.4% YoY 6.7k 3.2k Total Registered M-PESA Customers Active Mercha
Slide 20: CSafaricom
N25 [P CSafaricom EIR RIGELICK ROR MAING JUS
Slide 21: HY25 Performance: Robust Underlying Performance for the Group
HY25 PERFORMANCE | Robust Underlying Performance for the Group Service Revenue EBIT Net Income Safaricom Kenya +12.9% YoY +18.0% YoY +14.1% YoY KShs 177.5Bn KShs 79.2Bn KShs 47.5Bn Group underlying performance including +14.0% YoY +31.9% YoY +21.7% YoY KShs 181.4Bn KShs 61.6Bn KShs 36.7Bn* Ethiopia
Slide 22: Dilip Pal, Chief Finance Officer
DILIP PAL, CHIEF FINANCE OFFICER
Slide 23: Kenya Performance
SAPARIGOM \ KENYA BBEREORIMIAINCE CSafaricom
Slide 24: Key Highlights: Strong Performance for Our Kenyan Business
KEY HIGHLIGHTS | Strong Performance for our Kenyan Business Service +12.9% YoY EBITDA +13.7% YoY Revenue KShs 177.5Bn KShs 102.9Bn EBIT +18.0% YoY Net +14.1% YoY KShs 79.2Bn Income KShs 47.5Bn One Month Operating Active +6.0% YoY Free +41.4% YoY Customers 35.3Mn Cash Flow KShs 80.6Bn 24
Slide 25: Service Revenue: M-PESA and Mobile Data Driving 84% of Growth
SERVICE REVENUE | M-PESA and Mobile Data Driving 84% of the Growth Service Revenue (KShs Bn) Evolution of Service Revenue Profiles 177.5 0.8 178.3 172.6 157.2 Fixed Data 5.0% 5.0% +8.5% +14.8% +12.9% +13.4% YoY YoY YoY YoY Connectivity 52.9% 51.5% Business H1 FY24 H2 FY24 H1 FY25 MTR Impact** H1 FY2
Slide 26: Service Revenue: Higher ARPU Driven by Increased Usage
SERVICE REVENUE | Higher ARPU Driven by Increased Usage Boosting Revenues One Month Active Customers 35.3 34.6 6.0% 4.6% Contribution to Service Revenue growth from; 33.3 2.5% H1 FY24 H2 FY24 H1 FY25 Customers ARPU Service Revenue One month active customers (Mn) YoY customer growth (%) ARPU (KShs) 8
Slide 27: Customers: Accelerated Growth in Active Customers
CUSTOMERS | Accelerated Growth in Active Customers Across all Products One Month Active M-PESA Customers (Mn) Connectivity Customers (Mn) 33.5 34.9 32.4 34.3 +4.1% YoY +6.0% +0.9% +4.6% YoY YoY 32.9 32.1 YoY +3.1% +2.5% YoY YoY H1 FY24 H2 FY24 H1 FY25 H1 FY24 H2 FY24 H1 FY25 FTTH & Fixed Data Custom
Slide 28: M-PESA: Double-digit Growth Driven by Chargeable Transactions
M-PESA | Double-digit Growth Mainly Driven by Chargeable Transactions M-PESA Revenue (KShs Bn) ARPU driver 77.2 16.6% 73.7 +16.6% 13.1% 23.0% YoY +22.1% YoY 66.2 3.4% -9.9% +16.5% YoY Rate Usage Revenue Customer ARPU H1 FY24 H2 FY24 H1 FY25 Contribution Contribution Contribution to M-PESA Revenue HY
Slide 29: M-PESA: Solid Growth in Customers and Usage
M-PESA | Solid Growth In Customers And Usage M-PESA Value (KShs Trn) Chargeable Transactions per One Month active customers +10.7% 37.4 21.4 20.9 YoY 18.8 +25.6% 33.2 YoY +1.1% 9.4 8.2 YoY +35.2% Non-Chargeable 8.2 29.8 YoY +32.6% +18.1% YoY Chargeable 10.7 12.0 12.6 YoY H1 FY24 H2 FY24 H1 FY25 H1 F
Slide 30: M-PESA: Expanding Merchant Network, Lending and Wealth Management
M-PESA | Expanding Merchant Network, Lending and Wealth Management Revenue (KShs Bn) Tills +5.2% YoY +114.5% YoY 3.7 869.0 3.5 +0.05% YoY 658.4 658.7 +229.8% YoY 405.2 0.9 0.3 Lipa Na M-PESA Pochi Lipa Na M-PESA (000) Pochi (000) H1 FY24 H1 FY25 H1 FY24 H1 FY25 Revenue (KShs Mn) Value (KShs Bn) +61.
Slide 31: M-PESA Super Apps: Lifestyle & Business Platform
M-PESA SUPER APPS | Positioning M-PESA as a Lifestyle & Business Platform of Choice Consumer App Business App Downloads: 12.1Mn, +41.9% YoY Downloads: 5.7Mn, >100.0% YoY Active Customers: 3.6Mn, +5.8% YoY Active Merchants: 268.8k, +89.2% YoY Volumes transacted: 399.7Mn, +8.6% YoY Volumes transacted:
Slide 32: Connectivity Business: Mobile Data Driving Growth
CONNECTIVITY BUSINESS | Mobile Data Driving Connectivity Growth Connectivity Business Revenue (KShs Bn) Connectivity Business Revenue (KShs Bn) 90.8 91.3 Others +9.8% +9.6 % YoY 9.9%, KShs 9.0Bn YoY -1.3% YoY 83.1 Messaging 6.8%, KShs 6.2Bn +2.8% +8.0% YoY YoY HY25 KShs 91.3Bn +9.8% YoY Voice H1 FY2
Slide 33: Mobile Data: Excellent Performance Supported by Increased Usage
MOBILE DATA | Excellent Performance Supported by Increased Usage Mobile Data Revenue (KShs Bn) Increased usage as 4G+ traffic continues to grow 35.6 +10.1% YoY +15.7% YoY 33.7 23.5 24.7 +34.5% YoY 29.6 21.3 22.3 22.9 21.4 20.1 +12.5% +23.2% +20.2% 17.5 +18.6% YoY 14.9 YoY YoY YoY 10.9 9.2 10.0 One m
Slide 34: Fixed Service: Increased Connections Fueling Growth
FIXED SERVICE | Increased Connections Fueling Growth Fixed Service Revenue (KShs Bn) FTTH 2,421 2,413 8.5 262.9 +14.7% 248.6 YoY 7.7 223.2 +14.9% 2,345 7.4 YoY +9.1% 61.4% 66.4% 65.4% YoY H1 FY24 H2 FY24 H1 FY25 H1 FY24 H2 FY24 H1 FY25 Closing customers ('000's) ARPU (KShs) Conversion Rate (%) Contr
Slide 35: Costs: Investing in Futuristic Growth Areas
COSTS | Investing in Futuristic Growth Areas Operating Costs (KShs Bn) Direct Costs (KShs Bn) 1.5 0.4 (0.9) 31.5 1.5 1.7 27.2 44.3 15.7% 38.9 41.9 10.8% +15.7% YoY 8.8% 7.6% -1.8% -11.5% Other Employee Network Operating Foreign H1 FY24 H2 FY24 H1 FY25 H1 FY24 administrative benefits operating lease
Slide 36: Debt & Finance Costs: Well Managed Debt Levels
DEBT & FINANCE COSTS | Well Managed Debt Levels Despite High Finance Costs Interest Costs (KShs Bn) 6.1 Net Debt (KShs Bn) 5.8 +26.1% 4.9 +42.6% YoY +48.8% YoY HY24 FY24 HY25 YoY Cash & Cash Equivalents 14.9 21.3 23.0 H1 FY24 H2 FY24 H1 FY25 Short term borrowings (43.7) (39.8) (34.5) Net Debt/EBITDA
Slide 37: Free Cash Flow: Strong Cash Flow Position
FREE CASH FLOW | Strong Cash Flow Position 17.9 51.3 (6.3) (1.5) (0.4) (0.4) 12.4 +73.2% 29.6 YoY Net Working Capital Net taxation Net interest Other cash H1 FY24 EBITDA H1 FY25 Capital Changes Additions payable paid flow items All numbers are in KShs 37
Slide 38: Financial KPIs: Stable Margins
FINANCIAL KPIs | Stable Margins HY22 HY23 HY24 HY25 Contribution Margin % 68.9% 68.6% 72.8% 72.0% EBITDA Margin % 53.1% 52.2% 55.9% 55.1% EBIT Margin % 39.8% 38.1% 41.5% 42.4% OPEX Intensity 15.8% 16.3% 16.8% 16.9% CAPEX Intensity 13.5% 11.8% 15.1% 16.5% ROCE 79.2% 56.6% 56.1% 56.4% Net Debt to EBIT
Slide 39: Ethiopia Performance
S/APARICGOM EVAIOPIA ERIEORIVWAING re CSafaricom
Slide 40: Service Revenue: Great Revenue Growth Fueled by Customer Acquisition
SERVICE REVENUE | Great Revenue Growth Fueled by Customer Acquisition Others* 4.5% Contribution to Service Revenue Growth (KShs Bn) Mobile Incoming 5.2% KShs 0.19Bn KShs 0.21Bn 0.16 0.11 0.03 4.10 1.90 Voice 12.5% KShs 0.52Bn +115.4% HY25 YoY Kshs 4.14Bn 1.91 Mobile Data 77.8% KShs 3.22Bn HY24 Mobil
Slide 41: Customers & Usage: Accelerated Momentum in HY25
CUSTOMERS & USAGE | Accelerated Momentum in HY25 No. of Sites 90-day Active Customers ('000s) One-Month Active Customers ('000s) 6,068 2,806 3,008 4,124.9 4,351 4,481.2 2,057 2,584.4 3,061.4 HY24 FY24 HY25 HY24 FY24 HY25 HY24 FY24 HY25 90-day Active Voice Users ('000s) 90-day Active Data Users ('000
Slide 42: Foreign Exchange Reforms: Impact of Birr Depreciation
FOREIGN EXCHANGE REFORMS | Impact of Depreciation of the Birr in Ethiopia Impacting; • Capex creditors From 57.69 USD/ETB Rate To 118.99 • Lease agreements June 2024 Depreciated by 106.3% September 2024 • Foreign denominated borrowings Birr Depreciation Birr Depreciation Impact KShs 33.8Bn Impact KS
Slide 43: Ethiopia: Funding Status
ETHIOPIA | Funding Status USD Mn As at 30 Sep 2024 Equity funding 1,790* Local currency debt funding 92 IFC debt funding 100 Total funding 1,982 Deferred vendor payments 223 *Safaricom PLC funding contribution is USD 925Mn Shareholders & their respective shareholding of Global Partnership for Ethiop
Slide 44: Group Performance
% SAFARIGCOM CROP PEREOIRNMVAING CSafaricom
Slide 45: Capex: Sustained Investment to Support Network Expansion
CAPEX | Sustained Investment to Support Network Expansion in New Growth Areas HY25 Capex Split - Kenya HY25 Capex Split - Ethiopia Operations, 1.6% Operations, 1.1% Other Capex, 8.8% Radio Access, 36.2% IT Capex, 7.2% IT Capex, 28.7% Transmission, 7.1% Core Network, 6.4% Fixed Network, 6.5% Radio Ac
Slide 46: Group Net Income: Great Underlying Performance Despite Forex Impact
GROUP NET INCOME | Great Underlying Performance Despite Ethiopia Forex Impact 47.5 36.7 +14.1% (10.8) YoY 8.8 28.1 +21.7% YoY -17.7% (17.5) YoY HY25 Kenya Ethiopia* HY25 Group* Birr Depreciation* IAS 29* HY25 Group* Net Income Net Loss Underlying Impact Impact Net Income Net Income *Excluding minori
Slide 47: HY25 Group Performance: Strong Results on Constant Currency Basis
HY25 GROUP PERFORMANCE | Strong Results on Constant Currency Basis Group Kenya Group Reported Constant Currency* Service Revenue +12.9% +13.1% +14.5% EBITDA +13.7% -5.8% +13.9% EBIT +18.0% +1.8% +17.5% Net Income +14.1% -17.7% +10.3% Excluding Minority Interest *Group % YoY Constant Currency exclude
Slide 48: HY25 Group Performance
HY25 GROUP PERFORMANCE Safaricom Safaricom Safaricom Plc Safaricom Safaricom Safaricom Group % YoY Kenya Ethiopia Group Kenya Ethiopia Group Constant Currency (KShs Mn) (KShs Mn) (KShs Mn) % YoY % YoY % YoY (excl. IAS 29 & Birr Depreciation impact) Service Revenue 177,465.2 2,477.6 179,923.9 12.9% 2
Slide 49: Looking Ahead
KQOKING /MnIE/AD) CSafaricom
Slide 50: In Summary: Outstanding Performance in Kenya, Accelerated Momentum in Ethiopia
IN SUMMARY | Outstanding Performance in Kenya, Accelerated Momentum in Ethiopia Strong Kenya performance Driving societal value Customer-centric actions & through sustainable financing segmentation driving value Growing the core and expanding Great commercial into new services through innovation acc
Slide 51: FY25: Strategic Priority Areas in H2
FY25 | Strategic Priority Areas in H2 Continued Increased Grow 4G+ Customer Focus Commercial Device Sales Radical simplification of customer Intensity Local Manufacturing; journeys; Always On Network; New Growth Areas financing; Device Worry Free Experience; acceleration; Scale Fixed Insurance Safeg
Slide 52: Vision 2030: Africa's Leading Purpose-led Techco
Vision 2030 | Anchored on Being Africa’s Leading Purpose-led Techco Africa’s leading purpose-led technology company Fund future growth and unlock value Protect and Grow the Core Accelerate the transition to TechCo Boost and evolve Ethiopia through innovative delivery models • Protect & grow consumer
Slide 53: Vision 2030: Scaling Operations for Ethiopia's Digital Future
Vision 2030 | Scaling Operations for Ethiopia’s Digital Future We have also defined big bets for the Ethiopia Big bets 4G Network Fixed Content Financial services business for the next 3-5 years Best and most reliable Fixed broadband Local content and Digital payments 4G network for business VAS as
Slide 54: Group Medium Term Outlook
GROUP | Medium Term Outlook Kenya Ethiopia Service revenue profile EBITDA; Breakeven in YR5 (FY27)* •M-PESA; Double digit growth Commercial scale;15-20Mn customers •Mobile connectivity; High single digit growth •Fixed; Double digit growth Infrastructure scale; >4,000 sites EBITDA Margin; Stable Cape
Slide 55: FY25 Guidance: Upgraded Kenya and Birr Depreciation Impact in Ethiopia
FY25 GUIDANCE | Upgraded Kenya and Incorporated Birr Depreciation Impact in Ethiopia All numbers are in KShs Bn and exclude hyperinflationary impact (IAS 29) EBIT Capex Revised Initial Revised Initial Kenya 155 - 158 149 - 152 52 - 55 52 - 55 Ethiopia* (61 - 58) (46 - 43) 28 - 31 21 - 24 Group 94 -
Slide 56: Thank You
TRANK YOUS (Safaricom