Safaricom Plc · NSEKE:SCOM
Safaricom — FY2009 Earnings Presentation
39 slides from Safaricom's earnings presentation, May 2009
Slide 1: FY 2008/2009 Annual Results Presentation & Investor Update
FY 2008/2009 Annual Results Presentation & Investor Update May 2009
Slide 2: Mr. Michael Joseph, CEO
Mr. Michael Joseph CEO <(Safaricd m
Slide 3: 2009 Results Highlights
2009 Results Highlights Fiscal Year Ended March 31,, 2009 • Strong subscriber growth − 30.6% y-o-y growth from 10.23 million to 13.36 million subscribers − Market M k share h off 79% • Launch of several key initiatives to position Safaricom for future success − Launch of Data Services (3G & Wimax) −
Slide 4: Financial Highlights
Financial Highlights Turnover 14 8% to Ksh. 14.8% Ksh 70.48 70 48 bn EBITDA 0.3% to Ksh. 27.95 bn Shareholders Funds 19.9% to Ksh. 51.15 bn Subscribers 30.6% to Ksh. 13.36 mn Revenue Market Share 83 0% 83.0% Subscriber Market Share 79.0% Dividends 100% to Ksh. 4 bn
Slide 5: Competitive Landscape
Competitive Landscape • Ongoing brand awareness campaign following rebranding. • Launched flat tariff of Ksh 8 (on net/off net) in September 2008. • GSM network launched under the Orange brand in September 2008 • Fixed Line services offered under a rebranded Telkom Kenya. • Network coverage in Nairo
Slide 6: Subscribers: Continued Market Leadership
Subscribers Continued Market Leadership March 2008 March 2009 2.1% 14.4% 15.9% 2 1% 2.1% 3.0% Essar Telecom Kenya Safaricom Safaricom Telkom Kenya Telkom Kenya Zain Kenya Zain Kenya 79.1% 83.6% Source: Internal , company reports & WCIS estimates
Slide 7: Mobile Penetration
Mobile Penetration Still plenty of room to grow • Sub-Saharan Africa fastest growing mobile Libya 126.6 market in the world with penetration rising South Africa 100.7 from below 5% in 2002 to 27% in 2008 Algeria 78.9 Egypt 57.1 • Internet penetration lower than for mobile Tunisia 81.7 with less than
Slide 8: Data Services: Embracing New Technology
Data Services Embracing New Technology • 301 3G enabled base stations and growing - in Nairobi, Mombasa, Naivasha & Eldoret • Wimax rollout ongoing with focus on corporates’ branch networks, up-market residential areas and medium-sized companies • TEAMS –20% Shareholding with a 1.2 Tb capacity • SEA
Slide 9: Data Services: The Next Frontier
Data Services The Next Frontier • 89.3% growth rate in 6 months 3G DL Mbytes 2G DL Mbytes 1‐Nov‐08 1‐Dec‐08 1‐Jan‐09 1‐Feb‐09 1‐Mar‐09 1‐Apr‐09 1‐May‐09
Slide 10: Data Services: Impressive Growth
Data Services Impressive Growth Di ti t data Distinct d t users 1.60 1.45 1.47 • 158% growth in distinct data users to 1.47 1.40 million users in March 2009 1.40 1.31 • These distinct data users originated 80 1.20 1.14 ct users (m) million internet sessions with usage of 20.8 1.10 million MBs in Mar
Slide 11: M-PESA: A runaway success story
M-PESA A runaway success story • Distributed through 8,650 retail outlets countrywide • 6.175 million registered users as at 31st March (2,262 outlets in March. 08) 2009 ( 2.075 million in March 08) • 51 Paybill partners including KPLC, Old Mutual & • 12-month growth rate of 198% Youth Enterprise De
Slide 12: M-PESA: Value of Transactions
M-PESA A runaway success story Value of Transactions P2P Transactions • Total cumulative P2P transactions of Ksh. 135.38 bn • Ksh. Ksh 120.61 120 61 bn transferred person to person in as off 31st March M h 2009 FY2008/2009 (Ksh 14.74bn in FY2007/2008) • Ksh. 17.29bn transferred in March 2009 (Ksh 3.
Slide 13: M-PESA: Awards
M-PESA A runaway success story 2009 GSMA Global Mobile World Awards • Best Mobile Money Service - Winner: Safaricom and Vodafone - M-PESA. 2008 GSMA Global Mobile Awards - Winner in the Best Broadcast Commercial Category for our entry of The M-PESA ‘Send Money Home’ TVC UN World Business and Develop
Slide 14: Jambo Contact Centre
Jambo Contact Centre Setting Trends • State-of-the-art facility and one of a kind in Africa • Round the clock access to customer service with improved accessibility to the call centre. centre • Headcount has grown 129% in the 12-month period to 1,061 customer care agents from 462 agents as at March
Slide 15: Innovation
Innovation The lowest call rates countrywide Be S South Africa, but keep It local. Call for 5/- or 4/- or 3/- <Gafaricom www.safaricom.co.ke/surf2win | Need to make.a call but have no credit? to receive 50/- credit advance from Safaricom ne BY <Safaricom Ss
Slide 16: Innovation
Innovation Say it in pictures Safaricom
Slide 17: Mr. Chris Tiffin, CFO
Mr. Chris Tiffin CFO <(Safaricd m
Slide 18: Key Financials: Income Statement
Key Financials: Strong Results Against Depressed Economic Conditions INCOME STATEMENT Ksh. (Millions) 31‐Mar‐09 31‐Mar‐08 % change Revenue 70,480 61,369 14.8% EBITDA ((incl Forex)) 27,951 28,041 ((0.3%)) % of Revenue 39.7% 45.7% (6.0%) Depreciation & Amortisation (11,776) (9,683) 21.6% Operating Pro
Slide 19: Key Financial Drivers: Revenue
Key Financial Drivers: Revenue (1) Revenue – Upward trajectory 75,000 70,000 65 000 65,000 9,097 60,000 • SMS, MPESA & Data on an upward trend with 4,972 55,000 83% increase in revenues to 12.9% of total revenue mainly attributed to M-Pesa and 3G. 50,000 45,000 4,043 • Voice revenues continue on an
Slide 20: Key Financial Drivers: ARPU and Churn
Key Financial Drivers: Monthly ARPU (1) (Prepaid/Blended Ksh) (Postpaid Ksh) ARPU & Churn 3,000 10,000 2,500 Average Revenue Per User (ARPU) 6,945 8,000 2,000 5,491 6,000 • Blended ARPU of Ksh. 475 comparatively one of the 1,500 highest in the market 3,872 4,000 1,000 902 3,220 764 799 691 616 500 5
Slide 21: Key Financial Drivers: EBITDA
Key Financial Drivers: EBITDA (1) EBITDA – Resilient (Ksh MM) (% margin) 30 000 30,000 60 53.1 51.7 25,000 45.7 50 • EBITDA growth relatively flat in the 12-month 39.7 period at Ksh. 27.951 reflecting a 0.3% decline 20,000 40 from previous year 28 041 28,041 24,508 15,000 27,951 30 • EBITDA margin d
Slide 22: Key Financial Drivers: Operating Expenses
Key Financial Drivers: Operating Expenses (1) (Ksh MM) 35,000 Opex and SG&A – In line with targets 30,000 5,141 Operating p g Expenses p 25,000 , 6 172 6,172 •Network costs increased as a result of the increased site 20,000 5,723 7,557 roll out and the cost of fuel and electricity. 15,000 3,285 5,78
Slide 23: Key Financials: Balance Sheet
Key Financials Strong Results Against Depressed Economic Conditions BALANCE SHEET KSH (Millions) KSH. (Milli ) 31 31‐Mar‐09 09 31 31‐Mar‐08 08 % change h Non‐current Assets 74,180 61,478 20.7% Current Assets 17,502 12,887 35.8% Total Assets 91,682 74,365 23.3% Share Capital 2,000 2,000 0.0% Share Pr
Slide 24: Key Financial Driver: Base Stations and Capex
Key Financial Driver: Base Stations Capex – Positioned for Growth 1,950 1700 1,700 1,450 • 301 3G enabled base stations – covering Nairobi, Mombasa, Magadi, Eldoret and Naivasha 1,200 1,899 p • Increased site rollout to 1,899 2G base stations up 950 1,558 , from 1,558 in the previous year 700 1,150
Slide 25: Key Financials: Cash Flow Statement
Key Financials Strong Results Against Depressed Economic Conditions CASH FLOW STATEMENT KSH. (Millions) 31‐Mar‐09 31‐Mar‐08 % change Cash from Operating p g Activities 22,931 , 29,554 , ((22.4%)) Investing Activities (23,982) (24,670) (2.8%) Financing Activities & Dividend (171) (5,235) (96.7%) Decr
Slide 26: Financing Update
Financing Update: • Safaricom Ltd has appointed Mandated Lead Arrangers for a benchmark KES denominated public bond offering. • Safaricom is expected to access the debt capital markets in the second half of 2009. • Successful completion of this offering will bring total funding from the Kenyan debt
Slide 27: Mr. Les Baillie, CIRO
Mr. Les Baillie CIRO <(Safaricd m
Slide 28: Shareholder Structure: Free Float
Shareholder Structure Free Float Investor Summary - March 2009 Investor Summary - June 2008 Foreign Foreign Corporate Corporate 14.3% Local Foreign Local 13.2% Individual Individual Individual 41 1% 41.1% 1.1% 41 0% 41.0% Foreign Individual 1.2% Local Corporate Local 44.7% Corporate 43.4%
Slide 29: Shareholder Structure: Shareholder Profile
Shareholder Structure Shareholder Profile Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Movement Local Individual 810,316 806,358 802,187 798,180 798,193 799,805 799,251 798,524 796,945 796,567 (13,749) Local Corporate 30,286 30,545 30,364 30,420 30,271 30,351 30,268 30,276 3
Slide 30: Shareholder Structure: Investor Distribution
Shareholder Structure Investor Distribution 3 500 000 3,500,000 3,000,000 Jun-08 Jul-08 2,500,000 Aug-08 Sep-08 2,000,000 Oct-08 1,500,000 , , Nov 08 Nov-08 Dec-08 1,000,000 Jan-09 500,000 Feb-09 Mar-09 - ≤1000 1,001 - 10,000 10,001 - 100,000 100,001 - 1,000,001 - 10,000,001 - > 100,000,000 1,000,00
Slide 31: Mr. Michael Joseph, CEO
Mr. Michael Joseph CEO <(Safaricd m
Slide 32: Regulatory Environment
Regulatory Environment Kenya Communications (Amendment) Act 2008: • Establishment of a Universal Service Fund • Electronic Transactions Section provides for electronic means to disseminate statutory shareholder information. Migration to the unified licensing regime & licensing of new players • Safar
Slide 33: Economic Conditions
Economic Conditions GDP forecasted growth of 2 - 3%, 3% expected reduction due to: • Disappointing agricultural sector performance (24% of GDP), • Negative balance of trade that is likely to result in reduced Govt. spending • The effects of the global slowdown. Overall Inflation at 25.8% in March 09
Slide 34: Economic Conditions affecting Safaricom
Economic Conditions affecting Safaricom • Increased competition and resultant price war • High Hi h iinflation fl ti lleading di tto llow di disposable bl iincomes • Slowing economy • Significantly weaker shilling • Global financial crisis • High oil prices
Slide 35: Political Environment
Political Environment Political Fall outs have led to: • Depressed investor confidence leading to a weaker shilling as various investors prefer to hold dollars than shillings • Weakening tourism sector • Bear run at the Nairobi Stock Exchange • Delayed capital investment programme g budget • Increas
Slide 36: Challenges across the Sector
Challenges across the Sector: • Competition – 4 players in the mobile telephone market & numerous others in the data market • Regulatory Environment • Inflation; • customers customers’ disposable incomes • Network running costs • Weakening Shilling • Declining Voice ARPUs
Slide 37: Peer Comparison
Peer Comparison Continued Market Leadership April p 08‐ March 09 April p 07‐ March 08 April p 08‐ March 09 April p 07‐ March 08 SAFARICOM SAFARICOM ZAIN ZAIN Revenues (Kes Millions) 70,480 57,780 11,544 11,692 EBITDA (Kes Millions) 27,951 27,994 (2,348) 1,363 % of Revenue 39.70% 48.40% ‐20.30% 11.70
Slide 38: Our Future – Building on our Strengths
Our Future – Building on our Strengths • Maintain #1 Market Position • Significant potential for data growth • Mobile and Fixed Data with increased Wimax coverage • Increase Penetration of New Products • Provide Best Quality and Products • Capex to remain high
Slide 39: Thank You
THANK YOU