Safaricom Plc · NSEKE:SCOM
Safaricom — Investor Day (February 2023)
68 slides from Safaricom's investor day presentation, Feb 15, 2023
Slide 1: Safaricom Plc Investor Day
SAFARICOM PLC INVESTOR DAY Theme: Driving Purpose-Led Growth 15th February 2023 C2 - Safaricom Internal
Slide 2: Agenda
AGENDA TIME (EAT) TOPIC SPEAKER 7:30 – 8:30 Arrival & Registration 8:30 – 9:00 Welcome Note, Macros & Strategy Update Peter Ndegwa - CEO Safaricom PLC 9:00 – 9:30 Embedding Purpose Karen Basiye - Director Sustainable Business & Social Impact 9:30 – 10:30 Financial Services Boniface Mungania - Interi
Slide 3: CEO Business Overview
CEO BUSINESS OVERVIEW SAFARICOM INVESTOR DAY Driving Purpose-Led Growth C2 - Safaricom Internal
Slide 4: The Board of Directors
THE BOARD OF DIRECTORS C2 - Safaricom Internal
Slide 5: Safaricom Plc Board
SAFARICOM PLC BOARD Adil Arshed Khawaja Chairman Rose Ogega Winnie Ouko Dilip Pal Peter Ndegwa Michael Joseph Independent Non-Executive Independent Non-Executive Shameel Joosub CFO & Alternate Director CEO & Executive Director Non-Executive Director Director Director Non-Executive Director to CEO Pr
Slide 6: Safaricom Plc Senior Leadership Team
SAFARICOM PLC SENIOR LEADERSHIP TEAM C2 - Safaricom Internal
Slide 7: Safaricom Plc Senior Leadership Team
SAFARICOM PLC SENIOR LEADERSHIP TEAM Peter Ndegwa Chief Executive Officer Fawzia Ali-Kimanthi Nicholas Mulila Dilip Pal Interim Chief Consumer Business Stephen Kiptinness Paul Kasimu Chief Corporate Chief Finance Officer Unit Officer Chief Corporate Affairs Officer Chief Human Resources Officer Secu
Slide 8: Other Members of Senior Leadership Team
OTHER MEMBERS OF SENIOR LEADERSHIP TEAM Boniface Mungania Interim Chief Financial Services Officer Zizwe Awuor-Vundla Denish Osodo Lucille Aveva transitioning to Director-Public Sector Director – Brand & Marketing Director – Internal Audit Director – Customer Obsession Digital Transformation C2 - Sa
Slide 9: Safaricom Ethiopia Senior Leadership Team
SAFARICOM ETHIOPIA SENIOR LEADERSHIP TEAM Anwar Soussa Chief Executive Officer Charles Wanjohi Paul Kavavu Chris Lazarus Masahiro Miyashita James Maitai Chief Consumer Business Chief Financial Chief Enterprise Chief Strategy Officer Chief Technology Officer Officer Services Officer Business Officer Andar
Slide 10: Safaricom Spirit and People
SAFARICOM SPIRIT AND PEOPLE C2 - Safaricom Internal
Slide 11: Our Culture
SAFARICOM SPIRIT IS GUIDED BY BELIEFS, BEHAVIOURS AND LANGUAGE PURPOSE CUSTOMER OBSESSION ✓ BELIEF – We transform lives ✓ BELIEF – We are simple, transparent, honest ✓ BEHAVIOUR – We are purpose driven ✓ BEHAVIOUR – Ready, Willing and Able (RWA) ✓ LANGUAGE – I am Safaricom ✓ LANGUAGE – I am notoriou
Slide 12: We Have Embedded Customer Obsession at the Core of Our Business
WE HAVE EMBEDDED CUSTOMER OBSESSION AT THE CORE OF OUR BUSINESS Customer Obsessed Pillar Pillar Transparent & Targeted Culture Offers 6 1 Pillar Pillar Intuitive and Secure Omni Channel Excellence 5 CUSTOMER 2 M-PESA Journey OBSESSED Pillar Pillar Usage Driven Network & Seamless Fibre Systems Superi
Slide 13: ...And Focusing on Three Areas on People
...AND FOCUSING ON THREE AREAS ON PEOPLE Agile Operating Model Future Ready Talent Culture #702 Employees upskilled in Fintech craft 94% of staff understand Spirit of Safaricom pillars 36% (2,037) of the employees are fully Agile • 94% Purpose (in Technology, Fixed Enterprise, Financial Services, Mo
Slide 14: Our Purpose
OUR PURPOSE C2 - Safaricom Internal
Slide 15: We Are Committed to Our Purpose of Transforming Lives
WE ARE COMMITTED TO OUR PURPOSE OF TRANSFORMING LIVES We are committed to creating shared value guided by: True Value Assessment* Our Purpose Impact on Society Economic value added Kes. 393Bn Transforming Lives 10.4x more than profit generated through operations and taxes Our Vision To be a purpose-
Slide 16: Business Overview
BUSINESS OVERVIEW C2 - Safaricom Internal
Slide 17: Safaricom at a Glance
SAFARICOM AT A GLANCE 97% #1 Market Share 66% 4G 5G Telecom operator in Kenya Population covered by First to market (Q1 CA* Sector Statistics Report Sep 2022) our network 43.2Mn 31.2Mn ~540k ~263k ~120k Customers M-PESA Customers M-PESA Merchants M-PESA Agents Monthly active Business Super app users
Slide 18: Our Revenue Mix Is Changing Driven by Data and M-PESA
OUR REVENUE MIX IS CHANGING DRIVEN BY DATA AND M-PESA +12.3% +4.5% -0.3% 281,108 Absolute Service 251,214 250,351 Revenue (SR) 240,303 38.3% 31.2% 33.6% 33.0% 16.1% 16.0% 17.9% 17.2% Contribution to SR 36.6% 34.4% 33.0% 29.6% 16.1% 16.0% 16.0% 16.1% 14.9% 2019 2020 2021 2022 M-PESA Mobile Data Voice
Slide 19: Driving Affordability in Voice, Data & M-PESA
DRIVING AFFORDABILITY IN VOICE, DATA & M-PESA Voice Data M-PESA Rate per Min (Kes) 0.29 Rate per MB (Kes) 2.59 (42%) 0.23 (69%) Affordable Credit (Fuliza) 2.33 2.26 0.16 1.70 0.13 - 50% reduction in cumulative cost of 0.09 1.51 credit Price - Zero interest for transactions of below 1k for the first
Slide 20: Market and Regulatory Context
MARKET AND REGULATORY CONTEXT C2 - Safaricom Internal
Slide 21: Our Operating Environment, Operational Risks & Customer Insights
OUR OPERATING ENVIRONMENT, OPERATIONAL RISKS & CUSTOMER INSIGHTS Macro-Economic Regulatory Cyber, Privacy, Resilience Risks • Slowing GDP • Mobile Termination Rate reduction • Increased Cyber threats • High inflation (Food, energy) • Fiscal pressure (increased taxation) • Heightened Anti Money laund
Slide 22: We Are Developing Sustainable Operations
WE ARE DEVELOPING SUSTAINABLE OPERATIONS DELIVERING MORE VALUE FUNDING NEW MITIGATING EMERGING PROTECTING MARGINS & TO CUSTOMERS GROWTH RISKS PROFITABILITY • Mobile Termination Rate • We have continued to • Expanding into Ethiopia (MTR) reduced from 0.99 • Sustaining good returns is make our product
Slide 23: Strategy Execution Highlights
STRATEGY EXECUTION HIGHLIGHTS C2 - Safaricom Internal
Slide 24: Our Strategy
OUR STRATEGY Transforming lives Purpose FY23 Focus is; Vision To be a Purpose-Led Technology Company To accelerate new growth Areas delivering superior customer experience Transformation Goal A digital-first, insights-led organisation that enables platforms and ecosystem partnerships by 2023 in orde
Slide 25: Safaricom Is Undergoing Its Third Growth Phase
SAFARICOM IS UNDERGOING ITS THIRD GROWTH PHASE 2000s: Market 2010s: 2020s: What will drive leadership in mobile The M-PESA revolution our next S-curve? • We built a telco business providing connectivity • We drove financial inclusion for the first time for 15Mn Kenyans by 2010 (~32Mn as at HY23) for
Slide 26: We Are Accelerating Growth Opportunities and Driving Execution
WE ARE ACCELERATING GROWTH OPPORTUNITIES AND DRIVING EXECUTION People, Organisation and Digitization, Big Data and Financial Services Scale New Growth Areas Mobile Data Spirit Analytics • Lending • Ethiopia • 4G Device penetration • Agile operating model • Customer Value • Wealth • Government • Devi
Slide 27: Embedding Purpose
EMBEDDING PURPOSE Impacting 45 Mn Lives by 2025 Driving Purpose-Led Growth C2 - Safaricom Internal
Slide 28: Transforming Lives
TRANSFORMING LIVES Vision Our Mission The Pillars Our Promise Areas of Transformation Our Principles C2 - Safaricom Internal
Slide 29: Our Purpose Pillars
OUR PURPOSE PILLARS Creating Operating Our People Shared Value For the Planet Responsibly & the World • Creating digital societies • Net Zero by 2050 • Ethics and Integrity Around Us through our products and services • Building a Circular • Anti- bribery and • Leverage our brand & Economy corruption
Slide 30: Our Environmental Commitment
OUR ENVIRONMENTAL COMMITMENT We recognize that environmental considerations are not separate from our core business, but an integral part of our overall business growth, sustainability, and success. We are committed to transforming lives of our customers and We manage and stakeholders in an report o
Slide 31: Our Planet Projects Portfolio
OUR PLANET PROJECTS PORTFOLIO Environmental Circular Economy Climate Change Compliance Vision: Build a circular economy Vision: To be a Net Zero Company by 2050 & to decarbonize society • 100% conformance to all • Transforming value chains to national and regional create low-waste and • 100% Renewab
Slide 32: Our Foundations
OUR FOUNDATIONS C2 - Safaricom Internal
Slide 33: Our Foundations
OUR FOUNDATIONS THE FOUNDATIONS KEY PILLARS IMPACT Education 7 Mn people Health Environment, Water and over 2,000 Livelihoods partners Economic Empowerment Footprint: 47 counties Disaster Response C2 - Safaricom Internal
Slide 34: Our ESG Impact/Contribution
OUR ESG IMPACT/CONTRIBUTION 5Mn trees grown in 7Mn Lives touched by the government degraded forests Foundations across the country 1,693 tonnes of e-waste 3% of workforce persons with collected disabilities 5,000 Solar PVs installed 6.45% of our total procurement spend going to marginalized groups i
Slide 35: Financial Services
FINANCIAL SERVICES SAFARICOM INVESTOR DAY Driving Purpose-Led Growth C2 - Safaricom Internal
Slide 36: Phases of Deepening Financial Inclusion
3 PHASES OF DEEPENING FINANCIAL INCLUSION Empowerment Payment Platform Remittance Digitization Digitization Consumer digital Global lifestyle Digital Banking E-commerce Integrated solutions Cash in/Cash out Savings & credit Buy airtime Wealth Mgmt P2P Transfers APIs & Embedded Insurance platforms pa
Slide 37: M-PESA Has Evolved into a Three-Sided Ecosystem
M-PESA HAS EVOLVED INTO A THREE-SIDED ECOSYSTEM POWERED BY A ROBUST FINTECH TECHNOLOGY PLATFORM Business Developer Ecosystem Consumer Mini B2B Apps B2C Credit 4.6Mn Merchants 61K 41.5Mn C2B Wealth 263K M-PESA Agents Developers Customers P2P Insurance Target Addressable Target Addressable 32Mn 30-day
Slide 38: M-PESA Vision: Turbo Charge M-PESA Growth
M-PESA VISION: TURBO CHARGE M-PESA GROWTH IN ORDER TO BE THE LARGEST FINTECH PLATFORM AND DIGITAL ECOSYSTEM IN KENYA & AFRICA Powered by state of the art, common technical platforms We are building a fully-fledged lifestyle super-app with mini apps capabilities, Next Generation Tech exposing the bes
Slide 39: Fintech Services Affordability - Cost Reduction Driving Increased Velocity
FINTECH SERVICES AFFORDABILITY - COST REDUCTION DRIVING INCREASED VELOCITY KADOGO AFFORDABLE CREDIT TARIFF REDUCTION Zero-rated charges for transaction ticket 50% reduction in Fuliza cost of credit • 46% reduction in P2P charges (2021) sizes of 100/- and below for paybill & First 3 days have a waive
Slide 40: Strategic Thrusts Will Enable Us Achieve Growth
5 STRATEGIC THRUSTS WILL ENABLE US ACHIEVE GROWTH Growth Electronic payments Financial services New opportunities ARPU growth Expansion to Accelerated active merchant Deployment of existing and Introduction of new financial new customer demographics acquisition with enhancement new credit offerings
Slide 41: Enterprise Business
ENTERPRISE BUSINESS SAFARICOM INVESTOR DAY Driving Purpose-Led Growth C2 - Safaricom Internal
Slide 42: Mission: Purpose Led Technology Company by 2025
MISSION: PURPOSE LED TECHNOLOGY COMPANY BY 2025 Enterprise Business Unit Focus: Accelerate Customer Digital Transformation in order to Scale Tech Solutions Kes 36Bn 27% 3 Year Revenue CAGR Safaricom Enterprise Revenue – FY22 Source: Safaricom Data C2 - Safaricom Internal
Slide 43: Our Customers
OUR CUSTOMERS Economic Spend Kes 3.4Bn Kes 11.4Trn Kes 2.27Trn Kes 35Bn Mns Tens of Thousands Thousands Tens Customer Size Medium/Large Micro/Small Enterprise Public Wholesale Segments Mama Mboga Architect/Professional Services Registered MNC SME County National Agencies ISP Resellers MNO’s Farmer M
Slide 44: Kenya's Enterprise Space on the Cusp of a Digital Explosion
KENYA’S ENTERPRISE SPACE IN THE CUSP OF A DIGITAL EXPLOSION Government Infrastructure Ballooning The Case for Digital Digital Masterplan Growth Hub Security Needs Transformation 100,000 121.2% USD 8.4Trn 58% kms of fibre IP avg growth rate vs 18% globally cost to the global economy Kenyans buy onlin
Slide 45: Enterprise Market Opportunity
ENTERPRISE MARKET OPPORTUNITY Fibre Penetration Cloud Cyber Security Spend Internet of Things Kenya Middle East & Africa 8% Kes 2X growth 4X growth 12.4Mn 18 (Kes Bn) 8.2Trn Kes Kes 8.1Bn Businesses & 9 Kes 1.5 Bn Est. Kenya Households Market Size 9 2.3Trn 4 92% Managed Public Cloud Services Service
Slide 46: Enterprise Business Strategy
ENTERPRISE BUSINESS STRATEGY 1 2 3 Empower Investing Digitize for Growth/Transformation for the future Credit Fintech Cloud CAPEX OPEX SaaS Enablement + National IaaS Market Tech stack Apps Regional PaaS Expansion Global Managed Secure Security as Services Smart IoT Connectivity Fundamental Eco-syst
Slide 47: Our Commitment and Outlook
OUR COMMITMENT AND OUTLOOK Commitment Success Measures Drive higher penetration of fiber, 4G & 5G No. 1 Provider in the Market Shift in revenue mix towards ICT and IoT. Double Digit Revenue Growth. Build the right partnership models to scale Healthy EBITDA growth and margins Preferred Enterprise E2E
Slide 48: Technology
TECHNOLOGY SAFARICOM INVESTOR DAY Driving Purpose-Led Growth C2 - Safaricom Internal
Slide 49: Safaricom Network at a Glance
SAFARICOM NETWORK AT A GLANCE Safaricom Network Coverage Coverage Infrastructure >12,000 Km of Metro Fiber rolled out in all the 2G (97% Pop coverage) 47 counties 3G (97% Pop coverage) 75% of sites on Fiber 4G (97% Pop coverage) FTTB: >6,000 Buildings on fiber. 5G Sites launched in Nairobi, Kisumu,
Slide 50: Customer Demand Continues to Increase
CUSTOMER DEMAND CONTINUES TO INCREASE 200,000 Data Volume in TB 55 %YoY 4G has overtaken 3G devices Mobile Home ENT 14 150,000 Millions 12 100,000 10 8 50,000 6 3G Devices 4G Devices 4 0 2 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 0 2021 2022 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Slide 51: Towards a Purpose-Led Technology Company
TOWARDS A PURPOSE-LED TECHNOLOGY COMPANY C2 - Safaricom Internal
Slide 52: Revenue and Service Driven by Customer Insight
REVENUE AND SERVICE DRIVEN BY CUSTOMER INSIGHT 5,000+ data points about our customers Real-time customer experience measure across all channels and usage C2 - Safaricom Internal
Slide 53: Use Scale and Technology to Drive Lowest Cost of Production
USE SCALE AND TECHNOLOGY TO DRIVE LOWEST COST OF PRODUCTION DIGITAL CUSTOMER INTERACTIONS 25 20 15 %, cost Cost to Serve 10 Cost to Operate 5 Robotic Process Automation 0 across the company Cost to Build Cost to Run Vodafone Procurement >1,400 Solar sites, 22% Company Partner electricity savings C2
Slide 54: Financial Services - System of Innovation
FINANCIAL SERVICES – SYSTEM OF INNOVATION Access Channels Security App Intrusion Prevention USSD Web Protection Innovation and API’s integration Sim Toolkit End to End Encryption 700+ APIs to support core system integration 35,000 3rd party Integrations Lending Platform 3rd party interactions >50,00
Slide 55: Complementing Technologies to Deliver Broadband
COMPLEMENTING TECHNOLOGIES TO DELIVER BROADBAND 5G Devices 4G FWA*: Nationwide 4G 250,000 228,114 coverage, medium usage 200,000 150,000 5G FWA: High usage and 5G 100,000 higher speeds 50,000 FTTX 0 Enterprise Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep & HOME Fiber: High usage and high Cust
Slide 56: #1 Place to Work for Engineers
#1 PLACE TO WORK FOR ENGINEERS Continue to develop capabilities internally While focusing on career development and Falcon employee experience 300 Developers recruited last 2 years Customer Safaricom App Enterprise Sales Force 93% ‘My squad/team works together effectively using Agile ways of working
Slide 57: Ethiopia Business Overview
ETHIOPIA BUSINESS OVERVIEW SAFARICOM INVESTOR DAY Driving Purpose-Led Growth C2 - Safaricom Internal
Slide 58: Ethiopia at a Glance
ETHIOPIA AT A GLANCE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Tigray Ethiopia is a federal parliamentary republic; the Prime Minister is the head of government, and the President is the head of state but with largely ceremonial powers. Afar Amhara 1 9 2 Federal Autonomous City Administrations Benisha
Slide 59: Ethiopia - Opportunities
ETHIOPIA - OPPORTUNITIES Population Opportunity 119Mn 63Mn (+18yrs) 22% 78% Urban Rural 13.5Mn (14-18yrs) 35% Financially Included 57% Mobile Penetration $4.2Bn Annual Inward Remittance 10K Large Enterprises 240K Small & Micro Enterprises Source – Ethiopian Diaspora Agency(Fiscal year 2021/22), http
Slide 60: Ethiopia - Country Operating Context
ETHIOPIA – COUNTRY OPERATING CONTEXT Economy Regulatory Political/Security • GDP - GDP Growth in 2023 expected to be • Ethio telecom Privatization – 45% of Ethio 6.2% compared to average of 9.1% (2011- telecom privatization has been announced in • An overall stable environment currently 2020) Februa
Slide 61: Safaricom Ethiopia | Purpose, Vision, Values
SAFARICOM ETHIOPIA | PURPOSE, VISION, VALUES Transforming Lives for a Digital Future Purpose Loved and Innovative Brand Vision Further Ahead Together Brand Promise • Customer Obsessed • Speed & Innovation • Trust & Respect • Compliance & Integrity Values Culture & • Earn Customer Loyalty • Create th
Slide 62: Ethiopia - Our People
ETHIOPIA – OUR PEOPLE Purpose Ensure everyone at Safaricom Ethiopia Talent& Guaranteeing diverse talent and critical skills lives the Spirit /Culture Pillars and Values. Performance needed now and in future. Employee Deliver employee experience that unlocks Future fit Shaping an effective & efficien
Slide 63: Safaricom Ethiopia at a Glance
SAFARICOM ETHIOPIA AT A GLANCE Mobile Data Customer 2 Mn Gross Adds Population Covered ~11 Mn (10%) 25 Penetration Cities 64% of Customer Active base Voice Usage ~103 ~5k ~28k 64 mins/customer/month Data Usage Distributor shops Acquisition Agents Retailers 1.9GB/ customer/Month 847 754 Permanent Emp
Slide 64: Ethiopia - Cities Covered
ETHIOPIA – CITIES COVERED C2 - Safaricom Internal
Slide 65: Fastest Mobile Network in Ethiopia
FASTEST MOBILE NETWORK IN ETHIOPIA 847 Sites In service C2 - Safaricom Internal
Slide 66: Ethiopia - M-PESA Entrance to Ethiopia
ETHIOPIA – M-PESA ENTRANCE TO ETHIOPIA • Ethiopian Parliament enacted the National Payment System legislation for opening the mobile financial services sector to foreign investment on 22nd Dec 2022. • We are in discussions with the Ministry of Finance (MoF) to agree on the terms and conditions of in
Slide 67: Ethiopia - M-PESA Strategy
ETHIOPIA – M-PESA STRATEGY Transforming Lives for a digital future Purpose To build a robust digital platform for inclusive financial services Vision Mission To deepen financial inclusion and promote a cash-lite economy to empower customers and businesses Ubiquitous M-PESA Superior Customer Digital
Slide 68: C2 - Safaricom Internal
TUIN‘ ‘ANE Let’s Go Beyond Simple * Transparent * Honest FOR YOU