Safaricom Plc · NSEKE:SCOM
Safaricom — H1 FY2019 Earnings Presentation
26 slides from Safaricom's earnings presentation, Nov 2, 2018
Slide 1: Safaricom PLC HY2019 Results Presentation
Safaricom PLC HY2019 Results Presentation 2nd November 2018
Slide 2: Disclaimer
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 not
Slide 3: Sustained investment in a tough environment
Sustained investment in a tough environment What we have Tailwinds: delivered: Headwinds: 2018 GDP forecast Solid growth Regulatory risks at 5.8%* Low inflation, 4.5% as Sustained network investments Mobile tariffs competition at September 2018** Increased penetration of innovative Political stabilit
Slide 4: People, Purpose
People Purpose Creating value Community 200k+ people economically empowered 15k+ jobs created Customers 2.8m+ students on Shupavu291 6.5% M-PESA Foundation Academy - 100 scholarships Over 96% 2G coverage M-Tiba - 1.2m+ healthcare visits More than 162k M-PESA Agents Contribution to Free medical camps
Slide 5: Connecting
Connecting Fibre 3G 4G Homes Passed People to people, Over 5,500km 91% coverage 53% coverage Over 200k knowledge and From 4,700km HY18 +5ppts YoY +21ppts YoY From 90k HY18 opportunities Enablers Services Cloud Self service Internet of VoLTE channels Things 05
Slide 6: M-PESA: Expanding into new horizons
M-PESA Expanding into new horizons Domestic M-PESA overdraft Global CVM and machine learning From remittances to payments Enterprise payments 500k+ partner agents worldwide Regional Exploring regional opportunities 06
Slide 7: Digifarm: Enabling farmers
Quality & Digifarm Knowledge Affordable input Enabling farmers Market Size Value of agriculture transactions - 2.5Tn Agriculture 26% of Kenya’s GDP* 20m farmers Market Credit & Opportunities Insurance * Source: Food and Agriculture Organisation of the United Nations 07
Slide 8: Masoko: E-commerce connecting sellers and buyers
Masoko E-commerce: connecting sellers and buyers Scale and grow Conceptualization, Challenge Leveraging the Building and testing Logistics opportunities Stable platform Trusted payment platform Simplified customer journey Solutions Big data opportunity 160k agent pick up points Improved check out Und
Slide 9: Reflecting on our Journey
Reflecting on our Journey Listening to our customers “Nawe Kila Wakati.” - Always with you Giving customers more Driving affordability control on: through: • Choice of data speed • More-for-more bundles • Premium rate services • Data freeze & rollover 09
Slide 10: Key Financials
Key Financials Sustained momentum on EPS growth, investment and free cash flow EBIT Service Revenue • KShs 44.6Bn HY19 +18.7% +7.7% • KShs 118.2Bn HY19 YoY YoY • KShs 109.7Bn HY18 • KShs 37.5Bn HY18 Free Cashflow EPS • KShs 38.5Bn HY19 +18.8% +20.2% • KShs 0.79 HY19 • KShs 32.4Bn HY18 YoY YoY • KShs 0
Slide 11: The Numbers
The Numbers *Following the modified retrospective adoption of IFRS 15 - Revenue from Contracts with Customers on 1 April 2018, the Group’s results for the six months ended 30 September 2018 are on an IFRS 15 basis, whereas the results for the six months ended 30 September 2017 are (as previously repo
Slide 12: HY19 Service Revenue
HY19 Service Revenue Growth supported by M-PESA +7.7% YoY M-PESA Mobile Data Fixed Data Others +5.0ppts +1.7ppts +0.6ppts +0.4ppts · +18.2% (YoY) · +10.8% (YoY) · +21.0% (YoY) · +0.7% (YoY) Others: voice, messaging and other service revenue HY16 Revenue Contribution HY19 Revenue Contribution Others
Slide 13: M-PESA Revenue
M-PESA Revenue Growth YoY 49.9% Revenue 29.9% Expanding penetration across 26.2% 24.9% 17.1% multiple use cases 11.6% 8.4% 21.0m 12 Txns ARPU 0.9% 30 day active M-PESA Per customer Withdrawals P2P LNM Others* 10.2% YoY growth customers, 8.8% YoY per month. to KShs 284 HY18 HY19 growth 14.8% YoY grow
Slide 14: Mobile Data Revenue
Mobile Data Revenue Increased usage, drive to <100MBs increase penetration 70% of the data capable phones 61% 74% have usage below 100MBs HY16 in bundle HY19 in bundle data revenue data revenue Usage in MB per user Revenue (KShs Bn) 639.8 17.6m 4x mobile data customers. growth in MBs per user to 19.
Slide 15: Fixed Data Revenue
Fixed Data Revenue Over 5,500Km of fibre laid from 4,700Km in HY18 Over 200k homes passed with FTTH from 90k in HY18 Connecting families Over 2,000 buildings passed with FTTB from 1,600 in HY18 Enabling businesses Smart Home: IoT, Surveillance & Extended Coverage 38% parental 34% control 212 22% 19%
Slide 16: EBIT
EBIT EBIT (KShs Bn) Supported by revenue +3.5ppts 44.6 growth and cost 37.5 optimisation 25.3 31.1 +3.1ppts +0.1ppts +0.3ppts Contribution OpEx Depreciation Margin Intensity HY16 HY17 HY18 HY19 EBIT Waterfall YoY (KShs Bn) 9.3 (0.7) (0.8) (0.1) (0.7) 44.6 EPS (KShs) 37.5 0.79 0.65 0.60 0.45 HY18 HY1
Slide 17: CAPEX
CAPEX CAPEX Allocation CAPEX (KShs Bn) IT Systems, Other Capex, 36.3 10.1% 6.5% 35.3 35-38* 33.3 Fixed Network, 9.1% 20.0 18.9 17.4 17.0 Operations, 7.1% Core Network, Radio Access, 7.0% 51.2% FY15/16 FY16/17 FY17/18 FY18/19 Transmission, FY Capex HY Capex 9.0% Capex intensity Sites • Sites +8.6% Yo
Slide 18: Guidance maintained on EBIT and CAPEX
Guidance Guidance maintained on EBIT and CAPEX EBIT CAPEX From FY19 Guidance FY19 Guidance KShs 36.4Bn FY18 KShs 35Bn - 38Bn From KShs 85Bn - 89Bn KShs 79.3Bn FY18 18
Slide 19: Safaricom Twaweza
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Slide 20: Appendices
Appendices Safaricom Twaweza
Slide 21: Statement of Income
Statement of Income Key Highlights HY 19 HY19 HY18 YoY% KShs Bn IFRS 15 IAS 18 IAS 18 IAS 18 Voice revenue (Outgoing & Incoming) 47.53 48.03 47.35 1.4% Messaging revenue 9.67 8.81 8.92 (1.2%) Mobile data revenue 19.01 19.45 17.55 10.8% Fixed service revenue 3.84 3.91 3.23 21.0% M-PESA revenue 35.52
Slide 22: Statement of Income
Statement of Income Contribution Margin to Net Income HY19 HY19 HY18 YoY% KShs Bn IAS 18 IAS 18 IFRS 15 IAS 18 Direct costs M-PESA Commissions (10.59) (10.59) (9.62) 10.0% Airtime Commissions (5.50) (5.50) (5.79) (4.9%) Licence Fees (5.19) (5.20) (4.92) 5.6% Interconnect & Roaming (3.61) (3.61) (3.6
Slide 23: Free Cashflow
Free Cashflow Key Movements Lorem ipsum HY19 HY19 HY18 YoY% KShs Bn IFRS 15 IAS 18 IAS 18 IAS 18 Cashflow Trading cash flow (EBITDA) 61.79 62.12 54.27 14.5% Movement in inventory (0.48) (0.48) (1.69) (71.9%) Movement in receivables (4.63) (4.63) 1.35 <100.0% Movement in payables 11.56 10.55 9.24 14.1%
Slide 24: Net Cash & Usage
24 Open ing Balan ce FY 18 9.5 EBITD A 62.1 Cashflow Norm al Divid ends Net Cash & Usage (KShs Bn) (11.0) Cape x (16.9) Tax paid (13.7) Work ing 5.4 Capit al Net 1.3 Inter est Closi ng Balan ce HY 19 36.7
Slide 25: Revenue and Customer Evolution
Revenue and Customer Evolution Voice & SMS Revenue % of SR M-PESA Revenue % SR Mobile Data Revenue % SR Fixed Data Revenue % SR 67.6% 27.4% 30.0% 16.0% 16.5% 3.3% 55.4% 26.4% 2.9% 51.3% 22.8% 13.7% 48.1% 35.5 10.8% 2.2% 2.4% 30.1 19.5 3.9 56.3 56.8 17.5 3.2 25.9 13.4 54.3 1.9 2.4 53.2 19.4 9.2 HY16
Slide 26: M-PESA Value of transaction
M-PESA Value of transaction 4Year CAGR 24.1% 2,475 3,226 3,833 4,727 HY 2019 CAGR YoY 4Years 1,638 43% 55% 1,147 884 7% 11% 812 828 441 769 644 1,147 28% 21% 896 755 644 10% 12% 889 962 1,058 746 HY16 HY17 HY18 HY19 Deposits P2P Transfers Withdrawals Other* 26 * B2C, C2B, B2B, Lipa Na M-PESA, IMT, G