Safaricom Plc · NSEKE:SCOM
Safaricom — H1 FY2015 Earnings Presentation
35 slides from Safaricom's earnings presentation, 2014
Slide 1: Safaricom Limited H1-FY15 Presentation
Safaricom Limited H1-FY15 Presentation
Slide 2: Disclaimer
2 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 no
Slide 3: Contents
3 Contents H1 FY15 Highlights H1 FY15 Financial Review Strategic Focus and Guidance
Slide 4: H1 FY15 Highlights
4 H1 FY15 Highlights • Strong commercial and financial performance across all segments and metrics • Continued investment and innovation in network and services • Capex investment of Kshs 12.37bn, up 18% o Significant improvements in voice and data service quality based on our ongoing Best Network i
Slide 5: Strong financial performance
5 Strong financial performance TOTAL REVENUE +15% to Kshs 79.3bn SERVICE REVENUE +14% to Kshs 75.6bn NON-VOICE SERVICE REVENUE +27% to Kshs 31.9bn (SMS, BROADBAND & M-PESA) EBITDA +16% to Kshs 33.5bn NET INCOME +31% to Kshs 14.7bn FREE CASH FLOW +13% to Kshs 15.5bn
Slide 6: Contents
6 Contents H1 FY15 Highlights H1 FY15 Financial Review Strategic Focus and Guidance
Slide 7: Delivering on strategy: Strong financial results
7 Delivering on strategy: Strong financial results Total revenue EBITDA Net income Free cash flow Kshs. Billion Kshs. Billion Kshs. Billion Kshs. Billion +14.6% +16.2% +30.6% +12.7% 33.53 28.86 H1 FY14 H1 FY15 More subscribers 14.6% growth in Driven by growth Positive impact of using our products re
Slide 8: Strong revenue growth in the period
8 Strong revenue growth in the period H1 FY15 Total revenue • 14.6% growth in total revenue Kshs. Billion 14.6% • 4.9% growth in customer base to 21.85m customers (20.82m in H1 FY14) • Voice service revenue growth of 6.4% and non-voice service revenue growth of 26.6% Total revenue breakdown Kshs. Bi
Slide 9: Service revenue: Growth across all segments
Service revenue: Growth across all segments
Slide 10: Voice: Sustained growth momentum
10 Voice: Sustained growth momentum Voice Revenue Kshs. Billion 6.4% • 6.4 % growth in voice service revenue • 4.9 % growth in customers • Improved prepay airtime distribution o Top-up cards distributed in over 270,000 retail outlets and 42 own retail shops o 36.6% of airtime top-ups directly throug
Slide 11: Strong growth in non-voice service revenue
11 Strong growth in non-voice service revenue Non - Voice Revenue • Non-voice service revenue grew 26.6%, now Kshs. Billion 26.6% 40.2% of total revenue • Revenue growth of: • SMS +12.9% • Mobile data +52.9% • Fixed service +22.1% • M-PESA +24.7% • Other service revenue +31.1% (Okoa Jahazi)
Slide 12: M-PESA: Driving financial inclusion
12 M-PESA: Driving financial inclusion M-PESA Revenue Kshs. Billion • 24.7% growth in M-PESA revenue, driven by: 24.7% • 10.8% increase in 30 day active users to 12.80m • 5.88 chargeable transactions per month per 30 day active user (10.9% growth) • Kshs 121.3bn of real time payments per month* • Pe
Slide 13: SMS: Attractive bundles & active users driving growth
13 SMS: Attractive bundles & active users driving growth SMS Revenue Kshs. Billion • 12.9% growth in SMS revenue, driven by; 12.9% • 5.5% growth in 30 day active SMS users to 12.37m • 38.9% increase in active SMS bundle users to 3.50m • 34.6% growth in SMS usage per customer while average blended ra
Slide 14: Data: Customers, usage & devices driving growth
14 Data: Customers, usage & devices driving growth Mobile Data & Fixed Service Revenue Kshs. Billion • Mobile data revenue growth of 52.9% driven by: 46.1% • 23.9% growth in 30 day active mobile data users to 10.51m – now 48% of our customer base • 24.3% increase in mobile data usage per customer wh
Slide 15: Sustained ARPU growth
15 Sustained ARPU growth Voice SMS M-PESA Mobile Data Service ARPU Kshs. Kshs. Kshs. Kshs. Kshs. -1.2% +3.8% +10.8% +18.4% +5.5% Outgoing ARPU Increased 10.9% growth in 24.3% increase in 14.1% increase increased by 7.3%, usage driven chargeable mobile data usage in service but incoming by affordable
Slide 16: Direct Costs increased by smartphone campaign
16 Direct Costs increased by smartphone campaign H1 FY15 Direct costs H1 FY15 Direct costs breakdown Kshs. Billion Kshs. Billion • 16.7% increase in direct costs driven by increased handset costs from the July/August smartphone campaign where we sold smartphones at 30% below cost rather the usual 8%
Slide 17: Continued focus on cost control initiatives
17 Continued focus on cost control initiatives H1 FY15 OPEX Kshs. Billion 25.00 30.0% • Reduced operating costs as % of total revenue to 22.0% from 22.4% 24.6% 23.5% 22.4% 25.0% 20.00 22.0% • 12.1% increase in operating costs versus a 20.0% 14.6% increase in total revenue 15.00 15.0% 17.44 10.0% 10.
Slide 18: Strong growth in EBITDA
18 Strong growth in EBITDA EBITDA Kshs. Billion • 16.2% growth in H1 FY15 EBITDA to Kshs 33.5bn • H1 FY15 EBITDA margin improvement of 0.27 ppt to 41.97%
Slide 19: Largest & Fastest Network in Kenya
19 Largest & Fastest Network in Kenya H1 FY15 CAPEX Base stations Kshs. Billion 18.00 31.0% 35.0% 16.00 30.0% 14.00 25.0% 12.00 10.00 15.0% 20.0% 15.0% 15.5% 8.00 15.51 15.0% 6.00 12.37 10.52 10.0% 4.00 8.55 2.00 5.0% 0.00 0.0% H1 FY12 H1 FY13 H1 FY14 H1 FY15 CAPEX CAPEX Intensity Capital expenditur
Slide 20: Improved cash generation
20 Improved cash generation H1 FY15 Free Cash Flow H1 FY15 Net Cash Kshs. Billion Kshs. Billion • 12.7% growth in Free Cash Flow to Kshs 15.48bn • Kshs 7.5bn corporate bond at 12.25%, from Kshs 13.74bn in H1 FY14 expires Nov 2014 • Driven by improved trading results • Kshs 4.5bn corporate bond at 7.
Slide 21: Key Financials
Key Financials: H1 FY15 H1 FY14 % CHANGE Voice revenue 43.67 41.04 6.4% Messaging revenue 7.17 6.35 12.9% Mobile data revenue 6.50 4.25 52.9% Fixed service revenue 1.49 1.22 22.1% M-Pesa revenue 15.59 12.50 24.7% Other service revenue 1.18 0.90 31.1% Service Revenue 75.60 66.26 14.1% Handset revenue
Slide 22: Contents
22 Contents H1 FY15 Highlights H1FY15 Financial Review Strategic Focus and Guidance
Slide 23: Strategy Overview
23 Strategy Overview • Best Network in Kenya • Grow mobile and fixed data • Partner of choice for business • Deepen financial inclusion • Grow, retain and reward our loyal customer base • Grow youth appeal • High performing innovative organization
Slide 24: Best Network in Kenya
24 Best Network in Kenya What has been achieved Network • Highest data speeds averaging 4.3mbps Performance • Improvements in call drop rates Network Capacity • Initiated redeployment of UMTS 900 solution to increase 3G signal reach and improve & Quality indoor coverage Enhancement • 91% of our Radi
Slide 25: Best Network in Kenya…Cont’d
25 Best Network in Kenya…Cont’d Great Improvement in our Network Quality Commissioned independent drive tests in 13 towns • 5,500kms • 20,000 voice calls • 5,000 data sessions Covered Safaricom and its three competitors Voice tests results Data tests results Operator Call Setup Dropped Call Speech Q
Slide 26: Best Network in Kenya…Cont’d
26 Best Network in Kenya…Cont’d Top Priorities Accelerated • Improve Indoor coverage in 292 Commercial buildings and deploy 155 Small Cell solutions Rollout & Indoor • Complete the UMTS 900 re-farming of 453 sites Coverage • Deploy additional Spectrum from Essar for improved quality of service • Rol
Slide 27: Grow Mobile Data
27 Grow Mobile Data What has been achieved Active data users • Grew active mobile data customers by 24% to10.5m Smartphone users • Increased smartphone users by 104% to 3.1m Daily bundles • Enhanced daily bundles Okoa bundles • Customers can access internet bundles and pay later myTunes • Flexible a
Slide 28: Delighting our customers
28 Delighting our customers What has been achieved New SMS bundles • More affordable SMS bundle options Loyalty program • More flexible options for Customers to utilise their loyalty points Okoa Jahazi • Retained minimum airtime borrowing at Kshs 5 with 5 days repayment period to improve customer ex
Slide 29: Deepening financial inclusion using M-PESA
29 Deepening financial inclusion using M-PESA What has been achieved M-PESA • 30 day active Lipa na M-PESA merchants at 32,300 Everywhere • monthly transactional value to Kshs 3.9bn • 692 FMCG distributors • monthly transactional value to Kshs 2.7bn • Paybill Accounts • monthly transactional value t
Slide 30: Partner of choice of business
30 Partner of choice of business What has been achieved • 63% growth in active SME customers to 37,466 Win In SME • Partnered with KCB • Rolled out dedicated SME support Deepening Wallet • Launched Managed Wide Area Network solutions, IT consulting, and managed Wi-Fi in Share for Business partnershi
Slide 31: Mobile Industry Performance: April - June 2014
31 Mobile Industry Performance: April - June 2014 Safaricom Airtel Orange Yu Quarter June June June ‘14 Mar ‘14 June ‘14 Mar ‘14 Mar ‘14 Mar ‘14 Ending ‘14 ‘14 Key Indicator Market Share by Subscribers 68.0 67.8 15.7 16.5 8.3 7.7 8.0 8.0 (%) Mobile Subscribers in Millions 21.93 21.57 5.12 5.25 2.69
Slide 32: Grow youth appeal
32 Grow youth appeal What has been achieved Brand strength • Youth brand equity is now at 88% and Youth Net Promoter Score (NPS) at 55% Segment growth • Acquired 463k subscribers from the youth segment Activation • Engaged the youth through various activities; including the 7s rugby Series Recruitme
Slide 33: FY15 Guidance
33 FY15 Guidance Free Cash Flow: Expected to be in the range of Kshs 25bn - Kshs 26.5bn This is an upgrade for our underlying business in this financial year after offsetting the cash impact of building part of the national security network for the Kenyan Police which was not included in our previou
Slide 34: H1 FY15 Highlights
34 H1 FY15 Highlights • Strong commercial and financial performance across all segments and metrics • Continued investment and innovation in network and services • Capex investment of Kshs 12.37bn, up 18% o Significant improvements in voice and data service quality based on our ongoing Best Network
Slide 35: Transforming lives is not easy. today we celebrate years
a Transforming lives is not easy. today we celebrate 14 years of doing exactly that and doing it well together. We celebrate staying ahead of the curve and supporting business; delighting our customers and powering Kenya's cashless economy. We celebrate making data accessible, our YOLO attitude and