Safaricom Plc · NSEKE:SCOM
Safaricom — H1 FY2010 Earnings Presentation
36 slides from Safaricom's earnings presentation, Nov 4, 2009
Slide 1: Half-Year Results Presentation
Half-Year Results Presentation S Serena H Hotel,l N Nairobi b 4th November, 2009
Slide 2: Mr. Nicholas Nganga, Chairman
Mr. Nicholas Nganga Chairman
Slide 3: Michael Joseph, Chief Executive Officer
Michael Joseph Chief Executive Officer
Slide 4: Half-Year Highlights
• Arrival and activation of the undersea cable links Key initiatives • Acquisition A i iti off an additional dditi l WIMAX provider id in Data Highliights • Strategic partnership with Jamii Telecom Products & • Launch of Safaricom Live and Mobile DSTV Services • Innovative data products and services
Slide 5: Regulatory Environment
Regulatory Environmentt Kenya Communications (Amendment) Act 2008 • Establishment of a Universal Service Fund Tax Incentives • Mobile M bil phones h and d wireless i l h d handsets are now VAT exempt • Capex on the acquisition or an irrevocable right to use fibre optic cable by a telecommunication o
Slide 6: Plenty of room to grow: Market Penetration Across Africa
Plenty of room to grow Market Penetration Across Africa (September 09) netrattion Zambia • Sub-Saharan Africa remains the Uganda Tunisia fastest growing mobile market in the Tanzania Sudan world with penetration in Kenya South Africa Somalia rising from below 5% in 2002 to 47% Sierra Leone Seychelle
Slide 7: Strong Subscriber growth
Strong Subscriber growth (000 ) (000s) 16,000 14,515 13,914 13,363 117 12,828 115 14,000 112 11,955 139 11,102 132 12,000 10,231 128 9,246 120 10,000 7,957 114 6,913 107 8 000 8,000 6 082 6,082 98 14,398 5,335 13,799 6,000 4,280 4,644 93 12,690 13,251 90 11,823 3,489 3,944 10,974 76 83 10,111 71 9,1
Slide 8: Continued Market Leadership
September 2008 Continued Market Leadership 17% • No.1 Mobile Service provider in Kenya with the largest and most advanced network 2% coverage riberss • 1.15 million Net new subscribers between March-September 2009 • Estimated 83 % of revenue market share Subscr 81% September 2009 14% S 6% 3% 77% Saf
Slide 9: Key Developments: Data
Key Developments: Data
Slide 10: DATA: Embracing New Technology
DATA: Embracing New Technology • The only telecoms operator in Kenya that can deliver data, voice and video, whether fixed or mobile, through a multiplicity of platforms: Fibre,Wimax Fibre Wimax and 3G • SEACOM cable came into operation in end of July increasing our data capacity. TEAMS cable underg
Slide 11: DATA: The world just got smaller
DATA: The world just got smaller • Becoming the ISP of choice for Kenyans, in line with global trends that show most citizens of the developing world will most likely have their first cyber-experience through a mobile handset • Huge savings for firms SMEs, homes and individuals from fast and efficie
Slide 12: The Next Frontier
The Next Frontier Seacom cable operational in end of July • Growth in distinct data users to 1.8 million users in September 2009 p • 180 dealers with a national distribution footprint of 500 retail shops p for mobile data services (Modems)
Slide 13: Innovation
Innovation:
Slide 14: Super Ongea tariff
Super Ongea tariff Supa Ongea is Safaricom’s new revolutionaryy tariff that dynamically y y gives subscribers discounts based on the time and their location at the time of making a call. This first of a kind tariff allows subscribers to enjoy discounts of up to 90% with Supa Ongea. With on-net call
Slide 15: Safaricom Business
Safaricom Business Safaricom launched the Think Safaricom Business marketing campaign to position Safaricom Business as the preferred business communication partner. Through this campaign, campaign we are looking beyond the obvious communication needs of businesses and encouraging them, as partners,
Slide 16: Safaricom Live: Connect, Imagine, Discover
Safaricom Live: Connect, Imagine , Discover • Launch of Safaricom Live: one-stop shop for Music, videos, games, classifieds, sports and much more • Fast internet browsing speeds in real-time
Slide 17: M-PESA: Success through partnerships
M-PESA: Success through partnerships • Partnerships with Banks,ATM service providers, Saccos and MFIs to extend the reach, accessibility and convenience of using M-PESA • Over 27 bulk payment partners who benefit from easy and cheap payments for services, salary, promotions and CSR funds collection
Slide 18: M-PESA: Continued Growth
M-PESA: Continued Growth Cumulative Number of MPESA Users From inception our M-PESA customer 9,000,000 base has grown to 7.9 Million users as 8,000,000 7,000,000 at September 2009 (20% of the population) Number of Userrs 6 000 000 6,000,000 5,000,000 4,000,000 3,000,000 M-PESA is becoming increasing
Slide 19: M-PESA: Continued Growth (P2P value)
M-PESA: Continued Growth Monthly Value of P2P Transactions 25.00 Person-to-Person transactions for 20.00 September p 2009 at Ksh. 22.65 Bn (($ Number of Userrs 15.00 302 Million) 10.00 5.00 0.00 Jan-08 Jul-08 Jan-09 Jul-09 Nov-08 Mar-08 May-08 Sep-08 Mar-09 May-09 Sep-09 C l i Value Cumulative V l o
Slide 20: Financial Highlights
Financial Highlights Turnover 17.8% to Ksh. 40.66 bn EBITDA 10.1% to Ksh. 16.52 bn Shareholders Funds 14.8% to Ksh. 53.78 bn Subscribers 21.4% to 14.51 mn EPS 8.1% to Ksh. 0.168
Slide 21: Chris Tiffin, Chief Financial Officer
Chris Tiffin Chief Financial Officer
Slide 22: Key Financials
Key Financials: Strong results against adverse economic conditions INCOME STATEMENT KSH. BILLIONS Sep‐09 Sep‐08 % CHANGE Revenue 40.661 34.508 17.8% EBITDA 16.517 15.005 10.1% % off R Revenue 40 6% 40.6% 43 5% 43.5% Depreciation & Amortization (6.655) (5.432) 22.5% Operating Profit 9.898 9.573 3.4%
Slide 23: Key Performance Indicators: Revenue
Key Performance Indicators: Revenue Continued Growth R Revenue 80 • Double-digit growth of 17.8% to 70 70.5 Ksh 40.66 Ksh. 40 66 bn 61.4 6.2 60 4.6 • Voice revenue increased by 6.2% to 50 47.4 40.7 77 6% of Revenue (86.1% 77.6% (86 1% Sept 08) 40 4 0 4.0 34.5 28.7 7.2 3.7 30 • Data revenue increased
Slide 24: Key Performance Indicators: EBITDA
Key Performance Indicators: EBITDA Expanding p g Margins g EBITDA (% margin) • Strong EBITDA of Ksh. 16.52 bn which 35 55 51.7 was 10.1% 10 1% higher hi h than th the th previous i year 45.9 30 45.3 43.5 40.6 40.6 45 • Attributable to improved revenue 25 28.6 35 growth and a more stable cost structu
Slide 25: Key Performance Indicators: OPEX
Key Performance Indicators: OPEX Stable Cost Control Operating Expenses 35 Operating Expenses • Commissions (Trade & MPESA) 30 5.1 25 3.0 7.2 • Interconnection Costs – traffic 20 67 6.7 1.8 2.1 increases 15 7.6 3.7 5.8 2.0 4.3 1.3 3.5 10 4.3 4.0 8.8 3.5 • Ac isition Acquisition & Retention costs 7.8
Slide 26: Key Performance Indicators: SG&A
Key Performance Indicators: SG&A Stable Cost Control SG&A Selling Selling, General & Administrative Expenses • Payroll and personnel costs 44.4% 8 2.5 increase 1.7 2.3 1.3 1.3 2.3 4 1.1 0.8 1.3 • Marketing maintained 1.2 1.3 43 4.3 13 1.3 3.2 2.7 2.3 1.5 1.8 0 • Retail shop expansion up 79% from 14
Slide 27: Key Performance Indicators: ARPU & Churn
Key Performance indicators: ARPU & CHURN Robust ARPU (Blended) • Blended ARPU declined 7.3% to Ksh. 466.5 with increased penetration into rural areas and lower average tariffs. tariffs • Marginal reduction of 1.9% from March 2009, with an 8.6% increase in Subscribers over the same period Churn % (Bl
Slide 28: Balance Sheet
Balance Sheet Strongg Fundamentals BALANCE SHEET Sep-09 Sep-08 % Change KSHS (MILLIONS) Non‐current Assets 76,475 66,455 15.1% Current Assets 20,600 13,465 53.0% Total Assets 97,076 79,921 21.5% Share Capital 2,000 2,000 0.0% Share Premium 1,850 1,850 0.0% Retained Earnings 50,121 43,009 16.5% Non‐c
Slide 29: Capital Expenditure
Capital Expenditure Investingg for the Future B Base St Stations ti • Capex investment for the period was Ksh. 8.5 bn increasing total capital investment since i inception i to Ksh. K h 128.3 128 3 bn b • 2G sites increased to 1,972 from 1,741 of which 384 sites upgraded to 3G • Capital expenditure
Slide 30: Cash Flow Statement
Cash Flow Statement Positive CASH FLOW STATEMENT Sep-09 Sep-08 % Change KSHS (MILLIONS) Cash from Operating Activities 7,493 9,648 (22.3%) Investing Activities (8,532) (10,044) (15.1%) Financing Activities and Dividend 4,602 (2,294) (300.6%) Increase/(Decrease) in cash 3,563 (2,690) (232.5%) Movemen
Slide 31: The Future: Challenges
The Future: Challenges
Slide 32: Constraints across the Sector
Constraints across the Sector • Competition – 4 players in the mobile telephone market & numerous others in the data market • Regulatory Environment • Inflation I fl and d generall economic environment: customers’’ disposable incomes • Power/Energy costs increasing Network running costs • Declining
Slide 33: The Future: Initiatives
The Future: Initiatives
Slide 34: Our Future: Building on our Strengths
Our Future: Building on our Strengths
Slide 35: Q&A
Q &A <Safaricom
Slide 36: Thank You
THANK YOU