Safaricom Plc · NSEKE:SCOM
Safaricom — H1 FY2017 Earnings Presentation
31 slides from Safaricom's earnings presentation, Nov 4, 2016
Slide 1: Safaricom Limited H1FY17 Results Presentation
Safaricom Limited H1FY17 Results Presentation 4 November 2016
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: Content
CONTENT 01. Our Transforming Lives Story 02. Delivering Our Strategy 03. The Numbers 04. Way Forward
Slide 4: Our Transforming Lives Story
OUR TRANSFORMING LIVES STORY 16 Years Of Inclusive Growth
Slide 5: The Story Of A Base Station
OUR TRANSFORMING LIVES STORY The Story Of A Base Station Access Safety Health Connectivity Well-Being Education Dignity
Slide 6: Solutions That Transform Lives
OUR TRANSFORMING LIVES STORY Solutions That Transform Lives th Ag l ric ea u H ltu Fertilizer subsidy with re Government of Kenya Connected Farmers Alliance (CFA) lusion Ed nc u l I c a a i t c i n o a n Chakula Chap Chap in F Safaricom, UNHCR and WFP partnership Other
Slide 7: Case Study: Chakula Chap Chap – Dignity Restored
OUR TRANSFORMING LIVES STORY Case Study: Chakula Chap Chap – Dignity Restored Dignity
Slide 8: Building A Sustainable Future
OUR TRANSFORMING LIVES STORY Building A Sustainable Future 7
Slide 9: Delivering Our Strategy: Focus. Fix. Fine Tune.
DELIVERING OUR STRATEGY Focus. Fix. Fine Tune.
Slide 10: Enhancing Our Relationship With The Customer
DELIVERING OUR STRATEGY Enhancing Our Relationship With The Customer ways in Contro Al l “Simple, predictable, convenient solutions” • Safaricom App • Hakikisha “We value Rew your Connectivity Business ard and Loyalt “Best and Network WE CARE Patronage” for You” • Call Drop • Bonga Points Guarantee
Slide 11: Leveraging Partnerships To Meet Customer Needs
DELIVERING OUR STRATEGY Leveraging Partnerships To Meet Customer Needs Spark Fund Investments H1FY16 H1FY17 Innovation Co-creation 47% 53% 53% 47% and Partnerships Non-voice Voice Non-voice Voice
Slide 12: Building A Network For The Future
DELIVERING OUR STRATEGY Building A Network For The Future Over 600 4G sites Over 16,000 homes M-PESA passed with High availability Speed Fibre close to 100% Over 4,000 2G sites. 80% 3G population coverage
Slide 13: Our Growth Strategy
DELIVERING OUR STRATEGY Our Growth Strategy Customer First Relevant Products • Revenue Operational • EBITDA Excellence • Net Income • Free CashFlow
Slide 14: The Numbers
The Numbers
Slide 15: Strong Financial Performance | Key Financials H1FY17
Strong Financial Performance | Delivered By Our Purpose And Strategy Key Financials H1FY17 H1 FY16 YoY% Service Revenue 98.0 84.9 +15.4% EBITDA 50.8 38.8 +30.8% Underlying EBITDA* 47.4 38.8 +22.2% Net Income 23.9 18.1 +32.4% Free Cash Flow 20.1 9.5 +111.6% *Excludes one off adjustment of Shs 3.4Bn
Slide 16: H1 Service Revenue Driven By M-PESA & Mobile Data
H1 Service Revenue | Driven By M-PESA & Mobile Data Outgoing Voice +15.4% YoY · +0.9ppts (+1.9% YoY) · 43% of Service Revenue M-PESA +7.7ppts Mobile Data +4.9ppts Messaging · +0.7ppts (+8.1% YoY) · +33.7% (YoY) · +46.3% (YoY) · 8.8% of Service Revenue · 26.4% of Service Revenue · Total data 16.0% of
Slide 17: M-PESA Revenue Delivers Growth Driven By Deeper Customer Engagement
M-PESA Revenue | Delivers Growth Driven By Deeper Customer Engagement Bread and Butter +7.7 ppts • Person to Person transfers (P2P) +19% YoY • Withdrawals +21% YoY Bread & Butter +3.9 ppts New Business +3.8 ppts New Business (P2P & Withdrawals) (C2B,B2C,B2B,LNM,etc.) • Customer to Business (C2B) • 7
Slide 18: M-PESA Transaction Values
M-PESA Transaction Values | Growth Continues In Bread And Butter, Acceleration From New Business Shs ‘Bn’ 5 YR CAGR +27% 3,500 H1 CAGR 3,226 YoY% 5 Years 3,000 813 +84% +78% 2,500 2,475 441 2,000 1,972 768 +19% +21% 242 644 1,555 1,500 150 544 1,237 755 +17% +17% 82 436 644 1,000 357 557 464 401 500
Slide 19: Mobile Data Revenue | Customers And Usage Driving Growth
Mobile Data Revenue | Customers And Usage Driving Growth +4.9ppts • Mobile Data ARPU* – Shs 144 +21% (YoY) • Usage per customer per month at 231MBs +44% (YoY) Active customers +2.3ppts ARPU +2.6ppts • Total mobile data volume (Bn) - 21.1MBs +74% (YoY) • Rate/MB - Shs 0.63 reduced - 16% (YoY) Mobile
Slide 20: Traditional Telco Revenue Streams
Traditional Telco Revenue Streams | Voice As Well As SMS Continues To Deliver Growth Voice Revenue (Shs Bn) Messaging Revenue (Shs Bn) 45.7 45.2 43.7 41.0 8.6 8.0 37.4 7.2 6.4 4.3 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 • 30 day active voice customers, 21m +6.8% (YoY) •
Slide 21: EBITDA | Supported By Revenue Growth And Cost Management
EBITDA | Supported By Revenue Growth And Cost Management +30.8%* EBITDA *Underlying EBITDA growth +22.2%(YoY) +22.0% 9.3%** **Operating expenses (OpEx) growth excludes Contribution Margin OpEx forex on trading activities 50.8 EBITDA (Shs Bn) 44.2 38.8 37.7 33.5 32.0 28.9 26.9 22.3 H1FY13 H2FY13 H1FY
Slide 22: Operational Excellence In Managing Costs
Operational Excellence | In Managing Costs Contribution Margin (Shs Bn) OpEx (Shs Bn) and OpEx Intensity (%) 23.5% 25.0% 102.0 2.3 25.0 22.4% 22.0% 22.5% 21.0% 8.5 5.5 20.0% 5.0 71.8 20.0 6.6 3.6 21.0 3.4 20.0 17.4 15.0% 15.0 15.6 13.9 10.0% 10.0 5.0% 5.0 0.0% - e es s ts i H1FY13 H1FY14 H1FY15 H1FY
Slide 23: Operational Excellence | Wide Network For Our Customers
Operational Excellence | Wide Network For Our Customers Capex (Shs Bn) 20.0 Base Stations 18.9 4,061 3,562 3,247 3,221 12.4 2,984 10.5 2,281 8.6 1,973 1,650 635 379 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 H1FY14 H1FY15 H1FY16 H1FY17 Total (inc 2G) 3G 4G % Five Year FY Capex Intensity Sites • 2G sites gro
Slide 24: Free Cash Flow | Growth Delivered By Rising Trading Performance
Free Cash Flow | Growth Delivered By Rising Trading Performance Free Cash Flow (Shs Bn) Net Cash Position (Shs Bn) 50.8 43.0 (19.0) (16.5) (12.3) 26.5 20.1 (0.1) 0.7 EBITDA Capex Tax Working Net Free Cash & cash Bank Net cash Capital Interest cash flow equivalents Borrowings Free cash flow up, +111.6%
Slide 25: Key Financials | Statement Of Income
Key Financials | Statement Of Income H1 FY17 H1 FY17 YoY% YoY% Shs Bn H1 FY16 Reported Normalized** Reported Normalized Voice rev enue (Outgoing & Incoming) 45.70 45.70 45.19 1.1% 1.1% Messaging rev enue 8.63 8.63 7.98 8.1% 8.1% Mobile data rev enue 13.40 13.40 9.16 46.3% 46.3% Fixed serv ice rev en
Slide 26: Way Forward: Sustainable Growth For Kenya
WAY FORWARD SUSTAINABLE GROWTH FOR KENYA
Slide 27: True Value Highlights FY 2015/16
WAY FORWARD TRUE VALUE HIGHLIGHTS FY 2015/16 413.86 REVENUE GENERATION IMPACT ON KENYAN IN THE ECONOMY HOUSEHOLDS 383.36 305.2 SHS BILLION SHS BILLION An increase from 18% more than the SHS BILLION Kes 245bn in 2014/15 2014/15 contribution SAFARICOM’S TRUE EARNINGS FOR 2015/16 SOCIAL IMPACT CONTRIBU
Slide 28: Introducing M-PESA Kadogo
WAY FORWARD INTRODUCING M-PESA KADOGO
Slide 29: Upgraded EBITDA & Capex Guidance For FY17
WAY FORWARD UPGRADED EBITDA* & CAPEX GUIDANCE FOR FY17 EBITDA CAPEX To To Shs 34 - 35 Bn Shs 94 - 97 Bn From Shs 32 - 33 Bn From Shs 89 - 92 Bn *EBITDA Guidance includes one off adjustment
Slide 30: Safaricom
Safaricom
Slide 31: Summary Industry Performance | April - June 2016
APPENDIX SUMMARY INDUSTRY PERFORMANCE | APRIL - JUNE 2016 Mobile Operator Safaricom Airtel Orange Equitel Quarter Ending Jun ‘16 Mar‘16 Jun ‘16 Mar‘16 Jun ‘16 Mar‘16 Jun ‘16 Mar ‘16 Key Indicator Market Share by Subscribers (%) 65.2 65.6 16.60 17.5 13.20 12.5 5.1 4.4 Mobile Subscribers in Millions 2