Safaricom Plc · NSEKE:SCOM
Safaricom — FY2024 Earnings Presentation
56 slides from Safaricom's earnings presentation, May 9, 2024
Slide 1: Safaricom PLC FY24 Investor Presentation
9th MAY 2024 Safaricom PLC FY24 INVESTOR PRESENTATION
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: Business Overview: Purpose & Strategy
BUSINESS OVERVIEW PURPOSE & STRATEGY PETER NDEGWA, CHIEF EXECUTIVE OFFICER
Slide 4: Kenya Operating Environment
KENYA OPERATING ENVIRONMENT | Sustained Resilience in the Economy Post COVID-19 Macro Tailwinds & Headwinds Regulatory Customer Insights Macro Tailwinds: • Resilient GDP growth; +5.9% in Q3 2023 • Reduction in excise duty on Telephone and • Declining food prices • Tapering inflation Rates; 5.7% Marc
Slide 5: Our Purpose: Partnerships & Innovations to Transform Lives
OUR PURPOSE | Partnerships & Innovations to Transform Lives Partnering for Impact Our SDG Guiding Framework Forward Faster Initiative An initiative by United Nations Global Compact (UNGC) to fast-track achievement of the SDGs Advocacy •Africa Climate Summit •Conference of the Parties (COP28) The 9 S
Slide 6: Our Purpose: Decarbonising Our Societies
OUR PURPOSE | Decarbonising Our Societies Whilst Advancing a Circular Economy ESG Achievements Environment (E) Social (S) Governance (G) •1.5Mn trees grown, targeting 5Mn by 2025 •3.5Mn lives impacted by the Foundations in •Board Diversity: Male 55%; Female 45% •23% Solar energy mix, with 1,456 sola
Slide 7: Our Strategy: FY24 was the Penultimate Year
OUR STRATEGY | FY24 was the Penultimate Year FY24 Focus was: To Scale Tech Solutions in order to be a Purpose-Led Technology Company by the end of 2025 Transforming lives Purpose Vision To be a purpose-led Technology Company Transformation Goal A digital-first, insights-led organisation that enables
Slide 8: Strategy Execution Highlights
STRATEGY EXECUTION HIGHLIGHTS | Strong Commercial & Execution Momentum Performance Commercial Agile progress Momentum in Kenya in Ethiopia Acceleration Mobile Data; M-PESA; Consumer Mobile Data usage; M-PESA Launch; 49% Agile; Level 3 agile maturity Fixed; EBIT Growth Network rollout Big Data Purpos
Slide 9: Digitizing Kenya
DIGITIZING KENYA | We are Enabling Ease of Access to Services Financial Empowerment Program (Hustler Fund) Women Groups Empowerment ï 21Mn Customers ï 77% Repayment rate ï 977k groups created ï KShs 49.5Bn Disbursed ï 651k Groups enrolled ï 2Mn members (cumulative) ï KShs 0.9Bn value disbursed East
Slide 10: Consumer Business
CONSUMER BUSINESS | Improved Engagement and Performance Through Customer-centric Actions Accelerated 4G+ Devices Consumer Segmentation driving Enhanced our Integrated Personalization & Relevance Propositions 17.5Mn 4G+ devices on the network 4.5Mn youth on Safaricom hook platform accessing 30.3% gro
Slide 11: Financial Services: Broadening Services Beyond Payments
FINANCIAL SERVICES | Broadening Services Beyond Payments Scaling Pochi la Biashara Technology & Platforms Partnerships & Collaborations •Segmented solutions for •Capacity upgrade to support •Diversified partnerships to power SMEs/MSMEs that addresses specific 3,500 transactions per sec on financial
Slide 12: Enterprise Business
ENTERPRISE BUSINESS | Powering Growth and Innovation for Businesses SME Digital Adoption Scaling Cloud & Security in Accelerated IoT Solutions Large Enterprises •Accelerated Cloud services adoption •Full stack cyber security including •Smart Water project (1.5Mn devices (+13k SMEs) security operatio
Slide 13: Fixed Business
FIXED BUSINESS | Leveraged New Technology to Enable Broadband Access Improved Home Value Drove affordability Simplified Journeys Proposition •Increased 4G data volumes by 55% •Reduced 5G entry router prices by 60% •Enhanced dealer partners sales portal •Unleashed full 5G speeds of Home •Subsidized 4
Slide 14: Our Awards
OUR AWARDS | Recognition by External Stakeholders Diversity & Inclusion Brand 2023 Safaricom Women in technology Award Sustainability Awards 4th Edition of the Consumer Market Study of by Institute of Electrical & Electronic Environment sustainability award by the United the Top 100 Most Loved Brand
Slide 15: Ethiopia
ETHIOPIA
Slide 16: Ethiopia Operating Environment
ETHIOPIA OPERATING ENVIRONMENT | Challenging Operating Environment in FY24 Macro-Economic Regulatory Political/Security ▪ Easing Inflation; 26.2% in March ▪ MTR reduction from ETB 0.31 to ETB 0.23 ▪ Stable security situation in Tigray 2024 from 1 May 2024 ▪ Amhara under state of emergency ▪ FX Liqui
Slide 17: Ethiopia: Takeaways from the 2024 Investor Day
ETHIOPIA | Take Aways from the 2024 Investor Day Opportunity remains •2nd most populated country in Africa Evolving into a •Very youthful population fully-fledged Ethiopia-run •Low mobile and fixed penetration organization •Rapid economic growth Driving financial Focused on scaling sites, inclusion
Slide 18: Ethiopia Performance: Key Milestones in FY24
ETHIOPIA PERFORMANCE | We Achieved Key Milestones in FY24 4.4Mn 2.8Mn 4.3GB Customers 90-day Active 90-day Active per Mobile Data User Customers Data Customers (Mar exit at 6.2GB) 4.5Mn 62.7k KShs 24.5Bn M-PESA Total Registered Active Merchants Value & 31.5Mn M-PESA Customers & 25.8k Agents Volume o
Slide 19: Ethiopia's Medium Term Big Wins
ETHIOPIA'S MEDIUM TERM BIG WINS | Strong Business Momentum From an International Brand Strong data Superior usage levels customer service Our focus areas to get to the next growth phase: Building Scaling •Accelerate monetization coverage M-PESA momentum •Grow quality subscribers Penetrating the •Acc
Slide 20: FY24 Performance Highlights
FY24 PERFORMANCE HIGHLIGHTS
Slide 21: FY24 Performance: Outstanding Kenya Performance
FY24 PERFORMANCE | Outstanding Kenya Performance, Outperforming Group Guidance Safaricom Kenya Performance Safaricom Group Performance (Including Ethiopia)* EBIT CAPEX EBIT CAPEX 139.9Bn KShs KShs 47.3Bn 94.9Bn KShs KShs 93.5Bn Achievement +20.4% YoY Capex Intensity +3.5% YoY Capex Intensity (FY23:
Slide 22: Financial Performance
FINANCIAL PERFORMANCE DILIP PAL, CHIEF FINANCE OFFICER
Slide 23: Kenya Performance
KENYA PERFORMANCE
Slide 24: Key Highlights: Excellent Results for Kenya Business
KEY HIGHLIGHTS | Excellent Results for Our Kenya Business Service +11.7% YoY EBIT +20.4% YoY Revenue KShs 329.8Bn (+12.1% YoY adjusted for MTR) KShs 139.9Bn EBITDA +16.6% YoY Net +13.7% YoY KShs 187.0Bn Income KShs 84.7Bn Operating Free +11.2% YoY Cash Flow KShs 128.6Bn 24
Slide 25: Service Revenue
SERVICE REVENUE | Strong Growth Driven by M-PESA & Mobile Data Evolution of Service Revenue Profiles Fixed Data & IoT Service Revenue (KShs Bn) 4.8% KShs 15.9Bn Financial 1.2 +11.8% YoY Services 329.8 331.0 42.4% 295.2 KShs 139.9Bn +19.4% YoY +5.0% +11.7% +12.1% Connectivity FY24 YoY YoY YoY Busines
Slide 26: Customer Focus: Engagement & Usage Drives Monetization
CUSTOMER FOCUS | Customer Engagement & Usage Drives Monetization Rate* per MB One Month Active Customers One Month Active ARPU -4.6% YoY 6.4 cents, 4.6% 4.6% 10.7% -61.3% 843.2 (4-Year Change) 34.6 34.6 8.6% 814.8 Rate* per Min -12.7% YoY 6.4% 2.5% 785.8 1.25, 33.3 -40.4% 33.1 3.5% (4-Year Change) 7
Slide 27: M-PESA: Great Performance Post Return to Charging
M-PESA | Great Performance Post Return to Charging Revenue (KShs Bn) ARPU (KShs) 378.4 361.3 139.9 344.1 117.2 311.3 +19.4% YoY +1.9% +12.0% +20.0% +16.1% 73.7 +8.8% 66.2 YoY YoY YoY YoY YoY +16.5% +22.1% YoY YoY FY23 H1 FY24 H2 FY24 FY24 FY23 H1 FY24 H2 FY24 FY24 Contribution to M-PESA Revenue FY20
Slide 28: M-PESA Take Rates
MPESA TAKE RATES | Driving Affordability to Ensure Inclusivity in Digital Payments Consumer Payments Business Payments 112 41 108 30 31 30 106 105 FY23 H1 FY24 H2 FY24 FY24 FY23 H1 FY24 H2 FY24 FY24 Global Payments Financial Services 68 101 78 71 74 60 60 60 FY23 H1 FY24 H2 FY24 FY24 FY23 H1 FY24 H
Slide 29: New Growth Areas
NEW GROWTH AREAS | Expanding Merchant Network, Lending and Wealth Management Revenue (KShs Bn) +4.3% YoY Tills +38.2% 7.31 606.7 633.0 632.7 YoY +116.2% 5.29 YoY 292.6 +239.7% YoY 0.81 0.24 Lipa Na M-PESA (Bn) Pochi (Bn) Lipa Na M-PESA (000) Pochi tills (000) FY23 FY24 FY23 FY24 Revenue (KShs Bn) Va
Slide 30: M-PESA: Growth Driven by Usage & Affordability
M-PESA | Growth Driven by Usage & Affordability Chargeable Txns per One Month active customers M-PESA Value & Volume* 33.2 FY24 Value of FY24 Volume of 31.5 non-chargeable non-chargeable 29.8 +9.6% transactions 43.5% YoY transactions 56.9% 23.5 +35.2% 40.2 +33.9% 36.7 YoY YoY +33.9% +32.6% 30.0 YoY
Slide 31: M-PESA Super Apps
M-PESA SUPER APPS | Positioning M-PESA as a Lifestyle & Business Platform of Choice Consumer Super App Business Super App 9.6Mn +30.6% YoY 1.5Mn +100% YoY Downloads Downloads 40.5 Transactions 53.1Mn 3.6Mn +18.8% YoY 142.3k Active +3.7% YoY Active customers per month per Merchants using the App Volu
Slide 32: Mobile Data
MOBILE DATA | Double-Digit Growth Driven by Customer Value Management Initiatives Mobile Data Revenue (KShs Bn) Increased usage as 4G+* traffic continues to grow +13.9% +12.9% 63.2 YoY YoY 53.6 +18.0% 22.9 21.3 22.3 +28.9% 19.6 20.3 21.4 YoY +10.6% YoY 17.5 YoY 33.7 +13.4% 14.9 29.6 YoY 13.6 10.0 +1
Slide 33: Fixed Service
FIXED SERVICE | Enhanced Customer Engagement & Connections Supporting Growth FTTH Fixed Service Revenue (KShs Bn) 15.1 13.5 248.6 248.6 223.2 +12.0% 195.7 +20.0% YoY 7.4 7.7 YoY 2,413 2,381 2,336 2,345 +9.1% +14.9% YoY YoY 59.2% 61.4% 66.4% 66.4% FY23 H1 FY24 H2 FY24 FY24 FY23 H1 FY24 H2 FY24 FY24 C
Slide 34: Voice & Messaging
VOICE & MESSAGING | Customer Value Propositions Enhancing Usage Voice Revenue (KShs Bn) Messaging Revenue (KShs Bn) 12.3 80.9 79.5 11.4 +8.0% -2.8% -1.7% +4.6% YoY YoY YoY YoY 5.7 6.5 38.7 40.8 Revenue -0.5% +6.0% +9.8% YoY YoY YoY -3.0% YoY FY23 H1 FY24 H2 FY24 FY24 FY23 H1 FY24 H2 FY24 FY24 +15.9%
Slide 35: Costs
COSTS | Navigating a Complex Operating Environment With Addressable Opportunities Direct Costs (KShs Bn) Operating Costs (KShs Bn) 14.3% 83.2 2.4 59.5 3.3 0.1 0.1 53.6 80.3 10.8% 79.1 7.1% +11.0% 6.4% YoY 71.4 3.6% 1.6% -0.7% -1.1% FY21 FY22 FY23 FY24 Direct Costs (ex-handset costs) YoY% ex-handset
Slide 36: Debt & Finance Costs
DEBT & FINANCE COSTS | Growing Finance Costs on the Back of Increased Interest Rates Net Debt (KShs Bn) FY22 FY23 FY24 Cash & Cash Equivalents 28.1 18.3 21.3 Debt (KShs Bn) 89.8 10.6 Short term borrowings (20.4) (35.5) (39.8) 8.2 74.0 No FCY 75.9 Debt 7.4 FY24 Long term borrowings (44.9) (38.5) (36.
Slide 37: Cash Flow Statement
CASH FLOW STATEMENT | Strong Cash Flow Position 26.6 1.3 (6.9) (5.3) 76.1 (3.9) (1.5) 65.8 +15.7% YoY FY23 EBITDA Net taxation Capital Net Working Net interest Other cash FY24 Free payable Additions Capital paid flow items Cash Flow Numbers are in KShs Bn 37
Slide 38: Financial KPIs
FINANCIAL KPIs | Improved Margins, Well Positioned to Create Value FY21 FY22 FY23 FY24 Contribution Margin % 68.5% 68.5% 69.9% 72.1% EBITDA Margin % 51.0% 50.0% 51.9% 54.7% EBIT Margin % 36.5% 36.6% 37.6% 40.9% OPEX Intensity 17.5% 18.5% 17.5% 17.4% CAPEX Intensity 13.2% 13.2% 13.1% 13.8% ROCE 62.5%
Slide 39: Financial Performance Safaricom Ethiopia
FINANCIAL PERFORMANCE SAFARICOM ETHIOPIA
Slide 40: Ethiopia Service Revenue
SERVICE REVENUE | Solid Growth in the 1st Full Year Driven by Mobile Data Contribution to Service Revenue Growth (KShs Bn)** Mobile Others* 3.5% Incoming 0.2 5.4 0.3 6.2% 0.8 3.6 Voice 17.7% FY24 Mobile Data 72.6% 0.5 FY23*** Mobile Data Voice Mobile Incoming Others* FY24 Mobile Incoming Others* 0.7
Slide 41: Customers & Usage
CUSTOMERS & USAGE | Sustained Growth Momentum No. of Sites 90-day Active Customers One -Month Customers Active 2,806 ('000s) ('000s) 2,057 4,124.9 4,351.2 3,061.4 1,272 2,584.4 2,130.5 1,436.0 FY23 H1 FY24 FY24 FY23 H1 FY24 FY24 FY23 H1 FY24 FY24 90-day Active Voice Users 90-day Active Data Users ('
Slide 42: Ethiopia: Medium Term Capex Outlook and Funding
ETHIOPIA | Medium Term Capex Outlook and Funding Capex Investment Funding Status 5Yr Plan; USD Mn FY24 USD 1.0 - 1.3Bn •Total Equity Funding as at FY24 by; Equity cash funding 1,626 (Previously USD 1.5 - 2.0Bn) - Shareholders* 3Yr Actual; Y1-Y3; USD 1,626Mn USD 853Mn Local currency debt funding 134
Slide 43: Group Net Income
GROUP NET INCOME | Return to Growth on the Bottom Line 32.5 (6.2) (5.9) (5.8) 84.7 (3.0) (1.3) (0.1) 74.5 7.4 63.0 (29.2) +13.7% +1.2% YoY YoY FY23 Contribution Taxation Opex Net Depreciation, Share of Fair value FY24 Ethiopia IAS 29 FY24 Group Margin Financing Impairment & Associate & Adjustment Ne
Slide 44: Capex
CAPEX | Sustained Investment to Support Network Expansion in New Growth Areas & Ethiopia FY24 Capex Split - Kenya FY24 Capex Split - Ethiopia Operations, 3.0% Other Capex, 4.5% IT Capex, IT Capex, 7.8% 23.7% Radio Access, Transmission, 37.2% 8.8% Radio Fixed Core Network, Access, Network, 10.2% 68.7
Slide 45: FY24 Group Performance: Constant Currency Basis
FY24 GROUP PERFORMANCE | Strong Results on Constant Currency Basis Group Kenya Group Reported Constant Currency Service Revenue +11.7% +13.4% +13.4% EBITDA +16.6% +16.8% +19.2% EBIT +20.4% -5.5% +0.5% Net Income +13.7% +1.2% +4.2% Excluding Minority Interest 45
Slide 46: FY24 Group Performance
FY24 GROUP PERFORMANCE Safaricom Kenya Safaricom Ethiopia Safaricom Group Safaricom Kenya Safaricom Ethiopia Safaricom Group Group Constant (KShs Mn) (KShs Mn) (KShs Mn) % YoY % YoY % YoY Currency % YoY Service Revenue 329,805.6 5,758.3 335,353.1 11.7% >100.0% 13.4% 13.4% Total Revenue 342,098.0 7,3
Slide 47: Outlook & Conclusion
OUTLOOK & CONCLUSION
Slide 48: In Summary: Outstanding Performance
IN SUMMARY | Outstanding Performance Strong Kenya performance Gaining commercial M-PESA Launch progress in Ethiopia in Ethiopia Big Data Delivered value Acceleration for our customers Launched device Partner in assembly plant digitizing Kenya 48
Slide 49: Dividends: Similar Payout as Last Year
DIVIDENDS | Similar Payout as Last Year FY23 FY23 FY24 FY24 Interim Final Interim Proposed final Dividend Dividend Dividend Dividend KShs 23.24 Bn KShs 24.84 Bn KShs 22.04 Bn KShs 26.04 Bn KShs 0.58 DPS KShs 0.62 DPS KShs 0.55 DPS KShs 0.65 DPS FY23 KShs 48.08Bn FY24 KShs 48.08Bn KShs 1.20 DPS KShs
Slide 50: 2030 Vision
2030 Vision | Anchored on Becoming Africa’s Leading Purpose-led Tech-company Africa’s leading purpose-led technology company Accelerate the Unlock value through Protect and Grow the Core Boost and evolve Ethiopia transition to TechCo innovative delivery models Build end to end device play Supercharg
Slide 51: Group Medium Term Outlook
GROUP | Medium Term Outlook Kenya Ethiopia Service revenue profile EBITDA; Breakeven in YR4 (FY26) •M-PESA; Double digit growth Commercial scale;15-20Mn customers •Mobile connectivity; High single digit growth Infrastructure scale; >4,000 sites •Fixed; Double Digit Growth EBITDA Margin; Stable Capex
Slide 52: FY25 Strategic Priority Areas
FY25 | Strategic Priority Areas Deliver frictionless digital first Unlock segment led growth Invest in tech capabilities customer experience opportunities for the core business to accelerate path towards TechCo Accelerate Ethiopia Scale Best-in-class commercial execution Fixed Broadband services 52
Slide 53: FY25 Guidance
FY25 GUIDANCE | Safaricom Kenya, Ethiopia & Group All numbers are in KShs and exclude IAS 29 Kenya Ethiopia* Group EBIT 149 - 152Bn (46 - 43)Bn 103 -109Bn FY24 Actual 139.9Bn (45.0)Bn 94.9Bn Capex 52 - 55Bn 21 - 24Bn 73 - 79Bn FY24 Actual 47.3Bn 46.2Bn 93.5Bn *Ethiopia Guidance Assumptions • Mobile
Slide 54: Thank You
THANK YOU!
Slide 55: Corporate Information and Upcoming Updates
Corporate Information Registrars Upcoming Updates Image Registrars Limited 5th Floor, Absa Plaza, Loita Street AGM P.O. Box 928-00100, Nairobi July 2024 Telephone: +254 709 170 000 Email; Info@image.co.ke Safaricom Ethiopia Q1 Update Website: www.image.co.ke July 2024 Investor Relations HY25 Results
Slide 56: arent * Honest
arent * Honest =k val