Slide 1: Safaricom PLC FY2018 Results Presentation
Safaricom PLC FY2018 Results Presentation Wednesday 9th May 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: Economic headwinds in FY 2017, gradual recovery expected
ECONOMIC HEADWINDS IN FY 2017, GRADUAL RECOVERY EXPECTED GDP Growth Slows Down to 4.9% in FY 2017 ** 5.9% Uncertain 5.7% Regulatory 5.4% 4.7% 5.0% 5.0% Environment 4.4% 14 15 16 7 17 17 17 01 Service 20 20 20 20 20 20 12 2 3 4 FY FY FY Q Q Q Q Revenue +10.0% YoY Low Private Sector Credit Growth Tren
Slide 4: Bringing Twaweza to life: Digifarm and Connected Farmer
BRINGING TWAWEZA TO LIFE DIGIFARM AND CONNECTED FARMER 60% of Kenyans Providing access to knowledge dependent on farming* Empowering and information farmers to scale Technology best positioned to through mobile Giving underserved farmers transform lives - 90% of farmers technology access to credit h
Slide 5: Bringing Twaweza to life: M-TIBA mobile health wallet
BRINGING TWAWEZA TO LIFE M-TIBA- MOBILE HEALTH WALLET Over 1m enrolled Enabling to M-TIBA access to quality 2 in every 5 Kenyans lack affordable Over 400 medical facilities access to healthcare due to healthcare on board as partners poverty through the mobile phones Over KShs 200m paid out in more t
Slide 6: Transforming lives in over 80k community projects
BRINGING TWAWEZA TO LIFE TRANSFORMING LIVES IN OVER 80K COMMUNITY PROJECTS Over 34 schools for visually impaired Areas of focus: transformed through Education, Over 22k lives informational and Health, Water, touched through knowledge upgrade Disaster relief & free medical Environment camps conservat
Slide 7: Delivering the strategy: customers first
DELIVERING THE STRATEGY WE CONTINUE TO PUT OUR CUSTOMERS FIRST Enhanced customer care touch points: • New call centre opened • Over 800 people employed Enhanced usage on selfcare: Enhanced security • My Safaricom App - 700k using state of art daily usage (500% YoY) technology: • USSD - 24m daily usa
Slide 8: Delivering the strategy: segmentation to offer relevant products
DELIVERING THE STRATEGY USE OF SEGMENTATION TO OFFER RELEVANT PRODUCTS Flexible and convenient bundle offering 35% more value (275k sign ups) 3.5m youth access affordable bundles Personalised offers to give better customer value (198m bundles uptake) Worry free integrated plans SAFARICOM HOME FIBRE
Slide 9: Delivering the strategy: maintaining our lead with best technology
DELIVERING THE STRATEGY MAINTAINING OUR LEAD WITH THE BEST TECHNOLOGY IT modernization for better experience: • 10 major systems upgrade Network delivering world class experience: Rated Fastest • 4G sites up 49.4% YoY to over 1,600 sites Digital transformation: • Approx. 2m users on My Safaricom App
Slide 10: The Numbers
THE NUMBERS
Slide 11: Financial Performance: earnings higher than guidance
Financial Performance | Earnings higher than guidance despite macro headwinds EBIT CAPEX Achieved KShs 79.3Bn FY 18 Guidance Achieved FY 18 Guidance KShs 71-75Bn KShs 35-38Bn KShs 36.4Bn 11
Slide 12: Key Financials
Key Financials | Sustained investment, margin expansion and EPS growth Service Revenue EBIT* EPS* Free Cashflow +10.0% +18.3% +19.9% +27.3% YoY YoY YoY YoY • KShs 224.5Bn FY18 • KShs 79.3Bn FY18 • KShs 1.38 FY18 • KShs 55.4Bn FY18 • KShs 204.1Bn FY17 • KShs 67.0Bn FY17 • KShs 1.15 FY17 • KShs 43.5Bn
Slide 13: 1.4m additional customers: strong investments and personalised offers
1.4m Additional Customers | Strong investments and personalised offers Investment Prices* Customers +49% Sites YoY 29% Data Call +200% Centre Homes Customer Passed YoY Analytics 12% 29% 29.6m SMS P2P *Effective average rate per unit 13 *Effective average rate per unit
Slide 14: FY18 Service Revenue
FY18 Service Revenue l M-PESA and Mobile Data continue to drive growth +10.0% YoY M-PESA +3.8ppts Mobile Data +3.5ppts Voice Outgoing +1.0ppts Fixed Data +0.7ppts · +14.2% (YoY) · +24.0% (YoY) · +2.4 % (YoY) · +27.3% (YoY) Others: SMS, Voice Incoming and other service revenue +1.0% FY15 Revenue Cont
Slide 15: M-PESA Revenue
M-PESA Revenue l Continued focus on long term sustainability +3.8 ppts M-PESA Revenue (KShs Bn) 62.9 55.1 Traditional +2.4 ppts New Business +1.4 ppts 41.5 • 73.6% of M-PESA Revenue • 26.4% of M-PESA Revenue 32.6 • P2P +18.0% (YoY) • C2B/ B2C/ B2B +24.1% (YoY) • Withdrawals 7.5% (YoY) • Other +15.8%
Slide 16: Mobile Data revenue
Mobile Data revenue | Driving the digital revolution Data Usage Driven by Bundles +3.5ppts Out of Bundle MBs %, 8.1% Active customers +1.5ppts ARPU* +2.0ppts In Bundles MBs, 91.9% Mobile Data Revenue (KShs Bn) Mobile Data CAGR**| Usage 61%; ARPU 16% 173 36.4 153 421 29.3 130 110 269 21.2 14.8 177 10
Slide 17: EBIT
EBIT | Supported by revenue growth and effective cost management +2.4ppts* EPS* (KShs) 1.38 1.15 0.95 0.80 +1.2ppts -0.1ppts +1.3ppts Contribution Margin** OpEx Intensity* Depreciation FY15 FY16 FY17 FY18 EBIT* Waterfall YoY (KShs Bn) EBIT* (KShs Bn) (1.8) 79.3 17.2 (1.4) (1.4) 67.0 (0.3) 79.3 67.0
Slide 18: CAPEX: sustained investment to support growth
CAPEX l Sustained investment to support growth Capex (KShs Bn) FY 18 Capex Allocation Other Capex, 5% IT Systems, 21% 36.4 35.3 Fixed Network, 11% 33.7 Radio Access, 35% 33.3 Operations, 7% Core Network, 8% 2015 2016 2017 2018 Transmission, 13% FY Capex Sites Five Year FY Capex Intensity • 4,945 sit
Slide 19: Cashflow: growth supported by strong operating performance
Cashflow l Growth supported by strong operating performance Net Cash & Usage (KShs Bn) Healthy Debt Position Proposed Dividend 112.8 (12.5) • Debt / Equity Ratio: 0.03x • KShs 44.1Bn (+13.4% YoY) • Debt / EBITDA Ratio: 0.04x • KShs 1.10 per share (38.9) (36.4) (26.3) 4.5 6.0 0.7 9.5 FY ng en t x id p
Slide 20: Way Forward
WAY FORWARD
Slide 21: Transforming to a digital company
TRANSFORMING TO A DIGITAL COMPANY oko as n i o s M lco E x p a n Portfolio Mobile money Growth M-P Connected - Te Insight Driven Services • Accelerate growth in on Customer new business ES A N Proposition • Business solutions • Paypal and Google Ec • Home solutions Play Store o syste m • Tunukiwa •
Slide 22: Guidance: sustained investment and profit growth
Guidance | Sustained investment and profit growth EBIT CAPEX FY 19 Guidance KShs 85-89 Bn From From FY 19 Guidance KShs 79.3Bn KShs 36.4Bn KShs 35-38Bn 22
Slide 23: Q&A
When we come together, great things happen. Q&A
Slide 24: Appendices
APPENDICES c Safaricom
Slide 25: Statement of Income: Key Highlights
Statement of Income I Key Highlights FY 17 FY 17 YoY% YoY% Shs Bn FY 18 Reported Normalized** Reported Normalized Voice revenue 95.64 93.46 93.46 2.3% 2.3% Outgoing voice revenue 88.96 86.84 86.84 2.4% 2.4% Incoming voice revenue 6.68 6.62 6.62 0.9% 0.9% Messaging revenue 17.72 16.68 16.68 6.2% 6.2%
Slide 26: Statement of Income: Service Revenue to Contribution Margin
Statement of Income I Service Revenue to Contribution Margin FY 17 FY 17 YoY% YoY% Shs Bn FY 18 Reported Normalized** Reported Normalized Service Revenue 224.54 204.11 204.11 10.0% 10.0% Handset and other revenue 8.98 8.70 8.70 3.2% 3.2% Construction revenue 0.20 0.08 0.08 >100 >100 Total Revenue 23
Slide 27: Statement of Income: Contribution Margin to Net Income
Statement of Income I Contribution Margin to Net Income FY 17 FY 17 YoY% YoY% Shs Bn FY 18 Reported Normalized** Reported Normalized Contribution margin 163.47 148.54 146.31 10.1% 11.7% Operating costs (50.61) (44.92) (46.04) 12.7% 9.9% Forex Loss on trading activities (0.03) (0.01) (0.01) >100 >100
Slide 28: Free Cashflow: Key Movements
Free Cashflow I Key Movements Shs Bn FY 18 FY 17 YoY Cashflow Trading cash flow (EBITDA) 112.83 103.61 8.9% Net Working capital changes 4.49 (1.27) >100 Capital Additions (36.40) (35.33) 3.0% Operating free cash flow 80.92 67.01 20.8% Interest received / (paid) 0.75 0.50 50.0% Taxation received / (paid)
Slide 29: Appendix: Revenue contribution % SR
Appendix | Revenue contribution % SR Mobile Data (KShs Bn% SR) Voice and SMS (KShs Bn% SR) M-PESA (SKhs Bn% SR) 16% 66% 14% 61% 28% 54% 27% 12% 36.4 50% 23% 9% 62.9 29.3 21% 55.1 108.1 110.1 113.4 21.2 103.1 41.5 14.8 32.6 FY 15 FY 16 FY 17 FY 18 FY 15 FY 16 FY 17 FY 18 FY 15 FY 16 FY 17 FY 18 Mobil
Slide 30: Appendix: M-PESA transaction value trend
Appendix | M-PESA transaction value trend M-pesa Transaction Value CAGR 25% 8,114 FY 18 CAGR 6,869 YoY 4 Years 2,537 1,826 39% 64% 5,294 1,048 1,684 4,180 6% 14% 1,591 580 1,342 1,129 20% 19% 1,927 1,603 1,335 1,151 6% 14% 1,569 1,849 1,966 1,319 FY15 FY16 FY17 FY18 Deposits P2P Transfers Withdrawal
Slide 31: Our Long-term Strategy: Consumer Business
OUR LONGTERM STRATEGY CONSUMER BUSINESS Kenya’s brand of choice enabling digital lifestyles and transforming lives. C Connectivity & Security A Always excellent value R Reward loyalty E Easy, personal, instant support Differentiate our brand Deliver personalized Drive growth through Lead & grow thro
Slide 32: Our Long-term Strategy: Enterprise Business
OUR LONGTERM STRATEGY ENTERPRISE BUSINESS Become the digital partner of choice for businesses enabling success 1 Service delivery 2 Care 3 Enterprise products 4 Digital Proposition 5 Channel optimization Enabling Offer best digital Grow fixed Leverage existing Optimize digital automation of customer