Slide 1: Safaricom Limited FY2017 Results Presentation
Safaricom Limited FY2017 Results Presentation 10 May 2017
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: Table of Contents
TABLE OF CONTENTS: 01. NCHI YETU, STORI YETU 02. DELIVERING THE STRATEGY 03. THE NUMBERS 04. WAY FORWARD
Slide 4: Nchi Yetu, Stori Yetu
NCHI YETU, STORI YETU (Our country, Our Story)
Slide 5: The Power of Connection
NCHI YETU, STORI YETU THE POWER OF CONNECTION 90% of Kenya’s Mobile provides population wider access to Telecoms covered by mobile health, contribution to education and economy is financial 8% of GDP services. Source: Kenya Economic Survey, CA Reports
Slide 6: The Power of Connection: M-PESA in Kibera
NCHI YETU, STORI YETU THE POWER OF CONNECTION In Kibera, M-PESA is providing access to For over water for over 26 million 80,000 M-PESA users, mobile residents money is more than just money transfer
Slide 7: Impactful Innovation
NCHI YETU, STORI YETU IMPACTFUL INNOVATION Making a Difference: 120 projects this year creating meaningful impact in health, agriculture and education Commitment to responsible business by fully aligning with the Global Goals
Slide 8: A Human Network
NCHI YETU, STORI YETU A HUMAN NETWORK We believe in the power of unity to build a better Kenya. We have forged Over 70% #Twaweza over 35,000 Safaricom staff dedicate their time partnerships to community across industries to projects drive change this year
Slide 9: Sustainable Growth for Kenya
NCHI YETU, STORI YETU SUSTAINABLE GROWTH FOR KENYA | 2006/7 - 2016/7 TRUE VALUE IMPACT ON SOCIETY 10x PROFIT CONTRIBUTION SUSTAINING SOCIAL IMPACT TO GDP EMPLOYMENT OF M-PESA 6.5% on average 845K jobs in 2016 up 184.6 SHS BILLION from 426k in 2006 up from 83m annually in 2006 These results were calc
Slide 10: Delivering the Strategy
DELIVERING THE STRATEGY
Slide 11: Delivering the Strategy: Customer First
DELIVERING THE STRATEGY Customer First Relevant Products • Revenue Operational • EBIT Excellence • Net Income • Free CashFlow
Slide 12: Customer First
DELIVERING THE STRATEGY CUSTOMER FIRST ONNECTIVITY C Safaricom M-PESA App (400k users) My Data ALW 40% increase in Customer Care Manager (5 million users) AYS IN CONTR EASY ACCESS Staff CARE Expanded My service access Subscriptions Manager O (44 shops and Segments-led L 60 care desks) (2.1 million us
Slide 13: Relevant Products
DELIVERING THE STRATEGY RELEVANT PRODUCTS INNOVATE FLEX - BLAZE Discounting (1.6 million 35% value customers) Stori Ibambe – M-PESA Sh25 billion VALUE Statements redeemed 1.2 million Deep analytics users guiding a more customised E RE W NC customer M-PESA free P2P transfers M-PESA in East Africa (Ug
Slide 14: Operational Excellence
DELIVERING THE STRATEGY OPERATIONAL EXCELLENCE QUALITY Customer Great Network Analytics Availability OPTIONS Continuous Ambitious FTTH Fastest investment in the and FTTB roll rollout on 4G network of the out plan GE future CA Lean RA CI PA TY VE Operating CO Model
Slide 15: High Network Performance
DELIVERING THE STRATEGY HIGH NETWORK PERFORMANCE Our network is ranked the best when compared to other networks in Kenya and Africa Safaricom Kenya Competitors 38% Surveyed Countries in Africa Source: P3, an independent analyst has found that improvement our network is ranked the best when compared
Slide 16: The Numbers
THE NUMBERS <Safaricom
Slide 17: Strong Financial Performance
Strong Financial Performance | Delivered by our purpose and strategy Key Financials FY17 FY16 YoY% Service Revenue 204.1 177.8 +14.8% EBITDA* 100.3 83.1 +20.7% EBIT* 67.0 55.1 +21.6% Net Income* 45.1 38.1 +18.3% Free Cash Flow** 43.5 30.4 +43.3% *Excludes one off adjustment of Shs 3.4Bn in H1 **Exclu
Slide 18: Higher investment and affordable prices
Higher investment and affordable prices | 3m additional customers have chosen Safaricom Shs. 38Bn Investment* Prices* Customers 4,677 1,103 4,190km Customer 8% 22% 19% 9% 11.8% sites sites fibre analytics Voice Data SMS P2P *Includes Capital expenditure and 4G Spectrum purchase **Effective average rat
Slide 19: Resilient Business Model
Resilient Business Model | Stable traditional telco streams, growing data & financial services Voice* & SMS (Shs Bn, % SR) Mobile Data (Shs Bn, % SR) M-PESA (Shs Bn, % SR) 73% 71% 14% 27% 67% 23% 61% 12% 55.1 54% 29.3 19% 21% 9% 18% 41.5 108.2 110.1 7% 21.2 104.0 6% 32.6 97.9 26.6 86.0 14.8 21.8 9.3
Slide 20: FY17 Service Revenue
FY17 Service Revenue | M-PESA & Mobile Data continue to drive growth Outgoing Voice +14.8% YoY · +1.8ppts (+3.8% YoY) · 42.5% of SR (-4.5ppts YoY) M-PESA +7.6ppts Mobile Data +4.6ppts Fixed Data · +0.8ppts (37.4% YoY) · +32.7% (YoY) · +38.5% (YoY) · Total Data 16.9% of SR (+2.9ppts YoY) · 27.0% of S
Slide 21: M-PESA Revenue
M-PESA Revenue | Expansion of the eco-system drives growth +7.6 ppts Growing the Eco-system • 19m 30 day active M-PESA subs +14.6% (YoY) • 130k+ M-PESA Agents +35% (YoY) Bread & Butter +4.2 ppts New Business +3.4 ppts • 50k+ 30 day active LNM tills +32% (YoY) • 75% of M-PESA Revenue • 25% of M-PESA
Slide 22: M-PESA Transaction Values
M-PESA Transaction Values | Growth continues in Bread and Butter, acceleration from New Business Shs ‘Bn’ 5 YR CAGR +27% 7,000 6,869 6,000 H1 CAGR YoY% 5 Years 1,826 5,000 5,294 +74% +77% 1,048 4,000 4,181 1,591 580 1,342 3,321 +19% +21% 3,000 336 1,129 2,536 1,603 929 198 1,335 +20% +19% 2,000 751
Slide 23: Mobile Data Revenue
Mobile Data Revenue | Increasing penetration to drive growth Driving the digital revolution 4.6ppts • Mobile Data ARPU* – Shs 153 +17% (YoY) • Data subs now at 16.6m +18.1% (YoY) • Usage per customer per month at 269MBs +52% (YoY) Active customers +2.3ppts ARPU +2.3ppts • Data enabled devices now at
Slide 24: EBIT
EBIT* | Supported by revenue growth and cost management +21.6% Performance on reported basis • EBIT 27.7% (YoY) • Contribution margin 19.5% (YoY) +17.7% 12.4% • Opex 9.7% (YoY) Contribution Margin* OpEx* EBIT* YoY (Shs Bn) EBIT* (Shs Bn) 22.0 (2.5) (1.0) (1.3) 67.0 (5.3) 55.1 67.0 45.6 35.1 26.9 55.
Slide 25: Capex
Capex | Driven by our commitment to keep Kenya ahead in the technological roadmap Capex (Shs Bn) Capex Allocation 33.7 33.3 35.3 Other Capex, 6% 27.8 24.9 IT Systems, 21% Radio Access, 38% Fixed Network, 6% Operations, 9% FY13 FY14 FY15 FY16 FY17 Core Network, 8% Transmission, 12% Five Year FY Capex
Slide 26: Cash Flow
Cash Flow | Growth delivered by better operating performance Net Cash & Usage (Shs Bn) Healthy Debt Position 16.5 (30.4) • Debt / Equity Ratio: 0.15x • Debt / EBITDA Ratio: 0.16x 103.1 (27.2) (35.3) (24.0) (2.5) 6.2 (1.3) 0.5 6.0 nc g A t x id um pi ng re t nc g en al en al eb te Ne pe la in la in D
Slide 27: Key Financials: Statement of Income
Key Financials | Statement of Income FY17 FY17 YoY% YoY% Shs Bn FY16 Reported Normalized** Reported Normalized Voice revenue (Outgoing & Incoming) 93.46 93.46 90.80 2.9% 2.9% Messaging revenue 16.68 16.68 17.33 (3.7%) (3.7%) Mobile data revenue 29.29 29.29 21.15 38.5% 38.5% Fixed service revenue 5.2
Slide 28: Way Forward
WAY FORWARD
Slide 29: Our Operating Environment
OUR OPERATING ENVIRONMENT Industry collaboration Regulatory pressure
Slide 30: Digitising the Home
DIGITISING THE HOME Smart Expansion Home plan to capture Strategy based an under Fibre is the on converged penetrated Passed gateway to solutions market 53,000 Value Added homes with fibre Services for the Home
Slide 31: The Evolution of M-PESA
THE EVOLUTION OF M-PESA 2007 2009 2011 Simple Money Payments for Services International Transfer (Kenya Power) Money Transfer Savings and Loans 2012 (M-Shwari) 2016 2015 2013 Value Addition Payments for (API, Hakikisha, Statements, M-PESA Comes Goods and Services Bulk Payments, M-PESA Kadogo) Home (
Slide 32: Tap. Pin. Paid.
REVOLUTIONALISING PAYMENTS TAP. PIN. PAID. Phone Sticker Card Wristband
Slide 33: FY18 Guidance
FY18 GUIDANCE EBIT CAPEX To To Shs 71-75 Bn Shs 35-38Bn From From Shs 67 Bn Shs 35Bn FY17 (normalized)
Slide 34: Q&A
Q&A