Safaricom Plc · NSEKE:SCOM
Safaricom — Non-Deal Roadshow (November 2010)
33 slides from Safaricom's roadshow presentation, November 2010
Slide 1: Safaricom Ltd Investor Roadshow
Safaricom Ltd Investor Roadshow November, 2010
Slide 2: Our Vision & Strategy
2 Our Vision & Strategy Data growth through infrastructural investment Consolidate Fixed & Mobile Data Growth Increase Wimax Coverage & Product innovation Increase M-PESA Penetration Expansion of M-PESA services Increase product offering under M-PESA Stimulate voice revenue growth Sustain Voice Reve
Slide 3: Half-Year Key Highlights
3 Half-Year Key Highlights • Expansion of 3G network • Tests ongoing on LTE DATA • Acquisition of 2 additional Wimax providers • Introduction of innovative products on our Data offering • Phenomenal growth of users to 13.5 million as at September 2010 • Over 80% of our subscribers registered for M-P
Slide 4: Performance Highlights – H1 10 v H1 11
4 Performance Highlights – HI 10 v H1 11 16.71mn Kshs. 47.11 bn Kshs. 18.83bn Kshs. 7.63bn Kshs. 0.19 15.2% 15.9% 13.8% 15.1% 14.9% 100.% Net Customers Turnover EBITDA Income EPS
Slide 5: Regulatory Environment
5 Regulatory Environment 1. Mobile Termination Rates: Reduced by 50% to Kshs. 2.21. • Has led to aggressive reduction in pricing • However, Interconnect revenues contribute to <5% of total revenues 2. Kenya Information & Communications Regulations 2010 • Aligned to international best practice 3. Sub
Slide 6: A Growing Market
6 A Growing Market Mobile Penetration Across Africa (%) in September 2010 Zimbabwe Zambia Uganda Tunisia Tanzania Sudan • Safaricom operates in the world’s South Africa fastest growing mobile market with a Somalia diversity of consumer needs Réunion Rwanda Nigeria • SIM penetration in Kenya > 50% as
Slide 7: The Market Leader
7 The Market Leader March 2010 September 2010 21.7% 23.3% 78.3% 76.7% Safaricom Others Safaricom Others Source: CCK • The No.1 Mobile Service provider in Kenya with the largest and most advanced network coverage • 15.2% increase in number of customers to 16.71 million with 0.92 million net additions
Slide 8: Towards Total Communication
Towards Total Communication
Slide 9: Going beyond the conventional
9 Going beyond the conventional Safaricom has transitioned from being a pure voice player to a total communication provider. • Voice • Fixed Data – Wimax, Fibre Optic • Mobile broadband • Mobile Money transfer & Mobile-Banking • Handsets, Laptops, Modems • LTE
Slide 10: Its not all about Voice
10 Its not all about Voice Through value added services and products we ensure customer satisfaction and retention • M-PESA • Bonga Points • New generation SIM cards • Evolving to 4G technology (under trial) • Low cost recharge vouchers
Slide 11: Data for all
11 Data for all Aiding data penetration by • Providing affordable data rates & bundles • Aggressive selling of affordable data enabled devices • Financing partnerships with financial institutions • Promotions on data enabled devices Stimulate usage by • Attractive promotions • Continuous customer ed
Slide 12: Data Penetration
12 Data Penetration Data customers Data Penetration of total Safaricom customers 4.00 25% 3.50 20% Data customers in millions 3.00 2.50 Penetration 15% 2.00 10% 1.50 1.00 5% 0.50 - 0% Oct-08 Oct-09 May-08 May-09 Nov-09 May-10 Apr-08 Jun-08 Nov-08 Jul-08 Dec-08 Feb-09 Apr-09 Jun-09 Jul-09 Dec-09 Feb-
Slide 13: M-PESA: So much more
13 M-PESA: So much more M-PESA is now used for • Secure money transfer • Airtime purchase • Utility bill payments • Bulk cash payments • International money transfer • ATM withdrawals • Dividend payment • Social/Charitable collections • M-KESHO • Purchase of goods
Slide 14: M-PESA: Purely Phenomenal
14 M-PESA: Purely Phenomenal M-PESA Customers/Agents 16,000,000 25,000 14,000,000 S 20,000 U 12,000,000 B A S 10,000,000 15,000 G C E R 8,000,000 N I 10,000 T B 6,000,000 S E R 4,000,000 S 5,000 2,000,000 0 - Users Agents M-PESA continues to experience strong growth in users (13.5 million in Sept. 2
Slide 15: Financials
FINANCIALS
Slide 16: Strong Operational Performance
16 Strong Operational Performance Revenue EBITDA/EBITDA Margin 18.83 Kshs. Billion 47.11 Kshs. Billion / % 40.66 15.9% 13.8% 16.55 40.7% 40.0% H1 2010 H1 2011 H1 2010 H1 2011 Profit Before Tax Net Income/ Margin Kshs. Billion / % 7.63 Kshs. Billion 10.44 9.13 14.3% 6.63 15.1% 16.3% 16.2% H1 2010 H1
Slide 17: Strong Operational Performance
17 Strong Operational Performance Basic EPS Free Cashflow 2.44 Kshs. 0.19 Kshs. Billion 0.17 14.9% 167% 0.91 H1 2010 H1 2011 H1 2010 H1 2011 Shareholder Funds Gearing vs Net/EBITDA Kshs. Billion Net debt/EBITDA Gearing Times 62.26 0.6 28% 53.78 15.8% 26% 0.5 23% 24% 0.4 20% 22% 20% 0.3 18% 0.464 0.2
Slide 18: KPIs: Strong Revenue Growth
18 KPIs: Strong Revenue Growth YoY Revenues Analysis Data Revenue Breakdown Kshs. Billions Kshs. Billions / % of Revenue 50 23.8% 47.1 25% 45 43.2 12 19.7% 11.20 40.66 17.7% 20% 40 36.1 11.2 10 14.9% 2.26 34.51 8.5 35 7.2 8.52 15% 3.7 5.4 10.8% 30 8 7.20 1.64 10% 25 1.34 5.28 6 5.38 5% 20 0.99 4.34
Slide 19: KPIs: Robust ARPU
19 KPIs: Robust ARPU M-PESA DATA VOICE Blended ARPU Kshs. Kshs. Kshs. Kshs. 80.1 119.9 121.2 370.8 466.0 456.6 75.6 321.7 H1 10 H1 11 H1 10 H1 11 H1 10 H1 11 H1 10 H1 11 • Even with increase in M-PESA and Data customers, M-PESA ARPU and Data ARPU have increased by 6% and 1.1% respectively • Voice AR
Slide 20: KPIs: Expanding EBITDA & Margins
20 KPIs: Expanding EBITDA & Margins H1/H2 EBITDA EBITDA EBITDA Margin % Kshs. Billions 25.00 50% 43.5% 46.4% 40.6% 45% 40.0% 20.00 40% 35% 31.8% 15.00 30% 25% 10.00 20.1 18.8 20% 16.5 15.0 15% 12.95 5.00 10% 5% 0.00 0% H1 09 H2 09 H1 10 H2 10 H1 11 • Strong EBITDA growth of 13.8% to Kshs.18.83bn fro
Slide 21: KPIs: Effective cost control
21 KPIs: Effective cost control H1 2010 H1 2011 Ksh. billions Ksh. billions 40.66 47.11 (18.87) (21.62) (6.66) (5.25) 16.55 18.83 Revenue Opex SG&A EBITDA Revenue Opex SG&A EBITDA • OPEX of Ksh. 21.62bn representing 45.9% of revenue (46.4% September 2009) • SG&A of Ksh. 6.66bn representing 14.1% of
Slide 22: Cost Structure: OPEX
22 Cost Structure: OPEX H1/H2 OPEX Breakdown Ksh. billions 48% 49% 45% 46% 46% 39% 41% 3.6 2.1 1.4 2.3 4.1 2.0 3.8 4.0 1.7 4.0 1.3 3.8 3.3 2.5 9.6 10.5 11.6 9.1 7.5 8.1 7.0 1.4 1.5 2.7 2.2 2.3 2.3 1.3 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 Interconnection Airtime, Acquisition&Retension Network Ot
Slide 23: Cost Structure: OPEX
23 Cost Structure: OPEX H1 10 H1 11 11% Interconnection 11% Interconnection 4% 12% 17% Airtime 2% Airtime &Acquisition &Acquisition Network Network 21% Retention 19% Retention 51% 51% Other Other Effective control of OPEX costs
Slide 24: Cost Structure: SG&A
24 Cost Structure: SG&A H1/H2 SG&A Breakdown Ksh. billions 48% 45% 49% 46% 46% 39% 41% 1.4 1.5 1.2 1.3 1.9 1.1 1.4 0.8 0.9 1.3 1.0 1.3 1.3 1.0 2.9 3.3 2.5 2.7 1.5 1.7 1.8 H1 08 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 Payroll Marketing General Cost Intensity • SG&A costs increased by 27.2% • Increased Pa
Slide 25: Cost Structure: SG&A
25 Cost Structure: SG&A H1 10 H1 11 23% 22% Payroll Payroll 52% 50% Marketing Marketing General General 25% 29% Effective control of Selling, General and Administrative costs
Slide 26: Capital Expenditure: Expanding our Network
26 Capital Expenditure:-Expanding our Network Base Stations 2282 Total 2162 1972 1899 3G 1741 1558 Wimax 829 607 384 301 116 156 140 165 H2 08 H1 09 H2 09 H1 10 H2 10 H1 11 Network growth from 1,972 sites in Sept 09, to 2,282 sites in Sept 10 Metropolitan towns in Kenya now covered by 3G network Tec
Slide 27: Capital Expenditure: Investing for the Future
27 Capital Expenditure:-Investing for the Future CAPEX- H1 2010 CAPEX- H1 2011 Total Capex- Kshs. 6.6 Bn Total Capex- Kshs. 10.0 Bn 1.8 2.7 0.1 0.3 0.4 0.1 0.3 0.1 2.8 1.8 4.9 1.2 2G 3G Wimax Transmission Core Network Other 2G 3G Wimax Transmission Core Network Other • Capex intensity increased to 2
Slide 28: The Future
The Future
Slide 29: Safaricom: Well positioned in a Growing Sector
29 Safaricom: Well positioned in a Growing Sector Telecoms Industry in Safaricom Safaricom’s Emerging Markets Penetration • Linked to 2 undersea cables Data market opportunity • Acquisitions & Strategic partnerships 9.33% of population • Innovative and affordable data offerings • Increase in product
Slide 30: Our Future: Still Number 1
30 Our Future:- Still Number 1 Customer • Provide superior customer care service • Anticipate future needs of our customers Focus • Deliver innovative products and services Data • Increase data penetration and usage • Network expansion • Diversification M-PESA • Expansion of functionality and servic
Slide 31: The telecoms industry in Kenya is ever growing
The telecoms industry in Kenya is ever growing; presenting enormous opportunities for expansion and innovation Safaricom is well placed to capitalize on these opportunities We are Number 1 and we shall continue to be Number 1
Slide 32: Q&A
Q &A ‘ <Safaricd m
Slide 33: Thank You
eg OE, 2 if Niko na‘. Safaricom