Safaricom PLC · NSEKE:SCOM
Safaricom — Investor Day (February 2024)
65 slides from Safaricom's investor day presentation, Feb 22, 2024
Slide 1: Safaricom Plc Investor Day 2024
SAFARICOM PLC INVESTOR DAY 2024 Scaling Operations for Ethiopia's Digital Future PRESENTED 22 FEBRUARY 2024
Slide 2: Agenda
AGENDA Time (EAT) Topic Speaker / Venue Day 1: Thursday 22nd Feb 2024 Host Chairman Welcome note Michael Joseph, Board Chairman, Safaricom Ethiopia Group Chairman Welcome note Adil Khawaja, Board Chairman, Safaricom Plc 08:30 – 13:15 Group CEO’s presentation Peter Ndegwa, CEO, Safaricom Plc Break an
Slide 3: Global Partnership of Ethiopia Board of Directors
GLOBAL PARTNERSHIP OF ETHIOPIA (GPE) | Board of Directors Michael Joseph Board Chairman Karen Kandie Peter Ndegwa Richard Spearman Wim Vanhelleputte Board Member Board Member Board Member Board Member Tom Butler Dilip Pal Katsuya Kashiki Abhinav Sinha Atsushi Goto Board Member Board Member Board Mem
Slide 4: Safaricom Plc Board of Directors
SAFARICOM PLC | Board of Directors Adil Arshed Khawaja Chairman Peter Ndegwa Murielle Lorilloux Rose Ogega Winnie Ouko Shameel Joosub Dilip Pal CEO & Executive Director Non-Executive Director Independent Independent Non-Executive Director CFO & Alternate Non-Executive Director Non-Executive Director
Slide 5: Investor Day: Peter Ndegwa, CEO
INVESTOR DAY PETER NDEGWA SAFARICOM PLC CHIEF EXECUTIVE OFFICER Scaling operations for Ethiopia's Digital Future
Slide 6: Agenda for the Investor Day
AGENDA FOR THE INVESTOR DAY 01 Update on our strategy execution progress 03 Focus areas for the next year 02 04 Outline key initiatives driving Deep dive into Safaricom performance Ethiopia
Slide 7: Safaricom Plc Senior Leadership Team
SAFARICOM PLC | Senior Leadership Team Peter Ndegwa Chief Executive Officer Dilip Pal Fawzia Ali-Kimanthi Fred Waithaka Paul Kasimu Florence Nyokabi Nicholas Mulila Chief Finance Officer Chief Consumer Business Interim Chief Corporate Outgoing Chief Incoming Chief Human Chief Corporate Unit Officer
Slide 8: Other Members of the Senior Leadership Team
SAFARICOM PLC | Other Members of the Senior Leadership Team Boniface Mungania Zizwe Awuor-Vundla Denish Osodo Lucille Aveva Director – Public Sector Director - Brand and Marketing Director - Internal Audit Director - Customer Obsession Digital Transformation
Slide 9: Our Culture
OUR CULTURE | We Have Beliefs, Behaviors and Language Guiding the Spirit of Safaricom PURPOSE CUSTOMER OBSESSION ✓ BELIEF – We transform lives ✓ BELIEF – We are simple, transparent, honest ✓ BEHAVIOUR – We are purpose driven ✓ BEHAVIOUR – Ready, Willing and Able (RWA) ✓ LANGUAGE – I am notoriously c
Slide 10: Our Purpose: Committed to Transforming Lives
OUR PURPOSE | We are Committed to Our Purpose of Transforming Lives True Value Assessment* Partnering for ESG success: • Obtained a KES 15 billion Sustainability-Linked Impact on Society Environmental Loan to strengthen our ESG agenda. 14.6 times profit externalities • Implemented the Sustainable Su
Slide 11: Our Strategy: This is the Penultimate Year
OUR STRATEGY | This is the Penultimate Year Transforming Lives Purpose FY24 Focus is To Scale Tech Solutions in order to be a Purpose-Led Technology Vision To be a Purpose-Led Technology Company Company by the end of 2025 Transformation A digital-first, insights-led organisation that enables platfor
Slide 12: Operating Environment: Challenging Operating Environment
OPERATING ENVIRONMENT | Challenging Operating Environment Macro-Economic Regulatory Customer Insights • Resilient GDP growth; +5.9% in Q3 • Mobile Termination Rate 2023 reduction • Stable inflation rates; 6.6% Dec • Constrained consumer • Fiscal pressure (increased 2023 purchasing power taxation) •
Slide 13: Strategy Execution Highlights
STRATEGY EXECUTION HIGHLIGHTS | Our Progress Has Been Substantial Performance Agile Acceleration Big Data Acceleration 49% Agile; Level 3 agile maturity 20 Data Engineers and 20 Data scientists; full Momentum in Kenya set up Center of Excellence Mobile Data; M-PESA; Consumer Fixed; EBIT Growth Progr
Slide 14: Execution Highlights: Key Initiatives Driving Performance
EXECUTION HIGHLIGHTS | Key Initiatives Driving Performance in the Year Launched Youth Platform; Spark Accelerator Safaricom Hook (Partnering with Sumitomo, ( Focusing on Technology, M-PESA Africa; drive growth- Career and Culture; stage startups ) Engagement) Launched Credit Cyber security, Cloud an
Slide 15: Digitizing Kenya
DIGITIZING KENYA | We are Enabling Ease of Access to Services Financial Empowerment program (Hustler Fund) Women groups Empowerment. • 21Mn Customers • 30K Active groups formed • KES 46.3B Disbursed • 2Mn members • 76% Repayment rate • KES 0.9Bn value disbursed • 100k Groups enrolled Digital Health
Slide 16: Looking Forward: Sustaining Momentum in Kenya
LOOKING FORWARD | In Kenya, We Will Continue to Sustain the Strong Momentum New Growth Areas Cost and Productivity Acceleration Reduce blended Energy costs; Low-cost commercial models; Deliver value to customers Next Financial services (Wealth, Credit, Insurance); Fiber/Fixed; Content; IoT/ICT Digit
Slide 17: Our New Frontier: Why Ethiopia
OUR NEW FRONTIER | Why Ethiopia 120Mn Low Mobile Young People Money Penetration Population Rapid Government’s commitment to Low mobile Economic Growth and fixed data with a GDP growth rate driving digital of over 5% per year transformation penetration rate
Slide 18: Our Shareholders: A Powerful Consortium of Global Partners
OUR SHAREHOLDERS | A Powerful Consortium of Global Partners 51.67% Non-Economic Interest 5.74% 25.23% 10.11% 7.25%
Slide 19: Ethiopia Progress: Key Milestones Delivered
ETHIOPIA PROGRESS | We Have Delivered Key Milestones Network Customer Onboarding (Fastest Data Network; Rolled out (Digital Biometrics; ~15k Average daily 2,242 2G/3G,4G base stations) gross adds) M-PESA Launched Talent and Culture (Licensed in May 2023 , 3.1Mn (One Company, One Team, One Culture) r
Slide 20: Group Performance: We Will Deliver FY24 Group Guidance
GROUP PERFORMANCE | We Will Deliver the FY24 Group Guidance EBIT CAPEX KES 87-93Bn KES 85-93Bn
Slide 21: Investor Day: Wim Vanhelleputte, Safaricom Ethiopia CEO
INVESTOR DAY WIM VANHELLEPUTTE SAFARICOM ETHIOPIA CHIEF EXECUTIVE OFFICER Scaling operations for Ethiopia's Digital Future
Slide 22: Agenda
AGENDA SAFARICOM ETHIOPIA SENIOR LEADERSHIP TEAM PURPOSE, VISION, VALUES THE ENTRY PHASE 01 THE FOUNDATION PHASE 02 THE SCALING PHASE 03
Slide 23: Safaricom Ethiopia Senior Leadership Team
SAFARICOM ETHIOPIA | Senior Leadership Team Wim Vanhelleputte Chief Executive Officer Stanley Njoroge Masahiro Miyashita Julie Arndt Charles Wanjohi Paul Kavavu Chief Finance Officer Chief Strategy Officer Chief Risk & Chief Consumer Chief Financial Compliance Officer Business Officer Services Offic
Slide 24: Our Purpose, Vision & Values
OUR PURPOSE, VISION & VALUES PURPOSE VISION BRAND PROMISE VALUES Transforming Lives For a Loved and Innovative Future Ahead Together Customer Obsessed Digital Future Brand Trust & Respect Speed & Innovation Compliance & Integrity
Slide 25: The Entry Phase FY22 – FY23
tre THE ENTRY PHASE © Fv22 - FY23 ey /
Slide 26: Key Milestones: Marking Official Entry into Ethiopia
KEY MILESTONES | Marking Official Entry into Ethiopia JULY 21 DEC 21 AUG 22 OCT 22 MAY 23 AUG 23 Telecom license Our first data center Pre-launch in Dire Commercial launch M-PESA license Commercial awarded by ECA worth USD 100Mn Dawa with 150 in Addis Ababa with awarded by NBE launch of M-PESA arriv
Slide 27: Our Licenses: GSM and Mobile Financial Services
OUR LICENSES | GSM and Mobile Financial Services GSM Regulatory Landscape Mobile Financial Services Excellent spectrum allocation; Unified Payment Instrument Regulated by the National Telecommunications Issuers license Bank of Ethiopia (NBE) Services license at USD 850Mn Paid Investment Protection F
Slide 28: The Foundation Phase FY23 – FY25
THE FOUNDATION PHASE FY23 – FY24 – FY25
Slide 29: People & Organisational Structure
PEOPLE & ORGANISATIONAL STRUCTURE
Slide 30: People and Organization
PEOPLE AND ORGANIZATION The company will continue to evolve into a full-fledged Ethiopian-run organization over the next 12-18 months 891 Staff 40 % 36% ➢ <30yrs old 321 Female 797 In Cohort 1 Cohort 2 Market Talent 46 Graduates, 64 Graduate 41 permanent employees Management Trainees 110 In Market 1
Slide 31: Country Demographics: Regional Approach
COUNTRY DEMOGRAPHICS | Regional Approach Second most populated country in Africa Very diverse population: Three major religions: with 120Mn people, 90% living on Above 80 Ethnic Groups and Languages Christian Orthodox, Muslim and 35% of the geography (densely Protestant populated) 1 federal governme
Slide 32: Country Demographics: The Structure
COUNTRY DEMOGRAPHICS | The Structure Three pillars of regionalization Stakeholder Commercial Engagement Execution Technical Operations Regional Offices 1 Central Oromia Adama 2 West Oromia Jimma 3 West Amhara Bahir Dar 4 East Amhara Dessie 5 Somali Jijiga 6 Sidama Hawassa 7 Tigray Mekelle Our ambiti
Slide 33: Safaricom Ethiopia Awarded Top Employer Award
SAFARICOM ETHIOPIA AWARDED TOP EMPLOYER AWARD
Slide 34: Network Infrastructure
NETWORK INFRASTRUCTURE
Slide 35: Network Design Principles
NETWORK DESIGN PRINCIPLES WHERE? HOW? Geo-marketing – continuous socio-economic • Self-build & Infrastructure sharing clusters, highly densely populated areas Security situation – relatively safe and easy • Other infrastructure sharing partners; access required to build and operate the network • Et
Slide 36: The Build Timeline
THE BUILD TIMELINE | 125 Sites a Month for 18 Months Commercial Pre-launch in launch in Addis Currently Dire Dawa with Ababa with 450 2,242 sites 150 sites sites AUGUST 2022 OCTOBER 2022 DECEMBER 2023 Total Cumulative Capex Spend as at Dec 2023 – USD755Mn (Inclusive of data centres)
Slide 37: Sites Distribution: Priority High Population Density Areas
SITES DISTRIBUTION | Based on Priority High Population Density Areas Population Density Our Sites Distribution Blue zones represent sparsely populated regions. Coverage is guided by license obligations
Slide 38: Network: Scaling Sites and Subscribers
NETWORK | Scaling Sites and Subscribers COUNTRY AREA POPULATION POPULATION SITES CUSTOMERS CUSTOMERS SIZE (MN’S OF (MN’S) DENSITY (000’S) PER SITE SQUARE KM’S) 2.3 99.0 42 3,164 21,444 6,777 DRC 0.8 33.0 41 2,393 11,580 4,839 MOZAMBIQUE 0.9 65.5 69 3,469 19,126 5,513 TANZANIA 0.6 54.0 93 6,571 44,12
Slide 39: Sales & Distribution
SALES & DISTRIBUTION
Slide 40: Distribution: Evolving Model to Meet Customer Needs
DISTRIBUTION | Evolving Model to Meet Customer Needs Customer Focus Streamline Trade Execution Build Resilience & Efficiency Differentiate our distribution One customer – No One trade - No differentiation and build competitive segregation of GSM or M-PESA of retailers for GSM products, advantage. cu
Slide 41: Distribution: Our Model
DISTRIBUTION | Our Model No more scratch-cards or paper Distribution network for GSM, Vouchers, AIRTIME = M PESA ONE SME & M-PESA DIGITAL FLOAT, Real-time monitoring & reporting Territory management, creating clear accountability and visibility Focusing on scaling sites, critical REGIONAL to drive d
Slide 42: The Brand
THE BRAND
Slide 43: We Are the Challenger: Positioning for a Youthful Market
WE ARE THE CHALLENGER | Positioning Our Brand for a Youthful Market Population Demographics Why the Youth? Demographics: Almost 3Mn 40% 30% 30% Ethiopians turn 18 years < 15 years old >30 years old Between 15 – 30 old every year years old Open Broadest common About to leave High Affinity to new l
Slide 44: We Are the Challenger: Our Winning Strategy
WE ARE THE CHALLENGER | Our Winning Strategy Win with Best-in-class Digital experience Aspirational Youth Focus on Ethiopia GenZ Youth for (a) Know (b) Buy (c) Service Focused International brand positioning Win Youth brand consideration and Over Proposed digital first order to interact with Index
Slide 45: We Are the Challenger: Propositions Aligned to Market Dynamics
WE ARE THE CHALLENGER | Propositions Aligned to Market Dynamics Voice Mobile Data 75 40% 4.8GB 60% MOU On-net Data usage per of data traffic is Share subscriber social media Quantity of voice packs by duration Quantity of data packs by duration Daily Daily Weekly Weekly Monthly Monthly 0% 20% 40% 60
Slide 46: Data Experience: 96% of Samples Above 10Mbps
DATA EXPERIENCE | 96% of Measured Samples Experiencing >10Mbps in Download Throughput Download testing Upload testing Green is great! Average throughput of 84.7 Mbps Average throughput of 42.2 Mbps
Slide 47: The M-PESA Platform
THE M-PESA PLATFORM
Slide 48: The Opportunity: Digitize Cash Payments and Offer Financial Services
THE OPPORTUNITY | Digitize Cash Payments and Offer Financial Services Banking penetration in urban areas is relatively high, BUT Only 11% 99% of the population 1 has had of small value transactions 1 are in access to loans Cash from financial institutions The social construct USD 6.9Bn is less geare
Slide 49: The Journey: Leapfrogging With Best-in-class Services
THE JOURNEY | Leapfrogging With Best-in-class Services Kenya and Vodacom markets Ethiopia LAUNCH M-PESA launched years after GSM in M-PESA was launched shortly after TIMELINE our other Group markets GSM, so existing GSM base Solving the money transfer problem: USE CASE cash-in/P2P/cash-out Solving t
Slide 50: Building Phase: Building Blocks to Scale
BUILDING PHASE | Since Acquiring the License, We Have Established the Necessary Building Blocks to Allow Us to Scale Customer Acquisition Agent & Merchant Ecosystem Partnerships • 12 Banks, 3 e-commerce • 3.1Mn M-PESA Registered Customers • 43K Merchants and 70+ Supermarket outlets • International M
Slide 51: Our Approach: Complete 3-Sided Ecosystem
OUR APPROACH | We Have Leveraged on Our Experience to Build a Complete 3-Sided Ecosystem from Day 1, as Opposed to the Incremental Approach in our Other Markets B2C Payments Bank Transfer Credit Bill Pay Savings Developer Business Consumer Ecosystem P2P B2B Mini Wealth Apps Big Data Loyalty Merchant
Slide 52: M-PESA: Toolbox to Ignite a Digital Payments Ecosystem
M-PESA | We Have a Toolbox to Ignite a Digital Payments Ecosystem Consumer Payments Merchant Payments Next Financial Services Airtime Bulk Bank Merchant Pay Cash In Cash Out Group Micro Savings Top Up Disbursements Utility Overdraft Transfers Savings P2P Merchant Bill Merchant To OTC- Sell Loan Weal
Slide 53: M-PESA Partnerships
M-PESA PARTNERSHIPS | We Continue to Expand our Partnerships to Meet Various Customer Needs Local Banks Integration International Money Transfers 100+ corridors E-Commerce 12 Banks Supermarkets- 70+ Outlets Government Payments
Slide 54: Operating Model
Pot 2202. == Ss D- << ea . aqs wey ~wN We AW Vue Na e tt... y/ a UP 4 he | pli B : i | OPERATING MODEL
Slide 55: Operating Model: Lean and Agile
OPERATING MODEL | Lean and Agile Operational Capex Our People Efficiency • Marketing expense: • Low ARPU market • HR: Lean and agile Digital first, maximize • NOPEX: operating savings organization: recruit value for money start at the DESIGN-phase • talent and build skills • IT: reduce costs through
Slide 56: Ethiopia Performance: Key Milestones Achieved
ETHIOPIA PERFORMACE | We Have Achieved Key Milestones 9Mn 4.3Mn 33% 90-day Active Gross Adds Population Coverage Registered Customers 185 6K 57K Distributor shops Acquisition Agents Retailers 2,242 891 Fastest Network in Network Sites Permanent Employees Ethiopia Numbers reported as at December 2023
Slide 57: The Scaling Phase FY25 – FY27
THE SCALING PHASE FY25 – FY26 – FY27
Slide 58: Scaling Phase: Benchmarking to Other Group Markets
SCALING PHASE | Benchmarking to Other Group Markets Highlights Opportunity DRC Mozambique Tanzania Kenya Ethiopia Ethiopia vs average Data Usage (GB) 2.9 2.5 2.2 3.8 4.8 +67% Data Subscribers 6,818 6,336 9,951 26,742 1,810 (000's) Data Penetration 40% 67% 59% 90% 65% Smartphone 23% 51% 37% 62% 49% P
Slide 59: Scaling Phase: Ready to Execute
SCALING PHASE | Ready to Execute Customer per site Untapped markets Infrastructure roll-out in fixed, enterprise to benchmark level of >4000 sites and wholesale M-PESA platform ARPU benchmark growth leveraging best- opportunity of $2 in – class toolbox
Slide 60: Investor Day: Dilip Pal, CFO
INVESTOR DAY DILIP PAL SAFARICOM PLC CHIEF FINANCE OFFICER Scaling operations for Ethiopia's Digital Future
Slide 61: Kenya Outlook: Strong Growth Momentum in the Medium Term
KENYA OUTLOOK | Strong Growth Momentum in the Medium Term Financial services Enterprise Business Consumer Business Accelerating Supporting businesses for Strong Data growth payments/merchants growth and transformation Technology People/Purpose Efficient capital allocation to Critical assets as we tr
Slide 62: Kenya Outlook: Our Medium-Term Ambitions
KENYA OUTLOOK | Our Medium-Term Ambitions M-PESA Double Digit Mobile Connectivity Fixed Double Digit Service Revenue Growth High Single Digit Growth Growth CAPEX Stable Capex Intensity EBITDA Margin Stable 62 C2 - Safaricom Internal
Slide 63: Ethiopia's Medium Term Big Wins
ETHIOPIA'S MEDIUM TERM BIG WINS | Strong Business Momentum From an International Brand 63 C2 - Safaricom Internal
Slide 64: Ethiopia Outlook: Scaling Towards Medium-Term Ambition
ETHIOPIA OUTLOOK | Scaling Towards Our Medium-Term Ambition EBITDA Break even in FY26 Commercial Scale 15 – 20Mn Customers Infrastructure Scale >4,000 sites 64 C2 - Safaricom Internal
Slide 65: Thank You
THANK YOU