Safaricom Limited H1FY17 Results Presentation 4 November 2016 - PowerPoint PPT Presentation

Safaricom Limited H1FY17 Results Presentation 4 November 2016

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 constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite or subscribe for or otherwise acquire securities in the Company. The presentation also contains certain non-GAAP financial information. The Group’s management believes these measures provide valuable additional information in understanding the performance of the Company’s businesses because they provide measures used by the company to assess performance. Although these measures are important in the management of the business, they should not be viewed as replacements for, but rather as complementary to, the comparable GAAP measures. Safaricom, M-PESA and Safaricom/M-PESA logos are trade marks of Safaricom Ltd. Other products and company names mentioned herein may be the trademarks of their respective owners.

CONTENT 01. Our Transforming Lives Story 02. Delivering Our Strategy 03. The Numbers 04. Way Foward

OUR TRANSFORMING LIVES STORY 16 Years Of Inclusive Growth

OUR TRANSFORMING LIVES STORY The Story Of A Base Station Access Safety Health Connectivity Well-Being Education Dignity

OUR TRANSFORMING LIVES STORY Solutions That Transform Lives h A t g l a r i e c H u l t u r e Fertilizer subsidy with Government of Kenya Connected Farmers Alliance (CFA) n o i s u l E c n d u I l c a a i t c i n o a n n Chakula Chap Chap i F Safaricom, UNHCR and WFP partnership r e O h t

OUR TRANSFORMING LIVES STORY Case Study: Chakula Chap Chap – Dignity Restored Dignity

OUR TRANSFORMING LIVES STORY Building A Sustainable Future

DELIVERING OUR STRATEGY Focus. Fix. Fine Tune.

DELIVERING OUR STRATEGY Enhancing Our Relationship With The Customer i n C s o y n a t w r o l A l “Simple, predictable, convenient solutions” • Safaricom App • Hakikisha “We value R e your w y Business a t “Best i r v and d i Network WE CARE t a Patronage” c for You” n e d n n L • Call Drop • Bonga Points o o C Guarantee • Blaze Bonga y a l t y “Always available for you” • 600 new Customer Service Agents s s e E c a c s A y

DELIVERING OUR STRATEGY Leveraging Partnerships To Meet Customer Needs Spark Fund Investments H1FY16 H1FY17 Innovation Co-creation 45% 55% 53% 47% and Partnerships Non-voice Voice Non-voice Voice

DELIVERING OUR STRATEGY Over 600 Building A Network For The Future 4G sites M-PESA Over 16,000 homes availability passed with High Speed Fibre close to 100 % Over 4,000 2G sites. 80% 3G population coverage

DELIVERING OUR STRATEGY Our Growth Strategy Customer First Relevant Products • Revenue Operational • EBITDA Excellence • Net Income • Free CashFlow

The Numbers

Strong Financial Performance | Delivered By Our Purpose And Strategy Key Financials H1FY17 H1 FY16 YoY% Service Revenue 98.0 84.9 +15.4% EBITDA 50.8 38.8 +30.8% Underlying EBITDA* 47.4 38.8 +22.2% Net Income 23.9 18.1 +32.4% 20.1 9.5 +111.6% Free Cash Flow *Excludes one off adjustment of Shs 3.4Bn

H1 Service Revenue | Driven By M-PESA & Mobile Data Outgoing Voice +15.4% YoY · +0.9ppts (+1.9% YoY) · 43% of Service Revenue Messaging M-PESA +7.7ppts Mobile Data +4.9ppts · +0.7ppts (+8.1% YoY) · +33.7% (YoY) · +46.3% (YoY) · 8.8% of Service Revenue · Total data 16.0% of Service Revenue · 26.4% of Service Revenue Customer base now at 26.6m (+6% YoY) Service Revenue (Shs Bn) Service Revenue Waterfall (Shs Bn) 98.0 84.9 1.2 0.6 98.0 75.6 4.2 66.2 6.5 56.1 0.5 84.9 a t * e A a g 7 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 r 6 c D S n 1 e 1 i E o i Y h Y e g P V t F F l a - O i 1 1 M b s H H s o e M M *Includes Fixed data and other Service Revenue (Okoa Jahazi)

M-PESA Revenue | Delivers Growth Driven By Deeper Customer Engagement Bread and Butter +7.7 ppts • Person to Person transfers (P2P) +19% YoY • Withdrawals +21% YoY Bread & Butter +3.9 ppts New Business +3.8 ppts New Business (P2P & Withdrawals) (C2B,B2C,B2B,LNM,etc.) • Customer to Business (C2B) • Business to Customer (B2C) +64% YoY • 76% of M-PESA Revenue • 24% of M-PESA Revenue • Business to Business (B2B) • Lipa Na M-PESA +73% YoY M-PESA Revenue (Shs Bn) 30-day Active M-PESA Customers (m) 25.9 19.4 15.6 17.6 12.5 15.7 10.4 12.8 11.6 9.7 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17

M-PESA Transaction Values | Growth Continues In Bread And Butter, Acceleration From New Business Shs ‘Bn’ 5 YR CAGR +27% 3,500 H1 CAGR YoY% 5 Years 3,226 3,000 813 +84% +78% 2,475 2,500 441 1,972 768 +19% +21% 2,000 242 644 1,555 1,500 150 544 1,237 755 +17% +17% 436 82 644 1,000 357 557 464 401 500 889 +19% +22% 746 630 505 398 _ H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 Deposits P2P Transfers Withdrawals Other* * Other includes; B2C, C2B, B2B, Lipa Na M-PESA, IMT, Airtime, e.t.c

Mobile Data Revenue | Customers And Usage Driving Growth +4.9ppts • Mobile Data ARPU* – Shs 144 +21% (YoY) • Usage per customer per month at 231MBs +44% (YoY) Active customers +2.3ppts ARPU +2.6ppts • Total mobile data volume (Bn) - 21.1MBs +74% ( YoY) • Rate/MB - Shs 0.63 reduced - 16% (YoY) 30-day Active Mobile Data Customers (m) Mobile Data Revenue (Shs Bn) 14.9 13.4 13.1 10.5 8.5 9.2 5.6 6.5 4.3 2.5 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 *Mobile Data ARPU based on distinct data customers

Traditional Telco Revenue Streams | Voice As Well As SMS Continues To Deliver Growth Voice Revenue (Shs Bn) Messaging Revenue (Shs Bn) 45.7 45.2 43.7 41.0 8.6 8.0 7.2 37.4 6.4 4.3 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 • 30 day active voice customers, 21m +6.8% (YoY) • Active SMS users, 15.7m +6.5% (YoY) • M-PESA airtime top ups, 45.7% + 4.7ppts • SMS bundle users, 4.9m +3.7% (YoY) • Voice ARPU* - Shs 294 reduced 8% (YoY) • PRS SMS users, 6.4m +30.8% (YoY) *Voice ARPU based on total subscribers *PRS - Premium Rate Services

EBITDA | Supported By Revenue Growth And Cost Management +30.8%* EBITDA *Underlying EBITDA growth +22.2%(YoY) +22.0% 9.3%** **Operating expenses (OpEx) growth excludes forex on trading activities Contribution Margin OpEx 50.8 EBITDA (Shs Bn) 44.2 38.8 37.7 33.5 32.0 28.9 26.9 22.3 H1FY13 H2FY13 H1FY14 H2FY14 H1FY15 H2FY15 H1FY16 H2FY16 H1FY17

Operational Excellence | In Managing Costs Contribution Margin ( Shs Bn) OpEx (Shs Bn) and OpEx Intensity ( %) 23.5% 25.0% 102.0 2.3 25.0 22.4% 22.5% 22.0% 21.0% 8.5 20.0% 5.5 71.8 20.0 5.0 6.6 21.0 3.6 3.4 20.0 15.0% 17.4 15.0 15.6 13.9 10.0% 10.0 5.0% 5.0 0.0% - H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 L i ce ns e fe e s e n s on s ts s ts gi n e O t h er inc om u s c o s o n co os t n M ar m e c o m m issi s i e e v s e t c t c i c o m m r r e s l O th e d o nn OpEx OpEx intensity a t ributio t n o a T H c SA e r d n t n E C on A ir ti M - P a I R & A • Growth in contribution +22.0% (YoY) • Declining YoY OpEx as a % of revenue (down 1.5ppts) • Contribution margin at 70.4% , +4.14ppts • OpEx costs growth +9.3% (YoY) vs Service Revenue • Underlying margin at 68.2% growth of +15.4% (YoY)

Operational Excellence | Wide Network For Our Customers Capex (Shs Bn) Base Stations 20.0 18.9 4,061 3,562 3,247 3,221 2,984 12.4 10.5 2,281 1,973 8.6 1,650 635 379 H1FY13 H1FY14 H1FY15 H1FY16 H1FY17 H1FY14 H1FY15 H1FY16 H1FY17 3G Total (inc 2G) 4G Five Year FY Capex Intensity Sites % • 2G sites growth, +14% (YoY) 25.0 20.6% 20.0% • 3G Population coverage at 80% 19.2% 17.2% 20.0 16.4% • 4G in 32 out of 47 counties 15.0 Own Fibre Roll out 10.0 • Connected 34% of our sites • Over 16,000 homes passed with our Fibre To The Home (FTTH) 5.0 Better Internal Systems - FY13 FY14 FY15 FY16 FY17F* • M-PESA availability close to 100% *Forecast

Free Cash Flow | Growth Delivered By Rising Trading Performance Free Cash Flow (Shs Bn) Net Cash Position (Shs Bn) 50.8 43.0 (19.0) (16.5) (12.3) 26.5 20.1 0.7 (0.1) EBITDA Capex Tax Working Net Free Cash & cash Bank Net cash Capital Interest cash fl ow equivalents Borrowings Free cash flow up, +111.6% (YoY) • Shs 2.4Bn short term revolving facility at 91 day TB rate plus 0.45% • On improved trading results • Shs 7.7Bn short term revolving facility at 91 day TB rate plus 0.425% • USD 40Mn (Shs 4.0Bn) short term revolving facility at 3 months LIBOR plus 1.5% • Shs 2.4Bn short term facility at 91 day TB rate plus 2.25%