2. 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 through Dynamic
tariffs
Sustain Voice Revenue
Maintain # 1 position in
market
3. 3 Delivering on Strategy
We have achieved
Growth in Increased
Revenues and Maintained No. 1
penetration of
Profit Market Position
innovative products
p
through well aligned actions
Increased focus on Data Investment in Infrastructure to Strengthening our brand
and M-PESA services to support the quality & capacity presence and consistently
fuel Revenue growth of our Network and Services customer focused
operating in a highly competitive market
Aggressive competition Increasing regulatory Economy still in
coupled with declining activity recovery
disposable incomes
4. 4 Performance Highlights
15 79mn
15.79mn Ksh 83.96 bn
Ksh. 83 96 K h 36 60b K h 15 15b
Ksh. 36.60bn Ksh. 15.15bn K h 0 38
Ksh. 0.38 K h 8 00b
Ksh. 8.00bn
18.9%
18.2% 19.1% 31.0% 43.8% 44.2% 100.%
Subscribers
S b ib Turnover
T rn er EBITDA Net
N t EPS Dividends
Di id d
Income
6. 6 Regulatory Environment
• Universal Service Fund
• Service & Mobile Number portability
• Subscriber Identity Registration
• Kenya Information & Communications Regulations 2010
• Termination Rates
7. 7 Market Dynamics
Mobile Penetration Across Africa (%)
Zimbabwe
Uganda
Tunisia
Togo • Sub-Saharan Africa still the fastest
Tanzania
South Africa
growing mobile market in the world
Somalia
Seychelles
Senegal • Mobile penetration in Kenya at 50 % as
Réunion
Nigeria at 31st March 2010;
Mayotte
Mauritius
M iti
Mali
Madagascar
• Data penetration still below 10%
Libya
Liberia
Kenya
Guinea Republic
• Focus on expansion into the Data
Gambia segment as operators tap into the 3G
Egypt networks and under-sea data cables
Djibouti
Congo
Comoros Islands
Chad • Declining Voice ARPU
Cameroon
Burundi
Burkina Faso
Botswana
Benin
Algeria
0% 50% 100% 150% 200% 250%
Source: WCIS & ITU
10. 10 Maintained Market leadership
Subscribers 15 79
15.79 Market Share
Million 10.6% 5.4%
18.2%
13.36
5.6%
10.23
10 23
78.3%
Essar Telecom Kenya Safaricom
FY 08 FY 09 FY 10
Orange Kenya Zain Kenya
Source: WCIS
15.79 million subscribers by March 2010
15 79 illi b ib b M h Market leader with 78.3% of customer market
M k l d i h 78 3% f k
representing an increase of 2.43 million new share (79.1% in March ’09)
subscribers within the financial year Revenue market share rose by 1.3% to 84.3%
11. 11 Staying Ahead
Through cutting-edge products and
services we ensure customer satisfaction
and retention
• M-PESA
• Bonga Points
• Dynamic tariffs with low calling rates
• 3G network platform
• Low cost recharge vouchers
12. 12 Aggressive push on Acquisition products
• Aggressive selling of handsets , laptops
modems and other accessories
• Acquisition revenues increased by
58.5% Ksh 3 66
58 5% to Ksh. 3.66 bn (Ksh.2.31 bn in
(Ksh 2 31
March’09)
• In line with our acquisition strategy
that aims at increasing mobile
penetration nationwide
• Focus remains on Data enabled devices
13. 13 Growth propelled by DATA & M-PESA
DATA Revenue DATA/M-PESA Users
DATA/M PESA 9.48
Ksh. Billion Millions
7.56
6.18
Data Users
2.93 M-PESA Users
2.98
0.37 1.51 2.64
0.34
0 34 2.08
4.67 5.19 1.47
4.26
0.96
FY 2008 FY 2009 FY 2010 FY 08 FY 09 FY 10
Data revenue increased by 72.8% representing Strong growth in the number of Data
18.7% of revenue (12.9 % in March 09) driven by the users (79.6%) and M-PESA users
combined effect of (53.4%)
M-PESA up 158.1% (9.0% of revenue)
Data up 97.7% (3.6% of revenue)
SMS up 11.3% (6.2% of revenue)
14. 14 DATA Penetration
Data Subscribers & Penetration
16.71%
3.00 18.00%
16.00%
2.50
2.64
14.00%
2.00 12.00%
on
Data Subs -Millio
Penetration
10.00%
1.50
8.00%
1.00 6.00%
4.00%
4 00%
0.50
2.00%
- 0.00%
ar-09
ar-10
Sep-08
ct-08
c-08
Sep-09
ct-09
c-09
pr-08
pr-09
v-08
n-09
v-09
n-10
y-08
n-08
ul-08
g-08
b-09
y-09
n-09
ul-09
g-09
b-10
May
Jan
May
Jan
Aug
Dec
Aug
Dec
Jun
Feb
Jun
Feb
Nov
Nov
Ju
Ju
Oc
Oc
Ap
Ma
Ap
Ma
Subscribers Data Penetration
* Penetration is based on Safaricom subscribers
Driving growth in mobile data through mass market penetration
• Financed laptop acquisitions Business product packages
• Low priced modems, routers and laptops
modems Promotional activities
15. 15 M-PESA : Continued growth and performance
Registered Users Monthly Value of P2P Transactions
Billions
10,000,000 30.00
9,000,000
25.00
8,000,000
, ,
7,000,000 20.00
20 00
6,000,000
5,000,000 15.00
4,000,000
10.00
3,000,000
2,000,000 5.00
1,000,000
0 0.00
n-09
b-10
r-09
r-09
y-09
ul-09
g-09
p-09
t-09
v-09
c-09
n-10
r-10
Jun
May
Aug
Dec
Sep
Oct
Jan
Feb
Mar
Apr
Nov
Mar
Ju
The M-PESA customer base continues to Person-to-Person transactions for March 2010
grow with 9.48 Million users as at March 2010 stood at Ksh. 28.59 Billion
The M-PESA agent base is also expanding Cumulative value of transactions from inception
with 17,652 agents across the country was Ksh. 405.52 billion as at end of period
16. 16 M-PESA: Much more than money transfer
M-PESA is
M PESA i now used f
d for
• Airtime purchase
• Utility bill payments
y py
• Bulk cash payments e.g salary payments
• International money transfer
• ATM withdrawals
• Di id d payment
Dividend t
• Social/Charitable collections
• Banking
17. 17 Safaricom Business: Total Communications Solutions
Going beyond
Business Data connectivity to Business Voice
providing total
communication
service solutions.
Business Value Added Services
A S Business Messaging Service
18. 18 Our Future: Building on our Strengths
Sustain Voice
Company Revenue
Strategy M-PESA
expansion
Consolidate
Data Growth
Expansion Maintain
of #1
products Market
Enhance under the
Mobile Position
M-PESA
and Fixed service
Company Stable data
Focus cost growth
control
21. 21 KPIs: Continued Revenue Growth
YoY Revenues Analysis Data Revenue Breakdown
Ksh. billions Ksh. Billions / % of Revenue
15,724 5.19 6.2%
9,097 18.8%
4,067
2.98 3.6%
15.72
4,043
63,405
54,203 58,795 7.56 9.0%
41,508
FY 2007 FY 2008 FY 2009 FY 2010
Voice SMS/Data Acquisition Other SMS/ Data SMS Broadband MPESA
• Data revenue continues to grow by 72.8% • Broadband data services (97.7% increase)
representing 18.7% of revenue (12.9% Mar 09) • M-PESA (158.1% increase)
M PESA (158 1% i )
• Acquisition (58.5% increase)
22. 22 KPIs: Robust ARPU & CHURN
Blended ARPU Churn Rate
Ksh. 475
459 68%
30.6%
356 27.2%
27 2%
24.3%
22.4% 18.2%
126
79
3.2%
1.6%
-10.5%
M-PESA Data ARPU Voice Blended Blended FY 08 FY 09 FY 10
ARPU ARPU ARPU 2010 ARPU 2009 Subs
Churn Churn Growth
Growth
Blended ARPU declined 3.4% to Ksh. 458.5 due to • Churn rate of 27.2% that is lower in
• Increased penetration into rural areas comparison to the prepay industry average
• Lower disposable incomes coupled • Continued positive impact of M-PESA and
• Lower average tariffs Bonga Loyalty Scheme
Offset by increased contribution from Data
23. 23 KPIs: Expanding EBITDA & Margins
YoY EBITDA Revenue/EBITDA Analysis
EBITDA EBITDA Margin (%)
Ksh. Billion 60 83.96
35
51.7% 55
30
45.9% 50 (36.55)
43.6%
25 45
39.7%
20 40
36.6
(10.80) 36.60
35
15 28.2 28.0
24.5 30
10
25
5 20
0 15
Revenue
R Opex
O SG&A EBITDA
FY 07 FY 08 FY 09 FY 10
• Strong EBITDA growth of 31% to Ksh 36.60bn
g g • OPEX and SG&A cost grew by 11.4%
g y
from Ksh 27.95bn in March 2009 reflecting a compared to a 19.1% growth in Revenue
higher EBITDA margin of 43.6%
24. 24 Stable Cost Structure: OPEX & SG&A
OPEX & SG&A Breakdown Cost Intensity (% of Revenue)
2,689
2,662 46.5%
2,436 5,625 42.5% 43.5%
2,301
4,325 4,447 38.3%
1,816 3,356
3 356
2,291
3,155 6,566
2,960 7,126
1,263
7,994
2,331 6,749 7,557
1,846
3,674 13.8% 12.9%
5,783 10.8%
0.8% 11.8%
4,339 13,023
13 023
10,579
5,805 7,847
2,491 2,727 4,170 4,524
FY 07 FY 08 FY 09 FY 10 FY 07 FY 08 FY 09 FY 10
Interconnection Airtime Network
Acquisition & Retention Other Payroll OPEX SG&A
Marketing General
Increase in OPEX & SG&A due to y g
Key Savings in
• Increased Commissions by 23.15% • Network Cost
• Increase Acquisition costs by 27% • General and Administrative costs
• Increased Payroll and personnel cost by 30.1%
• Increased Marketing costs by 15.7%
g y
25. 25 Capital Expenditure:-Investing for the Future
B
Base S i
Stations CAPEX
Ksh. billion
30.0
2302 Total 40.2% 40%
3G 25.0 33.8%
1899 30%
Wimax
Wi 20.0 7.8 6.5
1558 20.8% 20%
15.0 3.4 3.0 4.0
2.3 1.0 10%
2.1
10.0 0%
8.5
85 7.6
76
607 10.5
5.0 -10%
301 1.4
3.6 2.6
116 140 0.0 0.9 -20%
FY 08 FY 09 FY 10
3G Network Wimax 2G Network
FY 2008 FY 2009 FY 2010
Transmission Core Network Other
% of Revenue
Network growth from 1,899 sites to 2,302 sites Capital expenditure expected to continue at a
high level in these key investment areas
Reduction in Capex, for the period by 24.3% to • Fixed data infrastructure
Ksh.17.43bn. • 3G Network equipment
• Upgrade of existing 2G equipment
Outstanding capital commitments of Ksh 6 1bn
Ksh. 6.1bn (Quality & Capacity)
26. 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 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 trademarks of Safaricom Ltd. Other products
S f SA S f / SA fS f O
and company names mentioned herein maybe the trademarks of their respective owners.
