Investor Fact Sheet and Presentation - Safaricom...Safaricom Plc is a leading Kenyan communications...
Transcript of Investor Fact Sheet and Presentation - Safaricom...Safaricom Plc is a leading Kenyan communications...
Investor Fact Sheet and Presentation
The following presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully becommunicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or itscontents.
This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person tounderwrite or subscribe for or otherwise acquire securities in the Company. The presentation also contains certain non-GAAPfinancial information.
The Group’s management believes these measures provide valuable additional information in understanding the performance of theCompany’s businesses because they provide measures used by the company to assess performance. Although these measures areimportant in the management of the business, they should not be viewed as replacements for, but rather as complementary to, thecomparable GAAP measures.
Safaricom, M-PESA and Safaricom/M-PESA logos are trade marks of Safaricom PLC. Other products and company namesmentioned herein may be the trademarks of their respective owners.
Following the modified retrospective adoption of IFRS 15- Revenue from Contracts with Customers on 1 April 2018, the Group’sresults for the year ended 31 March 2019 are on an IFRS 15 basis, whereas the results for the year ended 31 March 2018 are(as previously reported) on an IAS 18 basis. To ensure appropriate disclosure during the period of transition onto IFRS 15,numbers for the year ended 31 March 2019 have been disclosed on an IFRS 15 and IAS 18 basis and year-on-year comparisonsare on an IAS 18 basis.
DISCLAIMER
WHO WE ARESafaricom Plc is a leading Kenyan communications company and leading digital innovator
providing a wide range of communication services, including mobile, voice, messaging, data, financial and converged services with a vision to empower a connected society.
Segmented PropositionsWe have developed a deep insight of our customers’ needs, wants and behaviours in order to provide propositions to lead in
chosen segments
Best technologyWe are the leading digital company
through the best network and IT excellence.
Best Customer ExperienceWe have developed a seamless, personalized
digital experience for our customers.
Digital organisation and cultureWe are building a digital-first organization fit for
the future propelled by innovation and agility. Our culture is driven by purpose, humanness, growth
and trust
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Our PurposeTransforming lives
Our Brand PromiseTwaweza
When we come together great things happen
Our ValuesSpeed, Simplicity and Trust
Our Brand and ReputationWe have built a purpose-driven brand with a deserved reputation for leadership in driving
social and economic progress through transformational solutions
35 %Government of Kenya
25 %Retail and
Institutional Investors
40 %Vodafone Kenya Ltd.
Company's Shareholding Structure
SDGsIntegration of 9sustainable goals
Community
4.4M+ M-Tiba usersFree Medical camps 8.9k+ beneficiariesSafaricom foundation; 100 Scholarships1.4k+ approved health facilities
4.1m+ students on Shupavu291M-PESA Foundation Academy; 192 scholarships
200k+ people economically empowered15k+ jobs created
Contribution toKenya's GDP
6.3%Customers
Over 96% 2G coverageMore than 167k M-PESA Agents
460k+ customers enrolledon voice biometric service
Employment50% of employees and 34% ofsenior management are women
2.1% are differently-abled
ShareholdersFY19 dividend KSHs 50.08 Bn,Special dividend KSHs 24.84Bn.
02
PEOPLE, PURPOSE - CREATING VALUE
THE JOURNEY OF TRANSFORMING LIVES
Safaricom has been propelled into market leadership by putting the customer first and pioneering products that suit customer needs these include;• Lower denomination recharge (2002) • Per second billing (2003)• Launch of Innovations like M-PESA (2007) • Staying ahead of the curve and through sustained investment that enabled the launch of 3G 3 years ahead of
the competition (2007)
Entry of Kencell into the Kenyan market
Vodafone PLC (UK) bought 40% of Telkom Kenya
Safaricom was licensed (Officially launched in October 2000)
· Safaricom had 26Thousand subscribers· Shs 9Billion revenue· Converted into a public company with 60% owned by GoK· Shs100 scratch card was introduced
54% Market shareDrive into mass market: Launch of Simu ya Jamii (Swahili for communal phone) users were able to make affordable calls at regulated rates charged per unit second. Launch of per second billing - counter competition per minute billing rates
charged per unit second.
59.2% Market share
Telkom exclusivity with Safaricom ends. Kencell sold to Vivendi then Celtel Mobile Internet launched, subscriber numbers hit 2Million
60.8% Market Share
79.1% Market Share
M-PESA Interoperability with Banks, WimaxOff island fibre, Investment in SEACOM and TEAMS
59.2% Market share Safaricom IPO government sold 25% and diluted to 35%
ownership. 10Million subscribers Shs 61Billion revenue Celtel branded to Zain. Telkom Partners with Orange. Entry of Essar Telecoms YU. IMT pilot partnership with Vodafone and Western Union
65.4% Market share Launch of M-PESA 1st March 2007
First to market with 3G 6Million subscribers
54.5% Market Share
Launch of Sambaza and "Please Call Me” (Allows subscribers to share credit) Launch of "Please Call Me” Safaricom’s flash back service
Total market subscriber information before 2002* is unclear
2002
2001
2000
1999
2003
2004
03
20092005
20062007
2008
04
66.7% Market share 21 Million subscribers
Launch of 4G network Launch of national security surveillance Launch of Spark Venture Fund - Fund started to help tech startups grow their businesses
71.9% Market share 28Million subscribers
Shs 224Billion revenue Rebrand Twaweza “When we come together great things happen” Launch of Home Solutions and E-Commerce
67% Market share• Launch of Masoko –Safaricom’s E-Commerce proposition connecting
sellers and buyers• Launch of DigiFarm – Platform for farmers• 29 Million Customers• Voice biometrics• Competitive positioning of data bundles in the market
62.4% market share• 31.8 million customers• Launch of Nawe Kila Wakati (NKW) Always with you campaign• Launch of Fuliza• Launch of M-PESA global
67.1% Market share Regional structure - Inspired by Safaricom’s desire to put the Customer First and provide Operational excellence in line with our strategic pillars Safaricom relocates M-PESA servers from Germany to Kenya Launch of KCB M-PESA and True Value report (Safaricom contribution to Kenyan economy 6% of GDP) Orange and Airtel receive approval to test 4G Safaricom partners with GoK to launch eCitizen (Online Payment for GoK)
65.6% Market share Launch of SDG's - First company in Kenya to link its growth strategy to the
UN’s 17 Sustainable Development Goals (SDGs)
78.3% Market share Bob Collymore is appointed CEO
Airtel buys Celtel branded as Zain The Commission assigned additional frequency spectrum resources to Zain to enable it offer 3G services. Regulator implements MTR reduction to KShs 99 which sparks price war
67.0% Market share 17 Million subscribers
Mobile number portability Price war in the market
65.1% Market share Launch of Lipa Na M-PESA
Safaricom is the first company to launch of Sustainability report
65.3% Market share Safaricom partners with CBA to launch a savings and loan
product called M-Shwari Shs107Billion revenue
2011
2010
20172018
20192016
201520
1220
1320
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Safaricom’s market leadership sustained through continued innovation and investments including:• Finding sustainable solution for weathering the price war. (2011) • Launch of savings and loans products with CBA. (2012)• Launch of Lipa Na M-PESA. (2013) • Launch of 4G network 3 years ahead of competition. (2014) • Launch of Home Solutions. (2017)• Launch of Fuliza; World’s first contextual mobile money overdraft facility
THE JOURNEY OF TRANSFORMING LIVES ( C O N T I N U E D )
EVOLUTION OF OUR BUSINESS MODEL
05
% contribution to Service revenue
FY16
FY08
FY19
FY12
Four years ago, Voice and SMS together constituted 60.8% of our Revenues. Today, these two businesses represent 47.2% of Service Revenue. Our revenue is now well diversified with our data and M-PESA business acting as key drivers of growth . Our voice revenue defies global trends and continues to grow.
Voice51.1%
Others1.8%
Data14.0%
M-PESA23.3%
SMS9.7%
Voice91.4%
Data1.2%
SMS7.4%
Voice65.6%
Others1.2%
Data6.5%
M-PESA16.9%
SMS9.8%
Voice39.9%
Others2.1%
Data19.5%
M-PESA31.2%
SMS7.3%
Our business model shows sustained momentum in telco business revenue and a robust
growth in new revenue streams
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HOW WE DELIVER ON OUR STRATEGYInitial strategy was “ Focus on Growth”. Currently, the organization’s strategy is
grounded by creating social value, which is founded on three pillars, these pillars have helped us grow our loyal customer base and produce excellent results across
our key financial and commercial performance indicators, and provide a positive impact on the lives of the customers we serve.
Customer First: Segments-led approach driving sharper customer focus
Relevant Products: Deep analytics users guiding a more customized customer relationship
Operational Excellence: Continuos investment in the network of the future
OUR INVESTMENT IN TECHNOLOGY• Safaricom has always stayed ahead of competition
through initiatives that enhance customer experienceand top of priority includes investing in technology.
• We currently have the widest reach in the countrywith 4,949 sites providing 96% population coveragefor 2G; and 4,907 3G sites with a population coverageof 93%. Our fibre network now connects key cities andtowns, spanning 6700 kilometres.
• Safaricom’s significant Capital Expenditure whichhas taken place as technology developed, and theSafaricom network expansion, have made up asignificant portion of the company’s expenditure andin turn, economic value created.
• Our network is ranked the best when compared toother networks in Kenya and Africa.
Some of the key achievements include:
• M-PESA Platform is now hosted in Kenya. Safaricom isutilizing data to develop customer analytics toenhance product and service offering.
• Own Fibre Roll out: +297k homes passed with fibreand 2.4k commercial buildings passed with fibre
07
Enablers
5,000km in FY18 +7ppts YoY Over 297K from over 107K in FY18+22ppts YoY
Cloud
3G93% coverage
4G57% coverage
Homes passed,
Self-servicechannels
Internet ofThings
VoLTE
Services
Looking ahead the company is becoming more digital as we anticipate our customers evolving to being more
digitally enabled, hence focus is on enhancing our cloud capabilities, self service channels, IoT and VoLTE.
Fibre, Over6,700kms from
23.025.74
33.3 37.3
37.6%
24.1%17.0% 14.9%
FY08 FY12 FY16 FY19
Capex Capex Intensity
Capex and Capex intensity
OUR INNOVATION - M-PESA
M-PESA Global
• From remitances topayments
• 500k Partner agentsworldwide and 3bn+bank accountsworldwide
Domestic• Fuliza• CVM and Machine
Learning• Enterprise Payments• User experience
leadership API• QR App
Regional• Exploring
regionalopportunities
Withdrawals51.5%
New Business6.7%
Transfers41.7%
FY13 Withdrawals47.3%
New Business18.4%
Transfers34.2%
FY16
Withdrawals38.4%
New Business28.2%
Transfers33.5%
FY19
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INCUBATING PARTNERSHIPS –SPARK FUND
Sendy: The logistics firm connects small businesses with drivers/riders and allows users to send and track packages.
mSurvey: Like its name suggests, mSurvey is a mobile-based research tool that collects information by SMS. Seeks to simplify access to credible, on-demand data to its clients.
Eneza: Eneza provides affordable education through the mobile phone to primary school pupils who have limited access.
Lynk: Lynk allows a customer to find the right professionals for any project, such as farmhands, house help, restaurant waiters, chefs or carpenters.
FarmDrive: Provides alternative credit scoring for small scale farmers. FarmDrive provides data that helps connect small-scale farmers to financial services.
iProcure: Using Data Analytics and Machine Learning, iProcure is able to get quality farm input to farmers at 15-30% lower than normal market tariffs.
Safaricom spark venture fund started to help tech startups grow their businesses. The Fund, which was the first corporate venture fund in Kenya and East Africa, seeks to grow the techpreneurs by allowing them access to funds, mentorship and resources to expand their businesses. Since its inception in 2014, there has been strong interest from local startups with more than 600+ applications to date.
The following are some of the Spark Funded innovations:
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OUR PEOPLE
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We believe in our people, as they are an integral part of our transformative agenda. We empower them to give their best. We show appreciation to them by providing the right working conditions that improve their well-being. We continue to work towards building an environment that is inclusive of all cultures.
Safaricom strongly believes that work should have a purpose and that the workplace should be a place of belonging.
In alignment with the SDG strategy and the mission of The B Team - Africa, Safaricom launched the 100% Human at Workprogramme. The programme is an expression of The B Team beliefthat it is time for businesses to stop looking at people as‘resources’ and to start looking at them as ‘human beings’.
Safaricom has accelerated efforts towards D&I by focusing on two strategic dimensions:
Gender & disability:� 50% of Safaricom’s employees are women, 34% of senior
leadership and heads of department are women� 2.1% of our workforce are people living with disabilities and we
are working towards closing FY20 at 2.9%
50% employees are women
2.1% of workforce people living with
disabilities
6,000+ employees
OUR LEADERS
Safariom owes its success to the stewardship of Michael Joseph and Bob Collymore.
Michael was the CEO of Safaricom Limited from July 2000 when the company was re-launched as a joint-venture between Vodafone UK and Telkom Kenya until his retirement in November 2010. During his tenure, he steered the company from a subscriber base of less than 20,000 to over 16.71 million subscribers.
This phenomenal growth straddling nearly a decade was motored by the launch of many innovative products and services such as M-PESA.Bob took over from Michael in 2010 and brought with him over 30 years’ experience in the telecommunications sector.
On 1st July 2019, Mr Bob Collymore passed on following a long battle with cancer. He was a remarkable leader who had an extraordinary dream for the world and Safaricom. For nine years, Mr Collymore led our business to achieve notable milestones, including significantly increasing shareholder value and instilling in us a sense of purpose that has become the hallmark of what we do at Safaricom. This Purpose, to transform lives, is the reason we exist today.
Bob had a global perspective that was supplemented by his international affiliation with organizations such as the B-TEAM, Acumen and the UN Global Compact. In his tenure, Bob had grown the number of subscribers to more than 28 million and made Safaricom “More than your traditional TELCO” by enhancing the M-PESA offering, introducing E-Commerce, Home Solutions and launching the Spark Fund. Bob also integrated sustainability to the business.
• Mr Sateesh Kamath Chief Finance Officer-Alternate to Robert Collymore
• Mrs Esther Jepkemoi Koimett- Alternate toHenry Rotich
• Mr Gianluca Ventura*- Alternate to VivekBadrinath
• Mr Francesco Bianco** Alternate Director toVivek Badrinath
Alternate Directors
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• Mr Nicholas Nganga Chairman and Non-Executive Director
• Mr Robert Willian Collymore* Chief Executive Officer and Executive Director
• Mr Michael Joseph Chief Executive Officer (Interim) and Director
• Mrs Susan Mudhune** Independent Director
• Ms Linda Watiri Muriuki Non-Executive Director
• Mr Henry Rotich Cabinet Secretary to the National Treasury
• Vivek Badrinath Nominee of Vodafone Kenya Ltd
• Mr Mohamed Shameel Aziz Joosub Nominee of Vodafone Kenya Ltd
• Till Streichert Non-Executive Director
• Dr Bitange Ndemo Independent Non-Executive Director
• Rose Ogega Independent Non-Executive Director
Directors
*Robert Collymore ceased to be a Director on 1 July 2019 and consequently Sateesh Kamath ceased to be his alternate** Susan Mudhune ceased to be a Director of the Company on 31 August 2018
* Gianluca Ventura ceased to be the Alternate DirectorVivek Badrinath on 2 May 2019
**Mr Francesco Bianco was appointed as Alternate Directorto Vivek Badrinath on 2 May 2019
OUR COMMITMENT TO THE SUSTAINABLE DEVELOPMENT GOALS (SDGS)
Safaricom was among the first company in Kenya to integrate the Sustainable Development Goals into its strategy and operations.
We have identified 9 of the 17 SDGs that best represent our dedication to sustainability and incorporated them into our business strategy. Goals (SDGs), out of which we have adopted nine. This will help the organization in becoming a more sustainable company, creating meaningful impact on the communities that we have been given the opportunity to serve.
The Goals present significant opportunities for us to make a bigger and more impactful contribution to global and local growth and development by helping to find effective business solutions to some of the challenges that we face- from poor health and climate change to inequality and poverty.
We are pleased to report that the independent survey found that 83% of staff our are aware of their role in the achievement of ourSDGs aspirations.
TransformingLives Sustainably
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• Safaricom has always stayed ahead of competition through initiatives that enhance customer experience and top of priority includes investing in technology.
• We currently have the widest reach in the country with 4,949 sites providing 96% population coverage for 2G; and 4,907 3G sites with a population coverage of 93%. Our fibre network now connects key cities and towns, spanning 6700 kilometres.
• Safaricom’s significant Capital Expenditure whichhas taken place as technology developed, and the Safaricom network expansion, have made up a significant portion of the company’s expenditure and in turn, economic value created.
• Our network is ranked the best when compared to other networks in Kenya and Africa.
Some of the key achievements include:
• M-PESA Platform is now hosted in Kenya. Safaricom is utilizing data to develop customer analytics to enhance product and service offering.
• Own Fibre Roll out: +297k homes passed with fibreand 2.4k commercial buildings passed with fibre
Through our Foundations (Safaricom and M-PESA Foundations) we have reached more than four million Kenyans through programmes that help fight poverty, that increase access to quality education, increase access to maternal health care and improve access to clean water. This extensive reach has been attained through partnerships with more than 1,200 organizations.
Safaricom FoundationSince its inception in 2003, the Safaricom Foundation has contributed to the improvement of health, education, economic empowerment, water, environmental conservation, disaster relief, arts and culture projects. Over the past year, the Safaricom Foundation has invested in more than 120 projects that aim to impact Kenyan lives beyond the network, through different projects spread across the 47 counties in Kenya. These projects impacted 752,066 people directly and 3,760,330 indirectly.
M-PESA FoundationIn 2010, the M-PESA Foundation was created to shift the focus from investing in several, distinct and small scale projects as is typical with CSI (Corporate Social Investment) to a model that embraces the idea of large scale, transformative projects. This vision is brought to life at the M-PESA Foundation Academy in Thika, where 290 children (six from each county) are receiving world class, technology-oriented learning in one of Africa’s premier schools and is also Apple Academy agency.
The M-PESA Foundation has also implemented programmes in different parts of the country. These include the Kinango Integrated Disaster and Livelihood programme in Kwale County which has impacted over 17,000 people by providing them with a dam that has vastly improved their livelihoods. Through the Uzazi Salama project in Samburu on maternal and newborn health, we have given over 224,000 mothers, 350 health workers and 500 community health workers access to critical health information, facilities and resources.
M-PESA Foundation is funded by interest from the M-PESA trustaccounts.
OUR IMPACT TO SOCIETY
Safaricom and M-PESA Foundations
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Over the last 16 years, we have built a company that has a wide impact on the Kenyan economy. To understand this impact fully, we engaged KPMG to conduct a True Value Study of our business over the last 10 years.What we discovered is that our impact on the Kenyan economy goes well beyond the investments we make or the returns made to our shareholders.
Below is an overview of that impact.
OUR IMPACT TO SOCIETY - TRUE VALUE
• 9.6x profit- Safaricom’s “true earnings’ over the past 10 years• 6.3%- Safaricom’s contribution to GDP• 978,633 jobs sustained in FY19• KShs 213.5 billion- Total social impact of M-PESA in FY19.
Most of the value arose from M-PESA customers being able to receive,save and send money freely and jobs created by M-PESA agents
• 6%- Percentage of income generated from infrastructure investmentand revenue that flowed to low income households over the past decade.
• KShs 0.66 - The estimated amount of money that Safaricom added to theKenyan economy for every KShs 1 invested in infrastructure developmentover the past decade
https://www.safaricom.co.ke/images/Downloads/Resources_Downloads/Safaricom2019 Sustainability_Report.pdf
For more information on True Value visit the link below.
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OUR MISSION IS TO TRANSFORM LIVES THROUGH SOCIAL INNOVATION
Innovation Description
Fuliza
M-PESA Global
DigiFarm
Shupavu 291
M-Salama
Fuliza is an overdraft facility in partnership with two local banks KCB Group and Commercial Bank of Africa. The platform allows our customers to complete their transaction incase of insufficient funds.
This is a service that enables M-PESA registered customers to send and receive money globally. 33.7% (KSHs 101 billion) of all diaspora remittances were transacted through M-PESA in 2019.
In partnership with government, enables small-holder farmers to access government fertilizer subsidies directly using an e-voucher.
A partnership with Eneza Education, Shupavu 291 is an SMS and USSD-based education platform that enables students to study without an internet connection.
In partnership with Kenya Red Cross Society, a pilot to measure the effectiveness of using SMS to send early warning information.
MasokoMasoko is an e-commerce platform that creates opportunities for customers to access locally manufactured goods from anywhere in Kenya. 64% of vendors in the platform are SMEs, and we work with local manufacturers to help them grow their businesses through e-commerce.
M-Tiba is a health payment application or ‘e-wallet’ that enables low income earners to save towards their healthcare expenses and helps donors to target funds accurately and confidently.
M-Tiba won the Loeries Award for Shared Value.M-Tiba
Safariom owes its success to the stewardship of Michael Joseph and Bob Collymore.
Michael was the CEO of Safaricom Limited from July 2000 when the company was re-launched as a joint-venture between Vodafone UK and Telkom Kenya until his retirement in November 2010. During his tenure, he steered the company from a subscriber base of less than 20,000 to over 16.71 million subscribers.
This phenomenal growth straddling nearly a decade was motored by the launch of many innovative products and services such as M-PESA.Bob took over from Michael in 2010 and brought with him over 30 years’ experience in the telecommunications sector.
On 1st July 2019, Mr Bob Collymore passed on following a long battle with cancer. He was a remarkable leader who had an extraordinary dream for the world and Safaricom. For nine years, Mr Collymore led our business to achieve notable milestones, including significantly increasing shareholder value and instilling in us a sense of purpose that has become the hallmark of what we do at Safaricom. This Purpose, to transform lives, is the reason we exist today.
Bob had a global perspective that was supplemented by his international affiliation with organizations such as the B-TEAM,Acumen and the UN Global Compact. In his tenure, Bob had grown the number of subscribers to more than 28 million and made Safaricom “More than your traditional TELCO” by enhancing the M-PESA offering, introducing E-Commerce, Home Solutions and launching the Spark Fund. Bob also integrated sustainability to the business.
Note: Past performance cannot be relied on as a guide to future performance
Over KShs 301.16 billion returned toshareholders from FY08/09 to FY18/19in dividends
OWNERSHIP AND STOCKPERFORMANCEOwnership
Share Price HistoryClosing price from listing to 29th March 2019
Shareholder return
Safaricom has consistently disbursed the largest dividends in Kenya. In FY18/19, Safaricom proposed a dividend payment of KShs 1.25 per share and a special dividend of KShs 0.62 per share, and will continue paying dividends at 80% of Net Income.
Dividend Policy
FY
2009
2010
2011
2012
2013
2014
2015
2016
2016
2017
2018
2019
2019
Final
Final
Final
Final
Final
Final
Final
Final
Final (Special)
Final
Final
Final
Final (Special)
0.1
0.2
0.2
0.22
0.31
0.47
0.64
0.76
0.68
0.97
1.1
1.25
0.62
Rate Type
16
Listing IPO
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
3.60
4.55
4.70
2.95
5.05
10.85
14.05
16.30
19.15
26.75
31.00
27.55
5.00
Listing: NSETicker: SAFCOM KNType: OrdinaryShare in Issue: 40,065.43 MillionEquity Float: 10,039.03
Governmentof Kenya35%
Vodafone5%
East Africa Corporates10%
Foreign Individuals0%
East African Individuals4%
Foreign Corporate11%
Vodacom35%