Mwango Capital

Safaricom Earnings Note

Exploring Safaricom’s performance from HY 2012 to HY 2022

Erick Mokaya, CFA

Boniface Oyunge, ACIFA

Eric Maina

For Information Only

Mwango Capital

Key Highlights

2

Performance in H1 FY22

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Service Revenue

3 Source: Financial Statements

• HY 2021: -4.8% to KES 118.41B

• HY 2022: +16.9% to KES 138.43B

• HY 2012 - HY 2022 CAGR: 11.63%

Recovery to KES 138.43B driven by M-PESA revenue growth.

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Service Revenue Contribution

4 Source: Financial Statements

M-PESA top contributor growing by 45.8% following return to charging of previously zero rated transactions

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Service Revenue Mix

5 Source: Financial Statements

M-PESA now accounts for 37.8% of total service revenue from 27.4% in H1 FY18 Voice comes second at 29.9%; Data is a distant third at 17.1%

H1 FY22 H1 FY18

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M-PESA v Voice

6 Source: Financial Statements

M-PESA displaced voice for the first time earning KES 52.32B compared to voice at KES 41.46B

HY 2012 - HY 2022 CAGR:

• M-Pesa: 20.84%

• Voice: 2.79%

M-PESA & voice were at par in FY 2021 both earning KES 83B

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M-PESA v Voice

7 Source: Financial Statements

Growth rates for M-PESA and Voice between HY 2012 & HY 2022

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Total Revenue

8 Source: Financial Statements

• HY 2021: -4.8% to KES 124.54B

• HY 2022: +17.5% to KES 146.37B

• HY 2012 - HY 2022 CAGR: 11.42%

Recovery to KES 146.37B

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Net Income

9 Source: Financial Statements

• HY 2021: -6.0% to KES 33.07B

• HY 2022: +12.1% to KES 37.06B

• HY 2012 - HY 2022 CAGR: 24.90%

Recovery to KES 37.06B

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EBITDA & Net Income

10 Source: Financial Statements

Average 45.4% EBITDA margins and 20.5% Net Income margins over this period

Ethiopia:

• EBITDA breakeven in Year 4

• EBITDA margin estimated at

around 40% in Year 10

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Capital Expenditure

11 Source: Financial Statements

Average Capex spend of KES 16.72B from HY 2012 to HY 2022

Capital expenditure in Ethiopia

estimated at between USD 1.5B-2.0B

over the next 5 years

4G, 3G, & 2G population coverage now

stands at 95.9%, 96.3%, & 96.9%

respectively

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Market Share

12 Source: Communications Authority of Kenya

June 2021 June 2021

64.2% market share; 68.2% voice traffic market share

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Looking Forward

13

EBIT in FY22 to be in the range of KES 97-100B; Capex in the range of KES 70-73B inclusive of Ethiopia Excluding Ethiopia EBIT guidance given in May revised to KES 107-110B; Capex revised to KES 40-43B

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Ethiopia:

• Commercial launch in mid 2022

• The ongoing political conflict

• Funding sources

• Mobile financial services

• Building of infrastructure

14

Looking Forward Some things to watch

“The opportunities outweigh the risks

in our view and the uncertainties largely

because the telecom market

revitalization has been unquestionably

positive and of value for countries

across the word”

Safaricom CEO Peter Ndegwa