Safaricom Ltd 6 th Annual Africa Investment Conference

Safaricom Ltd 6 th Annual Africa Investment Conference

Market Dynamics

2 Market Penetration Mobile penetration is steadily growing (55.9% as at September 2010) due to:- Increased promotional activities by mobile operators Reducing costs of handset and SIM card acquisition Dual & Triple SIM usage Zimbabwe Uganda Tunisia Tanzania South Africa Somalia Rwanda Nigeria Morocco Libya Kenya Gabon Egypt Congo Botswana Algeria Mobile Penetration Across Africa (%) Penetration is still relatively low compared to other countries in the emerging markets Presents a strong potential to grow our customer base through our strategy of:- Providing low cost handsets Low denomination recharge cards Value added services Network expansion countrywide Source: WCIS 0% 50% 100% 150% 200%

3 Mobile Subscription Mobile subscriptions (SIM cards) continuously growing year on year to 22 million subscribers by September 2010 The market has experienced a sharp increase in penetration in the 7 months due to Cheaper handsets preloaded with SIM cards and airtime Reduction in tariffs Increased promotional tariffs Increase in dual SIMs

4 Subscriptions & Tariffs Mobile subscription s Market Share Average Mobile tariffs per minute In the face of the ongoing tariff wars, Safaricom remains the market leader With a total of 17 million subscribers by December 2010 compared to16.2 million in June 2010. Safaricom commanded a 75.9% market share as at September 2010.

5 Voice Traffic & MoUs Mobile Traffic in Minutes Minutes of Use per subscriber per month On-net traffic continues to take the bulk of voice minutes on all mobile networks attributable to continued promotional activities aimed at increasing on-net activity Off-net traffic experienced the largest growth as a result of reduction in off-net tariffs across all networks MoUs have stabilized as mobile traffic increases in equal proportions to mobile subscriptions

6 Data Statistics INTERNET PENETRATION INTERNET SUBSCRIPTIONS Sept. 2010 Sept. 2009 Growth Mobile Data subscriptions Fixed & wireless data subscriptions 3,192,667 1,864,991 71.2% 15,907 1,687 842.9% * Penetration based on CCK estimates As demand for data services grows, internet penetration has increased with 22.1% of the population with access to the internet as at Sept. 2010 Mobile data subscriptions through GPRS/EDGE and 3G dominate internet subscriptions (99% of total subscriptions) and this trend is expected to continue in future. Notable growth in wireless internet connections presenting growth opportunities for business and residential internet solutions

7 Internet Subscription-September 2010 3.23 million internet subscriptions Mobile operators dominate the internet market having the bulk of internet users Mobile handsets are the primary internet access channel Safaricom has the major share of users (92.2% as at Sept.2010) due to Fastest internet connection (3G, Wimax & Fibre) Superior data offering (affordable data bundles) Aggressive marketing of data enabled devices and modems Continuous customer education on internet and data products Safaricom business:- tailored data products for corporates, SMEs, residences and individuals

8 Regulatory Environment 1. Mobile Termination Rates: Reduced by 50% to Ksh. 2.21. Has led to increased competition in off-net pricing Further cuts expected in July However, interconnect revenues form a small part of Group revenues (>5%) 2. Subscriber Identity Registration Registration deadline passed but no action for non registered users. Government working on the legal framework. Registration an ongoing process 3. Service & Mobile Number portability Expected to commence in April 2011 Not expected to lead to a loss of subscriber base Cannot port services 4. Universal Service Fund Suggested levy of 0.5% on gross revenues; implementation targeted for 2 nd half of 2011 Industry lobbying for alternative measures to meeting Universal Services objectives 5. M-PESA Central Bank of Kenya (CBK) working on draft electronic transfers regulations CBK dismissed calls for inter-network operability

Safaricom s Strategy

10 Push on Data Aiding data penetration by Providing affordable data rates & bundles Aggressive selling of affordable data enabled devices Financing partnerships with financial institutions Stimulate usage by Attractive promotions Continuous customer education on our data offering Tailored Data solutions Continued roll out of Wimax sites Business and residential data based communication solutions

11 M-PESA M-PESA is growing in its uses Secure money transfer with larger transaction limits Airtime purchase Utility bill payments Bulk cash payments International money transfer ATM withdrawals Dividend payment Social/Charitable collections M-KESHO Purchase of goods Ticketing M-PESA Prepay Visa Safari card

12 M-PESA: Phenomenal Growth & Reach M-PESA & Financial Cards Penetration M-PESA Agents Vs ATM & POS Penetration Strong growth in number of M-PESA subscribers which is more than double the number of users of financial cards ( ATM, Debit, Credit, Prepaid and Charge cards). M-PESA agent numbers also growing in line with the increase of ATM and POS machines in the country.

13 M-PESA: Preferred Money Transfer Service Number of Transactions Value of Transactions Number of chargeable M-PESA transactions has continuously grown (66.4% between Sept. 2009 and Sept. 2010) compared to transaction via financial cards which has stagnated within the same period. With the newly introduced larger M-PESA transaction bands, the value of M-PESA transactions is expected to grow at a faster rate.

14 More than Voice Through value added services and products we ensure customer satisfaction and retention M-PESA Bonga Loyalty points Low cost recharge vouchers Okoa Jahazi emergency top-up service Personalized music and chat services:-skiza, I-Dj tunes, MXit

15 Investing in the Network Infrastructural investments aimed at improving both capacity and quality of the network Continued roll out of 3G and Wimax sites Evolving into 4G (LTE) Most metropolitan towns in Kenya now covered by Safaricom 3G. 2,472 base stations of which 1,089 are 3G active and 183 Wimax sites in operation. Safaricom has spent Ksh. 139 Billion ($ 1.67 Billion) in Capex since inception.

16 Opportunities in the Market DATA Most Kenyans are having their first cyber-experience through a mobile handset Internet penetration still lower than for voice with only a fifth of population using internet services The country is poised to benefit from a growing economy that is becoming more and more internet dependant and propelled by the widening cyberspace Subscriber growth Mobile penetration still low with only slightly above half of the population covered subscribed to a mobile service provider Mobile operators with data/internet broadband infrastructure expected to benefit from new acquisitions of data subscribers Value added services With increased price competition and reduced tariffs, voice has now become a commodity Focus is now on providing new innovative products and services in order to sustain and grow revenues

17 Company Strategy Consolidate Fixed & Mobile Data Growth Continued infrastructural investments and strategic partnerships Increase Wimax Coverage Affordable and innovative data products M-PESA expansion Increase M-PESA Penetration Increase product offering under M-PESA Voice Revenue Sustenance Activate increased usage and brand loyalty Maintain # 1 position in market Customer Focus Offer superior customer care Offer products and services tailored to meet and surpass customer expectations

18 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 within 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 and company names mentioned herein maybe the trademarks of their respective owners.

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