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Mobile Phones As a Communication Mobile Phones As a Communication

Platform in AfricaPlatform in Africa

Joseph OgutuChief Corporate Affairs Officer

Safaricom Ltd

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Source: Nokia at 3GSM Cannes, February 2005Source: Nokia at 3GSM Cannes, February 2005

Mobile phone subscriptions globally, millions

0 -92 -93 -94 -95 -96 -97 -98 -99 -00 -02-01 -03 -04 -05e -10e

200400600800

1 0001 2001 4001 6001 8002 0002 2002 4002 6002 8003 000

Current global penetration 28

%

3 BillionBy 2010

2 BillionBy 2005

Towards the 3 billion milestone

Mobile Phone Usage; A Great FutureMobile Phone Usage; A Great Future

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Africa

5%Americas

10%

Asia Pacific

38%

Europe: Western

23%

Middle East

2%

USA/Canada

11%

Europe: Eastern

10%

Africa = 88.4 m subscribers

Source: Source: 'Informa Telecoms & Media's World Cellular Information Service'Informa Telecoms & Media's World Cellular Information Service

World Cellular Subscribers; March 2005World Cellular Subscribers; March 2005

Africa second to last in percentage representation; after Middle East

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Cellular Penetration; 2006 (3rd Qtr)

0

20

40

60

80

100

120

140

160

Sources: Global Insight & 'Informa Telecoms & Media's World Cellular Information ServiceSources: Global Insight & 'Informa Telecoms & Media's World Cellular Information Service

UAE = 123.25%

Bahrain= 128.26%

Israel = 130.55%

*Kenya9.0m 28% (2007)

Ethiopia8708001.16%

Sudan3.212m7.73%

Uganda2.240m7.86%

Tanzania5.008m13.29%

DRC4.152m6.57%

Rwanda272,8003.13%

South Africa

33.781m

76.56%

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Subscriber Growth in Africa; 1998-2006Subscriber Growth in Africa; 1998-2006

Source: Source: 'Informa Telecoms & Media's World Cellular Information Service'Informa Telecoms & Media's World Cellular Information Service

Growth is still strong

4 716

2636

52

77

134

176

0

20

40

60

80

100

120

140

160

180

Dec '98 Dec '99 Dec. 2000 Dec. 2001 Dec. 2002 Dec. 2003 Dec. 2004 Dec.2005 Sept. 2006

Africa Cellular Connections

Cel

lula

r C

on

nec

tio

ns

(mill

ion

s)

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Source: Summit Strategies ltd

The Crossover: Mobile Overtakes Fixed Rapidly The Crossover: Mobile Overtakes Fixed Rapidly – The Kenyan Case– The Kenyan Case

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

Dec-98

Jun-99

Dec-99

Jun-00

Dec-00

Jun-01

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Jun-05

Dec-05

Jun-06

Dec-06

Con

nect

ions

Fixed lines

Total cellular

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Leveraging the Hidden OpportunityLeveraging the Hidden Opportunity

Business Plan Projections; Forecast vs. Actual (Safaricom)

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

2000 2001 2002 2003

forecast actual

Initial market projections were well below actual growth, illustrating demand, based on a paradigm shift in communications needs.

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1. Introduction of Mobile Technology was embraced by Customers as it offered a service

that addressed Customer daily communication needs, and is:

affordable

easily accessible

easy to use

2. The mobile industry continues to fill a communication vacuum and at a substantially

reduced cost (whether in transport, time, etc)

Question: Is this Growth Sustainable?

• The Mobile Phone – Could it become the ubiquitous supplier to communication needs?

• The untapped opportunity still exists at the lower economic group level –The strategy

remains to continue our participation in activities to reduce the cost of use, and facilitate

the acquisition of lower income bracket subscribers

Leveraging the Untapped OpportunityLeveraging the Untapped Opportunity

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AvailabilityAvailability

Optimistic Future Growth Driven by Cellular Industry

Source: Summit StrategiesSource: Summit Strategies

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Dec-02

Jun-

03

Dec-03

Jun-

04

Dec-04

Jun-

05

Dec-05

Jun-

06

Dec-06

Jun-

07

Dec-07

Jun-

08

Dec-08

Jun-

09

Dec-09

Jun-

10

Dec-10

Jun-

11

Dec-11

Jun-

12

Dec-12

con

nec

tio

ns

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Driving Growth into the New FrontiersDriving Growth into the New FrontiersThe Rural AreasThe Rural Areas

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• The Mobile Cellular is the technology of

choice to address the opportunity in rural

areas.

• Safaricom’s experience is that Rural/remote

areas represent a huge potential.

•Safaricom recognizes Rural areas as the next

growth frontier.

Opportunity in Rural/Remote AreasOpportunity in Rural/Remote Areas

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• Cellular based data to be the

catalyst for that growth and

piloting sites in;

– Education Institutions

– SMEs

– Hospitals

– Government Institutions

– Etc.

Education Opportunity: Flagship For GrowthEducation Opportunity: Flagship For Growth

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Technological DevelopmentTechnological Development

• Launch of 2G network to facilitate the provision of Voice based services and limited data via SMS platform. This also enabled the provision of international roaming services.

• Upgrading of network to 2.5G to provide data services via GPRS, including GPRS Roaming services.

• In order to meet demand for faster data speeds, the network has been upgraded to 2.75 EDGE.

• Safaricom is currently carrying out 3G/UMTS-HSDPA trials within selected areas in Nairobi for the next one year.

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•The mobile device is seen as the communication tool of choice and because of its ubiquity a lot of services are being planned around it-internet; video on demand; mobile TV; financial transactions; security and information.

•Mobile services have stimulated business within the SME sector by affording opportunity for communications within the Jua Kali sector.

•Mobile services have contributed to less travel by users making it easy to plan movements, and hence minimising costs. A study carried out in Tanzania and South Africa found that 67% of users said that the mobile had reduced travel time.

Impact of Mobile TelecommunicationsImpact of Mobile Telecommunications

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•Mobile services improve access to information such as prices, quantity and quality of products traded.

•Business executives, consultants, journalists and other professionals are able to access critical information from their office database using mobile services literally from anywhere in the world.

•Mobile has assisted in the fight against crime and enabled rapid response in circumstances of disaster and insecurity.

•Mobile services are facilitating banking services and will soon be used to reach the unbanked.

•With the introduction of multimedia messaging it is possible to instantly send video clips and photographs using the mobile devices

Impact of Mobile telecommunications (Cont…)Impact of Mobile telecommunications (Cont…)

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•The mobile service has changed lifestyles and the way we do business.

•Perhaps the most significant socio-economic impact of mobile phones has been in the way they have changed lives and circumstances of rural populations. Unemployment and underemployment has suddenly changed to self employment and entrepreneurship.

•From a mobile operator’s perspective, giving people hope and an opportunity to make a difference in their lives is what motivates us to continue investing in the expansion of our network.

Conclusion

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Thank YouThank You