Safaricom PLC (SCOM) Earnings Call Transcript

[Presentation] Good morning, ladies and gentlemen, and a warm welcome to our 12th Annual General Meeting coming to you live from the Michael Joseph Centre in Nairobi, Kenya. On behalf of Safaricom's Board, the entire management team, staff, I would like to express our very sincere gratitude to you for joining us today. [Foreign Language] I'd now like us to stand for the Kenya and East African Community Anthem. This will be led by the Ghetto Classics, a community-based program that aims to transform lives of children and young adults across socioeconomic levels using music education to provide them with opportunities to better their lives and also their communities. Let us stand. [Presentation]

[Audio Gap] to be led by [ Pramod Chechenshua ].

Thank you. Can we bring our hands together for the prayer? [Foreign Language] Thank you.

Then, our next prayer would be a Muslim prayer led by [ Husain Abdullahi ].

Good morning. Let us pray. [Foreign Language] Oh God, we thank you every day. Oh God, protect us from the evils. Oh God, give us the wisdom. Oh God, give us the health. Oh God, you see what we are going, the one now, we have a pandemic called coronavirus. Oh God, we seek your guidance, your mercy so that we become so helpful. Oh God, those who have been passed on through this coronavirus, regard them on the highest place of the paradise. Those who are sick, who don't have ability, who live under your mercy, give them quick recovery. Oh God, protect our Board, our management, our able CEO. [Foreign Language] Allow me to wish all the Muslim brothers and sisters [Foreign Language] Thank you.

Thank you. And now Christian prayer led by [ Rose Engiou ].

Good morning. Let us pray. Father, in the mighty name of Jesus, we come before you this beautiful morning with our hearts full of gratitude. We thank you, Lord, for the gift of life. We thank you for the gift of good health. We thank you for Safaricom. I thank you, Lord, for the Board of Management, the shareholders, our customers and our entire Safaricom family. Thank you so much, Lord. As we begin this Annual General Meeting, I invite you in our midst. Send us your Holy Spirit to guide our every thought and our every want. Let our deliberations be true to the glory of your name and the betterment of this organization. Be with us, grant us wisdom that comes from you, so that whatever choices we make, they are going to be for the betterment of everyone. Help us transform lives, help us touch lives in every corner of this world. Be in our midst from the start to the end. And it is in Jesus' name we pray and believe. Amen.

Thank you, [ Rose ]. And now to all our shareholders, we want to assure you that this online meeting will mirror the usual AGM structure, and we will have a question-and-answer session and an easy way to vote online. The Chairman will share more details as we continue. Should you like to keep your social network updated with the proceedings from today's meeting, please use the #SafaricomAGM2020. And now without further ado, it is my pleasure to invite the Chairman of the Board of Directors, Mr. Nicholas Nganga, to call the meeting to order. Over to you, Mr. Chairman.

Thank you very much, Joe. Our esteemed shareholders, members of the Board and management and staff, ladies and gentlemen, I welcome you to the Annual General Meeting of Safaricom PLC. My name is Nicholas Nganga, Chairman of the Board of Safaricom PLC, and I'm joined here today by some of our directors and officers of the company. On the panel here, we wish to introduce Peter Ndegwa, our Chief Executive Officer; Michael Joseph, our outgoing CEO; Chief Finance Officer, Sateesh Kamath; our Company Secretary, Kathryne Maundu; and we are also have the presence of our external auditors, Mr. Peter Ngahu. We also wish to introduce members of the Board who are not with us here. That is Esther Koimett, who represents the Cabinet Secretary to the National Treasury; Linda Muriuki, Non-Executive Director; Mohamed Shameel Joosub, Non-Executive Director; Till Streichert, Non-Executive Director; Francesco Bianco, Non-Executive Director; Dr. Bitange Ndemo, Independent Non-Executive Director; last but not least, Rose Ogega, independent Non-Executive Director. I shall now call upon our secretary to read -- to report on the registration and confirm participation of shareholders through registration, and also confirm the presence of a quorum for this meeting. Ms. Maundu?

Thank you, Chairman. Shareholders, in accordance with the High Court order, which was dated and delivered on 29th of April 2020, pursuant to Miscellaneous Application number E680 of 2020, the company applied and received the no objection letter from the Capital Markets Authority on Saturday, June 20, 2020, to conduct our virtual Annual General Meeting. To this end, the company has met all the required conditions with respect to the convening and conducting of this AGM by electronic means. Chairman, I confirm that a total number of 81,740 shareholders, holding a total of 34,809,198,073 shares, which represents 87% of the issued share capital, have registered for this electronic AGM. The quorum, Chairman, for this AGM, as per our Articles of Association, is 50 members present in person or by proxy and holding not less than 40% of the issued share capital of the company. Chairman, I, therefore, do confirm that we have a quorum for this meeting. Thank you.

Thank you. Having confirmed that we have a quorum, I now declare the meeting to be properly convened and duly [Audio Gap] the agenda -- the notice and agenda convening the meeting. Secretary?

Thank you, Chairman. Chairman, I do confirm that the notice and agenda of the meeting as outlined on Pages 208 -- 206 to 208 of the annual report was published in 2 daily newspapers: The Daily Nation and The Standard. Additionally, the notice was published on the company's website. Chairman, we have 2 sections. We have ordinary business, and we have special business. Thank you, Chairman.

Thank you. Ladies and gentlemen, we will now commence the formal business of today's meeting. Shareholders, please note that the minutes of the last Annual General Meeting, which was held on the 30th of August 2019, were approved by the Board of Directors and were signed for the company's records, as is our normal practice. Item 1 on today's agenda is to receive and consider the financial statements for the year ended 31st March 2019, together with the Chairman's statement, the directors' and auditors' report thereon. Shareholders, the 2019 abridged report and financial statements were made available to our shareholders through a publication in the local dailies, and the full report was made available on the company's website as indicated in the notice convening the meeting, which was published on the 2nd of July 2020. Shareholders, my report to you for the year ended 31st March 2020, is contained in the annual report on Pages 18 and 19 in English, and Pages 24, 25 in Kiswahili. I shall take the reports as read with your permission. The 2020 annual report remains accessible in the company's website. And at this point, I'll perhaps only make a few remarks. So ladies and gentlemen, it's a pleasure to welcome you to the meeting again. This Annual General Meeting signifies the challenging year we've had in our lives due to COVID-19 pandemic. This pandemic presents shareholders with an opportunity to witness how our organization is supporting a digital lifestyle in the country in the face of social distancing and other protocols. This is the first time your general meeting for Peter Ndegwa and this comes just a little after he has finished his first 100 days as the CEO of the company. Although he is no longer new, I think it's only fair to officially welcome him to Safaricom on behalf of the shareholders. Welcome, Peter. Peter is the first Kenyan to lead the management of the company, and the Board is extremely pleased with his appointment. It goes without saying that Peter has my full support and that of the whole Board as he leads the organization into the next phase of growth. He has already been instrumental in bridging the digital divide with commercial propositions to the customers, including the recently launched device financing initiative known as Lipa Mdogo Mdogo. On behalf of the shareholders, I would also like to recognize and appreciate Michael Joseph for playing a critical role in fast stepping in to lead the organization, but also and most important, staying on to help Peter settle in and make the transition smooth. Michael has done an outstanding job in steering the company through this transition and developing strong results, which appear in our reports today. Ladies and gentlemen, turning to the business of today. These are unprecedented times for us all. The effects of COVID-19 are not limited to public health. They affect all spheres of our lives. Kenya, like the rest of the world, continues to experience economic pressure and health effects caused by the virus. If there was ever a time for humanity to work together to find solutions, it is now. We have made significant decisions as a company in recent months to support customers and ensure Kenyans can spend their money where they need it most. We have partnered with the government to offer solutions to manage this pandemic. And the total value of our contribution to the fight against this pandemic currently stands at KES 6.5 billion, and this cost continues to grow every day. This includes, on our part, free M-PESA for transactions up to KES 1,000 in order to reduce cash handling. We estimate the impact on M-PESA payment support will increase to about KES 19 billion by the end of the year. We have offered our call center facilities to enable the medical doctors offer telemedicine support via line 719. We have partnered with education-related organizations to provide e-learning and SMS-based learning solutions to students who are required to stay at home. We look forward to increased collaboration, partnership and goodwill within our regulatory environment for solutions, which will be of ultimate benefit to our customers. We've been able to offer this support because of operating in a regulatory environment that allows innovative businesses to grow and thrive. Our appeal to the government would be that the regulatory environment that will follow this period of the pandemic be designed to support the revival of businesses and a return to growth. Beyond the provision of telecommunication services, we continue to make our contribution towards investing in our economy and building the country. This contribution to the economy comes in the form of license fees and spectrum fees, tax payments, growing and supporting a very broad ecosystem of dealers, agents, suppliers and business partners. We also retain a continuous firm commitment to prosper governance -- to proper governance and responsible social and environmental best practice. We'd like to take this opportunity to ask both the national and the counter government to find concrete ways to balance revenue maximization with boosting business growth. We are keen to support them in navigating this challenge if the opportunity is properly created. Our most critical support to the country remains ensuring network stability and sustainability and to support the usage in M-PESA, voice, SMS and data. As work from home becomes the new normal, this is a shift that we should be able to support effortlessly. We have a responsibility to keep the country connected and going. We remain steadfast in delivering our strategy, growing shareholders' wealth as we pursue our purpose of transforming lives. We are keen to see our regulators and all concerned stakeholders adopt a more conservative approach to concerns within the industry in order to arrive at a more considered outcome for the benefit of all. I would like to thank our shareholders for believing in us and in our purpose and in entrusting us with you wealth. Look -- so I'd like to take this opportunity to thank Safaricom management staff for their continued dedication to building a brand that has found a place in the hearts of Kenyans. With these remarks, ladies and gentlemen, I would now like to invite our past year and outgoing Chief Executive Officer, Michael Joseph, to share the highlights of our business in '19 -- in the year 2019. Thank you. Michael Joseph, please?

Thank you. Thank you, Mr. Chairman. This past year has been both challenging and positive for Safaricom. We began the financial year in a strong position regarding both customers and financial performance and this has continued throughout the year. But we also faced the continued illness of our CEO, Bob Collymore, and finally, he's untimely passing in June of 2019. But as a company, we pulled together, and I think in honor of Bob, we put more effort into both retaining and increasing our market share and improving our financial performance. The results speak for themselves. As a result, our focus during the year was to regain customers' trust and market share and to deliver on our purpose and promise of transforming lives. In October last year, we launched For You, our customer proposition that renews our commitment to be simple, transparent and honest across our operations and our products. It has delivered improved customer sentiment, greater brand awareness and love and a gain in market share for the first time since 2017. We have continued our digital transformation, automating internal and customer-facing operations and enhancing our use of artificial intelligence. We have increased our investment in IT capabilities with the objective of being focused on verticals such as agriculture, health, education and e-commerce. We have also together with Vodacom gained full control of the M-PESA brand technology, and this has led to the enhancement of the M-PESA platform for all our African operation -- our African footprint and created the opportunity to expand M-PESA into new African markets. Our long-term focus on the sustainable development goals underpins our approach to business and our commitment to ensure we leave no one behind. We sourced 74% of our procurement needs from local suppliers and our investments in local communities through the M-PESA -- through the Safaricom and M-PESA foundations, positively impacted the lives of millions of Kenyans. During the year, we also made the bold commitment to become carbon-neutral by 2050. And to achieve it, we will plant 5 million trees in the next 5 years, along with our investments and improvements across our networks and operations to ensure we achieve this goal. As I said during our full year's results investor briefing, we are very pleased with our performance, which outperformed our EBIT guidance. Service revenue increased 4.8%, driven by sustained customer acquisition, a return to double-digit mobile data growth and continued M-PESA and fixed data growth. The growth was partially offset by the contraction of the betting industry and the free transaction fees associated with our COVID-19 response. However, we sustained strong investment with capital additions amounting to KES 36 billion. The Board is committed to investing in the business and maintaining our strong record for paying progressive dividends each year. The proposed dividend for the financial year 2020 is KES 56 billion, comprised of a proposed dividend per share of KES 1.40 -- KES 1.4 a share. I'm extremely proud of what the team was able to achieve to deliver despite such a tough business year. We have given customers more value, put the consumer first by delivering more relevant products and services. I also want to take this opportunity, Mr. Chairman, of thanking the Board and the entire Safaricom family for each of their roles in making my second stint as CEO as wonderful as it was. And I want to record my appreciation for the privilege and real honor of being able to lead Safaricom during a very difficult time. I wish to congratulate Peter on his appointment as the new CEO of Safaricom, and to confirm my support to him going forward. With those remarks, I now hand over to the Chairman. Thank you.

Thank you very much, Michael. Shareholders, it's now my pleasure to invite the Chief Executive Officer of the company, Mr. Peter Ndegwa, who as I mentioned earlier, joined us on the 1st of April 2020. Peter, please brief the shareholders on the year under review and the future prospects of the company.

Thank you. Thank you, Chairman. Ladies and gentlemen, allow me first to start by introducing my executive management team: Sylvia Mulinge, who is Chief Customer Officer; Joseph Ogutu, Chief Special Projects Officer; Stephen Chege, our Chief Corporate Affairs Officer; Nicholas Mulila, our Chief Corporate Security Officer; Rita Okuthe, our Chief Enterprise Business Officer; Sitoyo Lopokoiyit, our Chief Financial Services Officer; Paul Kasimu, our Chief Human Resource Officer; and Deborah Mallowah, our Chief Business Development Officer. Ladies and gentlemen, this is my first AGM coming within the first 100 days of being CEO. To echo what the Chairman has said, indeed, if there was a time for humanity to work together to find solutions, it is now. As a company, the pandemic called on us to step in and to support the country during this period as the pandemic has presented us with an opportunity to leverage our digital and technology capabilities to continue to transform lives and to create a more sustainable future for our business and the society. I'll turn on to a few of the initiatives we are driving through partnership and digital transformation. My first quarter as CEO had been all about partnership and collaboration to transform lives. Our support in the unprecedented time, occasioned by the COVID pandemic, includes 0-rated M-PESA payments transactions below KES 1,000 to reduce the risk of handling cash and increasing transaction limits to support small businesses. We doubled bandwidth on our fiber connections to enable customers to work from home and to learn from home and providing concessional data rates for universities and other learning institutions. We donated thermal cameras worth about KES 10 million to the Ministry of Health for use at entry points to the country, along with KES 200 million donated towards food for the vulnerable. We supported the government to establish and operate a 24/7 COVID-19 information center, leveraging the capabilities of our customer contact center. This has seen us support the frontline staff to educate, inform and manage the spread of COVID-19. We've also supported the front line health officials with offers for voice -- free voice and data packages. We are supporting government to pilot COVID-19 cash disbursements to the vulnerable households by M-PESA for free. I'll turn on to the launch of Lipa Mdogo campaign. Further to our ambition to leverage on partnerships, we recently launched this week a device -- a smart device financing program through a groundbreaking Lipa Mdogo campaign. The campaign has been developed in partnership with Google. It is the first initiative of its kind in the world to give customers, about 1 million to begin with, access to quality 4G phones with flexible payment plan. This is because despite the high percentage of mobile phone penetration in Kenya, there remains a large proportion of the population that uses 2G phones. Financing being the reason why they cannot afford smartphones. Our aim is that 1 million more customers will gain access to the power of the Internet through this program. I'll turn on now to our support to small and medium-sized enterprises, what we are calling the SME support. As a purpose-driven business, Safaricom has been prioritizing to support -- support to SMEs during the COVID-19 pandemic. This will continue post COVID-19 to ensure support during the recovery period. SMEs make a significant contribution to the economy and the well-being most of the people in the sector. Indeed, they contribute in a significant way to employment. However, the sector struggles to access finance and communication networks and doesn't have the resources to wade through a complex and unpredictable regulatory environment. Through M-PESA, we work with about half of the 600,000 registered and active SMEs in the country. We indirectly reached almost all SMEs and MSMEs in the country given that they use the M-PESA platform for money transfer services, for payments and for micro financing services. We will continue to work with partners to support these businesses to digitize and to help them grow. We have recently launched the Lipa na M-PESA business app. M-PESA for business will empower the SME business owners to access real-time statements, to transact their accounts to make payments and to track their business performance on the go, amongst others. And then now I'll turn on to our commitment to shareholders. Ladies and gentlemen, we are committed to deliver on our strategy in growing shareholders' wealth and to deliver on our purpose of transforming lives. I reiterate my commitment is to protect shareholder value and profit by prudent investment in the business and continuing our strong record for paying progressive dividends each year. We will continue to work with partners locally and globally who share our purpose of transforming lives and to enhance the development and delivery of innovative services. In conclusion, I would like to thank the Board, the Chairman, Michael Joseph, for helping me settle in and making the transition smooth and delivering strong results that we reported. Finally, I express my sincere and personal appreciation to the entire Safaricom team for their dedication to serve our customers and our public and stakeholders and for keeping Kenyans going, especially during this difficult time. With those remarks, I hand over back to the Chairman. And thank you very much.

Thank you, Peter. Shareholders, I remind you, we are still on the reports. And it's now my pleasure to ask -- first, to note that the directors' report was circulated as part of the packages that have been sent to you. And we shall take the directors' report and other reports as read, but we would like now to ask the representative of our external auditors, Mr. Peter Ngahu, to read the auditor's opinion. Mr. Ngahu?

Thank you, Mr. Chairman. Ladies and gentlemen, our independent auditor's report for the shareholders of Safaricom PLC is on Page 116 to 119 of the annual report. I'll read the opinion to you. Report on the audit of the financial statements. We have audited the accompanying financial statements of Safaricom PLC, the company, and its subsidiaries, together, the group, set out on Pages 120 to 181, which comprise the consolidated statement of financial position at 31 March 2020, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, together with the company statement of financial position at 31 March 2020, and the company's statements of profit or loss and other comprehensive income, changes in equity, and cash flows for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements of Safaricom PLC give a true and fair view of the financial position of the group and the company at 31 March 2020, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act, 2015. Ladies and gentlemen, the rest of our report, as I said, is on Page 116 to 119, and it's signed and dated 28 of April 2020. Thank you. And back to the Chairman.

Thank you. Thank you very much, Mr. Ngahu. Shareholders, as you're all aware, shareholders were given an opportunity to ask questions and seek clarification with respect to the financial statements and the resolutions contained in the notice and the agenda of this meeting. Responses were provided to all the shareholders who asked questions and sought clarification prior to the AGM. To date, we have received over 2,500 questions. The responses to the questions raised have been classified into thematic areas have been uploaded on the company's website. Having said that, we shall provide additional opportunity to the shareholders who might have pressing questions to ask them using the question button on your streaming screen or on the USSD code. Please note that we might not be able to respond to all the questions due to time limitations, and therefore, all the questions received shall be collated and the responses will be published on our website. Before we proceed to respond to the questions, we shall provide you with a guideline on how to cast your votes for the resolutions, which will be placed before you at this AGM and which are summarized in the notice of this meeting. Shareholders, please note that the results of the voting will be announced prior to the close of this meeting, and I therefore urge you to vote at the meeting as the meeting progresses. I now kindly request that you watch the video, which will guide you on the voting process. [Presentation]

Ladies and gentlemen, we will now respond to questions from shareholders who are dialing into the meeting. When you dial in, please tell us who your name is, and then you can ask your question. Thank you.

Yes. Who is on the line? Who is on the line?

My name is [indiscernible], and I'm glad to talk to you, Honorable Chairman. We are all grateful that we have come to this day, and this day is a wonderful day for us all. We know we are in difficult times. And because of this COVID thing, which has really [ embarrassed us ] Mr. Chairman, but we are grateful to assemble today. Mr. Chairman, I have to say this, Mr. Chairman, that you as Chairman, Nicholas Nganga, Board Members, management and the staff of Safaricom, we are all grateful for the service you have given us, for the time and for the results you have always been giving us. Honorable Chairman, stakeholders are extremely happy for you because since the inception of this group, you have done fantastically well. Safaricom, there's no doubt, in Nairobi Securities Exchange, as from Monday, [ elite old group ]. And what we are saying is that we are happy that you have been onboard and it continues doing what you are doing, Mr. Chairman. We are happy. And we are extremely happy that you have Michael and Peter in their work to come and to takeover the baton from our CEO who is resting now and we are truly [ grateful ] [Audio Gap] we are supposed to get so much from it, but not much is happening from this [indiscernible] composition in a way that we get strengthening from this partnership, Mr. Chairman. Now when you leave this chair, Mr. Chairman, you would know that you have done a fantastic job, you will walk with your head high and then know that you did what you were supposed to do. Welcome, Michael (sic) [ Peter ], onboard and we need you. Thank you. Thank you, Mr. Chairman.

Thank you very much. We -- thank you very much and we very much appreciate those sentiments, both for myself, Michael, and also for Peter. The question you might want to deal with Peter?

Thank you, Chairman, and thank you for the question, [ Bonamora ], and also thank you for your compliments. Now on home fiber, we -- I think the COVID crisis has shown that we have a big opportunity to enable our customers work from home, but also learn from home. During this COVID period, we've been able to significantly increase the penetration of those who are installing home fiber by 25,000 new connections. We are planning to have an accelerated rollout of home fiber because we believe it will be an important driver of our business going forward. So we are pleased with what has happened over the past 3 months. We intend to increase that going forward into the future. Thank you, [ Bonamora ].

Thank you, Peter. Who is on the line? Your call, please. Who is on the line? Who is on the line? Anybody on the line? Anybody on the line? I assume our systems are working properly, and therefore, I would perhaps conclude that there is nobody on the line wanting to ask a question live. So we will go on to answer those questions which have been received prior to the start of the meeting. And there are quite a number of questions. We'll try and deal with them quickly. They have been put into, as we say, schematic areas. The first question by [ John Okomo Juma ] and [ Stephen Mutisya Mukiti ] and so on. The question is, how does one get to join the Board or a committee of the Board? What was the total remuneration of the Board Members that shareholders are requested to approve in the AGM? And how is the remuneration arrived at? I will answer that question myself. To get -- let's first look at the structure of the Board. The Board, you have directors who are representing shareholders and are nominated by the shareholders, and that is 7 directors, then you have a Managing Director who is appointed by the Board. And outside that, you have 3 independent nonexecutive directors. These are selected by the Board through a very rigorous process of such that involves highly qualified consultants in this type of work. And all sorts of qualities are looked for to deal with the character quality and skill set of the person required. So those are elected by the existing directors. As to the remuneration of the directors that appears in the report, I think it's at Page 114 of the annual report, and one can look at that there. How is the remuneration arrived at? The remuneration is arrived at by comparing in a thorough study, comparing the directors remuneration with the remuneration of peer companies, companies that are of equal standing, both national and sometimes external. But basically, that is how the remuneration is arrived at. I think that covers that set of questions. The next set of questions. [ Rachel Gacheche Kagoya ] asks, how have you ensured that there is diversity in leadership? Is it representative of the diversity of members, e.g., women, young people and people with disability? Peter?

Yes. Thank you, Chairman. I'll take that question. And thank you, Rachel. It's a great question. Diversity for Safaricom is an important area and it's a core part of our business strategy. And I'll give you an indication of where we are on diversity. In terms of overall, we look at our diversity to include gender, to include demographic in terms of people across the age groups, but also people with disabilities. At an overall level, we have 51% women and 49% men at a total company level. Whilst in management, we have 35% represented by female employees and 65% by male, which is good, but our objective is to go well over 40%. In terms of disability, we have 131 staff with varied disabilities, which is approximately 2.5% of our total staff population, and we continue to focus on this area. Approximately half of those are split between men and women. In terms of age demographics, Safaricom is a fairly youthful organization with an average age of 35 years. And actually, about 30% of the management is below 39 -- or rather, below 40. And in terms of skill set, we pride ourselves in the diverse sets of skills for job roles and employees across the place and continue to upskill. We have various targeted programs, including graduate -- discover graduate program to develop the youth and also women in technology and also women in leadership programs to grow representation of women in technology and leadership, respectively. I'll hand over back to you, Chairman.

Thank you. Thank you very much, Peter. The third set is from [ Mr. Alois Chami ]. How has the business being impacted by COVID-19? And what strategies have the Board put in place to ensure we would stand the shock of the pandemic, Mr. Chairman? This is a very, very large -- wide question. And overall, I'll ask Peter to give a very few comments on how we are approaching this COVID. Peter?

Thank you, Chairman. And [ Alois ], you'll have heard from my short and brief statement during this AGM that our primary focus during the COVID crisis is to keep Kenya connected. We have also provided significant support across the board, whether that is a free -- M-PESA free transactions, whether that is doubling bandwidth to allow people to work from home or learn from home, whether donating and supporting the Ministry of Health and also the vulnerable through our foundations, KES 200 million, and so on and so forth. So there is some significant support that we have provided during this period. In addition to that, as we go through the crisis, but also as we exit, we are prioritizing focus on SMEs, as I've said. But also we've launched Lipa Mdogo Mdogo, which is to support people who own a 2G device to upgrade to a 4G device so that we can allow everyone to access the Internet and leave no one behind. So I hand over back to you, Chairman.

Thank you, Peter. The next question from [ Joseph Kabu Kimuri ]. Many Kenyans live in the rural areas, especially those in -- well, in rural areas. And what is Safaricom doing to further increase the digital footprint, to extend digital services to rural folks, especially schoolgoing children? And complementary question is what innovative products and services are in the pipeline to ensure that rural people are not left behind in development? Again, a very wide question that touches on the company's strategies. But Peter, maybe you'll give a very brief response to this.

Thank you. Thank you, Chairman. And thank you, [ Joseph ], for that great question. Safaricom's intent is to make sure that we cover Kenya, the whole of Kenya. We spent approximately KES 36 billion in the financial year just ended to ensure that we upgrade our network and improve coverage across the country. For 2G and 3G, we already have coverage of more than 95%. This year, the forecast has been on 4G. During the COVID period itself, we have actually increased 4G sites across the country by 637. 4G is indeed very important to make sure that we enable data penetration for our customers. And that is 77% coverage so far. And by the end of the year, our commitment is to ensure that it goes to 100%. Once we have the network, we -- as we've announced, we have launched Lipa Mdogo Mdogo, which is to enable those who own 2G devices, which is approximately slightly more than 10 million customers across the country, to upgrade to 4G. And as part of that, Lipa Mdogo Mdogo will allow people to acquire a phone by paying a deposit of KES 1,000 and then KES 20 every day, which allows a large proportion of our country, especially those who couldn't afford smart devices, to a phone.

Thank you. Thank you very much, Peter. The next question from [ Sally Jifkorir ]. From [ Sally Jifkorir ]. Safaricom has used technology to transform Kenya, especially M-PESA. In which other areas are you likely to transform in future, especially with regard to small and medium businesses. Peter?

Thank you. Thank you, Chairman. That's a great question, [ Sally ]. And you'll have heard, again, from my brief remarks that small and medium-sized enterprise will be a major area of focus and has been a major area of focus for us. We believe that this economy relies on small businesses and therefore, enabling them to get through this crisis, but also recover post-COVID is very important. SMEs make a significant impact on the country. And through M-PESA, we work with about half of the 600,000 registered SMEs. And Safaricom's role is inspired to ensure that we support SMEs, whether that is providing technology support or actually working with partners to offer them opportunities to access credit. So we will do that and we'll be announcing even further measures in this area. We have also launched a business app that allows SMEs to operate in a much better way and controlled and be in charge of their business. Chairman, I'll hand over back to you.

Thank you, Peter. The next question from [ Rubali Magesi ]. What are the main cyber risks facing the industry? And what steps are you taking to protect the company and customers? Again, a very deep question. Can I ask Sateesh Kamath, our Finance Director, to answer this question briefly, please.

Thank you, Chairman. And thank you, [ Rubali ]. It's a very relevant question. We live in a digital age and the risks of cyber crime are a reality that we must contend and live with. We have hence invested significantly in enhancing our capacity to handle cyber-related incidents and technology-related crimes. What we have done is invest in world-class technology to enhance the cybersecurity controls and complemented it with 24/7 security operations center, which ensures we safeguard the services that we offer to Kenya. We're also committed to continuously educate the customers on how best they can secure their data while enjoying the best experiences on our network. Thank you. Back to you, Chairman.

The next question. [ Jones Scavivia Inzau ] would like to know what were the key revenue drivers during the financial year and what strength or strategies have the Board put in place to ensure that the good results are sustainable. Sateesh, a few comments on this, please?

Chairman, thank you. Thank you for the question, [ Jones ]. In the last financial year, our service revenues increased by 4.8%, and it was driven by strong customer acquisition; recovery in mobile data, which is now in double digits; sustained growth in M-PESA; and a good performance from fixed data. On M-PESA, the growth was more specifically driven by savings and lending products as well as person-to-person products, which have driven 2/3 of the total revenue growth. While we did face some short-term headwinds, including slowdown in economic activities as well as the impact of free fees, there's still a lot of opportunities that we are exploring and we are very excited about M-PESA's future. As far as mobile data is concerned, we are very pleased by seeing that the average consumption is now about 1 gigabit per month. Mobile data grew by 12% in the last year and in a strong 21% in the second half of the year. The growth in mobile data was driven by increase in smartphone penetration as well as a strong success of the For You campaign that we launched in October last year, which significantly enhanced affordability and gave our customers worry-free experience while using the mobile data. We expect these strategies to continue to bear fruits in the coming years as well. Chairman, thank you and back to you.