Deutsche Telekom Ag · XETR:DTE

Deutsche Telekom — Merger or Acquisition (October 2012)

36 slides from Deutsche Telekom's merger presentation, Oct 3, 2012

  1. Slide 1: Creating the Value Leader in Wireless

    Creating the Value Leader in Wireless The Combination of T-Mobile USA and MetroPCS October 3, 2012

  2. Slide 2: Safe harbor statement

    Safe harbor statement. Additional AdditionalInformation Informationand andWhere Whereto toFind FindItIt This Thisdocument documentrelates relatestotoaaproposed proposedtransaction transactionbetween betweenMetroPCS MetroPCSCommunications, Communications,Inc. Inc.(“MetroPCS”) (“MetroPCS”)and andDeuts

  3. Slide 3: Speaker lineup

    Speaker lineup.  René Obermann – Chief Executive Officer, Deutsche Telekom  Roger Linquist – Chairman and Chief Executive Officer, MetroPCS  John Legere – President and Chief Executive Officer, T-Mobile USA  Braxton Carter – Chief Financial Officer & Vice Chairman, MetroPCS 3

  4. Slide 4: Creating the Value Leader in Wireless

    Creating the Value Leader in Wireless Leading Leading Value Value Carrier Carrier in in U.S. U.S. Wireless Wireless Market Market Strengthened Strengthened Spectrum Spectrum Position Position to to Roll-out Roll-out 4G 4G LTE LTE Projected Projected $6 $6 -- $7Bn $7Bn Cost Cost Synergies Synergies f

  5. Slide 5: Transaction terms and structure

    Transaction terms and structure. 26% 74% Deutsche Telekom (DT) MetroPCS Shareholders Ownership Ownership Equity Debt $1.5 Bn Cash NewCo $15 Bn (T-Mobile & MetroPCS) Notes  Reverse acquisition of T-Mobile by  DT to nominate Board members MetroPCS consistent with its ownership percentage  MetroPCS

  6. Slide 6: Transformational combination enhances growth and profitability

    Transformational combination enhances growth and profitability.  Capture growth in industry’s fast growing no-contract services Value Leadership  Greater customer value and choice  Greater spectrum position, network coverage and capacity Scale Benefits  Deeper LTE network deployment with path to

  7. Slide 7: Strategic rationale for Deutsche Telekom

    Strategic rationale for Deutsche Telekom.  Enhances platform for credible challenger position in the U.S. wireless market Strengthens DT’s Strategic Position in  Leading player in fast growing no-contract services Attractive U.S. Market  Increases scale and positions NewCo for growth and value cr

  8. Slide 8: Strategic rationale and financial benefits for MetroPCS

    Strategic rationale and financial benefits for MetroPCS.  Addresses need for spectrum by increasing average depth from 22 to 83 MHz in MetroPCS’s major metro areas Strengthens Strategic  Ability to expand MetroPCS model into new geographies providing new growth platform Position  Stronger value p

  9. Slide 9: NewCo: The Wireless Value Leader

    NewCo: The Wireless Value Leader

  10. Slide 10: NewCo leadership in place

    NewCo leadership in place. Brings Together Seasoned Executive Leadership with Significant Industry Expertise John Legere J. Braxton Carter President and Chief Chief Financial Officer Executive Officer Jim Alling Thomas C. Keys COO of T-Mobile COO of MetroPCS Customer Unit Customer Unit 10

  11. Slide 11: NewCo: The premier challenger in the U.S. wireless market

    NewCo: The premier challenger in the U.S. wireless market. Simplicity, unlimited data, and “No Surprises” for both contract and no-contract customers Combined spectrum resources enabling at least 20x20 MHz LTE in major metro areas Growth platform delivering projected 7% - 10% EBITDA growth and 15% -

  12. Slide 12: Increasing our momentum

    Increasing our momentum. AT&T Network Verizon Tower MetroPCS spectrum modernization spectrum transaction Combination swap $4Bn LTE More Attractive investment efficient financial structure Creating the AWS spectrum including site network and while maintaining leading value received upgrades and deepe

  13. Slide 13: Enhanced spectrum position

    Enhanced spectrum position. Spectrum Transactions Significantly Improved T-Mobile's Spectrum Depth Total Spectrum in Top 100 Major Metro Areas MHz (1) 75 11 72 6 61 4 2 52 7 41 50 35 26 25 31 26 26 0 T-Mobile (Dec 2011) AT&T Spectrum VZW Spectrum T-Mobile (Oct 2012) MetroPCS NewCo PCS Spectrum AWS S

  14. Slide 14: NewCo: an enhanced competitor

    NewCo: an enhanced competitor. Total Spectrum in Top 25 Major Metro Areas Subscribers MHz 2Q-2012, Millions 76 48 42.5 75 63 36 33.2 9.3 6.6 6.6 14.6 50 24 5.3 25 12 21.3 21.3 13 0 0 NewCo NewCo (1) Branded Contract Branded No-Contract Wholesale Total Revenue EBITDA $Bn, 2012E (2) $Bn, 2012E (2) 9 3

  15. Slide 15: Accelerates Challenger Strategy

    Accelerates Challenger Strategy. Initiatives Underway Benefits with MetroPCS  $4Bn network modernization  Complementary spectrum position Amazing 4G Services  20% coverage improvement  Path to at least 20x20 MHz LTE  >200MM pops LTE in 2013  Improved urban and in-building coverage  Unlimited

  16. Slide 16: T-Mobile's network modernization unleashing new capacity and performance

    T-Mobile’s Network modernization unleashing new capacity Amazing and performance in 2012/2013 4G Services $4B Network Modernization Program well $4Bn Total Investment underway with PCS spectrum re-farming significantly completed: Antennas with integrated  Multi-mode radios (GSM/HSPA/LTE) radios sup

  17. Slide 17: MetroPCS enables deeper LTE spectrum in top areas

    MetroPCS enables deeper LTE spectrum in top areas. Amazing 4G Services Spectrum depth enhances LTE in key metro areas (1) = T-Mobile AWS Spectrum = Additional AWS spectrum from transaction Key Areas Post-Transaction LTE Spectrum (MHz) Average LTE Spectrum in Key Areas (MHz) New York 50 60 Los Angele

  18. Slide 18: Delivers greater network scale

    Delivers greater network scale. Amazing 4G Services Cell Sites and DAS Nodes Subscribers per Cell Site* Thousands  Enhanced Enhanced spectrum spectrum position position 60 765 52 633 664  MetroPCS MetroPCS DAS DAS site site consolidation consolidation enhances enhances network network density de

  19. Slide 19: T-Mobile network ready to accommodate MetroPCS subscribers

    T-Mobile network ready to accommodate MetroPCS Amazing 4G subscribers. Services Favorable Dynamics Integration Plan  T-Mobile’s T-Mobile’s HSPA+ HSPA+ // LTE LTE network network will will have have  Rapidly Rapidly transition transition MetroPCS MetroPCS subscribers subscribers to to capacity ca

  20. Slide 20: Straightforward spectrum migration strategy

    Straightforward spectrum migration strategy. Amazing 4G Services  MetroPCS Dallas Region Case Study MetroPCS AWS AWS spectrum spectrum migrates migrates 5x5 MHz Blocks early early to to LTE LTE CDMA / EVDO GSM HSPA+ LTE 2H2013 1H2014 2H2014 1H2015 2H2015  MetroPCS MetroPCS PCS PCS spectrum spect

  21. Slide 21: Creates the value leader in wireless

    Creates the value leader in wireless. Value Leader Best Value in the U.S. Market Contract Services No-contract Services Brands Partner Brands (MVNO)  Consumer Customer  B2B  Consumer Segments  M2M Primary Channel  National / Direct  National / Indirect  Local / Indirect ~70,000 ~70,000 total

  22. Slide 22: Improves customer experience

    Improves customer experience. Trusted Brand Benefits to NewCo Customers  Better service and faster speeds driven by:  Greatly expands on-net domestic coverage Network  Increased network density Coverage  Broader coverage area  International roaming options  Additional capacity in major metro a

  23. Slide 23: Leader in fast growing no-contract offerings

    Leader in fast growing no-contract offerings. Multi- Segment Player North America Industry Growth Branded No-contract Subscribers (1) Branded No-contract Revenue % Subscribers CAGR (2012-2017) Q2-2012, Millions Q2-2012, $Bn 21.3 1.0 Total 3% - 5% 15.4 1.2 NewCo 14.6 NewCo 1.6 9.3 1.2 No-Contract 9%

  24. Slide 24: MetroPCS expands footprint

    MetroPCS expands footprint. Multi- Segment Player NewCo’s Spectrum and Network Broadens MetroPCS’s Potential Reach MetroPCS Network T-Mobile Network Addressable Addressable POPs POPs coverage coverage increases increases from from 105MM 105MM to to more more than than 280MM 280MM 24

  25. Slide 25: Transaction accelerates momentum in contract offerings

    Transaction accelerates momentum in contract offerings. Multi- Segment Player  Powerful signal to customers that NewCo is here to compete in contract offerings  Network improvements contribute to improving churn metrics  Improves 4G LTE depth in major metro areas  Additional spectrum supports Un

  26. Slide 26: Poised for growth

    Poised for growth. Challenger Business Model Expected 5-year Growth % CAGR Capture Capture Scale Scale Benefits Benefits  Achievable Achievable projected projected cost cost synergy synergy realization realization Revenue 3% - 5% with with run-rate run-rate of of $1.2 $1.2 –– $1.5Bn $1.5Bn EBITDA 7

  27. Slide 27: Synergies turbocharge the Challenger business model

    Synergies turbocharge the Challenger business model. Challenger Business Model  T-Mobile’s network capacity accelerates MetroPCS customer transition Rapid Transition to  Highly complementary spectrum allows for greater LTE bandwidth a Single Network  Rapid handset turnover facilitates network mig

  28. Slide 28: Cost synergies yield projected $6 - $7 billion NPV

    Cost synergies yield projected $6 - $7 billion NPV (1). Challenger Business Model Year 1 Year 2 Year 3 Year 4 Year 5 Description Network ($MM)  Reduction in operating expenses Operating Opex Savings - ($0-$50) $100-$200 ($0-$50) $200-$300 $0-$100 $500-$600 $300-$400 $600-$700 related to tower, back

  29. Slide 29: NewCo's strong financial profile

    NewCo’s strong financial profile. Challenger Business Model Total Revenue EBITDA $Bn, 2012E (1) $Bn, 2012E (1) 9 30 5.1 24.8 1.4 6.3 19.7 6 4.9 20 3 10 0 0 (2) NewCo NewCo % Margin of Service 28.2% 30.3% 28.6% Revenue (3) Capital Expenditure Free Cash Flow (4) $Bn, 2012E (1) $Bn, 2012E (1) 6 4 0.9 4

  30. Slide 30: NewCo's attractive and flexible capital structure

    NewCo’s attractive and flexible capital structure. Challenger Business Model NewCo Debt NewCo NewCo Financial Financial Strategy Strategy $Bn, 2012E (1)  NewCo NewCo will will have have significant significant financial financial resources, resources, $20.4 $18.6 stability stability and and access

  31. Slide 31: NewCo's detailed capital structure

    NewCo’s detailed capital structure. Challenger Business Model Capital Structure 1 Deutsche Deutsche Telekom Telekom Financing Financing $Bn (1)  $15Bn $15Bn of of rollover rollover notes notes DT Financing $15.0 –– Average Average tenor tenor of of 8.5 8.5 years years 1 DT Revolving Credit Facilit

  32. Slide 32: Creating the Value Leader in Wireless

    Creating the Value Leader in Wireless Leading Leading Value Value Carrier Carrier in in U.S. U.S. Wireless Wireless Market Market Strengthened Strengthened Spectrum Spectrum Position Position to to Roll-out Roll-out 4G 4G LTE LTE Projected Projected $6 $6 -- $7Bn $7Bn Cost Cost Synergies Synergies f

  33. Slide 33: Back-Up

    Life is for sharing.

  34. Slide 34: Estimated Deutsche Telekom group impact from MetroPCS transaction

    Estimated Deutsche Telekom group impact from MetroPCS transaction. Major Financial Key Performance Indicators (KPIs) 2013 Revenue EBITDA (adj.) ROCE FCF EPS (adj.) Delta € 4.2 Bn € 1.1 Bn 0.4 p.p. € -0.3 Bn € 0.02 Other Other Effects Effects  One One time time effect effect 2012: 2012: estimated es

  35. Slide 35: MetroPCS Technology Transition to NewCo Network

    MetroPCS Technology Transition to NewCo Network Handset type Heavy Users Light Users Legacy NewCo Denali VoLTE LTE LTE EV-DO & HSPA+ CDMA 35

  36. Slide 36: Customer migration will leverage existing upgrade cycle

    Customer migration will leverage existing upgrade cycle Expected migration of existing MetroPCS customers to new network NewCo network MetroPCS network 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Upgrades/Gross Adds Additional incentives 60-65%

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