Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q2 2020 Earnings Presentation
36 slides from Deutsche Telekom's earnings presentation, Aug 13, 2020
Slide 1: Deutsche Telekom Q2 2020 Results
DEUTSCHE TELEKOM Q2 2020 RESULTS
Slide 2: Disclaimer
DISCLAIMER This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, dep
Slide 3: H1 2020 Results: Sector Leading Growth
H1 2020 RESULTS: SECTOR LEADING GROWTH Successful 1st quarter for New T-Mobile – surpassing AT&T in branded subs Win-win agreement with Softbank Leading in 5G on both sides of the Atlantic Strong H1 commercials and financials; continued limited impact from Covid-19 Highest ever employee an
Slide 4: Sprint Merger: The New Deutsche Telekom
SPRINT MERGER: THE NEW DEUTSCHE TELEKOM Mobile Customers 197 Balance sheet 270.0 € bn 163 99 164.2 ex US 97 196.5 Total 121.5 98 US 66 Equity 73.5 42.7 H1 19 H1 20 H1 19 H1 20 Quarterly revenues Quarterly EBITDA AL 27.0 € bn € bn 9.8 19.7 9.7 6.3 3.5 Ex US 9.8 Ex US 3.4 17.3 6.3 US 9.8 US 2.9 Q2 19
Slide 5: H1 2020: Headline Growth, Organic Growth
H1 2020: HEADLINE GROWTH, ORGANIC GROWTH Adj. EBITDA AL (organic growth) ADJ. EBITDA AL1 H1 2020 reported growth € mn Revenue +20.0% TMUS 12.1% +€ 1,025mn Adj. EBITDA AL +34.0% 4,382 Adj. EBITDA AL GER +3.6% 2.8% (excl. US) +€ 121mn Adj. Net profit +2.0% EU 2.2% 9,464 Net profit -9.5% +€ 42mn 1,941
Slide 6: Investments: Driving Network Leadership
INVESTMENTS: DRIVING NETWORK LEADERSHIP Fiber networks EU GER Mobile networks Agility Fiber households1 LTE outdoor POP coverage IP share of fixed network access lines mn +2.6mn % % 46.5 11.0 +0.6pp +0.2pp +6.5pp +3.4pp +1.2mn 98.4 97.3 99.7 92.1 35.5 8.1 6.3 1.8 GER EU GER EU Fiber Access with 1Gbi
Slide 7: Investments: 5G Leadership
INVESTMENTS: 5G LEADERSHIP Germany TM US Covered POPs Covered POPs >75% 50% 50% already covered with 2x15 MHz of 2.1 GHz. Target 2/3 Launch of world’s first nationwide standalone 5G network coverage by year end 2020 >250mn population covered with 600 MHz Top 20 cities to be covered with 3.6
Slide 8: Customers: Strong Customer Growth
CUSTOMERS: STRONG CUSTOMER GROWTH Magenta EINS (GER + EU) Mobile customers (US)1,2 mn +1.3 mn +32.3 +2.0 9.9 +5.0 98.3 8.6 6.6 61.0 66.0 H1/18 H1/19 H1/20 H1/18 H1/19 H1/20 Fiber (GER) Mobile contract customers (GER + EU + NL)2 mn mn +1.8 +1.4 +1.6 +2.4 15.2 54.4 55.8 57.3 13.4 11.0 H1/18 H1/19 H1/2
Slide 9: Guidance: Ex US Confirmed, US Now with Sprint
GUIDANCE: EX US CONFIRMED, US NOW WITH SPRINT ADJ. EBITDA AL 2020 ≈34 -0.4 € bn Ex US guidance unchanged 11.2 US GAAP/IFRS Bridge H2 Adj. EBITDA AL: around € 13.9bn FCF AL: around € 3.3bn 13.9 9.5 Midpoint of US$ 12.4 to 12.7bn Cash Capex around € 7.8bn 7.0 H2/20 H2/20 guidance of TMUS 6.9 H1/
Slide 10: Review Q2 2020
REVIEW Q2 2020
Slide 11: Financials: Strong Growth
FINANCIALS: STRONG GROWTH € mn Q2 H1 2019 2020 Change 2019 2020 Change Revenue 19,664 27,041 +37.5% 39,152 46,984 +20.0% Adj. EBITDA AL1 6,283 9,829 +56.4% 12,223 16,373 +34.0% Adj. EBITDA AL (excl. US)1 3,411 3,525 +3.3% 6,672 6,909 +3.6% Adj. Net profit 1,329 1,279 -3.8% 2,512 2,562 +2.0% Net prof
Slide 12: EBITDA AL: Growth on Both Sides of the Atlantic
EBITDA AL: GROWTH ON BOTH SIDES OF THE ATLANTIC Ex US growth (organic) TMUS growth (IFRS organic) % yoy % yoy 14.5% 11.0% 8.8% 6.0% 4.2% 4.1% 2.9% 3.1% 3.7% 1.5% Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 12
Slide 13: Germany: Revenue and EBITDA Growing
GERMANY: REVENUE AND EBITDA GROWING Revenues Adj. EBITDA AL € mn +1.1% € mn +3.0% 5,388 5,446 2,153 2,218 Q2/19 Q2/20 Q2/19 Q2/20 Total service revenue growth Adj. EBITDA AL growth (organic) % yoy % yoy 3.0% 2.7% 1.6% 2.4% 2.4% 2.4% 1.4% 1.0% 0.6% 0.6% Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19
Slide 14: Germany: Fixed Line Strength Offsets Roaming Drag
GERMANY: FIXED LINE STRENGTH OFFSETS ROAMING DRAG Mobile service revenue growth Fixed service revenue growth % yoy % yoy 2.4% 1.7% 1.4% 2.9% 0.7% 1.2% 0.5% 0.7% -1.1% -0.3% Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 COVID-19 related headwind on roaming (c2.4pp) and on visitor reve
Slide 15: Germany: Positive Mobile KPI
GERMANY: POSITIVE MOBILE KPI Magenta EINS share (mobile)1 Data usage3 % GB 59% 4.7 54% 3.1 +52% y/y Q2/19 Q2/20 Q2/19 Q2/20 Churn2 Branded contract net adds4 % 000 180 0.9% 140 141 0.8% 97 110 Q2/19 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 1) As % of B2C T-branded contract customers 2) contract excl. Leb
Slide 16: Germany: Steady Commercials in Fixed
GERMANY: STEADY COMMERCIALS IN FIXED Broadband net adds TV net adds 000 000 83 87 67 74 58 60 47 47 45 28 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Line losses Line losses org. Fiber net adds Retail 000 Line losses triggered by IP-migration 000 Wholesale 522 534 442 389 386 -62 304
Slide 17: Germany: Growth in Fixed
GERMANY: GROWTH IN FIXED Retail fixed revenues +1,9% Broadband revenue growth € mn % yoy 2.340 2.385 5.5% +5.5% 4.8% 4.6% 1.451 1.531 3.5% 2.3% Broadband revenues -18.6% 284 231 Single Play revenues 605 623 +3.0% Other revenues Q2/19 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Retail fixed revenue growth Wh
Slide 18: TMUS: New T-Mobile Off to a Good Start
TMUS: NEW T-MOBILE OFF TO A GOOD START Revenues (IFRS)1 Adj. EBITDA AL (IFRS) +72.5% US $ bn US $ bn +115.1% 19,0 6.9 11,0 3.2 13,5 Service revenues 8,3 Q2/19 Q2/20 Q2/19 Q2/20 Service revenue (IFRS)1 Adj. EBITDA AL growth (IFRS) organic US $ bn / % yoy US $ bn / % yoy 13.5 8.3 8.4 8.6 8.6 6.9 +6.9%
Slide 19: TMUS: Executing on Key Drivers
TMUS: EXECUTING ON KEY DRIVERS Postpaid phone churn ARPU % US $ Postpaid phone Prepaid phone 0.78% 0.80% 46.2 48.0 38.2 37.8 Q2/19 Q2/20 Q2/19 Q2/20 Q2/19 Q2/20 Network quality1 Net adds postpaid Postpaid phone Mbps mn 1.3 38.7 38.4 1.1 1.1 1.1 35.0 upload 10.5 5.8 0.8 7.6 download 32.6 1.0 28.2 27.
Slide 20: Europe: 10th Consecutive Quarter of Organic EBITDA Growth
EUROPE: 10TH CONSECUTIVE QUARTER OF ORGANIC EBITDA GROWTH, DESPITE COVID-19 Revenues Adj. EBITDA AL € mn -4.5% € mn -1.3% 2,978 2,843 991 978 Q2/19 Q2/20 Q2/19 Q2/20 Revenue growth (organic) Adj. EBITDA AL growth (organic) % yoy % yoy 5.7% 3.8% 2.0% 0.4% 0.7% 3.3% 3.4% 2.0% 1.1% -2.0% Q2/19 Q3/19 Q4
Slide 21: Europe: Solid Customer Growth
EUROPE: SOLID CUSTOMER GROWTH Mobile contract net adds1 Broadband net adds 000 000 227 244 73 69 222 63 174 59 50 110 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/202 Q2/20 FMC net adds TV net adds 000 000 330 329 299 26 238 265 20 9 5 -5 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q
Slide 22: T-Systems: Covid-19 Weighs on Transformation
T-SYSTEMS: COVID-19 WEIGHS ON TRANSFORMATION Order entry (LTM) Revenues Adj. EBITDA AL € bn € mn € mn -3.4% -3.8% 1,673 -22.8% 1,616 127 6.9 6.7 98 Q2/19 Q2/20 Q2/19 Q2/20 Q2/19 Q2/20 Revenue growth (organic) Adj. EBITDA AL growth (organic) % yoy % yoy 34.8% Order entry and revenue impacted by Covid
Slide 23: Group Development: Highest Growth Since Inception
GROUP DEVELOPMENT: HIGHEST GROWTH SINCE INCEPTION Revenues Adj. EBITDA AL € mn +4.8% € mn +13.2% 683 716 283 250 480 NL 117 143 NL 458 239 248 GD Towers 140 145 GD Towers -14 -12 -7 -5 Other Others Q2/19 Q2/20 Q1/20 Q2/20 Revenue growth (organic) Adj. EBITDA AL growth (organic) % yoy % yoy 14.9% 13.
Slide 24: GD/TMNL: Growth Continues Despite Covid-19
GD/TMNL: GROWTH CONTINUES DESPITE COVID-19 Contract net adds Mobile service revenue growth (organic) 000 % yoy 77 80 83 67 5.5% 50 3.3% 2.8% 2.6% 2.3% Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Broadband net adds Adj. EBITDA AL growth (organic) 000 % yoy 24.9% 22.2% 21 23 14.9% 18 1
Slide 25: GD Towers: Ongoing Expansion
GD TOWERS: ONGOING EXPANSION Total sites Recurring rental revenues 000 33.0 34.7 € mn 3.2 3.1 NL towers +5% 210 220 29.8 31.6 Q2/19 Q2/20 Q2/19 Q2/20 Opex AL per site Adj. EBITDA 000 € € mn +4% 3.2 3.1 188 195 EBITDA 140 145 EBITDA AL +4% Q2/19 Q2/20 Q2/19 Q2/20 25
Slide 26: Financials: FCF, Net Debt, Adj. Net Income and EPS
FINANCIALS: FCF, NET DEBT, ADJ. NET INCOME AND EPS Free Cash Flow AL1 Adj. net income € mn € mn +56.9% -3.8% -500 2,425 -2,638 1,546 1,714 -345 10 4,009 1,329 -776 -157 1,278 -487 Q2/19 CF gen. Leasing Capex (excl. Others Q2/20 Q2/19 Adj. D&A Financial Taxes Minorities Q2/20 from ops.2 repayments sp
Slide 27: Financials: Net Debt Analysis
FINANCIALS: NET DEBT ANALYSIS Sprint consolidation H1/20 Net debt Leverage ratios € bn € bn 2.90x Net financial 120.9 2.73x 34.8 liabilities 97.3 23.6 Spectrum leases 2.5 Leasing liabilities 6.8 Consolidation Net debt AL Leasing Net debt 44.1 liabilities1 IFRS 16 Excl. leases effect Sprint incl. lea
Slide 28: Balance Sheet: Ratio Outside Comfort Zone Due to Merger
BALANCE SHEET: RATIO OUTSIDE COMFORT ZONE DUE TO MERGER € bn 30/06/2019 30/09/2019 31/12/2019 31/03/2020 30/06/2020 Balance sheet total 164.2 174.3 170.7 173.6 270.0 Shareholders’ equity 42.7 45.1 46.2 45.9 73.5 Net debt 75.7 78.8 76.0 77.4 120.9 Net debt/Adj. EBITDA1 2.74 2.80 2.65 2.64 2.90 Equity
Slide 29: Appendix
, Ty Ee Pp ‘ A | 4 ) 0 - > . a | rs . , } . ye ‘ a <_ 3
Slide 30: FCF AL Excl. US
FCF AL EXCL. US € bn FY 2019 H1 2019 H1 2020 Adj. EBITDA AL 13.6 6.7 6.9 Cash Capex -7.8 -3.9 -3.6 Proceeds from sale of fixed assets +0.2 +0.1 +0.1 Special Factors Cash -1.3 -0.7 -0.8 Interest ex leasing -0.4 -0.2 -0.3 Cash Taxes -0.7 -0.4 0.0 Other (working capital etc.) -0.7 -0.2 -0.6 FCF AL 2.9
Slide 31: Mid Term Ambition Level
MID TERM AMBITION LEVEL Mid term ambition level1 Year Implications of US deal Group revenues CAGR +1–2% 2017–2021e Confirmed Group adj. EBITDA/EBITDA AL CAGR +2–4% 2017–2021e Confirmed Adj. EBITDA/EBITDA AL ex US CAGR +2–3% 2017–2021e Confirmed Group FCF/FCF AL CAGR ≈ +10% 2017–2021e Slightly diluti
Slide 32: Outlook 2020/21 as per Annual Report 2019 (1/2)
OUTLOOK 2020/21 AS PER ANNUAL REPORT 2019 (1/2)1 € bn 2019 2020e 2021e Revenue Group 80.5 Increase Slight increase Germany 21.9 Slight increase Slight increase US (in USD) 45.2 Increase Increase Europe 12.2 Slight increase Slight increase Systems Solutions 6.8 Stable Slight increase Group Developmen
Slide 33: Outlook 2020/21 as per Annual Report 2019 (2/2)
OUTLOOK 2020/21 AS PER ANNUAL REPORT 2019 (2/2)1 € bn 2019 2020e 2021e Cash Capex Group 13.1 13.0 Germany 4.2 Slight decrease Stable US (in USD) 6.0 Stable Europe 1.7 Stable Slight decrease Systems Solutions 0.4 Stable Stable Group Development 0.5 Strong increase Increase FCF AL Group 7.0 8.0 Increa
Slide 34: German Market Overview
GERMAN MARKET OVERVIEW German mobile market service revenue German broadband market1 € mn mn 34.7 Telefonica 1.319 1.275 Cable 8.3 1.260 Telco Competitors 12.8 Vodafone 1.226 Telekom 1.552 1.535 DT 13.6 13.9 Q2/19 Q2/20 Q2/19 Q2/20 1) Based on management estimations 34
Slide 35: Conference Call with Q&A Session
CONFERENCE CALL WITH Q&A SESSION The conference call will be held on August 13 at 2:00 PM CET, 1:00 PM GMT, 8 AM ET. DT Participants: Tim Hoettges (CEO), Christian Illek (CFO), Hannes Wittig (Head of IR) Webcast Dial-in The link to the webcast will be provided 20 minutes before the DE 0800 5889185
Slide 36: Further Questions Please Contact the IR Department
FURTHER QUESTIONS PLEASE CONTACT THE IR DEPARTMENT Investor Relations Contact details Phone +49 228 181 – 8 88 80 E-Mail investor.relations@telekom.de Contact details for all IR representatives: www.telekom.com/ircontacts IR Webpage IR Twitter Account IR YouTube Channel www.telekom.com/investors www