Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q4 2018 Earnings Presentation
38 slides from Deutsche Telekom's earnings presentation, Feb 21, 2019
Slide 1: Deutsche Telekom Q4/2018 Results
DEUTSCHE TELEKOM Q4/2018 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: Review FY/2018
REVIEW FY/2018
Slide 4: FY 2018 Highlights: Transatlantic Growth Champion
FY 2018 HIGHLIGHTS: TRANSATLANTIC GROWTH CHAMPION Growth: investments and innovations Growth: customers Growth: financials Cash capex at €12.2 bn (ex. spectrum) 12.2 mn German fiber homes (+27% yoy) Strong organic1 growth continues Fiber roll-out: 4.0 mn new homes in GER 1.7 mn converged n
Slide 5: FY 2018 Investments: Driving Network Leadership
FY 2018 INVESTMENTS: DRIVING NETWORK LEADERSHIP Fiber rollout1 LTE rollout IP migration Fiber households LTE outdoor pop coverage IP share of fixed network access lines mn % % +2.8 +17pp +14pp 33.1 +1.4 +4pp2 +3pp 86 82 6.2 7.6 94 98 94 97 69 68 30.3 FY/17 FY/18 FY/17 FY/18 FY/17 FY/18 FY/17 FY/18 F
Slide 6: FY 2018 Innovations: Focus on Customer Experience
FY 2018 INNOVATIONS: FOCUS ON CUSTOMER EXPERIENCE Hybrid Access Innovation/Network One APP penetration (EU) subs in % +24% +105% Automated AI-based fiber T-Mobile Austria’s “Tinka” 458k roll-out planning wins study about DAX 41 370k implemented. chatbots. 20 FY/17 FY/18 FY/17 FY/18 Smart Home Stream
Slide 7: FY 2018 Customers: Ongoing Strong Momentum
FY 2018 CUSTOMERS: ONGOING STRONG MOMENTUM MagentaEINS (Germany + EU)1 US Mobile mn mn +1.7 +5.72 +7.1 +1.4 7.6 71.5 72.6 79.7 5.8 4.4 FY/16 FY/17 FY/18 FY/16 FY/17 FY/18 Fiber in Germany Mobile contract customers GER (own brand) + EU mn +2.6 mn +1.5 +1.8 +2.8 12.2 40.8 42.6 44.1 9.6 6.8 FY/16 FY/17
Slide 8: 2018 Financials: Guidance Beat
2018 FINANCIALS: GUIDANCE BEAT € bn Revenue Adj. EBITDA FCF 2014 – 2018 CAGR1 +1 – 2% +2 – 4% ≈+10% Initial 2018 Guidance ($/€: 1.13) Group Slight Increase Around 23.2 bn Around 6.2 bn Final 2018 Guidance ($/€: 1.13) Group Slight Increase Around 23.6 bn Around 6.3 bn Results 2018 Group (at $/€ 1.13
Slide 9: 2014 – 2018 Financials: Medium Term Guidance Beaten
2014 – 2018 FINANCIALS: MEDIUM TERM GUIDANCE BEATEN Revenue Adj. EBITDA FCF Dividend € bn € bn € bn € per share CAGR 3%2 CAGR 6%2 CAGR 9% CAGR 11%2 1 73.1 74.9 75.7 22.2 23.3 6.2 0.65 0.70 62.7 69.2 17.6 19.9 21.4 4.9 5.5 0.55 0.60 4.1 4.5 0.50 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014
Slide 10: Guidance 2019: We Will Continue to Execute
GUIDANCE 2019: WE WILL CONTINUE TO EXECUTE € bn Revenue Adj. EBITDA AL2 FCF AL2 Cash Capex 2017 – 2021 CAGR (CMD 2018) +1 – 2% +2 – 4% ≈+10% Stable ex. US 2018 Result (pro forma) 76.4 23.2 6.0 12.4 2019 Guidance ($/€: 1.18) Slight increase Around 23.9 Around 6.7 Around 12.7 thereof Group excl. US 20
Slide 11: Review Q4/18
REVIEW Q4/18
Slide 12: Financials: Net Income Impacted by Tax Gain in Q4/17
FINANCIALS: NET INCOME IMPACTED BY TAX GAIN IN Q4/17 € mn Q4 FY 2017 2018 Change 2017 2018 Change Revenue 19,160 20,261 +5.7% 74,947 75,656 +0.9% Adj. EBITDA 5,015 5,649 +12.6% 22,230 23,333 +5.0% Adj. EBITDA (excl. US) 3,011 3,112 +3.3% 12,914 13,245 +2.6% Adj. Net profit 2,657 796 -70.0% 6,039 4,5
Slide 13: Germany: Strong Adj. EBITDA Performance
GERMANY: STRONG ADJ. EBITDA PERFORMANCE Revenue (as reported) Adj. EBITDA and margin (in % as reported) € mn Retail fixed1 Mobile Service Others € mn 39.9 40.8 39.1 38.8 Wholesale services Mobile handsets & other 36.9 +4.1% -1.1% 5,676 2,094 2,082 2,126 2,222 2,179 5,441 5,612 5,325 5,322 Q4/17 Q1/1
Slide 14: Germany: Growth in Service Revenues Impacted by Phasing and IP Migration
GERMANY: GROWTH IN SERVICE REVENUES IMPACTED BY PHASING AND IP MIGRATION Mobile service revenue1 Fixed line service revenue1 Total service revenue1 Q4/17 1.7% 0.5% 0.9% Q1/18 3.2% 0.2% 1.2% Q2/18 2.9% -0.1% 0.9% Q3/18 3.1% -0.4% 0.8% Q4/18 2.0% -0.7% 0.2% 1) Excluding IFRS 15 impact 14
Slide 15: Germany Mobile: Healthy Growth Continues
GERMANY MOBILE: HEALTHY GROWTH CONTINUES German mobile market service revenue (excl. IFRS 15) Own branded contract net adds € mn Telefonica Vodafone Telekom 000 181 +0.5% 122 76 81 4,567 4,539 4,661 4,592 481 4,473 1,332 1,285 1,306 1,331 1,322 -0.8% Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Smartphone penetrat
Slide 16: Germany: Good Progress with Convergence and Data
GERMANY: GOOD PROGRESS WITH CONVERGENCE AND DATA Mobile contract customers in MagentaEINS bundles1 Average Consumer Data Usage3 Q4/17 MB Growth 38% 54% 71% 58% 57% yoy % Q4/18 51% 2,326 2,450 2,603 42% 1,654 1,920 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Households in MagentaEINS bundles2 Average data usage up
Slide 17: Germany Fixed: Steady Broadband Customer Growth
GERMANY FIXED: STEADY BROADBAND CUSTOMER GROWTH German broadband market1 Magenta TV customers mn +104k +95k +80k2 +67k2 +57k Cable 000 +50 +54 +47 +51 +62 Telco Competitors 33.4 33.7 33.9 34.1 3,139 3,193 3,240 3,291 3,353 7.8 7.9 7.9 8.0 DT 12.4 12.5 12.5 12.6 12.7 DT net adds 13.2 13.4 13.4 13.5 1
Slide 18: Germany Fixed: Healthy Broadband Growth Offset by Legacy Attrition
GERMANY FIXED: HEALTHY BROADBAND GROWTH OFFSET BY LEGACY ATTRITION Fixed network revenue retail (as reported)1 Broadband revenue1 (excl. IFRS 15) € mn Broadband revenues Single play revenues Other revenues € mn +5.9% Broadband 3P Broadband 2P 1,336 1,398 1,406 1,407 1,415 -0.6% 360 365 370 377 357 2
Slide 19: TMUS: Continued Industry Leading Growth
TMUS: CONTINUED INDUSTRY LEADING GROWTH Revenue and service revenue Net adds US-$ bn +5.9% Total revenue 000 2,402 1,329 1,854 1,433 1,630 Service revenue Total net adds +7.2% 10.7 7.6 10.4 7.7 10.5 7.8 10.7 7.9 11.4 8.0 Branded: Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Postpaid 1,072 1,005 1,017 1,079 1,358
Slide 20: TMUS: Executing on Key Drivers
TMUS: EXECUTING ON KEY DRIVERS Branded postpaid phone churn Bad debt expenses & losses from sale of receivables % % of total revenue 1.4 1.0 1.0 1.2 1.0 1.28 1.18 0.99 Q4/16 Q4/17 Q4/18 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Branded postpaid phone churn Q4 record low level Decrease yoy reflects ongoing f
Slide 21: Europe: Strong Growth in Customer Base
EUROPE: STRONG GROWTH IN CUSTOMER BASE Mobile Contract Net Adds2 BB Net Adds1, 2 000 364 000 334 297 264 203 94 73 68 73 61 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 FMC Net Adds TV Net Adds2 000 406 000 53 229 229 45 216 201 35 27 22 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q4/17 Q1/18 Q2/18
Slide 22: Europe: Growing Revenue and EBITDA
EUROPE: GROWING REVENUE AND EBITDA Revenue Organic revenue development € mn € mn +2.0% +4.3% 3,132 3,071 61 0 3,002 2,811 2,896 3,045 3,132 -20 3,002 89 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q4/17 Cons./Decons. FX Revenue Mobile Q4/18 growth regulation Adj. EBITDA Organic adj. EBITDA development € mn € mn +
Slide 23: Systems Solutions: Full Year Guidance Achieved
SYSTEMS SOLUTIONS: FULL YEAR GUIDANCE ACHIEVED T-Systems financials Order Entry (LTM) € mn € mn +29.3% Total revenue Adj. EBITDA 5,473 6,010 5,978 6,776 5,241 +1.3% -24.5% Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 1,819 1,842 147 Adj. EBIT and margin in % 111 € mn 2.5 1.4 2.3 0.5 -2.3 45 40 23 6 -38 Q4/17 Q4/18
Slide 24: Group Development: Steady Underlying Delivery
GROUP DEVELOPMENT: STEADY UNDERLYING DELIVERY Revenue Mobile service revenue trend yoy (NL) € mn NL % -7.4 -14.6 -14.9 -5.5 -7.0 MSR trends as +3.0% reported Towers 561 528 535 544 578 Other MSR trends 342 309 318 335 360 excl. regulation -1.0 -1.0 -0.3 and IFRS 15 217 2 218 1 217 0 209 0 218 0 -1.3
Slide 25: Group Development: Tower Business Doing Well
GROUP DEVELOPMENT: TOWER BUSINESS DOING WELL Total site development Recurring rental revenue 000 +1.3k € mn +5.3% 28.1 28.2 28.4 28.6 29.4 184 187 188 190 194 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Opex per site (avg. sites) EBITDA & EBITDA margin development k€/site In % 61% 60
Slide 26: Financials: FCF, Net Debt, Adj. Net Income and EPS
FINANCIALS: FCF, NET DEBT, ADJ. NET INCOME AND EPS Free cash flow1 Adj. net income € mn € mn +34.5% -70.0% 1,471 2,657 634 1,094 434 -186 129 -162 -334 947 -2,790 796 792 Q4/17 Cash generated Capex (excl. Interest & Other Q4/18 Q4/17 Q4/17 Adj. Financial D&A Taxes Minorities Q4/18 from operations sp
Slide 27: Financials: Balance Sheet Ratios in Target Corridor
FINANCIALS: BALANCE SHEET RATIOS IN TARGET CORRIDOR € bn 31/12/2017 31/03/2018 30/06/2018 30/09/2018 31/12/2018 Balance sheet total 141.3 138.0 139.7 142.3 145.4 Shareholders’ equity 42.5 43.7 41.4 43.5 43.4 Net debt 50.8 50.5 54.8 55.5 55.4 Net debt/adj. EBITDA1 2.3 2.3 2.5 2.4 2.4 Equity ratio 30.
Slide 28: Why DT: Best Positioned for Future Growth
WHY DT: BEST POSITIONED FOR FUTURE GROWTH Unique footprint Transatlantic presence in worlds’ leading economies & Asset Base Converged leader in Europe with superior network position 95% of footprint growing with further FMC growth potential Growth Profile Supercharging the Un-Carrier boosts DT’s fin
Slide 29: Mid Term Ambition Level
MID TERM AMBITION LEVEL Mid term ambition level1 Year Implications of US deal2 Group revenues CAGR +1 – 2% 2017 – 2021e Confirmed Group adj. EBITDA CAGR +2 – 4% 2017 – 2021e Confirmed Adj. EBITDA ex US CAGR +2 – 3% 2017 – 2021e Confirmed Group FCF CAGR ≈ +10% 2017 – 2021e Slightly dilutive in 2021e
Slide 30: Conference Call with Q&A Session
CONFERENCE CALL WITH Q&A SESSION The conference call will be held on February 21 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 here 20 minutes before DE 0800 9656
Slide 31: 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
Slide 32: Appendix
APPENDIX
Slide 33: Outlook 2019/20 (1/2)
OUTLOOK 2019/20 (1/2) € bn 2018 reported 2018 pro forma 2019e 2020e 0, Revenue Group 75.7 76.4 Slight increase Increase Germany 21.7 21.7 Slight increase Slight increase US (in USD) 43.1 43.1 Increase Increase Europe 11.9 12.1 Slight increase Slight increase Systems Solutions 6.9 6.9 Stable Slight i
Slide 34: Outlook 2019/20 (2/2)
OUTLOOK 2019/20 (2/2) € bn 2018 reported 2018 pro forma 2019e 2020e Cash Capex Group 12.2 12.4 12.7 Stable Germany 4.2 4.2 Stable Slight decrease US (in USD) 5.2 5.2 Increase Stable Europe 1.9 1.9 Decrease Stable Systems Solutions 0.5 0.5 Strong decrease Stable Group Development 0.3 0.4 Strong Incre
Slide 35: 2018: Accounting Impact on Results
2018: ACCOUNTING IMPACT ON RESULTS Outlook beginning of year 2018 Final result Revenue Adj. EBITDA Group -0.15 bn max. +0.1 bn1 Confirmed Germany -1 to -1.5% Impact of IFRS 9 (-) and Moderate tailwind to the adj. IFRS 15 (+) will be neutral EBITDA US +0.5% +0.2%1 Confirmed Europe negligible negligib
Slide 36: Germany Mobile: Service Revenue (excl. IFRS 15)
GERMANY MOBILE: SERVICE REVENUE (EXCL. IFRS 15) Reported mobile service revenue Impact of mobile regulation1 Impact of convergent offers2 Q4/17 1.7% 1.9% 0.5% Q1/18 3.2% 1.0% 0.7% Q2/18 2.9% 1.1% 0.7% Q3/18 3.1% 0.1% 0.7% Q4/18 2.0% 0.1% 0.8% Old medium term guidance (2014 – 2018 CAGR) ≈ +1% (withou
Slide 37: German Fixed: Service Revenue (excl. IFRS 15)
GERMAN FIXED: SERVICE REVENUE (EXCL. IFRS 15) Growth rates YOY Wholesale revenue Broadband revenue1 Fixed line service revenue Q4/17 2.7% 0.6% 0.5% Q1/18 3.4% 0.8% 4.4% 0.2% Q2/18 2.4% 1.9% 5.5% -0.1% Q3/18 0.1% 2.0% 5.7% -0.4% Q4/18 0.2% 2.1% 5.9% -0.7% Old medium term guidance (2014 – 2018 CAGR) +
Slide 38: Thank You!
THANK YOU!