Deutsche Telekom Ag · XETR:DTE

Deutsche Telekom — Q1 2020 Earnings Presentation

42 slides from Deutsche Telekom's earnings presentation, May 14, 2020

  1. Slide 1: Deutsche Telekom Q1 2020 Results

    DEUTSCHE TELEKOM Q1 2020 RESULTS

  2. 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

  3. Slide 3: Q1 2020 Results: We Continue to Deliver

    Q1 2020 RESULTS: WE CONTINUE TO DELIVER  US Deal closed 1st of April  All final approvals gained  Synergies confirmed & being implemented  Successful re-financing (US$ 19 bn bond issuance)  Accelerated plan to cover 50% of Germany with 5G already in 2020  Strong Q1 commercials and financials 

  4. Slide 4: Q1 2020 Financials: Growth Across the Board

    Q1 2020 FINANCIALS: GROWTH ACROSS THE BOARD Adj. EBITDA AL (organic growth) ADJ. EBITDA AL Q1 2020 growth € mn Revenue +2.3% TMUS 14.5% Adj. EBITDA AL +10.2% GER Adj. EBITDA AL 2,164 +3.8% (excl. US) 2.7% 3,160 Adj. Net profit +8.5% EU 3.4% Net profit +1.8% GD Adj. EPS (in €) +8.0% 5.2% 100 963 Free

  5. Slide 5: Investments: Driving Network Leadership

    INVESTMENTS: DRIVING NETWORK LEADERSHIP Fiber networks Mobile networks Agility Fiber households1 LTE outdoor pop coverage IP share of fixed network access lines mn % % EU 45.9 GER 10.5 +0.5pp +0.8pp +9.3pp +7.0pp +1.0mn 5.1 98.2 97.3 99.4 91.8 35.4 3.4 1.7 Fiber Access with 1Gbit/s GER EU GER EU  G

  6. Slide 6: Investments: 5G for Half of Germany This Year

    INVESTMENTS: 5G FOR HALF OF GERMANY THIS YEAR Spectrum 5G (2.1 GHz) Coverage 5G MHz % of population x3  Leveraging additional frequencies 2x15 99% from 2019 auction  Use of DSS for efficient 4G/5G usage >50%  700 MHz frequencies also available 2x5 for 5G >40mn Pops  3.6 GHz deployments in top 20

  7. Slide 7: Customers: Growth Remains Strong

    CUSTOMERS: GROWTH REMAINS STRONG Magenta EINS (GER + EU) Mobile customers (US)1 mn +1.4 mn +4.4 +4.8 +2.0 9.6 64.7 68.5 8.2 59.9 6.2 Q1/18 Q1/19 Q1/20 Q1/18 Q1/19 Q1/20 Fiber (GER) Mobile contract customers (GER + EU + NL)2 mn mn +1.9 +1.7 +1.3 +2.5 14.8 54.1 55.8 57.1 12.9 10.4 Q1/18 Q1/19 Q1/20 Q1

  8. Slide 8: COVID-19: Keeping Germany Connected

    COVID-19: KEEPING GERMANY CONNECTED EXAMPLES B2C B2B Public Extra 10 GB for all mobile Extra 10 GB for all mobile 2.7m 0.8m Cisco Webex for schools1 40k B2C customers incl. WS B2B customers Free Disney + for 6 months free Office 365 and Teams Free phones for old people's >0.5m 5x 7k of charge 3 mont

  9. Slide 9: COVID-19: Resilient Operations

    COVID-19: RESILIENT OPERATIONS GER: Impact Network1 GER: Impact Service1 GER: Impact Distribution1 First contact Field service Mobile Fixed Complaints resolution accuracy 76% +1% +2% -24% 30% Mobile2 Broadband 18% 2% Voice Data Voice Prior Act Prior Act Prior Act Data -12% -13% (Minutes) (volume) (p

  10. Slide 10: Guidance: Despite Crisis, Confirmed as Stated

    GUIDANCE: DESPITE CRISIS, CONFIRMED AS STATED Revenue ADJ. EBITDA AL € bn € bn Increase Group1 Ex US Guidance incl. Sprint: to 80.5 +3% +2% be given with Q2 results 24.7 25.5 13.6 13.9 Dividend: unchanged proposal of € 60cents 2019 2020 2019 2020 2019 2020 COVID-19 impact (ex US): Cash Capex ex US F

  11. Slide 11: Review Q1 2020

    REVIEW Q1 2020

  12. Slide 12: Financials: Growth in All Metrics

    FINANCIALS: GROWTH IN ALL METRICS € mn Q1 FY 2019 2020 Change 2018 2019 Change Revenue 19,488 19,943 +2.3% 75,656 80,531 +6.4% Adj. EBITDA AL1 5,940 6,544 +10.2% 23,074 24,731 +7.2% Adj. EBITDA AL (excl. US)1 3,261 3,384 +3.8% 12,990 13,597 +4.7% Adj. Net profit 1,183 1,284 +8.5% 4,545 4,948 +8.9% N

  13. Slide 13: COVID-19: Areas of Possible Impact

    COVID-19: AREAS OF POSSIBLE IMPACT Maximum possible exposure Impact to date1 EU/NL Retail roaming revenue DE ~€ 0.35bn –80% from mid March to end of April EU/NL Mobile handset revenue DE ~€ 3.5bn –20% lower, prior to shops reopening EU/NL ICT revenue TSI ~€ 9bn Some IT project delays Fixed call reve

  14. Slide 14: 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) % yoy % yoy 8.8% 14.5% 4.2% 6.2% 6.0% 2.9% 2.1% 3.1% 3.7% 1.5% Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 14

  15. Slide 15: FCF AL ex US: On Track for €4bn CMD Guidance

    FCF AL EX US: ON TRACK FOR € 4BN CMD GUIDANCE Cons. FCF AL DT Group Cons. FCF AL ex US € bn € bn 0.7 0.1 0.4 1.6 ≈4.0 0.7 3.3 3.3 0.9 3.1 2.9 0.6 0.7 0.7 Q1/19 Q1/20 2017 2018 2019 2020 2021 as per Factoring ex US TM US CMD guidance Reduced Factoring FCF AL ex US  Decrease of € 0.3 bn in ex US FCF

  16. Slide 16: Leverage: Within Comfort Zone, Pre US Merger

    LEVERAGE: WITHIN COMFORT ZONE, PRE US MERGER IFRS 16 view (DT perspective) “AL” perspective 2.65 2.64 2.35 2.36  DT in IFRS 16 comfort zone of 2.25–2.75x1  $19bn funded at ~4% average cost in week of closing  $8bn intra-company loan repaid YE 19 Q1 20 YE 19 Q1 20 in week of closing  Maturities f

  17. Slide 17: Germany: Revenue and EBITDA Growing

    GERMANY: REVENUE AND EBITDA GROWING Revenues Adj. EBITDA AL € mn +0.9% € mn +2.7% 5,357 5,405 2,108 2,164 Q1/19 Q1/20 Q1/19 Q1/20 Total service revenue growth Adj. EBITDA AL growth (organic) %y/y %y/y 1.4% 2.7% 2.4% 2.4% 2.4% 2.4% 1.0% 1.0% 0.6% 0.6% Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q

  18. Slide 18: Germany: Service Revenues Growing

    GERMANY: SERVICE REVENUES GROWING Mobile service revenue growth Fixed service revenue growth %y/y %y/y 2.8% 2.4% 1.7% 1.4% 1.2% 0.7% 0.7% 0.5% 0.1% Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 -0.3% Q1/19 Q2/19 Q3/19 Q4/19 Q1/20  Small COVID-19 related headwind on roaming (~0.4pp)  Decreasing line losses and gro

  19. Slide 19: Germany: Positive Mobile KPI

    GERMANY: POSITIVE MOBILE KPI Magenta EINS share (mobile)1 Data usage3 % GB 58% 4.5 53% 2.8 +61% y/y Q1/19 Q1/20 Q1/19 Q1/20 Churn2 Branded contract net adds4 000 180 0.9% 140 141 0.8% 132 97 Q1/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 1) As % of B2C T-branded contract customers 2) contract excl. Lebar

  20. Slide 20: Germany: Steady Commercials in Fixed

    GERMANY: STEADY COMMERCIALS IN FIXED Broadband net adds TV net adds 000 000 74 66 67 83 58 60 47 47 47 28 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Line losses Line losses org. Fiber net adds Retail 000 Line losses triggered by IP-migration 000 Wholesale 688 522 534 373 442 389 -11

  21. Slide 21: Germany: Growth in Retail Fixed

    GERMANY: GROWTH IN RETAIL FIXED Retail fixed revenues +0.5% Broadband revenue growth € mn %y/y 2,353 2,364 4.8% 4.6% +4.6% 3.5% 1,445 1,512 2.3% 2.3% Broadband revenues –20.0% 304 243 Single Play revenues 604 609 +0.8% Other revenues Q1/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Retail fixed revenue gro

  22. Slide 22: TMUS: Continued Industry-Leading Growth

    TMUS: CONTINUED INDUSTRY-LEADING GROWTH Revenues (IFRS) Adj. EBITDA AL (IFRS) +0.7% US $ bn US $ bn +14.5% 11.1 11.2 3.5 3.0 Service revenues 8.1 8.6 Q1/19 Q1/20 Q1/19 Q1/20 Service revenue growth (IFRS) Adj. EBITDA AL growth (IFRS) %y/y %y/y 14.5% 6.9% +7.0% 6.2% 6.0% 6.1% 5.9% 3.6% 3.1% 3.7% Q1/19

  23. Slide 23: TMUS: Executing on Key Drivers

    TMUS: EXECUTING ON KEY DRIVERS Postpaid phone churn ARPU % US $ Postpaid phone Prepaid phone 0.88% 0.86% 46.1 45.8 37.7 38.1 Q1/19 Q1/20 Q1/19 Q1/20 Q1/19 Q1/20 Network quality1 Net adds Postpaid phone Mbps mn 1.3 37.0 37.0 1.0 1.1 1.1 35.1 10.4 6.1 27.7 0.8 8.3 2.9 30.9 1.0 26.6 26.8 24.8 0.7 0.7 0

  24. Slide 24: TMUS: Preliminary 2019 Pro Formas and Q2 Guidance

    TMUS: PRELIMINARY 2019 PRO FORMAS AND Q2 GUIDANCE 2019 pro formas (US GAAP)1 Q2 guidance (US GAAP) $ bn 80.9  Up to 150k postpaid net adds 71.3 Operating  Adj. EBITDA $ 6.2 to 6.5bn (leasing revenues $ 1.3–1.4bn) 20.1 leases  Capex $ 2.3–2.5bn  Merger-related costs $500–600m3  Covid-19 related

  25. Slide 25: Europe: 9th Consecutive Quarter of EBITDA Growth

    EUROPE: 9TH CONSECUTIVE QUARTER OF EBITDA GROWTH Revenues Adj. EBITDA AL € mn +0.4% € mn +1.9% 2,891 2,903 945 963 Q1/19 Q1/20 Q1/19 Q1/20 Revenue growth (organic) Adj. EBITDA AL growth (organic) %y/y %y/y 5.7% 3.8% 3.3% 3.4% 2.0% 2.0% 1.5% 0.4% 0.4% 0.7% Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3

  26. Slide 26: Europe: Solid Customer Growth

    EUROPE: SOLID CUSTOMER GROWTH Mobile contract net adds1 Broadband net adds 000 000 227 244 73 222 63 55 59 153 50 110 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/202 FMC net adds TV net adds 000 000 26 445 330 329 299 9 238 5 1 -5 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1

  27. Slide 27: T-Systems: Transformation Ongoing

    T-SYSTEMS: TRANSFORMATION ONGOING Order entry (LTM) Revenues Adj. EBITDA AL € bn € mn -0.1% € mn +8.7% +3.4% 1,630 1,628 92 100 6.9 7.1 Q1/19 Q1/20 Q1/19 Q1/20 Q1/19 Q1/20 Revenue growth (organic) Adj. EBITDA AL growth (organic) %y/y %y/y  Integration of TC into Germany planned for mid ‘20 52.2% -0

  28. Slide 28: Group Development: Highest Growth Since Inception

    GROUP DEVELOPMENT: HIGHEST GROWTH SINCE INCEPTION Revenues Adj. EBITDA AL € mn +3.8% € mn +5.5% 682 708 255 269 476 123 136 NL 461 NL 247 GD Towers 138 145 GD Towers 236 -15 -15 -6 -12 Other Others Q1/19 Q1/20 Q1/19 Q1/20 Revenue growth (organic) Adj. EBITDA AL growth (organic) %y/y %y/y 14.9% 12.8%

  29. Slide 29: GD/TMNL: Unabated Growth

    GD/TMNL: UNABATED GROWTH Contract net adds Mobile service revenue growth (organic) 000 %y/y 77 80 83 71 67 5.5% 3.3% 2.8% 2.5% 2.6% Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Broadband net adds Adj. EBITDA AL growth (organic) 000 %y/y 25.8% 24.9% 21 23 14.9% 18 13.0% 14 10.6% 7 Q1/1

  30. Slide 30: GD Towers: Ongoing Expansion

    GD TOWERS: ONGOING EXPANSION Total sites Recurring rental revenues 000 32.7 34.5 € mn 3.2 3.1 NL towers +1.8k +5% organic 210 220 29.5 31.3 Q1/19 Q1/20 Q1/19 Q1/20 Opex AL per site Adj. EBITDA 000 € € mn +2% 3.2 3.1 191 195 EBITDA 138 145 EBITDA AL +5% Q1/19 Q1/20 Q1/19 Q1/20 30

  31. Slide 31: 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 -17.3% € mn +8.5% 1,557 1,183 662 -225 1,284 1,287 -538 -519 329 -150 30 173 -1,530 1,600 Q1/19 Adj. D&A Financial Taxes Minorities Q1/20 Q1/19 CF gen. Interest Zero Bond Capex Others Q1/20 EBITDA result from

  32. Slide 32: Balance Sheet: Ratios in Stated Comfort Zone

    BALANCE SHEET: RATIOS IN STATED COMFORT ZONE €bn 31/03/2019 30/06/2019 30/09/2019 31/12/2019 31/03/2020 Balance sheet total 165.5 164.2 174.3 170.7 173.6 Shareholders’ equity 42.8 42.7 45.1 46.2 45.9 Net debt 71.9 75.7 78.8 76.0 77.4 Net debt/Adj. EBITDA1 2.65 2.74 2.80 2.65 2.64 Equity ratio 25.8%

  33. Slide 33: Appendix

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  34. Slide 34: Liquidity Profile: Strong Liquidity Reserve

    LIQUIDITY PROFILE: STRONG LIQUIDITY RESERVE € bn 20 credit facilities  € 12.6bn firm bilateral lines available 16.7 liquid assets bonds and term loans  unconditionally committed 15  no MAC clauses  diversified: 21 banks 12.6  3 year tenor, staggered maturities 10 8.1 1.1  No bilateral lines dr

  35. Slide 35: Maturities: Well Balanced Profile

    MATURITIES: WELL BALANCED PROFILE OTE DT maturities in USD TMUS DT maturities in EUR € bn DT other currencies DT maturities in GBP 9 8.2 8 0.7 0.5 7 6 5.4 3.2 5.1 5.0 5.1 5.1 5 0.4 0.9 0.5 4.5 0.4 4.4 4.1 1.4 4 0.8 1.8 0.1 0.5 3.8 1.2 0.2 0.3 0.1 0.3 0.9 2.7 3 0.3 0.1 2.0 1.1 1.1 0.7 2 1.9 4.2 1.7 4

  36. Slide 36: 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 S

  37. Slide 37: Outlook 2020/21 (1/2)

    OUTLOOK 2020/21 (1/2) € 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 Development 2.8 Increase Increase Adj

  38. Slide 38: Outlook 2020/21 (2/2)

    OUTLOOK 2020/21 (2/2) € 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 Increase Dividend per share (in €

  39. Slide 39: Germany Mobile: Service Revenue

    GERMANY MOBILE: SERVICE REVENUE1 Reported mobile service revenue Impact of mobile regulation1 Impact of convergent offers2 Q1/19 2.8% 0.2% 0.6% Q2/19 2.4% 0.6% 0.7% Q3/19 0.7% 0.9% 0.6% Q4/19 1.4% 0.9% 0.5% Q1/20 1.7% 0.7% 0.3% Old medium term guidance (2014–2018 CAGR) ≈ +1% (without EU roaming impa

  40. Slide 40: German Market Overview

    GERMAN MARKET OVERVIEW German mobile market service revenue German broadband market1 € mn mn 34.6 Telefonica 1.281 1.311 Cable 8.2 1.262 Telco Competitors 12.8 Vodafone 1.262 Telekom 1.521 1.546 DT 13.6 13.8 Q1/19 Q1/20 Q1/19 Q1/20 1) Based on management estimations 40

  41. Slide 41: Conference Call with Q&A Session

    CONFERENCE CALL WITH Q&A SESSION The conference call will be held on May 14 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 +

  42. Slide 42: 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

Deutsche Telekom — Q1 2020 Earnings Presentation on 6ix