Deutsche Telekom Ag · XETR:DTE

Deutsche Telekom — H1 2008 Earnings Presentation

33 slides from Deutsche Telekom's earnings presentation, Aug 7, 2008

  1. Slide 1: H1/08 Conference call. Deutsche Telekom.

    H1/08 Conference call. Deutsche Telekom. August 7, 2008 1

  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. They include, among others, statements as to market potential and financial guidance statements, as well as our dividend outlook. They are ge

  3. Slide 3: Agenda

    Agenda. Deutsche Telekom H1/08 results conference call . ƒ Introduction Stephan Eger Head of Investor Relations ƒ H1/08 Highlights René Obermann CEO ƒ H1/08 Financials Dr. Karl-Gerhard Eick CFO and Deputy CEO ƒ Q&A If you like to ask a question, please press ”* 1” on your touchtone telephone H1/08 C

  4. Slide 4: H1/08 Highlights

    H1/08. Highlights. René Obermann, CEO 4

  5. Slide 5: H1/08 Highlights

    H1/08 Highlights. ƒ Revenue up 0.3% on an organic basis1 and up 0.8% assuming constant currencies; reported revenue decreased 3% from €31.0 billion to €30.1 billion ƒ Adj. EBITDA up 0.5% on an organic basis1 and up 2.4% assuming constant currencies; reported adj. EBITDA decreased 0.5% from €9.6 bill

  6. Slide 6: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements Q2/08: ƒ BBFN domestic revenue decrease in Q2 with -4.4% at the upper end of -4 to -6% guidance range ƒ Adj. EBITDA margin of BBF

  7. Slide 7: BBFN domestic – adj. EBITDA stabilization

    Improve competitiveness in Germany and CEE. BBFN domestic – adj. EBITDA stabilization. BBFN domestic adj. EBITDA and margin ƒ BBFN domestic stabilizes absolute adj. € million EBITDA in Q2/08 yoy and improves adj. 36.0% 35.0% EBITDA margin 33.5% 33.6% 34.5% 1,656 1,682 1,796 1,667 1,656 ƒ Successful

  8. Slide 8: Domestic broadband market share above 40%

    Improve competitiveness in Germany and CEE. Domestic broadband market share above 40%. Broadband lines in million Development Q2/08: 20.8 21.6 19.5 1.4 ƒ Stabilized retail broadband market share of 18.3 1.3 17.2 1.0 46% since 4 quarters 0.8 7.1 0.7 6.6 Cable 6.0 ƒ DSL customer base has grown from 8.

  9. Slide 9: CEE fixed line – continued high profitability

    Improve competitiveness in Germany and CEE. CEE fixed line – continued high profitability. CEE fixed line adj. EBITDA and margin ƒ Fixed network CEE continues to deliver high € million profitability. Q2/08 adj. EBITDA margin at 43.1% 47.0% 44.6% 42.4% 43.1% ƒ Q2/08 revenue €0.6 billion 38.4% 271 289

  10. Slide 10: T-Mobile Germany – strong adj. EBITDA performance

    Improve competitiveness in Germany and CEE. T-Mobile Germany – strong adj. EBITDA performance. Service revenues ƒ Improved financial trends: ƒ Service revenues: -1.9% yoy vs. -3.1% € billion yoy in Q2/07 ƒ Adj. EBITDA: +4.3% yoy vs. -8.5% yoy in 1.81 1.85 1.74 1.71 1.78 Q2/07 ƒ Adj. EBITDA margin: 3

  11. Slide 11: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve competitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements Q2/08: ƒ 1.1 million contract customers added internationally. Total international sub base now at 86.6 million ƒ T-Mobile improves

  12. Slide 12: T-Mobile USA – strong financials

    Grow abroad with mobile. T-Mobile USA – strong financials. Service revenues ƒ Total revenues (US$) up 14.4% in Q2/08 US$ million ƒ Service revenues (US$) up 15.8% in Q2/08 4,257 4,455 4,735 ƒ Adj. EBITDA margin: 29.4% in Q2/08, up from 4,088 4,225 29.0% in Q2/07 ƒ Q2 net increase in customer base: 0

  13. Slide 13: CEE countries – delivering double-digit growth

    Grow abroad with mobile. CEE1 countries – delivering double-digit growth. Service revenues ƒ Total revenues up 12.3% in Q2/08 € million ƒ Service revenues up 13.1% in Q2/08 1,472 ƒ Adj. EBITDA up 17.0% in Q2/08 1,390 1,364 1,335 1,301 ƒ Adj. EBITDA margin in CEE countries up 1.7pp to 43.2% in Q2/08

  14. Slide 14: Stake in OTE/Cosmote adds further growth potential

    Grow abroad with mobile. Stake in OTE/Cosmote adds further growth potential. Footprint DT / Cosmote Overview Cosmote ƒ Acquisition of stake in OTE enables Romania (86%): access to growing markets with a total Nr. 3 Mobile Operator Bulgaria (100%): Nr. 2 Mobile Operator population of 56 million and s

  15. Slide 15: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements Q2/08: ƒ Non-voice revenues w/o messaging up 23.6% yoy to €588 million. Europe up 46.2% yoy to €350 million. US up 16.6% yoy in l

  16. Slide 16: Mobilize the Internet. Growth driver non-voice excl. messaging

    Mobilize the Internet. Growth driver non-voice excl. messaging. Web’n’walk users (Europe1) myFaves users (USA) Ending web’n’walk users (in 000) 4,146 Ending myFaves users (in mn) 6.5 3,836 5.5 3,239 5.0 2,409 2,822 2,105 3.6 1,890 2.5 880 1.5 627 0.7 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q

  17. Slide 17: Mobilize the Internet. Dynamic growth in data ARPU

    Mobilize the Internet. Dynamic growth in data ARPU. Data ARPU excl. messaging (Europe 1) Data ARPU incl. messaging (USA) (in €) (in US$) 1.50 8.50 8.60 1.30 1.30 1.30 8.10 8.20 1.20 7.80 7.50 1.10 1.10 6.50 0.90 0.90 5.90 5.70 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 06 06 06 07 07 07 0

  18. Slide 18: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements Q2/08: ƒ Joint sales force and production unit with Cognizant established ƒ Set-up of new go to market model ƒ Restructuring of d

  19. Slide 19: Targets for 2008 confirmed

    Targets for 2008 confirmed. Targets Adj. Group EBITDA Around €19.3 billion Free cash flow Around €6.6 billion Dividend policy Maintain attractive dividend policy H1/08 Conference call August 7, 2008 19

  20. Slide 20: H1/08 Financials

    H1/08. Financials. Dr. Karl-Gerhard Eick, CFO and Deputy CEO 20

  21. Slide 21: Overview Group financials

    Overview Group financials. Revenue (€ billion) Adj. EBITDA (€ billion) 15.6 15.4 4.90 4.85 4.9 4.9 15.1 15.4 -2.9% 0.2% -1.1% 0.0% Q2/07 Q2/08 Q2/07 Q2/08 Q2/07 Q2/08 Q2/07 Q2/08 reported reported organic organic reported reported organic organic Net income (€ million) FCF (€ billion) 570 633 2.0 60

  22. Slide 22: Mobile summary. 125 million customers worldwide

    Mobile summary. 125 million customers worldwide. Customers (million)1 Total revenue (€ billion) 125.0 8.7 8.7 9.01 115.0 0.3% 8.7% [3.9%1] Q2/07 Q2/08 Q2/07 Q2/08 Adj. EBITDA (€ billion) International adj. EBITDA (€ billion) 2.91 2.1 2.11 2.8 2.0 2.8 2.81 3.4% 3.1% [+5.3%1] [+5.5%1] Q2/07 Q2/08 Q2/0

  23. Slide 23: BBFN summary. Stable domestic adj. EBITDA

    BBFN summary. Stable domestic adj. EBITDA. Total revenue (€ billion) Domestic revenue (€ billion) 4.9 5.02 5.7 5.51 4.7 5.3 5.21 -6.4% -4.4% [-5.4%1] [-6.3%2] Q2/07 Q2/08 Q2/07 Q2/08 Adj. EBITDA (€ billion) Domestic adj. EBITDA (€ billion) 1.9 1.91 1.9 1.91 1.7 1.72 1.7 -0.1% 0.0% [-3.1%1] [-0.9%2]

  24. Slide 24: BBFN domestic revenue development in Q2 2008

    BBFN domestic revenue development in Q2 2008. ƒ Reduction in network communications from access (€0.17bn) and calling 4.95 -4.4% revenues (€0.1bn) due to line losses and price effects from Max 06/Max 07 -0.26 4.73 ƒ Wholesale almost stable, growth in ULL 0.01 0.1 offset by voice interconnection and

  25. Slide 25: BBFN adj. EBITDA development in Q2 08

    BBFN adj. EBITDA development in Q2 08. Revenue decrease compensated by opex cuts. -0.1% ƒ Revenue decrease could be compensated by corresponding OPEX reduction 1.905 1.903 -0.03 ƒ €0.2 billion domestic net cost reduction 0.24 ƒ €0.4 billion Save for Service -0.22 Adj. EBITDA Domestic Domestic Other*

  26. Slide 26: Business Customers summary

    Business Customers summary. Results impacted by sale of Media & Broadcast. Total revenue (€ billion) Adj. EBITDA (€ million) 3.0 2.711 2.7 2.681 280 2181 194 -10.0% [-1.2%1] -30.7% [-11.0%1] Q2/07 Q2/08 Q2/07 Q2/08 External revenue (€ billion) International revenue (€ million) 2.2 645 2.1 624 -8.1%

  27. Slide 27: Save for Service – Gross savings and opex development

    Save for Service – Gross savings and opex development. Significant net cost reduction for the group. Cost base development1 ƒ Total run rate of “Save for Service” (S4S) program at €3.0 billion annually ƒ Q2/08 contribution of “Save for Service” 10.96 €0.5 billion 0.55 --0.04 ƒ Net cost base reductio

  28. Slide 28: Group headcount development: H1/07 to H1/08

    Group headcount development: H1/07 to H1/08. Continued reduction in adj. personnel expenses. ƒ Group headcount net reduction – 6,900 FTEs (-2.8%) at the end of the period yoy ƒ Employees decrease in Germany: net –11,500 FTEs (-7.5%) ƒ Employees increase International: net + 4,600 FTEs (+5.1%) ƒ Incr

  29. Slide 29: Q2 2008 – Free cash flow

    Q2 2008 – Free cash flow. On track to achieve 2008 full-year guidance. € billion Q2/08 Q2/07 EBITDA (reported) 4.9 4.9 Non cash items and others - 0.4 - 0.3 Change in working capital and accruals - 0.0 - 0.3 Income taxes - 0.1 - 0.2 Cash generated from operations 4.4 4.1 Incl. restructuring payments

  30. Slide 30: Q2 2008 – Reported net income

    Q2 2008 – Reported net income. Impacted by special factors and “step up” charge. € billion Q2/08 Q2/07 EBITDA 4.6 4.8 Depreciation and amortization - 2.7 - 2.8 Net financial expense - 1.0 - 0.8 - of which net interest expense - 0.8 - 0.7 EBT 0.9 1.3 Income taxes - 0.3 - 0.5 Earnings after taxes 0.5

  31. Slide 31: Q2 2008 – Adjusted net income

    Q2 2008 – Adjusted net income. Improved from €570 million to €633 million. € billion Q2/08 Q2/07 adjusted adjusted EBITDA 4.9 4.9 Depreciation and amortization - 2.7 - 2.8 Net financial expense - 1.0 - 0.8 - of which net interest expense - 0.8 - 0.7 EBT 1.2 1.3 Income taxes - 0.4 - 0.6 Earnings afte

  32. Slide 32: H1 2008 – Balance sheet ratios

    H1 2008 – Balance sheet ratios. Increased net debt due to acquisitions & dividends. € billion 30/06/2008 31/03/2008 Balance sheet total 120.1 118.4 Shareholders‘ equity 42.1 44.5 Net debt 40.6 35.9 Gearing 1.0x 0.8x Equity ratio 35.1% 34.8%1 Net debt 31/03/2008 (€ billion) 35.9 Free cash flow -2.0 D

  33. Slide 33: Thank you for your attention!

    Thank you for your attention! 33

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