Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — Investor Day (2018)
38 slides from Deutsche Telekom's investor day presentation, 2018
Slide 1: Deutsche Telekom Capital Markets Day 2018
DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2018
Slide 2: Group strategy
Group strategy Timotheus Höttges
Slide 3: What Drives Us… turned DT into a growth company
What Drives Us… Dedicated Network Investment FOCUSED PORTFOLIO APPROACH & CAPITAL ALLOCATION Passion for Customer Experience Best-of-Breed team with Entrepreneurial spirit Leadership & Winning Mentality Walk the talk …tUrneD Dt into a growth company GROUP STRATEGY Germany Systems Solutions Technolog
Slide 4: Review 2014 – 2018
Review 2014 – 2018 GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 5: Growth Above commitments
Growth Above commitments Revenue (organic)1 Adj. EBITDA (organic)1 FCF2 Dividend per share € bn € bn € bn € +4% +5% +9% 74.9 23.3 +11% 0.703 69.1 71.7 22.2 6.2 0.65 67.1 18.9 20.1 20.6 5.5 0.60 4.5 4.9 0.50 0.55 4.1 2014 2015 2016 2017 2018e 2014 2015 2016 2017 2018e1 2014 2015 2016 2017 2018e1 2014
Slide 6: Growth profile across our footprint
Growth Profile across oUr footPrint… Germany revenue Europe revenue TMUS revenue Excl. DFMG, Organic, $ bn € bn € bn +10.8% 40.3 37.3 -0.6% +0.7% 29.7 22.0 21.9 21.8 -1.3% 11.8 +0.5% 11.5 11.6 2014 2016 2017 2014 2016 2017 2014 2016 2017 CAGR GROUP STRATEGY Germany Systems Solutions Technology & Inn
Slide 7: …supported by contract customer growth
…sUPPorteD by contract cUstomer growth Germany Europe TMUS Mobile postpaid customers, Mobile postpaid customers (excl TMNL), Mobile postpaid customers, mn mn mn +12% 38.0 +3% 31.7 34.4 +5% 25.2 25.9 25.5 27.2 22.3 23.7 23.1 23.7 24.3 Lebara DT ex Lebara 2014 2015 2016 2017 2014 2015 2016 2017 2014 2
Slide 8: Invest for sustained growth momentum
Invest for sustained growth Momentum We heavily invested in the past… …while delivering strongly on FCF… …and creating the basis for future growth Group Cash Capex1, Group FCF2, Germany € bn € bn 94% LTE Pop coverage (2017) 19.5 +11%1 5.5 ≈ 80% HH vectoring coverage (2019e)3 4.9 14.6 7.4 4.5 Eur
Slide 9: Winning mentality: bring me awards
winning mentality: “bring me aWarDs” Network Brand Customer Service & Satisfaction Products & Company GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance 9
Slide 10: Portfolio: Disciplined capital allocation
Portfolio: Disciplined capital allocation Invest in footprint Consolidate towards FMC Invest in innovation €11 bn 2015–2017 cum. spectrum spend Buy out minorities Divest non-core activities Risk situation stabilized GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe
Slide 11: We have kept our promises…
We have kept our Promises… Ambition level 2018 Achievements 2017 Delivered/on track Key Financials Group Revenue CAGR +1–2% (2014–2018) +4% CAGR (2014–2017) Group Adj. EBITDA CAGR +2–4% (2014–2018) +6% CAGR (2014–2017) Group FCF CAGR ≈ +10% (2014–2018) +11% CAGR (2014–2017) Group ROCE
Slide 12: …and have learned along the journey
…anD have learneD along the joUrney Key learnings Convergence works, our customers love it Dialogue marketing is a must Network leadership pays off M&A is a valid lever for growth The last 1% is the toughest (e.g. All-IP) People make the difference GROUP STRATEGY Germany Systems Solution
Slide 13: Strategy 2018 – 2021
Strategy 2018 – 2021 GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 14: Leading telco on both sides of the Atlantic…
leaDing telco on both siDes of the atlantic… Strong presence in US and Europe… …with significant value creation Market growth 2017 vs 2016 Presence in two strongest economies in +2.0%1 +1.8%2 Western Hemisphere 90% of revenues in AAA economies TMUS & Sprint pro forma 2017, DT ex US 2017, $ bn 73
Slide 15: …with an even stronger position post US deal
…With an even stronger Position Post Us Deal Attractive TMUS/Sprint deal terms DT’s global position strengthened Reported Revenue 20171, Unique value creation opportunity for DT shareholders € bn Attractive transaction terms 131 103 102 Benefitting US consumers, investments & job creation 27 Sprint
Slide 16: Future growth is fueled by three main pillars
Future Growth is fueled by three main pillars Lead In Customer experience + Lead in Technology/networks + Lead In Business productivity GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance 16
Slide 17: We lead in customer experience and improve continuously
We lead in customer experience and improve continuously Our proof points We provide one seamless T-connectivity: Connect App, European Aviation Network TV We offer the leading FMC proposition: Fixed Mobile Convergence (FMC) +1.5 mn FMC customers in our integrated footprint (FY 2017) EAN/One T-Co
Slide 18: Magenta 1: Our unique convergence offer
Magenta 1: Our unique convergence offer More than a tariff… …and resonating with customers Seamless customer experience FMC HH penetration in Germany and Europe (blended) Magenta ID (FMC HHs/fixed broadband base) Magenta ID as single identifier Customer Touchpoints Omni-channel customer journey
Slide 19: We strive for perfect customer service
We strive for perfect customer service We treat service as a key differentiator… …reflected in our high ambitions 66%2 > 80% Dedicated organization with > 30,000 employees Contact resolution for E2E responsibility of customer service within 24h One touch self service ability and personalized Der
Slide 20: We are dedicated network investors
We are “DeDicateD netWork investors” Our proof points We own extended fiber backbone in our european footprint: Key asset for integrated Gigabit networks Broadband Rollout Mobile Network Leadership (incl. fiber) We roll out broadband for the masses: ≈ 80% HH coverage with vectoring in 2019 (≈ 62
Slide 21: Mobile network leadership everywhere
Mobile network Leadership Everywhere Germany Europe TMUS Macro cell sites, Macro cell sites, Macro cell sites, k k + Small Cells k + Small Cells + Small Cells 41 61 27 47 36 2017 2021e 2017 2021e 2017 2021e Strengthen leadership position (incl. 5G) & Build on strong fiber footprint to lead Extend ne
Slide 22: Pushing fiber rollout in Germany…
PUshing fiber rolloUt in germany… In a very complex environment… …we developed a sustainable & economically viable fiber rollout plan High-speed networks (50–250 Mbps) Benefits for DT: Customer Finalize and monetize (Super) vectoring rollout for demand max. high-speed coverage until end 2019e Defend
Slide 23: …and integrating gigabit networks in Europe
…anD integrating gigabit netWorks in eUroPe Uniquely positioned to drive FMC… …and further drive broadband rollout Converged FTTH/B household coverage1, Leaders % of HH in GR, HU, SK, HR merger Converged 30% Challengers Fixed BB rollout planned 17% 2017 2021e acquisition Triple organic FTTH/B inve
Slide 24: Manage regulation
Manage regulation In a regulated environment… …German telecommunications policy sets the right tone DT Group revenue split Recent developments DT position Create conditions for “We create incentives via change to ex-post Open collaborations Fiber Access regulation instead of detailed ex-ante Reg
Slide 25: We increase business productivity…
We increase bUsiness ProDUctivity… Our proof points We build horizontal platforms & vertical solutions for the Internet of Things: NB-IoT network in 8 EU markets & US, IoT unit established Cloud & Data Analytics smb Digitalization We enable E2E SMB digitalization with secure & reliable ICT solut
Slide 26: …with secure ICT solutions for SMB digitalization
…With secUre ict solUtions for smb Digitalization We leverage our strengths… …with a strong portfolio… …to grow in SMB digitalization B2B revenue Germany, Connectivity-Based € bn Trusted partner with strong +2% B2B brand & customer base Converged ICT Portfolio 6.5 6.0 SaaS Large & efficient sales fo
Slide 27: Clear turnaround plan for T-Systems
Clear Turnaround plan for t-systems Preserving optionality with portfolio-based steering… …and turnaround initiatives Sales revitalization TC CORE GROWTH-PORTFOLIOS CLASSIC IT Portfolio focus Delivery integration Digital Solutions Overhead reduction Fixed Line Services Dedicated SAP IoT SI S
Slide 28: Growth underpinned by value transformation
Growth underpinned by Value transformation Lead In Customer experience + Lead in Technology/networks + Lead In Business productivity Save for growth investments Simplify, digitalize, accelerate GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Fina
Slide 29: Efficiency to fund investments into growth
efficiency to fund investments into growth Accelerated cost reduction… …across all segments Indirect Costs DT Group ex US, €bn 18.5 -€0.8 bn Deutschland Address cost savings potential more effectively than in the past 1.5 -€0.4 bn Focus on operational Europe excellence and lean organizational st
Slide 30: Digital transformation to address untapped potential
Digital transformation to address untapped potential We have started our E2E digitalization… …and aim for more Share of resolved requests in digital channels2 We digitalize our touchpoints: 70% “Mein Magenta App” in Germany1, One App for EU 38% Frontend We simplify our products and services: e.g. EU
Slide 31: Bold cultural transformation…
bold cultural transformation… Strengthened the team on all levels… …to drive cultural transformation New board members … Adel Al-Saleh Srini Gopalan Dirk Wössner T-Systems Europe Germany …supported by a strong international management team Transform culture & organization towards agile mindset (22
Slide 32: …innovative business & steering models…
…innovative bUsiness & steering moDels… New asset management & investment models Innovative ways of working New Segment Entrepreneurial headroom Flexible Incentive Group Models Collective targets Development Innovative Agile Iterative & incremental Spin-Outs Comfort Charge MOBILEDGE X Development Cr
Slide 33: …taking corporate responsibility
…taking corPorate resPonsibility “Lighthouse” examples… …of contribution to the sustainable development goals Climate Change Climate: 20% CO2 footprint reduction by 2020e1 & Enabling Renewable energy share: Group at 41% (2017), TMUS aims at 100% by 2021e Potential Impact: Positive CO2 effect e
Slide 34: Our ambition: leading European telco
Our ambition: leading European telco Grow Lead In Customer Lead in Lead in Business experience technology Productivity ONE CONNECTIVITY INTEGRATED SECURE ICT SOLUTIONS & PERFECT SERVICE GIGABIT NETWORKS & BIG IOT Save for Growth Investments Simplify, digitalize, accelerate GROUP STRATEGY Germany Sys
Slide 35: Mid term ambition level
Mid term ambition level GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 36: 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 GROUP FCF CAGR ≈ +10% 2017–2021e Slightly dilutive in 2021e & accretive in 2022e GROUP ADJ. EPS ≈ €1.20 2021e Slightly dilut
Slide 37: 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 38: Bottom line: we have a plan
Bottom line: we have a plan Accelerate FMC growth US Deal Implications Foster fiber monetization 0.5 Establish “Perfect Service” (Der Service) Group Revenues: CAGR +1–2% (2017–2021e) Internal Close convergence gaps in non-integrated NatCos Group Adj. EBITDA: CAGR +2–4% (2017–2021e) One Connectivity