Slide 1: Deutsche Telekom Q3/2016 Results
Deutsche Telekom Q3/2016 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, de
Slide 3: Review 9M/16
REVIEW 9M/16
Slide 4: Our strategy
OUR strategy LEADING EUROPEAN TELCO BEST INTEGRATED WIN WITH LEAD IN CUSTOMER IP NETWORKS PARTNERS BUSINESS EXPERIENCE TRANSFORM PORTFOLIO EVOLVE FINANCIAL TARGETS & EFFICIENCY ENCOURAGE LEADERSHIP & PERFORMANCE DEVELOPMENT 4
Slide 5: Leading European Telco: guidance re-iterated – ongoing execution
LEADING European TELCO: guidance Re-iterated – Ongoing execution Customers (9M/16) Investments and innovation (9M/16) Financial results (9M/16) Demand for Fiber in Germany continues unabated Further strengthening of spectrum position in Strong growth continues 6.1 million German homes with f
Slide 6: Customers: strong momentum
customers: Strong momentum MagentaEINS (Germany + EU)1 US Mobile mn mn +1.5 +8.2 3.9 69.4 2.4 61.2 9M/15 9M/16 9M/15 9M/16 Fiber in Germany Cloud revenues mn € bn +13% +2.3 6.1 1.0 1.1 3.8 9M/15 9M/16 9M/15 9M/16 1) FMC RGUs may also appear under other brand name outside of Germany 6
Slide 7: 9M 2016: Highlights
9M 2016: Highlights Innovation/Best networks Investments (€ bn) Cash Capex (excl. Spectrum) 9M/16 Spectrum spend Entertain mobile TV First Pan-Net factory included in MagentaEINS launched in Hungary +5.5% USA 1.2 7.8 8.2 2 Gbps LTE speed demon- World’s first NB-IoT end-to- Europe 1.0 strated by T-Mo
Slide 8: Financials and guidance 2016: strong momentum continues, guidance re-iterated
Financials and GUIDANCE 2016: Strong momentum continues, Guidance re-iterated € bn Revenue Adj. EBITDA FCF 14-18 CAGR1 +1-2% +2-4% ≈+10% 2016 Guidance ($/€: 1.11) Increase Around 21.2 bn2 Around 4.9 bn 9M 2016 performance +4.2% +9.4% (+5.4%)³ +14.0% (+27.4%)3 1) 14-18 CAGRs as per CMD 2015 guidance
Slide 9: Review Q3/16
REVIEW Q3/16
Slide 10: Q3/2016: Financial Highlights
Q3/2016: Financial Highlights € mn Q3 9M 2015 2016 Change 2015 2016 Change Revenue 17,099 18,105 +5.9% 51,369 53,552 +4.2% Adj. EBITDA 5,165 5,535 +7.2% 14,765 16,155 +9.4% Adj. Net profit 1,040 1,040 0.0% 3,154 3,141 -0.4% Net profit 809 1,053 +30.2% 2,308 4,799 +107.9% Adj. EPS (in €) 0.23 0.23 0.
Slide 11: Germany: underlying revenues close to stable
GERMANY: underlying Revenues close to stable Revenue reported Adj. EBITDA and margin (in %) € mn Retail fixed1 Mobile Service Others € mn 40.8 40.0 41.1 40.5 36.9 Wholesale services2 Mobile handsets & other -0.8% -0.8% 2,269 2,225 2,250 2,086 2,180 5,593 5,659 5,452 5,406 5,551 Q3/15 Q4/15 Q1/16 Q2/
Slide 12: German total service revenues: strong performance in mobile – fixed impacted by difficult comp
german total service revenues: strong performance in mobile – fixed impacted by difficult comp Mobile service revenues Fixed line service revenues1,2 Total service revenues1,2 Q4/14 1.8 -2.2% -0.9% Q1/15 2.8 -2.3% -0.6% Q2/15 0.1 -2.0% -1.3% Q3/15 -0.4 -0.7%3 -0.6%3 Q4/15 -0.4 -1.4% -1.1% Q1/16 -1.7
Slide 13: Germany mobile: steady commercial momentum
GERMANY mobile: steady commercial momentum German mobile market service revenue1 Contract net adds2 € mn Telefonica Vodafone Telekom 000 609 Service providers/ MVNOs 363 362 Own branded -0.5% 231 464 220 284 156 4,636 4,568 4,490 4,525 ~4.6 93 5 144 78 137 151 145 1,419 1,378 1,336 1,358 1,394 -1.8%
Slide 14: German mobile service revenues: trend recovery continues
german mobile service revenues: trend recovery continues, despite greater roaming drag Reported mobile service revenues Impact of mobile regulation1 Impact of convergent offers2 Q4/14 1.8 0.3% 0.2% Q1/15 2.8 0.3% 0.7% Q2/15 0.1 0.4% 1.0% Q3/15 -0.4 0.1% 1.4% Q4/15 -0.4 0.1% 1.4% Q1/16 -1.7 0.1% 1.1%
Slide 15: Germany: FMC penetration and data monetization
Germany: FMC PENETRATION AND DATA MONETIZATION Mobile contract customers in M1 bundles1 Average Consumer Data Usage3 Q3/15 MB Growth 25% 35% 35% 61% 81% yoy% 1,000 Q3/16 31% 846 554 643 684 18% Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Households in M1 bundles2 Average LTE usage uplift3 Q3/15 MB x2.7 more 14% Q
Slide 16: Germany fixed: strong growth in fiber continues
GERMANY Fixed: strong growth in fiber continues German broadband market1 Entertain customers mn +78k +48k +62k +64k +65k Cable 000 +54 +51 +53 +41 +41 30.6 30.9 31.3 31.7 31.9 Telco Competitors 2,632 2,683 2,736 2,777 2,818 6.5 6.7 6.8 7.0 7.1 DT 11.5 11.6 11.8 11.9 12.0 DT net adds 12.6 12.6 12.7 1
Slide 17: Germany fixed: fiber drives retail broadband revenues
GERMANY fixed: fiber drives retail broadband revenues Fixed network revenues retail Broadband revenues € mn € mn +1.7% Broadband revenues Single play revenues Other revenues Broadband 3P 1,285 1,289 1,296 1,303 1,307 Broadband 2P -2.2% 291 296 303 308 312 2,449 2,462 2,410 2,420 2,395 994 993 993 99
Slide 18: German fixed line service revenues: underlying revenues close to stable
german Fixed line service revenues: underlying revenues close to stable Growth rates YOY Wholesale revenues2 Broadband revenues Fixed line service revenues1,2 Q4/14 -1.7% -0.2% -2.2% Q1/15 -1.9% 0.0% -2.3% Q2/15 0.0% 0.2% -2.0% Q3/15 3.0%3 0.9% -0.7%3 Q4/15 -0.6% 1.3% -1.4% Q1/16 2.9% 1.8% -0.5% Q2/
Slide 19: Germany: almost 50% of IP migration completed
germany: Almost 50% of ip-migration completed INS – Status LTE rollout INS – Status fiber rollout2 POP +5pp Coverage in % and 59% 50% Coverage in %1 millions of households 87% 92% +20% 21.0 25.1 Q3/15 Q3/16 Q3/15 Q3/16 Status IP accesses (retail & wholesale) Status IP accesses (retail & wholesale) m
Slide 20: TMUS: strong growth in all key metrics
TMUS: strong growth in all key metrics Revenue and service revenue Net adds US-$ bn +13.1% Total revenue in 000 Total net adds 2,312 2,062 2,221 1,881 1,970 +17.5% Service revenue 7.8 6.2 8.2 6.4 8.6 6.5 9.3 6.8 9.2 7.0 Branded: Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Postpaid 1,085 1,292 1,041 890 969 Pr
Slide 21: Focus on TMUS: important drivers keep trending well
Focus on TMUS: Important drivers keep trending well Branded postpaid phone churn Bad debt expenses & losses from sale of receivables % in % of total revenues 2.8 2.5 1.64 1.46 2.0 1.8 1.9 1.32 Q3/14 Q3/15 Q3/16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Adjusted for the MVNO transfer churn rate of 1.2% Recei
Slide 22: Europe: improving customer momentum
europe: Improving customer momentum Contract Net Adds BB Net Adds 000 000 +227% +32% 219 84 79 153 67 54 119 88 41 67 Q3/15 Q4/151 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 FMC Net Adds TV Net Adds 000 000 +153% -23% 157 144 64 73 96 39 49 57 17 16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 Q1/
Slide 23: Europe: increased market invest and roaming weigh on trends
EUROPE: increased market invest and roaming weigh on trends Revenue as reported in € mn and organic change yoy in %1,2 Organic revenue development -0.4 -1.2 +0.1 -3.7 -2.6 € mn 3,261 +0.1% +0.5% -31 3,221 3,223 3,261 3,397 3,080 3,106 3,223 -9 3,207 -14 1 -11 26 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 C
Slide 24: Europe: focus on IP migration and LTE leadership
EUROPE: focus on IP migration and lte leadership IP migration LTE rollout IP share of fixed network access lines LTE outdoor pop coverage 101 85 +10pp mn and % 45% 55% 65% 78% Q3/15 Q3/16 Q3/15 Q3/16 Customer base1 Fiber rollout1 mn +3.5% TV Fiber household coverage +5pp +5.6% Broadband 23% +5.3% Mo
Slide 25: Systems Solutions: turnaround ongoing
SYSTEMS SOLUTIONS: turnaround ongoing T-Systems Financials Revenue Market Unit in € million and change yoy in %1 € mn 4.6 1.5 6.6 -3.0 -7.5 Total revenue Adj. OPEX Adj. EBITDA 1,671 1,724 1,728 1,592 1,546 Tel-IT MU -7.7% -4.9% -19.9% Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 2,031 1,886 1,794 176 1,875 360 329
Slide 26: Financials: FCF, net debt and net income
FINANCIALs: FCF, Net debt AND net income Free cash flow Q3/161 Adj. net income Q3/16 € mn € mn +45.6% 0.0% 1,904 125 1,308 706 -41 -69 1,040 370 -388 1,040 -67 -40 Q3/15 Cash gen. from Capex (excl. Interest & Other Q3/16 Q3/15 adj. Financial D&A Taxes Minorities Q3/16 operations spectrum) EBITDA res
Slide 27: Financials: balance sheet ratios in target corridor
FINANCIALS: balance sheet ratios in target corridor € bn 30/09/2015 31/12/2015 31/03/2016 30/06/2016 30/09/20165 Balance sheet total 135.2 143.9 143.6 143.5 143.1 Shareholders’ equity 36.5 38.2 38.4 37.0 37.6 Net debt 47.9 47.6 47.6 48.7 48.5 Net debt/adj. EBITDA1 2.5 2.4 2.3 2.3 2.3 Equity ratio 27
Slide 28: Executing our strategy
Executing our strategy 1 Leading European Telco: Integrated market leader with superior margins and returns. 2 We strengthen our differentiation by best customer experience and by continuously investing into leading access networks and our transformation programs. 3 We are transforming towards a lea
Slide 29: Conference call with Q&A session
Conference call with q&a Session The conference call will be held on November 10 at 2:00 PM CET, 1:00 PM GMT, 8 AM ET. DT Participants: Tim Höttges (CEO), Thomas Dannenfeldt (CFO), Hannes Wittig (Head of IR) Webcast Dial-in The link to the webcast will be provided here 20 minutes DE 0800 9656288 +
Slide 30: 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 31: Thank you!
THANK YOU!