Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — Investor Day (2018)
30 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: Systems Solutions
SYSTEMS SOLUTIONS Adel Al-Saleh
Slide 3: Key Messages
Key Messages 01 TRANSFORMATION STILL UNDER WAY T-Systems has struggled with growth and profitability, however, since the 2015 CMD has invested heavily in transforming its portfolio (growth 04 ACCELERATE THE TRANSFORMATION Four transformational streams launched to address business challenges, reinvig
Slide 4: Review 2014 – 2018
Review 2014 – 2018 GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 5: What happened to the old plan?
What happened to the old plan? What we delivered Stopped more than 20 bad contracts Addressed three major loss contracts Invested in growth areas What went wrong Execution of transformation plan Compromise in cost reductions Weak portfolio management discipline Inefficient organization
Slide 6: Challenged performance in a competitive market
challenged PERFORMANCE IN A COMPETITIVE MARKET Ambition level 2018 Achievements 2017 Delivered/on track Financials Revenue TSI > 1% CAGR (2014–2018e) expected -1.5% CAGR (2014–2017) [pro forma: CAGR > 2%] Adj. EBIT margin TSI around 6% (2018e) 1.7% [pro forma: ≈ 7%] Adj. cash contribution
Slide 7: Business Challenges & Foundations to build on
Business Challenges & Foundations to build on Business challenges Strong foundations to build on Revenue Marque clients Impacted by classical IT erosion, not compensated by new growth areas Sales set-up/structure/tools and processes, capability gaps, internally focused Network and Telecommunicat
Slide 8: New portfolio strategy defined
new portfolio strategy defined New New Enhanced Reshaped Reshaped Reshaped Managed Public Infra- Dedicated Fixed Line Mobile Classified Road Digital Cloud structure IoT Security SAP SI Services Services ICT Charging Solutions Managed Services & Solutions Services Private Cloud TC CORE GROWTH PORTFOL
Slide 9: Strategy 2018 – 2021
strategy 2018 – 2021 GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 10: Four transformational initiatives to address challenges
Four transformational initiatives TO ADDRESS CHALLENGES 1 2 PORTFOLIO SALES FOCUS Revitalization DELIVERY Overhead INTEGRATION REDUCTION 3 4 GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance 10
Slide 11: Portfolio: significant change by portfolio management
1 Portfolio: significant change by portfolio management Portfolio focus Portfolio-oriented Business management Creation of portfolio units with full accountability and P&L responsibility Market Our Do we have a Can we opportunity capabilities right to play? make money? Portfolio Strategy evaluat
Slide 12: Portfolio: revenue equally split between three clusters
1 Portfolio: REVENUE equally split between three clusters New New Enhanced Reshaped Reshaped Reshaped Managed Public Infra- Dedicated Fixed Line Mobile Classified Road Digital Cloud structure IoT Security SAP SI Services Services ICT Charging Solutions Managed Services & Solutions Services Private C
Slide 13: Portfolio: Internet of Things
1 Portfolio: INTERNET OF THINGS Integrated platform built on our connectivity Client example Emerging multi-billion market, growing at +20% European market leader in property damage restoration DT revenue today at €0.31 bn, growing > 20% p.a. E2E condition monitoring solution for digitalizing
Slide 14: Portfolio: Security
1 Portfolio: SECURITY Becoming leading European provider Client example Dynamic-growth market with 8% growth Double-digit growth since launch, now revenue at €0.31 bn, growing > 10% p.a. World leading supplier of industrial, process and specialty gases > 1,400 security experts – German leader
Slide 15: Portfolio: Digital Solutions
1 Portfolio: DIGITAL SOLUTIONS Support European enterprises on their digital journey Client example Multi-billion market growing double digit Large international computer manufacturer Order picking system based on smart glasses, €0.4 bn revenue, expected growth of 10% p.a. providing warehouse
Slide 16: Portfolio: Digital Solutions
1 Portfolio: DIGITAL SOLUTIONS 370 470 IoT Solution & Integration Mobile and Network Experts Solutions Experts 280 720 Data Analyst & (General) Management Consultants Big Data Experts and Digitalization Experts Growth & Success Expertise & Competence 230 830 4,000 4,800 Enabling Technologies 620 Exp
Slide 17: Portfolio: SAP
1 Portfolio: SAP Capitalize on SAP’s market growth Client example Recognized market leader in Germany Europe’s largest bus manufacturer implements SAP S/4HANA €0.5 bn revenue, 1%–2% growth today, Migration of SAP R/3 to SAP S/4HANA as part of the expected to grow > 5% p.a. going forward client
Slide 18: Portfolio: SAP
1 Portfolio: SAP 6.7 million SAP users 10,000 SAP instances Expertise & Competence Biggest single SAP system with 4,000 850,000 SAPS 15 SAP experts Global competence centres Largest SAP hosting provider 600 TB HANA database GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US
Slide 19: Sales: How we execute better in sales
2 SALES: How we execute better in sales Sales revitalization Integrated sales and go-to-market organization – Responsible for Line of business CIO Procurement entire portfolio, supported by portfolio sales specialists Sales Return to significant signings per year > €6 bn Drive client centricit
Slide 20: Delivery: How we execute better in delivery
3 DELIVERY: How we execute better in delivery Delivery integration Integrate delivery functions within the portfolio units, creating end to end cost transparency and clear ownership Cross delivery function driving standardization, automation and tooling saving > €100 mn Digitalizing client i
Slide 21: Overhead: Lean overhead supports our ambition
4 OVERHEAD: Lean overhead supports our ambition Overhead reduction Simplify central functions & general administration, processes and structure Reduction of management layers 8 5 Create agile organization designs, fit for growth areas, and efficient structures for mature areas Cost saving >
Slide 22: Transformation supported by five business principles and change management program
Transformation supported by five business principles and change management program PORTFOLIO SALES FOCUS Revitalization DELIVERY Overhead INTEGRATION REDUCTION Strong Management System & Change Management program GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Gro
Slide 23: Lessons learned from the past help improve execution
LESSONS LEARNED from the past help improve execution From… To… Revenue decline due to sales set-up and portfolio gaps New sales organization set-up. Strong initiative with new spirit, client centricity and opportunity tracking Clearly defined portfolio, focused on growth Loss making contract
Slide 24: T-Systems leveraging full potential
T-systems leveraging full potential Integrated client approach Line of business CIO Procurement Growth portfolio benefits strongly from DT network ownership and IT capabilities, e.g. Sales Leverage IT delivery capability and expertise in complex projects Leverage of client base to up-sell new so
Slide 25: Strategy execution to evolve our revenue mix
Strategy execution TO evolve our revenue mix New revenue mix as result of our strategy – Leveraging our core and legacy to drive growth in new areas >7 6.81 Revamp classic IT 37% portfolio & productivity Drive growth in 30% targeted areas Secure TC core, 33% return to growth in 2021e 2017 2021e 1 Re
Slide 26: Sound profitability basis through > €300 mn savings
sound profitability-basis through > €300 mn savings Measures Gross-savings Delivery right-shoring-strategy > €100 mn Delivery standardization, automation and tooling > €100 mn Overhead reduction > €100 mn > €300 MN GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Eu
Slide 27: Financial Outlook
Financial Outlook GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 28: Financial Outlook
FINANCIAL OUTLOOK Revenue growth Cash Contribution1 Cash Capex € bn € bn € bn CAGR ≈ +1% 6.9 Stable 0.4 2017 2021e 2017 2021e Adj. EBITDA -0.1 Special factors (Cash) € bn 2017 2021e € bn CAGR ≈ +5% Stable 0.2 0.5 2017 2021e 2017 2021e 1 Cash Contribution = Adj. EBITDA – Cash Capex – Special factors
Slide 29: Mid term ambition level
Mid term ambition level GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 30: Mid term ambition level
MID TERM AMBITION level Mid term ambition level Year FINANCIALS Growing revenue: CAGR +1% 2017–2021e Growing adj. EBITDA: CAGR ≈ +5% 2017–2021e Adj. EBITDA margin: 8–10% 2021e Cash Contribution1 breaking even 2020e Quality Maintain TRI*M index above peer average at current level Above 80 p