Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — H1 2006 Earnings Presentation
22 slides from Deutsche Telekom's earnings presentation, Aug 10, 2006
Slide 1: H1 2006 Conference Call
H1 2006 Conference Call. Deutsche Telekom. August 10, 2006. Kai-Uwe Ricke
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 statements as to market potential, the “Targets 2006 and 2007” statements as well as our dividend outlook. They are generally id
Slide 3: H1 2006 Group Results: Difficult first half year
H1 2006 Group Results. Difficult first half year. Revenue (€ billion) Adj. EBITDA (€ billion) 30.0 29.0 10.0 9.8 +3.2% -2.4% Net cash from operations (€ billion) Net income (€ billion) 5.8 2.2 2.1 5.7 -2.2% -3.2% H1 2005 H1 2006 H1 2006 Conference call Investor Relations August 10, 2006, Page 3
Slide 4: Domestic vs. international revenues
Domestic vs. international revenues. Two opposing trends. Domestic revenues (€ billion) International revenues (€ billion) 17.0 16.3 13.6 12.0 -4.0% +13.5% Domestic adj. EBITDA (€ billion) International adj. EBITDA (€ billion) 6.6 3.6 6.2 3.5 -5.8% +4.0% H1 2005 H1 2006 H1 2006 Conference call Inves
Slide 5: Domestic market: All business lines affected by changed market assumptions
Domestic market . All business lines affected by changed market assumptions. Mobile Predicted market growth over 2 years of 10%, actual H1 at 1% Fixed-line Bundled tariff price decline 30% in H1 2006 DSL usage prices trend towards €0 from €29.95 in H1 2005 Business customers Voice mark
Slide 6: Domestic market: Defending market share
Domestic market. Defending market share. Implementing measures in all divisions Mobile Fixed Line Business Drive elasticity Simple bundles Extend frame contracts Aggressive bundles Double Play (below 10ct./minute) significantly Win back TC below €40 customers Reduce complexity T-Home
Slide 7: Strong international development
Strong international development. US and UK key contributors. T-Mobile USA Mobile Data ARPU revenues (US$) up by 19.6%, Becomes recognizable factor with adj. EBITDA growth (US$) of 16.4% in € 2.0 billion in H1 2006 – up 22.9% Q2 2006 T-Com International Two-year contracts to reduce churn and i
Slide 8: H1 2006 Conference Call
H1 2006 Conference Call. Deutsche Telekom. August 10, 2006. Dr. Karl-Gerhard Eick
Slide 9: Broadband/Fixed Network: Trends continue
Broadband/Fixed Network. Trends continue. Domestic revenue (€ billion) International revenue (€ billion) 11.7 1.36 1.39 10.9 -6.5% +2.7% Domestic adj. EBITDA (€ billion) International adj. EBITDA (€ billion) 4.4 4.1 0.5 0.4 -7.0% -10.5% H1 2005 H1 2006 H1 2006 Conference call Investor Relations Augu
Slide 10: Broadband/Fixed network – domestic
Broadband/Fixed network – domestic. Challenging market environment. Revenues in € million H1 2006 H1 2005 Delta Total 10,909 11,667 -6.5% Network communications 5,723 6,262 -8.6% thereof narrowband access 3,896 3,942 -1.2% thereof calling revenues 1,822 2,322 -21.5% Value added services 457 537 -14.
Slide 11: Mobile Germany
Mobile Germany. Good contract growth in difficult environment. Contract net adds (‘000) -3.1% ARPU revenues (H1 2006): termination rate cuts and competition 175 Adj. EBITDA margin: 39.4% (from 41.1% in H1 2005) More than 700k T-Mobile@home 89 customers, of which 200k in Q2 2006 German consum
Slide 12: Mobile: Strong international growth
Mobile. Strong international growth. Domestic revenue (€ billion) International revenue (€ billion) 11.4 4.2 4.1 9.7 -3.3% +16.7% Domestic adj. EBITDA (in € billion) International adj. EBITDA (€ billion) 1.7 1.6 3.0 2.8 -5.4% + 8.0% H1 2005 H1 2006 H1 2006 Conference call Investor Relations August 1
Slide 13: Mobile International: T-Mobile USA
Mobile International. T-Mobile USA – Consistently strong financial metrics. ARPU revenues (US$ billion) Total revenue (US$) growth +16.9% 3.5 Contract ARPU (IFRS): 2.9 $56 (from $55 in Q2 2005) +19.6% Data ARPU: 11%, up 3 pp from Q2 2005 More than 800k BlackBerry customers, up 51k in Q2 2006
Slide 14: Mobile International: T-Mobile UK
Mobile International. T-Mobile UK – strong contract net adds. Contract net adds (‘000) ARPU revenue growth +8.4% 629 Stable contract ARPU: € 64 Contract churn: 2.1% 44 (from 3.0% in H1 2005) SAC per gross add: Contract: € 435, +26% y-o-y Adj. EBITDA (€ million) Prepay: € 35, unchanged y-
Slide 15: Business Customers: Results dominated by German business
Business Customers. Results dominated by German business. Domestic revenue (€ billion) International revenue (€ billion) 5.5 1.0 5.2 0.9 -5.2% 13.7% Domestic adj. EBITDA (in € million) International adj. EBITDA (in € million) 743 86 72 581 -21.8% 19.2% H1 2005 H1 2006 H1 2006 Conference call Investo
Slide 16: H1 2006 – Free Cash Flow
H1 2006 – Free Cash Flow. Cash flow supported by lower tax and interest payments. € billion H1 2006 H1 2005 Cash Flow 9.4 9.9 Change in working capital and accruals - 1.8 - 1.8 Taxes and dividends - 0.5 - 0.7 Cash generated from operations 7.1 7.4 Net interest payment - 1.4 - 1.6 Net cash provided b
Slide 17: H1 2006 – Net income
H1 2006 – Net income. EBITDA trends impact bottom line. € billion H1 2006 H1 2005 H1 2006 adj. H1 2005 adj. EBITDA 9.6 10.0 9.8 10.0 Depreciation and amortization - 5.2 - 5.1 - 5.2 - 5.1 Net financial expense - 1.3 - 1.2 - 1.5 - 1.2 - of which net interest expense - 1.3 - 1.2 - 1.3 - 1.2 EBT 3.1 3.7
Slide 18: Balance sheet
Balance sheet. Balance sheet continues to be in excellent shape. € billion 30.06.2006 31.12.2005 Balance sheet total 126.3 127.9 Equity 49.4 49.6 Net debt 38.8 38.6 Net debt/adj. EBITDA n/a 1.9x Gearing 0.79x 0.78x Equity ratio 39.1% 38.8% H1 2006 Conference call Investor Relations August 10, 2006,
Slide 19: H1 2006 Conference Call
H1 2006 Conference Call. Deutsche Telekom. August 10, 2006. Kai-Uwe Ricke
Slide 20: 2006 and 2007 Targets: Guidance adjusted
2006 and 2007 Targets. Guidance adjusted. Revenue Adj. EBITDA Moderate rate of revenue 2006 (€ bn) 2006 (€ bn) growth expected in 2007 BBFN New 24.6 – 25.0 8.8 – 9.0 2007 adj. EBITDA Nov 2005 25.4 – 25.8 9.4 – 9.6 expected to be at a similar level to 2006 Mobile New 31.9 – 32.3 9.8 – 10.0 Expe
Slide 21: Focus on cash flow
Focus on cash flow. Management determined to deliver on FCF. Capex Capex adjustments in line with EBITDA expectations Existing cost reduction Current staff reduction program on track on track Cost savings of approx. €400 million implemented Save for Growth at €900 million Securing competitiv
Slide 22: Use of cash flow
Use of cash flow. Invest in existing business development AWS auction Broadband infrastructure Ensure competitiveness Reduction of legacy costs Investment in the IP-based future Commitment of management to attractive dividends 2006 dividend at least at 2005 level Management focus o