Telefonica Deutschland Holding AG · LS:A1J5RX

Telefonica Deutschland — Q1 2018 Earnings Presentation

20 slides from Telefonica Deutschland's earnings presentation, Apr 25, 2018

  1. Slide 1: Q1 2018 preliminary results

    Q1 2018 preliminary results Telefónica Deutschland, Investor Relations 25 April 2018 Public – Nicht vertraulich

  2. Slide 2: Disclaimer

    Disclaimer This document contains statements that constitute forward-looking statements and expectations about Telefónica Deutschland Holding AG (in the following “the Company” or “Telefónica Deutschland”) that reflect the current views and assumptions of Telefónica Deutschland's management with res

  3. Slide 3: Q1 2018 – Summary

    Q1 2018 – Summary Solid operational trends with strong OIBDA growth +46% +0.4% +5.4% +8.7% (y-o-y) (y-o-y) (y-o-y) (y-o-y) DATA REVENUE1 OIBDA2 OpCF • Sustained strong data traffic growth (+50% y-o-y) leveraging new O2 Free portfolio; 16.1 million LTE customers (+15% y-o-y) • MSR1 +0.4% y-o-y; ARPU

  4. Slide 4: Positive underlying y-o-y performance across P&L

    Positive underlying y-o-y performance across P&L Q1‘17 Q2 ‘17 Q3 ‘17 Q4 ‘17 Q1 ’18 (IFRS 15) +1.6% +0.4% +0.2% +0.1% -2.3% -1.2% REVENUE1 -0.2% IAS 18, excl. -1.3% -1.6% regulatory effects -4.7% -3.4% +0.8% +0.4% -0.6% -0.4% -0.1% +0.3% MSR1 -0.4% -1.2% IAS 18, excl. reg effects -3.3% -3.0% -3.6% +6

  5. Slide 5: Big data portfolio feeds mass market consumer demand

    Big data portfolio feeds mass market consumer demand ARPU ~25 EUR • Driving ARPU-up with O2 Free portfolio EUR 49.99 • M tariff most popular sell with USAGE ~6 GB XL ~60% share EUR 39.99 • Usage of ~6GB and average EUR 29.99 L ARPU of EUR ~25 • Competition now also with focus EUR 19.99 M on large da

  6. Slide 6: Becoming the Mobile Customer & Digital Champion

    Becoming the Mobile Customer & Digital Champion Fixing the basics and delivering execution proof points No.2 in customer service ahead Customer Service of incumbent in turnaround 2018 connect test >9k TechCity Sites Network Early 5G innovation cluster with NOKIA switched off up next NGN fibre coop P

  7. Slide 7: Digital4Growth: Preparation in 2018

    Digital4Growth: Preparation in 2018 Driving app penetration, CS automation and launch of O2 hub O2 app penetration: Tariff detox: Total IT spend/ Postpaid churn: SIMPLER ~40% subscriber: -15% -2% pts >80% (vs. 20% 2017) Lead time product changes: Manual back-office Sales in self- Gross adds market i

  8. Slide 8: Q1 2018 with focus on value; strong OIBDA trends

    Q1 2018 with focus on value; strong OIBDA trends Net adds • Solid operational momentum in the quarter driven by O2 Free with focus on value +157k PO • Strong partner trading in a more benign pricing environment +92k VDSL • Continued strong demand for VDSL • MSR1 +0.4% y-o-y: Tailwinds from O2 Free a

  9. Slide 9: IFRS15 accounting: Only minor impact on Telefónica Deutschland P&L

    IFRS15 accounting: Only minor impact on Telefónica Deutschland P&L REVENUE impact of IFRS15 (in EUR m) +3m 1,764 total impact 1,767 4 -2.5m 2 Other 195 199 +3.6m Fixed 279 280 1,285 +0.7m 1,287 Handset MSR +1.7m Q1’18 Q1’18 (IAS 18) (IFRS 15) OIBDA impact of IFRS15 (in EUR m) +3m 419 total impact 42

  10. Slide 10: Underlying revenue with positive overall trend; on track for 2018 guidance

    Underlying revenue with positive overall trend; fully on track to achieve full-year 2018 guidance Revenue trends further improving Underlying MSR continues to grow y-o-y (in EUR m) Fixed Handset MSR (in EUR m) +0.3% -0.2% +0.4% +0.2% IAS 18, excl. -0.4% +0.4% reg effects Excl. regulatory effects IAS

  11. Slide 11: Data uptake with seasonal effects in Q1, showing steady growth

    Data uptake with seasonal effects in Q1, showing steady growth Data growing steadily LTE usage trends with seasonal effects Traffic (TB/Q) Average data usage for O2 LTE customers (GB/month) +46% O2 Free M tariff ~6 +56% >2x 2.4 2.8 2.8 122,367 126,040 2.0 98,612 110,684 1.6 1.8 86,423 Q1’17 Q2’17 Q3

  12. Slide 12: Trading trends steady with focus on value in Q1; O2 churn improvement

    Trading trends steady with focus on value in Q1; O2 churn with further improvement Value over volume focus Maintaining retention focus Net adds (in thousand) Postpaid Prepaid Postpaid churn (in %) O2 PO Total PO Retail (abs) -1.3% 172 197 183 186 157 -1.5% -1.5% -1.5% -1.6% -1.6% -1.6% -1.5% Q1’17 Q

  13. Slide 13: Segment stats reflect MBA MVNO dynamics and focus on value

    Segment stats reflect MBA MVNO dynamics and focus on value Partner effected by migrations Partner revenue reflects focus on value PO gross adds share GA retail brands GA partner brands PO partner MSR / Share over PO revenue (in %) ~21% ~22% ~22% ~23% ~23% +4.5% +2.8% -0.1% -3.0% 55% 55% 53% 58% 61%

  14. Slide 14: Fixed business driven by wholesale migration and strong VDSL net adds

    Fixed business driven by wholesale migration and strong VDSL net adds VDSL drives fixed retail trading… … and ARPU performance Net adds (in thousand) Retail VDSL Retail ADSL DSL ARPU (in EUR) Retail stable 88 103 89 92 67 25.0 24.5 24.8 24.9 24.8 -75 -101 -113 -89 -104 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18

  15. Slide 15: Recap: Clear synergy trajectory

    Recap: Clear synergy trajectory Synergy case 2017 -2019 (in EURm) CapEx synergies Opex & rev. synergies ~75% >90% 100 900 130 800 40 670 50 60 310 80 270 220 450 530 590 2017 2018 2018 2019 2019 cum. incr. cum. incr. cum. • Major integration projects mostly finalised by year end 2017; ~75% of increa

  16. Slide 16: OIBDA reflects successful synergy capture, RLH-regulation and investment activities

    OIBDA reflects successful synergy capture, RLH-regulation and investment activities Structure of OIBDA for January to March 2018 OIBDA delta (in EURm) 22.3% 23.8% -0.2% margin margin y-o-y 1,767 +1.1% +5.4% 35 y-o-y y-o-y -601 -151 -655 394 408 422 14 14 Revenue Other income Supplies Personnel Other

  17. Slide 17: FCF with normal seasonal annual distribution

    FCF with normal seasonal annual distribution Evolution of Free Cash Flow (FCF)1 YTD March 2018 FCF (in EURm) Working capital movements & adjustments: -EUR 184m 394 -182 -40 -185 -17 -13 15 58 OIBDA CapEx ex CapEx payables Prepayments Restructuring Other working Other FCF1 pre spectrum capital divide

  18. Slide 18: Summary

    Summary Solid revenue1 trend with positive trajectory Trading with focus on value in Q1 Strong OIBDA1 supported by cost discipline and synergies Operational momentum and Capex efficiency driving FCF momentum 1 Excluding regulatory effects Public – Nicht vertraulich 18

  19. Slide 19: Q1 2018 preliminary results – Q&A session

    Telefónica Deutschland Q1 2018 preliminary results – Q&A session Public – Nicht vertraulich 19

  20. Slide 20: ‘Jelefonica

    ‘Jelefonica

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