Slide 1: Deutsche Telekom Q2/2018 Results
DEUTSCHE TELEKOM Q2/2018 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, dep
Slide 3: Review H1/2018
REVIEW H1/2018
Slide 4: 2018 H1 Highlights: Growth on Both Sides of the Atlantic
2018 H1 HIGHLIGHTS: GROWTH ON BOTH SIDES OF THE ATLANTIC Growth: investments and innovations Growth: customers Growth: financials Cash capex at €6.1 bn (ex. spectrum) 11 mn German fiber homes (+34% yoy) Strong organic1 growth continues IP-Migration continues in GER (77%) and 1 mn converged
Slide 5: H1/2018 Innovations: Focus on Customer Experience
H1/2018 INNOVATIONS: FOCUS ON CUSTOMER EXPERIENCE Hybrid Access1 Innovation/Network E-service share of interactions subs in % +20% +21% Ground breaking FTTH Launch of new customer 339k 408k agreement signed for the app in multiple European 34.0% 28.0% Stuttgart region. 1.3 mn countries. HHs to be co
Slide 6: H1/2018 Customers: Ongoing Strong Momentum
H1/2018 CUSTOMERS: ONGOING STRONG MOMENTUM MagentaEINS (Germany + EU)1 US Mobile mn mn +1.0 +6.1 5.6 69.6 75.6 4.6 H1/17 H1/18 H1/17 H1/18 Fiber in Germany Mobile contract customers GER (own brand) + EU mn +2.8 mn +1.7 11.0 41.6 43.3 8.2 H1/17 H1/18 H1/17 H1/18 1) FMC RGUs may also appear under othe
Slide 7: Guidance 2018: EBITDA Outlook Raised Again by €0.1 bn
GUIDANCE 2018: EBITDA OUTLOOK RAISED AGAIN BY €0.1 BN € bn Revenue Adj. EBITDA FCF 2014 – 2018 CAGR +1 – 2% +2 – 4% ≈+10% Achievements H1/18 +2.2%1 +5.2%1 +14.5% 2018 Guidance ($/€: 1.13) Slight increase Old: around 23.2 Around 6.2 Q1 Update: 23.3 New: around 23.4 thereof group excl. US Around 13.2
Slide 8: Review Q2/18
REVIEW Q2/18
Slide 9: Q2 2018: Financial Highlights
Q2 2018: FINANCIAL HIGHLIGHTS € mn Q2 HY 2017 2018 Change 2017 2018 Change Revenue 18,890 18,367 -2.8% 37.537 36.291 -3.3% Adj. EBITDA 5,944 5,928 -0.3% 11,495 11,477 -0.2% Adj. Net profit 1,199 1,238 +3.3% 2,138 2,428 +13.6% Net profit 874 4953 -43.4% 1,621 1,487 -8.3% Adj. EPS (in €) 0.26 0.26 +0.
Slide 10: Germany: Revenue Impacted by IFRS, Adj. EBITDA on Track
GERMANY: REVENUE IMPACTED BY IFRS, ADJ. EBITDA ON TRACK Revenue (as reported) Adj. EBITDA and margin (in % as reported) € mn Retail fixed1 Mobile Service Others € mn 38.8 39.7 39.1 39.9 Wholesale services Mobile handsets & other 36.9 -0.9% +1.9% 5,676 2,086 2,177 2,094 2,082 2,126 5,371 5,488 5,325
Slide 11: Germany: Sustained Growth in Service Revenues (excl. IFRS 15)
GERMANY: SUSTAINED GROWTH IN SERVICE REVENUES (EXCL. IFRS 15) Mobile service revenue Fixed line service revenue1 Total service revenue1 Q2/17 0.8% -1.2% -0.6%2 Q3/17 0.9% 0.3% 0.5% Q4/17 1.7% 0.5%2 0.9% Q1/18 3.2% 0.2% 1.2% Q2/18 2.9% -0.1% 0.9% 1) Total service revenue is a sum of fixed line and mo
Slide 12: Germany Mobile: Healthy Growth Continues
GERMANY MOBILE: HEALTHY GROWTH CONTINUES German mobile market service revenue (excl. IFRS 15) Contract net adds1 € mn Telefonica Vodafone Telekom 000 Own branded 228 +1.3% 181 137 122 4,611 4,567 4,539 76 4,479 4,473 1,318 1,344 1,332 1,285 1,306 -0.5% Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Smartphone penetr
Slide 13: Germany: Good Progress with Convergence and Data
GERMANY: GOOD PROGRESS WITH CONVERGENCE AND DATA Mobile contract customers in MagentaEINS bundles1 Average Consumer Data Usage3 Q2/17 MB Growth 61% 55% 38% 54% 71% yoy % Q2/18 45% 2,326 38% 1,654 1,920 1,360 1,554 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Households in MagentaEINS bundles2 Average data usage up
Slide 14: Germany Fixed: Strong Broadband Customer Growth
GERMANY FIXED: STRONG BROADBAND CUSTOMER GROWTH German broadband market1 Entertain customers mn +46k +70k +104k +95k3 +80k Cable 000 +69 +65 +50 +54 +47 Telco Competitors 32.7 33.0 33.4 33.8 3,024 3,089 3,139 3,193 3,240 7.5 7.6 7.8 7.9 DT 12.2 12.3 12.4 12.5 12.5 DT net adds 13.0 13.1 13.2 13.4 13.
Slide 15: Germany Fixed: Solid Underlying Trend in Fixed
GERMANY FIXED: SOLID UNDERLYING TREND IN FIXED Fixed network revenue retail (as reported) Broadband revenue1 (excl. IFRS 15) € mn Broadband revenues Single play revenues Other revenues € mn +6.2% Broadband 3P Broadband 2P 1,313 1,314 1,318 1,384 1,395 -0.5% 334 342 346 351 357 2,419 Q2/18 underlying
Slide 16: Germany: Network Roll-out and IP-Migration on Track
GERMANY: NETWORK ROLL-OUT AND IP-MIGRATION ON TRACK INS – Status LTE rollout INS – Status fiber rollout2 POP +2pp Coverage in % and 74% 67% Coverage in %1 millions of households 93% 95% +14% 28.0 32.0 Q2/17 Q2/18 Q2/17 Q2/18 Status IP accesses (retail & wholesale) Status IP accesses (retail & wholes
Slide 17: TMUS: Continued Industry Leading Growth
TMUS: CONTINUED INDUSTRY LEADING GROWTH Revenue and service revenue Net adds +6.1% US-$ bn Total revenue 000 1,333 1,329 1,854 1,433 1,579 Service revenue Total net adds +3.5% 10.2 7.3 9.9 7.4 10.7 7.6 10.4 7.7 10.5 7.8 Branded: Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Postpaid 817 817 1,072 1,005 1,017 Pr
Slide 18: TMUS: Executing on Key Drivers
TMUS: EXECUTING ON KEY DRIVERS Branded postpaid phone churn Bad debt expenses & losses from sale of receivables % % of total revenue 1.9 1.27 1.6 1.4 1.10 0.95 1.0 1.0 Q2/16 Q2/17 Q2/18 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Branded postpaid phone churn on record low level Decrease reflects ongoing focus
Slide 19: Europe: Strong Growth in Customer Base
EUROPE: STRONG GROWTH IN CUSTOMER BASE Contract Net Adds BB Net Adds1 000 000 372 364 334 72 73 68 73 265 61 203 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 FMC Net Adds TV Net Adds 000 229 000 56 216 201 175 167 44 45 27 22 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18
Slide 20: Europe: Growing Revenue and EBITDA
EUROPE: GROWING REVENUE AND EBITDA Revenue Organic revenue development € mn € mn +1.4% +1.3% 2,896 -3 2,860 2,945 3,002 2,811 2,896 2,860 43 2,856 0 -4 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q2/17 Cons./ FX Revenue Mobile Q2/18 Decons. growth regulation Adj. EBITDA Organic adj. EBITDA development € mn € mn +
Slide 21: Europe: Ongoing Investments in Network Leadership
EUROPE: ONGOING INVESTMENTS IN NETWORK LEADERSHIP IP migration LTE rollout IP share of fixed network access lines LTE outdoor pop coverage 108 mn and % 102 % +10pp 64 74 91% 96% Q2/17 Q2/18 Q2/17 Q2/18 Customer base1 Fiber rollout1 mn +4.4% TV Fiber households +1.5 +5.6% Broadband mn 6.8 +2.4% Mobil
Slide 22: Systems Solutions: On Track for Full Year Guidance
SYSTEMS SOLUTIONS: ON TRACK FOR FULL YEAR GUIDANCE T-Systems financials Revenue € mn € mn -0.8% Total revenue Adj. EBITDA 1,688 1,707 1,819 1,665 1,674 -0.8% -11.0% Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 1,688 1,674 136 121 Adj. EBIT and margin in % € mn 2.4 2.2 2.5 1.4 -2.3 41 38 45 23 -38 Q2/17 Q2/18 Q2/17
Slide 23: Group Development: Steady Underlying Delivery – TM NL Revenues Impacted by IFRS 15
GROUP DEVELOPMENT: STEADY UNDERLYING DELIVERY – TM NL REVENUES IMPACTED BY IFRS 15 Revenue Mobile service revenue trend yoy (NL) € mn NL % +0.9 -5.2 -7.4 -14.6 -14.9 MSR trends as -4.8% reported Towers 1.6 562 545 561 528 535 Other 0.6 MSR trends 345 327 342 309 318 excl. regulation (all periods) an
Slide 24: Group Development: Tower Business Doing Well
GROUP DEVELOPMENT: TOWER BUSINESS DOING WELL Total site development Recurring rental revenue k € mn +3.9% 27.4 27.6 28.1 28.2 28.4 180.6 182.6 184.3 187.1 187.7 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Opex per site (avg. sites) EBITDA & EBITDA margin development k€/site In % 59%
Slide 25: Financials: FCF, Net Debt, Net Income and EPS
FINANCIALS: FCF, NET DEBT, NET INCOME AND EPS Free cash flow1 Adj. net income € mn € mn +16.4% +3.3% 1,301 1,514 1,199 1,238 248 -16 36 -50 107 -36 -8 -27 Q2/17 Cash gen. from Capex (excl. Interest & Other Q2/18 Q2/17 Adj. Financial D&A Taxes Minorities Q2/18 operations spectrum) EBITDA result Net d
Slide 26: Financials: Balance Sheet Ratios in Target Corridor
FINANCIALS: BALANCE SHEET RATIOS IN TARGET CORRIDOR € bn 30/06/2017 30/09/2017 31/12/2017 31/03/2018 30/06/2018 Balance sheet total 141.5 139.8 141.3 138.0 139.7 Shareholders’ equity 38.6 39.1 42.5 43.7 41.4 Net debt 55.2 52.6 50.8 50.5 54.8 Net debt/adj. EBITDA1 2.5 2.3 2.3 2.3 2.5 Equity ratio 27.
Slide 27: 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 28: 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 Slig
Slide 29: Conference Call with Q&A Session
CONFERENCE CALL WITH Q&A SESSION The conference call will be held on August 9 at 2:00 PM CET, 1:00 PM GMT, 8 AM ET. DT Participants: Tim Hoettges (CEO), Thomas Dannenfeldt (CFO), Hannes Wittig (Head of IR) Webcast Dial-in • The link to the webcast will be provided here 20 minutes before DE 0800 9656
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: Appendix
APPENDIX
Slide 32: 2018: Accounting Impact on Results
2018: ACCOUNTING IMPACT ON RESULTS Outlook beginning of year 2018 Current view Revenue Adj. EBITDA Group -0.15 bn max. +0.1 bn1 Unchanged Germany --1 to -1.5% Impact of IFRS 9 (-) and We expect a moderate tailwind IFRS 15 (+) will be neutral to the adj. EBITDA US +0.5% +0.2%1 Unchanged Europe neglib
Slide 33: Germany Mobile: Service Revenue (excl. IFRS 15)
GERMANY MOBILE: SERVICE REVENUE (EXCL. IFRS 15) Reported mobile service revenue Impact of mobile regulation1 Impact of convergent offers2 Q2/17 0.8% 1.7% 0.8% Q3/17 0.9% 2.8% 0.7% Q4/17 1.7% 1.9% 0.5% Q1/18 3.2% 1.0% 0.7% Q2/18 2.9% 1.1% 0.7% Old medium term guidance (2014 – 2018 CAGR): Re-iterated
Slide 34: German Fixed: Service Revenue (excl. IFRS 15)
GERMAN FIXED: SERVICE REVENUE (EXCL. IFRS 15) Growth rates YOY Wholesale revenue Broadband revenue Fixed line service revenue1 Q2/17 -0.4%2 0.8% -1.2% Q3/17 2.8% 0.6% 0.3%2 Q4/17 2.7% 0.6% 0.5% Q1/18 3.4% 1.8% 5.3%3 0.2% Q2/18 2.4% 2.5% 6.2%3 -0.1% Old medium term guidance (2014 – 2018 CAGR): Re-ite
Slide 35: Thank You!
THANK YOU!