Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — FY2005 Earnings Presentation
23 slides from Deutsche Telekom's earnings presentation, Mar 2, 2006
Slide 1: FY 2005 Conference Call
FY 2005 Conference Call. Deutsche Telekom. March 2, 2006. Kai-Uwe Ricke 1
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 and the planned T-Online merger, and the “Outlook 2006” statements at the end of this presenta
Slide 3: FY 2005 Highlights
FY 2005. Highlights. All financial targets achieved Q4 revenue growth of 5.4%. 2005 revenue increased by 3.9% to €59.6 billion FY 2005 adj. EBITDA increased by 5.7% to €20.7 billion FY 2005 Free Cash Flow1 at €7.8 billion – free cash flow yield of 14% Net income of €5.6 billion – EPS of €1
Slide 4: Excellence program – Business Objectives
Excellence program – Business Objectives. Update on execution. Achievements 2005 1 Secure fixed-line core business Success in stabilizing minute market shares BBFN 2 “Conquer the home” Football rights – first class content secured 3 Grow core wireless business 5.2 million contract net adds in 2005 B
Slide 5: Broadband market development
Broadband market development. Strong growth: more than 2.1 million domestic net adds in 2005. Domestic DSL access lines and net adds (m)1 Despite strong growth still large market potential in Germany 10 BBFN domestic retail share2 at YE05: 7.9 80% 1.6 When completed, merger will support 5.8 5
Slide 6: Broadband/Fixed Network: T-Com external revenue Q4/05
Broadband/Fixed Network. T-Com: Development of external revenue in Q4/05. (€ million) External revenue of T-Com decreased by 4.8% 5,213 - 268 18 4,963 Domestic Network Communications: Price cuts through optional tariffs DSL: marketing to consumers only through T-Online Loss of narrowband acc
Slide 7: Mobile: Revenue growth accelerated during 2005
Mobile. Revenue growth accelerated during 2005. Revenue in € million All operations returned to revenue growth in Q4/2005 +10.6% +17.5% +8.2% Germany +1.0% +7.6% 7,648 7,861 7,197 UK +9.7% 6,746 Service revenue growth in Q4 Germany +2.0% UK +5.6% 6,649 6,914 6,692 6,272 Good adj. EBITD
Slide 8: T-Mobile USA: Key contributor to revenue and EBITDA growth
T-Mobile USA. Key contributor to revenue and EBITDA growth. Revenues (US$ billions) T-Mobile USA contribution in 2005: 14.7 40% of mobile revenues – up from 31% in 2003 11.5 34% of mobile adj. EBITDA – up from 18% in 2003 8.5 Record net adds of 4.4 million – surpassing the key 20 million custo
Slide 9: Mobile: T-Mobile UK turnaround in revenue development
Mobile. T-Mobile UK – turnaround in revenue development. Revenue in € million Revenue increased by 9.7% in Q4 2005 Adj. EBITDA margin in 2005 -12.8% -8.7% -4.3% 9.7% essentially stable over 2004 at 31.4% 1,133 1,094 Strong Q4 net adds of 845,000 1,108 1,106 1,058 988 1,012 997 Q4 adj. EBITDA
Slide 10: Business customers – IT push
Small, medium, and large business customers1 – IT push. Promising achievements in 2005 . IT revenues of SE/ME/LE (€ million) Push IT +29% Position Business Services among the top IT service providers for the German “Mittelstand” 405 Leveraging the Group’s IT expertise and scale effects in cross-
Slide 11: FY 2005 Conference Call
FY 2005 Conference Call. Deutsche Telekom. March 2, 2006. Dr. Karl-Gerhard Eick 11
Slide 12: FY 2005 – Highlights: All financial targets achieved
FY 2005 – Highlights. All financial targets achieved. Actual Financial 2005 targets Revenue (€ billion) 59.6 59.5 – 60.0 Adj. EBITDA (€ bn) 20.7 20.7 – 21.0 Capex1 (€ billion) 7.2 7.5 – 8.0 FCF1 (€ billion) 7.8 7.5 – 8.0 Net debt/adj. EBITDA 1.9x 2 – 3x Gearing 0.8x 0.8 – 1.2x Equity ratio 38.8% 30
Slide 13: FY 2005 Group: Excellent results
FY 2005 Group. Excellent results. Revenue (€ billion) Adj. EBITDA (€ billion) 59.6 20.7 57.4 19.6 +3.9% +5.7% Net income (€ billion) Adj. net income (€ billion) 5.6 4.7 3.7 1.6 +26.7% 250.5% FY 2004 FY 2005 FY 2005 Conference call Investor Relations March 2, 2006, Page 13
Slide 14: Broadband/Fixed Network: Adj. EBITDA defended
Broadband/Fixed Network. Adj. EBITDA defended despite topline pressure. Total revenue BBFN (€ billion) Total revenue T-Com (€ billion) 27.0 25.6 24.7 26.0 -3.6% -3.5% Adj. EBITDA BBFN (€ billion) Adj. EBITDA T-Com (€ billion) 10.2 9.9 9.7 9.6 -3.1% -0.9% Margin 37.6% 37.9% 38.0% 39.0% FY 2004 FY 200
Slide 15: Mobile: Strong development in growth and margin
Mobile. Strong development in growth and margin. Customers (million) Revenue (€ billion) 86.6 29.5 77.6 26.5 +11.6% +11.0% Adj. EBITDA (€ billion) Adj. EBITDA margin 33.2% 9.8 8.4 31.7% + 16.3% +1.5pp FY 2004 FY 2005 FY 2005 Conference call Investor Relations March 2, 2006, Page 15
Slide 16: T-Systems: Growth with Top 60+ customers
T-Systems. Growth with Top 60+ customers. T-Systems – Revenue (€ billion) T-Systems – adj. EBITDA (€ billion) 13.0 12.9 1.63 1.59 -0.9% -2.7% Margin 12.6% 12.3% Top 60+ customers1 – Revenue (€ billion) SE/ME/LE2 – Revenue (€ billion) 8.4 4.7 8.2 4.5 +1.5% -5.0% 1 Enterprise Services. 2 Business Serv
Slide 17: FY 2005 – Free Cash Flow
FY 2005 – Free Cash Flow. FCF within €7.5 to 8.0 billion guidance range. € billion FY 2005 FY 2004 Cash Flow 19.8 19.5 Change in working capital and accruals - 0.7 0.8 Taxes and dividends - 1.1 0.1 Cash generated from operations 17.9 20.5 Net interest payment - 2.9 - 3.7 Net cash provided by operati
Slide 18: FY 2005 – Net income
FY 2005 – Net income. Net income more than tripled – €1.31 EPS. € billion FY 2005 FY 2004 FY 2005 adj. FY 2004 adj. EBITDA 20.1 19.4 20.7 19.6 Depreciation and amortization - 12.5 - 13.1 - 10.6 - 9.4 Net financial expense - 1.4 - 2.7 - 2.5 - 3.9 - of which net interest expense - 2.4 - 3.3 - 2.4 - 3.
Slide 19: Special influences in Q4 2005
Special influences in Q4 2005. Driven by personnel, taxes, and amortization. Costs (ex D & A) Other operat. income D&A Taxes 1,696 1,575 792 -2,827 -4,763 -11,110 - 639 -12,356 €1.2 billion personnel €0.8 billion gain from the €1.9 billion unscheduled €2.2 billion gain from restructuring charges rel
Slide 20: Balance sheet in excellent shape
Balance sheet. Balance sheet in excellent shape. € billion 31.12.2005 31.12.2004 Balance sheet total 127.9 125.3 Equity 49.6 45.8 Net debt 38.6 39.9 Net debt/adj. EBITDA 1.9x 2.0x Gearing 0.8x 0.9x Equity ratio 38.8% 34.5% FY 2005 Conference call Investor Relations March 2, 2006, Page 20
Slide 21: Net debt: Significant achievement since 2002
Net debt. Significant achievement since 2002. Net debt (€ billion) 64.9 51.1 39.9 38.6 2002 2003 2004 2005 FY 2005 Conference call Investor Relations March 2, 2006, Page 21
Slide 22: FY 2005 Conference Call
FY 2005 Conference Call. Deutsche Telekom. March 2, 2006. Kai-Uwe Ricke 22
Slide 23: FY 2005 Outlook 2006
FY 2005. Outlook 2006. We reconfirm our guidance 2006 revenue between € 62.1 and 62.7 billion 2006 adj. EBITDA between € 20.2 and 20.7 billion Future dividend dependent on profitability FY 2005 Conference call Investor Relations March 2, 2006, Page 23