Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — H1 2002 Earnings Presentation
30 slides from Deutsche Telekom's earnings presentation, Aug 21, 2002
Slide 1: Analysts Meeting August 21, 2002
Deutsche Telekom Analysts Meeting August 21, 2002 Deutsche Analyst meeting August 21, 2002
Slide 2: Disclaimer
Disclaimer. This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of the safe harbor provisions of the U.S. federal securities laws. Such statements are subject to
Slide 3: Highlights and Strategy
Highlights and Strategy. Prof. Dr. Helmut Sihler CEO Deutsche Analyst meeting August 21, 2002
Slide 4: Strategic review underway. Debt reduction and improving profitability is top priority
Strategic review underway. Debt reduction and improving profitability is top priority. – Comprehensive Strategic Review ongoing – Strategic Review focusing on all aspects of operations (domestic and international) – Report on the Review by November 20 (3rd quarter results) – All options will be cons
Slide 5: Half-year 2002 – financial highlights
Half-year 2002 – financial highlights. Strong operational performance. – Group revenue up approx. 15% H1/02 to approx. € 25.8 billion – Strong adj. EBITDA growth of more than € 500 million (+7.2%) to approx. € 7.8 billion – Capex* reduced by 17.6 % to € 3.1 billion – Free cash-flow (before dividends
Slide 6: Revenue and adj. EBITDA development
Revenue and adj. EBITDA development. Overall improvements in Q2/2002 vs Q1/2002. Revenue (€ million) Q2/2002 Q1/2002 ∆€ ∆% T-Com 7,399 7,440 - 41 - 0.6 T-Mobile 4,675 4,465 210 4.7 T-Systems 2,835 2,652 183 6.9 T-Online 437 427 10 2.3 Adj. EBITDA* (€ million) Q2/2002 Q1/2002 ∆€ ∆% T-Com 2,515 2,467
Slide 7: Operational Review
Operational Review. Dr. Karl-Gerhard Eick CFO Deutsche Analyst meeting August 21, 2002
Slide 8: Group financial highlights H1/02
Group financial highlights H1/02. € million H1/02 H1/01 ∆% Q2/02 Q2/01 ∆% Revenue 25,754 22,468 14.6 12,984 11,386 14.0 EBITDA* 7,559 8,195 - 7.8 3,777 4,573 - 17.4 adj. EBITDA** 7,757 7,239 7.2 3,975 3,617 9.9 adj. EBITDA margin 30.1% 32.2% n/a 30.6% 31.8% n/a Depreciation and amortization - 7,874
Slide 9: Debt reduction. Significant progress in Q2/02
Debt reduction. Significant progress in Q2/02. – Net debt as of March 31 67.3 (€ billion) – Dividend payment +1.6 – Satelindo - 0.3 – France Télécom - 0.3 – Real estate - 0.2 – Q2/02 free cash-flow* -1.6 – Tax refund - 0.8 – Foreign currency exchange effects - 1.5 – Net debt as of June 30 64.2 * FCF
Slide 10: Liquidity reserves as of June 30, 2002
Liquidity reserves as of June 30, 2002. Fully funded through the end of 2003. € bn. 90 Liquidity Reserves: 20.9 bn. € – Unused Credit Lines 80 – Syndicated Loan 20.9 DTAG 10.1 bn. € 70 – Syndicated Loan 60 T-Mobile UK 2.0 bn. € – Bilateral Credit Lines 50 DTAG 5.4 bn. € 40 85.1 – Bilateral Credit Li
Slide 11: Group's balance sheet structure
Group’s balance sheet structure. June 30, 2001 June 30, 2002 Total assets € billion 177.0 177.0 Prepaid expenses, deferred 1.5 0.9 charges and taxation 20.8 152.1 152.1 1.4 0.9 Current assets 14.4 85.5 Non-current assets 77.6 20.1 Total liabilities 154.7 136.3 18.4 Deferred income Liabilities 70.5 5
Slide 12: Deutsche Telekom AG. Significant increase in free cash-flow
Deutsche Telekom AG. Significant increase in free cash-flow. € million H1/02 H1/01 ∆€ ∆% Cash generated from operations 8,401 6,793 1,608 23.7 Net cash provided by operating activities 6,645 4,719 1,926 40.8 Cash outflows from investments in property, plant & equipment - 3,439 - 4,137 698 -16.9 Cash
Slide 13: Interest and Capex Coverage in H1/02
Interest and Capex Coverage in H1/02. Positive contribution from each pillar. Capex & Net interest Income € million Adj. EBITDA intangible income taxes Coverage* T-Com 4,982 - 1,691 - 353 2,938 T-Mobile 2,559 - 1,261 - 456 842 T-Systems 509 - 333 - 21 155 T-Online 82 - 37 65 110 Others - 171 - 208 -
Slide 14: T-Com. Recovery is beginning
T-Com. Recovery is beginning. – Rebalancing policy working: access revenues above calling revenues in Q2/02 – Continuing steady increase in access revenues (+10%) – Domestic retail business up by approx. 2% in Q2/02 compared to Q2/01 – Migration to high-value access continues (+2.3 million ISDN chan
Slide 15: T-Com. Rebalancing starts to pay off
T-Com. Rebalancing starts to pay off. € billion – Access revenues above 2000 calling revenues for the first time in Q2/02 1950 1900 – More than 10% increase in access revenues from H1/01 1850 to H1/02 1800 – Strong decrease in calling revenues in Q2/02 caused by 1750 price reduction in local calls 1
Slide 16: T-Com adjusted
T-Com adjusted. Revenues and EBITDA stabilized in H1/02. € million H1/02 H1/01 ∆% Q2/02 Q2/01 ∆% Total revenue 14,839 14,694 1.0 7,399 7,195 2.8 - of which domestic 12,957 13,459 - 3.7 6,436 6,554 - 1.8 - of which E. Europe 1,882 1,235 52.4 963 641 50.2 - of which external 12,526 12,402 1,0 6,243 6,
Slide 17: T-Mobile. Strong operating performance
T-Mobile . Strong operating performance. Revenues EBITDA (€ million) (€ million) – Controlled sub base increased from +53% 9,140 46.3 million in Q1/02 to 47.5 million in Q2/02 +86% 2,559 – EBITDA rises approx. € 1.2 billion 5,973 to more than € 2.5 billion in H1/02 1,375 – Revenue of € 4.7 billion i
Slide 18: T-Mobile USA (German GAAP)
T-Mobile USA (German GAAP). Continuing Strong Performance Revenues EBITDA (€ million) (€million) – Subscriber base more than +6% 1,439 8 million – Gaining 691,700* new contract 1,357 subs, while prepaid decreases by +66% 176 165,800* 106 – Contract proportion now 80% of base (Q1: 76%) – EBITDA margi
Slide 19: T-Mobile adjusted
T-Mobile adjusted. Adjusted EBITDA increased by approx. € 1.2 billion. € million H1/02 H1/01 ∆% Q2/02 Q2/01 ∆% Revenue total 9,140 5.973 53.0 4,675 3,292 42.0 external 8,412 5,237 60.6 4,297 2,919 47.2 EBITDA* 2,559 1.375 86.1 1,348 785 71.7 EBITDA margin 28.0% 23.0% 21.7 28.8% 23.8% 21.0 Depreciati
Slide 20: T-Systems. Strong growth in IT
T-Systems. Strong growth in IT. – Revenues in Q2/02 up 7% vs. Q1/02 despite challenging market environment – Double-digit growth in IT revenue in Q2/02 over Q1/02 – Over 40% EBITDA improvement in H1/02 compared to H1/01 – T-Systems’ IT business is outperforming peers in revenue growth – Consolidatio
Slide 21: T-Systems: leveraging customer potential
T-Systems: leveraging customer potential. Follow-up orders from Federal Agency of Labor. [Arbeitsamt] Complexity of services/ – high – High performance intenseness of performance network concept customer relationship commu- nications – 100,000 users at network 1,400 branches – sophisticated mobile-,
Slide 22: T-Systems adjusted
T-Systems adjusted. € million H1/02 H1/01 ∆% Q2/02 Q2/01 ∆% Revenue total 5,487 5,686 - 3.5 2,835 2,882 - 1,6 external 3,869 3,976 - 2.7 1,995 1,984 0.6 EBITDA* 509 357 42.6 251 210 19,5 EBITDA margin 9.3% 6.3% - 8.8% 7.3% - Depreciation and amortization - 1,010 - 662 52.6 - 654 - 336 - 94.6 Financi
Slide 23: T-Online. EBITDA positive on group level
T-Online.* EBITDA positive on group level. – 22% revenue increase at the T-Online division (incl. DeTeMedien) over H1/01 to € 864 million – 11.6 million subscribers, incl. almost 1 million subscribers each in France and Spain – About 2.3 millions T-Online Group DSL-subscribers basis for pan European
Slide 24: T-Online adjusted
T-Online* adjusted. € million H1/02 H1/01 ∆% Q2/02 Q2/01 ∆% Revenue total 864 707 22.2 437 346 26.3 external 786 656 19.8 399 300 33.0 EBITDA** 82 - 52 257.7 65 - 25 360.0 EBITDA margin 9.5% - 7.4% - 14.9% - 7.2% - Depreciation and amortization - 96 -102 5.8 - 49 - 65 24.6 Financial income (exp.), n
Slide 25: Others adjusted
Others adjusted. € million H1/02 H1/01 ∆% Q2/02 Q2/01 ∆% Revenue total 1,923 2,333 - 17.6 966 1,145 - 15.6 external 161 197 - 18.3 50 118 - 57.6 EBITDAa - 171b 539c - 131.7 - 143 320 - 144.7 EBITDA margin - 8.9% 23.1% - - 14.8% 27.9% - Depreciation and amortization - 640 -548 - 16.8 - 407 - 277 - 46
Slide 26: Capex. Half-year capex in line with revised full-year target
Capex*. Half-year capex* in line with revised full-year target € billion H1/02 Old Target 02** New Target 02*** 2001 T-Com 1.6 3.5 3.3 5.0 T-Mobile 1.1 4.0 3.9 3.2 T-Systems 0.3 1.1 0.9 0.9 T-Online and other 0.1 0.4 0.4 0.8 Total capex* 3.1 9.0 8.5 9.9 * Excl. investments in intangible assets. ** R
Slide 27: Free cash-flow target for 2002
Free cash-flow target for 2002. Target € billion for 2002 2001 Adjusted EBITDA* 15.9 - 16.9 15.1 Change in working capital up to 0.3 1.2 Net interest expense - 4.5 - 4.3 Income tax expenses - 0.8 - 0.8 Cash-flow from operating activities 10.6 - 11.9 11.2 Capex** - 8.5 - 9.9 Free cash -flow 2.1 – 3.4
Slide 28: Debt reduction. Scenario to year end 2003
Debt reduction. Scenario to year end 2003. € billion Free cash -flow before dividends H2/02 and ‘03 4-5 Currently envisaged measures in H2/02 & 2003: – Real estate 2-4 – Cable 2.5 - 3.5 – Disposal of other assets 2 – Acquisition BEN (incl. liabilities) - 2,1 Current measures and free cash-flow will
Slide 29: Reconciliation of net income (loss) from German GAAP to U.S. GAAP
Reconciliation of net income (loss) from German GAAP to U.S. GAAP. € million H1/2002 H1/2001 2001 Net loss in accordance with German GAAP - 3,891 - 349 - 3,454 Other differences from U.S.GAAP 3,456 869 2,911 Income taxes differences - 4,552 - 368 1,066 Net income (loss) in accordance with U.S. GAAP
Slide 30: Targets for full-year 2002
Targets for full-year 2002. – Approximately 10% growth expected in group revenue – € 15.9 - 16.9 billion range for group EBITDA reconfirmed – Full-year capex guidance lowered to approximately € 8.5 billion – € 0.5-1.8 billion positive free cash-flow after dividend payments – Continued focus on debt