Slide 1: Deutsche Telekom FY 2019 Results & CMD 2018 Progress Update
DEUTSCHE TELEKOM Link to FY 2019 RESULTS & CMD 2018 Webcast PROGRESS UPDATE
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: 2019 Results and CMD Update: We Are Delivering
2019 RESULTS AND CMD UPDATE: WE ARE DELIVERING US Deal: Positive ruling by New York District Court Two major multi-year German investment programs completed (B2C All-IP, FTTC) Accelerated 5G rollout in U.S. and Germany Substantial progress with efficiency and digitization Ongoing strong cu
Slide 4: US Deal: Leading on Both Sides of the Atlantic
US DEAL: LEADING ON BOTH SIDES OF THE ATLANTIC Creating value for customers & shareholders Strong presence in US and Europe Sprint merger Next Uncarrier 2.0 2013 - Big investments New T-Mobile* DT ex US 2019 Big growth 140 mn 127.5 mn 54 2012 - Creation of Uncarrier 1.0 US$ 77 bn 98.0 2013
Slide 5: 2019 Financials: Strong Growth Across the Board
2019 FINANCIALS: STRONG GROWTH ACROSS THE BOARD Adj. EBITDA AL (organic growth) ADJ. EBITDA AL FY growth € mn TMUS Revenue +6.4% 4.7% Adj. EBITDA AL +7.2% GER Adj. EBITDA AL 2.4% +4.7% 8,720 (excl. US) 11,134 Adj. Net profit +8.9% EU 3.1% Net profit +78.5% GD 519 Adj. EPS (in €) +8.3% 4,005 10.9% 1,
Slide 6: Investments: Big Milestones Achieved
INVESTMENTS: BIG MILESTONES ACHIEVED Fiber coverage LTE outdoor pop coverage HH mn GER: Committed FTTC % GER: 1,400 additional sites +1.8m +2.8m build done +0.5pp +1.1pp GER/EU: Network 35 GER: Supervectoring 28mn 98.1% 97.6% leadership in footprint 10 lines1 with up to 250Mbps EU: Full fi
Slide 7: Customers: Growth Remains Strong
CUSTOMERS: GROWTH REMAINS STRONG Magenta EINS (GER + EU) Mobile customers (US)1 mn +2.0 mn +7.1 +6.4 +1.8 9.6 79.7 86.0 7.6 72.6 5.8 2017 2018 2019 2017 2018 2019 Fiber (GER) Mobile contract customers (GER + EU + NL)2 mn mn +2.2 +1.0 +2.4 +2.6 14.4 54.6 55.6 58.0 12.2 9.6 2017 2018 2019 2017 2018 20
Slide 8: Indirect Costs: On Track for CMD Target
INDIRECT COSTS: ON TRACK FOR CMD TARGET Organic savings ex US 2017 – 2019 Organic savings ex US 2017 – 2021 € bn € bn 0.8bn GER 4% of indirect costs saved GHS -0.8 Savings driven by greater agility and digitization TSI Personnel -1.5bn productivity +6% EU 2017-19 2019-2021e CMD target GD By se
Slide 9: Digital: Becoming Part of the DNA
DIGITAL: BECOMING PART OF THE DNA Marketing & Sales Customer Service Network & IT Steering & Support Push online channels & Drive customer self-service Increase bang for the buck Push employee self-service DT personalized offerings to (app, chat) & 360° customer w/ value-based network and automate r
Slide 10: Capital Utilization: Sharing, Smartly
CAPITAL UTILIZATION: SHARING, SMARTLY Germany Europe White spot sharing of all German Long-standing network sharing in MNOs (c6,000 sites) most countries (e.g. CZ, PL, RO) Grey spot sharing with Vodafone Various tower sharing agreements Mobile (c4,000 sites) (e.g., Austria) Extensive tower
Slide 11: ESG: Being Sustainable
ESG: BEING SUSTAINABLE Energy intensity1 DT’s climate strategy Share of renewable Energy kWh/TB 100% renewables from 2021 % 142 194 84 64 90% less CO2e2 by 2030 74 120 52 41 25% lower value chain emissions per customer by 2030 GER GROUP Targets certified by SBTi3 GER GROUP More efficient t
Slide 12: CMD Targets: Financials Growing Faster
CMD TARGETS: FINANCIALS GROWING FASTER Revenue Adj. EBITDA AL FCF AL Adj. EPS Dividend € bn € bn € bn €/share €/share CAGR CAGR +0.08 CAGR +3% +6% +17% 74.9 75.7 80.5 23.1 24.7 7.0 1.04 0.65 0.70 22.2 6.1 0.921 0.96 0.60 5.5 2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019
Slide 13: Ex US CMD Targets: All Segments Delivering
EX US CMD TARGETS: ALL SEGMENTS DELIVERING Ex US adj. EBITDA AL Adj. EBITDA AL growth yoy € bn % CAGR CAGR +2-3% GER +2-2.5% EU +2.5% +1-2% CAGR +3% 3.1% +2.4% 2.4% 2.4% 1.8% +4% 13.6 +2% 12.9 13.0 GD CAGR +3-4% SYS +5% +6.1% CAGR +0.5% 10.9% 16.8% 1.5% 2017 2018 2019 2020e -13.5% All CAGRs are orga
Slide 14: 2020 Guidance: Maintaining Momentum
2020 GUIDANCE: MAINTAINING MOMENTUM Revenue ADJ. EBITDA AL Based on € 1 = € bn € bn Group Ex US US$ 1.12. Increase 80.5 +3% +2% TM US EBITDA at 24.7 25.5 13.6 13.9 midpoint of US$ US GAAP 2019 2020 guidance of 2019 2020 2019 2020 US$ 13.85bn Cash Capex FCF AL Including the US € bn € bn GAAP IFRS bri
Slide 15: Germany: Growing Future Business
GERMANY: GROWING FUTURE BUSINESS M1share (mobile)1 Contract net adds4 M1share (fixed)5 % HH 57 mn % HH 25 42 0.6 18 0.5 0.5 Ongoing progress Ongoing progress Data usage2 TV subs GB 4.0 mn 3.1 3.6 1.7 Broadband net adds 3m Stream On subs mn Accelerating momentum Mobile churn3 0.3 0.3 B2B reve
Slide 16: Germany: Improved Agility as Enabler
GERMANY: IMPROVED AGILITY AS ENABLER Flexible delivery IT time-to-market Reskilling % of software delivered in agile mode Months # of reskilled FTE x6 Big reduction in B2B 412 60 -50% tariff complexity 17 New FTTH OSS 8 developed in agile 10 mode in record time 0 2017 2019 2017 2019 2017 2019
Slide 17: Germany: Significant Process Improvements
GERMANY: SIGNIFICANT PROCESS IMPROVEMENTS Waiting times Complaints Improved customer satisfaction -43% -50% Won all major service tests Process redesign 2017 2019 2017 2019 Cost reduction Faults repairs First-time resolution Missed appointments -19% +30% -84% 2017 2019 2017 2019 2017 2019 17
Slide 18: Germany: Resilient Mobile Network Leadership
GERMANY: RESILIENT MOBILE NETWORK LEADERSHIP LTE coverage Average mobile data speed1 Spectrum 98% pop coverage Large cities +110 MHz from 2019 88% area coverage +41Mbps +41Mbps +20Mbps auction (+20MHz in 91 68 2.1 GHz) 50 37 27 17 Fiber backhaul Site expansion ~80% of sites +1.4k new sites
Slide 19: Germany: FTTC Already Providing Highspeed
GERMANY: FTTC ALREADY PROVIDING HIGHSPEED German broadband coverage end 2019 Homes passed by fiber mn Bandwidth Cable area Non-cable area 33 35 >>1 Gbit/s 30 Cable & FTTC DT and White third party spots FTTH/B area FTTC FTTC/(Super-)Vectoring ≥ 50 MBit/s Supervectoring Cable with (up to 250Mbps) FTTH
Slide 20: Germany: From FTTC to FTTH
GERMANY: FROM FTTC TO FTTH FTTH factory Cash Capex Subsidized build Cost per home passed € bn Stuttgart area (partly) ~5.5 ~ 4.2 ~2 Successfully under way c100K homes passed YE2020 € 1,000 E.g., Mecklenburg-Vorpommern Successfully under way 2017 2020 GER TDG Fiber 40k homes passed by Y
Slide 21: EU: Successful Strategy Implementation
EU: SUCCESSFUL STRATEGY IMPLEMENTATION FMC penetration1 2019 achievements App penetration % HH 49% Net adds % 55% 30% (000) 25% 1,403 1,041 2017 2019 2017 2019 250 Mobile network leadership Customer experience Leading mobile network in 9 out of Mobile Converged Broadband Churn (e.g. Greece): ~8p
Slide 22: GD/TMNL: Delivering Merger Benefits
GD/TMNL: DELIVERING MERGER BENEFITS Mobile leadership 2019 achievements Merger synergies1 MSR growth € mn 150 Winner of P3/Umlaut test for 4th year in a row % Highest score ever measured by Umlaut 3.3 Well on track 0.3m contract net adds 2.5 2.6 2.8 achieved Q1 Q2 Q3 Q4 Target2 Fixed line sc
Slide 23: GD/Towers: Strong Growth with Infrastructure
GD/TOWERS: STRONG GROWTH WITH INFRASTRUCTURE Sites 70 2019 achievements Collocation ratios GER 000 57 Organic revenues 2.3x EU 36 € mn 923 945 26 Third party 1.4x GD NL 3 3 1.0x Towers GER 28 31 DT Owned Sites in 2018 2019 Towers Rooftops Total sites operation Ongoing site expansion GER Efficiency
Slide 24: TSI: Turnaround on Track
TSI: TURNAROUND ON TRACK Sales 2019 achievements Portfolio Order Entry: Growth for two consecutive Revenue New portfolio model: Fully operational years up, +40% vs 2017 € bn 6.9 6.9 6.8 TC: Move into Germany to create B2B TC Clients: Better coverage with integrated powerhouse approach Secu
Slide 25: TMUS: Ongoing Momentum
TMUS: ONGOING MOMENTUM Network expansion 2019 achievements Commercial focus Macro Net adds Growth in B2B, 55+, military, new geos 66 +2k k sites Best ever industry score in JD Power wireless Small 4,515 25 +4k 3,121 customer care survey, based on “Team of cells Experts” success Number of citie
Slide 26: Strategy: Working Towards Implementation
STRATEGY: WORKING TOWARDS IMPLEMENTATION NW leadership in Strong customer DE: Growth in B2B footprint growth in all markets TSI: Strong orderbook US 1st nationwide 5G GROW LEADININCUSTOMER LEAD CUSTOMER LEAD IN BUSINESS TMUS: Team of EXPERIENCE LEAD IN TECHNOLOGY LEAD IN BIZ PRODUCTIVITY PRODUCTIVIT
Slide 27: Agenda: We Won't Stop!
AGENDA: WE WON‘T STOP! Drive innovation, diversity, and cultural change Crystallize tower value for shareholders Integrate TSI TC into Germany Maximize FTTH return-on-invest Monetize FTTC/supervectoring Further step-up digitization Improve customer satisfaction Continue to drive commercial momentum
Slide 28: Review Q4/19
REVIEW Q4/19
Slide 29: Financials: Growth in All Metrics
FINANCIALS: GROWTH IN ALL METRICS € mn Q4 FY 2018 2019 Change 2018 2019 Change Revenue 20,261 21,361 +5.4% 75,656 80,531 +6.4% Adj. EBITDA AL1 5,573 6,030 +8.2% 23,074 24,731 +7.2% Adj. EBITDA AL (excl. US)1 3,037 3,320 +9.3% 12,990 13,597 +4.7% Adj. Net profit 796 1,016 +27.6% 4,545 4,948 +8.9% Net
Slide 30: Germany: Revenue and EBITDA Growing
GERMANY: REVENUE AND EBITDA GROWING Revenues +1.0% Adj. EBITDA AL +2.4% € mn € mn 5,612 5,669 2,154 2,205 Q4/18 Q4/19 Q4/18 Q4/19 Total service revenue growth Adj. EBITDA AL growth (organic) %y/y 1.0% 1.0% %y/y 4.1% 0.6% 0.6% 2.4% 2.4% 2.4% 2.4% 0.2% Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q4/181 Q1/19 Q2/19
Slide 31: Germany: Service Revenues Growing
GERMANY: SERVICE REVENUES GROWING Mobile service revenue growth Fixed service revenue growth %y/y %y/y 2.8% 2.4% 2.0% 1.4% 0.7% 0.7% 0.5% 0.1% Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 -0.3% -0.7% Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q3 visitor phasing unwound in Q4 Broadband/wholesale strength offsets All-IP head
Slide 32: Germany: Good Progress in Mobile
GERMANY: GOOD PROGRESS IN MOBILE Magenta EINS share (mobile)1 Data usage3 % GB 57% 4.0 51% 2.6 +57% y/y Q4/18 Q4/19 Q4/18 Q4/19 Churn2 Branded contract net adds4 000 180 1.1% 1.0% 140 130 132 97 Q4/18 Q4/19 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 1) As % of B2C T-branded contract customers 2) contract excl. L
Slide 33: Germany: Steady Commercials in Fixed
GERMANY: STEADY COMMERCIALS IN FIXED Broadband net adds TV net adds 000 000 67 74 57 62 66 58 47 47 47 28 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Line losses Line losses org. Fiber net adds Retail 000 Line losses triggered by IP-migration 000 Wholesale 625 688 522 534 373 442 340
Slide 34: Germany: Retail Fixed Almost Stable; Wholesale Growing
GERMANY: RETAIL FIXED ALMOST STABLE; WHOLESALE GROWING Retail fixed revenues -0.5% Broadband revenue growth € mn %y/y 2,404 2,391 5.9%1 Broadband revenues +4.8% 4.8% 1,420 1,488 3.5% Single Play revenues 2.3% 2.3% -19.6% Other revenues 321 258 663 645 2.1% -2.7% Q4/18 Q4/19 Q4/18 Q1/19 Q2/19 Q3/19 Q
Slide 35: TMUS: Continued Industry-Leading Growth
TMUS: CONTINUED INDUSTRY-LEADING GROWTH Revenues (IFRS) +4.6% Adj. EBITDA AL (IFRS) US $bn US $bn +3.7% 11.4 12.0 2.9 3.0 Service revenues 8.0 8.6 Q4/18 Q4/19 Q4/18 Q4/19 Service revenue growth (IFRS) Adj. EBITDA AL growth (IFRS) %y/y %y/y 23.3% 6.9% +7.0% 6.2% 6.0% 5.9% 6.1% 3.6% 3.1% 3.7% Q4/18 Q1
Slide 36: TMUS: Executing on Key Drivers
TMUS: EXECUTING ON KEY DRIVERS Postpaid phone churn ARPU % US $ Postpaid phone Prepaid phone 0.99% 1.01% 46.3 45.8 38.4 38.5 Q4/18 Q4/19 Q4/18 Q4/19 Q4/18 Q4/19 Network quality1 Net adds Postpaid phone Mbps mn 2.4 34.4 33.2 33.5 1.8 1.7 1.9 26.6 1.7 8.6 7.9 6.0 2.7 25.8 25.3 27.5 23.9 1.0 0.7 0.7 0.
Slide 37: Europe: 8th Consecutive Quarter of EBITDA Growth
EUROPE: 8TH CONSECUTIVE QUARTER OF EBITDA GROWTH Revenues 3.0% Adj. EBITDA AL € mn € mn 5.0% 3,132 3,225 935 982 Q4/18 Q4/19 Q4/18 Q4/19 Revenue growth (organic) Adj. EBITDA AL growth (organic) %y/y %y/y 5.7% 3.8% 3.3% 2.0% 2.0% 1.2% 1.5% 0.4% 0.4% 0.7% Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q4/181 Q1/19 Q2/
Slide 38: Europe: Steady Customer Growth
EUROPE: STEADY CUSTOMER GROWTH Mobile contract net adds Broadband net adds 000 000 300 288 94 264 257 73 196 55 63 59 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q4/18 Q1/19 Q2/19 Q3/191 Q4/19 FMC net adds TV net adds 000 000 406 445 53 330 329 299 26 5 9 1 Q4/18 Q1/19 Q2/19 Q3/19 Q4/192 Q4/18 Q1/19 Q2/19 Q3/19 Q
Slide 39: TSI: Transformation Increasingly Visible
TSI: TRANSFORMATION INCREASINGLY VISIBLE Order entry (LTM) Revenues Adj. EBITDA AL € bn € mn 0.2% € mn 35.7% +8.2% 1,842 1,845 7.3 156 6.8 115 Q4/18 Q4/19 Q4/18 Q4/19 Q4/18 Q4/19 Revenue growth (organic) Adj. EBITDA AL growth (organic) %y/y %y/y 1.4% 52.2% 34.8% Integration of TC into Germany planne
Slide 40: Group Development: Growth Across the Board
GROUP DEVELOPMENT: GROWTH ACROSS THE BOARD Revenues Adj. EBITDA AL € mn +26% € mn 19% 729 259 578 218 513 NL 102 130 NL 360 143 GD Towers 218 231 GD Towers 125 -15 -9 -14 Other Others Q4/18 Q4/19 Q4/18 Q4/19 Revenue growth (organic) Adj. EBITDA AL growth (organic) %y/y %y/y 14.9% 12.8% 9.7% 2.9% 2.7
Slide 41: GD/TMNL: Strong Growth
GD/TMNL: STRONG GROWTH Contract net adds Mobile service revenue growth (organic) 000 %y/y 77 80 83 3.3% 2.8% 71 2.5% 2.6% 37 -1.3% Q4/181 Q1/19 Q2/19 Q3/19 Q4/19 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Broadband net adds Adj. EBITDA AL growth (organic) 000 %y/y 25.8% 24.9% 21 23 14.9% 18 13.0% 14 10.6% 7 Q4/1
Slide 42: GD Towers: Ongoing Expansion
GD TOWERS: ONGOING EXPANSION Total sites Recurring rental revenues 000 34.3 € mn 29.4 3.1 NL towers +10% +2% organic +1.8k 194 213 31.2 organic Q4/18 Q4/19 Q4/18 Q4/19 Opex AL per site1 Adj. EBITDA 000 € € mn 3.5 194 3.1 136 EBITDA 125 143 EBITDA AL +7% organic Q4/18 Q4/19 Q4/18 Q4/19 42
Slide 43: Financials: FCF, Net Debt, Adj. Net Income and EPS
FINANCIALS: FCF, NET DEBT, ADJ. NET INCOME AND EPS Free Cash Flow AL1 Adj. net income € mn € mn +22.6% +27.6% -194 1,763 1,438 1,332 -741 4 -76 796 1,405 -960 -86 173 1,016 -90 -41 -1,046 -182 Q4/18 CF gen. Interest Lease Capex Others Q4/19 -9 from ops. adjustment (excl. Q4/18 Adj. D&A3 Financial Ta
Slide 44: Financials: Debt Ratio Back in Comfort Zone
FINANCIALS: DEBT RATIO BACK IN COMFORT ZONE €bn 31/12/2018 31/03/2019 30/06/2019 30/09/2019 31/12/2019 Balance sheet total1 145.4 165.5 164.2 174.3 170.7 Shareholders’ equity1 43.4 42.8 42.7 45.1 46.2 Net debt1 55.4 71.9 75.7 78.8 76.0 Net debt/adj. EBITDA2 2.4 2.65 2.74 2.80 2.65 Equity ratio 29.9%
Slide 45: Appendix
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Slide 46: Mid Term Ambition Level
MID TERM AMBITION LEVEL Mid term ambition level1 Year Implications of US deal Group revenues CAGR +1 – 2% 2017 – 2021e Confirmed Group adj. EBITDA/EBITDA AL CAGR +2 – 4% 2017 – 2021e Confirmed Adj. EBITDA/EBITDA AL ex US CAGR +2 – 3% 2017 – 2021e Confirmed Group FCF/FCF AL CAGR ≈ +10% 2017 – 2021e S
Slide 47: Outlook 2020/21 (1/2)
OUTLOOK 2020/21 (1/2) € bn 2019 2020e 2021e 0, Revenue Group 80.5 Increase Slight increase Germany 21.9 Slight increase Slight increase US (in USD) 45.2 Increase Increase Europe 12.2 Slight increase Slight increase Systems Solutions 6.8 Stable Slight increase Group Development 2.8 Increase Increase
Slide 48: Outlook 2020/21 (2/2)
OUTLOOK 2020/21 (2/2) € bn 2019 2020e 2021e 0, Cash Capex Group 13.1 13.0 Germany 4.2 Slight decrease Stable US (in USD) 6.0 Stable Europe 1.7 Stable Slight decrease Systems Solutions 0.4 Stable Stable Group Development 0.5 Strong Increase Increase FCF AL Group 7.0 8.0 Increase Dividend per share (i
Slide 49: Germany Mobile: Service Revenue
GERMANY MOBILE: SERVICE REVENUE1 Reported mobile service revenue Impact of mobile regulation2 Impact of convergent offers3 Q4/18 2.0% 0.1% 0.8% Q1/19 2.8% 0.2% 0.6% Q2/19 2.4% 0.6% 0.7% Q3/19 0.7% 0.9% 0.6% Q4/19 1.4% 0.9% 0.5% Old medium term guidance (2014 – 2018 CAGR) ≈ +1% (without EU roaming im
Slide 50: German Market Overview
GERMAN MARKET OVERVIEW German mobile market service revenue1 German broadband market2 € mn mn 34.4 Telefonica 1.330 Cable 8.1 1.299 1.273 Telco Competitors 12.7 Vodafone Telekom 1.535 1.557 DT 13.6 13.7 Q4/18 Q4/19 Q4/18 Q4/19 1) On IFRS 15 basis 2) Based on management estimations 50
Slide 51: Conference Call with Q&A Session
CONFERENCE CALL WITH Q&A SESSION The conference call will be held on February 19 at 2:00 PM CET, 1:00 PM GMT, 8 AM ET. DT Participants: Tim Hoettges (CEO), Christian Illek (CFO), Hannes Wittig (Head of IR) Webcast Dial-in The link to the webcast will be provided 20 minutes before the DE 0800 58891
Slide 52: 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