Slide 1: Deutsche Telekom Q4/2017 Results
Deutsche Telekom Q4/2017 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, de
Slide 3: Review FY/2017
REVIEW FY/2017
Slide 4: 2017 Highlights: growth in commercials and financials
2017 Highlights: growth in commercials and financials Growth: investments and innovations Growth: customers Growth: financials Cash capex +10.4% to €12.1 billion Demand for fiber in Germany unabated Strong growth continues IP-Migration for 70% of HHs in GER and 9.6 million German homes wit
Slide 5: 2017 Innovations: Focus on customer experience
2017 Innovations: Focus on customer experience Hybrid Access1 Innovation/Network Digital Service App subs +26% visits +27% Narrowband IoT roll-out European aviation 370k started in eight countries network roll-out 11.2mn 294k 8.8mn completed Q4/16 Q4/17 Q4/16 Q4/17 Smart Home2 IT-Support3 subs +87%
Slide 6: 2017 customers: Strong demand drives momentum
2017 customers: Strong demand drives momentum MagentaEINS (Germany + EU)1 US Mobile mn +1.5 mn +5.72 5.9 72.6 4.4 71.5 FY/16 FY/17 FY/16 FY/17 Fiber in Germany Cloud revenues mn € bn +12% +2.8 9.6 1.6 1.7 6.8 FY/16 FY/17 FY/16 FY/17 1) FMC RGUs may also appear under other brand name outside of Germa
Slide 7: 2017 Achievements: accelerated growth in GER + EU
2017 Achievements: accelerated growth in GER + eu1 Net adds mobile contract (GER + EU1) Service revenue trend yoy (GER + EU1) mn +41.5% 0.4% +2.8% 2.1 0.0% 1.4 1.5 -0.9% -1.8% FY/15 FY/16 FY/17 FY/15 FY/16 FY/17 Q4/17 Net adds broadband (GER + EU1) Organic service revenue trend yoy (GER + EU1)2 000
Slide 8: FY 2017 Highlights: Capital allocation decisions
FY 2017 Highlights: Capital allocation decisions Stronger assets Pension funding / BT Austria: acquisition of UPC Austria BT stake to be transferred into DT pension fund TM-NL: Take-over of Tele2 Netherlands Voluntary annual pension funding of c250m € discontinued Poland: Fiber wholesale a
Slide 9: German infrastructure: achievements
German infrastructure: achievements 2017 German Capex1 Fiber coverage Fiber customers € bn 5.4 71% mn 9.6 Other 1.2 44% 4.2 1.7 2.5 TDG 1.1 0.2 DT VOD O2D UTDI 2014 2017 2014 2017 Fiber build LTE Coverage LTE Customers km Pops 94% mn 10.8 40k 80% 21k 5.6 2014 2017 2014 2017 2014 2017 1) Peers accord
Slide 10: German infrastructure priorities: mobile
German infrastructure priorities: mobile Accelerated tower build 2018/19 milestones 28k Coverage of “white spots” Increase LTE pop coverage to 98% (2019) Annual build Improving customer 3mn POPs in “white spots” to get LTE access by 2.0k experience year end 2019 DFMG capex to grow Covera
Slide 11: German infrastructure priorities: Fixed
German infrastructure priorities: Fixed B2C B2B 2017 71% fiber coverage c75% of businesses with up to 50Mbp/s available 2018 80% fiber coverage Accelerated build out of business 15m homes with up to 250 Mbp/s districts with direct fiber by end 2018 FTTC coverage and speed increases Mid t
Slide 12: German infrastructure: continued high investments
German infrastructure: continued high investments 2017 German Capex1 Outlook mid term € bn 5.4 5.7 High investments to stay in place 1.2 Assuming fair and reliable regulatory framework Other 4.2 TDG stable at high levels TDG Completion of promised vectoring roll-out in 2019 2017 2018e Inve
Slide 13: 2017 Financials: Guidance achieved
2017 Financials: Guidance achieved € bn Revenue Adj. EBITDA FCF 2014 – 2018 CAGR1 +1 – 2% +2 – 4% ≈+10% Initial 2017 Guidance ($/€: 1.11) Increase Around 22.2 bn2 Around 5.5 bn Final 2017 Guidance ($/€: 1.11) Increase Around 22.4 – 22.5 bn2 Around 5.5 bn Results 2017 at guidance f/x ($/€: 1.11) 75.7
Slide 14: 2017 financials: delivering growth
2017 financials: delivering growth Revenue Adj. EBITDA FCF Dividend1 € bn € bn € bn € per share CAGR 4%3 CAGR 5%3 CAGR 9% CAGR 11%3 69.2 73.1 74.9 21.4 22.2 23.2 6.2 0.60 0.65 62.7 19.9 5.5 0.55 17.6 4.5 4.9 0.50 4.1 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 201
Slide 15: Guidance 2018: we will grow on both sides of the Atlantic
GUIDANCE 2018: we will Grow on both sides of the atlantic € bn Revenue Adj. EBITDA FCF 2014 – 2018 CAGR1 +1 – 2% +2 – 4% ≈+10% 2018 Guidance ($/€: 1.13) Slight increase Around 23.2 Around 6.2 thereof group excl. US Around 13.2 thereof TM US (US$ bn) Around 11.31 impact of new revenue standard (US$ b
Slide 16: Review Q4/17
REVIEW Q4/17
Slide 17: FY and Q4 2017: Financial Highlights
FY AND q4 2017: Financial Highlights € mn Q4 FY 2016 2017 Change 2016 2017 Change Revenue 19,543 19,160 -2.0% 73,095 74,947 +2.5% Adj. EBITDA 5,265 5,015 -4.7% 21,420 22,230 +3,8% Adj. Net profit 973 2,657 +173.1% 4,114 6,039 +46.8% Net profit -2,124 1,332 n.m. 2,675 3,461 +29.4% Adj. EPS (in €) 0.2
Slide 18: Germany: growing revenue and adj. EBITDA
GERMANY: growing revenue and adj. ebitda Revenue reported Adj. EBITDA and margin (in %) € mn Retail fixed1 Mobile Service Others € mn 38.4 39.1 39.9 36.2 37.1 Wholesale services Mobile handsets & other +4.7% +2.0% 2,013 2,070 2,100 2,190 2,107 5,565 5,488 5,676 5,397 5,371 Q4/16 Q1/17 Q2/17 Q3/17 Q4
Slide 19: Germany: Sustained growth in service revenues
germany: Sustained growth in service revenues Mobile service revenue Fixed line service revenue1 Total service revenue1 Q4/16 -0.3% -0.3% -0.3% Q1/17 -0.8% -0.6% -0.7% Q2/17 0.8% -1.2%2 -0.6%2 Q3/17 0.9% 0.3% 0.5% Q4/17 1.7% 0.5% 0.9% 1) Total service revenue is a sum of fixed line and mobile servic
Slide 20: Germany mobile: good commercial momentum
GERMANY mobile: good commercial momentum German mobile market service revenue1 Contract net adds2 € mn Telefonica Vodafone Telekom 000 514 435 SPs/MVNOs 368 334 (incl. Lebara) 515 231 254 180 89 228 137 181 Own branded +0.8% -39 -414 4,532 4,426 4,479 4,611 4,567 -186 1,349 1,292 1,318 1,344 1,332 Q
Slide 21: Germany: good progress with convergence and data
Germany: good progress with convergence and data Mobile contract customers in MagentaEINS bundles1 Average Consumer Data Usage3 Q4/16 MB Growth 87% 82% 61% 55% 38% yoy % 42% Q4/17 1,554 1,654 34% 1,200 1,244 1,360 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Households in MagentaEINS bundles2 Average LTE usage upl
Slide 22: Germany Fixed: strong broadband customer growth
GERMANY Fixed: strong broadband customer growth German broadband market1 Entertain customers mn +87k +67k +46k +70k +104k Cable 000 +61 +76 +69 +65 +50 32.2 32.6 32.7 33.0 33.4 Telco Competitors 2,879 2,955 3,024 3,089 3,139 7.3 7.4 7.5 7.6 7.8 DT 12.0 12.1 12.2 12.3 12.4 DT net adds 12.9 13.0 13.0
Slide 23: Germany fixed: fixed retail close to stable
GERMANY fixed: fixed retail close to stable Fixed network revenue retail Broadband revenue € mn Broadband revenues Single play revenues Other revenues € mn +0.6% Broadband 3P 1,310 1,314 1,313 1,314 1,318 Broadband 2P -0.6% 317 328 334 342 346 2,434 2,392 2,385 2,379 2,419 993 986 979 972 972 Q4/16
Slide 24: Germany: network transformation on track
germany: network transformation on track INS – Status LTE rollout INS – Status fiber rollout2 POP +1pp Coverage in % and 71% 64% Coverage in %1 millions of households 93% 94% +11% 27.2 30.3 Q4/16 Q4/17 Q4/16 Q4/17 Status IP accesses (retail & wholesale) Status IP accesses (retail & wholesale) mn +4.
Slide 25: TMUS: continued industry leading growth
TMUS: continued industry leading growth Revenue and service revenue Net adds US-$ bn +6.4% Total revenue 000 2,101 1,854 1,142 1,333 1,329 Service revenue Total net adds +4.8% 10.2 7.1 9.6 7.2 10.2 7.3 9.9 7.4 10.7 7.6 Branded: Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Postpaid 1,197 914 817 817 1,072 Prepa
Slide 26: 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 2.0 1.9 1.46 1.6 1.4 1.28 1.18 Q4/15 Q4/16 Q4/17 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Branded postpaid phone churn further decreased Decrease reflects ongoing focus o
Slide 27: Europe: Strong commercial momentum
europe: Strong commercial momentum Contract Net Adds BB Net Adds 000 000 372 364 81 88 310 265 692 2251 56 47 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 FMC Net Adds TV Net Adds 000 000 612 216 56 180 175 167 51 44 45 1303 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17
Slide 28: Europe: financials on path to turnaround
EUROPE: financials on path to turnaround Revenue Organic revenue development € mn € mn -0.6% +0.2% 3,019 2,996 3,002 0 23 -2 2,996 2,781 2,860 2,945 3,002 -102 87 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q4/16 Cons./ FX Trad. Telco Growth Mobile Q4/17 Decons. & Other areas1 regulation Adj. EBITDA Organic adj.
Slide 29: 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 106 93 % +9pp mn and % 59 68 83% 94% Q4/16 Q4/17 Q4/16 Q4/17 Customer base1 Fiber rollout1 mn +4.8% TV Fiber household coverage +6pp +4.7% Broadband % 32 +4.8% M
Slide 30: Systems Solutions: Strong Q4 but legacy challenges remain
SYSTEMS SOLUTIONS: Strong Q4 but legacy challenges remain T-Systems financials Revenue € mn € mn +4.5% Total revenue Adj. EBITDA 1,741 1,704 1,688 1,707 1,819 +75.0% +4.5% 1,741 1,819 147 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Adj. EBIT and margin in % 84 € mn -0.1 2.4 2.2 2.5 -1.5 41 38 45 -2 Q4/16 Q4/17 Q4
Slide 31: Group Development: steady delivery
Group Development: steady delivery Revenue Mobile service revenue trend yoy (NL) € mn NL % -1.3% -0.7% +1.6% +0.6% -1.0% Revenue trend -3.1% excl. regulation Towers 0.9 579 564 562 545 561 Other1 356 341 345 327 342 -1.3 -0.9 -5.2 218 5 217 6 213 4 217 1 217 2 -7.4 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q4/1
Slide 32: Financials: FCF, Net debt, net income and ROCE
FINANCIALs: FCF, Net debt, net income AND roce Free cash flow1 Adj. net income € mn € mn +22.5% +173.1% 1,094 893 317 -136 20 2,657 2,675 973 -1,186 -250 296 149 Q4/16 Cash gen. from Capex (excl. Interest Q4/17 Q4/16 Adj. Financial D&A Taxes Minorities Q4/17 operations spectrum) & Other EBITDA resul
Slide 33: Financials: balance sheet ratios in target corridor
FINANCIALS: balance sheet ratios in target corridor € bn 31/12/2016 31/03/2017 30/06/2017 30/09/2017 31/12/2017 Balance sheet total 148.5 148.6 141.5 139.8 141.3 Shareholders’ equity 38.8 39.8 38.6 39.1 42.5 Net debt 50.0 50.0 55.2 52.6 50.8 Net debt/adj. EBITDA1 2.3 2.3 2.5 2.3 2.3 Equity ratio 26.
Slide 34: Executing our strategy
Executing our strategy 1 Leading European Telco: Integrated market leader with superior margins and returns. 2 We strengthen our differentiation by best customer experience and by continuously investing into leading access networks and our transformation programs. 3 We transform towards a lean and h
Slide 35: Conference call with Q&A Session
Conference call with q&a Session The conference call will be held on February 22 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 the DE 08
Slide 36: 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 37: Appendix
Appendix
Slide 38: Germany mobile: service revenue
germany mobile: service revenue Reported mobile service revenue Impact of mobile regulation1 Impact of convergent offers2 Q4/16 -0.3% 1.9% 0.9% Q1/17 -0.8% 2.2% 0.8% Q2/17 0.8% 1.7% 0.8% Q3/17 0.9% 2.8% 0.7% Q4/17 1.7% 1.9% 0.5% Medium term guidance (2014 – 2018 CAGR): Re-iterated ≈ +1% (without EU
Slide 39: German Fixed: service revenue
german Fixed: service revenue Growth rates YOY Wholesale revenue Broadband revenue Fixed line service revenue1 Q4/16 2.3% 1.6% -0.3% Q1/17 0.0% 1.4% -0.6% Q2/17 -0.4%2 0.8% -1.2%2 Q3/17 2.8% 0.6% 0.3% Q4/17 2.7% 0.6% 0.5% Medium term guidance (2014 – 2018 CAGR): Re-iterated +0.0% +2.0% 1) Fixed netw
Slide 40: Thank you!
THANK YOU!