Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q3 2017 Earnings Presentation
33 slides from Deutsche Telekom's earnings presentation, Nov 9, 2017
Slide 1: Deutsche Telekom Q3/2017 Results
Deutsche Telekom Q3/2017 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 9M/2017
REVIEW 9M/2017
Slide 4: 9M/2017 Highlights: strong growth and raised guidance
9M/2017 Highlights: strong growth and raised guidance Investments and innovations Customers Financial results 2/3 of customer base in GER and EU migrated to Demand for fiber in Germany unabated Strong growth continues IP 8.9 million German homes with fiber (+45% yoy) Revenue up 4.2% yoy
Slide 5: Customers: Strong demand drives momentum
customers: Strong demand drives momentum MagentaEINS (Germany + EU)1 US Mobile mn mn +5.92 +1.6 5.5 70.7 3.9 69.4 Q3/16 Q3/17 Q3/16 Q3/17 Fiber in Germany Cloud revenues mn € bn +14% +2.8 8.9 1.1 1.3 6.1 Q3/16 Q3/17 9M/16 9M/17 1) FMC RGUs may also appear under other brand name outside of Germany 2)
Slide 6: Innovations: Focus on customer experience
Innovations: Focus on customer experience Hybrid Access1 Innovation/Network Service App subs +34% visits +24% First 5G sites with 1st network product 354k 2GBit/s launched in launched on 3.6m 265k 2.9m Berlin “ngena” platform Q3/16 Q3/17 Q3/16 Q3/17 Smart Home2 IT-Support3 subs +94% subs +4% StreamO
Slide 7: Financials and Guidance 2017: growth again ahead of mid-term targets
Financials and GUIDANCE 2017: growth again ahead of mid-term targets € bn Revenue Adj. EBITDA FCF 2014 – 2018 CAGR1 +1 – 2% +2 – 4% ≈+10% Initial 2017 Guidance ($/€: 1.11) Increase Around 22.2 bn2 Around 5.5 bn Revised Guidance per H1/17 ($/€: 1.11) Increase Around 22.3 bn2 Around 5.5 bn NEW 2017 Gu
Slide 8: Review Q3/17
REVIEW Q3/17
Slide 9: Q3/2017: Financial Highlights
Q3/2017: Financial Highlights € mn Q3 9M 2016 2017 Change 2016 2017 Change Revenue 18,105 18,251 +0.8% 53,552 55,787 +4.2% Adj. EBITDA 5,535 5,720 +3.3% 16,155 17,215 +6.6% Adj. Net profit 1,040 1,244 +19.6% 3,141 3,382 +7.7% Net profit 1,053 507 -51.9% 4,799 2,129 -55.6% Adj. EPS (in €) 0.23 0.26 +
Slide 10: Germany: Strong growth in adj. EBITDA
GERMANY: Strong growth in adj. ebitda Revenue reported Adj. EBITDA and margin (in %) € mn Retail fixed1 Mobile Service Others € mn 38.2 36.2 38.4 39.1 39.9 Wholesale services Mobile handsets & other +4.5% +0.1% 2,095 2,013 2,070 2,100 2,190 5,485 5,565 5,397 5,371 5,488 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17
Slide 11: Germany: turn-around in service revenues
germany: turn-around in service revenues Mobile service revenue Fixed line service revenue1 Total service revenue1 Q3/16 0.2% -1.4%2 -0.8%2 Q4/16 -0.3% -0.3% -0.3% Q1/17 -0.8% -0.6% -0.7% Q2/17 0.8% -1.2%3 -0.6%3 Q3/17 0.9% 0.3% 0.5% 1) Total service revenue is a sum of fixed line and mobile service
Slide 12: Germany mobile: steady commercial momentum
GERMANY mobile: steady commercial momentum German mobile market service revenue1 Contract net adds2 € mn Telefonica Vodafone Telekom 000 609 514 SPs/MVNOs 368 (incl. Lebara) 464 334 515 231 Own branded 145 180 89 228 137 -39 -414 4,636 4,532 4,479 ~4.6bn 4,426 -186 1,394 1,349 1,292 1,318 1,344 -3.6
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 Q3/16 MB Growth 81% 87% 82% 61% 55% yoy % 40% Q3/17 1,554 1,200 1,244 1,360 31% 1,000 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Households in MagentaEINS bundles2 Average LTE usage upl
Slide 14: Germany Fixed: upselling drives broadband growth
GERMANY Fixed: upselling drives broadband growth German broadband market1 Entertain customers mn +65k +87k +67k +46k +70k Cable 000 +41 +61 +76 +69 +65 31.9 32.2 32.6 32.7 33.0 Telco Competitors 2,818 2,879 2,955 3,024 3,089 7.1 7.3 7.4 7.5 7.6 DT 12.0 12.0 12.1 12.2 12.3 DT net adds 12.8 12.9 13.0
Slide 15: 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 1,306 1,310 1,314 1,313 1,314 Broadband 2P -0.6% 312 317 328 334 342 2,394 2,434 2,392 2,385 2,379 994 993 986 979 972 Q3/16
Slide 16: Germany: network transformation on track
germany: network transformation on track INS – Status LTE rollout INS – Status fiber rollout2 POP +1pp Coverage in % and 68% 59% Coverage in %1 millions of households 92% 93% +15% 25.1 28.8 Q3/16 Q3/17 Q3/16 Q3/17 Status IP accesses (retail & wholesale) Status IP accesses (retail & wholesale) mn +4.
Slide 17: TMUS: continued industry leading growth
TMUS: continued industry leading growth Revenue and service revenue Net adds US-$ bn +6.5% Total revenue 000 Total net adds 1,970 2,101 1,333 1,329 +7.5% Service revenue 1,142 9.2 7.0 10.2 7.1 9.6 7.2 10.2 7.3 9.9 7.4 Branded: Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Postpaid 969 1,197 914 817 817 Prepay 6
Slide 18: TMUS: executing on key drivers
TMUS: executing on key drivers Branded postpaid phone churn Bad debt expenses & losses from sale of receivables % i% of total revenue 1.9 2.0 1.9 1.6 1.9 1.46 1.32 1.23 Q3/15 Q3/16 Q3/17 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Branded postpaid phone churn further decreased Underlying trend of improvement
Slide 19: Europe: positive commercial momentum
europe: positive commercial momentum Contract Net Adds BB Net Adds 000 000 372 81 310 692 2251 265 54 56 47 165 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 FMC Net Adds TV Net Adds 000 000 612 180 175 167 56 144 1303 49 51 44 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q3/16 Q4/16 Q1/17 Q2/17 Q3/1
Slide 20: Europe: financials on track
EUROPE: financials on track Revenue Organic revenue development € mn € mn +0.7% +1.6% 2,945 2,925 -16 2,900 2,996 2,781 2,860 2,945 2,900 25 0 -68 104 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q3/16 Cons./ FX Trad. Telco Growth Mobile Q3/17 Decons. & Other areas1 regulation Adj. EBITDA Organic adj. EBITDA devel
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 105 85 % +11pp mn and % 55 66 75% 93% Q3/16 Q3/17 Q3/16 Q3/17 Customer base1 Fiber rollout1 mn +4.6% TV Fiber household coverage +6pp +4.3% Broadband % 30 +4.5%
Slide 22: Systems Solutions: results remain mixed
SYSTEMS SOLUTIONS: results remain mixed T-Systems financials Revenue € mn € mn +2.0% Total revenue Adj. EBITDA 1,674 1,741 1,704 1,688 1,707 +2.0% -5.8% 1,674 1,707 139 131 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Adj. EBIT and margin in % € mn 2.4 2.2 2.2 -1.5 -0.1 37 41 38 Q3/16 Q3/17 Q3/16 Q3/17 -2 -26 Q3/1
Slide 23: Segment Group development: towers in transition, Dutch commercial performance strong
Segment Group development: towers in transition, dutch commercial performance remains strong Revenue Mobile service revenue trend yoy (NL) € mn NL -2.2% % Towers 0.9 557 579 564 562 545 Other1 -1.3 -0.9 332 356 341 345 327 -5.2 221 4 218 5 217 6 213 4 217 1 -9.7 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q3/16 Q
Slide 24: Financials: FCF, Net debt, and net income
FINANCIALs: FCF, Net debt, and net income Free cash flow1 Adj. net income € mn € mn -1.6% +19.6% 1,904 1,873 1,244 47 -263 185 1,040 41 188 -121 -90 185 Q3/16 Cash gen. from Capex (excl. Interest Q3/17 Q3/16 Adj. Financial D&A Taxes Minorities Q3/17 operations spectrum) & Other EBITDA result Net deb
Slide 25: Financials: balance sheet ratios in target corridor
FINANCIALS: balance sheet ratios in target corridor € bn 30/09/2016 31/12/2016 31/03/2017 30/06/2017 30/09/2017 Balance sheet total 143.1 148.5 148.6 141.5 139.8 Shareholders’ equity 37.6 38.8 39.8 38.6 39.1 Net debt 48.5 50.0 50.0 55.2 52.6 Net debt/adj. EBITDA1 2.3 2.3 2.3 2.5 2.3 Equity ratio 26.
Slide 26: 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 27: Conference call with Q&A session
Conference call with q&a Session The conference call will be held on November 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 DE 0800 9656288 +
Slide 28: 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 29: Appendix
Appendix
Slide 30: Our strategy
OUR strategy LEADING EUROPEAN TELCO BEST INTEGRATED WIN WITH LEAD IN CUSTOMER IP NETWORKS PARTNERS BUSINESS EXPERIENCE TRANSFORM PORTFOLIO EVOLVE FINANCIAL TARGETS & EFFICIENCY ENCOURAGE LEADERSHIP & PERFORMANCE DEVELOPMENT 30
Slide 31: Germany mobile: service revenue
germany mobile: service revenue Reported mobile service revenue Impact of mobile regulation1 Impact of convergent offers2 Q3/16 0.2% 2.3% 1.0% 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% Medium term guidance (2014 – 2018 CAGR): Re-iterated ≈ +1% (without EU
Slide 32: German Fixed: service revenue
german Fixed: service revenue Growth rates YOY Wholesale revenue Broadband revenue Fixed line service revenue1 Q3/16 0.5%2 1.7% -1.4%2 Q4/16 2.3% 1.6% -0.3%3 Q1/17 0.0% 1.4% -0.6% Q2/17 -0.4%3 0.8% -1.2%3 Q3/17 2.8% 0.6% 0.3% Medium term guidance (2014 – 2018 CAGR): Re-iterated +0.0% +2.0% 1) Fixed
Slide 33: Thank you!
THANK YOU!