Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — Q4 2009 Earnings Presentation

38 slides from Deutsche Telekom's earnings presentation, Feb 25, 2010

  1. Slide 1: Q4/09 – Results Presentation

    Q4/09 – Results Presentation. Deutsche Telekom. February 25, 2010

  2. 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

  3. Slide 3: Agenda

    Agenda. Deutsche Telekom Results Presentation. René Obermann CEO FY09 and Q4 2009 Review Outlook 2010 & Guidance Timotheus Höttges CFO FY09 and Q4 2009 Review Save for Service Review and Outlook Shareholder Remuneration

  4. Slide 4: Good 2009 results despite economic crisis

    Good 2009 results despite economic crisis.  Targets achieved: €20.7 billion adj. EBITDA, €7 billion free cash flow  Both free cash flow and adj. net income (€3.4 billion) at last year’s level FY 2009  Significant investment into operations: €9.2 billion capex  Q4 with robust operating performanc

  5. Slide 5: Realistic outlook, reasonable investment & predictable returns for shareholders

    Realistic outlook, reasonable investment & predictable returns for shareholders.  Around €20 billion in adj. EBITDA  Around €6.2 billion in FCF Guidance 20101)  Slightly higher cash capex than in 2009  No major M&A  More investment in broadband access (fixed and mobile) Operations  Focus on ne

  6. Slide 6: 1. Economic environment 2009/2010

    1. Economic environment 2009/2010

  7. Slide 7: Economic environment 2009 and impact on DT

    Economic environment 2009 and impact on DT. GDP Development (% Real Change p.a.) Private Consumption (% Real Change p.a.) 3.9 4.4 1.3 0.5 0.5 0.4 0.4 0.4 0.4 0.9 (0.2) (1.4) (0.8) (2.5) (3.2) (4.1) (3.8) (4.8) (3.9) (5.0) Germany EU-15 Eastern Europe UK USA Germany EU-15 Eastern Europe UK USA Source

  8. Slide 8: Economic Outlook 2010 and potential issues for DT

    Economic Outlook 2010 and potential issues for DT. GDP Development (% Real Change p.a.) Potential Impact on Deutsche Telekom 2008 2009E 2010E 2011E  Low GDP growth expectations for Europe and the US will keep pressure on prices, especially as private consumption 3.9 2.9 2.5 growth lags behind overa

  9. Slide 9: 2. Q4/FY2009

    2. Q4/FY2009 Life is for sharing. A

  10. Slide 10: Q4 Group highlights: Group margin up more than 2pp

    Q4 Group highlights: Group margin up more than 2pp. Revenue (€ billion) Overview Q4 financials  Achieved guidance despite considerable currency headwind +0.6% Group revenue growth of 0.6% in Q4/09 1.5 -0.6  Group adj. EBITDA growth of 8.6% in Q4/09 -0.8 16.2  Group margin improved from 29.0% to 3

  11. Slide 11: Germany: Adj. EBITDA growth – €947 million net cost reduction 2009

    Germany: Adj. EBITDA growth – €947 million net cost reduction 2009. Revenue (€ million) Adj. opex (€ million) -3.1% -4.5% 6,608 6,331 6,220 6,471 6,401 4,540 4,334 4,162 4,004 4,130 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Adj. EBITDA (€ million and margin in %) Adj. EBITDA (€ bil

  12. Slide 12: Germany: Fixed – on its way towards adj. EBITDA stabilization

    Germany: Fixed – on its way towards adj. EBITDA stabilization. Revenue (€ million)  Fixed network adj. EBITDA of -3.1% in Q4/09,  Due to cost discipline FY/09 adj. EBITDA -2.4% -6.3%  Adj. Opex of fixed network reduced by €0.9 billion in FY/09, 4,987 cost base reduced to €13 billion 4,724 4,628 4

  13. Slide 13: Germany: Fixed – 45% broadband net add market share, as guided

    Germany: Fixed – 45% broadband net add market share, as guided. Broadband lines1 (million) Retail net adds ‘000 / Share % DTAG Competitors Cable Market Share XX% retail broadband net add market share per quarter 46 46 46 46 46 FY/09: 23.1 23.8 24.2 24.6 25.0 45.1% 1.8 2.0 2.2 2.5 2.6 53% 10.6 10.8 1

  14. Slide 14: Germany: Mobile returns to growth with increased margin

    Germany: Mobile returns to growth with increased margin. Service revenues (€ million)  1.5 million iPhones dispatched since market launch, 1million during 2009 +0.2%  Data Revenues up 46% yoy to €947 million in FY/09  Service Revenue leadership expanded to almost 2 pp 1,751 1,722 1,733 1,798 1,75

  15. Slide 15: USA: 371k net adds – revenues still not satisfactory

    USA: 371k net adds – revenues still not satisfactory. Service revenues (US$ million) Net adds (‘000) 621 Total net adds -3.5% Contract net adds 415 371 4,780 325 4,655 4,654 4,624 4,611 267 160 56 -77 -117 -140 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Adj. EBITDA (US$ million) and

  16. Slide 16: USA: Good execution on roadmap

    USA: Good execution on roadmap. 3G POP coverage (million) T-Mobile USA stores 205 National retail 9,573 Own Stores 167 5,318 7,522 107 107 113 4,583 4,089 3,566 2,815 3,082 1,274 1,501 1,752 2,051 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q4/06 Q4/07 Q4/08 Q4/09 Number of 3G-enabled converged devices on air (mi

  17. Slide 17: Europe: Good margin performance despite F/X and regulation

    Europe: Good margin performance despite F/X and regulation. Adj. EBITDA margin Q4 09 over Q4 08 (%)  UK: revenue (GBP) decrease of 10% in Q4 cannot be compensated by cost reductions. Prepay push delivers 25 20 570k net-adds. 48 31 36  NL: synergies from Orange integration driving massive 44 improv

  18. Slide 18: Europe: UK JV on track

    Europe: UK JV on track  JV document filed with EU on January 11  Remedies under discussion Regulation  Office of Fair Trade asked for referral on February 3  March 1: Clearance from EU expected  Deal closing expected in H1 2010  Strong focus kept on day to day business  Businesses continue to

  19. Slide 19: SEE: Market leadership translates into strong profitability

    SEE: Market leadership translates into strong profitability. Adj. EBITDA margin Q4 09 over Q4 08 (%)  Revenue and adj. EBITDA growth driven by consolidation of OTE 33 37  Negative currency impact for FY: €0.2 billion revenue and 40 36 35 €0.1billion adj. EBITDA lost in currency translation yoy 38

  20. Slide 20: Systems Solutions: Strong order entry in Q4

    Systems Solutions: Strong order entry in Q4.  Several new big deals won, basis set for future revenue Revenue (€ million)1  Revenue 2009 affected by financial crisis in line with overall Internal Revenue difficult market environment External Revenue  Full year 2009 external revenues down by 4.5%

  21. Slide 21: Systems Solutions: Margin turnaround over the last six quarters

    Systems Solutions: Margin turnaround over the last six quarters. Adj. EBIT (€ million)1 and adj. EBIT margin  Adj. EBITDA up by 8.2% to €250 million EBIT margin  Adj. EBITDA margin in Q4/09 improved to 10.5% from 8.9% in EBIT Q4/08 3.0% 3.1% 2.7%  Adequate adj. EBIT improvement since Q2/08, but E

  22. Slide 22: Group free cash flow: Higher capex, taxes and interest compensated

    Group free cash flow: Higher capex, taxes and interest compensated. Free cash flow FY 2009 (€ billion) Year over Year 7.0 1.1 7.0 -1.2 0.0 -0.5 -0.2 -0.4 FY 2008 Cash Capex Interest Taxes Change in Increase in cash FY 2009 working capital generated from operations1 Per quarter 2009 Contribution per

  23. Slide 23: Group income statement: Q4 adj. net income grows by 5.1%

    Group income statement: Q4 adj. net income grows by 5.1%. P&L adjusted for special infuences (in € million) Q4/09 Q4/08 FY/09 FY/08 EBITDA 5,070 4,669 20,668 19,459 Depreciation and amortization -2,730 -2,713 -11,510 -10,639 Net financial expense -735 -702 -3,125 -2,936 - of which net interest expen

  24. Slide 24: Group balance sheet: Solid ratios

    Group balance sheet: Solid ratios. € billion 31/12/09 30/09/09 30/06/09 31/03/09 31/12/08 Balance sheet total 127.8 129.3 132.9 133.8 123.1 Shareholders’ equity 41.9 41.6 41.5 45.2 43.1 Net debt 40.9 42.4 45.0 42.8 38.2 Net debt / adj. EBITDA1 2.0 2.0 2.2 2.0 2.0 Gearing 1.0x 1.0x 1.1x 0.9x 0.9x Equ

  25. Slide 25: 3. Outlook 2010

    3. Outlook 2010 Life is for sharing. A

  26. Slide 26: Operational priorities for 2010

    Operational priorities for 2010. Strategy update on Investor Day March 17/18.  Improve US market position  Exploit German fixed mobile integration  Make the JV in the UK a success  Maintain market and profitability leadership in SEE  Further financial turnaround and improvement of market positi

  27. Slide 27: Operational priorities for 2010: Improve the US market position

    Operational priorities for 2010: Improve the US market position.  Roll out HSPA+ (21 Mbps) to Top 30 markets Network  75% of 3G sites with Ethernet backhaul by year-end  Over 5,000 additional 3G cell sites  First HSPA+ data stick in US market (“webConnect Rocket”) Devices  HSPA+-capable smartph

  28. Slide 28: Guidance 2010

    Guidance 20101. Guidance assumes constant currencies and no further significant economic deterioration (Basis 2009 average exchange rates: 1€ = 1.39US$) Adj. Group EBITDA  Around €20 billion Free cash flow  Around €6.2 billion 1 incl. TM UK for the full year 2010 Chart 24

  29. Slide 29: 4. Save 4 Service

    4, Save 4 Service Life is for sharing.

  30. Slide 30: 2007-2009 S4S delivered €5.9 billion gross savings

    2007-2009 S4S delivered €5.9 billion gross savings. Net savings after reinvest into service and growth: €1.3 billion. OPEX savings 2007-2009 (cons., w/o OTE) (€ billion)  Gross savings of €5.9 billion realized, versus original target of €4.2 to €4.7 billion by 2010 5.9 4.6  Freed up capital to rei

  31. Slide 31: S4S cost reductions of €1.8 billion in 2009 – margin increase to 32%

    S4S cost reductions of €1.8 billion in 2009 – margin increase to 32%. Cost base development YE2008-YE2009 (€ billion) Contribution by Business Unit (in € million) 2009 T-Home 976 0.4 T-Mobile (w/o TMUS) 165 -0.3 -1.8 Systems Solutions 595 45.4 3.6 GHS 94 DT Group 1.831 43.6  €1.8 billion savings on

  32. Slide 32: We continue our successful track record – S4S 2010-2012

    We continue our successful track record – S4S 2010-2012. Gross savings 2010 – 2012 (billion €)  Continuation of successful track record – S4S is a number one priority initiative in the group  Global scope: Stronger focus on international units ~4.2  Ambitious target defined: €4.2 billion gross sa

  33. Slide 33: 5. New Shareholder Remuneration

    5. New Shareholder Remuneration

  34. Slide 34: Financial framework aimed at reconciling the interests of all stakeholders

    Financial framework aimed at reconciling the interests of all stakeholders.  2010 capex slightly above 2009 level – consistent investment through the Group downturn. Expectation to broadly maintain capex in 2011/2012   No major M&A  Safe jobs with a perspective Employees  Any necessary staff re

  35. Slide 35: €0.78 per share dividend for 2009 proposed

    €0.78 per share dividend for 2009 proposed by Management and Supervisory Board1. Results 2009  Revenue For 2009:  €0.78 dividend per share without  Adj. EBITDA German withholding tax  €0.78 adj. EPS per share  FCF  €1.60 FCF per share  Adj. net income  Dividend per share  2009 dividend w/o

  36. Slide 36: First DAX company with an explicit 3 year minimum dividend plus buybacks policy

    First DAX company with an explicit 3 year minimum dividend per share plus additional buybacks policy. Previous Shareholder  Maintain attractive dividend Remuneration Policy Paradigm shift  2009: €0.78 per share New  2010-2012: Shareholder  Unchanged €3.4 billion remuneration to DT shareholders R

  37. Slide 37: Q&A

    Q&A. René Obermann CEO Timotheus Höttges CFO

  38. Slide 38: Thank you for your attention!

    Thank you for your attention!

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