Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — Investor Day (February 2015)
38 slides from Deutsche Telekom's investor day presentation, Feb 26, 2015
Slide 1: Deutsche Telekom Capital Markets Day 2015
DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2015 Bonn, February 26/27, 2015
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: Group Strategy
Group Strategy Tim Höttges, CEO Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 3
Slide 4: Key Messages: DT is the leading European telco
KEY MESSAGEs: DT IS THE LEADING EUROPEAN TELCO! 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 are t
Slide 5: Review 2013–2014
Review 2013–2014 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 5
Slide 6: Performance towards ambition level
PERFORMANCE TOWARDS AMBITION LEVEL DELIVERED/ AMBITION LEVEL 2015 (FROM CMD 2012) ACHIEVEMENTS 2014 ON TRACK 2013 2014 GROUP REVENUES Growing in 2014 60.1 62.7 GROUP ADJ. EBITDA Growing in 2014 17.61 17.6 Improvement GROUP FCF 4.6 4.1 (to reach ≈ €6 bn in 2015) Improvement 0.63 GROUP ADJ. EPS 0.54 (
Slide 7: Strong execution in business & portfolio
STRONG EXECUTION IN BUSINESS & PORTFOLIO BUSINESS 2013–2015 Return to organic Market leadership in Execution Un-carrier 1–8 Ongoing revenue MU: TSI 2015+ revenue growth mobile expanded Stellar customer & transformation launched Group EBITDA Profitable business revenue growth Conseq
Slide 8: We created value for DT shareholders since last CMD
WE CREATED VALUE FOR DT SHAREHOLDERS SINCE LAST CMD TOTAL SHAREHOLDER RETURN SINCE CAPITAL MARKETS DAY 2012 Dec 2012– % Feb 2015 50 Telcos 70 +108% 46 41 43 56 119 40 99 12 CMD 2012 DIVIDEND POLICY DELIVERED FY 2012: €0.70 FY 2013: €0.50 FY 2014: €0.501 1 Subject to board resolution and AGM approval
Slide 9: Leading European Telco: key highlights 2014
LEADING European TELCO: KEY highlights 2014 2014 HIGHLIGHTS Germany: Revenue trends improved (-0.8% 2014 yoy versus -1.3% 2013 yoy). Adj. EBITDA Margin stabilized at 40% level. Improvement in all relevant KPIs: line losses reduced by 25%, Broadband losses stopped. TV net adds +26% (265k), Fiber ne
Slide 10: Market trends
Market trends Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 10
Slide 11: Changing industry's paradigms
CHANGING industry’s paradigms internet of things data analytics convergence digitalization virtualizationmodularization self-service sharing bandwidth mix and match All-IP softwarization individualization coverage reliability apps convenience hybrid networks simplicitysynchronity stability LTE open
Slide 12: Customer trends: sharing in a connected world
Customer trends: sharing in a connected world Exemplary device and apps LTE WLAN FIBRE Telekom.de LTE 16:45 38% Seamless connectivity HYBRID Phone by Apple Contract by Telekom Individual mix & match Sharing is the new having 25 different apps1 Appification: one use case, one app Intuitive and
Slide 13: Technology trends: Convergence & Virtualization
Technology trends: Convergence & Virtualization SOFTWARIZATION VIRTUALIZATION CONVERGENCE DATA ANALYTICS Software defined networks Network function virtualization Hybrid SAP HANA Modern in- Service Programming Service A Service B Fixed net for memory platform base load Control & Automation Control
Slide 14: Business Model Trends: OTT disruption
Business Model Trends: OTT disruption TELCO BUSINESS MODEL OTT BUSINESS MODEL ASSET-HEAVY ASSET-LIGHT NETWORK INVEST PORTFOLIO EXTENSION 5 DISRUPTION 5 Open Closed USAGE-BASED platforms PREMIUM FREEMIUM platforms AD-BASED MONETIZATION 4 1 SERVICE SERVICE 1 4 MONETIZATION Interoperable De-facto sta
Slide 15: We fight for control over our value points
we fight for control over our value points Examples Infrastructure projects Virtualized access Telco service Retailization of Customer relationships dominated OTT through eSIM substitution device distribution through app and content stores, moves enforced by eSIM payment solutions and online service
Slide 16: Strategy 2015–2018
Strategy 2015–2018 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 16
Slide 17: 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 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior P
Slide 18: Our core beliefs
Our core beliefs WE ARE THE TRUSTED PARTNER FOR OUR CUSTOMERS We relentlessly strive for delivering the best customer experience Our products make “life is for sharing” simple, reliable and secure Our networks provide best seamless connectivity Sales and service processes go digital, omni-chan
Slide 19: Our seamless high performing network
our Seamless High performing network TECHNOLOGY LEADERSHIP SUPERIOR SPEED AND COVERAGE – SEAMLESS ACCESS Target picture: Integrated We push a highly competitive fiber based infrastructure and at the same time stick to our capex envelope! 95% LTE pop-coverage1 in 2018 with up to 300Mbps Fiber hou
Slide 20: Our superior production model
our superior production model DIGITAL TRANSFORMATION OF CUSTOMER FACING PROCESSES COST EFFICIENCY & SIMPLICITY Annual run rate adj. ALL-IP TRANSFORMATION PAN-EUROPEAN NETWORK INTEGRATED NETWORK STRATEGY Opex savings: PAN 1 LTE roll-out NET PSTN migration Centralized, 2 Optical fiber ≈ €-1.2 bn1 in a
Slide 21: Our integrated customer proposition
Our integrated Customer proposition Mobile L Internet S M SERVICE DSL CLOUD COMMUNI- CATION L S M Access ENTER- LIVING TAINMENT Product world in silos SECURITY Every tariff element to be booked separately Simplified tariff scheme Convergent portfolio, also beyond Data as key differentiator
Slide 22: Partnering strengthens our customer proposition
partnering strengthens our customer proposition WIN-WIN-WIN THROUGH PARTNERING ACHIEVEMENTS AND AMBITION OF PARTNERING Customers One-stop shopping Integrated proposition Subscriber (mn.) Best digital products 2014 2018 Revenue (€ mn.) 2014 2018 Partner DT 6.0 Product reach Platform scale
Slide 23: Lead in business: new setup and high ambition level
lead in business: new setup and high ambition level B2B: UNIFYING THE STRENGTHS OF EUROPE, TSI AND GERMANY PARTNERS REVENUE AMBITION LEVEL (€ BN) Examples Europe TSI Germany Strengthen B2B in Europe: Strengthen B2B in EU TSI 2015+ program German SME initiative Target: B2B/ICT revenue growth >12% F
Slide 24: Open & interoperable platforms
open & interoperable platforms INDUSTRIAL INTERNET EXAMPLE: CONNECTED CAR Pure Data Platform Car Industry Secure Smart Data fuels the next industrial revolution: Connect. Mgmt. Services Solutions Autocloud Lot sizes of 1 Autonomous robots Data-driven services (context & 3rd party data) Real-
Slide 25: Innovation drives future differentiation
Innovation drives future differentiation INTEGRATED BEST CUSTOMER WIN LEAD IN IP NETWORKS EXPERIENCE WITH PARTNERS BUSINESS INNOVATION @ DT... Access Enhancement Communication “Steckerleiste” M2M All-IP/PAN-Net Security Strategic Partners Cloud ...is leading edge: e.g. Hybrid, QoS Wearables Vertic
Slide 26: Regulation needs to keep pace with market realities
Regulation needs to keep pace with market realities REVENUE SCALE USER ACCESS DEVICES SERVICES EXPERIENCE Fix regulatory framework to restore industry Enable scale economies to unlock dynamic growth efficiencies Revise price regulation Enable market consolidation Allow quality differentiation
Slide 27: Strategy execution is supported by three enablers
strategy execution is supported by three enablers INTEGRATED BEST CUSTOMER LEAD IN WIN WITH PARTNERS IP NETWORKS EXPERIENCE BUSINESS TRANSFORM PORTFOLIO EVOLVE FINANCIAL TARGETS & EFFICIENCY ENCOURAGE LEADERSHIP & PERFORMANCE DEVELOPMENT Group STRATEGY Cost and Portfolio Transformation Lead in busin
Slide 28: We follow a clear portfolio strategy
We follow a clear portfolio strategy CMD 2012: EE AND SCOUT UNDER STRATEGIC REVIEW M&A POLICY GOING FORWARD Strategic solution: building the next FMC 1 Europe market leader Selective and minor FMC/ICT acquisitions in our core integrated Premium valuation: £12.5 bn EV markets, but only for attr
Slide 29: We reduce our indirect cost ex TMUS
WE REDUCE OUR indirect cost ex TMUS “VARIABILIZATION OF COST” (EX. US) … … DRIVEN BY REVENUE GROWTH AND INDIRECT COST REDUCTION Share of direct and indirect1 cost (ex US) € bn Total cost (ex US) CAGR ≈ 1-2% -€0.8 bn 10.4 driven by revenue growth -€0.4 bn Ambition €-1.8 bn 67% 65% ≈ indirect cost1 re
Slide 30: The best team puts our strategy in action
The best team puts our strategy in action LEADING EUROPEAN TELCO More… Leadership …collaborate, innovate and empower to perform. Live new leadership culture Diversity …international mindset. Foster international job rotation Responsibility …clear leadership and ownership. Ensure clear end-to-end res
Slide 31: CR & SRI: We take responsibility
CR & SRI: We take Responsibility WITHIN THE GROUP… ...WHICH IS WIDELY RECOGNIZED AND AWARDED Living guiding principles: Restructure responsibly: values for global workforce internal before external DT IN SECTOR TOP 10% DT Sector LeadeR dt „PRIME“ status Collaboration: leverage Jobs of the future: ma
Slide 32: Most valuable and trusted European telco brand
Most valuable and TRUSTED european telco brand MOST TRUSTED INTERNET AND MOBILE BRAND1 Most valuable European Telco brand 46 24 24 21 21 19 18 17 15 Most 9 8 trusted internet and mobile brand Source: Institut für Demoskopie Allensbach, 2014 1 Share of people who consider these companies to be reliab
Slide 33: Operational and financial priorities per segment
Operational and financial Priorities PER SEGMENT GERMANY EUROPE USA T-SYSTEMS MU Superior All-IP production First to move to pan-European Un-carrier strategy: TSI 2015+ Execution model and INS rollout! All-IP production model 2.2–3.2mn branded postpaid No. 1 choice for customers via No
Slide 34: Financial outlook
Financial outlook Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 34
Slide 35: Balanced finance strategy
FINANCE LEADING STRATEGY EUROPEAN IS OUR TELCO WITHBALANCED TRAINING PLAN... FOCUS ON ROCE EQUITY STRATEGY LEADING EUROPEAN TELCO DEBT RELIABLE SHAREHOLDER BEST UNDISPUTED ACCESS REMUNERATION POLICY INTEGRATED WIN WITH LEAD IN TO DEBT CAPITAL MARKETS CUSTOMER IP NETWORKS PARTNERS BUSINESS EXPERIENCE
Slide 36: Our guidance
our GUIDANCE GUIDANCE 2015 GUIDANCE 2015 2014 RESULTS Reported ON A CONSTANT CURRENCY BASIS1 ON CURRENT €/$ EXCHANGE RATE2 € BN €/$: 1.33 €/$: 1.13 REVENUE 62.7 Growth Growth ADJ. EBITDA 17.6 around 18.3 around 19.3 FCF 4.1 around 4.3 around 4.3 1 Guidance based on constant exchange rates (Average €
Slide 37: Mid term ambition level
MID TERM ambition level Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 37
Slide 38: Mid term ambition level
MID TERM AMBITION LEVEL TOPIC MID TERM AMBITION LEVEL1 YEAR GROUP REVENUES CAGR 1–2% 2014–2018 GROUP ADJ. EBITDA CAGR 2–4% 2014–2018 GROUP FCF CAGR ≈10% 2014–2018 GROUP ADJ. EPS ≈€1 in 2018 2018 GROUP ROCE ROCE > WACC in 2018 2018 GROUP CASH CAPEX CAGR 1–2% 2014–2018 GROUP ADJ. OPEX DECREASE (ex US)