Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q2 2016 Earnings Presentation
29 slides from Deutsche Telekom's earnings presentation, August 2016
Slide 1: Deutsche Telekom Q2/2016 Results
Deutsche Telekom Q2/2016 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 H1/16
REVIEW H1/16
Slide 4: 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 4
Slide 5: Leading European Telco: guidance re-iterated, ongoing execution
LEADING European TELCO: guidance Re-iterated – Ongoing execution Customers (H1/16) Investments and innovation (H1/16) Financial results (H1/16) Record demand for Fiber in Germany Further strengthening of spectrum position in Strong growth continues 5.6 million German homes with fiber the US
Slide 6: Customers: strong momentum
customers: Strong momentum MagentaEINS (Germany + EU)1 US Mobile mn mn +1.6 +8.5 3.6 67.4 2.0 58.9 H1/15 H1/16 H1/15 H1/16 Fiber in Germany Cloud revenues mn € bn +22% +2.2 5.6 0.6 0.7 3.4 H1/15 H1/16 H1/15 H1/16 1) FMC RGUs may also appear under other brand name outside of Germany 6
Slide 7: H1 2016: Highlights
H1 2016: Highlights Innovation/Best networks Investments (€ bn) Cash Capex (excl. Spectrum) H1/16 Spectrum spend Launching the new TV- Building public 5G test Platform network +7.6% USA 0.6 5.1 5.5 Driving the connected car Investing in the Cloud Europe 0.5 H1/15 H1/16 Total 1.1 Efficiency Regulatio
Slide 8: Financials and Guidance 2016: strong momentum continues, guidance re-iterated
Financials and GUIDANCE 2016: Strong momentum continues, Guidance re-iterated € bn Revenue Adj. EBITDA FCF 14-18 CAGR1 +1-2% +2-4% ≈+10% 2016 Guidance ($/€: 1.11) Increase Around 21.2 bn2 Around 4.9 bn H1 2016 performance +3.4% +10.6% (+6.9%)³ -4.4% (+15.9%)3 1) 14-18 CAGRs as per CMD 2015 guidance
Slide 9: Review Q2/16
REVIEW Q2/16
Slide 10: Q2/2016: Financial Highlights
Q2/2016: Financial Highlights € mn Q2 H1 2015 2016 Change 2015 2016 Change Revenue 17,428 17,817 +2.2% 34,270 35,447 +3.4% Adj. EBITDA 5,026 5,457 +8.6% 9,600 10,620 +10.6% Adj. Net profit 1,078 1,054 -2.2% 2,114 2,101 -0.6% Net profit 712 621 -12.8% 1,499 3,746 +149.9% Adj. EPS (in €) 0.24 0.23 -4.
Slide 11: Germany: higher margin reflecting lower handset sales and cost management
GERMANY: higher Margin reflecting lower handset sales and cost management Revenue reported Adj. EBITDA and margin (in %) € mn Retail fixed1 Mobile Service Others € mn 39.9 40.8 40.0 41.1 36.9 Wholesale services2 Mobile handsets & other 0.0% -3.1% 2,224 2,269 2,086 2,180 2,225 5,580 5,593 5,659 5,452
Slide 12: German total service revenues: growth in fixed, stable overall
german total service revenues: growth in fixed, stable overall Mobile service revenues Fixed line service revenues1,2 Total service revenues1,2 Q4/14 +1.8% -2.2% -0.9% Q1/15 +2.8% -2.3% -0.6% Q2/15 +0.1% -2.0% -1.3% Q3/15 -0.4% -0.7%3 -0.6%3 Q4/15 -0.4% -1.4% -1.1% Q1/16 -1.7% -0.5% -0.9% Q2/16 -0.8
Slide 13: Germany mobile: steady commercial momentum
GERMANY mobile: steady commercial momentum German mobile market service revenue Contract net adds1 € mn Telefonica Vodafone Telekom 000 408 Service providers/ 363 362 MVNOs -0.9% 236 220 231 Own branded 284 156 93 5 4,567 4,636 4,568 4,490 4,525 172 144 78 137 151 1,382 1,419 1,378 1,336 1,358 -1.7%
Slide 14: German mobile service revenues: trend recovery in Q2 as expected
german mobile service revenues: trend recovery in q2 as expected Reported mobile service revenues Impact of mobile regulation1 Impact of convergent offers2 Q4/14 +1.8% 0.3% 0.2% Q1/15 +2.8% 0.3% 0.7% Q2/15 +0.1% 0.4% 1.0% Q3/15 -0.4% 0.1% 1.4% Q4/15 -0.4% 0.1% 1.4% Q1/16 -1.7% 0.1% 1.1% Q2/16 -0.8%
Slide 15: Germany Fixed: strong growth in fiber
GERMANY Fixed: strong growth in fiber German broadband market1 Entertain customers mn +81k +78k +48k +62k +64k Cable 000 +7.7% 30.3 30.6 30.9 31.3 31.7 Telco Competitors 6.5 6.7 6.8 7.0 2,578 2,632 2,683 2,736 2,777 6.3 DT 11.5 11.5 11.6 11.8 11.9 DT net adds +62 +54 +51 +53 +41 12.5 12.6 12.6 12.7
Slide 16: Germany fixed: fiber drives retail broadband revenues
GERMANY fixed: fiber drives retail broadband revenues Fixed network revenues retail Broadband revenues € mn € mn +1.8% Broadband revenues Single play revenues Other revenues Broadband 3P 1,280 1,285 1,289 1,296 1,303 Broadband 2P -0.8% 285 291 296 303 308 2,439 2,449 2,462 2,410 2,420 995 994 993 99
Slide 17: German fixed line service revenues: successful turnaround
german Fixed line service revenues: Successful turnaround Growth rates YOY Wholesale revs2 Broadband revs Fixed line service revenues1,2 Q4/14 -1.7% -0.2% -2.2% Q1/15 -1.9% 0.0% -2.3% Q2/15 0.0% 0.2% -2.0% Q3/15 3.0%3 0.9% -0.7%3 Q4/15 -0.6% 1.3% -1.4% Q1/16 2.9% 1.8% -0.5% Q2/16 3.4%4 1.8% 0.4%4 Me
Slide 18: Germany: network roll-out and transformation progress towards target
germany: network roll-out and transformation progress towards Target INS – Status LTE rollout INS – Status fiber rollout2 POP +6pp Coverage in % and 57% 47% Coverage in %1 millions of households 91% +22% 85% 19.8 24.1 Q2/15 Q2/16 Q2/15 Q2/16 Status IP accesses (retail & wholesale) Status IP accesses
Slide 19: TMUS: strong growth in all key metrics
TMUS: strong growth in all key metrics Revenue and service revenue Net adds US-$ bn +12.5% Total revenue in 000 Total net adds 2,072 2,312 2,062 2,221 1,881 +12.6% Service revenue 8.2 6.0 7.8 6.2 8.2 6.4 8.6 6.5 9.3 6.8 Branded: Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Postpaid 1,008 1,085 1,292 1,041 890
Slide 20: Focus on TMUS: important drivers keep trending well
Focus on TMUS: Important drivers keep trending well Branded postpaid phone churn Bad debt expenses & losses from sale of receivables % in % of total revenues 2.8 2.5 1.48 1.32 1.27 1.9 2.0 1.8 Q2/14 Q2/15 Q2/16 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Lowest ever churn level Receivables classified as prime
Slide 21: Europe: trend towards stabilization continues
EUROPE: Trend towards stabilization continues Revenue as reported in € mn and organic change yoy in %1,2 Organic revenue development -0.4 -1.2 € mn -2.7 -2.6 3,209 -3.7 -1.2% +0.2% -35 3,144 3,209 3,261 3,397 3,080 3,106 -30 3,101 3,106 -43 -14 -12 31 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q2/15 Cons./ FX NL
Slide 22: Europe: IP migration and LTE leadership
EUROPE: IP migration and lte leadership IP migration LTE rollout IP share of fixed network access lines LTE outdoor pop coverage 97 78 +9pp mn and % 43% 52% 60% 75% Q2/15 Q2/16 Q2/15 Q2/16 Customer base1 Fiber rollout1 mn +3.0% TV Fiber household coverage +4pp +5.0% Broadband 21% +5.1% Mobile Contra
Slide 23: Systems Solutions: transformation continues
SYSTEMS SOLUTIONS: transformation continues T-Systems Financials1 Revenue Market Unit in € million and change yoy in %3 € mn 3.6 4.6 1.5 6.6 -3.0 Total revenue Adj. OPEX2 Adj. EBITDA 1,641 1,671 1,724 1,728 1,592 Tel-IT MU -3.1% -1.6% -13.8% Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 2,073 2,009 1,900 1,870 203
Slide 24: Financials: FCF, net debt and net income
FINANCIALs: FCF, Net debt AND net income Free cash flow Q2/161 Adj. net income Q2/16 € mn € mn -4.0% -2.2% 1,375 1,320 -8 -89 42 1,078 3 1,054 431 -472 20 -6 Q2/15 Cash gen. from Capex (excl. Interest & Other Q2/16 Q2/15 adj. Financial D&A Taxes Minorities Q2/16 operations spectrum) EBITDA result Ne
Slide 25: Financials: balance sheet ratios in target corridor
FINANCIALS: balance sheet ratios in target corridor € bn 30/06/2015 30/09/2015 31/12/2015 31/03/2016 30/06/20165 Balance sheet total 135.0 135.2 143.9 143.6 143.5 Shareholders’ equity 36.0 36.5 38.2 38.4 37.0 Net debt 48.8 47.9 47.6 47.6 48.7 Net debt/adj. EBITDA1 2.6 2.5 2.4 2.3 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 are transforming towards a lea
Slide 27: Conference call with Q&A session
Conference call with q&a Session The conference call will be held on August 11 at 2:00 PM CET, 1:00 PM GMT, 8 AM ET. DT Participants: Tim Höttges (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 + c
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 playlist www.telekom.com/investors ww
Slide 29: Thank you!
THANK YOU!