Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q2 2019 Earnings Presentation
35 slides from Deutsche Telekom's earnings presentation, August 2019
Slide 1: Deutsche Telekom Q2/2019 Results
DEUTSCHE TELEKOM Q2/2019 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, dep
Slide 3: Review H1/2019
REVIEW H1/2019
Slide 4: H1 2019 Highlights: Executing on Growth
H1 2019 HIGHLIGHTS: EXECUTING ON GROWTH Growth: investments and innovations Growth: customers Growth: financials Cash capex at €7.0 bn (ex. spectrum). 13.4 mn German fiber homes (+22% yoy) Strong organic1 growth continues Ex. US almost stable at €3.9 bn 2.0 mn converged net adds LTM EU+GER
Slide 5: H1 2019 Investments: Driving Network Leadership
H1 2019 INVESTMENTS: DRIVING NETWORK LEADERSHIP Fiber Mobile broadband All IP Fiber households1 LTE outdoor pop coverage IP share of fixed network access lines mn % % +2.6 +0.3pp +1.1pp +16pp +15pp 34.3 +1.4 93 89 8.2 97.5 97.8 96.0 97.1 77 74 6.8 31.7 H1/18 H1/19 H1/18 H1/19 H1/18 H1/19 H1/18 H1/19
Slide 6: H1 2019 Innovations: Focus on Customer Experience
H1 2019 INNOVATIONS: FOCUS ON CUSTOMER EXPERIENCE Hybrid Access Innovation/Network One APP penetration (EU)1 subs in % +25% +9pp 5G auction in Germany Magenta TV and FMC 512k completed. DT acquires products launched in 39 408k 30 130 MHz for 2.2 bn € Poland in June H1/18 H1/19 H1/18 H1/19 Smart Home
Slide 7: H1 2019 Customers: Strong Growth Continues
H1 2019 CUSTOMERS: STRONG GROWTH CONTINUES MagentaEINS (GER + EU)1 US Mobile mn mn +2.0 +6.0 +7.4 +1.4 8.6 69.6 75.6 83.1 5.2 6.6 H1/17 H1/18 H1/19 H1/17 H1/18 H1/19 Fiber in GER Mobile contract customers GER + EU + NL2 mn mn +2.4 +2.1 +3.1 +2.8 13.4 44.3 46.4 49.5 11.0 8.2 H1/17 H1/18 H1/19 H1/17 H
Slide 8: Guidance 2019: Confirmed
GUIDANCE 2019: CONFIRMED € bn Revenue Adj. EBITDA AL2 FCF AL2 Cash Capex 2017 – 2021 CAGR (CMD 2018) +1 – 2% +2 – 4% ≈+10% Stable ex. US 2019 Guidance ($/€: 1.18) Slight increase Around 23.9 Around 6.7 Around 12.7 H1/19 Result (organic change yoy) 39.2 (+3.2%) 12.2 (+3.7%) 3.1 (+9.0%) 7.0 (+9.9%) th
Slide 9: Review Q2/19
REVIEW Q2/19
Slide 10: Financials: Strong Revenue, EBITDA AL, FCF and Net Income
FINANCIALS: STRONG REVENUE, EBITDA AL, FCF AND NET INCOME € mn Q2 HY 2018 2019 Change 2018 2019 Change Revenue 18,367 19,664 +7.1% 36,291 39,152 +7.9% Adj. EBITDA AL1 5,866 6,283 +7.1% 11,353 12,223 +7.7% Adj. EBITDA AL (excl. US)1 3,314 3,411 +2.9% 6,470 6,672 +3.1% Adj. Net profit 1,238 1,329 +7.4
Slide 11: Germany: Revenue and EBITDA Growth
GERMANY: REVENUE AND EBITDA GROWTH Revenue Adj. EBITDA AL and margin (in %) € mn Retail fixed1 Mobile Service Others € mn 39.5 40.4 40.0 38.4 39.4 Wholesale services Mobile handsets & other +1.2% +2.4% 5,612 2,103 2,200 2,154 2,108 2,153 5,322 5,441 5,357 5,388 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 2,373 2,
Slide 12: Germany: Growth in Service Revenues
GERMANY: GROWTH IN SERVICE REVENUES Mobile service revenue1 Fixed line service revenue1 Total service revenue1 Q2/18 2.9% -0.1% 0.9% Q3/18 3.1% -0.4% 0.8% Q4/18 2.0% -0.7% 0.2% Q1/19 2.8% 0.1% 1.0% Q2/19 2.4% -0.3% 0.6% 1) 2018 rates calculated excl. IFRS15. from 2019 onwards incl. IFRS 15 12
Slide 13: Germany Mobile: Healthy Growth Continues
GERMANY MOBILE: HEALTHY GROWTH CONTINUES German mobile market service revenue1 Own branded contract net adds2 € mn Telefonica Vodafone Telekom 000 151 132 140 130 90 1,311 1,339 1,330 1,281 1,331 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Smartphone penetration2 LTE customers3 1,268 1,321 1,299 1,262 1,260 % mn
Slide 14: Germany: Good Progress with Convergence and Data
GERMANY: GOOD PROGRESS WITH CONVERGENCE AND DATA Mobile contract customers in MagentaEINS bundles1 Average Consumer Data Usage3 Q2/18 MB Growth 71% 58% 57% 48% 36% yoy % Q2/19 54% 2,843 3,181 45% 2,326 2,450 2,603 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Households in MagentaEINS bundles2 Average data usage up
Slide 15: Germany Fixed: Solid Commercials, Line Losses Reflect IP-Migration
GERMANY FIXED: SOLID COMMERCIALS, LINE LOSSES REFLECT IP-MIGRATION German broadband market1 Magenta TV customers mn +80k +67k +57k +47k +28k Cable 000 +47 +51 +62 +66 +58 Telco Competitors 33.9 34.1 34.4 34.6 3,240 3,291 3,353 3,419 3,477 7.9 8.0 8.1 8.2 DT 12.5 12.6 12.7 12.8 DT net adds 13.4 13.5
Slide 16: Germany Fixed: Steady Broadband Revenue Growth
GERMANY FIXED: STEADY BROADBAND REVENUE GROWTH Fixed network revenue retail (as reported)1 Broadband revenue1 € mn Broadband revenues Single play revenues Other revenues € mn +2.3% Broadband 3P Broadband 2P -1.4% 1,418 1,418 1,420 1,445 1,450 369 373 377 391 397 2,374 2,373 2,404 2,353 2,340 1,049 1
Slide 17: TMUS: Continued Industry Leading Growth
TMUS: CONTINUED INDUSTRY LEADING GROWTH Revenue and service revenue (IFRS) Net adds +6.9% US-$ bn Total revenue 000 1,579 1,630 2,402 1,650 1,751 Service revenue Total net adds +5.1% 10.5 7.8 10.7 7.9 11.4 8.0 11.1 8.1 11.0 8.3 Branded: Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Postpaid 1,017 1,079 1,358 1,01
Slide 18: 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 (US GAAP) 1.18 0.96 1.03 0.98 0.90 1.10 0.95 0.78 Q2/17 Q2/18 Q2/19 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Branded postpaid phone churn on all time record low Decrease yoy
Slide 19: Europe: Strong Customer Growth Continues
EUROPE: STRONG CUSTOMER GROWTH CONTINUES Mobile Contract Net Adds2 BB Net Adds1, 2 000 334 000 297 300 264 196 94 73 61 63 55 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 FMC Net Adds TV Net Adds2 000 445 000 406 330 53 229 229 35 22 1 5 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q2/18 Q3/18 Q4/18
Slide 20: Europe: Growing Revenue and EBITDA AL
EUROPE: GROWING REVENUE AND EBITDA AL Revenue Organic revenue development € mn € mn +0.4% +2.8% 2,978 2,965 -5 -11 18 2,896 3,045 3,132 2,891 2,978 80 2,896 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q2/18 Cons./Decons. FX Revenue Mobile Q2/19 growth regulation Adj. EBITDA AL Organic adj. EBITDA AL development €
Slide 21: Systems Solutions: Good Progress with Transformation
SYSTEMS SOLUTIONS: GOOD PROGRESS WITH TRANSFORMATION T-Systems financials Order Entry (LTM) € mn € mn +15.0% Total revenue Adj. EBITDA AL 6,019 5,977 6,776 6,879 6,923 -0.1% +2.4% Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 1,674 1,673 124 127 Adj. EBIT and margin in % € mn 1.4 2.3 0.3 -0.2 1.9 40 31 23 6 -3 Q2/1
Slide 22: Group Development: Steady Underlying Delivery
GROUP DEVELOPMENT: STEADY UNDERLYING DELIVERY Revenue1 Mobile service revenue trend yoy (NL)2 € mn +27.7% (+2.1% org.) NL % Towers 3.3 682 683 2.5 535 544 578 Other 318 335 360 461 458 217 0 209 0 218 0 236 239 -1.0 -0.3 -1.3 -15 -14 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Adj. E
Slide 23: Group Development: Tower Business Expanding
GROUP DEVELOPMENT: TOWER BUSINESS EXPANDING Total sites GER + NL (since Q1/19)2 Recurring rental revenue2 000 +4.6k (+1.4k org.) € mn +11.9% (+3.4% org.) 28.6 29.4 32.7 33.0 188 190 194 210 210 28.4 29.5 29.8 3.2 3.2 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Opex AL per site (avg.
Slide 24: Financials: FCF, Net Debt, Adj. Net Income and EPS
FINANCIALS: FCF, NET DEBT, ADJ. NET INCOME AND EPS Free cash flow AL1 Adj. net income € mn € mn +5.4% +7.4% -211 -4 -719 1,335 -886 14 202 1,467 1,210 -303 1,546 1,238 1,329 -105 -38 -124 -1,097 -188 Q2/18 CF gen. Interest Lease Capex (excl. Others Q2/19 Q2/18 Adj. EBITDA D&A3 Financial Taxes Minori
Slide 25: Financials: Balance Sheet Ratios in Target Corridor
FINANCIALS: BALANCE SHEET RATIOS IN TARGET CORRIDOR € bn 30/06/2018 30/09/2018 31/12/2018 31/03/2019 30/06/2019 Balance sheet total1 139.7 142.3 145.4 165.5 164.2 Shareholders’ equity1 41.4 43.5 43.4 42.8 42.7 Net debt1 54.8 55.5 55.4 71.9 75.7 Net debt/adj. EBITDA2 2.5 2.4 2.4 2.65 2.74 Equity rati
Slide 26: Appendix
APPENDIX
Slide 27: Why DT: Best Positioned for Future Growth
WHY DT: BEST POSITIONED FOR FUTURE GROWTH Unique footprint Transatlantic presence in worlds’ leading economies & Asset Base Converged leader in Europe with superior network position 95% of footprint growing with further FMC growth potential Growth Profile Supercharging the Un-Carrier boosts DT’s fin
Slide 28: Mid Term Ambition Level
MID TERM AMBITION LEVEL Mid term ambition level1 Year Implications of US deal2 Group revenues CAGR +1 – 2% 2017 – 2021e Confirmed Group adj. EBITDA CAGR +2 – 4% 2017 – 2021e Confirmed Adj. EBITDA ex US CAGR +2 – 3% 2017 – 2021e Confirmed Group FCF CAGR ≈ +10% 2017 – 2021e Slightly dilutive in 2021e
Slide 29: Conference Call with Q&A Session
CONFERENCE CALL WITH Q&A SESSION The conference call will be held on August 8 at 2:00 PM CET, 1:00 PM GMT, 8 AM ET. DT Participants: Tim Hoettges (CEO), Christian Illek (CFO), Hannes Wittig (Head of IR) Webcast Dial-in The link to the webcast will be provided 20 minutes before the DE 0800 9656288
Slide 30: 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 31: Outlook 2019/20 (1/2)
OUTLOOK 2019/20 (1/2) € bn 2018 reported 2018 pro forma 2019e 2020e 0, Revenue Group 75.7 76.4 Slight increase Increase Germany 21.7 21.7 Slight increase Slight increase US (in USD) 43.1 43.1 Increase Increase Europe 11.9 12.1 Slight increase Slight increase Systems Solutions 6.9 6.9 Stable Slight i
Slide 32: Outlook 2019/20 (1/2)
OUTLOOK 2019/20 (1/2) € bn 2018 reported 2018 pro forma 2019e 2020e 0, Cash Capex Group 12.2 12.4 12.7 Stable Germany 4.2 4.2 Stable Slight decrease US (in USD) 5.2 5.2 Increase Stable Europe 1.9 1.9 Decrease Stable Systems Solutions 0.5 0.5 Strong decrease Stable Group Development 0.3 0.4 Strong In
Slide 33: Germany Mobile: Service Revenue
GERMANY MOBILE: SERVICE REVENUE1 Reported mobile service revenue Impact of mobile regulation2 Impact of convergent offers3 Q2/18 2.9% 1.1% 0.7% Q3/18 3.1% 0.1% 0.7% Q4/18 2.0% 0.1% 0.8% Q1/19 2.8% 0.2% 0.6% Q2/19 2.4% 0.6% 0.7% Old medium term guidance (2014 – 2018 CAGR) ≈ +1% (without EU roaming im
Slide 34: German Fixed: Service Revenue
GERMAN FIXED: SERVICE REVENUE1 Growth rates YOY Wholesale revenue Broadband revenue2 Fixed line service revenue Q2/18 2.4% 1.9% 5.5% -0.1% Q3/18 0.1% 2.0% 5.7% -0.4% Q4/18 0.2% 2.1% 5.9% -0.7% Q1/19 1.6% 2.1% 2.3% 0.1% Q2/19 2.1% 2.3% -0.3% Old medium term guidance (2014 – 2018 CAGR) +0.0% +2.0% New
Slide 35: Thank You!
THANK YOU!