Slide 1: Deutsche Telekom Q4/FY 2013 & Strategy Update
DEUTSCHE TELEKOM Q4/FY 2013 & STRATEGY UPDATE
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 Q4/FY 2013
REVIEW Q4/FY 2013 7 | ase @@ LIFE IS FOR SHARING.
Slide 4: 2013 Key Achievements: Creating Value
2013 KEY ACHIEVEMENTS: CREATING VALUE Segments Revenue trends further improved Organic revenue trends improved MetroPCS merger successfully Adj. Margin at 40% level Revenue and cost transformation accomplished Mobile market leadership progressing well Turnaround in subscriber regained
Slide 5: Q4 Key Achievements: Turnaround in the US Continues
Q4 KEY ACHIEVEMENTS: TURNAROUND IN THE US CONTINUES, GERMANY REMAINS SOLID, EUROPE WITH SLIGHT IMPROVEMENT Growth in key areas: 1,639k mobile contract net adds, 163TV net adds, 42k broadband net adds. Revenue grows 6.5% to €15.7 billion. Organic revenue growth1 of 2.8%. GROUP Adj. EBITDA of €4
Slide 6: 2013: Key Figures
2013: KEY FIGURES Q4 FY € mn 2012 2013 Change 2012 2013 Change Revenue 14,707 15,665 6.5% 58,169 60,132 3.4% Adj. EBITDA 4,008 4,060 1.3% 17,973 17,424 -3.1% Adj. net profit 200 355 77.5% 2,537 2,755 8.6% Net profit 641 -752 n.a. -5,353 930 n.a. Adj. EPS (in €) 0.05 0.08 60.0% 0.59 0.63 6.8% EPS (in
Slide 7: Germany: FY Adj. EBITDA Margin at Around 40%
GERMANY: FY ADJ. EBITDA MARGIN AT AROUND 40% Revenues Adj. EBITDA and margin (in %) € mn Mobile Core fixed Wholesale services Others € mn 40.5 40.6 41.9 36.1 35.9 -1.7% -2.3% 5,731 5,566 5,565 5,670 5,634 2,074 2,255 2,279 2,375 2,027 1,987 1,842 1,925 2,006 1,957 -1.5% Q4/12 Q1/13 Q2/13 Q3/13 Q4/13
Slide 8: Germany: Fixed – Increasing ARPA, Fiber Base Growing
GERMANY: FIXED – INCREASING ARPA, FIBER BASE GROWING, LINE LOSSES DECREASING German broadband market1 Average revenue per access growing mn +16 -14 -47 -22 Cable € 25.9 26.1 26.2 26.2 26.3 TP 27.9 28.2 28.3 28.5 28.7 DSL Competitors 39 39 DP 38 32 32 32 38 32 38 32 4.3 4.6 4.7 4.9 5.1 11.1 11.2 11.2
Slide 9: Germany: Mobile – Continued Outperformance of Competition
GERMANY: MOBILE – CONTINUED OUTPERFORMANCE OF COMPETITION German mobile market service revenue TD mobile service revenue excl. MTR cut € mn E-Plus O2 Vodafone Telekom € mn MTR -0.4% -5.0% 1,700 1,680 1,673 1,674 4,965 4,820 4,843 1,628 24 4,722 4,717 -2.9% 1,650 782 714 764 752 759 -6.3% 793 733 748
Slide 10: TMUS: Q4 with Strongest Customer Growth Since 2005
TMUS: Q4 WITH STRONGEST CUSTOMER GROWTH SINCE 2005 Revenue and service revenue Net additions +25.3% US-$ mn Total revenue in 000 1,130 1,023 1,645 61 579 +40.7% Service revenue Total net adds 4,678 6,305 6,764 6,919 Branded: Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 4,916 4,005 3,908 4,624 5,013 5,018 Postpai
Slide 11: Europe: Organic Revenue and Adj. EBITDA with Slight Improvement
EUROPE: ORGANIC REVENUE AND ADJ. EBITDA WITH SLIGHT IMPROVEMENT Revenue Revenue € mn -3.3% € mn +0.4% -3.3% 3,594 -87 3,462 122 3,476 3,594 3,327 3,420 3,436 3,476 -45 -34 -93 19 Q4/12 Cons./ FX Trad. Mobile Growth Old Telco Q4/13 Decons. Telco & Regulation areas1 Tax HU Other Q4/12 Q1/13 Q2/13 Q3/1
Slide 12: Europe: Continued Growth in Mobile and Fixed Key Areas
EUROPE: CONTINUED GROWTH IN MOBILE AND FIXED KEY AREAS Pockets of growth – broadband and TV1 Net adds – broadband and TV1 mn broadband accesses TV customers in 000 broadband net adds TV net adds 105 110 107 5.01 5.07 5.13 5.19 5.26 83 79 2.94 3.01 3.09 3.45 3.56 59 72 58 68 64 Q4/12 Q1/13 Q2/13 Q3/1
Slide 13: Europe: Commercial and Technology Initiatives
EUROPE: COMMERCIAL AND TECHNOLOGY INITIATIVES DRIVING REVENUE AND COST TRANSFORMATION Revenue transformation Technology and Cost transformation Growth Areas1 Connected Home share All-IP share of EU fixed FTEs in 000 share of total revenues of fixed revenues network access lines (end of period) +4pp
Slide 14: Systems Solutions: EBIT Margin Improved at Market Unit
SYSTEMS SOLUTIONS: EBIT MARGIN IMPROVED AT MARKET UNIT, TEL-IT DELIVERS ON COST SAVINGS Total Revenue Revenue Market Unit € mn -7.6% -0.5% € mn -3.8% 2,829 2,627 2,613 2,127 -136 -28 -38 -13 1,893 1,884 1,873 2,047 Organic decline Q4/12 Tel- Deconsolidations F/X Market Unit Q4/13 Q4/12 Q1/13 Q2/13 Q
Slide 15: Financials: 2013 and Q4 FCF and Adj. Net Income
FINANCIALS: 2013 AND Q4 FCF AND ADJ. NET INCOME Free cash flow 2013 Adj. net income 2013 -26.2% +8.6% € mn € mn 6,239 2,755 -670 4,606 2,537 -840 -123 -549 87 85 -226 821 2012 Cash gen. from Capex (excl. Other 2013 2012 adj. Financial D&A Taxes Minorities 2013 operations spectrum) EBITDA result Free
Slide 16: Financials: Improvement in ROCE and Adj. EPS
FINANCIALS: IMPROVEMENT IN ROCE AND ADJ. EPS ROCE development FY/13 Adj. EPS development FY/13 +6.2pp +6.8% in % € per 3.8 share 0.59 0.63 0.02 0.02 0.19 -0.14 -0.05 -2.4 FY/12 adj. Financial D&A Taxes Minorities FY/13 FY/12 NOPAT NOA FY/13 EBITDA result Net debt development Q4/13 € bn 39.7 39.1 -1.
Slide 17: Financials: Balance Sheet
FINANCIALS: BALANCE SHEET € bn 31/12/2012 31/03/2013 30/06/2013 30/09/2013 31/12/2013 Balance sheet total 107.9 108.8 116.1 115.3 118.1 Shareholders’ equity 30.5 31.0 31.3 32.0 32.1 Net debt 36.9 37.1 41.4 39.7 39.1 Net debt/Adj. EBITDA1 2.1 2.1 2.4 2.3 2.2 Equity ratio 28.3% 28.5% 26.9% 27.8% 27.1%
Slide 18: Strategy Update: Deutsche Telekom – Leading Telco
STRATEGY UPDATE: DEUTSCHE TELEKOM – LEADING TELCO
Slide 19: DT Strategy: Leading European Telecommunications Provider
DT STrATEGY LEADING EUROPEAN TELecommunications Provider LEADING TELCO BEST INTEGRATED WIN WITH LEAD IN CUSTOMER IP NETWORKS PARTNERS BUSINESS EXPERIENCE 19
Slide 20: Integrated IP Networks
INTEGRATED IP NETWORKS INTEGRATED BEST CUSTOMER WIN WITH LEAD IN IP NETWORKS PARTNERS BUSINESS EXPERIENCE All-IP transformation Pan-European network INTEGRATED NETWORK STRATEGY Future-proof IP platform with focus on DT as technology front runner in LTE roll-out: customer and faster installatio
Slide 21: Best Customer Experience
BEST CUSTOMER EXPERIENCE INTEGRATED BEST CUSTOMER WIN WITH LEAD IN IP NETWORKS PARTNERS BUSINESS EXPERIENCE BEST network Integrated products BEST CUSTOMER SERVICE Best network quality Integrated products/services for Easy and fast service at home or on the move fixed/mobile communications for
Slide 22: Win with Partners
WIN WITH PARTNERS INTEGRATED BEST CUSTOMER WIN WITH LEAD IN IP NETWORKS PARTNERS BUSINESS EXPERIENCE “Steckerleiste” NEW GENERATION TV PLATFORM-BASED BUSINESS Set up partner system for innovative Best HD-offering&Premium-Contents DT as a platform for third-party services (“power strip”): state-o
Slide 23: Lead in Business
LEAD IN BUSINESS INTEGRATED BEST CUSTOMER WIN WITH LEAD IN IP NETWORKS PARTNERS BUSINESS EXPERIENCE T-SYStems 2015+ Strengthening B2B IN GERMAN SME INITIATIVE EUROPE Restructuring of IT business to focus Focussed expansion of mobile- Focus on SME growth market: on scalable, platform-based cent
Slide 24: Lead in Business – TSI 2015+ Faster Strategy Execution
LEAD IN BUSINESS – TSI 2015+ INTEGRATED BEST CUSTOMER WIN WITH LEAD IN FASTER STRATEGY EXECUTION IP NETWORKS EXPERIENCE PARTNERS BUSINESS Changing Environment Transform our Business model Increased competitive intensity especially in classical ICT and commoditized cloud services leads to massively
Slide 25: Lead in Business – TSI 2015+ Revenue Profile and Profitability
LEAD IN BUSINESS – TSI 2015+ INTEGRATED BEST CUSTOMER WIN WITH LEAD IN REVENUE PROFILE AND PROFITABILITY IP NETWORKS EXPERIENCE PARTNERS BUSINESS Revenue distribution TSI Market Unit 2013 2014 2017 7.3 €bn1 6.7 €bn ~7.7 €bn 10% 7% 35% 17% Revenue share generated by 12% 13% 0% 37% 44% 45% growth area
Slide 26: Our Finance Strategy – Proven and Still Valid
OUR FINANCE STRATEGY – PROVEN AND STILL VALID EQUITY STRATEGY LEADING TELCO DEBT BEST Reliable Shareholder INTEGRATED CUSTOMER WIN WITH LEAD IN Undisputed access to Remuneration policy IP NETWORKS PARTNERS BUSINESS debt capital markets EXPERIENCE Dividend1 Rating: A-/BBB FY 2013: €0.50 VALUE CRE
Slide 27: Portfolio Transformation
PORTFOLIO TRANSFORMATION Create, protect & invest for “economic FMC fortresses” Strengthen the strength Continue network investments Capture MetroPCS synergies DERISKING T-MOBILE US Maintain & monetize Uncarrier momentum Acquisitions to be funded by cleaning up weak spots PORTFOLIO DISCIPL
Slide 28: Guidance
GUIDANCE1 2013 RESULTS GUIDANCE 2014 AMBITION 2015 € bn Reported Pro forma2 Revenue 60.1 60.9 Slight growth3 Growing Adj. EBITDA 17.4 17.6 flat around 17.64 Growing FCF 4.6 4.6 around 4.2 Slight growth SHAREHOLDER REMUNERATION POLICY5 Unchanged 2013/2014: 0.5 € per share 2015: re-visit 1) Guidan
Slide 29: Update Mid Term Ambition CMD 2012
UPDATE MID TERM AMBITION CMD 2012 MID TERM AMBITION (INCL. PCS) GROUP REVENUES Growing 2014 GROUP Adj. EBITDA Growing 2014 GROUP FCF ≈€6 bn 2015 GROUP Adj. EPS Improvement to ≈€0.8 2015 GROUP ROCE Improvement to ≈5.5% 2015 SHAREHOLDER REMUNERATION POLICY Review 2015 29
Slide 30: Key Messages
Key Messages DEUTSCHE TELEKOM – LEADING TELCO DT with clear game plan to finish All-IP migration YE2018 Integrated IP networks Clear Advantages: Market agility, efficiency, costs ACROSS European footprint DT as strong integrated player in >70% of its European assets DT with the best network
Slide 31: Further Questions Please Contact the IR Department
FURTHER QUESTIONS PLEASE CONTACT THE IR DEPARTMENT Investor Relations Phone +49 228 181 - 8 88 80 E-Mail investor.relations@telekom.de For further information please visit www.telekom.com/investors IR webpage: IR twitter account: IR youtube playlist: 31
Slide 32: Thank You!
THANK YOU!