Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q3 2020 Earnings Presentation
37 slides from Deutsche Telekom's earnings presentation, Nov 12, 2020
Slide 1: Deutsche Telekom Q3 2020 results
Deutsche Telekom Q3 2020 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: 9M 2020 results: sector leading growth
9M 2020 results sector leading growth • Successful Q3 for New T-Mobile • T-Mobile making strong progress with 5G/integration • Ongoing strong organic operational performance in Europe: Germany 16th, Europe 11th consecutive quarter of EBITDA growth • BB-net adds in GER doubled yoy. Line-losses cut by
Slide 4: 9M 2020 we grow, despite Covid-19
9M 2020 we grow, despite Covid-19 Adj. EBITDA AL (Organic growth) Adj. EBITDA AL1 9m 2020 Reported growth € mn Revenue +24.0% TMUS 10.2% +€ 1,434mn Adj. EBITDA AL +39.4% GER Adj. EBITDA AL 1.7% 6,898 +3.2% (excl. US) +€ 117mn Adj. Net profit +3.6% EU 2.1% +€ 62mn Net profit -22.6% 15,458 2,953 GD 17
Slide 5: US merger delivering the benefits
US merger delivering the benefits Operational progress Financial progress • Successful commercial integration • Confirming target $ 6bn synergy run-rate, and $ 43bn NPV • Rebranding executed in August • $ 1.2bn synergies expected already in 2020 • 2.0m postpaid net adds in Q3 • 0.9% postpaid phone c
Slide 6: Investments driving network leadership
Investments driving network leadership Fiber networks Mobile networks Agility Fiber households1 LTE outdoor POP coverage Improvement in service parameters (GER) mn % % yoy +2.5mn yoy 47.0 11.3 EU GER +0.5pp yoy +0.0pp yoy +1.3mn yoy 98.4 35.7 97.3 9.5 -20 7.6 1.9 -36 Fiber Access with GER EU Fault r
Slide 7: Investments/5G leading across the footprint
Investments/5G leading across the footprint Germany TM US Covered POPs Covered POPs • >50% already covered with 2x15 MHz of 2.1 GHz. • Launch of world’s first nationwide standalone 5G network >80% Target 2/3 coverage by year end 2020 >50% • >270mn POPs covered with 600 MHz, double the • Top 20 citie
Slide 8: Customers growing strongly
Customers growing strongly Magenta EINS (GER + EU) Mobile customers (US)1,2 mn mn +1.2 +33.9 +2.1 10.2 +4.4 100.4 9.0 6.9 62.1 66.5 9M/18 9M/19 9M/20 9M/18 9M/19 9M/20 Fiber (GER) Mobile contract customers (GER + EU + NL)2 mn mn +2.4 +1.6 +1.2 +1.6 14.0 15.5 55.1 56.3 57.8 11.6 9M/18 9M/19 9M/20 9M/
Slide 9: Guidance raised in US and in Europe, despite Covid-19
Guidance raised in US and in Europe, despite Covid-19 ADJ. EBITDA AL 2020 Ex US guidance raised ≥35.0 € bn -0.2 • Adj. EBITDA AL: around 5.9 € 14.0bn (+0.1bn) US GAAP/IFRS Bridge Q4 • FCF AL: around € 3.3bn 15.5 Midpoint of TMUS 14.0 Q4/20 guidance of 6.6bn US$ • Cash Capex around € 7.8bn 3.4 Q4/20
Slide 10: Review Q3 2020
Review Q3 2020
Slide 11: Financials strong growth
Financials strong growth € mn Q3 9M 2019 2020 Change 2019 2020 Change Revenue 20,017 26,393 +31.9% 59,169 73,377 +24.0% Adj. EBITDA AL 6,478 9,692 +49.6% 18,701 26,065 +39.4% Adj. EBITDA AL (excl. US) 3,605 3,698 +2.6% 10,277 10,608 +3.2% Adj. Net profit 1,420 1,509 +6.3% 3,932 4,072 +3.6% Net profi
Slide 12: EBITDA AL growth on both sides of the Atlantic
EBITDA Al growth on both sides of the Atlantic Ex US growth (IFRS organic) TMUS growth (IFRS organic)1 % yoy % yoy 14.5% 14.6% 8.8% 4.2% 4.1% 4.5% 2.9% 3.2% 3.7% 3.1% Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 1) Sprint included since Q2/20 12
Slide 13: Covid-19 impacts expected headwinds
Covid-19 impacts expected headwinds Maximum possible exposure (ex US) Q3 2020 estimated impact Retail roaming revenue EU/NL ~€ 0.35bn € 65m DE Mobile handset revenue EU/NL DE ~€ 3.5bn Limited impact DE EU/NL ICT revenue ~€ 9bn1 ~€ 100m TSI Fixed call revenue EU/NL ~€ 0.6bn ~+€ 10m DE 1.4% 0.6% Bad d
Slide 14: Germany revenue decline due to lower equipment revs, EBITDA growing
Germany revenue decline due to lower equipment revs, EBITDA growing Revenues Adj. EBITDA AL € mn -1.1% € mn +1.3% • Handset related 5,905 5,839 2,343 2,373 around -1.5pp • Covid-19 related >1pp Q3/19 Q3/20 Q3/19 Q3/20 Total service revenue growth1 Adj. EBITDA AL growth (organic)1 % yoy % yoy 1.0% 1.
Slide 15: Germany fixed line service revenues growing, mobile c2% ex Covid-19
Germany fixed line service revenues growing, mobile c2% ex Covid-19 Mobile service revenue growth1 Fixed service revenue growth1 % yoy % yoy • Covid-19 related headwind on roaming (c1.9pp) and on visitor • Decreasing line losses and growing Broadband net adds revenues • 0.2pp Covid-19 related tailwi
Slide 16: Germany positive mobile KPIs
Germany positive mobile KPIs Magenta EINS share (mobile)1 Data usage3 % 60% GB 5.2 55% 3.9 +33% y/y Q3/19 Q3/20 Q3/19 Q3/20 Churn2 Branded contract net adds4 % 000 0.9% 180 192 0.8% 141 97 110 Q3/19 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 1) As % of B2C T-branded contract customers 2) contract excl. Leb
Slide 17: Germany improving commercials in fixed
Germany improving commercials in fixed Broadband net adds TV net adds 000 000 97 67 74 83 87 60 64 45 47 47 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Line losses Line losses org. Fiber net adds Retail 000 Line losses triggered by IP-migration 000 Wholesale • 0.6mn super vectoring c
Slide 18: Germany growth in fixed
Germany growth in fixed Retail fixed revenues1 Broadband revenue growth1 € mn +1,7% % yoy 2.930 2.979 5.7% 6.2% +6.2% Broadband revenues 4.8% 4.4% Single Play revenues 1.450 1.541 3.5% +9.3% Other revenues 254 278 1.226 1.160 -5.4% Q3/19 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Retail fixed revenue growt
Slide 19: T-Mobile new T-Mobile off to a good start
T-Mobile new T-Mobile off to a good start Revenues (IFRS) Adj. EBITDA AL (IFRS) US $ bn +74.0% US $ bn +119.3% 19.4 7.0 11.1 3.2 Service revenues Q3/19 Q3/20 Q3/19 Q3/20 Service revenue (IFRS)1 Adj. EBITDA AL growth (IFRS) organic US $ bn / % yoy US $ bn / % yoy 6.9 7.0 13.5 13.6 +4.5% +14.6% 8.4 8.
Slide 20: T-Mobile executing on key drivers
T-Mobile executing on key drivers Postpaid phone churn ARPU % US $ Postpaid phone Prepaid phone 0.89% 0.90% 46.2 48.6 38.2 38.5 Q3/19 Q3/20 Q3/19 Q3/20 Q3/19 Q3/20 Bad debt expense and losses from sale of receivables Net adds postpaid Postpaid phone in US $ mn and as % of total revenues mn 2.0 0.92%
Slide 21: Europe 11th consecutive quarter of organic EBITDA growth
Europe 11th consecutive quarter of organic EBITDA growth Revenues Adj. EBITDA AL € mn € mn -1.7% +0.3% 2,929 2,880 1,061 1,064 Q3/19 Q3/20 Q3/19 Q3/20 Revenue growth (organic)1 Adj. EBITDA AL growth (organic) 1 % yoy % yoy 5.7% 3.8% 2.1% 0.7% 3.3% 3.2% 0.2% 2.1% 1.1% -1.7% Q3/19 Q4/19 Q1/20 Q2/20 Q3
Slide 22: Europe solid customer growth
Europe solid customer growth Mobile contract net adds1 Broadband net adds 000 000 244 73 69 222 59 60 174 171 50 110 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/202 Q2/20 Q3/20 FMC net adds2 TV net adds 000 000 329 26 26 299 20 258 234 197 9 -5 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20
Slide 23: T-Systems Covid-19 weighs on transformation
T-Systems Covid-19 weighs on transformation Order entry Revenues Adj. EBITDA AL € bn € mn € mn -11.6% -24.9% -16.3% 0.9 1,087 80 961 67 0.7 Q3/19 Q3/20 Q3/19 Q3/20 Q3/19 Q3/20 Revenue growth (organic)1 Adj. EBITDA AL growth (organic)1 % yoy % yoy Order entry impacted by Covid-19 related 95.2% delays
Slide 24: Group Development ongoing strong performance
Group Development ongoing strong performance Revenues Adj. EBITDA AL € mn € mn +2.1% +5.6% 704 719 269 284 479 484 NL 132 141 NL 239 248 GD Towers 142 149 GD Towers -14 -13 -5 -6 Other Others Q3/19 Q3/20 Q3/19 Q3/20 Revenue growth (organic) Adj. EBITDA AL growth (organic) % yoy % yoy 4.8% 14.9% 13.2
Slide 25: GD/TMNL growth continues despite Covid-19
GD/TMNL growth continues despite Covid-19 Contract net adds Mobile service revenue growth (organic) 000 % yoy 80 83 5.5% 67 62 50 2.6% 2.8% 2.3% 0.4% Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Broadband net adds Adj. EBITDA AL growth (organic) 000 % yoy 23 24.9% 22.2% 18 17 14 11 13
Slide 26: GD Towers ongoing expansion
GD Towers ongoing expansion Total sites Recurring rental revenues 000 € mn 33.3 35.0 +3.8% 3.2 3.1 NL towers 221 213 30.1 31.9 Q3/19 Q3/20 Q3/19 Q3/20 Opex AL per site Adj. EBITDA 000 € € mn +1.0% 3.2 3.0 197 199 EBITDA 142 149 EBITDA AL +4.9% Q3/19 Q3/20 Q3/19 Q3/20 26
Slide 27: Financials FCF reflects merger-related investments
Financials FCF reflects merger-related investments Free Cash Flow AL1 Adj. net income € mn € mn -23.9% +6.3% -497 2,147 1,415 -2,549 -1,453 1,634 3,612 22 1,420 -375 -179 1,509 -419 Q3/19 CF gen. Leasing Capex (excl. Others Q3/20 Q3/19 Adj. EBITDA D&A Financial Taxes Minorities Q3/20 from ops. repay
Slide 28: Net debt analysis financial leverage down to 2.5 times
Net debt analysis financial leverage down to 2.5 times Q3/20 net debt w/o leases1 Q3/20 net debt incl. leases Leverage ratios2 € bn € bn 2.90x 97.3 10.5 2.50x 1.1 6.9 1.6 9.4 TMUS 124.5 towers 92.7 120.9 3.0 Net debt FCF AL Others Net debt Net debt Leasing Other Net debt IFRS 16 Excl. leases Q2/20 Q
Slide 29: Balance sheet ratio outside of comfort zone due to merger
Balance sheet ratio outside of comfort zone due to merger € bn 30/09/2019 31/12/2019 31/03/2020 30/06/2020 30/09/2020 Balance sheet total 174.3 170.7 173.6 270.0 265.3 Shareholders’ equity 45.1 46.2 45.9 73.5 72.0 Net debt 78.8 76.0 77.4 120.9 124.5 Net debt/Adj. EBITDA1 2.80 2.65 2.64 2.90 2.90 Equ
Slide 30: Appendix
Appendix
Slide 31: FCF AL excl. US
FCF AL excl. US € bn FY 2019 9M 2019 9M 2020 Adj. EBITDA AL 13.6 10.3 10.6 Cash Capex -7.8 -5.7 -5.4 Proceeds from sale of fixed assets +0.2 +0.1 +0.2 Special Factors Cash -1.3 -1.0 -1.1 Interest ex leasing -0.4 -0.3 -0.5 Cash Taxes -0.7 -0.5 -0.3 Other (working capital etc.) -0.7 -0.5 -0.6 FCF AL 2
Slide 32: Mid term ambition level
Mid term ambition level Mid term ambition level1 Year Implications of US deal Group revenues CAGR +1–2% 2017–2021e Confirmed Group adj. EBITDA/EBITDA AL CAGR +2–4% 2017–2021e Confirmed Adj. EBITDA/EBITDA AL ex US CAGR +2–3% 2017–2021e Confirmed Group FCF/FCF AL CAGR ≈ +10% 2017–2021e Slightly diluti
Slide 33: Outlook 2020/21 as per annual report 2019 (1/2)
Outlook 2020/21 as per annual report 2019 (1/2)1 € bn 2019 2020e 2021e Revenue Group 80.5 Increase Slight increase Germany 21.9 Slight increase Slight increase US (in USD) 45.2 Increase Increase Europe 12.2 Slight increase Slight increase Systems Solutions 6.8 Stable Slight increase Group Developmen
Slide 34: Outlook 2020/21 as per annual report 2019 (2/2)
Outlook 2020/21 as per annual report 2019 (2/2)1 € bn 2019 2020e 2021e Cash Capex Group 13.1 13.0 Germany 4.2 Slight decrease Stable US (in USD) 6.0 Stable Europe 1.7 Stable Slight decrease Systems Solutions 0.4 Stable Stable Group Development 0.5 Strong increase Increase FCF AL Group 7.0 8.0 Increa
Slide 35: German market overview
German market overview German mobile market service revenue German broadband market1 € mn mn 34.9 Telefonica 1.361 1.361 Cable 8.4 Telco Competitors 12.8 Vodafone 1.289 Telekom 1.568 1.560 DT 13.7 14.0 Q3/19 Q3/20 Q3/19 Q3/20 1) Based on management estimations 35
Slide 36: Conference call with Q&A session
Conference call with q&a session The conference call will be held on November 12 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 58891
Slide 37: 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