Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — Q3 2007 Earnings Presentation
30 slides from Deutsche Telekom's earnings presentation, Nov 8, 2007
Slide 1: Q3 2007 Conference call
Q3 2007 Conference call. Deutsche Telekom. November 8, 2007 1
Slide 2: Disclaimer
Disclaimer. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They include statements as to market potential, the guidance statements as well as our dividend outlook. They are generally identified by the
Slide 3: Q3 2007 Highlights
Q3 2007. Highlights. René Obermann, CEO 3
Slide 4: Q1-Q3/07 Highlights: Delivering on our strategy
Q1-Q3/07 Highlights: Delivering on our strategy. Group revenue of €46.7 billion (+2.8%). International revenue +14.4% Adj. group EBITDA at €14.7 billion (-1.1%) – on track to achieve FY guidance Free cash flow of €5.8 billion (+52.4%) – FY guidance increased to €6.5 billion Net income of €1.
Slide 5: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Build the ICT Improve com- Mobilize Grow abroad business petitiveness Internet and with mobile in Germany Web 2.0 trend With partner(s) Achievements: 3rd quarter DSL retail market share of net adds at 48%, reduced line losses (497k) Successful retention: 8
Slide 6: Best DSL retail share in the last four quarters
Best DSL retail share in the last four quarters. Domestic DSL retail net adds (000) and market share (%) Strong DSL retail share of 48% in Q3/07 48 % 40% 42% 42 % Good start for Triple Play products – 40 – 45 % 572 almost 50,000 customers connected 563 480 as of Q3 373 ∅2006 18% Line losses at
Slide 7: Update on service: Improving metrics
Update on service: Improving metrics. Availability (all/E20 in 20%) 100% strike all > 65% 80% Most quality metrics strongly improved 60% E20 after the strike 40% Punctuality still below expectations 20% T-Service units are set up and show first 0% CW 14 15 16 17 18 19 20 21 22 23 25 26 27 28 2
Slide 8: Continued growth in contract customers in Germany
Continued growth in contract customers in Germany. Contract net adds T-Mobile Germany (in 000) 577 Contract net adds up almost 40% 414 Contract churn stable at 1.2% +39.4% Adj. EBITDA margin at 37.7% in Q3/07, up from 36.5% in Q2/07 Q1-Q3 2006 Q1-Q3 2007 Exclusive launch of iPhone in Germany
Slide 9: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Build the ICT Improve Mobilize Grow abroad business competitiveness Internet and with mobile in Germany Web 2.0 trend With partner(s) Achievements: T-Mobile continues double-digit international revenue growth (14.3% yoy in Q1-Q3) and improves international a
Slide 10: T-Mobile USA: Delivering growth and profitability
Grow abroad with mobile: T-Mobile USA: Delivering growth and profitability. Service revenues (US$ billion) 12.2 Total revenues (US$) up 12.8% in Q1-Q3/07 10.4 +17.3% Service revenues (US$) up 17.3% in Q1-Q3/07 Adj. EBITDA margin: 28.3% in Q1-Q3/07, up from 28.1% in Q1-Q3/06 Q1-Q3 2006 Q1-Q3 20
Slide 11: T-Mobile UK: Strong margin improvement
Grow abroad with mobile: T-Mobile UK: Strong margin improvement. Service revenues (€ billion) 3.3 Total revenues up 8.3% in Q1-Q3/07 2.9 +11.8% Service revenues up 11.8% in Q1-Q3/07 Adj. EBITDA margin at T-Mobile UK up 4.2pp to 24.1% yoy in Q1-Q3, Q3/07 margin at 29.2% Q1-Q3 2006 Q1-Q3 2007
Slide 12: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Build the ICT Improve com- Mobilize Grow abroad business petitiveness Internet and with mobile in Germany Web 2.0 trend With partner(s) Achievements: Total data revenues €3.9 billion in Q1-Q3 2007, up 30.1% US data revenues €1.4 billion in Q1-Q3 2007, up 4
Slide 13: Mobilize the Internet and Web 2.0 trends
Mobilize the Internet and Web 2.0 trends. Europe USA web‘n‘walk users1 (in 000) Non-voice revenue myFaves users (in 000) Non-voice revenue excluding messaging excluding messaging (in € million) (in € million) +49% +41% +390% +43% 2,822 716 3,608 709 1,890 509 495 737 2006 YE Q1-Q3 07 Q1-Q3 06 Q1-Q3
Slide 14: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Improve com- Mobilize Build the ICT Grow abroad petitiveness Internet and business with mobile in Germany Web 2.0 trend With partner(s) Achievements: New CEO Reinhard Clemens will join as of December 1st Second large outsourcing deal in the UK won this yea
Slide 15: Outlook
Outlook We are very confident in achieving our adj. EBITDA guidance for 2007 (around €19 billion) FCF for 2007 is expected to be ahead of our original FY 2007 guidance at around €6.5 billion For 2008 we expect adj. EBITDA and FCF to be around this year’s levels In the light of the strong bal
Slide 16: Q3 2007 Financials
Q3 2007. Financials. Dr. Karl-Gerhard Eick, CFO and Deputy CEO 16
Slide 17: Overview Group financials
Overview Group financials. Revenue (€ billion) Adj. EBITDA (€ billion) 45.5 46.7 14.9 14.7 +2.8% --1.1% Q1-Q3 2006 Q1-Q3 2007 Q1-Q3 2006 Q1-Q3 2007 Adj. net Income (€ billion) FCF adj. (€ billion) 3.0 5.8 2.2 3.8 -27.5% +52.4% Q1-Q3 2006 Q1-Q3 2007 Q1-Q3 2006 Q1-Q3 2007 Q3/07 Conference call Novembe
Slide 18: BBFN Summary
BBFN Summary. Total revenue (€ billion) Domestic revenue (€ billion) 16.4 18.4 15.1 17.1 -7.0% -8.0% Q1–Q3 2006 Q1–Q3 2007 Q1–Q3 2006 Q1–Q3 2007 Adj. EBITDA (€ billion) Domestic adj. EBITDA (€ billion) 6.1 6.8 5.0 5.7 -18.3% -14.9% Q1–Q3 2006 Q1–Q3 2007 Q1–Q3 2006 Q1–Q3 2007 Q3/07 Conference call No
Slide 19: BBFN Summary – Improving trends in revenues and adj. EBITDA in 2007
BBFN Summary – Improving trends in revenues and adj. EBITDA in 2007. Total revenue (€ million)1 Domestic revenue (€ million) (Excl. Club Internet and Ya.Com) 5,726 5,609 5,541 5,146 5,002 4,948 Q1/07 Q2/07 Q3/07 Q1/07 Q2/07 Q3/07 Adj. EBITDA (€ million)1 Domestic adj. EBITDA (€ million) (Excl. Club
Slide 20: Mobile summary
Mobile summary. Customers (million) Total revenue (€ billion) 113.7 25.9 103.5 23.6 +9.9% +9.9% Q1-Q3 2006 Q1-Q3 2007 Q1-Q3 2006 Q1-Q3 2007 Adj. EBITDA (€ billion) Adj. EBITDA margin (in %) 31.0% 31.7% 8.2 7.3 +0.7pp +12.3% Q1-Q3 2006 Q1-Q3 2007 Q1-Q3 2006 Q1-Q3 2007 Q3/07 Conference call November 8
Slide 21: Business Customers summary
Business Customers summary. Total revenue (€ billion) External revenue (€ billion) 9.4 6.8 8.8 6.6 -7.0% -3.1% Q1-Q3 2006 Q1-Q3 2007 Q1-Q3 2006 Q1-Q3 2007 International revenue (€ billion) Adj. EBITDA (€ billion) 1.8 1.0 0.8 1.7 +8.3% -18.3% Q1-Q3 2006 Q1-Q3 2007 Q1-Q3 2006 Q1-Q3 2007 Q3/07 Conferen
Slide 22: Personnel: 8,100 net domestic headcount reduction
Personnel: 8,100 net domestic headcount reduction. 10,900 domestic headcount reduction1 as of Q3-end (23,000 employees since start of “32,000 program” in 2006) Of which 6,800 early and partial retirement and severance programs Of which 2,300 turnover and regular retirement Of which 1,800 dec
Slide 23: Save for Service – gross savings and OPEX development
Save for Service – gross savings and OPEX development Cost base development1) 1.3 -1.4 0.9 32.9 1.2 -0.5 2007 “Save for Service” (S4S) target of 31.4 €2 billion on track €1.4 billion actual savings achieved in first nine months 2007 Thereof €0.8 billion BBFN, €0.2 billion T-Mobile, €0.2 billio
Slide 24: Net OPEX savings target of €0.9 billion at BBFN
Net OPEX savings target of €0.9 billion at BBFN. Net OPEX1 savings of € 0.9 bn Gross cost savings Q1-Q3/07 of €0.8 billion 4.0 Net cost savings of €0.3 billion achieved (€ billion) predominately due to personnel, IT and termination rate cuts Net cost cutting of €0.9 billion in FY07 vs. cost 3.6
Slide 25: Q1-Q3 2007 – Free cash flow
Q1-Q3 2007 – Free cash flow. € billion Q1-Q3/07 Q1-Q3/06 EBITDA (reported) 14.3 14.4 Non cash items and others - 0.4 0.0 Change in working capital and accruals - 2.0 - 1.9 - of which restructuring payments - 1.3 - 0.4 Income taxes 0.4 - 1.0 Cash generated from operations 12.2 11.4 Net interest payme
Slide 26: Q1-Q3 2007 – Reported net income
Q1-Q3 2007 – Reported net income. € billion Q1-Q3/07 Q1-Q3/06 EBITDA 14.3 14.4 D&A increased due to PTC & Telering Depreciation and amortization - 8.5 - 8.0 (€0.6 billion) Net financial expense - 2.2 - 2.0 - of which net interest expense - 1.9 - 1.9 2006 better due to EBT 3.5 4.4 gain from sale of I
Slide 27: Q1-Q3 2007 – Adjusted net income
Q1-Q3 2007 – Adjusted net income. € billion Q1-Q3/07 Q1-Q3/06 adjusted adjusted EBITDA 14.7 14.9 Depreciation and amortization - 8.3 - 8.0 Net financial expense - 2.2 - 2.2 - of which net interest expense - 1.9 - 1.9 EBT 4.2 4.7 Includes €0.4 billion in purchase price Income taxes - 1.6 - 1.3 alloca
Slide 28: Q1-Q3 2007 – Adjusted vs. reported net income
Q1-Q3 2007 – Adjusted vs. reported net income. € billion Q1-Q3/07 Q1-Q3/07 EBITDA includes €0.4 adjusted reported billion restructuring EBITDA 14.7 14.3 charges Depreciation and amortization - 8.3 - 8.5 Net financial expense - 2.2 - 2.2 Includes a €0.2 billion - of which net interest expense - 1.9 -
Slide 29: Q1-Q3 2007 – Balance sheet ratios
Q1-Q3 2007 –Balance sheet ratios. € billion 30.09.2007 30.06.2007 Balance sheet total 120.7 124.5 Shareholders‘ equity 46.1 47.2 Net debt 36.5 40.4 Gearing 0.8x 0.9x Equity ratio 38.2% 37.9% decreased in particular due to €3.6 billion Free cash flow €0.4 billion gain in F/X Q3/07 Conference call Nov
Slide 30: Thank you for your attention!
Thank you for your attention! 30