Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q1 2019 Earnings Presentation
35 slides from Deutsche Telekom's earnings presentation, May 9, 2019
Slide 1: Deutsche Telekom Q1/2019 Results
DEUTSCHE TELEKOM Q1/2019 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 Q1/2019
REVIEW Q1/2019
Slide 4: Q1 2019 Highlights: Strong Start into the Year
Q1 2019 HIGHLIGHTS: STRONG START INTO THE YEAR Growth: investments and innovations Growth: customers Growth: financials Cash capex at €3.7 bn (ex. spectrum). 12.9 mn German fiber homes (+24% yoy) Strong organic1 growth continues Ex. US stable at €2.1 bn 2.0 mn converged net adds LTM EU+GER
Slide 5: Q1 2019 Investments: Driving Network Leadership
Q1 2019 INVESTMENTS: DRIVING NETWORK LEADERSHIP Fiber rollout1 LTE rollout IP migration Fiber households LTE outdoor pop coverage IP share of fixed network access lines mn % % +2.8 +0.2pp +2.5pp +17pp +14pp 34.0 +1.5 90 85 7.9 97.5 97.7 94.7 97.2 73 71 31.2 6.4 Q1/18 Q1/19 Q1/18 Q1/19 Q1/18 Q1/19 Q1
Slide 6: Q1 2019 Innovations: Focus on Customer Experience
Q1 2019 INNOVATIONS: FOCUS ON CUSTOMER EXPERIENCE Hybrid Access Innovation/Network One APP penetration (EU)1 subs in % +27% +11pp Europe’s first campus Customer service in 490k network launched Germany achieves top 38 386k 27 (Osram) scores Q1/18 Q1/19 Q1/18 Q1/19 Smart Home StreamOn subs +33% subs
Slide 7: Q1 2019 Customers: Ongoing Strong Momentum
Q1 2019 CUSTOMERS: ONGOING STRONG MOMENTUM MagentaEINS (GER + EU)1 US Mobile mn mn +2.0 +5.92 +7.3 +1.4 8.2 72.6 74.0 81.3 6.2 4.8 Q1/17 Q1/18 Q1/19 Q1/17 Q1/18 Q1/19 Fiber in GER Mobile contract customers GER + EU + NL3 mn +2.5 mn +3.3 +2.8 +2.0 12.9 43.9 45.9 49.1 10.4 7.6 Q1/17 Q1/18 Q1/19 Q1/17
Slide 8: Guidance 2019: Unchanged
GUIDANCE 2019: UNCHANGED € 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 Q1/19 Result (organic change yoy) 19.5 (+3.5%) 5.9 (+3.9%) 1.6 (+9.6%) 3.7 (+13.7%) th
Slide 9: Review Q1/19
REVIEW Q1/19
Slide 10: Financials: Strong Revenue, EBITDA AL and FCF
FINANCIALS: STRONG REVENUE, EBITDA AL AND FCF € mn Q1 2018 2019 Change Revenue 17,924 19,488 +8.7% Adj. EBITDA AL3 5,487 5,940 +8.3% Adj. EBITDA AL (excl. US)3 3,156 3,261 +3.3% Adj. Net profit 1,190 1,183 -0.6% Net profit 992 900 -9.2% Adj. EPS (in €) 0.25 0.25 +0.0% Free cash flow AL1,3 1,318 1,55
Slide 11: Germany: Solid Financials, in Line with Guidance
GERMANY: SOLID FINANCIALS, IN LINE WITH GUIDANCE Revenue Adj. EBITDA AL and margin (in %) € mn Retail fixed1 Mobile Service Others € mn 39.5 40.4 38.6 38.4 39.4 Wholesale services Mobile handsets & other +2.4% +0.6% 5,612 2,058 2,103 2,200 2,154 2,108 5,325 5,322 5,441 5,357 Q1/18 Q2/18 Q3/18 Q4/18
Slide 12: Germany: Growth in Service Revenues
GERMANY: GROWTH IN SERVICE REVENUES Mobile service revenue1 Fixed line service revenue1 Total service revenue1 Q1/18 3.2% 0.2% 1.2% 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% 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 000 137 151 132 130 90 1,287 1,311 1,339 1,330 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Smartphone penetration2 LTE customers3 % mn +8.0% +2pp 11.2 12.1 88 90 1,480 1,5
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 Q1/18 MB Growth 54% 71% 58% 57% 48% yoy % Q1/19 53% 2,450 2,603 2,843 44% 1,920 2,326 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Households in MagentaEINS bundles2 Average data usage up
Slide 15: Germany Fixed: Healthy Commercials, Line Losses Reflect IP-Migration
GERMANY FIXED: HEALTHY COMMERCIALS, LINE LOSSES REFLECT IP-MIGRATION German broadband market1 Magenta TV customers mn +95k2 +80k +67k +57k +47k Cable 000 +54 +47 +51 +62 +66 Telco Competitors 33.7 33.9 34.1 34.4 3,193 3,240 3,291 3,353 3,419 7.9 7.9 8.0 8.1 DT 12.5 12.5 12.6 12.7 DT net adds 13.4 13
Slide 16: Germany Fixed: Steady Broadband Growth
GERMANY FIXED: STEADY BROADBAND 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 1,413 1,418 1,418 1,420 1,445 -0.8% 364 369 373 377 391 2,371 2,374 2,373 2,404 2,353 1,049 1,049 1,0
Slide 17: TMUS: Continued Industry Leading Growth
TMUS: CONTINUED INDUSTRY LEADING GROWTH Revenue and service revenue Net adds +6.1% US-$ bn Total revenue 000 1,433 1,579 1,630 2,402 1,650 Service revenue Total net adds +7.0% 10.4 7.7 10.5 7.8 10.7 7.9 11.4 8.0 11.1 8.1 Branded: Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Postpaid 1,005 1,017 1,079 1,358 1,019
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 1.18 1.01 0.96 1.03 0.98 1.18 1.07 0.88 Q1/17 Q1/18 Q1/19 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Branded postpaid phone churn on all time record low Decrease yoy reflects o
Slide 19: Europe: Strong Growth in Customer Base
EUROPE: STRONG GROWTH IN CUSTOMER BASE Mobile Contract Net Adds2 BB Net Adds1, 2 000 334 000 297 264 203 196 94 68 73 61 55 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 FMC Net Adds TV Net Adds2 000 445 000 406 53 201 229 229 35 27 22 1 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q1/18 Q2/18 Q3/18
Slide 20: Europe: Growing Revenue and EBITDA AL
EUROPE: GROWING REVENUE AND EBITDA AL Revenue Organic revenue development € mn € mn +0.4% +2.8% 2,891 -21 2,880 0 3,132 12 2,811 2,896 3,045 2,891 89 2,811 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q1/18 Cons./Decons. FX Revenue Mobile Q1/19 growth regulation Adj. EBITDA AL Organic adj. EBITDA AL development €
Slide 21: Systems Solutions: On Track for FY Guidance
SYSTEMS SOLUTIONS: ON TRACK FOR FY GUIDANCE T-Systems financials Order Entry (LTM) € mn € mn +25.7% Total revenue Adj. EBITDA AL 5,473 6,019 5,977 6,776 6,879 +53.3% -2.1% Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 1,665 1,630 92 Adj. EBIT and margin in % 60 € mn 1.4 2.3 0.3 -0.2 -2.3 40 23 6 -3 -38 Q1/18 Q1/19
Slide 22: Group Development: Steady Underlying Delivery
GROUP DEVELOPMENT: STEADY UNDERLYING DELIVERY Revenue1 Mobile service revenue trend yoy (NL)2 € mn NL % +29.2% (+2.2% organic) Towers 2.5 682 Other 528 535 544 578 218 217 209 218 461 309 318 335 360 -0.3 1 0 0 0 236 -1.3 -1.0 -1.3 -15 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Adj.
Slide 23: Group Development: Tower Business Expanding
GROUP DEVELOPMENT: TOWER BUSINESS EXPANDING Total site development GER + NL (since Q1/19)2 Recurring rental revenue2 000 +4.5k (+1.3k organic) € mn +12.2% (+4.0% organic) 28.4 28.6 29.4 32.7 187 188 190 194 210 28.2 29.5 3.2 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Opex AL per sit
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 +18.1% -0.6% -246 -91 -749 1,352 -861 7 1,804 1,557 1,190 190 1,183 1,318 -606 -119 -66 -195 -1,107 -183 Q1/18 CF gen. Interest Lease Capex (excl. Others Q1/19 Q1/18 Adj. EBITDA D&A3 Financial Taxes Minor
Slide 25: Financials: Balance Sheet Ratios in Target Corridor
FINANCIALS: BALANCE SHEET RATIOS IN TARGET CORRIDOR € bn 31/03/2018 30/06/2018 30/09/2018 31/12/2018 31/03/2019 Balance sheet total1 138.0 139.7 142.3 145.4 165.5 Shareholders’ equity1 43.7 41.4 43.5 43.4 42.8 Net debt1 50.5 54.8 55.5 55.4 71.9 Net debt/adj. EBITDA2 2.3 2.5 2.4 2.4 2.65 Equity ratio
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 May 9 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 + c
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 (2/2)
OUTLOOK 2019/20 (2/2) € bn 2018 reported 2018 pro forma 2019e 2020e 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 Incre
Slide 33: Germany Mobile: Service Revenue
GERMANY MOBILE: SERVICE REVENUE1 Reported mobile service revenue Impact of mobile regulation2 Impact of convergent offers3 Q1/18 3.2% 1.0% 0.7% 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% 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 Q1/18 3.4% 0.8% 4.4% 0.2% 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% 2.3% 0.1% Old medium term guidance (2014 – 2018 CAGR) +0.0% +2.0% New
Slide 35: Thank You!
THANK YOU!