Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q3 2019 Earnings Presentation
37 slides from Deutsche Telekom's earnings presentation, Nov 7, 2019
Slide 1: Deutsche Telekom Q3/2019 Results
DEUTSCHE TELEKOM Q3/2019 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 9M/2019
REVIEW 9M/2019
Slide 4: 9M 2019 Highlights: Executing on Growth
9M 2019 HIGHLIGHTS: EXECUTING ON GROWTH Growth: investments and innovations Growth: customers Growth: financials Cash capex at €10.0 bn (ex. spectrum). 14.0 mn German fiber homes (+20% yoy) Strong organic1 growth continues Ex. US with slight decline at €5.7 bn 2.1 mn converged net adds LTM E
Slide 5: 9M 2019 Investments: Driving Network Leadership
9M 2019 INVESTMENTS: DRIVING NETWORK LEADERSHIP Fiber Mobile broadband All IP Fiber households1 LTE outdoor pop coverage IP share of fixed network access lines mn % % +2.3 +0.3pp +1.3pp +15pp +11pp 34.6 +1.4 8.4 97 90 7.0 97.6 97.9 96.1 97.4 82 79 32.3 9M/18 9M/19 9M/18 9M/19 9M/18 9M/19 9M/18 9M/19
Slide 6: 9M 2019 Innovations: Focus on Customer Experience
9M 2019 INNOVATIONS: FOCUS ON CUSTOMER EXPERIENCE Hybrid Access Innovation/Network One APP penetration (EU)1 subs in % +21% +10pp 2024 UEFA football With “Hello Magenta” first 434k 523k championship rights for European smart speaker 44 34 Germany secured launched 9M/18 9M/19 9M/18 9M/19 Smart Home S
Slide 7: 9M 2019 Customers: Strong Growth Continues
9M 2019 CUSTOMERS: STRONG GROWTH CONTINUES MagentaEINS (GER + EU)1 US Mobile mn mn +2.1 +6.5 +7.02 +1.4 9.0 70.7 77.2 84.2 5.5 6.9 9M/17 9M/18 9M/19 9M/17 9M/18 9M/19 Fiber in GER Mobile contract customers GER + EU + NL3 mn +2.4 mn +3.1 +2.7 +2.2 14.0 44.8 47.0 50.1 11.6 8.9 9M/17 9M/18 9M/19 9M/17
Slide 8: 9M 2019: All Segments Contribute to Growth
9M 2019: ALL SEGMENTS CONTRIBUTE TO GROWTH 9M/2019 ADJ. EBITDA AL in € mn Adj. EBITDA AL (9M 2019) Organic growth rate yoy Reported growth rate yoy TMUS +11.6% +5.0% GER +2.4% +2.4% 6,515 EU +5.0% +2.3% 8,424 GD +14.8% +11.3% SYS +10.9% +10.4% 363 3,022 774 8
Slide 9: Guidance 2019: Raising Guidance
GUIDANCE 2019: RAISING GUIDANCE € bn Revenue Adj. EBITDA AL2 FCF AL2 Cash Capex 2017 – 2021 CAGR (CMD 2018) +1 – 2% +2 – 4% ≈+10% Stable ex. US 2019 Guidance ($/€: 1.18) OLD Slight increase Around 23.9 Around 6.7 Around 12.7 2019 Guidance ($/€: 1.18) NEW Slight increase Around 24.1 Around 6.7 Around
Slide 10: Finance Strategy Is Our Balanced Training Plan
UPDATE FINANCEFINANCIAL STRATEGYSTRATEGY IS OUR BALANCED TRAINING PLAN... II Equity I Leading European Telco – ROCE > WACC III Debt Reliable shareholder GROW Undisputed access to debt remuneration policy capital markets LEAD IN CUSTOMER LEAD IN LEAD IN BUSINESS DIVIDEND1 EXPERIENCE TECHNOLOGY PROD
Slide 11: Review Q3/19
REVIEW Q3/19
Slide 12: Financials: Growth in All Metrics
FINANCIALS: GROWTH IN ALL METRICS € mn Q3 9M 2018 2019 Change 2018 2019 Change Revenue 19,104 20,017 +4.8% 55,395 59,169 +6.8% Adj. EBITDA AL1 6,148 6,478 +5.4% 17,501 18,701 +6.9% Adj. EBITDA AL (excl. US)1 3,483 3,605 +3.4% 9,953 10,277 +3.3% Adj. Net profit 1,321 1,420 +7.5% 3,749 3,923 +4.9% Net
Slide 13: Germany: Revenue and EBITDA Growth
GERMANY: REVENUE AND EBITDA GROWTH Revenue Adj. EBITDA AL € mn Retail fixed1 Mobile Service Others € mn Wholesale services Mobile handsets & other +2.4% +0.6% 2,200 2,154 2,108 2,153 2,254 5,441 5,612 5,388 5,472 5,357 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 2,373 2,404 2,353 2,340 2,357 Adj. OPEX AL 864 870
Slide 14: Germany: Growth in Service Revenues
GERMANY: GROWTH IN SERVICE REVENUES Mobile service revenue1 Fixed line service revenue1 Total service revenue1 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% Q3/19 0.7% 0.5% 0.6% 1) 2018 rates calculated excl. IFRS15. from 2019 onwards incl. IFRS 15 14
Slide 15: Germany Mobile: Healthy Growth Continues
GERMANY MOBILE: HEALTHY GROWTH CONTINUES German mobile market service revenue1 Own branded contract net adds2 € mn Telefonica Vodafone Telekom 000 180 130 132 140 90 1,339 1,330 1,281 1,319 1,361 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Smartphone penetration2 LTE customers3 1,321 1,299 1,262 1,260 % mn +7.8%
Slide 16: Germany: Good Progress with Convergence and Data
GERMANY: GOOD PROGRESS WITH CONVERGENCE AND DATA Mobile contract customers in MagentaEINS bundles1 Average Consumer Data Usage3 Q3/18 MB Growth 58% 57% 48% 36% 58% yoy % Q3/19 55% 3,876 47% 2,843 3,181 2,450 2,603 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Households in MagentaEINS bundles2 Average data usage up
Slide 17: 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 +67k +57k +47k +28k +47k Cable 000 +51 +62 +66 +58 +67 34.6 34.7 Telco Competitors 34.1 34.4 3,291 3,353 3,419 3,477 3,544 8.0 8.1 8.2 8.3 DT 12.6 12.7 12.8 12.8 DT net adds 13.5 13.6
Slide 18: 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 +3.5% Broadband 3P Broadband 2P 1,418 1,420 1,445 1,450 1,467 -0.7% 391 397 408 373 377 2,373 2,404 2,353 2,340 2,357 1,045 1
Slide 19: TMUS: Continued Industry Leading Growth
TMUS: CONTINUED INDUSTRY LEADING GROWTH Revenue and service revenue (IFRS) Net adds +7.2% US-$ bn Total revenue 000 1,630 2,402 1,650 1,751 1,747 Service revenue Total net adds +3.6% 10.7 7.9 11.4 8.0 11.1 8.1 11.0 8.3 11.1 8.4 Branded: Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Postpaid 1,079 1,358 1,019 1,10
Slide 20: 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) 1.23 1.02 1.18 1.03 0.98 0.90 0.92 0.89 Q3/17 Q3/18 Q3/19 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Branded postpaid phone churn on 3 quarter record low rd Decrease
Slide 21: Europe: Strong Customer Growth Continues
EUROPE: STRONG CUSTOMER GROWTH CONTINUES Mobile Contract Net Adds2 BB Net Adds1,2 000 297 300 000 264 288 196 94 61 55 63 47 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 FMC Net Adds TV Net Adds2 000 445 000 406 330 329 53 229 35 5 9 1 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q3/18 Q4/18 Q1/193
Slide 22: Europe: Growing Revenue and EBITDA AL
EUROPE: GROWING REVENUE AND EBITDA AL Revenue Organic revenue development € mn € mn +0.7% +1.0% -9 3,074 3,045 3,132 2,891 2,978 3,074 3,053 30 3,045 14 -6 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q3/18 Cons./Decons. FX Revenue Mobile Q3/19 growth regulation Adj. EBITDA AL Organic adj. EBITDA AL development €
Slide 23: Systems Solutions: Good Progress with Transformation
SYSTEMS SOLUTIONS: GOOD PROGRESS WITH TRANSFORMATION T-Systems financials Order Entry (LTM) € mn € mn +21.1% Total revenue Adj. EBITDA AL 5,977 6,776 6,879 6,923 7,236 -5.5% +0.7% Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 1,754 1,657 143 144 Adj. EBIT and margin in % € mn 2.3 0.3 -0.2 -1.9 3.0 40 50 31 6 -3 Q3/
Slide 24: Group Development: Growth in NL and Towers
GROUP DEVELOPMENT: GROWTH IN NL AND TOWERS Revenue1 Mobile service revenue trend yoy (NL)2 € mn +29.4% (+2.7% org.) NL % Towers 3.3 682 683 704 2.5 2.6 544 578 Other 335 360 461 458 479 -0.3 209 0 218 0 236 239 239 -1.3 -15 -14 -14 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Adj. EBI
Slide 25: Group Development: Tower Business Expanding
GROUP DEVELOPMENT: TOWER BUSINESS EXPANDING Total sites GER + NL (since Q1/19)2 Recurring rental revenue2 000 +4.7k € mn +12.1% (+3.9% org.) 28.6 29.4 32.7 33.0 33.3 190 194 210 210 213 Towers 29.5 29.8 30.1 Dutch Towers 3.2 3.2 3.2 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Opex AL
Slide 26: 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 +7.5% +17.5% 26 1,828 -220 2,147 1,283 -942 74 1,290 -766 9 6 1,321 1,420 -189 -36 -118 -916 -115 Q3/18 CF gen. Interest Lease Capex (excl. Others Q3/19 Q3/18 Adj. EBITDA D&A3 Financial Taxes Minorities Q
Slide 27: Financials: IFRS16 Debt Ratio at 2.80
FINANCIALS: IFRS16 DEBT RATIO AT 2.80 € bn 30/09/2018 31/12/2018 31/03/2019 30/06/2019 30/09/2019 Balance sheet total1 142.3 145.4 165.5 164.2 174.3 Shareholders’ equity1 43.5 43.4 42.8 42.7 45.1 Net debt1 55.5 55.4 71.9 75.7 78.8 Net debt/adj. EBITDA2 2.4 2.4 2.65 2.74 2.80 Equity ratio 30.6% 29.9%
Slide 28: Appendix
APPENDIX
Slide 29: 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 30: 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 31: Conference Call with Q&A Session
CONFERENCE CALL WITH Q&A SESSION The conference call will be held on November 7 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 965628
Slide 32: 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 33: 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 34: Outlook 2019/20 (2/2)
OUTLOOK 2019/20 (2/2) € bn 2018 reported 2018 pro forma 2019e 2020e 0, Cash Capex Group 12.2 12.4 12.9 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 35: Germany Mobile: Service Revenue
GERMANY MOBILE: SERVICE REVENUE1 Reported mobile service revenue Impact of mobile regulation2 Impact of convergent offers3 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% Q3/19 0.7% 0.9% 0.6% Old medium term guidance (2014 – 2018 CAGR) ≈ +1% (without EU roaming im
Slide 36: German Fixed: Service Revenue
GERMAN FIXED: SERVICE REVENUE1 Growth rates YOY Wholesale revenue Broadband revenue2 Fixed line service revenue 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% Q2/19 2.1% 2.3% -0.3% Q3/19 3.4% 3.5% 0.5% Old medium term guidance (2014 – 2018 CAGR) +0.0% +2.0% New medium ter
Slide 37: Thank You!
THANK YOU!