Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q1 2003 Earnings Presentation
28 slides from Deutsche Telekom's earnings presentation, May 15, 2003
Slide 1: Deutsche Telekom Analysts Meeting May 15, 2003
Deutsche Telekom Analysts Meeting May 15, 2003 ===!"§ Deutsche Telekom
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “project” and “should ” and similar expressions are intended
Slide 3: Q1 2003 Results
Q1 2003. Results. Kai-Uwe Ricke CEO ===!"§ Deutsche Telekom
Slide 4: Deutsche Telekom Q1 2003. We deliver.
Deutsche Telekom Q1 2003. We deliver. We are ahead of target De – Net debt1 bt red down to € 56.3 billion uc – Efficiency tio gains € 0.4 billion n – Net income positive Financial & – Strong free cash flow strategic flexibility lf ow ash e c Fre 1 To interpret this non-GAAP measure, please refer to
Slide 5: Q1 2003 highlights. Excellent quarter.
Q1 2003 highlights. Excellent quarter. € billion Q1/03 Q4/02 ∆ billion Net debt1 56.3 61.1 - 4.8 € billion Q1/03 Q1/02 ∆% Revenues 13.6 12.8 + 6.6 Adj. EBITDA1 4.5 3.8 + 18.4 Net income 0.9 - 1.8 n/a Free cash flow1 2.0 0.3 n/a 1 To interpret this non-GAAP measure, please refer to the chapter “Recon
Slide 6: Debt reduction. + works.
Debt reduction. 6 + 6 works. Net debt 1 (€ billion) Asset sales2 € 2.3 bn Free cash flow 1 € 2.0 bn Others € 0.5 bn Real estate 61.1 Asset sales e.g. MTS, TRI Free cash flow 1 56.3 3x adj. EBITDA1 FY 2002 Q1 2003 FY 2003 1 To interpret this non-GAAP measure, please refer to the chapter “Reconciliati
Slide 7: Profitable growth and efficiency improvements. Implementing projects.
Profitable growth and efficiency improvements. Implementing projects. T-Com T-Mobile T-Systems T-Online Headquarters – WIN 2003 – One – Key – Platform – PSA – Product Company accounting integration – Decentrali- portfolio – Mobile data – Data center – Marketing zation optimization – USA consoli- con
Slide 8: Margin improvements in all divisions
Profitable growth and efficiency improvements. Margin improvements in all divisions. Adj. EBITDA margins1 Major cost saving results in Q1/03: – T-Com cost savings € 0.2 billion % – T-Mobile economies of scale: 35.7 32.9 33.1 € 0.1 billion 29.6 – T-Online economies of scale : 27.1 28.5 € 0.1 billion
Slide 9: Cash contribution. Adj. EBITDA - capex strong improvement
Cash contribution1. Adj. EBITDA2 - capex3 strong improvement. Adj. EBITDA2 - Capex3 – Capex3 reduced to € 0.9 billion from € 1.6 billion in Q1 2002 3.6 – Continue to manage capex3 cautiously – Capex3 guidance unchanged € 6.7 - 7.7 billion 2.4 2.2 Q1 2002 1.7 Q1 2003 1.1 0.7 0.1 0.2 0.1 0.0 1 Adj. EB
Slide 10: T-Com. Maximizing cash flow.
T-Com. Maximizing cash flow. Optimization projects Annualized full-year effects Processes 15,000 - 20,000 personnel reduction IT implementation ca. € 750 million WIN 2003 personnel cost reductions p.a. Distribution mix ca. € 150 million Divisional OPEX savings p.a. structure ===!"§ Deutsche Telekom
Slide 11: T-Com. Efficiency gains and strong cash contribution
T-Com. Efficiency gains and strong cash contribution. T-Com adj. EBITDA1 (€ billion) – Adj. EBITDA 1 in Germany: up by 8.2% despite deconsolidation of cable 2.644 2.674 business 2.555 2.575 – Capex4 in Germany down by 70%: 2.494 investments in DSL and SDH network mostly done – 3.4 million T-DSL subs
Slide 12: T-Mobile USA. Strong improvement in all areas
T-Mobile USA. Strong improvement in all areas. EBITDA1 (€ million) Net adds (thousands) 927 323 509 106 Q1/02 Q1/03 Q1/02 Q1/03 ARPU 1,2 (US $) Contract churn (%) 47.1 2.7 1 To interpret this non-GAAP measure, please refer to the 45.1 chapter “Reconciliation to 2.3 pro forma figures” in the Q1/03 in
Slide 13: T-Mobile. Growth and improving EBITDA
T-Mobile. Growth and improving EBITDA. T-Mobile EBITDA 1 (€ million) – Revenue increase of 18.9% to € 5.3 billion 2000 – Another record quarter: EBITDA1 1500 of € 1.5 billion, up 25.0% from Q1/02 1000 – Subscriber base3 increased by 8.8 500 million (70% contract) to 55.1 million 0 Q1 Q2 Q3 Q4 Q1 Q2
Slide 14: T-Systems. Global computing factory
T-Systems. Global computing factory - Profitability improvement. Implementation project Improved Data center purchasing consolidation conditions 2003 target: € 0.2 billion cost savings Process harmonization Consolidation and merging of of monitoring organizations functions ===!"§ Deutsche Telekom Pa
Slide 15: T-Systems. Focus on profitability pays off
T-Systems. Focus on profitability pays off. Adj. EBITDA1 (€ million) – 2.8% revenue increase 1,3 compared to Q1/02 324 318 258 286 251 – Adj. EBITDA1,3 increase of 10.9% – Adj. EBITDA margin 1,3 11.2% up from 10.4 % – Strong order book in Q1/03 Q1/02 Q1/03 Q2/02 Q3/02 Q4/02 – Headcount reduction of
Slide 16: T-Online. Excellent quarter
T-Online. Excellent quarter. EBITDA1 (€ million) – Revenue increased by 21.6% to € 445 million from Q1/02 75.0 – Further improvement in EBITDA1 53.2 to € 75 million in Q1/03 35.6 1.51 -14.0 – Gross margin improved to over 55% compared to 43% in Q1/02 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 – Total subscribers
Slide 17: Personnel Service Agency (PSA)
Personnel Service Agency (PSA). 2003 transfer process well underway. Implementation project T-Com temp workers 3,1 72 1,116 Year-end target: PSA > 2,000 Headquarters /shared 1,605 Headcount services 4,8991 as of 31.03.03 122 Permanently T-Mobile placed 234 T-Online Full year Year-end target: T-Syste
Slide 18: Outlook. Well positioned.
Outlook. Well positioned. – Targeted adj. EBITDA1 between € 17.2 and 17.7 billion – Expect strong free cash flow1 from – Implementing E3 projects – Operational performance – Net debt1: 3 x adj. EBITDA1 by year-end – Aim to be net income positive for 2003 1 To interpret this non-GAAP measure, please
Slide 19: Financials
Financials Karl-Gerhard Eick, CFO ===!"§ Deutsche Telekom Page 19 Unaudited figures
Slide 20: Net debt reduction. Strong progress.
Net debt reduction. Strong progress. Net debt1 (€ billion) Net debt 1 reduced by € 4.8 billion to € 56.3 billion in Q1/03 67.7 64.5 64.3 – € 2.3 billion asset sales 61.1 56.3 – € 0.5 billion forex gains and other – € 2.0 billion in free cash flow1 (after deduction of € 0.9 billion cash-out for civil
Slide 21: Debt reduction. Sales of € 4.9 billion since November 2002
Debt reduction. Sales of € 4.9 billion since November 2002. November/ December 20021 Sale of UMC/Eutelsat S.A. € 0.2 billion Sale of 120 million T-Online shares € 0.7 billion ABS transaction of T-Systems € 0.2 billion Sale and leaseback at T-Systems € 0.1 billion Proceeds from real estate € 1.1 bill
Slide 22: Free cash flow. € 2.0 billion in Q1/03
Free cash flow1. € 2.0 billion free cash flow in Q1/03. € billion2 Q1/03 Q1/02 ∆%3 2002 Cash generated from operations 3.4 2.9 19.0 16.7 Net interest payment - 0.3 - 0.6 53.1 - 4.2 Net cash provided by operating activities 3.1 2.3 37.7 12.5 Cash outflows from investments in – property, plant and equ
Slide 23: Capex status. Strong increase in cash contribution
Capex1 status. Strong increase in cash contribution. € billion Q1/03 Q1/02 T-Com 0.3 0.8 T-Mobile 0.4 0.5 T-Systems 0.1 0.2 € billion Q1/03 Q1/02 T-Online and Others 0.1 0.1 Adj. EBITDA 2 4.5 3.8 Total capex1 0.9 1.6 Capex1 0.9 1.6 1 Property, plant and equipment and intangible assets (excl. goodwil
Slide 24: Q1 2003 – Debt reduction going forward
Q1 2003 – Debt reduction going forward. – Focus on real estate and free cash flow1 generation – Further asset sales when attractive deals are available – T-Online, Matav and towers not part of asset sale program going forward € billion Target Q3/02 Achieved To go Free cash flow1 5.5 - 6.0 2.2 3.3 -
Slide 25: Q1 2003 – Net income. Positive.
Q1 2003 – Net income. Positive. € million Q1/03 Q1/02 Adj. EBITDA1 4.52 3.8 Depreciation and amortization - 3.3 - 3.7 Net financial expense - 1.1 - 1.2 4 Taxes 0.13 - 0.2 5 Minorities - 0.1 - 0.1 Adj. net income 1 0.1 - 1.4 Special factors 1 0.8 - 0.4 Net income 0.9 - 1.8 • To interpret this non-GAA
Slide 26: Others. Combining the central functions
Others. Combining the central functions. Revenue (€ million) Q1/03 Q1/02 FY/02 Shared services 1,116 1,036 4,299 thereof PSA 0 0 0 thereof other shared services1 1,116 1,036 4,299 Headquarters/miscellaneous 16 48 60 Total 2 1,093 957 4,411 EBITDA3 (€ million) Q1/03 Q1/02 FY/02 Shared services 394 33
Slide 27: Q1 2003 – Accounting changes
Q1 2003 – Accounting changes. Increasing the transparency of the Group. – Change from total cost to cost of sales method – Reallocation of agency business – DeTeMedien now part of T-Com – Deconsolidation effects (cable, etc.) ===!"§ Deutsche Telekom Page 27 Unaudited figures
Slide 28: Outlook. Targets for 2003.
Outlook. Targets for 2003. – Adj. EBITDA1 € 17.2 - 17.7 billion – Capex2 € 6.7 - 7.7 billion – Net debt 1 3 x adj. EBITDA1 by year-end 1 To interpret this non-GAAP measure, please refer to the chapter “Reconciliation to pro forma figures” in the Q1/03 interim report or the reconciliation to pro form