Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q3 2018 Earnings Presentation
34 slides from Deutsche Telekom's earnings presentation, Nov 8, 2018
Slide 1: Deutsche Telekom Q3/2018 Results
DEUTSCHE TELEKOM Q3/2018 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/2018
REVIEW 9M/2018
Slide 4: 2018 9M Highlights: European Growth Champion
2018 9M HIGHLIGHTS: EUROPEAN GROWTH CHAMPION Growth: investments and innovations Growth: customers Growth: financials Cash capex at €9.1 bn (ex. spectrum) 11.6 mn German fiber homes (+30% yoy) Strong organic1 growth continues Fiber roll-out: 4.8 mn new homes in GER 1.4 mn converged net add
Slide 5: 9M/2018 Investments: Driving Network Leadership
9M/2018 INVESTMENTS: DRIVING NETWORK LEADERSHIP Fiber rollout1 LTE rollout IP migration Fiber households LTE outdoor pop coverage IP share of fixed network access lines mn % % +3.5 +17pp +13pp 32.3 +1.3 +5pp2 +3pp 82 79 5.7 7.0 93 98 93 96 65 66 28.8 Q3/17 Q3/18 Q3/17 Q3/18 Q3/17 Q3/18 Q3/17 Q3/18 Q
Slide 6: 9M/2018 Innovations: Focus on Customer Experience
9M/2018 INNOVATIONS: FOCUS ON CUSTOMER EXPERIENCE Hybrid Access1 Innovation/Network E-service share of interactions subs in % +23% +15% “Hallo Magenta”. Smart 5G: Lighthouse campus 434k speaker launched in solution deal with 36.3% 354k 31.7% Germany. OSRAM 9M/17 9M/18 9M/17 9M/18 Smart Home2 StreamO
Slide 7: 9M/2018 Customers: Ongoing Strong Momentum
9M/2018 CUSTOMERS: ONGOING STRONG MOMENTUM MagentaEINS (Germany + EU)1 US Mobile mn mn +1.4 +6.5 6.9 70.7 77.2 5.5 9M/17 9M/18 9M/17 9M/18 Fiber in Germany Mobile contract customers GER (own brand) + EU mn +2.7 mn +1.7 11.6 42.0 43.7 8.9 9M/17 9M/18 9M/17 9M/18 1) FMC RGUs may also appear under othe
Slide 8: Guidance 2018: 3rd Increase of Outlook
GUIDANCE 2018: 3RD INCREASE OF OUTLOOK € bn Revenue Adj. EBITDA FCF 2014 – 2018 CAGR +1 – 2% +2 – 4% ≈+10% Achievements 9M/18 +2.8%1 +6.2%1 +8.5% 2018 Guidance ($/€: 1.13) Slight increase ~23.6 ~6.3 ~23.3 ~23.4 ~23.2 ~6.2 old Q1 Q2 new old new thereof group excl. US ~13.2 2 thereof TM US (US$ bn) 2
Slide 9: Review Q3/18
REVIEW Q3/18
Slide 10: Q3 2018: Financial Highlights
Q3 2018: FINANCIAL HIGHLIGHTS € mn Q3 9M 2017 2018 Change 2017 2018 Change Revenue 18,251 19,104 +4.7% 55,787 55,395 -0.7% Adj. EBITDA 5,720 6,207 +8.5% 17,215 17,684 +2.7% Adj. EBITDA (excl. US) 3,433 3,542 +3.2% 9,902 10,133 +2.3% Adj. Net profit 1,244 1,321 +6.2% 3,382 3,749 +10.9% Net profit 507
Slide 11: Germany: Revenue Impacted by IFRS; Adj. EBITDA on Track
GERMANY: REVENUE IMPACTED BY IFRS; ADJ. EBITDA ON TRACK Revenue (as reported) Adj. EBITDA and margin (in % as reported) € mn Retail fixed1 Mobile Service Others € mn 39.7 39.1 39.9 40.8 Wholesale services Mobile handsets & other 36.9 +2.1% -0.9% 5,676 2,177 2,094 2,082 2,126 2,222 5,488 5,325 5,322
Slide 12: Germany: Sustained Growth in Service Revenues
GERMANY: SUSTAINED GROWTH IN SERVICE REVENUES (EXCL. IFRS 15) Mobile service revenue Fixed line service revenue Total service revenue Q3/17 0.9% 0.3% 0.5% Q4/17 1.7% 0.5% 0.9% Q1/18 3.2% 0.2% 1.2% Q2/18 2.9% -0.1% 0.9% Q3/18 3.1% -0.4% 0.8% 12
Slide 13: Germany Mobile: Healthy Growth Continues
GERMANY MOBILE: HEALTHY GROWTH CONTINUES German mobile market service revenue (excl. IFRS 15) Own branded contract net adds2 € mn Telefonica Vodafone Telekom 000 181 +1.1% 137 122 76 4,611 4,567 4,539 4.7bn1 483 4,473 1,344 1,332 1,285 1,306 1,331 -1.0% Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Smartphone penet
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 Q3/17 MB Growth 55% 38% 54% 71% 58% yoy % Q3/18 47% 2,326 2,450 40% 1,554 1,654 1,920 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Households in MagentaEINS bundles2 Average data usage up
Slide 15: Germany Fixed: Strong Broadband Customer Growth
GERMANY FIXED: STRONG BROADBAND CUSTOMER GROWTH German broadband market1 Entertain customers mn +70k +104k +95k +80k2 +67k Cable 000 +65 +50 +54 +47 +51 Telco Competitors 33.0 33.4 33.7 33.9 3,089 3,139 3,193 3,240 3,291 7.6 7.8 7.9 7.9 DT 12.3 12.4 12.5 12.5 12.6 DT net adds 13.1 13.2 13.4 13.4 13.
Slide 16: Germany Fixed: Solid Underlying Trend in Fixed
GERMANY FIXED: SOLID UNDERLYING TREND IN FIXED Fixed network revenue retail (as reported)1 Broadband revenue1 (excl. IFRS 15) € mn Broadband revenues Single play revenues Other revenues € mn +5.7% Broadband 3P Broadband 2P 1,331 1,336 1,398 1,406 1,407 -0.3% 353 357 360 365 370 2,419 Q3/18 underlyin
Slide 17: TMUS: Continued Industry Leading Growth
TMUS: CONTINUED INDUSTRY LEADING GROWTH Revenue and service revenue Net adds US-$ bn +5.9% Total revenue 000 1,854 1,333 1,329 1,433 1,630 Service revenue Total net adds +8.0% 9.9 7.4 10.7 7.6 10.4 7.7 10.5 7.8 10.7 7.9 Branded: Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Postpaid 817 1,072 1,005 1,017 1,079
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 1.9 1.32 1.23 1.4 1.2 1.02 1.0 1.0 Q3/16 Q3/17 Q3/18 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Branded postpaid phone churn on Q3 record low level Decrease yoy reflects ongoin
Slide 19: Europe: Strong Growth in Customer Base
EUROPE: STRONG GROWTH IN CUSTOMER BASE Mobile Contract Net Adds2 BB Net Adds1, 2 000 000 364 334 73 68 73 297 61 61 265 203 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 FMC Net Adds TV Net Adds2 000 229 229 000 45 216 201 44 167 35 27 22 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q3/17 Q4/17 Q1/18
Slide 20: Europe: Growing Revenue and EBITDA
EUROPE: GROWING REVENUE AND EBITDA Revenue Organic revenue development € mn € mn +2.2% +3.4% 3,045 0 2,945 3,002 2,811 2,896 3,045 -24 2,980 65 2,945 59 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q3/17 Cons./Decons. FX Revenue Mobile Q3/18 growth regulation Adj. EBITDA Organic adj. EBITDA development € mn € mn +
Slide 21: Systems Solutions: On Track for Full Year Guidance
SYSTEMS SOLUTIONS: ON TRACK FOR FULL YEAR GUIDANCE T-Systems financials Revenue € mn € mn +2.8% Total revenue Adj. EBITDA 1,707 1,819 1,665 1,674 1,754 +2.8% +6.1% Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 1,707 1,754 131 139 Adj. EBIT and margin in % € mn 2.2 2.5 1.4 2.3 -2.3 38 45 40 23 -38 Q3/17 Q3/18 Q3/17
Slide 22: Group Development: Steady Underlying Delivery
GROUP DEVELOPMENT: STEADY UNDERLYING DELIVERY Revenue Mobile service revenue trend yoy (NL) € mn NL % -5.2 -7.4 -14.6 -14.9 -5.5 MSR trends as -0.2% reported Towers 0.6 545 561 528 535 544 Other MSR trends 327 342 309 318 335 excl. regulation -0.3 (all periods) and 217 1 217 2 218 1 217 0 209 0 -1.0
Slide 23: Group Development: Tower Business Doing Well
GROUP DEVELOPMENT: TOWER BUSINESS DOING WELL Total site development Recurring rental revenue k € mn +4.1% 27.6 28.1 28.2 28.4 28.6 182.6 184.3 187.1 187.7 190.0 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Opex per site (avg. sites) EBITDA & EBITDA margin development k€/site In % 58%
Slide 24: Financials: FCF, Net Debt, Net Income and EPS
FINANCIALS: FCF, NET DEBT, NET INCOME AND EPS Free cash flow1 Adj. net income € mn € mn +0.5% +6.2% 1,873 1,883 4 -45 51 1,244 487 -11 1,321 93 -365 -126 Q3/17 Cash generated Capex (excl. Interest & Other Q3/18 Q3/17 Adj. Financial D&A Taxes Minorities Q3/18 from operations spectrum) EBITDA result N
Slide 25: Financials: Balance Sheet Ratios in Target Corridor
FINANCIALS: BALANCE SHEET RATIOS IN TARGET CORRIDOR € bn 30/09/2017 31/12/2017 31/03/2018 30/06/2018 30/09/2018 Balance sheet total 139.8 141.3 138.0 139.7 142.3 Shareholders’ equity 39.1 42.5 43.7 41.4 43.5 Net debt 52.6 50.8 50.5 54.8 55.5 Net debt/adj. EBITDA1 2.3 2.3 2.3 2.5 2.4 Equity ratio 27.
Slide 26: 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 27: 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 28: Conference Call with Q&A Session
CONFERENCE CALL WITH Q&A SESSION The conference call will be held on November 8 at 2:00 PM CET, 1:00 PM GMT, 8 AM ET. DT Participants: Tim Hoettges (CEO), Thomas Dannenfeldt (CFO), Hannes Wittig (Head of IR) Webcast Dial-in The link to the webcast will be provided here 20 minutes before DE 0800 96
Slide 29: 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 30: Appendix
APPENDIX
Slide 31: 2018: Accounting Impact on Results
2018: ACCOUNTING IMPACT ON RESULTS Outlook beginning of year 2018 Current view Revenue Adj. EBITDA Group -0.15 bn max. +0.1 bn1 Unchanged Germany -1 to -1.5% Impact of IFRS 9 (-) and We expect a moderate tailwind IFRS 15 (+) will be neutral to the adj. EBITDA US +0.5% +0.2%1 Unchanged Europe negligi
Slide 32: Germany Mobile: Service Revenue (excl. IFRS 15)
GERMANY MOBILE: SERVICE REVENUE (EXCL. IFRS 15) Reported mobile service revenue Impact of mobile regulation1 Impact of convergent offers2 Q3/17 0.9% 2.8% 0.7% Q4/17 1.7% 1.9% 0.5% Q1/18 3.2% 1.0% 0.7% Q2/18 2.9% 1.1% 0.7% Q3/18 3.1% 0.1% 0.7% Old medium term guidance (2014 – 2018 CAGR): Re-iterated
Slide 33: German Fixed: Service Revenue (excl. IFRS 15)
GERMAN FIXED: SERVICE REVENUE (EXCL. IFRS 15) Growth rates YOY Wholesale revenue Broadband revenue1 Fixed line service revenue Q3/17 2.8% 0.6% 0.3% Q4/17 2.7% 0.6% 0.5% 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% Old medium term guidance (2014 – 2018 CAGR): Re-ite
Slide 34: Thank You!
THANK YOU!