Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Investor Day (March 2008)
68 slides from Deutsche Telekom's investor day presentation, Mar 19, 2008
Slide 1: Investors Day. Deutsche Telekom.
Investors Day. Deutsche Telekom. March 19, 2008.
Slide 2: T-Home. Broadband/Fixed Network.
T-Home. Broadband/Fixed Network. Timotheus Höttges, Member of the Board of Management DTAG.
Slide 3: 2007: Turnaround in all parameters
2007: Turnaround in all parameters. 2007 goal FY 2007 Expand broadband Broadband net add market share 40-45% 44% market leadership Launch IPTV Entertain customers 100-200K 150K Biggest sales Telekom shops 786 804 (+181) interface Telekom partners 1000 1011 (+767) E20 availability 65% 69% M
Slide 4: Broadband net adds and fixed-line losses in European comparison
Broadband net adds and fixed-line losses in European comparison at peer level again. BB development Broadband in 2006 in development und 2007 2006 & 2007 Fixed-line losses in 2006 & 2007 822 +50% -6% -1,351 TI 788 +52% -6% -1,300 TI* 1,022 +60% -1% -186 TEF 829 +65% -52 TEF 0% 809 +25% -9% -1,668 BT
Slide 5: Broadband net add market share more than doubled in 2007
Broadband net add market share more than doubled in 2007; target for 2008: > 45%. Broadband market share Net add market share Retained broadband customers 2008 measures Concentrated market investment in H1 Portfolio adjustments Win back DSL resale customers Develop new target groups (e.g. VS
Slide 6: Increase Entertain customer base to > 500,000 in 2008
Increase Entertain customer base to > 500,000 in 2008. Customer development for Entertain T-Home high-speed network coverage Seamless provision established New Entertain portfolio -8% andd -1 7% New! moan -8% re Entertain -1 7% Entertain New! Entertain e! nternt como content ! Comfort Comfort Plus P
Slide 7: Sustainable improvements in service performance
Sustainable improvements in service performance indisputable and ambitious targets for 2008. Call Center availability at high level Customer Care awards Technical Service deadline compliance Perspectives for 2008 Increase of service level 20 to service benchmark of 80% Increase of deadline compl
Slide 8: Opex savings of €1.2 billion gross achieved in 2007
Opex savings of €1.2 billion (gross) or €900 million (net) achieved in 2007. German OPEX development (in € bn) 2007 achievements 4.0 Gross cost savings 2007 of €1.2 billion: 2006 €0.4 billion personnel costs €0.4 billion IT/billing €0.4 billion rent, consulting and other 3.6 3.6 €900 m Ter
Slide 9: BIG 2008: Continue reorganization through focus program
BIG 6 2008: Continue reorganization through focus program. 2008 goal Expand broadband Broadband net add market share > 45% Christian market leadership Decline in revenues -4% to -6% Illek Mass-market-capable Entertain customers > 500K IPTV Availability (E20) 80% Berlemann Thomas Meet service
Slide 10: BBFN domestic revenue and EBITDA decline lowered in 2007
Strong sequential BBFN domestic revenue and EBITDA decline in 2006 could be significantly lowered in 2007. Revenue (millions of €) Adj. EBITDA (millions of €) -5.3% -3.8% 1.1% -0.4% -7.3% 6.8% -0.1% 1.6% 5,433 5,146 4,948 5,002 4,982 1,788 1,796 1,658 1,656 1,682 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q4/06
Slide 11: BBFN domestic: Visible trend towards revenue and EBITDA stabilization
BBFN domestic: Visible trend towards revenue and EBITDA stabilization. 2007 2008 2010 Revenues -8% -4% to -6% Stabilize revenue Gross €1.2bn €1.0bn Ongoing cost reduction with Save for Service €0.9bn €0.1bn higher net savings Net Adj. EBITDA -14% -5% to -8% Stabilize EBITDA Net adds 2.0 m 1.6 Broadb
Slide 12: T-Home. Broadband/Fixed Network.
T-Home. Broadband/Fixed Network. Dr. Christian P. Illek, Member of the Board of Management T-Home, Marketing.
Slide 13: Despite fierce competitive pressure T-Home strengthened position in 2007
Despite fierce competitive pressure T-Home strengthened position in 2007. Market Development 2007 DT Achievements Broadband net adds: 4.4 m DT share of net adds increased from 18% in 2006 to 44% in 2007 Streetprice: decline of 25% for Double play Entertain customer base in line with Change
Slide 14: Broadband continues to grow but at slower pace
Broadband continues to grow but at slower pace. Broadband development DT market* (in millions) Development PSTN market share (in %) 30 95% ≈ 27 25 82% 22-23 20 19 ≈ 65% 15 15 37 11 31 10 7 5 0 2004 2005 2006 2007 2008 2009 2010 2004 2007 2010 *Source: DT estimate; Residential and business.
Slide 15: Competitive landscape will consolidate with 6+ players
Competitive landscape will consolidate with 6+ players likely to remain. No. of Competitors 2007: Relevant Players 2010+: Potential endgame scenario No. of Competitors ca. 3 Re- seller Re- seller 1-2 players 1 TNB 1-3 TNB ca. 9 regional +2 3 players +x ca. 3 KNB KNB 1-2 players 2 ≈ 15 6 plus x regio
Slide 16: Market dynamics in 2008 driven by 3 major trends
Market dynamics in 2008 driven by 3 major trends. Market YE 2007 Market trends 2008 16% 1. DSL market 19% PSTN W-DSL Component* W-DSL Component* continues to grow (at 2% Competitors the expense of single play) 32% Competitors 85% 2. Wholesale Customer Cable** base migrates to All 82% IP DT 3. Triple
Slide 17: Strategy 1: Increase broadband net add share to >45%
Strategy 1: Increase broadband net add share to >45% to compensate for single play losses. Major market trends PSTN W-DSL Component* W-DSL Component* Competitors Competitors Cable** DT 1. DT DT Single Play Double Play Triple Play Source: DT estimate * W-DSL double counted: PSTN line directly from DT
Slide 18: Strategy 1: Targeted customer approach and churn reduction
Strategy 1: Net add share of broadband >45% mainly through targeted customer approach and churn reduction. Customer Attract new target groups (e.g. best ager/family) Target Push congstar through All IP Groups Continuous portfolio adjustments, follower strategy on pricing Portfolio Convergenc
Slide 19: Strategy 2: Mitigate All IP Migration
Strategy 2: Mitigate All IP Migration through ULL focus and winback activities. Major market trends PSTN W-DSL Component* Competitors 2. W-DSL Component* Competitors Cable** DT DT DT Single Play Double Play Triple Play Source: DT estimate * W-DSL double counted: PSTN line directly from DT/ wholesale
Slide 20: Our view on the PSTN development 2008
Our view on the PSTN development 2008. - 1.9 - 2.5 - 0.2 - 0.8 -0,9 - 1.9 to - 2.1 ≈ +0.2 - 1.7 to – 1.9 - 0.5 (versus - 2.1 in 2007) - 0.3 Line losses due to Mix of FMS, new HH, ≈ - 1.1 ≈ - 3.0 DSL growth churn prevention Line losses and winback All-IP Migration (temporary PSTN effect)
Slide 21: Strategy 3: Increase Triple Play customer base to >500k
Strategy 3: Increase Triple Play customer base to >500k to increase both, ARPA and customer loyalty. Major market trends PSTN W-DSL Component* W-DSL Component* Competitors Competitors Cable** DT 3. DT DT Single Play Double Play Triple Play Source: DT estimate * W-DSL double counted: PSTN line direct
Slide 22: New Triple Play portfolio allows uptake in Entertain customer base
New Triple Play portfolio allows significant uptake in Entertain customer base. Development customer base Entertain New IPTV Portfolio > 500,000 ! - -8% andd 8% ran -17 % NNew ew! mo e -17 % morent Entertain Entertain Entertain co nte content Comfort Comfort Plus Premium from 49,95 from 59,95 from 6
Slide 23: Revenue rebalancing 2008 dependent on broadband success
Revenue rebalancing 2008 heavily dependent on broadband success. Revenue rebalancing 2008 in % of 2007 revenues (retail only) Broadband induced revenues 1.2% - 1.7% - 4% to - 6% 0.7% - 0.9% 1.3% - 1.6% Thereof line losses 0.8% - 1.3% -11% 1% - 1.5% Revenue decline: - Line losses DSL Net Add DSL Net
Slide 24: T-Home. Broadband/Fixed Network.
T-Home. Broadband/Fixed Network. Thomas Berlemann, Member of the Board of Management T-Home, Customer Services.
Slide 25: BIG 6 2008: Service objectives 2008
BIG 6 2008: Service objectives 2008. 2008 goal Expand broadband Broadband net add market share > 45% market leadership Decline in revenues -4% to -6% Mass-market-capable Entertain customers > 500K IPTV Availability (E20) 80% Meet service Deadline compliance 85% expectations Complaints ra
Slide 26: Integrated customer service across all contact points
Deutsche Telekom offers an integrated customer service across all customer contact points. Deutsche Telekom Customer Field Telekom Retail eChannel Service Service Shops Partners Deutsche Telekom Deutsche Telekom Local Retail partners of Online Services of Kundenservice Technischer Telekom Shops Deut
Slide 27: Overall target: Increase customer satisfaction and loyalty
Overall target: Increase customer satisfaction and loyalty. Customer Loyalty Index Measures and improvements Index Value Customer-oriented products and service 55 improvements led to a sharp increase in customer loyalty in 2007 50 Target 2008 Overall Index Introduction of Top Customer program is
Slide 28: Main KPIs of customer service radically improved in 2007
Main KPIs of customer service radically improved in 2007. Focus in 2008 on stabilization on high level. Call Center availability (E20) Timely Processing of Client Orders Availability # of customer within 20s requests in % 100 Service level 20 Target 2008 80 period period Strike Strike 600,000 Target
Slide 29: Significantly increased call productivity in 2007
Significantly increased call productivity in 2007 – further improvements in 2008 planned. Call Productivity # of Calls/agent/call-handling hour 9 Postprocessing Time Ø duration + Speaking Time = Call Handling Time 8 10 min 22.2% 7.7 Target 2008 Target 2008 7 5 min 6.3 6 5 Jan 07 X Dec 07 Half-Year A
Slide 30: Field service improves deadline compliance and productivity
Field service continuously improves deadline compliance rate and productivity with rising customer satisfaction level. Deadline compliance rate Productivity of Service Technicians 90% Target 2008 9 Average number of jobs per service Strike 80% 8 technician per day Target 2008 Target 2007 7 +35% 70%
Slide 31: KPI improvements at Telekom Shops in 2007
KPI improvements at Telekom Shops in 2007 will be continued in 2008. Keeping waiting time promise (<5min) Productivity in % 95 2007 Target 2008: Sales/FTE/year +14% Ø 91 % [indexed] 114 100 69% T-Home 90 65% 35% 31% T-Mobile 85 Jan Apr Jul Oct Jan 2006 2007 Customer satisfaction Revenue/m² sales spa
Slide 32: Target 2008: Reduce customer service complaints rate by 60%
Target 2008 in service: Reduce customer service complaints rate by approx. 60% until year-end. Target Complaints Rate 2008 Measures X-functional task force drives aggressive process to avoid complaints - 60% All service channels implement program to 100% improve employees' complaint management s
Slide 33: Integrated Customer Service embraces all of DT's customers
Integrated Customer Service embraces all of DT's customers and their different needs. Nord Nord-Ost Nord-West West Mitte-Ost Mitte Service segments to ensure Süd-West Süd Top/Diamond harmonized service experience Retention Starter PK Platinum Gold Value segments ensure appropriate service cost p
Slide 34: Achievements 2007 in sales: No.1 in customer and dealer satisfaction
Achievements 2007 in sales: Integrated sales is No.1 in customer and dealer satisfaction. Local Presence in German Market 2007 Customer satisfaction with Telekom Shop* Biggest sales organization on 100 78 76 75 72 72 71 German telecoms market 69 69 67 Shop presence increased to 50 > 800 (in 2006
Slide 35: Customer satisfaction is key driver to stabilize customer base
Customer satisfaction is the key driver to stabilize customer base and revenues. Customer Loyalty Index Index Value 55 50 Target 2008 45 Overall Index We will continue to drive customer 40 satisfaction and thereby customer loyalty throughout 2008! 35 Top Customers Index 30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 07
Slide 36: T-Home. Broadband/Fixed Network.
T-Home. Broadband/Fixed Network. Thomas Dannenfeldt, Member of the Board of Management T-Home, Market & Quality Management.
Slide 37: Achievements 2007: Gross cost savings of €1.2bn at BBFN
Achievements 2007: Gross cost savings of €1.2bn and net savings of €0.9bn at BBFN Domestic. Opex development domestic (in € billion) Achievements 2007 domestic Gross cost savings of €1.2 billion in 2007: 4.0 2006 € 0.4 billion personnel costs € 0.4 billion IT/Billing € 0.4 billion rent, cons
Slide 38: Longer-term cost savings initiative: S4S@T-Home
Longer-term cost savings initiative: New setup of S4S@ T-Home to deliver mainly cross-functional cost savings. Top targets T-Home transformation Securing profit & short-term optimization of service and Secure 2008 quality Stabilize EBITDA; service and quality levels in line with Opex target structur
Slide 39: S4S@T-Home will deliver EUR 1.0 bn gross cost savings
S4S@T-Home will deliver EUR 1.0 bn gross cost savings. 1.0 ~0.1 ~ 0.3 Sources of savings 1 1 Field Service (TS) ~ 0.1 2 Customer service (KS) Incl. headcount efficiency (T-Service) 0.2 - 0.3 2 3 Technology 3 4 IT restructuring ~ 0.1 0.1 - 0.2 5 Billing 4 5 6 Overhead and other cost reduction 6
Slide 40: Main share of 2008 savings will be reinvested
Main share of 2008 savings will be reinvested to stabilize top line. Areas of Reinvest 13.8 -0.1 -1.0 ~0.7 ~ 0.2 ~ 0.1 13.7 A Consolidation: Active Billing C Congstar B DTKS A Immobilienscout 24 B Reinvest to stabilize current business (e.g., Entertain, better value mix in 2play) C External-
Slide 41: Significant reductions of IT systems and spend
Significant reductions of IT systems and spend. IT retire measures to continue in 2008 and beyond Retire IT 2007 2008 2009 2010 Realization of IT savings by deactivating IT applications 10 9 10 5 completely Price optimization Number of major application shut downs Lowering IT wholesale prices
Slide 42: Contribution to savings through billing
Contribution to savings through billing: More online business and complexity reduction. Online billing customer growth Savings drivers +31% Increasing number of online bills +4% +11% +11% Complexity reduction Retire IT Product portfolio Consolidation of change request cycles Q1 2007 Q2 200
Slide 43: Zero Touch initiative essential for savings
Zero Touch initiative essential for savings and ambition levels. Zero touch implementation …addresses efficiency of provisioning and repair/fault clearance of products Scope …represents >10% of total T-Home OPEX …will enable savings in the 3-digit million € range until 2010 Reason / …will resul
Slide 44: Main driver of Zero Touch is automation
Main driver of Zero Touch is automation and increase of first-contact solution rate. Provisioning Provisioning: Automation rate Quality/ Customer satisfaction +8% Provides transparency and control to customer Speeds up delivery time Efficiency Avoidance of direct and failure costs 2007 Q1/08 Q
Slide 45: S4S@T-Home initiatives
S4S@T-Home covers the entire business and will deliver significant savings by 2010: Initiatives. Process and platform-related Market-related initiatives G&A-related initiatives initiatives IT/process retirement Increase retail sales efficiency Reduce rent/space/energy More efficient production Incre
Slide 46: Q&A session on T-Home
Q&A session on T-Home.
Slide 47: Break
Break.
Slide 48: T-Systems. Next Generation.
T-Systems. Next Generation. Reinhard Clemens, Member of the Board of Management DTAG. Joachim Langmack, Chief Sales & Service Officer of T-Systems Enterprise Services GmbH. Zwezdana Seeger, Chief Systems Integration Officer of T-Systems Enterprise Services GmbH.
Slide 49: Next Generation T-Systems
Next Generation T-Systems. A. Our point of departure – Challenging situation in an attractive market B. Our way forward – Restoring growth and profitability C. Our target – Leading European-based ICT player
Slide 50: T-Systems in 2007
T-Systems in 2007. T-Systems was shrinking in a growing ICT market. T-Systems delivered significantly lower EBIT-margin than competitors. Costs in many areas are above benchmark levels. Customer satisfaction and quality are ok but do not fit to our aspiration level. 50
Slide 51: T-Systems was shrinking in a growing ICT market
T-Systems was shrinking in a growing ICT market. Revenue (in bn €) EBIT EBITDA Competitors* + 4.0% 6.5% 13.1% - 8.4% 13.1 -1.1 12.0 T-Systems 8.9% 1.3% 1.1 0.2 2005 2007 -0.1 2007 2007 * IT Providers (e.g. IBM Global Services, HP Services, Logica CMG) TC Providers (e.g. FT ECS, COLT Telecom, KPN), S
Slide 52: Fundamentally we are a sound company
Fundamentally we are a sound company. Excellent people Recent sales successes show that the ICT strategy is working # 1 TC provider for German SMEs # 1 globally in the SAP field with more than 1,550,000 SAP users # 2 Europe-wide in operating data centers # 3 globally in IT services for the automotiv
Slide 53: Our market is large with approx. €180 bn
Our market is large with approx. €180 bn and attractive growth rates. ICT services stack T-Systems approach 2007 WEU CAGR 07-10 (in €) Systems Integration Fully addressed 51.2 bn 5.5% IT Infrastructure Services Fully addressed 68.4 bn 5.9% “Network- Telecommunications Services* Fully addressed 58.3
Slide 54: Next Generation T-Systems
Next Generation T-Systems. A. Our point of departure – Challenging situation in an attractive market B. Our way forward – Restoring growth and profitability C. Our target – Leading European-based ICT player
Slide 55: Positioning: Services and target groups
Positioning: Services and target groups. What do we sell? ICT services on a global basis Global TC delivery What is our „Go to market“ approach? Large corporations with headquarters in Europe Public institutions in Europe SME in Germany Automotive industry IT provider of Deutsche Telek
Slide 56: Our target structure and objectives
Our target structure and objectives. T-Systems Network-centric ICT services Worldwide delivery capabilities Competitive cost structures Systems Corporate Customers Business Customers Corporate Business Development Integration Win big deals (ICT) Ensure successful product Develop innovati
Slide 57: New focus in sales - Corporate Customers (1/2)
New focus in sales - Corporate Customers (1/2). Clear, effective and efficient go to market. Focus on key accounts Key factor for growth – Improve “Share of Wallet”. Global responsibility for profitability. One face to the customer. Focus on large corporations – one direct sales Direct sales
Slide 58: New focus in sales - Corporate Customers (2/2)
New focus in sales - Corporate Customers (2/2). Clear, effective and efficient go to market. Public institutions in Europe Public market with specific requirements and different go-to-market. Key area for growth – Improve market success. Deutsche Telekom Support Deutsche Telekom in optimizing
Slide 59: Focus Systems Integration. Cognizant partnership
Focus Systems Integration. Cognizant partnership will drive SI business. DT-strategy gap closed T-Systems structural problems hedged Improving cost position: Outsourcing our offshore workload at competitive pricing Additional verticals: Cognizant adds Financial Services, Pharma capabilities
Slide 60: Partnership logic: Complementary capabilities
Partnership logic: Complementary capabilities. Strong footprint in North America, Geographic Coverage Continental European Leadership: UK and India Top 3 in market, Number 1 in Germany 57,000 associates Talent Management 55,000 associates Leadership in Financial Services, Leadership in Automotive, L
Slide 61: Next Generation T-Systems
Next Generation T-Systems. A. Our point of departure – Challenging situation in an attractive market B. Our way forward – Restoring growth and profitability C. Our target – Leading European-based ICT player
Slide 62: Target: Revenue and EBIT growth until 2010
Target: Revenue and EBIT growth until 2010. Revenue EBIT (in billion €) (in billion €) Mid single digit growth 11.1 Growth segments IT Mid single IP Solutions 5.0 digit margin TC International Shrinking segments 6.1 -1.0% Legacy TC 0,8 Captive (DTAG) -0.1 2007 2010 2007 2010 Key: margin CA
Slide 63: Competitive cost structures – Save-for-Service
Competitive cost structures – Save-for-Service. Save-for-Service (S4S) targets Fields of action (in billion €) ICT production: Optimized delivery of TC-services 2008 2010 Personnel cost reduction ICT production/ 0.5 Cost reduction in computing/desktop SI support services Sales/G&A 0.3 Sales: T
Slide 64: T-Systems BIG 6 strategic targets
T-Systems “BIG 6” strategic targets – Platform for restoring growth & profitability. 1 Build a Next Generation T-Systems that stands for competitive cost structures Primary growth in line with market target an open and internationally oriented performance culture an innovation and quality le
Slide 65: Q&A session on T-Systems
Q&A session on T-Systems.
Slide 66: Thank you for your attention
Thank you for your attention.
Slide 67: Backup
Backup.
Slide 68: The significance of regulation for T-Home in Germany
The significance of regulation for T-Home in Germany. Market environment Key regulatory challenges DT is obliged to offer access to ducts and under certain conditions to dark fiber. Moreover competitors may collocate at the street cabinet. Many details are still unclear. VDSL Negotiations are ongo