Telefonica Deutschland Holding AG · LS:A1J5RX

Telefonica Deutschland — Merger or Acquisition (July 2013)

28 slides from Telefonica Deutschland's merger presentation, Jul 23, 2013

  1. Slide 1: Creating a Leading Digital Telco in Germany

    Creating a Leading Digital Telco in Germany 23 July 2013 Telefónica Deutschland Holding AG, Investor Relations Public – Nicht vertraulich

  2. Slide 2: Disclaimer

    Disclaimer The financial information contained in this document (in general prepared under International Financial Reporting Standards (IFRS)) contains in respect of the results for the January-June 2013 period only preliminary numbers. The financial information and opinions contained in this docume

  3. Slide 3: Creating a Leading Digital Telco in Germany

    Creating a Leading Digital Telco in Germany René Schuster Rachel Empey Markus Haas CEO CFO CSO Telefónica Deutschland Telefónica Deutschland Telefónica Deutschland Holding AG Holding AG Holding AG Telefónica Deutschland Holding AG 3 Public – Nicht vertraulich

  4. Slide 4: Acquisition of E-Plus by Telefónica Deutschland

    Acquisition of E-Plus by Telefónica Deutschland Public – Nicht vertraulich

  5. Slide 5: Transaction summary

    Transaction summary Two step transaction structure 1 Acquisition of E-Plus by Telefónica Deutschland for a combination of cash and a stake in the enlarged Telefónica Deutschland  €3.70bn of cash  24.9% stake in enlarged Telefónica Deutschland (after capital increase) Key terms 2 Telefónica subse

  6. Slide 6: Transaction structure

    Transaction structure Transaction summary Telefónica Public KPN Pre- Two step structure transaction 100% 1 Acquisition of E-Plus by Telefónica structure 76.8% 23.2% Deutschland for a combination of cash Telefónica E-Plus and a stake in the enlarged Telefónica Deutschland Deutschland  €3.70bn of ca

  7. Slide 7: Transaction rationale

    Transaction rationale 1  A leading player with a combined customer base of 43m, 42% in postpaid  Strong scale benefits with combined mobile revenue market share of 32% Creation of a Leading  Driving mobile market growth in Germany since 2010: Digital Telco  +2.2pp in postpaid customer share  +5

  8. Slide 8: Transaction rationale (cont'd)

    Transaction rationale (cont'd) 4  Customers to benefit from the best high speed mobile and fixed experience from a single LTE network and access to future-proof DT NGA network Creating a  Strong multi-brand portfolio across segments superior  Offering ICT / cloud solutions for business customers

  9. Slide 9: Creation of a Leading Digital Telco

    1 Creation of a Leading Digital Telco Q1 2013 mobile revenue market share (%) Creation of a 31.6 34.8 33.6 leading mobile 17.6 14.1 operator in Germany Enlarged Telefónica T-Mobile Vodafone Telefónica E-Plus Deutschland Deutschland 2010 – 2012 Postpaid mobile market share growth (pp) 2.2 2.0 2.0 0.2

  10. Slide 10: Highly attractive mobile market

    1 Highly attractive mobile market Relatively low churn Strong subscriber base growth Monthly Churn, 2012 (%) 2013E YoY Growth (%) 2.6 2.7 2.0 1.4 Germany EU Average Germany EU Average Smartphone penetration upside EBITDA growth Smartphone connections as % of mobile 2009 – 2013E CAGR (%) connections,

  11. Slide 11: Identified and realisable synergies of €5.0 – 5.5bn NPV

    2 Identified and realisable synergies of €5.0 – 5.5bn NPV Distribution  Rationalisation of distribution network and  Increased efficiency in customer service costs leveraging best Operating customer practices and scale synergies of service  Channel management and overheads €4.5bn NPV  Focused ro

  12. Slide 12: Synergies value of €5.0 – 5.5bn NPV

    2 Synergies value of €5.0 – 5.5bn NPV in EUR billion % of Total Synergies 70% 32% (16%) 14% 0.5–1.0 5.0–5.5 1.7 4.5 0.6 3.7 (0.9) 1.7 1.3 Distribution and Network SG&A Opex synergies Capex Integration NPV of Revenue and NPV of revenue customer synergies costs and other operating other synergies and

  13. Slide 13: Stronger competitive position from increased scale in Germany

    3 Stronger competitive position from increased scale in Germany Based on consensus forecasts 2013 Revenue 2013 OIBDA In EUR billion In EUR billion 3.2 8.3 0.9 2.2 5.1 1.3 Telefónica E-Plus Enlarged Telefónica E-Plus Enlarged Deutschland Telefónica Deutschland Telefónica Deutschland Deutschland profo

  14. Slide 14: Enhanced profitability and cash flow generation in Germany

    3 Enhanced profitability and cash flow generation in Germany Pro forma financial impact on Telefónica Deutschland, based on consensus forcasts Revenues OIBDA OpFCF1 In EUR billion In EUR billion In EUR billion 8.3 2.8–2.9 1.7–1.8 5.1 1.3 0.6 2013 2013 proforma 2013 2013 PF ind. 2013 2013 PF ind. Run

  15. Slide 15: Creating superior customer experience

    4 Creating superior customer experience  Strong commitment to invest in the German market Single LTE  Spectrum and network capacity to cope with growing data volumes network to  Access to fibre backhaul deliver the best  Environmental benefits through reduction of sites mobile broadband  Improv

  16. Slide 16: Expected transaction timetable

    Expected transaction timetable Telefónica Deutschland & KPN EGM 23 July 2013 July/Aug 2013 September 2013 Mid 2014 Signing of Submission for KPN convocation of EGM Completion of merger Agreement regulatory Key milestones clearance H2 2013 KPN EGM Mid 2014 Regulatory approvals H2 2013 Key approvals e

  17. Slide 17: Closing remarks

    Closing remarks  A natural strategic move for Telefónica Deutschland to create a Leading Digital Telco with focus on mobile data and LTE enhancement  Significant value creation through €5.0 – 5.5bn NPV synergies crystallization  Germany is the largest mobile market in Europe and is the most advan

  18. Slide 18: January – June 2013 Operating & Financial performance

    January – June 2013 Operating & Financial performance Public – Nicht vertraulich

  19. Slide 19: Overview of key financials

    Overview of key financials Top line pressures compensated by more efficient usage of resources January - June April - June In EUR million 2013 2012 % y-o-y ∆ 2013 2012 % y-o-y ∆ Revenues 2,445 2,554 (4.2) 1,216 1,295 (6.2) OIBDA 572 597 (4.1) 294 317 (7.2) OIBDA margin 23.4% 23.4% 0.0 p.p. 24.2% 24.

  20. Slide 20: Revenue performance

    Revenue performance Ongoing trends from the transition to a data-centric environment Total revenue in EUR million  Wireless service revenue driven by -6.2% postpaid dynamics -3.8%  Non-SMS data revenue acceleration y-o-y  Lower y-o-y trading performance 1,295 1.247 Other 1 1.216  Higher y-o-y ta

  21. Slide 21: Trading performance in Q2 2013

    Trading performance in Q2 2013 Consistent approach to a complex market, driving smartphone penetration Postpaid churn rate in % +0.1%p y-o-y  60k postpaid net additions  Market focus on retention and customer base 1.3%  Better customer mix from O2 Blue All-in push  Successful management of tarif

  22. Slide 22: Continuous improvement of mobile data monetisation

    Continuous improvement of mobile data monetisation Focus on execution based on a clear set of priorities Key levers for data monetisation Traffic vs Revenues Non-SMS data revenue (y-o-y%) Data traffic (y-o-y%) +25% 1 Drive data & smartphone penetration for new & +21% existing customers 2 Fit demand

  23. Slide 23: Continued dynamics in O2 massmarket postpaid

    Continued dynamics in O2 massmarket postpaid Tangible results from base management leveraging O2 Blue All-in Main drivers for wireless service revenues Q-o-Q absolute performance ex MTRs % vs Q4-Q1 -50% -40% -10% SMS i/c Q1 ’13 Trading Tariff migrations Base effects Seasonal effects Q2 ’13 Customer

  24. Slide 24: Stable y-o-y OIBDA performance

    Stable y-o-y OIBDA performance Revenues downside partly offset by cost savings OIBDA in EUR million Q1 (changes y-o-y) -24,7 Q2 (-4,1%) +597 -108 -29 +23 +572 +54 -1 +22 +5 0 -1 +1 -80 +49 +8 +7 +1 OIBDA Revenues Other income Supplies Personnel Other Expenses OIBDA H1 2012 H1 2013 OIBDA margin in %

  25. Slide 25: Q&A

    Q&A Public – Nicht vertraulich

  26. Slide 26: Q&A: Telefónica Deutschland Q2 2013 results conference call

    Q&A Telefónica Deutschland Q2 2013 results conference call Telefónica Deutschland Holding AG 26 Public – Nicht vertraulich

  27. Slide 27: For further questions please contact IR department

    For further questions please contact IR department Investor Relations Victor Garcia-Aranda, Head of Investor Relations Marion Polzer, Investor Relations Manager Pia Hildebrand, Investor Relations Office Coordinator Email: ir-deutschland@telefonica.com Telephone: +49 89 2442-1010 www.telefonica.de/in

  28. Slide 28: Public – Nicht vertraulich

    ‘Jelefontca Deutschland Public — Nicht vertraulich

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