Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — Q3 2009 Earnings Presentation

27 slides from Deutsche Telekom's earnings presentation, Nov 5, 2009

  1. Slide 1: Q3/09 – Results Presentation

    Q3/09 – Results Presentation. Deutsche Telekom. November 5, 2009

  2. Slide 2: Disclaimer

    Disclaimer. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They include, among others, statements as to market potential and financial guidance statements, as well as our dividend outlook. They are ge

  3. Slide 3: Agenda

    Agenda. Deutsche Telekom Results Presentation. Q3/09 Highlights & Operations René Obermann CEO Q3/09 Operations & Financials Timotheus Höttges CFO 3

  4. Slide 4: Strong third quarter

    Strong third quarter. ƒ Q3 with excellent financial and strong operational performance: ƒ Adj. group EBITDA up 5.2% to €5.5 billion ƒ Free cash flow with strong growth in Q3 to €5.1billion year to date ƒ Out-performance in several markets relative to our competitors ƒ We can confirm our full year gu

  5. Slide 5: Group overview on regional performance of revenue and adj. EBITDA

    Group overview on regional performance of revenue and adj. EBITDA. USA Europe -3% 2.940 +5% 2.552 3.657 3.758 Germany -3% 765 745 1.038 1.089 6.601 6.471 Q3 2008 Q3 2009 Q3 2008 Q3 2009 2.610 2.523 Systems Solutions Southern and Eastern Europe +14% +84% 2.293 2.125 2.616 Q3 2008 Q3 2009 1.265 1.089

  6. Slide 6: Q3 Group highlights – excellent financial and strong operational performance

    Q3 Group highlights – excellent financial and strong operational performance. Revenue (€ billion) Excellent Q3 financials ƒ Group revenue growth of 5.2% 5.2% ƒ Group adj. EBITDA growth of 5.2%, strongest quarterly 1.5 -0.1 -0.6 adj. EBITDA ever 16.3 ƒ Q3 adj. net income of €1.1 billion 15.5 ƒ Group

  7. Slide 7: Mobilize the Internet – €1 billion of mobile data revenues reached in Q3

    Mobilize the Internet – €1 billion of mobile data revenues reached in Q3. Quarterly data revenue (Europe w/o OTE)1 Quarterly data revenue (USA)3 w/o messaging (€ million) w/o messaging (US$ million) +40.4% +32.5% 502 +21.2% 548 575 +45.2% 432 455 480 409 386 410 443 350 379 338 349 368 301 278 261 Q

  8. Slide 8: Initiatives for our future

    Initiatives for our future. Improve competitiveness in Germany and SEE Grow abroad with Mobile ƒ First convergence products launched: Liga Total, Family ƒ iPhone (Austria, Netherlands, Greece, Poland, Czech option, Entertain program manager Republic, Hungary, Slovakia, Croatia, Bulgaria and others)

  9. Slide 9: USA – strong margin despite challenging market environment

    USA – strong margin despite challenging market environment. Service revenues (US$ million) ƒ Q3 total revenues (US$) +0.7% qoq; -2.3% yoy ƒ Q3 service revenues (US$) -0.6% qoq; -3.4% yoy -3.4% ƒ Q3 blended ARPU (IFRS) at $46, -$1 vs. Q2 (-$4 yoy) 4,787 4,780 4,655 4,654 4,624 ƒ Q3 net adds -77k (Q3/

  10. Slide 10: USA – accelerated 3G rollout and enhance 3G handset portfolio

    USA – accelerated 3G rollout and enhance 3G handset portfolio. 3G POP coverage (million) Rollout of 3G network: 200 ƒ Q3 cash capex of $0.8 billion 167 ƒ 21,200 3G cell sites on air per Q3 (up 5,200 in Q3); more than 25,000 targeted by year-end 113 107 ƒ HSPA 7.2 enabled across entire 3G network by

  11. Slide 11: USA – enhance distribution and underscore value proposition

    USA – enhance distribution and underscore value proposition. T-Mobile USA stores Enhance distribution National retail 9,244 ƒ Own stores expanded to more than 2,000 Own Stores ƒ T-Mobile USA in 4,000 RadioShack stores since August 5,318 5,300 ƒ JD Power awards: Wireless Retail Sales Satisfaction and

  12. Slide 12: Germany: sequential improvement in adj. EBITDA since four quarters

    Germany: sequential improvement in adj. EBITDA since four quarters. Revenue (€ million) Adj. opex (€ million) -2% -5% 6,601 6,608 6,331 6,220 6,471 4,540 4,358 4,162 4,004 4,130 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Adj. EBITDA (€ million and margin in %) Cost cutting achieveme

  13. Slide 13: Germany: fixed – adj. EBITDA margin improvement

    Germany: fixed – adj. EBITDA margin improvement. Revenue (€ million) ƒ Improved revenue growth trend (-5.3% Q2/09 over Q2/08) now at -4% -4% ƒ Sequentially revenue up in Q3 over Q2 4,884 4,987 4,724 4,628 4,711 ƒ Fixed Network recorded adjusted EBITDA of €1.6 billion in Q3/09. ƒ Thanks to excellent

  14. Slide 14: Germany: fixed – cumulated broadband net add market share of 46%

    Germany: fixed – cumulated broadband net add market share of 46% in Q1-Q3/09. German broadband net adds (‘000) Retail net adds ‘000 / Share % Net Add Share 07/08 FY 09 per quarter accumulated FY/09: 45%+ e 1,378 1,261 1,258 XX% retail broadband net add market share per quarter forecast 1.048 42% 53%

  15. Slide 15: Germany: fixed – line losses significantly below last year

    Germany: fixed – line losses significantly below last year. Entertain on track to break 1 million barrier. Line losses (’000) ƒ Cumulated line losses of 1,648k are below 2008. ƒ Line losses of 573k in Q3/09 after 473k in Q2/09 are driven 2,476 by a one-off effect (expire of 24month contracts). 573 1

  16. Slide 16: Germany: mobile returns to growth

    Germany: mobile returns to growth. Service revenues (€ billion) and growth rates (yoy) ƒ Return to revenue growth in Q3 with 1.4% total revenue growth yoy to €2.1 billion, despite MTR cuts (-€32 million) ƒ Percentage change in service revenues in line or ahead of -0.5% competition: market leadership

  17. Slide 17: Europe – profitability is catching up through cost cutting

    Europe – profitability is catching up through cost cutting. Adj. EBITDA margin Q3 09 over Q3 08 (%) ƒ Revenue impacted by regulation and currency (loss of €0.8 billion): organic decrease of 2.6% in nine months yoy 22 21 (Q3 -5.6% yoy); excluding MTR and roaming regulation revenue would have been fla

  18. Slide 18: SEE – market leadership translates into profitability leadership

    SEE – market leadership translates into profitability leadership. Adj. EBITDA margin Q3 09 over Q3 08 (%) ƒ Revenue and adj. EBITDA growth driven by consolidation of OTE 45 48 ƒ Negative currency impact: €0.2 billion revenue and 52 43 43 €0.1billion adj. EBITDA lost in currency translation in 49 fir

  19. Slide 19: OTE: Higher synergies – sooner than expected

    OTE: Higher synergies – sooner than expected. Q3 synergy measures show a fairly even split between opex & capex ƒ Cosmote synergies are in 40% capex and 60% in opex (€ million) 100+ ƒ OTE fixed-line synergies nearly 100% in capex 70 ƒ 92% of RomTelecom synergies are capex- Opex 43% based. 57% Capex

  20. Slide 20: Systems Solutions – ongoing margin turnaround

    Systems Solutions – ongoing margin turnaround. Revenue (€ million)1 ƒ External revenues down by 5.5% due to continued pricing pressure and postponed investment decisions by customers Internal -7.3% ƒ Adj. EBITDA up by 13.8%, organically up by 20.3% External 2,599 2,251 2,293 2,106 2,179 2,125 ƒ Adj.

  21. Slide 21: Free cash flow – achieving guidance secured with strong Q3

    Free cash flow – achieving guidance secured with strong Q3. Free cash flow Q1 – Q3 2009 (€ billion) Year over Year 5.8 +0.8 5.1 -1.2 +0.4 -1.2 -0.3 -0.4 Q1 - Q3 2008 Cash Capex Interest Taxes Change in Operational Q1 - Q3 2009 working capital improvement Per quarter 2009 Contribution per quarter 5.1

  22. Slide 22: Status S4S: €5.4 billion savings realized – original target overachieved

    Status S4S: € 5.4 billion savings realized – original target overachieved. Cost base development1 Contribution (€ billion) by Business Unit (€ million) Q3/09 2007-Q3/09 0.58 -1.31 0.16 Germany 745 3,017 2.55 33.79 Europe 95 764 31.81 Systems Solutions 401 1,085 GHS 71 552 DT Group 1,312 5,418 ƒ 2nd

  23. Slide 23: Q3 adj. net income almost stable yoy

    Q3 adj. net income almost stable yoy. Q3/09 Q3/08 Q1-Q3/09 Q1-Q3/08 € billion adjusted adjusted adjusted adjusted EBITDA 5.5 5.3 15.6 14.8 Depreciation and amortization - 2.9 - 2.6 - 8.8 - 7.9 Net financial expense - 0.8 - 0.6 - 2.4 - 2.2 - of which net interest expense - 0.7 - 0.6 - 1.9 - 1.9 EBT 1

  24. Slide 24: Balance sheet – Solid ratios

    Balance sheet – Solid ratios. € billion 30/09/09 30/06/09 31/03/09 31/12/08 30/09/08 Balance sheet total 129.3 132.9 133.8 123.1 123.4 Shareholders’ equity 41.6 41.5 45.2 43.1 44.8 Net debt 42.4 45.0 42.8 38.2 39.4 Net debt / adj. EBITDA1) 2.0 2.2 2.0 2.0 2.0 Gearing 1.0 1.1x 0.9x 0.9x 0.9x Equity r

  25. Slide 25: Outlook 2009 – confirmed

    Outlook 2009 – confirmed. Targets DT standalone Targets DT including OTE Adj. Group EBITDA ƒ Down 2-4% from 2008 level ƒ DT 09 guidance + ca. €2 billion1 Free cash flow ƒ Around €6.4 billion ƒ Around €7.0 billion Guidance assumes constant currencies and no further significant economic deterioration

  26. Slide 26: Q&A

    Q&A. René Obermann CEO Timotheus Höttges CFO 26

  27. Slide 27: Thank you for your attention!

    Thank you for your attention!

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