Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — Investor Day (2018)
26 slides from Deutsche Telekom's investor day presentation, 2018
Slide 1: Deutsche Telekom Capital Markets Day 2018
DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2018
Slide 2: Finance
Finance Thomas Dannenfeldt, CFO
Slide 3: Key Messages
Key Messages 01 leading growth in Key financial metrics 04 debt policy unchanged We maintain undisputed access to credit markets We expect growth for all our businesses driven by both better revenue momentum, and increased cost reductions. Ex US EBITDA growth to average 2–3% through 2021 02 Deliver
Slide 4: Review 2014 – 2018
Review 2014 – 2018 GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 5: Finance Strategy Achievements
Finance FINANCE Strategy Achievements STRATEGY 2014–2018 TRAINING PLAN... IS OUR BALANCED II Equity Strategy leading European telco III Debt Reliable shareholder Undisputed access to debt remuneration policy BEST capital markets INTEGRATED WIN WITH LEAD IN CUSTOMER IP NETWORKS PARTNERS BUSINESS Di
Slide 6: Delivering value…
Delivering value… Revenue ROCE > WACC Cash Capex € bn € bn +6% +4% +6% 12.1 12.5 67.1 74.9 10.1 +1–2% +1–2% CAGR 2014–2018 5.5% 5.8% CAGR 2014–2018 2014 2017 2018e WACC 2014 2017 2018e Adj. EBITDA 5.3%2 Special factors (EBITDA) 4.0%1 € bn € bn 1.8 €1.3 bn +6% 22.2 23.3 in 2018 18.9 2014 2017 2018e +
Slide 7: …while investing into future growth
…while investing into future growth Cash Capex Spectrum Further investments… € bn 2015–2017 cumulative spend, 12.5 € bn …in customer growth 11.1 Growth leader in US mobile 10.1 and ex US mobile 4.6 US 3.8 Low-band roll-out of ≈ €0.3 bn in 2018 7.9 Ex US 2.7 …in transformation 6.3 ≈ €0.4 bn IP
Slide 8: Delivering free cash flow and dividend growth
Delivering free cash flow and dividend growth Free Cash Flow DT group1 Dividends following FCF growth Relative TSR since last CMD € bn € % +11% CAGR 6.2 5.5 0.703 +14% 4.9 0.65 4.1 4.5 0.55 0.60 Minimum 0.50 €0.50 Telco Sector 2014 2015 2016 2017 2018e2 2014 2015 2016 2017 2018e Feb ’15 May ’18 1 Be
Slide 9: CMD 2015 commitments: well achieved
cmd 2015 commitments: well achieved Ambition level 2018 Achievements 2017 Delivered/on track Key Financials Group Revenue CAGR +1–2% (2014–2018) +4% CAGR (2014–2017) Group Adj. EBITDA CAGR +2–4% (2014–2018) +6% CAGR (2014–2017) Group FCF CAGR ≈ +10% (2014–2018) +11% CAGR (2014–2017) Gr
Slide 10: Strategy 2018 – 2021
Strategy 2018 – 2021 GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 11: 10% FCF growth to continue, driven by both US and ex US
10% FCF growth to continue, driven by both US and ex US DT FCF in non US deal scenario € bn +10% CAGR >8.0 Adj. EBITDA growth 6.2 5.5 Improving balance sheet Ongoing tax benefits 2014–2021 US FCF CAGR Adj. EBITDA growth ≈ 4.0 Stable Cash Capex of 10% Ex US 3.3 ≈ 3.0 (2021 vs. 2017) Decli
Slide 12: Ex US EBITDA has turned around and is growing
Ex us ebitda has turned around and is growing Guidance 2017 2018 2019 2020 2021 Ex US EBITDA2 € bn Germany 2–2.5% 2–3% CAGR Europe 1–2% -1.3% CAGR 13.2 13.2 GD ≈ 3–4% ( )1 12.8 12.9 TSI ≈ 5% DT ex US ≈ 2–3% 2014 2016 2017 2018e 2021 EBITDA growth Service revenues 1 Pre-accounting effects 2 Pro forma
Slide 13: Our ex US capex peaks in 2018
Our ex us capex peaks in 2018 Cash Capex ex US Drivers € bn Invest in fiber/IP migration Stable outlook TSI with ca. 0.2 bn one-off spends in 2018 7.5 7.9 ≈ 7.6 2018 vs. 2017 increase also reflects greater tower spend (€0.1 bn) 6.3 2014 2017 2018e 2021e GROUP STRATEGY Germany Systems Solutions
Slide 14: Targeting €1.5 bn of net indirect cost reductions ex US
Targeting €1.5 bn of net indirect cost reductions ex US Net indirect cost reduction & composition of savings Across all segments € bn (ex US) 18.5 Internal Workforce Costs by automation & -€0.8 bn 0.5 operational excellence: gross reduction of Deutschland ≈ 13 k FTEs already secured by YE 2018 -1.5
Slide 15: GHS to support segment cost savings
GHS to support segment cost savings Lower real estate cost1 Efficient shared services1 Reducing purchasing costs1 € bn 0.2–0.3 € bn € bn 0.2 0.1–0.2 Savings Savings Savings 2017–2021e 2017–2021e 2017–2021e Savings enabled by desk sharing, €0.1 bn savings already delivered since CMD Innovative sourci
Slide 16: Digitalize: Fit4Future program
Central Program (Fit4Future) improves customer experience and supports cost savings Approach Key levers supporting segment initiatives Group-wide program Operational Excellence Driven by all Board members personally Smart & lean processes accelerated with robotic process automation Simplify Leve
Slide 17: Demographics to increasingly support cost savings
demographics to increasingly support cost savings Personnel Special Factors (Cash) ex US Pension cash-outs ex US decreasing € bn € bn Civil Servant Pensions Pension Plans -0.3 1.0 1.1–1.2 0.8–0.9 0.9 0.8 0.5 0.6 0.5 0.5 ≈ 0.5 0.4 0.4 0.2 0.2 0.4 0.4 0.2 0.3 0.3 2017 2018e 2021e 2025e 2015 2017 2019e
Slide 18: Stable interest costs and reduced tax rate pay into 20% adj. EPS growth
Stable Interest Costs and reduced tax rate pay into 20% adj. EPS growth Interest costs1 Adjusted EPS € bn € 2.5 Stable €15 bn refinanced ≈ 1.2 ≈ 2.0 outlook since September 2016 ≈ 1.0 0.9 2017 2018e 2021e Group tax rate % ≈ 34 20172 2018e 2021e ≈ 27 ≈ 27 US tax rate down Unadjusted EPS to exceed
Slide 19: Debt – DT remains anchor of stability
Debt – DT REMAINS ANCHOR OF STABILITY Stable rating Solid country profile Low CDS (5Y) Balanced maturity profile EBITDA generated in countries rated: 350 TEF DT ORA TMUS DT ex. US 8.7 BBB+ 300 TIM BT VDF Baa1 85% of EBITDA AAA/AA+ 250 6.2 5.1 BBB+ 200 4.8 4.3 4.0 3.0 4.8 150 1.7 5% of EBITDA AA up t
Slide 20: Financial Strategy Overview
Overview FINANCEFinancial STRATEGYStrategy IS OUR BALANCED TRAINING PLAN... II Equity Leading European Telco – ROCE > WACC III Debt Reliable shareholder Grow Undisputed access to debt remuneration policy capital markets Lead In Customer Lead in Lead in Business Dividend1 experience technology Prod
Slide 21: Boosting Deutsche Telekom's financial profile…
boosting Deutsche Telekom’s financial profile… Supercharging the Un-Carrier Accelerated T-Mobile US Free Cash Flow Boosting Deutsche Telekom’s financial growth profile² T-Mobile US Free Cash Flow1, 16–18 $ bn EPS accretive from year 3 for Deutsche Telekom 10–11 1–2 Deutsche Telekom ex-U.S. investmen
Slide 22: …Based on a robust financial framework
…Based on a robust financial framework Only a short departure from our “Comfort zone” Phasing out parental funding Deutsche Telekom Group Net Debt/Adj. EBITDA Deutsche Telekom Parental Funding to T-Mobile US, $ bn Expected Rating 14.6 BBB/Stable 2.5x S&P 2.0x Baa1/Negative 6.6 2.3x ≤ 2.5x Moody’s No
Slide 23: Financial outlook
Financial outlook GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 24: Financial outlook
Financial outlook Revenue growth Free Cash Flow1 Cash Capex2 € bn CAGR +1–2% € bn € bn 74.9 12.1 CAGR ≈ +10% 5.5 2017 2021e 2017 2021e Adj. EBITDA Special factors (Cash) 2017 2021e € bn CAGR +2–4% € bn 22.2 1.5 ≈ 1.0 2017 2021e 2017 2021e 1 Free Cash Flow before dividend payments and spectrum paymen
Slide 25: Mid term ambition level
Mid term ambition level GROUP STRATEGY Germany Systems Solutions Technology & Innovation T-Mobile US Europe Group Development Finance
Slide 26: 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 GROUP FCF CAGR ≈ +10% 2017–2021e Slightly dilutive in 2021e & accretive in 2022e GROUP ADJ. EPS ≈ €1.20 2021e Slightly dilut