Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — Investor Day (February 2015)
24 slides from Deutsche Telekom's investor day presentation, Feb 26, 2015
Slide 1: Deutsche Telekom Capital Markets Day 2015
DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2015 Bonn, February 26/27, 2015
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: Finance
Finance Thomas Dannenfeldt, CFO Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance
Slide 4: Key message: DT is the leading European telco!
KEY MESSAGE: DT IS THE LEADING EUROPEAN TELCO! 1 Leading European Telco: Integrated market leader with superior margins and returns. 2 We strengthen our differentiation by best customer experience and by continuously investing into leading access networks and our transformation programs. 3 We are tr
Slide 5: Review 2013–2014
Review 2013–2014 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Best customer Experience/Win with Partners Europe Germany T-Mobile USA Finance 5
Slide 6: We created value for DT shareholders since last CMD
WE CREATED VALUE FOR DT SHAREHOLDERS SINCE LAST CMD DEVELOPMENT OF MARKET CAP SINCE CAPITAL MARKETS DAY 2012 Dec. 7, 2012 99 Feb. 13, 2015 83 72 61 46 43 48 36 22 23 19 6 14 13 CMD 2012 DIVIDEND POLICY DELIVERED FY 2012: €0.70 FY 2013: €0.50 FY 2014: €0.501 1 Subject to board resolution and AGM appr
Slide 7: We are still the safe haven for debt investors
WE ARE STILL THE “SAFE HAVEN” FOR DEBT INVESTORS RATING POSITION1 CREDIT DEFAULT SWAPS (5 YRS) 400 Basispoints (Change vs. last CMD)2 2004 2012 2014 152 (-45%) VOD A VOD A- VOD A- 300 TEF A ORA A- 2. DT BBB + 74 (-56%) BT A- 3. DT BBB + ORA BBB + 74 (-70%) KPN A- Avg. BBB +/BBB Avg. BBB 200 64 (-5%)
Slide 8: Financial Strategy 2015–2018
Financial Strategy 2015–2018 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Best customer Experience/Win with Partners Europe Germany T-Mobile USA Finance 8
Slide 9: With balanced finance strategy
FINANCE LEADING STRATEGY EUROPEAN IS OUR TELCO WITHBALANCED TRAINING PLAN... FOCUS ON ROCE II EQUITY STRATEGY LEADING EUROPEAN TELCO III DEBT RELIABLE SHAREHOLDER BEST UNDISPUTED ACCESS REMUNERATION POLICY INTEGRATED WIN WITH LEAD IN TO DEBT CAPITAL MARKETS CUSTOMER IP NETWORKS PARTNERS BUSINESS EXP
Slide 10: Top line and EBITDA growth will strengthen ROCE
TOP LINE AND EBITDA GROWTH will strengthen I VALUE CREATION ROCE REVENUE (CASH) CAPEX € bn CAGR 1–2% € bn CAGR 1–2% ROCE 62.7 9.5 ROCE > WACC 2014 2018 5.5% 2014 2018 ADJ. EBITDA 4.0%1 SPECIAL FACTORS (EBITDA) € bn CAGR 2–4% € bn 2014 2018 1.81 17.6 1.3 2014 2018 2014 2018 1 Excl. effects from 70% S
Slide 11: Continued high investments in infrastructure & transformation
CONTINUED HIGH INVESTMENTS IN 1 INFRASTRUCTURE TRANFORMATION INFRASTRUCTURE & TRANSFORMATION (CASH) CAPEX PROFILE1 € bn CAGR 9.5 9.8 2014–18 1–2% Cash Capex/Sales: ≈15% ≈ 15% ≈ 15% FLAT ≈1% 3.8 SLIGHT INCREASE ≈4% $ 4.3 INCREASE FLAT 1.6 2014 2015 2018 1 Excl. spectrum Group STRATEGY Cost and Portfo
Slide 12: We build a superior production platform
WE BUILD A SUPERIOR PRODUCTION PLATFORM 1 INFRASTRUCTURE TRANFORMATION WITH STEADY State IN EARLY 2020ies DIGITAL TRANSFORMATION OF CUSTOMER FACING PROCESSES COST EFFICIENCY & SIMPLICITY Annual run rate adj. ALL-IP TRANSFORMATION PAN-EUROPEAN NETWORK INTEGRATED NETWORK STRATEGY Opex savings: PAN 1 L
Slide 13: We will transform our opex profile towards more flexibility
WE will Transform our OPEX Profile Towards 2 COST TRANSFORMATION more flexibility INCREASE OF FLEXIBILITY BY “VARIABILIZATION OF COST” (EX US) CASH PERSONNEL SPECIAL FACTORS (EX US) Share of direct and indirect1 cost € bn ≈+30% -4pp Ambition 67% 1.6 65% 61% ≈55%– 1.2 1.2 50% 2011 2014 2018 Early 202
Slide 14: We reduce our indirect cost ex US by €1.8 bn
WE Reduce our INDIRECT COST EX US BY € 1.8 BN 2 COST TRANSFORMATION TO self-fund our investments ADJ. OPEX 2014 TOTAL COST2 VIEW (EX US) MID TERM AMBITION € bn 46.2 Revenue growth drives Total cost US adj. direct costs CAGR 2014–18 CAGR 2014–18 direct 10.4 ≈ 1–2% 18.5 ≈4% cost New revenues come
Slide 15: We will grow in EBITDA, EBIT and EPS
WE WILL GROW IN EBITDA, EBIT AND EPS 2 COST TRANSFORMATION INCREASING ADJ. EBITDA MARGIN FLAT ADJ. DEPRECIATIONS % € bn +2–3pp FLAT 28.0 10.5 2014 2015 2018e 2014 2015 2018e INCREASING ADJ. EBIT MARGIN IMPROVEMENT OF ADJ. EPS % € +4–5pp ≈1 11.3 0.54 2014 2015 2018e 2014 2015 2018e Group STRATEGY Cos
Slide 16: Impressive de-risking track record since last Capital Markets Day
IMPRESSIVE DE-RISKING TRACK RECORD 4 RISK MANAGEMENT SINCE LAST CAPITAL MARKETS DAY SUBSTANTIAL ECONOMIC RISK REDUCTION COMPARED TO CMD 2012 US D UK RO HU HR GR PL A SK NL Sum of the Parts Share CZ 15% 3% 85% +6 ppt 91% -12 ppt 2012 20151 2012 20151 T-MOBILE US: SUCCESSFUL DE-RISKING STORY OTE: RIGO
Slide 17: We are expecting slightly declining payouts for pensions
WE ARE EXPECTING SLIGHTLY DECLINING PAYOUTS 4 RISK MANAGEMENT FOR PENSIONS PAYOUTS FOR PENSIONS (GER) DECREASING FUNDING RATIO INCREASING (VOLUNTARY) SENSITIVITY DRIVERS OF DBO2 € bn Pension Plans Civil Servant Pensions € bn € bn 1 Discount rate (+/- 100bps) DBO1 Plan Assets up to -1.2 1.5 0.9 0.8 0
Slide 18: Management incentives aligned with shareholders interest
MANAGEMENT INCENTIVES ALIGNED II EQUITY WITH SHAREHOLDERS INTEREST 1 SHORT TERM INCENTIVE 2 LONG TERM INCENTIVE 3 SHARE MATCHING PLAN STOCK PERFORMANCE EXECUTIVE TELEKOM Illustrative Voluntary Providing investment in shares + matching shares Individual TELEKOM KPIS Collective Customer & Employee sat
Slide 19: Our shareholders will participate in growth
OUR SHAREHOLDERS WILL PARTICIPATE IN GROWTH II EQUITY FREE CASHFLOW DT GROUP1 DIVIDENDS FOLLOWING FCF GROWTH2 € bn € CAGR ≈10% 4.1 Minimum €0.50 2014 2018 20143 2015 2016 2017 2018 Note: Pension funding and spectrum investments will have no impact on our dividend policy 1 Before spectrum investment
Slide 20: DT remains anchor of stability with no change in debt comfort zone ratios
DT REMAINS ANCHOR OF STABILITY III DEBT WITH NO CHANGE IN DEBT COMFORT ZONE RATIOS! DEBT POLICY STILL VALID COMFORT ZONE DEVELOPMENT 35 Rating: A-/BBB Equity Ratio in % Undisputed access Net debt/adj. EBITDA: 2.0–2.5x to debt capital 25 Equity ratio: 25–35% markets 2.5x Liquidity reserve: Ne
Slide 21: 2014–2018 in a nutshell
2014–2018 IN A NUTSHELL SUMMARY DT WILL GROW IN ALL ... OUR SHAREHOLDERS WILL PARTICIPATE ! RELEVANT FINANCIAL KPI’S … Following FCF growth DIVIDENDS REVENUES ADJ. EBITDA CASH CAPEX FCF Floor at €0.50 CAGR 1–2% CAGR 2–4% CAGR 1–2% CAGR ≈10% ROCE ROCE > WACC in 2018 SPECIAL D&A TAX FACTORS Group STRA
Slide 22: Guidance and mid term ambition level
GUIDaNCE and Mid term ambition level Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Best customer Experience/Win with Partners Europe Germany T-Mobile USA Finance 22
Slide 23: Our guidance
our GUIDANCE GUIDANCE 2015 GUIDANCE 2015 2014 RESULTS Reported ON A CONSTANT CURRENCY BASIS1 ON CURRENT €/$ EXCHANGE RATE2 € BN €/$: 1.33 €/$: 1.13 REVENUE 62.7 Growth Growth ADJ. EBITDA 17.6 around 18.3 around 19.3 FCF 4.1 around 4.3 around 4.3 1 Guidance based on constant exchange rates (Average €
Slide 24: Mid term ambition level
MID TERM AMBITION LEVEL TOPIC MID TERM AMBITION LEVEL1 YEAR GROUP REVENUES CAGR 1–2% 2014–2018 GROUP ADJ. EBITDA CAGR 2–4% 2014–2018 GROUP FCF CAGR ≈10% 2014–2018 GROUP ADJ. EPS ≈€1 in 2018 2018 GROUP ROCE ROCE > WACC in 2018 2018 GROUP CASH CAPEX CAGR 1–2% 2014–2018 GROUP ADJ. OPEX DECREASE (ex US)