Deutsche Telekom Ag · XETR:DTE

Deutsche Telekom — Investor Day (November 2012)

25 slides from Deutsche Telekom's investor day presentation, November 2012

  1. Slide 1: Deutsche Telekom Capital Markets Day 2012 – Finance

    DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2012 FINANCE TIMOTHEUS HÖTTGES, CFO

  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. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, de

  3. Slide 3: Safe Harbor Statement

    SAFE HARBOR STATEMENT. Additional Information and Where to Find It This document also relates to a proposed transaction between MetroPCS Communications, Inc. (“MetroPCS”) and Deutsche Telekom AG (“Deutsche Telekom”) in connection with T-Mobile USA, Inc. (“T-Mobile”). The proposed transaction will be

  4. Slide 4: Review 2010 – 2012

    REVIEW 2010 – 2012

  5. Slide 5: 2010 – 2012: Predictability and Reliability

    2010 – 2012: PREDICTABILITY AND RELIABILITY. AMBITION LEVEL 2012 ACHIEVEMENTS 2012 €3.4 bn per annum, €0.70 minimum dividend per share Div 3 3 SHAREHOLDER REMUNERATION 2010 – 2012 SBB 0.4 3 + up to €1.2 bn share buybacks 2010 2011 2012e €4.2 bn savings, of which €1.8 bn net savings 4.5 EXECUTE SAVE

  6. Slide 6: 2010 – 2012: Disciplined Execution

    2010 – 2012: DISCIPLINED EXECUTION. Adj. EBITDA-margin improved oFCF virtually stabilized AT&T break-up fee and tower by 4 pp1 despite difficult economy monetization funds spectrum and network modernization S4S: Gross opex reduction of Net debt reduced Joint Ventures €4.5 bn - gap to peers closed by

  7. Slide 7: 2010 – 2012: Good Rating, Good Relative TSR and Low Financing Costs

    2010 – 2012: GOOD RATING, GOOD RELATIVE TSR AND LOW FINANCING COSTS. EV/EBITDA VALUATION 2012 VERSUS 20101  Share ownership based program for 2010 2012 6.1 senior management 5.2 5.3 5.7 5.3 Ø 2010: 5.1 5.4  Management incentivized on ROCE 4.8 4.7 4.7 4.8 4.7 4.1 Ø 2012: and EPS 3.8 3.7 4.4 DT BT V

  8. Slide 8: Strategy 2013 – 2015

    STRATEGY 2013 – 2015

  9. Slide 9: Strategic Core Priorities 2012 – 2015 – Role of Finance

    STRATEGIC CORE PRIORITIES 2012 – 2015 – ROLE OF FINANCE. Seamless Best-in-class connectivity More innovation Secure cloud customer for the by cooperation solutions experience Gigabit Society ROLE ROLE OF OF FINANCE FINANCE INNOVATE 1 Efficiency management 2 Portfolio management TRANSFORM 3 Risk mana

  10. Slide 10: Increasing ROCE

    INCREASING ROCE. Financial Overview REVENUE CAPEX € bn ROCE € bn 9.5 8.3 Metro 58.0 Metro 5.5% 4.0% 2012e 2015e 2012e 2015e 2012e 2015e OPEX SPECIAL FACTORS € bn € bn 41.6 D&A 1.1 Metro 0.7 direct direct € bn indirect indirect 11 Metro 2012e 2015e 9.3 2012e 2015e 2012e 2015e 10

  11. Slide 11: Investing into DT's Future – Capex and FCF Profile

    INVESTING INTO DT’S FUTURE – CAPEX AND FCF PROFILE. Financial Overview CAPEX PROFILE 2012 – 2015 Investing into INS € bn +1.2  Gross Capex FTTC/Vectoring: ≈€6 bn 9.8 9.5  Capex Germany: 8.3  2013: ≈€3.4 bn  2014: ≈€4.1 bn  2015: ≈€4.3 bn 2012e 2013e 2015e Network modernization & PCS integration

  12. Slide 12: Operational Performance Enables Investments

    OPERATIONAL PERFORMANCE ENABLES INVESTMENTS. Financial Overview FCF 2013 (INCL. METRO) € bn Operations Investments Guidance 2013 FCF: 2015 FCF: around around €5 bn €6 bn 0.2 0.2 0.1 7.1 0.2 0.3 0.6 1.6 6.0 ≈6.0 0.7 0.5 4.9 5.1 FCF EBITDA OWC Restructuring Other Market INS Capex WC impact Cash FCF Me

  13. Slide 13: Striving for €2bn Cost Savings

    STRIVING FOR € 2BN COST SAVINGS. Efficiency Management INDIRECT COSTS DIRECT COSTS % of revenue % of revenue 44 29 42 26 2012e 2015e 2012e 2015e Germany Europe Shared Services STABILITY €1.0 bn1 €0.6 bn1 (GHS) Indirect Opex Indirect Opex 4% p.a. Indirect Reduction Reduction Opex Reduction EFFICIENCY

  14. Slide 14: ROCE Remains Our Steering Logic

    ROCE REMAINS OUR STEERING LOGIC Efficiency Management LEARNINGS ROCE1 IMPROVEMENT ONGOING CHALLENGES 3.5% 3.8% 4.0%  Change of investment behavior: “Sell first, External: build later“  Market environment  Retirement of platforms and systems 2010 2011 2012e  Expensive UMTS License: -0.5pp2  Resa

  15. Slide 15: ROCE Ambition +150bps (5.5%)

    ROCE AMBITION +150BPS (5.5%). Efficiency Management FURTHER ROCE IMPROVEMENT BY 2012 – 2015 Increase Revenues GER  Focus on INS EU  Rigorous CAPEX Management Improve profitability  Network sharing (CZ, PL) margin US  Support attacker case by regionally targeted investments  Increased Network ut

  16. Slide 16: EBIT and EPS Increase 2013 - 2015

    EBIT AND EPS INCREASE 2013 - 2015. Efficiency Management EBIT TAKES PREVIOUS AND FUTURE CAPEX INTO ACCOUNT INCREASING ADJ. EBIT MARGIN (INCL. METRO PCS) % Asset base % CAPEX 13.9 11.8 12.6 EBITDA D&A EBIT 2012e 2013e 2015e DEPRECIATION IMPROVEMENT OF ADJ. EPS € ≈0.8 € bn 11 0.6 9.5 9.3 2012e 2013e 2

  17. Slide 17: Raise Value of Assets

    RAISE VALUE OF ASSETS. Portfolio Management ACHIEVEMENTS FUTURE PROJECTS 1 CLEAR FOCUS No M&A outside footprint Everything AT&T, Secure PTC Everywhere Spectrum, Ownership Invest in Germany and US/LTE expansion EU Towers, Metro PCS 2 VALUE CREATION FOR SHAREHOLDERS Strategic review EE DBU Small Strat

  18. Slide 18: EE: Success Story Ready for Next Step

    EE: SUCCESS STORY READY FOR NEXT STEP. Portfolio Management MARKET SHARE BROKER VALUATION ENTERPRISE VALUE % € bn Mobile Service Revenue EBITDA +1.8 35 5.3 6 3.5 4 30 2 25 0 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 TM-UK Q4/09 50% EE Q4/121 CONTRACT CUSTOMERS LTE ROLL-OUT PLAN ‘000 Outdoor pop HSPA+ LTE +22% c

  19. Slide 19: Low Risk Portfolio

    LOW RISK PORTFOLIO. Risk Management MONITORING OF ECONOMIC ENVIRONMENT IMPROVED REFINANCING COSTS interest 5yrs yield D A NL -10% GR 5.9% -59% US RO UK 5.3% 3.5% PL SK CZ 1.5% - €0.4 bn SotP HU Share 85% HR 2010 2012e 2010 2012e WELL-BALANCED MATURITY PROFILE1 STRONG LIQUIDITY RESERVE POSITION1 € bn

  20. Slide 20: Stable Payouts for Pension Plans

    STABLE PAYOUTS FOR PENSION PLANS. Risk Management DEFINED BENEFIT OBLIGATIONS (DBO) FORECAST: PAYOUTS FOR PENSIONS (GER) € bn € bn -1.7% 8.7 0.9 0.9 0.9 0.9 6.8 7.0 7.0 0.8 0.7 0.3 0.4 0.4 0.4 0.5 5.25%1 5.31%1 0.5 5.16%1 3.51%1 0.6 0.5 0.5 0.4 0.3 0.2 2009 2010 2011 9/30/12 2012e 2015e 2018e 2021e

  21. Slide 21: Maintain Undisputed Access to Debt Capital Markets

    MAINTAIN UNDISPUTED ACCESS TO DEBT CAPITAL MARKETS. Stakeholder Management RATING TRENDS1 DT COMFORT ZONE RATIOS 2004 2012 Equity Ratio Deutsche Telekom BBB + BBB + 4.0 25 – 35% 35 BT A- BBB 30 Net Debt/Adj. EBITDA 3.5 France Telecom BBB + A- 25 Equity Ratio % KPN A- BBB 3.0 20 Telecom Italia BBB +

  22. Slide 22: New Option for Shareholders: Dividend in Kind

    NEW OPTION FOR SHAREHOLDERS: “DIVIDEND IN KIND”. Stakeholder Management NEW DIVIDEND POLICY NEW FEATURE: DIVIDEND IN KIND FY 2012 Dividend proposal of €0.7 per share  Additional option for shareholders: Either cash dividend confirmed or new shares -- cash is default.  Both cash and new shares (as

  23. Slide 23: Updated Finance Strategy to Embrace Transition to Growth

    UPDATED FINANCE STRATEGY TO EMBRACE TRANSITION TO GROWTH. EQUITY TELCO PLUS DEBT New Shareholder Undisputed access Remuneration policy COMPETE TRANSFORM INNOVATE to debt capital markets  Dividend1  Rating: A-/BBB  FY 2012: €0.70 VALUE CREATION  Net debt/adj. EBITDA:  FY 2013: €0.50 2-2.5x 1 EF

  24. Slide 24: Guidance 2013 & Mid Term Ambition

    GUIDANCE 2013 & MID TERM AMBITION

  25. Slide 25: DT Group Guidance 2013 and Mid Term Ambition

    DT GROUP GUIDANCE 2013 AND MID TERM AMBITION. GUIDANCE 2013 MID TERM AMBITION (EXCL./INCL. PCS) (INCL. PCS) GROUP REVENUES Growing 2014 GROUP ADJ. EBITDA ≈€17.4 bn/≈€18.4 bn Growing 2014 GROUP FCF ≈€5 bn/≈€5 bn ≈€6 bn 2015 GROUP ADJ. EPS Improvement to ≈€0.8 2015 GROUP ROCE Improvement to ≈5.5% 2015

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