Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — Investor Day (February 2015)

33 slides from Deutsche Telekom's investor day presentation, Feb 26, 2015

  1. Slide 1: Deutsche Telekom Capital Markets Day 2015

    DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2015 Bonn, February 26/27, 2015

  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, dep

  3. Slide 3: Europe & Technology

    EuropE & TechnOLOGY Claudia Nemat, Board member for Europe and Technology Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance

  4. Slide 4: Key Messages

    KEY MESSAGES 1 Leading European Telco: We are the first operator to move to a superior, pan-European all-IP production model, based on our Technology Leadership. 2 Creating Best Customer Experience with the differentiator “trust”, “best seamless connectivity”, “simple and personal”. 3 Making us more

  5. Slide 5: Review 2013–2014

    Review 2013–2014 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 5

  6. Slide 6: Strong cost savings and technology achievements, cash not yet stable

    Strong cost savings and technology achievements cash not yet stable DELIVERED / AMBITION LEVEL 2015 (FROM CMD 2012) ACHIEVEMENTS 2014 ON TRACK FINANCIAL OFCF ADJ. Stable (€3.1 bn) €2.9 bn STABILITY IN EUROPE TOTAL REVENUE1 €14 bn €13 bn5 CUM. INDIRECT OPEX €0.6 bn €0.5 bn REDUCTION BY 20152 OP. ROCE

  7. Slide 7: Superior cash and EBITDA performance compared to peers

    Superior cash and EBITDA performance compared to peers DT EUROPE PERFORMANCE VS. MARKET CASH CONTRIBUTION2 MARKET SHARE YoY development DT EU Market3 Groups’ Cash contribution2 in DT Europe footprint, -3.5% -4.4% as share of total sum4 REVENUES1 -5.4% -4.7% DT EU 39.1% 39.5% 42.7% 0.8% EBITDA1 adj.

  8. Slide 8: Market trends

    Market trends Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 8

  9. Slide 9: Market trends improving slowly

    MARKET trends improving slowly MACROECONOMIC DEVELOPMENT REGULATORY INTERVENTIONS COMPETITIVE PRESSURE 1.4 YoY market decline of interconnection revenues Competition intensity increased: in € mn Netherlands +3.6  Number of inhabitants per operator: Poland From 3.3 mn to 3.1 mn (2012 vs. 2015)2 +2.8

  10. Slide 10: Expected spectrum investment decreasing

    Expected spectrum investment decreasing NL 800/900 Auctioned spectrum 1800/2100 in MHz CZ 800/1800 HU 3500 2600 HU 900/1800 PL 800/2600 PL 1800 PL 1800 NL 2100 HU 9001 AT 800/900 GR 800/2600 AL 900/1800 1800 800/2600 RO 800/900 HR 800 HR 1800 CZ 1800/2600 RO 700/800 AT 700/2100 1800/2600 3700 2600/3

  11. Slide 11: Strategy 2015–2018

    Strategy 2015–2018 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 11

  12. Slide 12: Our Strategy: Europe

    OUR STRATEGY: EUROPE LEADING EUROPEAN TELCO INTEGRATED BEST CUSTOMER WIN WITH LEAD IN IP NETWORKS EXPERIENCE PARTNERS BUSINESS  All-IP Transformation  Digitalization1  Easy-to-Partner  Revenue  Pan-European Network  Differentiators rollout: transformation (PANNET)  Trust  GTS integration  I

  13. Slide 13: Superior production model with 4 programs

    Superior Production model with 4 programs DIGITAL TRANSFORMATION OF CUSTOMER FACING PROCESSES COST EFFICIENCY & SIMPLICITY ALL-IP TRANSFORMATION PAN-EUROPEAN NETWORK INTEGRATED NETWORK STRATEGY PAN 1 LTE roll-out Holistic approach NET PSTN migration Centralized, 2 Optical fiber in all NatCos PSTN vi

  14. Slide 14: Integrated Network Strategy Europe

    Integrated Network Strategy Europe 1 LTE ROLLOUT 2 FIBER2 ROLLOUT Ambitions 2018: Ambitions 2018:  75 – 95% LTE pop coverage1 with up to 300 Mbit/s  ≈50% of households3 with at least 100 Mbit/s  ≈12% of households3 with up to 500 Mbit/s (FTTH, FTTB, FTTC, cable/ED34) LTE pop coverage1 Household c

  15. Slide 15: Production model and leadership paradigm evolution

    Production model and leadership paradigm evolution Scale Create up 2012 Facts Today 2018 Production model  39% IP accesses  All-IP transformation ----  100% IP accesses  Completed 1  PanNet ---  PanNet successfully piloted  Services on PANNET final target architecture 1  INS  3G leadership

  16. Slide 16: Customer experience differentiators evolution

    Customer experience differentiators evolution Scale Create up 2012 Facts Today 2018 Customer experience differentiators  Trusted brand  T-shops  T-brand  T-brand rollout  T-brand outside OTE group  Cloud VPN  Best seamless…  Hybrid router piloted 3 − Connectivity,  INS rollout  TeraStream

  17. Slide 17: Digitalization of customer experience

    digitalization of customer experience KEY ELEMENTS E-TRANSFORMATION STEERING KPIs Customer self service capabilities 2014 2018 E-SALES best integr. NatCo 14% 29% Social media share best mobile NatCo 18% 30% Personalized interaction Ø 6% Ø 21% SELF-SERVICE best integr. NatCo 77% 89% Selective involve

  18. Slide 18: Differentiation: customer experience at DT

    Differentiation : customer experience at DT SELECTED PRODUCT EXAMPLES Macedonia: FIXED BROADBAND  Instant broadband activation ON DEMAND  Simple & personal  Seamless self-service Croatia:  Secure and high-speed transfer of data  Trust TERASTREAM  Best connectivity, 1GB data transmitted  Best

  19. Slide 19: TV: Key differentiator for FMC in DT Europe

    TV: Key differentiator for FMC in DT Europe OUR DIFFERENTIATED PROPOSITION… … RESULTING IN GROWTH ABOVE MARKET TV & video at the core of our Pay-TV revenues, in € bn, stable FX marketing & sales approach… … with superior experience, live and Market1: +4% on demand, across all screens… 0.6 CAGR: +15%

  20. Slide 20: Easy-2-Partner: Enhancing customer experience

    Easy-2-Partner: Enhancing customer experience “EASY-TO-PARTNER” SUBSCRIBERS DEVELOPMENT1 LEADING PARTNERS TO DIFFERENTIATE CORE PRODUCTS Subscribers on partner products, in mn  Trust CAGR: +37%  Best seamless… ≈6.0 − Connectivity & − Products/services  Exclusive/ +143% innovative services 1.7 1.7

  21. Slide 21: B2B Revenue Transformation

    B2B REVENUE TRANSFORMATION B2B REVENUE TRANSFORMATION B2B BUSINESS TRANSFORMATION & ACHIEVEMENTS B2B revenues1,  B2B organizations everywhere (2012) in € bn  New service portfolio (from 2014 onwards) 3.2 3.0 3.2  Integration of GTS B2B/ICT +19%3  Cloud VPN, M2M best-coverage 12% 18% Mobile Data

  22. Slide 22: GTS integration on track

    GTS integration on track GTS INTEGRATION ACHIEVEMENTS SO FAR SYNERGIES IMPACT OF GTS  EC anti-trust clearance without remedies Cash impact of synergies from GTS integration,  Operational integration completed 4months after closing: Impact in Poland, Czech Republic, and on international carrier ser

  23. Slide 23: Special topics

    Special topics Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 23

  24. Slide 24: TMNL & TMA

    TMNL & TMA STRATEGIC PRIORITIES ACHIEVEMENTS BY 2014  Fast transformation towards e-company  Rigorous cost containment  20% Opex reduction 2014 vs. 2013 (TMNL)  High degree of online experience  18% e-sales, 96% self-service, 90% e-bill share (TMNL)  “Simple” customer experience  Example “T-M

  25. Slide 25: Strict rules on wholesale deals

    Strict rules on wholesale deals EU WHOLESALE/MVNO APPROACH: EBITDA IMPACT OF WHOLESALE/MVNO DEAL  MVNO business is done case-by-case & country-by- illustrative 1 country; a central decision team ensures consistency +3-5%  We design wholesale contracts that make our retail differentiation possible

  26. Slide 26: Financial outlook

    Financial outlook Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 26

  27. Slide 27: Manage for value not for volume

    manage for value not for volume POSITIONING VALUE ORIENTED PRICING DT as first choice in the market:  Technology leader IN THE PAST TODAY & IN THE FUTURE  Creating best customer experience  Trust Steering  Net adds  Net margin  Best seamless connectivity & logic  Revenue market shares  Absol

  28. Slide 28: Technology leadership: investments necessary

    technology leadership: investments necessary ADJ. EBITDA & EBITDA-MARGIN CASH CAPEX ADJ. CASH CONTRIBUTION € bn, like for like1 € bn, like for like1 Basic Transformation € bn, like for like1 CAGR ≈ +0.5% 4.5 4.3 CAGR ≈ +0.5% 2.9 CAGR ≈ 0% 1.6 2014 2015 2018 2014 2015 2018 2014 2015 2018 Margin: 34%

  29. Slide 29: Continuation of cost transformation

    CONTINUATION OF COST TRANSFORMATION STABLE ADJ. DIRECT COST RADICAL REDUCTION OF ADJ. INDIRECT COST1 € bn, like for like2 € bn, like for like2 CAGR -0.3% CAGR -2.5% 4.6 4,5 4.5 4.1 2014 2018 2014 2018  Interconnection costs will steadily decrease in the next years, partly  Total workforce costs op

  30. Slide 30: Long term transformation drives opex savings of €0.5 bn

    Long term transformation drive opex savings of €0.5 bn in early 2020’s BENEFITS OF IP & PROCESS TRANSFORMATION MAIN OPEX SAVINGS1 IMPROVED PROCESSES CUSTOMER AND TECHNICAL SERVICE  Disruptive digital customer experience €0.3 bn1  End-to-end process optimization 2013 Early 2020’s €0.5 bn1 without s

  31. Slide 31: Increasing return on capital due to opex savings and lower asset base

    INCREASING RETURN ON CAPITAL DUE TO OPEX SAVINGS AND LOWER ASSET BASE REVENUE1 (CASH) CAPEX1 € bn CAGR ≈ -0.5% € bn CAGR ≈ 0% OPERATING ROCE1 13.1 1.6 % ≈ +2%p 2014 2018 2014 2018 ADJ. EBITDA1 SPECIAL FACTORS (EBITDA)1 € bn CAGR ≈ +0.5% € bn 4.5 2014 2018 CAGR ≈ +4% 0.13 0.15 2014 2018 2014 2018 1 l

  32. Slide 32: Mid term ambition level

    Mid term ambition level Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 32

  33. Slide 33: Mid term ambition level

    MID TERM AMBITION level MID TERM AMBITION LEVEL YEAR  Start of PANNET implementation, migration of first platform 2015 TECHNOLOGY  All-IP Transformation: All integrated NatCos 100% IP-based 2018 LEADERSHIP  Next generation accesses: 75-95% LTE pop coverage and 2018 FTTx for ≈50% of households1 wi

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