Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — FY2005 Earnings Presentation

23 slides from Deutsche Telekom's earnings presentation, Mar 2, 2006

  1. Slide 1: FY 2005 Conference Call

    FY 2005 Conference Call. Deutsche Telekom. March 2, 2006. Kai-Uwe Ricke 1

  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 statements as to market potential and the planned T-Online merger, and the “Outlook 2006” statements at the end of this presenta

  3. Slide 3: FY 2005 Highlights

    FY 2005. Highlights. „ All financial targets achieved „ Q4 revenue growth of 5.4%. 2005 revenue increased by 3.9% to €59.6 billion „ FY 2005 adj. EBITDA increased by 5.7% to €20.7 billion „ FY 2005 Free Cash Flow1 at €7.8 billion – free cash flow yield of 14% „ Net income of €5.6 billion – EPS of €1

  4. Slide 4: Excellence program – Business Objectives

    Excellence program – Business Objectives. Update on execution. Achievements 2005 1 Secure fixed-line core business Success in stabilizing minute market shares BBFN 2 “Conquer the home” Football rights – first class content secured 3 Grow core wireless business 5.2 million contract net adds in 2005 B

  5. Slide 5: Broadband market development

    Broadband market development. Strong growth: more than 2.1 million domestic net adds in 2005. Domestic DSL access lines and net adds (m)1 „ Despite strong growth still large market potential in Germany 10 „ BBFN domestic retail share2 at YE05: 7.9 80% 1.6 „ When completed, merger will support 5.8 5

  6. Slide 6: Broadband/Fixed Network: T-Com external revenue Q4/05

    Broadband/Fixed Network. T-Com: Development of external revenue in Q4/05. (€ million) „ External revenue of T-Com decreased by 4.8% 5,213 - 268 18 4,963 Domestic Network Communications: „ Price cuts through optional tariffs „ DSL: marketing to consumers only through T-Online „ Loss of narrowband acc

  7. Slide 7: Mobile: Revenue growth accelerated during 2005

    Mobile. Revenue growth accelerated during 2005. Revenue in € million „ All operations returned to revenue growth in Q4/2005 +10.6% +17.5% +8.2% „ Germany +1.0% +7.6% 7,648 7,861 7,197 „ UK +9.7% 6,746 „ Service revenue growth in Q4 „ Germany +2.0% „ UK +5.6% 6,649 6,914 6,692 6,272 „ Good adj. EBITD

  8. Slide 8: T-Mobile USA: Key contributor to revenue and EBITDA growth

    T-Mobile USA. Key contributor to revenue and EBITDA growth. Revenues (US$ billions) T-Mobile USA contribution in 2005: 14.7 „ 40% of mobile revenues – up from 31% in 2003 11.5 „ 34% of mobile adj. EBITDA – up from 18% in 2003 8.5 „ Record net adds of 4.4 million – surpassing the key 20 million custo

  9. Slide 9: Mobile: T-Mobile UK turnaround in revenue development

    Mobile. T-Mobile UK – turnaround in revenue development. Revenue in € million „ Revenue increased by 9.7% in Q4 2005 „ Adj. EBITDA margin in 2005 -12.8% -8.7% -4.3% 9.7% essentially stable over 2004 at 31.4% 1,133 1,094 „ Strong Q4 net adds of 845,000 1,108 1,106 1,058 988 1,012 997 „ Q4 adj. EBITDA

  10. Slide 10: Business customers – IT push

    Small, medium, and large business customers1 – IT push. Promising achievements in 2005 . IT revenues of SE/ME/LE (€ million) Push IT +29% „ Position Business Services among the top IT service providers for the German “Mittelstand” 405 „ Leveraging the Group’s IT expertise and scale effects in cross-

  11. Slide 11: FY 2005 Conference Call

    FY 2005 Conference Call. Deutsche Telekom. March 2, 2006. Dr. Karl-Gerhard Eick 11

  12. Slide 12: FY 2005 – Highlights: All financial targets achieved

    FY 2005 – Highlights. All financial targets achieved. Actual Financial 2005 targets Revenue (€ billion) 59.6 59.5 – 60.0 Adj. EBITDA (€ bn) 20.7 20.7 – 21.0 Capex1 (€ billion) 7.2 7.5 – 8.0 FCF1 (€ billion) 7.8 7.5 – 8.0 Net debt/adj. EBITDA 1.9x 2 – 3x Gearing 0.8x 0.8 – 1.2x Equity ratio 38.8% 30

  13. Slide 13: FY 2005 Group: Excellent results

    FY 2005 Group. Excellent results. Revenue (€ billion) Adj. EBITDA (€ billion) 59.6 20.7 57.4 19.6 +3.9% +5.7% Net income (€ billion) Adj. net income (€ billion) 5.6 4.7 3.7 1.6 +26.7% 250.5% FY 2004 FY 2005 FY 2005 Conference call Investor Relations March 2, 2006, Page 13

  14. Slide 14: Broadband/Fixed Network: Adj. EBITDA defended

    Broadband/Fixed Network. Adj. EBITDA defended despite topline pressure. Total revenue BBFN (€ billion) Total revenue T-Com (€ billion) 27.0 25.6 24.7 26.0 -3.6% -3.5% Adj. EBITDA BBFN (€ billion) Adj. EBITDA T-Com (€ billion) 10.2 9.9 9.7 9.6 -3.1% -0.9% Margin 37.6% 37.9% 38.0% 39.0% FY 2004 FY 200

  15. Slide 15: Mobile: Strong development in growth and margin

    Mobile. Strong development in growth and margin. Customers (million) Revenue (€ billion) 86.6 29.5 77.6 26.5 +11.6% +11.0% Adj. EBITDA (€ billion) Adj. EBITDA margin 33.2% 9.8 8.4 31.7% + 16.3% +1.5pp FY 2004 FY 2005 FY 2005 Conference call Investor Relations March 2, 2006, Page 15

  16. Slide 16: T-Systems: Growth with Top 60+ customers

    T-Systems. Growth with Top 60+ customers. T-Systems – Revenue (€ billion) T-Systems – adj. EBITDA (€ billion) 13.0 12.9 1.63 1.59 -0.9% -2.7% Margin 12.6% 12.3% Top 60+ customers1 – Revenue (€ billion) SE/ME/LE2 – Revenue (€ billion) 8.4 4.7 8.2 4.5 +1.5% -5.0% 1 Enterprise Services. 2 Business Serv

  17. Slide 17: FY 2005 – Free Cash Flow

    FY 2005 – Free Cash Flow. FCF within €7.5 to 8.0 billion guidance range. € billion FY 2005 FY 2004 Cash Flow 19.8 19.5 Change in working capital and accruals - 0.7 0.8 Taxes and dividends - 1.1 0.1 Cash generated from operations 17.9 20.5 Net interest payment - 2.9 - 3.7 Net cash provided by operati

  18. Slide 18: FY 2005 – Net income

    FY 2005 – Net income. Net income more than tripled – €1.31 EPS. € billion FY 2005 FY 2004 FY 2005 adj. FY 2004 adj. EBITDA 20.1 19.4 20.7 19.6 Depreciation and amortization - 12.5 - 13.1 - 10.6 - 9.4 Net financial expense - 1.4 - 2.7 - 2.5 - 3.9 - of which net interest expense - 2.4 - 3.3 - 2.4 - 3.

  19. Slide 19: Special influences in Q4 2005

    Special influences in Q4 2005. Driven by personnel, taxes, and amortization. Costs (ex D & A) Other operat. income D&A Taxes 1,696 1,575 792 -2,827 -4,763 -11,110 - 639 -12,356 €1.2 billion personnel €0.8 billion gain from the €1.9 billion unscheduled €2.2 billion gain from restructuring charges rel

  20. Slide 20: Balance sheet in excellent shape

    Balance sheet. Balance sheet in excellent shape. € billion 31.12.2005 31.12.2004 Balance sheet total 127.9 125.3 Equity 49.6 45.8 Net debt 38.6 39.9 Net debt/adj. EBITDA 1.9x 2.0x Gearing 0.8x 0.9x Equity ratio 38.8% 34.5% FY 2005 Conference call Investor Relations March 2, 2006, Page 20

  21. Slide 21: Net debt: Significant achievement since 2002

    Net debt. Significant achievement since 2002. Net debt (€ billion) 64.9 51.1 39.9 38.6 2002 2003 2004 2005 FY 2005 Conference call Investor Relations March 2, 2006, Page 21

  22. Slide 22: FY 2005 Conference Call

    FY 2005 Conference Call. Deutsche Telekom. March 2, 2006. Kai-Uwe Ricke 22

  23. Slide 23: FY 2005 Outlook 2006

    FY 2005. Outlook 2006. „ We reconfirm our guidance „ 2006 revenue between € 62.1 and 62.7 billion „ 2006 adj. EBITDA between € 20.2 and 20.7 billion „ Future dividend dependent on profitability FY 2005 Conference call Investor Relations March 2, 2006, Page 23

Deutsche Telekom — FY2005 Earnings Presentation on 6ix