Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — FY2008 Earnings Presentation

44 slides from Deutsche Telekom's earnings presentation, Feb 27, 2009

  1. Slide 1: Full Year 2008 – Conference Call

    Full Year 2008 – Conference Call. Deutsche Telekom. February 27, 2009

  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, among others, statements as to market potential and financial guidance statements, as well as our dividend outlook. They are ge

  3. Slide 3: Agenda

    Agenda. Deutsche Telekom Investor Presentation. ƒ Introduction Stephan Eger Head of Investor Relations ƒ FY 2008 Highlights & Operations René Obermann CEO ƒ FY 2008 Financials Dr. Karl-Gerhard Eick CFO and Deputy CEO ƒ Q&A: If you like to ask a question, please press ”* 1” on your touchtone telephon

  4. Slide 4: Full Year 2008. Highlights & Operations

    Full Year 2008. Highlights & Operations.

  5. Slide 5: FY 2008 Financial highlights

    FY 2008 Financial highlights. ƒ Revenue flat on an organic basis1 (reported revenue decreased by -1.4% from €62.5 billion in 2007 to €61.7 billion in 2008) ƒ Adj. EBITDA up 0.8% on an organic basis1 (reported adj. EBITDA increased by 0.7% from €19.3 billion in 2007 to €19.5 billion in 2008) ƒ Free c

  6. Slide 6: Strategy focus, fix & grow: Key achievements 2008

    Strategy focus, fix & grow: Key achievements 2008. ƒ BBFN domestic: 45% BB retail net add share, >500k registered winbacks, 480k Entertain packages marketed ƒ OTE: 25% stake acquired in 2008; management control ƒ TMD: service revenue market secured, full consolidation leadership from February 2009 ƒ

  7. Slide 7: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany with mobile Internet centric ICT and CEE Achievements FY/08: ƒ BBFN domestic revenue decrease in FY/08 of 5.1% in line with guidance of -4 to -6% range ƒ Adj. EBITDA of BBFN domestic

  8. Slide 8: Improve competitiveness in Germany and CEE: cost and headcount reduction

    Improve competitiveness in Germany and CEE. Ongoing cost and headcount reduction in Germany. BBFN domestic adj. EBITDA and margin ƒ BBFN adj. domestic EBITDA with -4.9% in FY at better end of FY guidance € million of -5 to -8% 36.0% 35.0% 33.8% 34.5% 32.3% ƒ BBFN FY/08 domestic EBITDA margin 1,796 1

  9. Slide 9: Domestic broadband retail net add market share 45%

    Improve competitiveness in Germany and CEE. Domestic broadband retail net add market share 45%. Domestic broadband lines in million Domestic broadband net add share* by competitor 22.3 23.1 in percent 20.8 21.6 1.6 1.8 Alternative infrastucture operators2 19.5 1.4 T-Home 1.0 1.3 x.x Cable operators

  10. Slide 10: Long term contracts support the reduction in churn

    Improve competitiveness in Germany and CEE. Long term contracts support the reduction in churn. Increase in long-term contracts: Increase in long-term contracts: (BB retail lines, domestic) (FN retail lines, domestic ) In percent In percent 0 100 100 11 20 25 30 35 38 40 16 66 14 77 13 82 85 11 88 9

  11. Slide 11: Major Customer Service KPIs improved

    Improve competitiveness in Germany and CEE. Major Customer Service KPIs improved. Availability IT stability Percent 100 Hours 2008 target Attendance 212 215 80 level overall 200 60 Servicelevel 150 2008 E20 104 40 100 88 77 73 89 target 65 20 50 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 20

  12. Slide 12: CEE fixed line – continued high profitability

    Improve competitiveness in Germany and CEE. CEE fixed line – continued high profitability. CEE fixed line adj. EBITDA and margin ƒ FY/08 adj. EBITDA margin at 41.6% (from € million 43.6% in FY/07) 43.2% ƒ Q4/08 37.7% vs. Q4/07 38.4% 43.1% 38.4% 42.4% 37.7% ƒ FY/08 revenue €2.3 billion (-3.6%) 268 ƒ

  13. Slide 13: T-Mobile Germany

    Improve competitiveness in Germany and CEE. T-Mobile Germany. Service revenues (€ billion) and growth rates (yoy) ƒ Service revenue market leadership gained in 2008 ƒ Service revenues: +0.5% in Q4/08 vs. -4.0% yoy in Q4/07; -1.6% in FY/08 vs. -3.8% in FY/07 1.78 1.81 1.75 ƒ Adj. EBITDA1: -4.0% vs -1

  14. Slide 14: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany with mobile Internet centric ICT and CEE Achievements FY/08: ƒ 4.2 million contract customers added internationally1. Total international customer base at 89.2 million ƒ Solid interna

  15. Slide 15: T-Mobile USA: Continued double-digit growth

    Grow abroad with mobile: T-Mobile USA. Continued double-digit growth. Total revenues ƒ Q4 total revenues (US$) up 12.9% yoy ƒ 2008 total revenues up 13.5% to $21.9 billion US$ million ƒ Q4 service revenues (US$) up 12.3% yoy 5,720 5,467 5,504 ƒ 2008 service revenues up 14.0% to $18.8 billion 5,067 5

  16. Slide 16: CEE countries – continued double-digit growth in 2008

    Grow abroad with mobile. CEE1 countries – continued double-digit growth in 2008. Service revenues ƒ Total revenues up 2.4% in Q4/08 ƒ Total revenues up 10.0% in 2008 € million 1,609 ƒ Service revenues up 3.0% in Q4/08 1,472 ƒ Service revenue up 10.9% in 2008 1,405 1,364 ƒ Adj. EBITDA up 5.5% in Q4/0

  17. Slide 17: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany with mobile Internet centric ICT and CEE Achievements FY/08: ƒ Data revenues w/o messaging up 28.8% yoy to €2.5 billion. Europe up 44.9% yoy to €1.4 billion. US up 19.3% yoy in local

  18. Slide 18: Mobilize the Internet. Growth driver data without messaging

    Mobilize the Internet. Growth driver data without messaging. web’n’walk users (Europe1) myFaves users (USA) web’n’walk users (in ‘000) 5,330 myFaves users (in million) 7.7 4,146 4,717 6.5 7.0 3,239 3,836 5.5 2,822 5.0 2,105 2,409 3.6 1,890 2.5 1.5 0.7 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2

  19. Slide 19: Mobilize the Internet. Dynamic growth in data ARPU

    Mobilize the Internet. Dynamic growth in data ARPU. Data ARPU excl. messaging (Europe1) Data ARPU incl. messaging (USA) (in €) 1.50 1.50 1.70 (in US$) 8.60 8.90 9.30 1.30 1.30 1.30 8.10 8.20 8.50 1.20 7.80 7.50 1.10 6.50 0.90 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 06 07 07 07 07 08 08

  20. Slide 20: Management update: Focus, fix and grow

    Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany with mobile Internet centric ICT and CEE Achievements FY/08: ƒ Refocusing T-Systems, e.g. Top 400 clients ƒ International sales strategy delivers – international revenue up 7.4% in FY

  21. Slide 21: Build network-centric ICT. Strong increase in adj. EBIT

    Build network-centric ICT. Continued growth, strong increase in adj. EBIT. Total revenues ƒ Continuous sequential growth in revenues in 2008 € million 3,024 ƒ Shell with positive impact starting Q3 2,667 2,716 2,603 Q1/08 Q2/08 Q3/08 Q4/08 Adj. EBIT ƒ Sequential adj. EBIT improvement since Q2 ƒ Q2 b

  22. Slide 22: “Focus, fix and grow”: Remaining challenges

    “Focus, fix and grow”: Remaining challenges. ƒ BBFN: stabilize BB net add ƒ TMUS: broadband catch-up, share at approx. 45%, driven by 3G network rollout. 1million Entertain packages, Coverage target 205 million regulation Improve pops; reduce contract churn ƒ TMD: stabilize service ƒ TM EU: service

  23. Slide 23: Targets for 2009. Guidance for DT standalone

    Targets for 2009. Guidance for DT standalone. Targets Adj. Group EBITDA Around 2008 level Free cash flow Around 2008 level 2008: €0.78 per share proposed to AGM; Dividend policy Maintain attractive dividend policy 23

  24. Slide 24: Global Leader for “Connected Life & Work”

    Global Leader for “Connected Life & Work”: The next step in DT’s strategy implementation. Strategic goals Phase I – 2007/08 Phase II – 2009ff 2015 DTAG Improve Improve competitiveness competitiveness in in GER/CEE GER/CEE ƒ 2 years of “focus, fix & grow” ƒ Continue with strategy with initial achieve

  25. Slide 25: Shift from divisional to regional go-to-market approach

    Project to shift from divisional to regional go-to-market approach and strengthening of functional steering logic. ƒ Shift from divisional to regional go-to-market approach to accommodate diverging regional market requirements in DT's portfolio ƒ Further integrate and harmonize customer and go-to-ma

  26. Slide 26: Target structure: Regional responsibility and integrated COO function

    Target structure: Regional responsibility and integrated COO function. Rest of Europe Germany SEE T-Systems US N. van Damme G. Kerkhoff R. Clemens ƒ Prod.&Innov. ƒ Tech. & IT ƒ Procurement CEO COO R. Obermann H. Akhavan CFO T. Höttges CHRO T. Sattelberger DRC M. Balz 26

  27. Slide 27: Full Year 2008. Financials

    Full Year 2008. Financials. Dr. Karl-Gerhard Eick, CFO and Deputy CEO

  28. Slide 28: Positive development in all financials; turnaround in adj. EBITDA and FCF

    Positive development in all financials; turnaround in adj. EBITDA and FCF. Adj. EBITDA in billion € FCF1 in billion € 20.7 19.4 19.3 19.5 8.3 6.6 7.0 6.3 2005 2006 2007 2008 2005 2006 2007 2008 Adj. net income in billion € Net debt in billion € 4.7 39.6 38.6 38.2 3.9 3.4 37.2 3.0 2005 2006 2007 2008

  29. Slide 29: Overview Group financials

    Overview Group financials. Adj. EBITDA target beat despite €0.3 billion currency headwind. Revenue (€ billion) ƒ Organic revenue flat FY on FY: €1.3 billion lost in currency translation 62.5 61.7 €0.5 billion gained from acquisitions 16.1 ƒ Revenue trends FY on FY: 15.8 International revenues +€0.9

  30. Slide 30: Mobile summary

    Mobile summary. Revenue and EBITDA growth abroad with mobile. Total revenue (€ billion) International revenue (€ billion) 34.7 35.6 26.8 27.9 9.4 6.9 7.5 8.8 +7.1% 2.4% +9.7% 4.0% [+3.2%1] [+3.6%1] [+4.7%1] [+5.6%1] Q4/07 Q4/08 FY/07 FY/08 Q4/07 Q4/08 FY/07 FY/08 Adj. EBITDA (€ billion) Internationa

  31. Slide 31: BBFN summary

    BBFN summary. Domestic revenue and adj. EBITDA overachieved guidance. Total revenue (€ billion) Domestic revenue (€ billion) 22.7 21.3 20.1 19.1 5.6 -4.2 % 5.3 -6.0% 5.0 -3.9% 4.8 -5.1% [-4.8%1] [-6.0%1] [-4.6%1] [-6.0%1] Q4/07 Q4/08 FY/07 FY/08 Q4/07 Q4/08 FY/07 FY/08 Adj. EBITDA (€ billion) Domest

  32. Slide 32: Business Customers summary FY 2008

    Business Customers summary. FY 2008: five-fold increase in organic adj. EBIT. Total revenue (€ billion) International revenue (€ million) 11.99 11.201 2,692 11.01 11.07 1 2,506 -8.2% [-1.2%1] +7.4% FY/07 FY/08 FY/07 FY/08 Adj. EBITDA (€ million) Adj. EBIT (€ million) 155 1,062 8531 850 8511 -20.0% -

  33. Slide 33: Business Customers summary Q4 2008

    Business Customers summary. Q4 2008: turnaround in adj. EBIT. Total revenue (€ billion) International revenue (€ million) 3.02 3.04 785 1 3.20 3.001 697 -5.6% [1.5%1] +12.6% Q4/07 Q4/08 Q4/07 Q4/08 Adj. EBITDA (€ million) Adj. EBIT (€ million) 48 451 237 2371 230 1861 3.1% -21 [27.4%1] 321.2% -471 [

  34. Slide 34: Save for Service – Gross savings and opex development

    Save for Service – Gross savings and opex development. Total run rate of program at €4.1 billion. Cost base development1 Contribution by Business Unit 2008 2007 Mobile 358 505 1.89 0.23 Broadband/Fixed Network 838 1,240 44.34 Business Customers 471 213 43.58 GHS 173 308 -1.04 -1.84 DT Group 1,840 2,

  35. Slide 35: Group headcount development: Q4 2007 to Q4 2008

    Group headcount development: Q4 2007 to Q4 2008. ƒ Group headcount net reduction 13,700 FTEs (-5.7%) from 241,400 YE 2007 to 227,700 YE 2008 ƒ Employees decrease in Germany: net 17,200 FTEs (-11.6%) ƒ Employees increase International: net 3,500 FTEs (+3.8%) ƒ Increase in headcount at T-Mobile USA ƒ

  36. Slide 36: FY 2008 – Free cash flow

    FY 2008 – Free cash flow. With €7.0 billion target of €6.6 billion clearly overachieved. € billion Q4 08 Q4 07 FY/08 FY/07 EBITDA (reported) 3.6 2.6 18.0 16.9 Non cash items and others -0.1 0.1 -0.5 -0.3 Change in working capital and accruals 1.3 1.4 0.6 -0.6 Income taxes -0.1 -0.2 -0.5 0.2 Cash gen

  37. Slide 37: FY 2008 – Adjusted net income

    FY 2008 – Adjusted net income. YoY increase of 14% driven by EBITDA and lower D&A. € billion Q4 08 Q4 07 FY 08 FY 07 EBITDA 4.7 4.6 19.5 19.3 Depreciation and amortization -2.7 -2.9 -10.6 -11.2 Net financial expense -0.7 -0.6 -2.9 -2.8 - of which net interest expense -0.6 -0.6 -2.5 -2.5 EBT 1.3 1.1

  38. Slide 38: FY 2008 – Reported net income

    FY 2008 – Reported net income. Year-on-year more than doubled. € billion Q4 08 Q4 07 FY 08 FY 07 EBITDA reported 3.6 2.6 18.0 16.9 Depreciation and amortization -3.0 -3.1 -11.0 -11.6 Net financial expense -1.3 -0.6 -3.6 -2.8 - of which net interest expense -0.6 -0.6 -2.5 -2.5 EBT -0.7 -1.1 3.5 2.5 I

  39. Slide 39: FY 2008 – Net debt development

    FY 2008 – Net debt development. Net debt 31/12/2007 (€ billion) 37.2 Free cash flow -7.0 Dividends (incl. minorities) 4.0 Investments (OTE, SunCom (incl. net debt), etc.) 4.8 Divestments (M&B, Bild@t-online, DeTeImmo) -0.4 F/X and other -0.4 Net debt 31/12/2008 (€ billion) 38.2 Limited impact of the

  40. Slide 40: Q4 2008 – Balance sheet ratios

    Q4 2008 – Balance sheet ratios. Solid balance sheet. € billion 31/12/2008 30/9/2008 31/12/2007 Balance sheet total 123.1 123.4 120.7 Shareholders’ equity 43.1 44.8 45.2 Net debt 38.2 39.4 37.2 Net debt /adj. EBITDA 2.0 n.a. 1.9 Gearing 0.9x 0.9x 0.8x Equity ratio 35.0% 36.3% 37.5% Comfort zone ratio

  41. Slide 41: Liquidity reserves as of December 31, 2008

    Liquidity reserves as of December 31, 2008. Strong liquidity bolster. Liquidity reserves in € billion ƒ 28 bilateral credit facilities of €600 million each add up to €16.8 billion 20.0 ƒ 3-year maturities with extension requests after 12 months already ƒ Loan terms insure quality of our liquidity 58

  42. Slide 42: Maturity profile as of December 31, 2008

    Maturity profile as of December 31, 2008. € billion ƒ Total €4.4 billion bond maturities in 2009 5.0 ƒ Sufficient unused bilateral credit lines 4.4 4.4 4.6 3.9 ƒ Funding 2009 done so far: 3.7 3.3 ƒ Eurobond: €2 billion 2.8 ƒ Schuldscheindarlehen: 1.8 1.7 1.2 €0.2 billion 0.0 12 14 9 13 09 10 11 15 1

  43. Slide 43: Deutsche Telekom – a financially very strong company

    Deutsche Telekom – a financially very strong company. ƒ DTAG successfully managed the financial turnaround and is in a very solid financial shape: ƒ Positive net income development ƒ Positive adj. EBITDA development ƒ Positive FCF development ƒ Stable net debt and net debt/adj. EBITDA ratio despite

  44. Slide 44: Thank you for your attention!

    Thank you for your attention! For further questions please contact the IR department: Investor Relations, Bonn office Investor Relations, New York office Phone +49 228 181 - 8 88 80 Phone +1 212 424 2959 Fax +49 228 181 - 8 88 99 Phone +1 877 DT SHARE (toll-free) Fax +1 212 424 2977 E-Mail investor.

Deutsche Telekom — FY2008 Earnings Presentation on 6ix