Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — Investor Presentation (October 2006)

35 slides from Deutsche Telekom's investor presentation, Oct 6, 2006

  1. Slide 1: Post auction update. Deutsche Telekom.

    Post auction update. Deutsche Telekom. October 6, 2006.

  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 future development of T-Mobile USA. They are generally identified by the words “expect,” “

  3. Slide 3: Kai-Uwe Ricke, CEO Deutsche Telekom

    Post auction update. Deutsche Telekom. October 6, 2006. Kai-Uwe Ricke CEO Deutsche Telekom

  4. Slide 4: 7 objectives – U.S. key component of group strategy

    Deutsche Telekom. 7 objectives – U.S. key component of group strategy. „ 1. Germany - Defend position „ 2. Europe - Increase revenue market share „ 3. USA - Maximize revenue market share „ 4. Business Customers - Target top 3 position in Europe „ 5. Innovation - Focus on IP-TV, Mobile internet, ICT

  5. Slide 5: U.S. wireless – continued favorable market environment

    Deutsche Telekom. U.S. wireless – continued favorable market environment. „ Industry growth Wireless penetration (%)1 „ Penetration headroom (high to mid 80s) „ Robust postpaid growth 70 73 62 „ Landline replacement accelerating 55 43 „ Strong growth and high acceptance of mobile data services „ Ind

  6. Slide 6: T-Mobile USA. Success story – Consistent execution since acquisition

    T-Mobile USA. Success story – Consistent execution since acquisition1. $ million ‘000 5.000 25.000 4.000 20.000 3.000 15.000 2.000 10.000 1.000 5.000 0 0 -1.000 -5.000 1 1 2 2 3 3 4 4 5 5 6 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 /0 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Service rev. OIBDA/adj. EBITDA Customers 1 U

  7. Slide 7: T-Mobile USA. Key revenue and EBITDA driver

    T-Mobile USA. Key revenue and EBITDA driver. Contribution of TM US to Contribution of TM US to group and TMO revenue (%) group and TMO adj. EBITDA (%) 40 43 40 35 34 DT DT 22 24 20 TMO 19 TMO 16 16 10 2004 2005 H1/06 2004 2005 H1/06 October 6, 2006 Investor Relations Page 7

  8. Slide 8: Growing importance of international operations

    Deutsche Telekom. Growing importance of international operations. International contribution to International contribution to group and TMO revenue (%) group and TMO adj. EBITDA (%) 72 75 68 63 66 56 45 DT DT 39 43 37 TMO 31 36 TMO 2004 2005 H1/06 2004 2005 H1/06 October 6, 2006 Investor Relations P

  9. Slide 9: René Obermann, CEO T-Mobile International

    Post auction update. Deutsche Telekom. October 6, 2006. René Obermann CEO T-Mobile International

  10. Slide 10: Pioneering mobile data services

    Deutsche Telekom. Pioneering mobile data services. „ Significant growth in non-voice revenues (H1/06) „ €2.0 billion total non-voice revenues (+23%) „ €0.6 billion non-voice non-SMS revenues (+36%) „ First carrier to launch open Internet product (“Web’n’walk”) „ First carrier to launch HSDPA in Germ

  11. Slide 11: Global T-Mobile business delivering group benefits

    Deutsche Telekom. Global T-Mobile business delivering group benefits. „ Operational benefits – learning from the other side „ U.S.-style bundled tariffs (“best value for money”) launched in Europe „ Applying T-Mobile USA’s ‘Best in Class’ service models to European operations „ U.S. to benefit from

  12. Slide 12: Auction 66 – Solid foundation to continue U.S. success story

    T-Mobile USA. Auction 66 – Solid foundation to continue U.S. success story. „ Key auction highlights: „ 120 licenses for $4.2 billion (€3.3 billion) „ Doubles average spectrum in top 100 markets (26 ⇒ 52 MHz) „ Reasonable valuation – $0.63 per MHz POP (total average: $0.54) „ Nationwide AWS spectrum

  13. Slide 13: Robert Dotson, CEO T-Mobile USA

    Post auction update. Deutsche Telekom. October 6, 2006. Robert Dotson CEO T-Mobile USA

  14. Slide 14: Since 2002…America's leading service provider

    Since 2002…America’s leading service provider October 6, 2006 Investor Relations Page 14

  15. Slide 15: Foundation in place for sustained success

    T-Mobile USA. Foundation in place for sustained success. America’s #1 rated company in customer satisfaction „ 4 consecutive J.D. Power and Associates wins „ Only carrier to ever win all 6 regions—4 times „ Most recent win—this week! „ Multi-year wins in Customer Care and Retail Battle-tested senior

  16. Slide 16: Operations positioned for future success

    T-Mobile USA. Operations positioned for future success. Network a major driver of #1 ranking „ T-Mobile fewest dropped calls across top 35 U.S. markets „ Communicating in New York, Chicago, L.A., Houston, Miami, etc. October 6, 2006 Investor Relations Page 16

  17. Slide 17: Global "Power-of-One" leverages scale

    T-Mobile USA. Global “Power-of-One” leverages scale. ƒ 76% larger than biggest U.S. wireless competitor 101 million October 6, 2006 Investor Relations Page 17

  18. Slide 18: Service strategy delivers sustained financial results

    T-Mobile USA. Service strategy delivers sustained financial results. Financial performance Q2 2006 ARPU ($) „ $52 ARPU outpaces two largest 60 competitors 52 „ 12% year over year OIBDA 50 49 growth „ 32% OIBDA margin rivals carriers double our size Sprint TM US VZ Cingular 2G competing head-to-head

  19. Slide 19: Commercial success leveraged by consumer insights

    T-Mobile USA. Commercial success leveraged by consumer insights. Ratio of successful new services to introductions unrivaled „ Over 1.5M converged device customers „ Blackberry phone innovator „ Sidekick top consumer device „ MDA and SDA „ T-Mobile HotSpots „ Largest global footprint of HotSpots (in

  20. Slide 20: myFaves only beginning of real differentiation

    T-Mobile USA. myFaves only beginning of real differentiation. Consumer insight driven—18 months development „ New UI, rate plan, service integration across all devices and manufacturers „ Unlimited calling to 5 people on any network „ People-centric interface „ Easiest interface in the industry—1 cl

  21. Slide 21: AWS spectrum both timely and strategic

    T-Mobile USA. AWS spectrum both timely and strategic. High growth areas spectrum challenged by success „ Fastest postpay growth over past 12 months „ Voice: 17 hours/mo versus 3 hours/mo Europe1 „ Text: 130 SMS per postpay customer per month (industry leader) Unwind of Cingular/TMUS Empire agreement

  22. Slide 22: AWS spectrum both timely and strategic

    T-Mobile USA. AWS spectrum both timely and strategic. Adoption curve of 3G fits T-Mobile’s focus strategy „ Adoption curve fits the consumer target „ Affordable handsets will hit market in next 12 months (under $230) „ Dramatically lower infrastructure cost of 2nd generation „ Services matching cons

  23. Slide 23: New spectrum fuels growth of Next Generation Networks

    T-Mobile USA. New spectrum fuels growth of Next Generation Networks (NGN). Evolution of core technology--Not simple overlay Voice and data benefits „ Lean future cost structure „ Most efficient voice network „ Harness IP convergence to unleash new services New services drive effortless communication

  24. Slide 24: AWS auction achieved every major objective

    T-Mobile USA. AWS auction achieved every major objective. 1. Doubled spectrum position 2. Closed gap to other national carriers 3. Price per MHz/Pop below historical levels 4. Deep enough with 1.7/2.1 MHz to limit operations to only two bands 5. Pre-work to integrate banding and for network and devi

  25. Slide 25: Scope and scale of network bulletproofing

    T-Mobile USA. Scope and scale of network bulletproofing. „ 2005 geographic coverage footprint increased >50% „ Suburban focus „ Roaming agreements on 850 MHz and 1900 MHz October 6, 2006 Investor Relations Page 25

  26. Slide 26: Scope and scale of network bulletproofing

    T-Mobile USA. Scope and scale of network bulletproofing. „ Doubled spectrum depth in top 100 markets „ From 26 MHz to 52 MHz >=30MHz (Before Auction 66) >=30MHz (Additional areas after Auction 66) October 6, 2006 Investor Relations Page 26

  27. Slide 27: AWS auction closed competitive disparity

    T-Mobile USA. AWS auction closed competitive disparity. „ Consolidation created gap to national carriers „ Now at parity with PCS/cellular and SMR spectrum positions „ Achieved without loss of market position or momentum Avg. spectrum1 Q2 2006 Avg. spectrum1 post AWS auction Top 100 markets Top 100

  28. Slide 28: Auction 66 – Attractive valuation

    T-Mobile USA. Auction 66 – Attractive valuation. $4.2 billion spend equivalent to $0.63 per MHz POP „ 39% less expensive than avg. historical price ($1.03 per MHz POP) „ 20 MHz New York spectrum for $0.4 billion Historical spectrum price ranges ($ per MHz POP) 4.18 1.94 1.60 1.33 1.07 0.62 0.54 0.28

  29. Slide 29: Depth sufficient to maintain 2 operational bands

    T-Mobile USA. Depth sufficient to maintain 2 operational bands. National average of 23.2 MHz „ 20 MHz AWS in Southeast, Central, West, Puerto Rico (30 MHz Hawaii) „ At least 10 MHz of AWS spectrum in Continental U.S. 1900 1700/2100 Market PCS AWS Total New York 20 30 50 Los Angeles 20 30 50 Chicago

  30. Slide 30: The benefit of Next Generation Network today

    T-Mobile USA The benefit of Next Generation Network today. Deployment plans and technology have matured „ Converged network greater reliability „ Lower cost „ Simple GSM overlays with small equipment Alignment with Europe achieved „ European learning and global cost benefit „ HSDPA ready to complime

  31. Slide 31: AWS success contemplated; powerful rollout underway

    T-Mobile USA. AWS success contemplated; powerful rollout underway. Seasoned team acquired spectrum blocks that are easier to clear Head start on deployment „ Planning and execution started in 2004 (e.g, Alcatel converged switching platform) „ Parallel path on AWS band development with partners „ 50%

  32. Slide 32: AWS Auction – Securing the long-term future of T-Mobile USA

    T-Mobile USA. AWS Auction – Securing the long-term future of T-Mobile USA. Supports future growth of U.S. core business Continuing leverage of the TMO European experience and scale Position us to attack mass consumer trends and commercial innovation October 6, 2006 Investor Relations Page 32

  33. Slide 33: Karl-Gerhard Eick, CFO Deutsche Telekom

    Post auction update. Deutsche Telekom. October 6, 2006. Karl-Gerhard Eick CFO Deutsche Telekom

  34. Slide 34: Auction 66 – Impact on DT group guidance

    Deutsche Telekom. Auction 66 – Impact on DT group guidance. „ DT group guidance unchanged1 „ Capex „ 2006 (pre spectrum) at €9 billion plus €3.3 billion for spectrum „ 2007 at €7.5-8.0 billion „ Free cash flow2 „ 2006 FCF (pre spectrum) at €5 billion, post spectrum at €1.7 billion „ 2007 FCF at €6 b

  35. Slide 35: T-Mobile USA – Solid business case post auction

    Deutsche Telekom. T-Mobile USA – Solid business case post auction. „ Key assumptions in current T-Mobile USA business plan „ Additional capacity enables higher market share in the future „ 35-40 million customers by 2015 „ Slightly rising ARPU due to new services „ Long-term EBITDA margin (in % of t

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