Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — Investor Day (February 2015)

35 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: Safe Harbor Statement

    SAFE HARBOR STATEMENT This presentation contains “forward-looking” statements within the meaning of the U.S. federal securities laws. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any

  3. Slide 3: T-Mobile US

    T-MOBILE US Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 3

  4. Slide 4: Key Messages: Un-carrier

    KEY MESSAGES Un -carrier  The Un-carrier revolution continues! 2014 was the best customer growth year in T-Mobile US history. 4.0 million branded postpaid nets – captured virtually all of industry growth; 55M total customers year-end  We are the leader in prepaid with over 16.3 million customers,

  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: Path to Growth as Un-carrier

    PATH TO GROWTH AS UN-CARRIER 55 Million Total Customers ! UNCARRIER 8.0 – DATA STASH Dec Dec 2014 UNCARRIER 7.0 – WiFi CALLING Sep UNCARRIER 5.0 & 6.0 – TEST DRIVE & MUSIC FREEDOM Jun THREE DAYS OF UN-CARRIER Apr FASTEST NATIONWIDE LTE NETWORK Jan UNCARRIER 4.0 – CONTRACT FREEDOM Jan LOW-BAND SPECTR

  7. Slide 7: Record customer growth fuels industry leading service revenue growth

    RECORD CUSTOMER GROWTH FUELS INDUSTRY LEADING SERVICE REVENUE GROWTH…  Over 12.7 million total net adds since the Un-carrier revolution began – 8.3 million total net adds in 2014  Nearly 6.0 million branded postpaid phone net adds since the launch of the Un-Carrier revolution  Over 4.0 million br

  8. Slide 8: Leading to Adjusted EBITDA growth and strong ABPU trends

    …LEADING TO ADJUSTED EBITDA GROWTH AND STRONG ABPU TRENDS Adjusted EBITDA Branded Postpaid Average Billings Per User (ABPU) mn USD USD $61.80 Up 30% from Q3 and $61.59 $1,751 41% from Q4 2013 $1,469 $1,451 $59.54 $1,344 $1,346 $59.08 $58.72 $59.79 $1,265 $1,239 Highest in $1,088 $58.78 company’s his

  9. Slide 9: Market Trends

    MARKET TRENDS Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 9

  10. Slide 10: Attractive macro conditions in US

    ATTRACTIVE MACRO CONDITIONS IN US Real GDP YoY % Growth Unemployment Rate Percent Percent 4.0 12% 11% 3.0 EU USA 10% 9% 2.0 EU 8% 1.0 7% 6% USA 0.0 5% -1.0 4% 2012 2013 2014 2015E 2016E 2017E 2018E 2012 2013 2014 Source: Eurostat, US Bureau of Labor Statistics, Goldman Sachs Global Investment Resear

  11. Slide 11: Higher ARPUs in US supported by higher mobile data traffic and spectrum scarcity

    HIGHER ARPUS IN US SUPPORTED BY HIGHER MOBILE DATA TRAFFIC AND SPECTRUM SCARCITY Average Revenue Per User (ARPU) Mobile Data Traffic Forecast (TB Per Month) US N. America USD Europe TB per month W. Europe $50 $40 $30 $20 $10 $- 2012 2013 2014E 2015E US consumer demonstrates higher willingness to pay

  12. Slide 12: Strategy 2015–2016

    STRATEGY 2015–2016 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 12

  13. Slide 13: Four strategic pillars

    1. Un-carrier 2.EXPERIENCE 3. 4. LEAN SALES & SERVICE NETWORK FOUNDATION BUSINESS MODEL Superior Sales and Solid Network Foundation Lean Cost Structure and full Customer Experience and Spectrum Position capture of MetroPCS Integration Synergies Group STRATEGY Cost and Portfolio Transformation Lead i

  14. Slide 14: Un-carrier: Driving innovation in the wireless industry

    UN-CARRIER DRIVING INNOVATION IN THE WIRELESS INDUSTRY Re-write the rules on behalf of the consumer Provide revolutionary value Be simple & transparent Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 14

  15. Slide 15: Un-carrier: It's all about changing wireless for the better

    UN-CARRIER: IT’S ALL ABOUT CHANGING WIRELESS FOR THE BETTER Data Un-carrier 8.0 WiFi Stash Un-carrier 7.0 Un-carrier 6.0 Music Calling Un-carrier 5.0 Test Freedom Free 10GB Contract Un-carrier 4.0 Drive Now Every Gift of Data Make Freedom Un-carrier 3.0 The No WiFi Easy The Un-carrier 2.0 Network Li

  16. Slide 16: Building the brand as Un-carrier movement gains momentum

    BUILDING THE BRAND AS UN-CARRIER MOVEMENT GAINS MOMENTUM Using social media to build on brand momentum 46% +46% Share of Gross Additions YoY1 BRANDED POSTPAID  Despite smaller size, T-Mobile social channels generating massive social share of voice, with 1.5x the engagement of other carriers  Huge

  17. Slide 17: Growing and sustaining the Un-carrier revolution

    GROWING AND SUSTAINING THE UN-CARRIER REVOLUTION Un -carrier Un-Carrier for Consumer Business MetroPCS Tablets & Wearables Strategic Partnerships & M2M Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 17

  18. Slide 18: Experience: Sales & Service

    1. Un-carrier 2.EXPERIENCE 3. 4. LEAN SALES & SERVICE NETWORK FOUNDATION BUSINESS MODEL  Delight customers with award-winning, innovative service  Transform the customer experience to support the Un-Carrier movement Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Product

  19. Slide 19: Delight customers with award winning, innovative service

    DELIGHT CUSTOMERS WITH AWARD WINNING, INNOVATIVE SERVICE TMUS Leading the Way in Customer Service Continuing to Innovate the Service Experience  Empower customers with self service J.D. Power. Customer tools Care experience – major wireless carriers  One cloud based solution for customer service a

  20. Slide 20: Transform the customer experience to support the Un-carrier movement

    TRANSFORM THE CUSTOMER EXPERIENCE TO SUPPORT THE UN- CARRIER MOVEMENT  Reinvented retail experience with the Evolution Store: — Revamped old store design — Removed sales barriers, allowing seamless engagement — Flexible design to allow for future Un-Carrier moves  Dramatic improvements to web chan

  21. Slide 21: Network Foundation

    1. Un-carrier 2.EXPERIENCE 3. 4. LEAN SALES & SERVICE NETWORK FOUNDATION BUSINESS MODEL  Level the competitive playing field from a coverage perspective  Provide fast speed despite explosive data usage growth, by leveraging robust position in mid-band  Achieve results while keeping costs under co

  22. Slide 22: Level the competitive playing field from a coverage perspective

    LEVEL THE COMPETITIVE PLAYING FIELD FROM A COVERAGE PERSPECTIVE End of 2014 LTE Coverage End of 2015 LTE Coverage ~265M LTE ~300M LTE covered pops, covered pops, 0.6 M sq.miles 1.6 M sq. miles Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany

  23. Slide 23: Expand coverage efficiently through low-band purchase and deployment

    EXPAND COVERAGE EFFICIENTLY THROUGH THE DISCIPLINED PURCHASE AND DEPLOYMENT OF LOW-BAND Low-band deployment provides significant in-building coverage  Currently own or have agreements to own Dallas example low-band spectrum for roughly 190 Million POPs; will opportunistically pursue more low- LTE o

  24. Slide 24: Provide industry-leading fast service amid explosive data growth

    PROVIDE INDUSTRY-LEADING FAST SERVICE EVEN IN AN ENVIRONMENT OF EXPLOSIVE DATA GROWTH Data Fast Network supports High Speed experience Data Strong network supports Data growth Results based on Data growth (Indexed to IH 2012) #1 MILLIONS OF TESTS BY >7.5x 19.2 REAL CUSTOMERS* 17.9 15.0 9.9 >2.5x TMU

  25. Slide 25: Spectrum position provides runway for continued growth

    SPECTRUM POSITION PROVIDES RUNWAY FOR CONTINUED GROWTH Spectrum Holdings in Top 25 Markets by Carrier, Rapidly converting technology to achieve even higher including AWS-3 auction results spectral efficiency Total Spectrum Holdings /Total WCS + BRS spectrum Relative efficiency by technology Subs (in

  26. Slide 26: Achieve results while keeping costs under control

    ACHIEVE RESULTS WHILE KEEPING COSTS UNDER CONTROL Network Costs as a Percent of Total Revenue Percent 24 22 20  Network costs declining versus revenue despite sharp increases in data growth 2012 2013 2014 Data growth Indexed to 2012 1x >2.5X >7.5X Group STRATEGY Cost and Portfolio Transformation Le

  27. Slide 27: Continuing to be a leader in network innovation

    CONTINUING TO BE A LEADER IN NETWORK INNOVATION VoLTE  First to launch VoLTE  First to unleash WiFi calling worldwide with Un-Carrier 7.0 iOS8  First and only carrier to support WiFi calling with VoLTE handoff on iOS8  First to HD Voice and first to launch nationwide  First to launch free in-fl

  28. Slide 28: Lean Business Model

    1. Un-carrier 2.EXPERIENCE 3. 4. LEAN SALES & SERVICE NETWORK FOUNDATION BUSINESS MODEL  MetroPCS integration tracking well ahead of original integration plan. Run-rate cost synergies from merger being realized ahead of schedule  Continuing organic cost transformation and re-investing in growth Gr

  29. Slide 29: Tracking well ahead of original MetroPCS integration plan

    TRACKING WELL AHEAD OF ORIGINAL METROPCS INTEGRATION PLAN MetroPCS Integration Ahead of Plan Synergies Realized Ahead of Plan Share of MetroPCS customers on T-Mobile Network Percent 87% 78%  Expect after tax NPV of synergies $9–$10 billion – 67% 53% $3 billion higher than original plan of $6 - $7 b

  30. Slide 30: MetroPCS synergies $9–10B after tax NPV vs. original plan

    METROPCS SYNERGIES $9–10 B AFTER TAX NPV1 vs. Better/at original plan ORIGINAL PLAN OF $6–7 B One-time cost pull forward Original plan 2013 2014 2015 2016 2017 5 Year Total Current view Network ($ M) (5 Year Total, $ M) Opex savings (0–50) (0–50) 0–100 300–400 600–700 800–1200 1900–2100 Capex saving

  31. Slide 31: Continuing organic transformation

    CONTINUING ORGANIC TRANSFORMATION Impact of Cost Programs Key Cost Transformation Actions in 2013/14 $ Billions Optimize handset lifecycle and remorse management 1.7 Improve operational and back office efficiencies 1.1 Reduce network costs Business optimization Tighten policies on discretionary spen

  32. Slide 32: 2015 Guidance

    2015 GUIDANCE Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 32

  33. Slide 33: Strong outlook for 2015

    STRONG OUTLOOK FOR 2015 4.9 BRANDED POSTPAID NET ADDS (M) 2.2–3.2 2.2–3.2  Continue strong momentum from 2014  Big push in 1Q15: Un-carrier 8.0 – Data Stash 2014 2015 ADJUSTED EBITDA ($ B) $6.8–$7.2 $6.8–$7.2 $5.6  Aim to grow approximately 25% at the mid-point  Realizing the benefits of scale 

  34. Slide 34: 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 34

  35. Slide 35: 2X revenue CAGR to create significant long-term value

    2X REVENUE CAGR TO CREATE SIGNIFICANT LONG-TERM VALUE 2012–2017 FINANCIAL GROWTH (% CAGR) CMD 2012: 5 year growth Total 3–5%  Significant outperformance of initial postpaid CMD 2015: Updated 5 year growth1 Revenue customer growth expectations drives revenue 7–9% upside two times the original plan A

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