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1&1 — 1&1 Drillisch — H1 2019 Earnings Presentation

25 slides from 1&1's earnings presentation, Aug 15, 2019

  1. Slide 1: H1 2019 and Outlook

    181] DRILLISGH H1 2019 and Outlook

  2. Slide 2: Agenda

    Agenda  Business development  Results H1 2019  5G-Frequency Auction & Next Steps  Outlook 2

  3. Slide 3: Business development

    Business development 3

  4. Slide 4: Product portfolio: Broadband connections

    Product portfolio: Broadband connections  Largest alternative DSL provider serving 4.34m broadband connections (ADSL, VDSL, FTTH)  connect: Landline Network Test: #1 in 2015, #2 in 2016, #1 in 2017, #2 in 2018, # 3 in 2019 Last mile:  VDSL-Vectoring (FTTC) mainly through FTTC Layer 2-infrastructu

  5. Slide 5: Product portfolio: Mobile

    Product portfolio: Mobile  Germany’s leading MVNO serving 9.58 million mobile services contracts  Broad market coverage Primary brand  Telefónica remedy partner with long- term guarantee of access to up to 30% of network capacity and all Co-brands future technologies, incl. 5G  Additional procur

  6. Slide 6: Customer contracts

    Customer contracts Customer contracts (in million)  13.92 million cutomer contracts (+ 0.38m) 14,00 13,54 13,92  9.58 million Mobile Internet (+ 0.38m) 12,00  4.34 million Broadband ADSL / VDSL / FTTH 10,00  Net Adds Mobile 9,20 9,58 8,00  Q1 2018: + 240k 6,00  Q2 2018: + 190k 4,00  Q3 2018:

  7. Slide 7: Revenue

    Revenue  + 3.4 % Service-Revenue to €1,471.1 million Revenues (in €m)  - 10.4 % Other Revenues, in particular low-margin 2.000 1.819,0 1.825,6 hardware business 1.750 1.500 1.250 1.423,3 1.000 1.471,1  + 4,7 % Service revenues without effect of increasing 750 LTE demand of existent customers (hig

  8. Slide 8: EBITDA

    EBITDA  + 0.1 % EBITDA to € 340.4 million EBITDA (in €m)  18.6 % EBITDA margin (previous year: 18.7%) 400 350 340,1 340,4  EBITDA H1 2019 includes: 300  + € 2.3 million from the first-time application of IFRS 16 250 200  - € 2.3 million expenses in connection with integration 150 projects (prev

  9. Slide 9: Development Mobile

    Development Mobile Mobile contracts Mobile data usage per contract in (MB/month) 12.000.000 2.000 1.800 10.000.000 1.600 1.400 8.000.000 1.200 6.000.000 1.000 800 4.000.000 600 400 2.000.000 200 0 0 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Total LTE Total LTE  9.6 million custome

  10. Slide 10: Key figures H1 19

    Key figures H1 19 H1 2018 H1 2019 Change Subscribers in current product lines 13.04m 13.92m + 0.88m Thereof Mobile Internet 8.73m 9.58m + 0.85m Thereof Broadband 4.31m 4.34m + 0.03m Revenue €1,819.0m €1,825.6m + 0.4 % Thereof Service-Revenue €1,423.3m €1,471.1m + 3.4 % Service Revenues excluding eff

  11. Slide 11: Results H1 2019

    Results H1 2019 11

  12. Slide 12: Profitability H1 2019 vs. H1 2018

    Profitability H1 2019 vs. H1 2018 (in €m) H1 2018 H1 2019 Change Revenues 1,819.0 1,825.6 + 0.4 % Cost of sales - 1,291.3 - 1,282.5 - 0.7 % Gross profit from turnover 527.7 543.1 + 2.9 % Distribution costs - 204.1 - 209.2 + 2.5 % Administration costs - 46.1 - 50.2 + 8.9 % Other operating expenses /

  13. Slide 13: Balance Sheet

    Balance Sheet 31 December 2018 30 June 2019 (in €m) ASSETS EQUITY AND LIABILITIES (in €m) ASSETS EQUITY AND LIABILITIES 5,246.6 5,246.6 5,223.4 5,223.4 675,2 Short-term liabilities 448,1 Short-term Short-term assets 1060,6 Short-term assets liabilities 1.068,0 319,6 Long-term liabilities 326,6 Long-

  14. Slide 14: Cashflow

    Cashflow (in €m) H1 2018 H1 2019 Change Comment  246.2 €m Cash flow from operating activities  - 94.1 €m Change in trade accounts payable  - 58.9 €m Change of Contract Assets and Contract Net inflow of funds from 44.6 86.2 + 92.2 % Liabilities operating activity  - 27.1 €m Change in deferred exp

  15. Slide 15: Bridge EBITDA to FCF

    Bridge EBITDA to FCF -58,9 340,4 -1,1 - 118,0 -76,0 -5,3 81,1 EBITDA Contract Asset Inventories other WC Taxes Capex FCF H1 2019 H1 2019 und Liabilities Q1 168.5 - 42.1 - 9.6 - 61.9 - 37.9 - 2.3 14.7 Q2 171.9 - 16.8 + 8.5 - 56.1 - 38.1 - 3.0 66,4 15

  16. Slide 16: 5G-Frequency Auction & Next Steps

    5G-Frequency Auction & Next Steps 16

  17. Slide 17: 5G connects people, machines and applications (I)

    5G connects people, machines and applications (I) Autonomous Driving Smart City  5G is the basis for a new ecosystem Digital Digital  Networks, applications and billions of devices that E-Health Farming Startups are not yet internet-enabled today are growing together Connected Intelligent Factory

  18. Slide 18: Successful participation in the 5G auction

    Successful participation in the 5G auction  Acquisition of frequencies (5x10 MHz in 3.6 GHz), available from 1 January 2021 at the latest Agenda  € 735 million (payable 12 September 2019)  Acquisition of frequencies (2x10 MHz1 in 2 GHz), available from 1 January 2026  € 335 million (payable 30 J

  19. Slide 19: Roadmap for network build

    Roadmap for network build 1st step: Acquisition of spectrum  2nd step: Negotiations about National Roaming and infrastructure sharing 3rd step: Cooperation Agreement with one or more technology partner(s) and their respective services 4th step: Network build-out based on the 1&1 Versatel network 5t

  20. Slide 20: Using 1&1 Versatel's fiber network

    Using 1&1 Versatel’s fiber network  1&1 Versatel runs one of the largest fiber networks in Germany, which can be used as 5G backhaul  In 250 German cities, including 19 of the 25 largest cities  47,013 km (previous year: 45,839 km) FTTB Today: Mobile communications base stations from third partie

  21. Slide 21: Roll-out obligations

    Roll-out obligations  End of 2022 Tagesordnung  1,000 active 5G base stations  End of 2025  25 % household coverage – corresponding to up to 40 biggest cities  End of 2030  50 % household coverage – corresponding to up to 390 biggest cities 21

  22. Slide 22: Outlook 2019

    Outlook 2019 22

  23. Slide 23: Forecast 2019 - Concretisation

    Forecast 2019 - Concretisation  Service Revenue  Increased demand for LTE tariffs from existing customers leads to increased sales deduction  Ca. 3 % growth in service revenues (so far ca. 4 %)  EBITDA  New: Ca. €10 million negative regulatory effect (Increase of the so-called TAL charges from

  24. Slide 24: Our Success Story Continues!

    Our Success Story Continues!

  25. Slide 25: Disclaimer and Contact

    Disclaimer and Contact This presentation contains statements and forecasts related to future developments; they express the current assessments of the 1&1 Drillisch AG management. These assessments and statements may be subject to changes and/or uncertain general conditions which, in the majority of

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