Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — Investor Day (February 2015)

34 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: Disclaimer

    DISCLAIMER This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, dep

  3. Slide 3: Germany

    GERMANY Niek Jan van Damme, Board member for Germany Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance

  4. Slide 4: Key Messages

    KEY MESSAGES 1 Leading European Telco: Among the first European Integrated Incumbents to return to Revenue stabilization & EBITDA growth. 2 Differentiation via Superior Networks, Best Customer Experience and Integrated Best in class Products. 3 Number One choice in Mobile, Fixed, Broadband, TV and C

  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: Solid performance in competitive markets

    SOLID PERFORMANCE IN competitive MARKETs DELIVERED/ AMBITION LEVEL 2015 (FROM CMD 2012) ACHIEVEMENTS 2014 ON TRACK  #1 in mobile service revenue market share ≈35% 36.3% MARKET  #1 broadband market share ≈43% 41.6%  #1 in TV growth (2012–2014)1 +476k QUALITY  Customer loyalty index ≈+10% 60 point

  7. Slide 7: Market trends

    Market trends Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 7

  8. Slide 8: Digital transformation drives convergence and data centric market growth

    digital transformation drives Convergence and data centric market growth CHANGE IN CONSUMER BEHAVIOR MARKET TRENDS (2014–2018)3 REVENUE MARKET DEVELOPMENT4 USAGE1 1 DATA TRAFFIC € bn EU Roaming Mobile Broadband 40% on Fixed CAGR Mobile Mobile Video mobile devices CAGR CAGR≈0.5%5 34% 30% 18.6 18.3 0.

  9. Slide 9: Data demand and need for convergence increase trend towards consolidation

    Data Demand and need for convergence increase trend towards consolidation CONVERGENCE LEVEL OF CONVERGENCE1 Customer illustrative Perception Multibrand 2014 INS 2013 2012 2009 2011 2013 2014 Company level of Convergence 1 Telekom estimate Group STRATEGY Cost and Portfolio Transformation Lead in busi

  10. Slide 10: Strategy 2015–2018

    Strategy 2015–2018 Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 10

  11. Slide 11: Our strategy: Germany

    our strategy: germany LEADING EUROPEAN TELCO INTEGRATED BEST CUSTOMER WIN WITH LEAD IN IP NETWORKS EXPERIENCE PARTNERS BUSINESS  Integrated Network  MagentaEINS  Partnering Initiatives  Mid-Market Initiative Strategy  Next Generation TV  Steckerleiste  IT-Cloud  Network Quality  E-Company 

  12. Slide 12: Integrated IP Networks: Differentiation and superior quality

    Integrated IP Networks: Differentiation and superior quality lead to technology leadership of today MOBILE BROADBAND FIXED BROADBAND HYBRID ACCESS BANDWIDTH HIGHSPEED FOOTPRINT CONVERGENT TECHNOLOGY  Fastest Network1 with  Largest national fiber HH coverage with 44%  Market launch Q4/14 80% LTE P

  13. Slide 13: More coverage & speed within the same capex envelope

    More coverage & speed within the same capex envelope INTEGRATED NETWORK STRATEGY STATUS 2014 AMBITION 2018 1 LTE rollout 80% Pop coverage 95% Pop coverage with up to 300 Mbps Download up to 150 Mbps 2 Fiber rollout 44% HH coverage ≈80% HH coverage with at least 50 Mbps depending on regulatory adjust

  14. Slide 14: Transformation on track to achieve 100% IP-Customers in 2018

    Transformation on track to achieve 100% IP-Customers in 2018 FROM THE “OLD PSTN WORLD”… SHARE OF IP-ACCESS1 …TO THE “NEW IP ERA” SP DP TP Business Mobile 100% SP DP TP Business Mobile Service Service Control Control Transport YE/14: 5.8 mn ≈60% Transport Aggregation IP customer Aggregation Access Ac

  15. Slide 15: We strive for the "Wow"-experience

    we strive for the “Wow”-experience SURPRISING & INNOVATIVE „WOW“-EXPERIENCE SEAMLESS CONVERGED OMNICHANNEL SIMPLE TO USE CONNECTIVITY COMMUNICATION SALES & SERVICE & HIGH QUALITY Consistent & unlimited Integrated portfolio on Self-Service and Innovative products high-speed access multi devices, Unif

  16. Slide 16: Differentiation in mobile through superior network and clear value strategy

    Differentiation in mobile through superior network and clear value strategy BRAND PORTFOLIO CONTRACT CUSTOMER BASE1 SERVICE REVENUES # mn Single Play Double Play € bn EU Roaming ≈30€ CAGR 3% CAGR ≈ 1%2 16.8 15.0 6.7  “D-Netz” Quality  Best Network 21%  Medium speed  High speed 35%  Smartphone l

  17. Slide 17: Differentiation in broadband via innovative products and increased fiber footprint

    Differentiation in broadband via innovative products and increased fiber footprint LEVERS IN BROADBAND RETAIL BROADBAND CUSTOMER BASE BROADBAND REVENUES 1 MagentaEINS  Leverage the base # mn Double Play Triple Play € mn Double Play Triple Play  Increase loyalty CAGR 2% CAGR 2% 2 Entertain 2.0  Ne

  18. Slide 18: Growth in TV by a multilayer strategy and increased fiber footprint

    Growth in TV by a multilayer strategy and increased fiber footprint NEXT GENERATION TV WITH NEW FEATURES TV CUSTOMER BASE  Revised state of the art user interface # mn Wholesale Housing Entertain Associations  Seamless multi-screen experience  Number 1 in HD and becoming innovator in 4K CAGR ≈20%

  19. Slide 19: Increase network utilization by upselling wholesale partners to fiber

    Increase network utilization by Upselling Wholesale partners to fiber service revenues KEY GOALS WHOLESALE ACCESS BASE WHOLESALE REVENUES % FTTC ADSL/ULL1 € bn 1 Utilization of Fiber Infrastructure with ≈35% of Fiber Footprint in active service CAGR -3% CAGR 0% 11.3 thereof ≈85% 6% 10.2 in cable 3.4

  20. Slide 20: MagentaEINS: Fixed and mobile are converging

    MAGENTA EINS: Fixed and mobile are converging… OUR FIRST CONVERGED OFFER KEY GOALS 2018 (CONSUMER) CUSTOMER BASE 63% MARKET RESEARCH1 1 CROSS-/UPSELLING # mn Customers prefer bundles from a Leverage customer base single source 1.0 3.0 2 ADD ON MOBILE SIM’S 1.5 SIM cards per household 2.0 3 LOYALTY I

  21. Slide 21: Generating additional value through cross-/upselling

    … and generating additional value through Cross-/UpsellING FMC CUSTOMER POTENTIAL HIGHLIGHTS AFTER 4 MONTH MagentaEINS CUSTOMER BASE 1 TRIPLE PLAY SHARE sim cards k Add on SIM Upsell/Fencing Cross/Up New Customers >50% 506 Cross-/Upsell New Customer 2 GROWING SIM CARD PENETRATION no ≈2 SIMs per HH 3

  22. Slide 22: e-company transformation with focus on e-service and e-sales

    e-company transformation with focus on e-service and e-sales EXCELLENT CUSTOMER EXPERIENCE “24/365” Digital touch points & omni-channel approach 1 Increase E-SALES1  Products and services are e-Channel enabled ≈ 17%  Seamless customer experience across all touch points 10% in 2018 in 2014 Increase

  23. Slide 23: Partnering activities contribute to revenue growth

    Partnering activities contribute to revenue growth KEY GOAL: LEADING PARTNERS TO DIFFERENTIATE CORE PRODUCTS REVENUE & SUBSCRIBER DEVELOPMENT € mn SMART HOME 300 100 SECURITY 2014 2018 ENTERTAINMENT # mn 6 2 1 Enrich portfolio with 2 Leverage customer demand through 3 Platform with standardized inno

  24. Slide 24: Nationwide distribution and ICT competence basis for leading business position

    Our strong nationwide distribution and ICT competence are the basis for a leading position in the business market MARKET LEADER IN BUSINESS... ...BASED ON SUPERIOR ICT COMPETENCES MID-MARKET INITIATIVE AS A GROWTH DRIVER MOBILE MARKET Telekom 1 Others Nationwide sales and service presence & IT/CLOUD

  25. Slide 25: Growth initiatives and Mid-Market approach drive ambition in business

    Growth initiatives and Mid-Market approach drive our high Ambition in business FOCUSED BUSINESS INITIATIVES ... LEAD TO REVENUE GROWTH 1 IT Cloud BMP1-Seats mn IT Mobile Fixed € bn +90% CAGR 2% 0.6 Telekom Market 0.05 6.1 5.7 +21% +4.8% 5% 11% 2 M2M SIM mn +29% +1.2% +0.8% 44% 43% ≈10 3.7 -0.7% -1.7

  26. Slide 26: Key differentiators for our customers

    Key differentiators for our customers Secure data IT/Cloud Fast G2M Access via Seamless Cloud & IT Partner experience Efficient First solutions Service across all integration Best HD & convergent MagentaEINS Simple S/M/L touch points VoD content offer Enrich portfolio IT partnering Hybrid Router Por

  27. Slide 27: Financial outlook

    Financial outlook Group STRATEGY Cost and Portfolio Transformation Lead in business Superior Production Model Europe Germany T-Mobile USA Finance 27

  28. Slide 28: Revenue stabilization YOY in 2016

    Revenue stabilization YOY in 2016 REVENUE DEVELOPMENT REVENUE DRIVER € bn EU Roaming 1 Increased Mobile Service Revenues growing contract customer base & multibrand portfolio CAGR 0.3%1 22.3 2 Stable Wholesale Wireline Revenues driven by fiber access “Kontingentmodell” and high utilization 3 Growing

  29. Slide 29: Further focus on cost reduction through simplicity, efficiency and transformation

    further focus on cost reduction through simplicity, efficiency and transformation INDIRECT COST1 ADJ. OPEX DIRECT COST € bn € bn € bn CAGR ≈-1% CAGR ≈-2% 13.8 CAGR ≈1% 13.2 9.8 8.92 5.0 5.2 2014 2018 2014 2018 2014 2018 Main areas:  Continuous right-sizing of overhead functions  Generation of furt

  30. Slide 30: IP & process transformation drive opex savings of €0.7 bn

    Long term IP & Process transformation drive opex savings of €0.7 bn in early 2020’s BENEFITS OF IP & PROCESS TRANSFORMATION MAIN OPEX SAVINGS1 IMPROVED PROCESSES CUSTOMER AND TECHNICAL SERVICE  Zero Touch provisioning  Plug & Play installation for customer €0.5 bn  Zero touch repair without assig

  31. Slide 31: We fund our investments through growing EBITDA

    We fund our investments through growing EBITDA ADJ. EBITDA & EBITDA-MARGIN (CASH) CAPEX ADJ. CASH CONTRIBUTION € bn € bn Basic Key Projects € bn CAGR 1–2% CAGR ≈2% 8.8 8.8 CAGR ≈1% 5.0 3.8 2014 2015 2018 2014 2015 2018 2014 2015 2018 Margin: 40% 40% 42% Group STRATEGY Cost and Portfolio Transformati

  32. Slide 32: Key levers for stable ROCE

    KEY LEVERS FOR stable ROCE REVENUES1 (CASH) CAPEX € bn € bn CAGR ≈1% CAGR 0.3% OPERATING ROCE 22.3 3.8 2014 2018 2014 2018 ADJ. EBITDA SPECIAL FACTORS (EBITDA)2 € bn CAGR 1–2% € bn 2014 2018 8.8 0.6 WACC 0.3 2014 2018 2014 2018 1 Without EU roaming impact 2 Restructuring Group STRATEGY Cost and Port

  33. Slide 33: 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 33

  34. Slide 34: Mid term ambition level

    MID TERM AMBITION LEVEL MID TERM AMBITION LEVEL YEAR  #1 in FMC with MagentaEINS: 3mn customers 2018 MARKET  #1 in mobile service revenue: CAGR ≈1%1/market share >36% 2018  #1 broadband: CAGR ≈2%/market share >40%2 2018 QUALITY  Customer loyalty index: ≈64 points 2018  Adj. EBITDA margin: ≈42%

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