Deutsche Telekom Ag · XETR:DTE

Deutsche Telekom — Investor Day (November 2012)

43 slides from Deutsche Telekom's investor day presentation, November 2012

  1. Slide 1: Deutsche Telekom Capital Markets Day 2012: T-Mobile USA

    DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2012 T-MOBILE USA. JOHN LEGERE, PRESIDENT AND CEO NEVILLE RAY, CTO BRAXTON CARTER, VICE CHAIRMAN AND CFO, METROPCS

  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, de

  3. Slide 3: Safe Harbor Statement

    SAFE HARBOR STATEMENT. Additional Information and Where to Find It This document also relates to a proposed transaction between MetroPCS Communications, Inc. (“MetroPCS”) and Deutsche Telekom AG (“Deutsche Telekom”) in connection with T-Mobile USA, Inc. (“T-Mobile”). The proposed transaction will be

  4. Slide 4: Key Messages

    KEY MESSAGES.  MetroPCS combination accelerates Challenger strategy.  Clear path toward 100 million LTE POP coverage by mid-year 2013, 200 million by end of year 2013 – with 2x10 MHz in nearly 90% of Top 25 service areas, expanding to at least 2x20 MHz in 90% of Top 25 service areas in 2014+.  TM

  5. Slide 5: Apple Partnership

    APPLE PARTNERSHIP.  TMUS is excited to announce it has entered into an agreement with Apple to bring products to market together next year  Details to be provided closer to device launch  Go forward financials fully reflect estimated impact of Apple products on our business:  Included in 2013 gu

  6. Slide 6: Review 2010 – 2012

    REVIEW 2010 – 2012 6

  7. Slide 7: Recap—Jan 2011 Investor Day Targets Before AT&T Deal

    RECAP—JAN 2011 INVESTOR DAY TARGETS BEFORE AT&T DEAL. TARGETS 2012E (US GAAP) SERVICE REVENUE ($ BILLION) Increasing 17.2 (-6.7% yoy) CONTRACT DATA ARPU 1,2 $18 $19 SMARTPHONE PENETRATION2 50% 57% CONTRACT CHURN 1,2 1.8% 2.3% EBITDA MARGIN (%) Low 30s 28% OFCF (EXCL. SPECTRUM) ($ BILLION) Increasing

  8. Slide 8: In 2011–12, We Have Made Progress Across Multiple Fronts

    IN 2011 – 12, WE HAVE MADE PROGRESS ACROSS MULTIPLE FRONTS. 2011 2012 AMAZING 4G  Launched America’s largest 4G network  Cleared PCS spectrum, launched modernization SERVICES  Introduced 25+ 4G smart phones  HSPA 1900 available across major markets by YE VALUE LEADER  Innovated with nation’s on

  9. Slide 9: Market Trends

    MARKET TRENDS 9

  10. Slide 10: Attractive Macro Conditions in US

    ATTRACTIVE MACRO CONDITIONS IN US. GDP GROWTH PRIVATE CONSUMPTION GROWTH % % 4 4 USA USA 3 3 Better macro- 2 2 economic EU EU outlook 1 1 in the U.S. 0 0 -1 -1 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015  Economic recovery in the U.S. leads to lower unemployment figures and expected rise in c

  11. Slide 11: No-Contract to Drive Wireless Growth in US

    NO-CONTRACT TO DRIVE WIRELESS GROWTH IN US. TOTAL CONNECTIONS 2012 – 15 CONNECTIONS GROWTH RATE (end base in millions, including CE) (CAGR %) +4% 453 4% 433 444 417 396 368 322 324 Contract 315 320 305 +2% 289 1% 102 113 122 129 No-contract 79 91 +10% 2012 2013 2014 2015 2016 2017 Western Europe US

  12. Slide 12: Strategy 2013 – 2015 Re-invigorate Growth

    STRATEGY 2013 – 2015 RE-INVIGORATE GROWTH 12

  13. Slide 13: T-Mobile Has Accelerating Momentum

    T-MOBILE HAS ACCELERATING MOMENTUM. APPLE PARTNERSHIP METROPCS COMBINATION TOWER TRANSACTION VERIZON SPECTRUM SWAP NETWORK MODERNIZATION AT&T SPECTRUM 13

  14. Slide 14: Launching LTE on a Strong Network Foundation

    LAUNCHING LTE ON A STRONG NETWORK FOUNDATION. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G LEADER BRAND SEGMENT BUSINESS PLAYER MODEL SERVICES Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen.

  15. Slide 15: Delivering Strong 4G Performance and Coverage

    DELIVERING STRONG 4G PERFORMANCE AND COVERAGE. AMAZING 4G SERVICES NEW YORK T-MOBILE 4G DELIVERING COMPETITIVE PERFORMANCE 16.03  T-Mobile’s 4G (HSPA+) network beat Verizon LTE 6.70 6.51 4.83 average download speeds in more than a third of cities tested CHICAGO 8.19 9.02  “T-Mobile’s HSPA+ 42 is t

  16. Slide 16: Network Modernization Is Progressing Rapidly

    NETWORK MODERNIZATION IS PROGRESSING RAPIDLY. AMAZING 4G SERVICES $4 BILLION 4G NETWORK EVOLUTION PLAN 4G NETWORK COVERAGE: ACCELERATED LTE COVERAGE million State of the art, Release 10-capable equipment at 37,000 cell sites across T-Mobile’s 4G network 225 225 225 200 200 2x10 MHz LTE will be rolle

  17. Slide 17: Modernization Improves Coverage and Reliability

    MODERNIZATION IMPROVES COVERAGE AND RELIABILITY. AMAZING 4G SERVICES IMPROVED COVERAGE (EARLY MARKET RESULTS, INDEXED) ENHANCED RELIABILITY IN-HOME (EXPECTED NATIONAL RESULTS) Increased traffic capture attributable to improved cell site coverage +15-20% +29% +10% -74% -34% Data traffic Voice traffic

  18. Slide 18: T-Mobile and MetroPCS: Migration Not Integration

    T-MOBILE AND METROPCS: MIGRATION NOT INTEGRATION. AMAZING 4G SERVICES KEY ENABLERS MIGRATION PLAN  T-Mobile’s network has the capacity to support  Rapidly transition MetroPCS subscribers to NewCo customer migration network  MetroPCS LTE customers will be able to use the  MetroPCS customers compl

  19. Slide 19: MetroPCS Strengthens Strong LTE Spectrum Position

    METROPCS STRENGTHENS STRONG LTE SPECTRUM POSITION. AMAZING 4G SERVICES KEY ENABLERS POST-TRANSACTION LTE SPECTRUM WE’RE DEPLOYING THE “NEXT GENERATION” OF LTE MHz  Combined spectrum enables contiguous LTE 2x20 MHz New York 50  Effective doubling of LTE speed Los Angeles 50  Contiguous LTE spectru

  20. Slide 20: MetroPCS' DAS Network to Enhance Coverage & Capacity

    METROPCS’ DAS NETWORK TO ENHANCE COVERAGE & CAPACITY. AMAZING 4G SERVICES DAS (DISTRIBUTED ANTENNA SYSTEM)  Re-use and upgrade MetroPCS’ DAS network  6,000 DAS nodes (especially in dense urban areas such as New York and Philadelphia)  Will be upgraded to include HSPA+ and expanded LTE Repeater Re

  21. Slide 21: Challenging Status Quo with a Disruptive Approach

    CHALLENGING STATUS QUO WITH A DISRUPTIVE APPROACH. AMAZING VALUE TRUSTED MULTI- CHALLENGER 4G SEGMENT BUSINESS SERVICES LEADER BRAND PLAYER MODEL Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next

  22. Slide 22: Launched a Set of Innovative Service Offerings

    LAUNCHED A SET OF INNOVATIVE SERVICE OFFERINGS. VALUE LEADER VALUE ~80% of current post paid  Limited subsidy, lower price activations in our stores are  EIP financing option Value plans BYOD  Bring your own device 1.7M+ iPhones on the network today  Trade-in options for device UNLIMITED 30 – 35

  23. Slide 23: 100% Move to Value Plans in 2013

    100% MOVE TO VALUE PLANS IN 2013 VALUE UNMATCHED VALUE, LOVED BY CONSUMERS, ENABLES FUTURE MOVES. LEADER CUSTOMER VALUE PROPOSITION EARLY IMPACT  Fair and simple pricing  Improved CLV: 1 to 2 months extended life over  Enables lowest out-of-pocket handset expense with 24 month contract period vs.

  24. Slide 24: Best Smartphones at the Lowest Out-of-Pocket Prices

    BEST SMARTPHONES AT THE LOWEST OUT-OF-POCKET PRICES. VALUE LEADER 2012 Q4 DEVICES SMARTPHONE UNITS SOLD IN MILLIONS (POSTPAID ONLY) 2.6 2.5 2.1 2.3 1.8 +28% Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 2013 pricing enabled by value plans SMARTPHONE % IN BRANDED CONTRACT BASE 49% 53% 54% 57% 44% +13 pts Q3’11 Q4’11

  25. Slide 25: Dramatically Improving Our Customer Experience

    DRAMATICALLY IMPROVING OUR CUSTOMER EXPERIENCE. TRUSTED BRAND WHAT WE HAVE ACCOMPLISHED IN 2012 WHAT WE PLAN TO ACHIEVE IN 2013+ New retail formats Improve customer experience along all touch points  ~1,440 stores converted and across life cycle  Observed activation lift of  Empower front-line em

  26. Slide 26: Resulting in Ongoing Churn Improvement

    RESULTING IN ONGOING CHURN IMPROVEMENT. TRUSTED BRAND BRANDED CONTRACT CHURN KEY INITIATIVES %  Improvements in sales and on-boarding experience 3.0 2011  Aggressive re-contracting  Smart rate plan migration  Significant improvement in credit management and fraud detection 2.5 2012  Voice of th

  27. Slide 27: Aggressively Re-establishing T-Mobile as a Powerful Mobile Brand

    AGGRESSIVELY RE-ESTABLISHING T-MOBILE AS A POWERFUL TRUSTED MOBILE BRAND… BRAND KEY ACTIONS EARLY IMPACT Drive reconsideration and greater loyalty through improved coverage  Consideration up by ~10%  Improved perception on network dependability and speed by 10 – 12%  Coverage satisfaction scores

  28. Slide 28: Becoming the Un-carrier in 2013

    … BECOMING THE UN-CARRIER IN 2013. We are going after issues that frustrate consumers in this industry, differentiating our service, and returning to profitable growth 28

  29. Slide 29: Continue Expansion into B2B and No-Contract

    CONTINUE EXPANSION INTO B2B AND NO-CONTRACT. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G LEADER BRAND SEGMENT BUSINESS SERVICES MODEL PLAYER Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. L

  30. Slide 30: Strong Branded No-Contract Momentum, Driven by Monthly 4G

    STRONG BRANDED NO-CONTRACT MOMENTUM, MULTI- SEGMENT DRIVEN BY MONTHLY 4G. PLAYER MONTHLY 4G BRANDED NO-CONTRACT ENDING SUBSCRIBERS million +23% 5.7 4.6 Q3’11 Q3’12 BRANDED NO-CONTRACT REVENUES $ milllion +38% 450 325  Single brand SoGA leadership since March 2012  +365k branded prepaid net adds in

  31. Slide 31: Transaction Enhances and Accelerates No-Contract Growth

    TRANSACTION ENHANCES AND ACCELERATES T-MOBILE’S MULTI- SEGMENT NO-CONTRACT GROWTH. PLAYER OPPORTUNITIES FOR METROPCS Greatly expands on-network coverage Provides international roaming options Access to faster, broader 4G/LTE network Wider handset choices 31

  32. Slide 32: Investing in MVNO for Growth and Increased Coverage

    INVESTING IN MVNO FOR GROWTH AND INCREASED COVERAGE. MULTI- SEGMENT PLAYER SIGNING NEW AND INNOVATIVE MVNO PARTNERS ENDING SUBSCRIBERS million +11% 3.5 3.9  Innovative online “social commerce” distribution model, leveraging social networks Q3’11 Q3’12  45k+ subscribers in first two months of launc

  33. Slide 33: Investing in B2B for Additional and Diversified Growth

    INVESTING IN B2B FOR ADDITIONAL AND DIVERSIFIED GROWTH. MULTI- SEGMENT PLAYER ENDING SUBSCRIBERS1 SALES million +5%  Growing B2B presence in retail  Growing B2B sales force toward medium-term 6.0 6.3 goal of +1,000 FTEs  Expanding indirect sales program MARKETING Q3’11 Q3’12  Launched stackable/

  34. Slide 34: MetroPCS Accelerates Cost Transformation

    METROPCS ACCELERATES COST TRANSFORMATION. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G LEADER BRAND SEGMENT BUSINESS SERVICES PLAYER MODEL Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. LTE

  35. Slide 35: Transforming Cost Structure to Enhance Challenger Model

    TRANSFORMING COST STRUCTURE TO ENHANCE CHALLENGER CHALLEN- GER MODEL AND ACHIEVE VALUE CREATION OBJECTIVES. BUSINESS MODEL Synergies from  Savings from decommissioning transition to single redundant network sites network $5– $6 billion NPV1 Capture efficiencies  Savings from realizing efficiencies

  36. Slide 36: Challenger Strategy Is Accelerating

    CHALLENGER STRATEGY IS ACCELERATING. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G SEGMENT BUSINESS LEADER BRAND SERVICES PLAYER MODEL Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. LTE affor

  37. Slide 37: Financial Outlook

    FINANCIAL OUTLOOK 37

  38. Slide 38: 2013 Guidance

    2013 GUIDANCE. T-MOBILE T-MOBILE WITH STAND-ALONE METRO PCS2 US GAAP 2012E 2013E 2013E SERVICE REVENUE ($B) 17.2 16.4 – 16.6 20.8 – 21.0 EBITDA ($B) 4.9 4.5 – 4.6 5.8 – 6.0 MARGIN 28% 27% – 28% 27% – 29% CASH CAPEX ($B) 2.71 3.3 – 3.4 4.7 – 4.8 2013 impact of Value plan and other initiatives estimat

  39. Slide 39: Mid Term Ambition

    MID TERM AMBITION 39

  40. Slide 40: Our Combined Long-Term Ambition for NewCo

    OUR COMBINED LONG-TERM AMBITION FOR NEWCO. NEWCO WITH METROPCS PROJECTED GROWTH PRINCIPAL SOURCES OF REVENUE GROWTH FOR NEWCO:  CONTRACT OFFERS – flat growth EXPECTED 5-YEAR GROWTH Revenue 3-5% Stabilize subs in 2013, followed by modest sub growth beginning 2014 % CAGR EBITDA 7-10%  NO-CONTRACT OF

  41. Slide 41: Expect MetroPCS Deal to Close in H1 2013

    EXPECT METROPCS DEAL TO CLOSE IN H1 2013. Regulatory approval process on track, and we expect to get approval by the expiration of FCC the FCC’s self-imposed 180-day clock — April 24, 2013. DOJ process proceeding well. We have received a second request for information which DOJ is normal course for

  42. Slide 42: Summary

    SUMMARY.  MetroPCS combination accelerates Challenger strategy.  Clear path toward 100 million LTE POP coverage by mid-year 2013, 200 million by end of year 2013 – with 2x10 MHz in nearly 90% of Top 25 service areas, expanding to at least 2x20 MHz in 90% of Top 25 service areas in 2014+.  TMUS ha

  43. Slide 43: Thank You!

    THANK YOU! 43

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