Deutsche Telekom AG · XETR:DTE

Deutsche Telekom — Q3 2010 Earnings Presentation

23 slides from Deutsche Telekom's earnings presentation, Nov 4, 2010

  1. Slide 1: Q3/10 – Results Presentation

    Q3/10 – Results Presentation. Deutsche Telekom. November 4, 2010

  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: Agenda

    Agenda. Deutsche Telekom Results Presentation. René Obermann CEO Timotheus Höttges CFO 3

  4. Slide 4: 9M 2010 Highlights – Decent progress to achieve FY10 targets

    9M 2010 Highlights – Decent progress to achieve FY10 targets. 9 months results – on track to achieve full year targets  Excluding T-Mobile UK revenue growth of 0.4% in 9M  Adj. EBITDA at €14.9 billion in 9M – on track to achieve guidance of “around €20 billion minus de-consolidation impact of the

  5. Slide 5: Q3 Overview group financials

    Q3 Overview group financials. Q3/09 Q3/10 Q3/09 Q3/10 change in % in € million reported reported excl. UK excl. UK excl. UK Revenue 16,262 15,601 15,448 15,601 1.0% Adj. EBITDA 5,528 5,021 5,345 5,021 -6.1% Adj. net profit 1,074 969 1,006 1,021 1.5% Net profit 959 1,035 892 1,087 21.9% Adj. EPS (in

  6. Slide 6: Q3 Overview: strong Q3 09 impacts yoy comparison

    Q3 Overview: strong Q3 09 impacts yoy comparison. Revenue (€ million) Adj. EBITDA (€ million) +1.0% -6.1% 15,448 +23 +459 -329 15,601 5,345 +9 +107 -440 5,021 Q3/09* Acquisitions F/X Organic Q3/10 Q3/09* Acquisitions F/X Organic Q3/10 Revenue Q3/09 vs. Q3/10 (€ million) Adj. EBITDA Q3/09 vs. Q3/10 (

  7. Slide 7: Q3 strategy update: Fix – Transform - Innovate on track

    Q3 strategy update: Fix – Transform - Innovate on track. Fix Transform Innovate Improve performance Leverage Build networks and Connected life Connected work of mobile-centric one company in processes for the across all screens with unique assets integrated assets gigabit society ICT solutions  US

  8. Slide 8: Strategy update: growth areas

    Strategy update: growth areas. Ambition Deutsche Telekom Growth Areas 9M 2009 9M 2010 Change 2015 Revenue (€ bn) Mobile Internet 2.6 3.2 0.7 26.2% ≈ 10 Connected Home 3.9 4.2 0.3 7.8% ≈7 Double & Triple play, Home Gateway and Communication Suite Online Consumer Services 0.5 0.7 0.2 33.3% 2-3 T-Syste

  9. Slide 9: US: continued revenue stabilization and strong data ARPU

    US: continued revenue stabilization and strong data ARPU – margin reflecting smartphone uptake and network costs. Service revenues (US$ million) NetTotal adds in ‘000Contract net adds net adds -0.4% Net-adds total 371 Net-adds contract 4,624 4,611 4,537 4,605 4,607 137 106 -77 -77 -60 -140 -117 -118

  10. Slide 10: Operational priorities for 2010: improve the US market position

    Operational priorities for 2010: improve the US market position.  3G 3G coverage: coverage: 209 209 million million POPs; POPs; >29,000 >29,000 3G 3G sites, sites, up up >1,600 >1,600 in in Q3 Q3  Nationwide Nationwide 4G 4G network: network: HSPA+ HSPA+ (21 (21 Mbps) Mbps) expected expected to

  11. Slide 11: Germany: sustainable improvement in EBITDA-margin

    Germany: sustainable improvement in EBITDA-margin. Revenue (€ million) Adj. opex (€ million) -2.4% -4.9% 6,471 6,401 6,189 6,197 6,317 4,130 4,334 4,013 3,907 3,927 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Adj. EBITDA (€ million) Adj. EBITDA margin (in %) 39.9 0.0% 40 39.0 +0.9pp

  12. Slide 12: Germany fixed: strong 'Save 4 Service' execution

    Germany fixed: strong ‘Save 4 Service’ execution. Revenue (€ million)  Revenue trend impacted by wholesale and value added services in Q3 09. Improvement in trend expected for Q4 -4.3%  Adj. EBITDA stable at around €1.6 billion  Efficiency program ‘Save 4 Service’ proves to be successful, sequent

  13. Slide 13: Germany fixed: strong leadership in the German broadband market

    Germany fixed: strong leadership in the German broadband market. Broadband lines1 (million) Broadband net add share by competitor2 Cable DT DSL competitors 24.3 24.7 25.1 25.3 25.6 Cable 80 2.1 2.2 2.4 2.5 2.7 59 DSL competitors 60 53 49 52 43 Telekom 10.8 11.0 11.1 11.0 11.1 40 40% 18 18 20 11.3 11

  14. Slide 14: Germany mobile: data revenues boosting top line growth

    Germany mobile: data revenues boosting top line growth. Service revenues (€ million)  Data revenues growth of 27% boosting top line growth of +2.3% despite loss of O2 deal (EUR 81mn) +5.0%  Continuous ramp up of high-value customers with  record level iPhone numbers in Q3 (+400k)  increased cont

  15. Slide 15: Europe – integrated operations: Defending cash flow and margin

    Europe – integrated operations: Defending cash flow and margin - outperforming peers. Adj. EBITDA margin in % Cash Contribution (adj. EBITDA – cash capex) (€ million) 0% 49 50 48 45 47 46 +2% 341 341 +36% +24% 38 37 168 171 91 124 94 76 OTE Croatia MT Slovakia OTE Croatia MT Slovakia Adj. EBITDA (€

  16. Slide 16: Europe – mobile centric: Higher market invest impacting margins

    Europe – mobile centric: Higher market invest impacting margins. Revenue (€ million)  CZ:  Revenue driven by regulation (excl. regulation revenue flat). +5% 0% -5% -2% Increase in market invest (in €) of 31% due to more retention. Integration of broadband business and FDD roll- 450 472 452 450 out

  17. Slide 17: Systems Solutions: accelerating revenue growth in Q3

    Systems Solutions: accelerating revenue growth in Q3. Revenue (€ million) Revenue increase continues:  Revenue increase yoy of +3.8 % up to €2,205 million +3.8%  Despite decreasing internal revenue, as T-Systems contributes to the optimization of group IT costs  International revenues grew yoy +1

  18. Slide 18: Systems Solutions: profitability improvement driven by efficiency

    Systems Solutions: profitability improvement driven by efficiency. Adj. EBIT / margin (€ million) Adj. EBIT increase despite additional expenses from new deals:  EBIT +€9 million up to €73 million in Q3/10  Adj. EBIT margin in Q3/10 improved to 3.3% from 3.0% 3.3% in Q3/09 3.0% 64 73 0.5% 12 Q3/08

  19. Slide 19: Free cash flow: on track to achieve at least €6.2 billion

    Free cash flow: on track to achieve at least € 6.2 billion. Free cash flow (before spectrum) development (€ million) 5,106 4,810 3,286 1,882 1,439 1,404 1,489 416 Q1 Q2 Q3 9M Factoring 2009 2010 19

  20. Slide 20: S4S: €1.7 billion savings gross so far – €740 million net

    S4S: €1.7 billion savings gross so far – €740 million net. Cost base1) development 9M/09 vs. 9M/10 (€ billion) Contribution -2,2% by Business Unit (€ million) YtD 2010 Germany 515 33.79 USA 361 0.93 Europe 300 0.57 33.05 Systems Solutions 404 1.72 GHS 140 1.34 DT Group 1,720  €1.7 billion gross sav

  21. Slide 21: Ongoing solid balance sheet ratios and stable rating

    Ongoing solid balance sheet ratios and stable rating. in € billion 30/09/2010 30/06/10 31/03/10 31/12/09 30/09/09 Balance sheet total 127.8 132.8 130.8 127.8 129.3 Shareholders’ equity 43.4 44.8 44.3 41.9 41.6 Net debt 43.7 46.3 40.4 40.9 42.4 Net debt/adj. EBITDA1 2.2 2.3 1.9 2.0 2.1 Gearing 1.0x 1

  22. Slide 22: Q&A - Please press "*1" to ask a question

    Q&A - Please press “*1” to ask a question. René Obermann CEO Timotheus Höttges CFO For remaining questions please contact the IR department after the call. 22

  23. Slide 23: Thank you for your attention!

    For further questions please contact the IR department: Investor Investor Relations, Relations, Bonn Bonn office office Investor Investor Relations, Relations, New New York York office office Phone Phone +49 +49 228 228 181 181 -- 88 88 88 80 80 Phone Phone +1 +1 212 212 424 424 2959 2959 Fax Fax +4

Deutsche Telekom — Q3 2010 Earnings Presentation on 6ix