Deutsche Telekom Ag · XETR:DTE
Deutsche Telekom — Q1 2002 Earnings Presentation
56 slides from Deutsche Telekom's earnings presentation, May 22, 2002
Slide 1: Telefonkonferenz zum 1. Quartal 2002
Deutsche Telekom Telefonkonferenz zum 1. Quartal 2002 22. Mai 2002 ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 1
Slide 2: Disclaimer
Disclaimer This presentation contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of the safe harbor provisions of the U.S. federal securities laws. Such statements are subject to
Slide 3: Highlights and Strategy
Highlights and Strategy Dr. Ron Sommer CEO ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 3
Slide 4: Key differentiators
Key differentiators. Successful combination of secured base businesses and growth businesses. n Key liberalization issues already behind us while other incumbents are just beginning to face them n Started to sell non-core assets before the market even started thinking about it n We are not going ex
Slide 5: Q1/02 key achievements
Q1/02 key achievements. n Group revenue growth 15.2% n T-Mobile EBITDA more than doubled n T-Systems EBITDA up 76% n T-Com: measures implemented to improve profitability n Positive EBITDA at the T-Online division ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 5
Slide 6: T-Com. Managing fierce competition
T-Com. Managing fierce competition. Access revenues* (€ billion) n Full competition since 1998 – homework done/market consolidation n Market share stable – customer retention, happy digits, +9% 1.8 calling plans n Soft re-balancing with T-ISDN and 1.65 T-DSL starts to work out n World class penetrat
Slide 7: T-Mobile. Fully on track
T-Mobile. Fully on track. EBITDA (€ million) n VoiceStream growth and EBITDA contribution confirm U.S. strategy n Growth driver within the group +105% 1,211 n Focus on synergies and profitability in European operations n Mobile data on track n 14% non-voice revenue in European operations (up from 11
Slide 8: T-Mobile. VoiceStream: successful integration
T-Mobile. VoiceStream*: successful integration EBITDA** (€ million) n 30% of T-Mobile group revenue in Q1 n 60% of T-Mobile net additions 106 n 80% of T-Mobile net contract additions n Contract ARPU stable above $50 n Positive EBITDA achieved n U.S. management retained n Gaining traction in mobile d
Slide 9: T-Systems. Solid performance in turbulent markets
T-Systems. Solid performance in turbulent markets. EBITDA (€ million) n Unique IT/ telecommunications approach n Best positioned to participate in growth in e-business and security applications +76% 258 n Strong focus on 1,400 high-value customers n Customer loyalty improved through offering of comp
Slide 10: T-Online. Leveraging the largest DSL subscriber base
T-Online*. Leveraging the largest DSL subscriber base among European and U.S. telcos. EBITDA (€ million) n Access business turned into solid foundation n T-DSL subscriber base forms the basis for developing broadband content 17 (T-Online Vision) n Positive EBITDA (including DeTeMedien) n Leading the
Slide 11: Outlook
Outlook. n Focus on execution and free cash flow generation n Further operational improvement in group n Assets disposals (e.g. Satelindo and real estate) n Successful T-Mobile re-branding n T-DSL supporting T-Com und T-Online n T-Com access price increases to improve profitability ===!"§ Deutsche T
Slide 12: Financials
Financials Dr. Karl-Gerhard Eick CFO ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 12
Slide 13: First quarter 2002 at a glance
First quarter 2002 at a glance. Strong performance. n Group revenues improve by 15.2% n Revenues generated outside of Germany now at 33% n T-Systems EBITDA margin at 10% n T-Mobile above expectations n Cash from operations up 14% to € 2.9 billion n Capex at €1.5 billion n Net debt increases to € 67.
Slide 14: Deutsche Telekom Group. Financial performance in line
Deutsche Telekom Group. Financial performance in line. € million Q1/2002 Q1/2001 ∆ € ∆% Revenues 12,770 11,082 1,688 15.2% of which international 4,252 2,289 1,96385.8% EBITDA 3,782 3,622 160 4.4% EBITDA margin 29.6% 32.7% Cash from operations 2,852 2,502 350 14.0% Net cash from operations 2,263 1,6
Slide 15: T-Mobile. Adjusted EBITDA more than doubled
T-Mobile. Adjusted EBITDA more than doubled. € million Q1/2002 Q1/2001 ∆ € ∆% Revenue total 4,465 2,681 1,784 66.5 % external 4,115 2,318 1,797 77.5% EBITDA 1,211 590 621 105.3% EBITDA margin 27.1% 22.0% Depreciation - 1,729 - 689 - 1,040 150.9% and amortization Financial income (exp.), net - 322 -
Slide 16: T-Com. EBITDA weakness due to German business
T-Com. EBITDA weakness due to German business. € million Q1/2002 Q1/2001 ∆€ ∆% Revenue total 7,440 7,499 - 59 - 0.8% external 6,283 6,337 - 54 - 0.9% EBITDA 2,467 2,681 - 214 - 8.0% EBITDA margin 33.2% 35.8% Depreciation - 1,326 - 1,259 - 67 5.3% and amortization Financial income (exp.), net - 447 -
Slide 17: T-Com Germany. Revenues Q1/01 vs. Q1/02
T-Com Germany. Revenues Q1/01 vs. Q1/02. € billion 6.9 -0.2 -0.1 -0.2 Call Revenues Data +0.15 6.5 Comm. -0.05 Terminal Carrier Equipment Services Cable Access BaWü Revenue Q1/2001 Q1 2002 ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 17
Slide 18: T-Com. Measures to counter decrease in calling revenues
T-Com. Measures implemented to counter decrease in calling revenues + Increase access charges – Price decrease for local + Increase T-DSL charges calls as of May 1 + Increase T-DSL one-off fee – Calling plans/customer + ISDN/T-DSL sub growth loyalty program ===!"§ Deutsche Telekom Conference call Ma
Slide 19: T-Systems. EBITDA margin almost doubled
T-Systems. EBITDA margin almost doubled. € million Q1/2002 Q1/2001 ∆€ ∆% Revenue total 2,652 2,804 - 152 - 5.4% external 1,874 1,992 - 118 - 5.9% EBITDA 258 147 111 75.5% EBITDA margin 9.7% 5.2% Depreciation - 356 - 326 - 30 9.2% and amortization Financial income (exp.), net - 2 21 - 23 n/a Income (
Slide 20: T-Online. Positive EBITDA at the division level
T-Online*. Positive EBITDA at the division level. € million Q1/2002 Q1/2001 ∆€ ∆% Revenue total 427 361 66 18.3% external 387 356 31 8.7% EBITDA 17 - 27 44 n/a EBITDA margin 4.0% - 7.5% Depreciation - 47 - 37 - 10 27.0% and amortization Financial income (exp.), net 27 37 - 10 - 27.0% Income (loss) b
Slide 21: Others
Others. € million Q1/2002 Q1/2001 ∆€ ∆% Revenue total 957 1,188 - 231 - 19.4% external 111 79 32 40.5% EBITDA - 28 219 - 247 n/a EBITDA margin - 2.9% 18.4% Depreciation - 233 - 271 38 - 14.0% and amortization Financial income (exp.), net - 961 - 402 - 559 139.1% Income (loss) bef. taxes. - 1,222 - 4
Slide 22: Deutsche Telekom Group. Update on debt reduction
Deutsche Telekom Group. Update on debt reduction. n Net debt: € 67.3 billion as of March 31 n Financial reserves unchanged at € 19 billion n Sale of Satelindo for US$ 333 million in cash agreed ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 22
Slide 23: Outlook. Quarter-by-quarter execution and debt reduction
Outlook. Quarter-by-quarter execution and debt reduction n 10% group revenue growth target for 2002 n Further EBITDA growth at T-Mobile, T-Systems, and T-Online n Measures implemented to stabilize revenue and EBITDA at T-Com n Focus on free cash-flow and debt reduction measures: non-core assets, cab
Slide 24: Backup
Backup ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 24
Slide 25: Financials
Financials ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 25
Slide 26: T-Mobile unadjusted
T-Mobile unadjusted. € million Q1/02 Q1/01 ∆€ ∆% Revenue total 4,465 2,681 1,784 66.5 % external 4,115 2,318 1,797 77.5 % EBITDA 1,211 590 621 105.3 % Adjusted EBITDA 1,211 590 621 105.3 % Adj. EBITDA-Margin 27.1 % 22.0 % n/a n/a Depreciation and amortization - 1,729 - 689 - 1,040 150.9 % Net intere
Slide 27: T-Com unadjusted
T-Com unadjusted. € million Q1/02 Q1/01 ∆€ ∆% Revenue total 7,440 7,499 - 59 - 0.8 % external 6,283 6,337 - 54 - 0.9 % EBITDA 2,467 2,681 - 214 - 8.0 % Adjusted EBITDA 2,467 2,681 - 214 - 8.0 % Adj. EBITDA-Margin 33.2 % 35.8 % n/a n/a Depreciation and amortization - 1,326 - 1,259 - 67 5.3 % Net inte
Slide 28: T-Systems unadjusted
T-Systems unadjusted. € million Q1/02 Q1/01 ∆€ ∆% Revenue total 2,652 2,804 - 152 - 5.4 % external 1,874 1,992 - 118 - 5.9 % EBITDA 258 147 111 75.5 % Adjusted EBITDA 258 147 111 75.5 % Adj. EBITDA-Margin 9.7 % 5.2 % n/a n/a Depreciation and amortization - 356 - 326 - 30 9.2 % Net interest income 1
Slide 29: T-Online unadjusted
T-Online unadjusted. € million Q1/02 Q1/01 ∆€ ∆% Revenue total 427 361 66 18.3 % external 387 356 31 8.7 % EBITDA 17 - 27 44 163.0 % Adjusted EBITDA 17 - 27 44 163.0 % Adj. EBITDA-Margin 4.0 % - 7.5 % n/a n/a Depreciation and amortization - 47 - 37 - 10 27.0 % Net interest income 32 48 - 16 - 33.3 %
Slide 30: Others unadjusted
Others unadjusted. € million Q1/02 Q1/01 ∆€ ∆% Revenue total 957 1,188 - 231 - 19.4 % external 111 79 32 40.5 % EBITDA - 28 219 - 247 - 112.8 % Adjusted EBITDA - 28 219 - 247 - 112.8 % Adj. EBITDA-Margin - 2.9 % 18.4 % n/a n/a Depreciation and amortization - 233 - 271 38 - 14.0 % Net interest expens
Slide 31: Information concerning non-GAAP measures
Information concerning non-GAAP measures. Net loss excl. special factors. € billion Q1/02 2001* Net loss - 1.8 - 3.5 Special factors - 0.4 1.2 - of which write-downs on financial assets - 0.5 - 0.9 - of which tax effect of offstting the loss from write-down on the net carrying amount of NAB/ Sprint
Slide 32: T-Com
T-Com ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 32
Slide 33: Access revenues up by 9% in Q1/02
Access revenues up by 9% in Q1/02. € million* Q1/02 Q1/01 ∆€ ∆% Analog incl. T-DSL 1,073 1,066 7 0.7% ISDN incl. T-DSL 729 587 142 24.2% Total access revenues 1,802 1,653 149 9.0% – of which T-DSL 65 11 54 490.9% * on the basis of rounded figures, unaudited ===!"§ Deutsche Telekom Conference call Ma
Slide 34: Call Minutes
Call Minutes*. Minutes (billion) - 20.0% 80 Jan-Mar 2001 Jan-Mar 2002 68.1 70 60 54.5 50 - 4.0% - 48.8% 40 27.0 26.0 28.4 30 11.6% 20 14.5 9.8 10.9 3.5% 8.3% 10 1.0 1.1 1.9 2.0 0 City/local Long International Fixed-to- Other Total distance mobile services** * In the PSTN = Public Switched Telephone
Slide 35: Call Prices
Call Prices*. Euros per 100 minutes 40 Jan-Mar 2001 35 Jan-Mar 2002 - 5.8% 30 - 7.1% 26.6 25.1 25 20.2 18.7 20 15 - 19.5% - 9.2% 10.4% 10 44.4% 5.3 4.3 3.1 2.8 3.9 4.3 5 2.0 2.9 0 City/local Long International Fixed-to- Services** Total distance mobile total * In the PSTN = Public Switched Telephone
Slide 36: Call Revenues
Call Revenues*. € million 3500 Jan-Mar 2001 - 11.6% Jan-Mar 2002 3000 2,630 2500 2,324 2000 - 12.8% 1500 836 - 10.1% 2.0% - 26.1% 1000 729 524 - 3.9% 495 505 568 471 420 500 207 199 0 City/local Long International Fixed-to- Other Total distance mobile services** * In the PSTN = Public Switched Telep
Slide 37: T-Systems
T-Systems ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 37
Slide 38: Financials
Financials. Revenues in € billion* Q1/02 Q1/01 Trend SL** Systems Integration **** 0.5 0.4 SL Computing Services/ Desktop Services*** 1.0 0.9 of which Computing Services 0.6 0.6 of which Desktop Services 0.4 0.3 SL Network Services 1.4 1.5 SL Hosting & ASP Services 0.04 0.03 Consolidation -0.3 -0.2
Slide 39: SL Systems Integration
SL Systems Integration.* Q1/02 Q1/01 Trend Revenues (€ billion)** 0.5 0.4 of which international 0.1 0.1 of which intragroup 0.22 0.21 Cost structure: personnel costs 55 % 52 % goods & services 26 % 29 % EBITDA margin 8% 5% Depreciation (€ billion) 0.02 0.02 Employees 14,471 13,310 Operational figur
Slide 40: SL Computing Services
SL Computing Services/Desktop Services. - of which Computing Services. Q1/02 Q1/01 Trend Revenues (€ billion)* 0.6 0.6 of which international 0.1 0.1 of which intragroup 0.3 0.3 Cost structure: personnel costs 26 % 26 % goods & services 23 % 25 % EBITDA margin 25 % 26 % Depreciation (€ billion) 0.1
Slide 41: SL Desktop Services
SL Computing Services/Desktop Services. - of which Desktop Services. Q1/02 Q1/01 Trend Revenues (€ billion)* 0.4 0.3 of which international 0.1 0.1 of which intragroup 0.2 0.2 Cost structure: personnel costs 15 % 15 % goods & services 26 % 28 % EBITDA margin 6% 2% Depreciation (€ billion) 0.0 0.0 Em
Slide 42: SL Hosting & ASP Services
SL Hosting & ASP Services. Q1/02 Q1/01 Trend Revenues (€ billion)* 0.04 0.03 of which international 0.00 0.00 of which intragroup 0.01 0.01 Cost structure: personnel costs 27 % 44 % goods & services 31 % 35% EBITDA margin break even break even Depreciation (€ billion) 0.00 0.00 Employees 751 837 Ope
Slide 43: SL Network Services
SL Network Services. Q1/02 Q1/01 Trend Revenues (€ billion)* 1.4 1.5 of which international 0.07 0.06 of which intragroup 0.3 0.3 of which CS international 0.3 0.4 of which Media Broadcast 0.1 0.1 of which Data Solution 0.5 0.5 of which Voice Solution 0.2 0.2 Cost structure: personnel costs 6% 5% go
Slide 44: T-Mobile
T-Mobile ===!"§ Deutsche Telekom Conference call May 22, 2002 Page 44
Slide 45: TMO Group. 2001 quarterly subscriber data
TMO Group. 2001 quarterly subscriber data (majorities only). million Q1/01 Q2/01 Q3/01 Q4/01 FY/00* FY/01 Q1/02 Subscribers (end of period) – Europe 31.917 35.842 37.032 38.456 29.506 38.456 38.786 – US 5.952 6.325 6.993 6.993 7.501 – Total 31.917 41.794 43.357 45.449 29.506 45.449 46.307 Contract s
Slide 46: T-Mobile Germany. Key operating data
T-Mobile Germany. Key operating data.* million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Penetration 63.9% 67.7% 68.2% 68.6% 68.6% n.a. Subscribers (end of period) 20.858 22.082 22.555 23.081 23.081 23.038 – Contract 9.621 10.086 10.375 10.669 10.669 10.724 – Prepay 11.237 11.996 12.180 12.412 12.412 12.3
Slide 47: T-Mobile Germany. Key financial data
T-Mobile Germany. Key financial data.* million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Net revenues 1,658 1,746 1,794 1,877 7,075 1,796 EBITDA 447 628 716 757 2,549 738 EBITDA margin 27.0% 36.0% 39.9% 40.3% 36.0% 41.1% SAC (€) 134 128 116 95 120 96 – Contract 203 208 187 155 189 172 – Prepay 89 60 40 46
Slide 48: T-Mobile UK. Key operating data
T-Mobile UK. Key operating data.* million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Penetration 72.0% 75.4% 77.7% 80.6% 80.6% n.a. Subscribers (end of period) 8.981 9.428 9.929 10.422 10.422 10.750 Contract 1.725 1.623 1.630 1.695 1.695 1.928** Prepay 7.256 7.804 8.298 8.726 8.726 8.822 Market Share 20.7%
Slide 49: T-Mobile UK. Key financial data
T-Mobile UK. Key financial data.* € million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Net revenues 774 780 852 872 3,279 920 EBITDA 101 128 139 169 537 199 EBITDA margin 13.0% 16.5% 16.3% 19.4% 16.4% 21.6% SAC (€) 90 67 98 73 82 158 – Contract 417 247 391 300 343 412 – Prepay 35 42 45 37 39 56 ARPU (€)***
Slide 50: T-Mobile Austria. Key operating data
T-Mobile Austria. Key operating data.* million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Penetration 71.9% 73.2% 74.0% 75.5% 75.5% n.a. Subscribers (end of period) 2.078 2.089 2.093 2.102 2.102 1.985 – Contract 0.883 0.884 0.891 0.891 0.891 0.878 – Prepay 1.195 1.205 1.202 1.211 1.211 1.107 Market Share 3
Slide 51: T-Mobile Austria. Key financial data
T-Mobile Austria. Key financial data.* million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Net revenues 259 258 260 274 1,052 254 EBITDA 59 57 58 87 261 77 EBITDA margin 22.9% 21.9% 22.4% 31.8% 24.8% 30.3% SAC (€) 112 146 129 105 122 72 – Contract 186 244 193 154 194 123 – Prepay 54 65 75 62 63 45 ARPU (€)
Slide 52: T-Mobile Czech Republic. Key operating data
T-Mobile Czech Republic. Key operating data.* million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Penetration 47.0% 52.0% 57.9% 67.7% 67.7% n.a. Subscribers (end of period) 2.074 2.243 2.455 2.850 2.850 3.033 – Contract 0.405 0.414 0.419 0.448 0.448 0.486 – Prepay 1.669 1.829 2.036 2.403 2.403 2.547 Market
Slide 53: T-Mobile Czech Republic. Key financial data
T-Mobile Czech Republic. Key financial data.* ** € million Q2/01 Q3/01 Q4/01 FY/01*** Q1/02 Net revenues 148 158 180 487 163 EBITDA 68 53 63 **** 155 76 EBITDA margin 45.6% 33.8% 35.0% 31.9% 46.6% SAC (€) 22 18 41 30 34 – Contract 42 56 57 53 35 – Prepay 19 15 39 28 34 ARPU (€) 19 19 18 18 14 – Cont
Slide 54: VoiceStream. Key operating data
VoiceStream. Key operating data.* million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Penetration 44.4% 45.7% 45.7% n.a. Subscribers (end of period) 5.498 5.953 6.325 6.993 6.993 7.501 – Contract 3.856 4.222 4.589 5.173 5.173 5.729 – Prepay 1.642 1.731 1.736 1.820 1.820 1.772 Market Share 6.4% 6.6% 6.7% 7.1
Slide 55: VoiceStream. Key financial data (US GAAP)
VoiceStream. Key financial data (US GAAP)*. US$ million Q1/01 Q2/01 Q3/01 Q4/01 FY/01 Q1/02 Net revenues 879 972 1,026 1,122 3,998 1,176 EBITDA - 133 - 138 - 134 - 67 - 471 75 ** EBITDA margin - 15.1% - 14.1% - 13.0% - 5.9% - 11.8% 6.4% CPGA (US$) 311 342 362 322 333 291 ARPU (US$) – Blended 50 49 4
Slide 56: VoiceStream. Key financial data (German GAAP)
VoiceStream. Key financial data (German GAAP).* ** € million June/01 Q3/01 Q4/01 FY/01 Q1/02 Net revenues 370 1,145 1,284 2,798 1,357 EBITDA -63 -124 -71 -258 106 EBITDA margin -17.0% -10.8% -5.5% -9.2% 7.8% SACs (€) – Blended 257 278 261 261 234 – Contract 321 337 306 314 285 – Prepay 147 173 175 1