Deutsche Telekom Ag · XETR:DTE

Deutsche Telekom — H1 2004 Earnings Presentation

29 slides from Deutsche Telekom's earnings presentation, Aug 12, 2004

  1. Slide 1: Analyst Meeting. Deutsche Telekom. August 12, 2004

    Analyst Meeting. Deutsche Telekom. August 12, 2004.

  2. Slide 2: H1 2004 Results

    H1 2004. Results. Kai-Uwe Ricke CEO

  3. Slide 3: Disclaimer

    Disclaimer. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “project” and “should ” and similar expressions are intende

  4. Slide 4: Highlights of H1 2004. Strong revenue and subscriber growth

    Highlights of H1 2004. A growth story – strong revenue and subscriber growth. Revenue (organic) (€ bn) Mobile net adds (millions) +7.4% 28.855 +72% 4.9 26.873 2.8 Adj. EBITDA (organic) (€ bn) Broadband net adds (millions) +5.2% 9.476 0.8 +33% 0.6 9.010 H1/03 H1/04 H1/04 Analysts Meeting August 12, 2

  5. Slide 5: Highlights of H1 2004. Net income up by almost two-thirds

    Highlights of H1 2004. A growth story – net income up by almost two-thirds. EBT (reported) (€ bn) „ Improved EBITDA, lower depreciation 2.752 and amortization, and improved net +152% financial results boost EBT 1.092 Net income (reported) (€ bn) +64.5% 1.824 1.109 H1/03 H1/04 H1/04 Analysts Meeting

  6. Slide 6: Agenda 2004. Three growth areas to drive the integrated telco

    Agenda 2004. Three growth areas to drive the integrated telco. T-Brand Growth areas Highest valued Mobile brand among DAX 30 Customer Broadband companies1 Business customers Employees Personnel 1 Source: BBDO Consulting/Professor Bernd Wirtz, 2004. H1/04 Analysts Meeting August 12, 2004 Page 6

  7. Slide 7: Mobile. Profitable growth story continues

    Mobile. Profitable growth story continues. Revenues (€ bn) Subscribers (million) + 12.1%1 12.2 + 16.1%1 65.7 10.9 56.5 Adj. EBITDA (€ bn) Adj. EBITDA pre SACs and SRCs (€ bn) + 14.1%1 5.6 + 10.7%1 3.6 4.9 3.3 1 Calculated on exact figures. H1/03 H1/04 H1/04 Analysts Meeting August 12, 2004 Page 7

  8. Slide 8: Mobile. USA: Key milestone achieved with over 15 million subs

    Mobile. USA: Key milestone achieved with over 15 million subs. Revenues1 ($ bn) Net adds (million) + 41.2%2 5.4 + 48.4%2 2.3 3.8 1.5 EBITDA1 ($ bn) ARPU 3 ($) + 43.2%2 1.2 55 + 3.8% 0.8 53 1 In accordance with German GAAP. 2 Calculated on exact figures. H1/03 Q2/03 3 In accordance with U.S. GAAP. 20

  9. Slide 9: Mobile. Relax tariffs – addressing the ARPU challenge

    Mobile. Relax tariffs – addressing the ARPU challenge. Relax customers Germany (‘000) „ Relax leads to higher voice usage and higher ARPU „ Three-quarters of Relax customers migrated 650 + 390 out of existing customer base „ Customer benefits: „ Price transparency 260 „ Simple and flexible „ Break d

  10. Slide 10: Mobile. Data: the future has already arrived

    Mobile. Data: the future has already arrived. Data revenue w/o sms (€ million) „ In Q2/04 data revenue w/o sms increased to € 158 million by 121% yoy. 350 Driven by: +142.8%1 298 „ Access: € 97 million (+143% yoy) 300 „ Content: € 59 million (+103% yoy) 250 219 „ Non-voice non-sms ARPU increased sig

  11. Slide 11: Broadband/fixed network. Improving revenue trend

    Broadband/fixed network. Improving revenue trend – continued efficiency gains. External revenues T-Com (€ mn)1 Adj. EBITDA T-Com (€ mn)1 6,314 -4.1% -1.1% 1.8% 1.2% 6,123 2,594 2,641 2,592 6,053 6,054 2,561 2003 2003 2004 2004 Q1 Q2 Q1 Q2 1 Adjusted for cable deconsolidation. H1/04 Analysts Meeting

  12. Slide 12: Broadband/fixed network. Strong DSL growth

    Broadband/fixed network. Strong DSL growth. Domestic DSL lines in operation (million) „ Strong DSL line growth in the last half year (+17,5%) +38.2% „ Successful introduction of “1-2-3” 4.7 4.4 broadband initiative in April 2004 in 3.7 4.0 Germany 3.4 „ 7 Resale contracts signed – implementation fro

  13. Slide 13: Business customers. Exploiting the SME potential

    Business customers. Exploiting the SME potential. Business customers Off-the-shelf Solutions Solutions products Mass market Soho Small and medium Large Multinational enterprises enterprises Corporations Old T-Com Old T-Systems H1/04 Analysts Meeting August 12, 2004 Page 13

  14. Slide 14: Personnel Initiative. Successful initiatives and projects started

    Personnel Initiative. Successful Initiatives and Projects started. Vivento as of June 30, 2004 Foundations laid for a future successful development: Transfers into Vivento: 26,400 „ Business lines: Foundation of VTS Call center services (installation unit) and ongoing business Left Vivento1 developm

  15. Slide 15: H1 2004 Financials

    H1 2004. Financials. Dr. Karl-Gerhard Eick CFO

  16. Slide 16: Telekom Group: revenue and adjusted EBITDA

    Telekom Group: revenue and adjusted EBITDA. Strong organic growth. 28,855 (€ million) 28,398 27,211 -338 -457 26,873 F/X Impact1 Deconsoli- 7.4% dations Revenue growth Revenue Pro forma Pro forma Revenue H1 2003 Revenue Revenue H1 2004 H1 2003 H1 2004 9,476 9,368 9,074 -64 -108 9,010 5.2% F/X Impact

  17. Slide 17: Capex, FCF, and net debt

    Capex, FCF, and net debt. € 4.2 billion free cash flow. Capex (€ billion) Free cash flow (€ billion) Net debt (€ billion) 2.6 2.5 4.5 47 46.6 2.4 4.2 2.1 46 2.2 4.0 2.0 4.0 45 1.8 1.6 44 43.3 3.5 1.4 43 1.2 1.0 3.0 42 H1 2003 H1 2004 H1 2003 H1 2004 Dec-03 Jun-04 H1/04 Analysts Meeting August 12, 20

  18. Slide 18: H1 2004 – Cash Flow

    H1 2004 – Cash Flow. Operating Cash Flow increased by almost 1 billion €. € billion H1 2004 H1 2003 FY 2003 Cash generated from operations 9.0 8.0 18.1 Net interest payment - 1.9 - 1.8 - 3.8 Net cash provided by operating activities 7.1 6.3 14.3 Cash outflows from investments in property, plant and

  19. Slide 19: T-Com. Decline in revenue improved

    T-Com. Decline in revenue improved. Total revenue (yoy change in %)1 1.0% -2.6% -3.6% -4.3% -5.1% -5.5% Q2 2004 T-Com Total T-Com Domestic T-Com CEE Q1 2004 1 Adjusted for cable deconsolidation. H1/04 Analysts Meeting August 12, 2004 Page 19

  20. Slide 20: T-Com Domestic. External revenues highlight improving trend

    T-Com Domestic. External revenues highlight improving revenue trend. External revenues T-Com Domestic (€ mn)1 Internal revenues T-Com Domestic (€ mn)1 1,197 5,395 -4.6% -1.5% 5,149 5,168 1,046 5,088 1,028 1,019 931 910 818 2003 2004 Q1 Q2 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 1 Adjusted for cabl

  21. Slide 21: T-Com Domestic. Core fixed line revenues flat

    T-Com Domestic. Core fixed line revenues flat. Development of core-fixed line revenues1 (€ million) „ Domestic core fixed line revenues flat yoy in Q2/04 4000 after –2.2% yoy in Q1/04 „ Access revenues growth: 3500 11% yoy in H1/04 vs. H1/03 3000 „ Calling revenues: down 15% yoy in H1/04 2500 vs. H1

  22. Slide 22: T-Com. Strong efficiency improvements

    T-Com. Strong efficiency improvements. Adj. EBITDA T-Com Domestic1 (€ million) Adj. EBITDA margin T-Com1 +1.3% 4,373 +6.2% 37.8 4,318 35.6 H1 2003 H1 2004 H1 2003 H1 2004 1 Adjusted for cable deconsolidation. H1/04 Analysts Meeting August 12, 2004 Page 22

  23. Slide 23: T-Mobile. Organic growth H1 2003 – H1 2004

    T-Mobile. Organic growth H1 2003 – H1 2004. 12,640 (€ million) 12,181 10,867 -67 -459 10,800 F/X Impact Deconsoli- 17.0% dations Revenue growth Revenue Pro forma Pro forma Revenue H1 2003 Revenue Revenue H1 2004 H1 2003 H1 2004 3,703 3,607 4 3,261 3,257 -96 Deconsoli- 13.6% F/X Impact dations EBITDA

  24. Slide 24: T-Mobile Germany. Margin development in Germany

    T-Mobile Germany. Margin development in Germany. Revenue (€ million) „ Reported EBITDA margin decreased from 41.3% (H1/03) to 37.5% (H1/04) 4,282 „ ARPU impact + 4.7% „ Opex for UMTS rollout 4,089 „ Relax „ Wholesale deal signed for € 68 million „ Additional SACs and SRCs due to higher customer addi

  25. Slide 25: T-Systems. Margin improvements H1 2003 - H1 2004

    T-Systems. Margin improvements H1 2003 - H1 2004. 5,100 (€ million) 5,127 4,982 - 145 Deconsoli- 2.4% dations Revenue growth Revenue Pro forma Revenue H1 2003 Revenue H1 2004 H1 2003 12 662 623 635 Deconsoli- dations 4.3% EBITDA growth Adj. EBITDA Pro forma Adj. EBITDA H1 2003 EBITDA H1 2004 H1 2003

  26. Slide 26: T-Systems. Strong improvement in external revenues

    T-Systems. Strong improvement in external revenues. Revenues (€ million)1 External revenues (€ million)1 3,535 5,100 4,982 3,320 2.4% 6.5% H1 2003 H1 2004 H1 2003 H1 2004 1 On an organic basis. H1/04 Analysts Meeting August 12, 2004 Page 26

  27. Slide 27: H1 2004 – Net income

    H1 2004 – Net income. HY 2004 net income higher than FY 2003. € billion H1 2004 H1 2003 FY 2003 EBITDA 10.7 9.6 18.5 Depreciation and amortization - 6.0 - 6.5 - 12.9 Other taxes - 0.1 - 0.1 - 0.2 Net financial expense - 1.8 - 1.9 - 4.0 - of which net interest expense - 1.8 - 1.9 - 3.8 EBT 2.8 1.1 1.

  28. Slide 28: H1 2004 – Balance sheet

    H1 2004 – Balance sheet. Equity ratio and gearing further improved. € billion H1 2004 FY 2003 H1 2003 Assets 114.2 116.1 122.3 Equity 36.8 33.8 35.0 Net debt 43.3 46.6 53.0 Net debt/adj. EBITDA n/a 2.5 x n/a Gearing1 1.2 x 1.4 x 1.5 x Equity ratio2 32.2% 29.1% 28.6% 1 Net debt divided by shareholder

  29. Slide 29: Outlook 2004. New targets

    Outlook 2004. New targets. „ Earnings before tax expected to be around € 4.2 billion „ Net income expected to be around € 2.5 billion „ Dividend announcement in connection with the Q3 results „ Confirm Group adj. EBITDA of at least € 19.2 billion „ Expect group free cash flow of at least € 7 billion

Deutsche Telekom — H1 2004 Earnings Presentation on 6ix