Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — FY2007 Earnings Presentation
31 slides from Deutsche Telekom's earnings presentation, Feb 28, 2008
Slide 1: FY 2007 Conference call
FY 2007 Conference call. Deutsche Telekom. February 28, 2008 1
Slide 2: Disclaimer
Disclaimer. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They include, among others, statements as to market potential and financial guidance statements, as well as our dividend outlook. They are ge
Slide 3: FY 2007 Highlights
FY 2007. Highlights. René Obermann, CEO 3
Slide 4: 2007 Highlights: Delivering on what we promised
2007 Highlights: Delivering on what we promised. Target Achieved Adj. Group EBITDA Around €19 billion €19.3 billion Free cash flow Around €6.5 billion (raised from €6 bn) €6.6 billion „Save for Service“ €2 billion gross savings €2.3 billion gross savings Net cost reduction at BBFN €0.9 billion €0.9
Slide 5: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements 2007: DSL retail market share of net adds at 44% – target ratio of 40-45% achieved (FY 2006 18%) Successful retention: 85% of
Slide 6: Deutsche Telekom more than doubles share of DSL new customer business
Deutsche Telekom more than doubles share of DSL new customer business. DSL broadband PSTN lines 1 Broadband retail net add share in % 1 Line losses in ‘000 48 45 Q4‘06 Q1‘07 Q2‘07 Q3‘07 Q4‘07 50 42 42 40 Q4: -537k 40 Q4: 526k 20 7 10 FY: -2.1m 2 FY: 2.0m 500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 600 2006 2007 2 G
Slide 7: We have significantly improved customer service
We have significantly improved customer service. In % Achievements 2007: E20 availability up to 69%, target >65% 100 Service level 20 Target 2008 Deadline compliance up to 82%, target 80% 80 IT stability up to 104 hours, target >100 Order handling time 1.4 days, target 1-2 period Strike Targ
Slide 8: Continued growth in contract customers in Germany
Continued growth in contract customers in Germany. Contract net adds T-Mobile Germany (in 000) Achievements 2007: 962 Contract net adds up more than 20% in 2007 – 385k in Q4 797 Contract churn stable at 1.2% in 2007 – Q4 churn of 1.0% +20.7% Exclusive launch of iPhone in Germany on November 9
Slide 9: Personnel: Restructuring ahead of plan and showing significant cost savings in 2007
Personnel: Restructuring ahead of plan and showing significant cost savings in 2007. 14,400 domestic headcount gross reduction – 11,100 headcount net reduction (-6.9%) in 2007 5,000 FTE reduction in temp work and external contracting (primarily T-Home) in 2007, full impact only to be seen from 2
Slide 10: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Improve competitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements: T-Mobile continues double-digit international revenue growth (12.2% yoy in 2007) and improves international adj. EBITDA (+17.8%
Slide 11: T-Mobile USA: Delivering growth and profitability
Grow abroad with mobile: T-Mobile USA: Delivering growth and profitability. Service revenues (US$ billion) Total revenues (US$) up 12.6% in 2007 Service revenues (US$) up 16.6% in 2007 16.5 Adj. EBITDA margin: 27.8% in 2007, up from 14.1 27.5% in 2006 +16.6% Strong ARPU in 2007: Blended: $
Slide 12: T-Mobile UK: Strong margin improvement
Grow abroad with mobile: T-Mobile UK: Strong margin improvement. Service revenues (€ billion) Total revenues up 7.1% in 2007 Service revenues up 9.2% in 2007 4.4 Adj. EBITDA margin at T-Mobile UK up 2.8pp to 4.0 +9.2% 24.6% yoy in 2007, Q4 margin at 26.1% Strong ARPU in 2007: Blended: €31,
Slide 13: CEE countries: Delivering growth
Grow abroad with mobile: CEE1 countries: Delivering growth. Revenues (€ billion) Total revenues up 9.3% in 2007 Service revenues up 9.8% in 2007 5.6 Adj. EBITDA margin in CEE countries up 1.1pp 5.1 +9.3% to 39.4% yoy in 2007 Contract net adds: 2.0 million in 2007 Strong non-voice % of ARPU
Slide 14: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements: Non-messaging data revenue growth 40.0% to €1.9 billion in 2007 UMTS data volume in Q4 2007 up 61% up from Q3 2007 – 2007 to
Slide 15: Mobilize the Internet
Mobilize the Internet. Europe USA web‘n‘walk users1 (in 000) Non-voice revenue myFaves users (in 000) Non-voice revenue excluding messaging excluding messaging (in € million) (in € million) +71% +42% +572% +38% 3,239 994 4,956 943 701 682 1,890 737 2006 YE 2007 YE 2006 2007 2006 YE 2007 YE 2006 2007
Slide 16: Management update: Focus, fix and grow
Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements: Partnering talks regarding Systems Integration in advanced stage, solution expected over next weeks Major double digit milli
Slide 17: Targets for 2008
6 Targets for 2008. Target Adj. Group EBITDA around €19.3 billion Free cash flow around €6.6 billion Dividend policy maintain attractive dividend policy Broadband retail net adds minimum 45% market share Germany Grow abroad with Mobile 3 million organic net adds for TMUS increase data revenue exclud
Slide 18: FY 2007 Financials
FY 2007. Financials. Dr. Karl-Gerhard Eick, CFO and Deputy CEO 18
Slide 19: Overview Group financials
Overview Group financials. Revenue (€ billion) Adj. EBITDA (€ billion) 62.5 63.6 2 61.3 19.4 19.62 19.3 +1.9% -0.6% [+ 3.6%2] [+0.8%2] 2006 2007 2006 2007 Adj. net Income (€ billion) FCF adj. 1 (€ billion) 3.9 6.6 6.3 3.0 -22.0% +4.5% 2006 2007 2006 2007 1 2006 excl. € 3.3 billion for spectrum capex
Slide 20: BBFN Summary
BBFN Summary. Total revenue (€ billion) Domestic revenue (€ billion) 21.8 24.5 20.1 22.7 -7.4% -8.0% 2006 2007 2006 2007 Adj. EBITDA (€ billion) Domestic adj. EBITDA (€ billion) 7.9 8.7 6.8 7.8 -14.1% -11.2% 2006 2007 2006 2007 FY 2007 Conference call February 28, 2008 20
Slide 21: BBFN Summary – Improved adj. EBITDA in Q4/07
BBFN Summary – Improved adj. EBITDA in Q4/07. Total revenue (€ million)1 Domestic revenue (€ billion) (Excl. Club Internet and Ya.Com) 5,726 5,541 5,609 5,577 5,146 4,948 5,002 4,982 Q1’07 Q2’07 Q3’07 Q4’07 Q1’07 Q2’07 Q3’07 Q4’07 Adj. EBITDA (€ million)1 Domestic adj. EBITDA (€ billion) (Excl. Club
Slide 22: Net Opex savings of €0.9 billion at BBFN Domestic
Net Opex savings of €0.9 billion at BBFN Domestic. Net Opex1 savings of €0.9 billion Gross cost savings 2007 of €1.2 billion: 4.0 € 0.4 billion personnel costs (€ billion) € 0.4 billion IT/Billing € 0.4 billion rent, consulting and other 3.6 3.6 Termination costs reduced by €0.2 billion 0.
Slide 23: Mobile summary
Mobile summary. Customers (million) Total revenue (€ billion) 34.7 35.9 1 119.6 108.5 32.0 +8.4% +10.3% [+12.0%1] 2006 2007 2006 2007 Adj. EBITDA (€ billion) International adj. EBITDA (€ billion) 11.01 8.21 10.7 7.9 9.9 6.7 +8.4% +17.8% [+11.4%1] [+22.3 %1] 2006 2007 2006 2007 1 Assuming constant F/
Slide 24: Business Customers summary
Business Customers summary. Total revenue (€ billion) External revenue (€ billion) 12.9 9.3 12.0 9.0 -6.9% -3.5% 2006 2007 2006 2007 International revenue (€ billion) Adj. EBITDA (€ billion) 2.5 1.3 1.1 2.3 +7.1% -17.7% 2006 2007 2006 2007 FY 2007 Conference call February 28, 2008 24
Slide 25: Save for Service – gross savings and opex development
Save for Service – gross savings and opex development. Cost base development1 1.9 2007 “Save for Service” (S4S) target with -2.3 €2.3 billion overachieved Thereof €1.2 billion BBFN, €0.5 billion 1.2 T-Mobile, €0.2 billion Business 1.2 -0.8 44.3 customers and €0.3 billion GHS 40% of cost saving
Slide 26: 2007 – Free cash flow
2007 – Free cash flow. € billion 2007 2006 EBITDA (reported) 16.9 16.3 Non cash items and others - 0.3 0.0 Change in working capital and accruals - 0.6 1.9 Income taxes 0.2 - 1.2 Cash generated from operations 16.2 17.0 Incl. Restructuring payments - 1.7 - 0.7 Net interest payment - 2.5 - 2.8 Net ca
Slide 27: 2007 – Income taxes
2007 – Income taxes. € billion 2007 2006 Cash income taxes 0.2 - 1.2 Reported income taxes - 1.4 1.0 - of which actual taxes - 0.2 - 0.2 - of which deferred taxes - 1.2 1.2 Taxes impacted Adjusted income taxes - 1.7 - 1.3 by non-cash write-down of deferred tax assets in 2007 (€0.7 billion, due to Ge
Slide 28: 2007 – Reported net income
2007 – Reported net income. € billion 2007 2006 EBITDA 16.9 16.3 D&A increased due to PTC & Telering Depreciation and amortization - 11.6 - 11.0 (€0.6 billion) Net financial expense - 2.8 - 2.7 - of which net interest expense - 2.5 - 2.5 2006 better due to EBT 2.5 2.6 gain from sale of Income taxes
Slide 29: 2007 – Adjusted net income
2007 – Adjusted net income. € billion 2007 2006 adjusted adjusted EBITDA 19.3 19.4 Depreciation and amortization1 - 11.2 - 11.0 Net financial expense - 2.8 - 2.9 - of which net interest expense - 2.5 - 2.5 EBT 5.3 5.6 Income taxes - 1.7 - 1.3 Earnings after taxes 3.5 4.3 Minorities - 0.5 - 0.4 Net i
Slide 30: 2007 – Balance sheet ratios
2007 –Balance sheet ratios. € billion 31.12.2007 31.12.2006 Balance sheet total 120.7 130.2 Shareholders‘ equity 45.2 49.7 Net debt 37.2 39.6 Net debt/adjusted EBITDA 1.9x 2.0x Equity ratio1 34.7% 35.8% 1 After dividends. FY 2007 Conference call February 28, 2008 30
Slide 31: Thank you for your attention!
Thank you for your attention! 31