Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — Investor Day (March 2010)
16 slides from Deutsche Telekom's investor day presentation, March 2010
Slide 1: DT Finance Strategy: Towards Efficiency and Capital Returns
DT Finance Strategy: Towards Efficiency and Capital Returns. Investor Day 2010, Timotheus Höttges
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
Slide 3: Finance supports strategy with strong focus on profitability and shareholder returns
Finance supports strategy with strong focus on profitability and shareholder returns. EQUITY FIX – TRANSFORM – INNOVATE DEBT New Shareholder Improve Leverage Build networks Connected Life Connected Undisputed access performance of One Company and processes Work with Remuneration policy mobile-centri
Slide 4: Strict focus on continuous increase in Return on Capital Employed
Strict focus on continuous increase in Return on Capital Employed. ROCE is Our Key Metric ROCE Drivers Operating ROCE and ROCE (%) * Net Operating Profit After Tax (€ bn) 1 OPEX benchmarks towards peer level 10 7.5 WACC 2 CAPEX prioritization based on value creation +150 bps 0 = 3 Dedicated worki
Slide 5: OPEX: Today No. 1 in domestic savings in the sector – no reason to stop
1 OPEX: Today No. 1 in domestic savings in the sector – no reason to stop. ΔOPEX Domestic Fixed Line Business 2007 – 2009* Achievements Save for Service 2007 – 2009 With overall € 5.9 bn of savings 30% above plan -17.0% Focus on domestic operations -9.7% Sustainable & value creating savings lo
Slide 6: OPEX: Overall €4.2 billion by 2012 with stronger international savings contribution
1 OPEX: Overall € 4.2 billion by 2012 with stronger international savings contribution. Gross Savings (€ bn) Measures Remote provisioning and fault elimination (“Zero Touch”) DT 2.0 4.2 GER Integrated fixed/mobile market communication 2010 2010-2012 Online-billing Simplify service offering
Slide 7: OPEX: Save for Service lays the ground for a profound transformation
1 OPEX: Save for Service lays the ground for a profound transformation of Deutsche Telekom. “Transform” S4S II + overarching functions S4S I Global scope tbd Domestic scope € -4.2 bn Global operations, OPEX & CAPEX Leverage DT scale by e.g.: € -5.9 bn Shape Headquarters IT factory, NT factory
Slide 8: CAPEX shift towards transformation and revenue growth
2 CAPEX shift towards transformation and revenue growth. Strategic Capex shift Efficiency in capital allocation Capex Volume: Capex to fund transformation and innovation process Efficiency leverage: Capex as pre-requisite of Revenue Growth Opex reduction (e.g. automation) Monitoring: Top Manag
Slide 9: oWC: Centralized FCF management and working capital optimization
3 oWC: Centralized FCF management fine-tuning instruments and roll-out of working capital optimization. oWC – Key figures 2008 to 2009 Measures to improve FCF management in 2009 Receivables € bn Centralized FCF management 7.4 Group-wide forecasting tool “FCF on demand” -9% 6.8 installed in 60 en
Slide 10: Portfolio: Consequent portfolio management – no long-term toleration of value destroying assets
4 Portfolio: Consequent portfolio management – no long-term toleration of value destroying assets. Rigorous analysis of status quo Consequent management action Op. ROCE Actual % Shift to more active portfolio management 50 Close monitoring of asset development 30 ROCE = WACC Top-Management foc
Slide 11: Portfolio: Strong execution in establishing new market leader in UK
4 Portfolio: Strong execution in establishing new market leader in UK. Market leadership Customer leadership People leadership 37%+ mobile subscriber based on network, top talents & market share distribution, loyalty & experience best place to work Step change in business model Foundation Efficien
Slide 12: M&A: Focus on portfolio optimization, not expansion
5 M&A: Focus on portfolio optimization, not expansion. Cash synergies 2008 – 2010 p.a. (in € mn)* DT M&A policy JV UK No major acquisitions, focus on existing footprint Synergies Orange NL, Suncom, OTE ~ 1,100 Preference for in-market consolidation ~600 Clear path to full operational control ~
Slide 13: Low impact of tax cash outs on free cash flow
Low impact of tax cash outs on free cash flow. Low taxes compared to peers (2008/09) Tax assets safeguard low cash taxes payout Income Taxes/Revenues Income taxes and cash taxes represent a lower Cash Taxes/Revenues 6.9% percentage of revenues compared to peers 5.5% Cash taxes significantly belo
Slide 14: Equity: 2010 policy shift in shareholder remuneration
Equity: 2010 policy shift in shareholder remuneration. 2009 – Strong dividend yield in peer group* 2010-2012 Shareholder remuneration mix Share buybacks as additional instrument of 7.9% 8.0% shareholder remuneration Investment in an asset with 14.2% FCF yield** 6.4% Right capital allocation de
Slide 15: Debt: Stable net debt despite continuous inorganic growth
Debt: Stable net debt despite continuous inorganic growth. Moderate credit risk compared to European peers* Excellent standing in debt capital markets Average 2009 5-year CDS Credit Risk at lower end of European Telco risk scale 211 as market appreciates less risky portfolio 157 100 96 92 59 201
Slide 16: DT commits to further efficiency push and more value-oriented allocation of capital
DT commits to further efficiency push and more value-oriented allocation of capital. Key priorities Ambition level 2012 1 Shareholder Remuneration € 3.4 bn p.a. 2 Continuous Increase of Return on Capital Employed (ROCE) Increase >150 bps 3 Execute Save for Service € 4.2 bn gross savings 4 Concentrat