Deutsche Telekom AG · XETR:DTE
Deutsche Telekom — 9M 2022 Earnings Presentation
38 slides from Deutsche Telekom's earnings presentation, November 2022
Slide 1: Deutsche Telekom Investor presentation Nov 2022
Deutsche Telekom Investor presentation Nov 2022
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, dep
Slide 3: 9M 2022 results sector leading growth
9M 2022 results sector leading growth Group • Strong organic service revenue growth +4.0% and adj. Core EBITDA AL growth of +5.9% • FCF AL up +13.9% and adj. EPS growth of +47.4% • Guidance raised for the 3rd time this year • Dividend proposal of 0.70€ per share1 T-Mobile US • Service revenues up 5.
Slide 4: Deutsche Telekom continues to execute on its strategic agenda
Deutsche Telekom continues to execute on its strategic agenda Organic growth Capital allocation/portfolio Shareholder value Adj. EPS >1.75 Strategic review of GD Towers €/share – completed On track 1.22 • Our flywheel works • Proven execution Invest in “leading” fiber & 5G networks… On track and mon
Slide 5: Financials Q3 2022 reported strong growth
Financials Q3 2022 reported strong growth € mn Q3 9M 2021 2022 Change 2021 2022 Change Revenue 26,641 28,979 +8.8% 79,164 84,613 +6.9% Adj. EBITDA AL 9,661 10,481 +8.5% 28,323 30,244 +6.8% Adj. EBITDA AL (excl. US)2 3,890 3,791 -2.5% 11,108 11,046 -0.6% Adj. Net profit 1,313 2,411 +83.6% 4,627 7,094
Slide 6: Financials 9M 2022 organic strong growth
Financials 9M 2022 organic strong growth 9M/22 Adj. EBITDA AL 9M/22 Adj. EBITDA AL2 9M/22 Key Financials growth yoy, organic € mn % growth yoy, organic TMUS Adj. Core EBITDA AL -1.2% Group revenues 0.6% -€226 mn growth of 7.0%1 GER 7,358 3.2% Group service revenues 4.0% +€229 mn EU ex US Service rev
Slide 7: DT has unique growth opportunities
DT has unique growth opportunities United states Europe • Clear 5 G leader • Clear 5G leader • Unique SRMA opportunity Market share SRMA ~40% 5G coverage Q2/22 Growth with ~20% of the US speed upsell Low teens % 93% 37% 2020 2025 EU GER • Unique wireless high speed opportunity • Clear fiber leader H
Slide 8: Financials 2017–2021 consistent growth in key KPIs
Financials 2017–2021 consistent growth in key KPIs Service revenues Adj. EBITDA AL FCF AL % growth yoy, organic % growth yoy, organic € bn >€18 bn in 2024e 7.9% 7.8%1 8.8 7.2% 7.0 6.3 6.3 3.7% 3.5% 4.9% 5.5 4.2% 2.6% 2.6% 1.6% 1.9% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 202
Slide 9: DT ex US strong EBITDA growth outperformance
DT ex US strong EBITDA growth outperformance EBITDA AL adj.: DT ex US vs. Ø Peer1 Ø Peer DTexUS in %, organic growth yoy 6 4.8 4.4 3.7 3.7 4 2.8 2.4 2 1.2 1.0 0 0.8 -0.3 -2 -1.4 -2.6 -4 2017 2018 2019 2020 2021 H1 2022 1 Peer group: 8 European Telco groups (Orange, Telefonica, Vodafone, BT, Telecom
Slide 10: Financials Q3 2022 net debt up on share buyback TM US, and F/X
Financials Q3 2022 net debt up on share buyback TM US, and F/X Net debt excl. leases (AL) (Q3/22 over Q2/22) Leverage ratios € bn • CMD target: back in 2.25 – 2.75x IFRS16 range YE24 109.5 0.2 3.34x 2.79x 106.3 4.8 -2.9 0.6 0.1 0.4 Net Debt FCF AL Dividends Spectrum SBB F/X Effect1 Derivatives Net D
Slide 11: Financials well balanced maturity profile with strong liquidity reserve
Financials well balanced maturity profile with strong liquidity reserve DT (ex US) bonds maturing Ex US liquidity position Credit lines € bn € bn Liquid assets 13.4 3.4 3.2 12.0 1.7 6.0 2.0 Ø 2.4 3.4 0.9 0.9 1.4 2022 2023 2024 2025 Liquidity Maturities Maturities Maturities Total maturities reserve
Slide 12: Operations Review Q3/2022
Operations Review Q3/2022
Slide 13: Networks leading with 5G, FTTH well on track
Networks leading with 5G, FTTH well on track FTTH (1 Gbps) 5G TM US 5G Germany Homes passed Ultra capacity 5G2 % of POPs +3pp 17.3% mn mn POPs +19.0% 12.2 91 94 10.4 250 7.7 210 7.0 3.4 4.5 YE/21 9M/22 YE/21 9M/22 YE/21 9M/22 On track for 2022 and CMD targets Targeting 260m YE 2022 6,000 anten
Slide 14: Customers consistent strong growth
Customers consistent strong growth Mobile net adds Fixed line net adds 000 000 US (postpaid) Broadband 5,486 5,495 716 764 4,459 4,515 585 645 3,620 506 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Ex US (contract)1 TV 2,167 1,689 1,690 1,628 456 1,523 359 343 366 347 2017 2018 2019 2020 2021 2
Slide 15: Customers growing strongly
Customers growing strongly Mobile net adds Fixed line net adds2 000 000 4,601 US (postpaid) 3,745 Broadband 533 Sequential Best in industry 378 improvement in GER and EU 9M/21 9M/22 9M/21 9M/22 Ex US (contract)1 1,401 TV YoY growth driven by 1,063 247 Sequential both Europe and improvement in GER Ge
Slide 16: ESG taking tangible steps towards ambitions
ESG taking tangible steps towards ambitions ENVIRONMENT SOCIAL GOVERNANCE • Emissions: Net zero (Scope 1&2) until 2025, • Diversity1: Increase share of female • Move of Group Corporate Responsibility Net neutrality (Scope 1-3) until 2040 latest, executives to 30% by 2030 (vs 22% in 2022) department
Slide 17: Germany Review Q3/2022
Germany Review Q3/2022
Slide 18: Germany 24th consecutive quarter of EBITDA growth
Germany 24th consecutive quarter of EBITDA growth Revenues (as reported) Adj. EBITDA AL (as reported) € mn € mn +2.8% +3.0% 5,974 6,144 2,462 2,535 Q3/21 Q3/22 Q3/21 Q3/22 Revenue growth (organic) Adj. EBITDA AL (organic) % yoy % yoy 3.4% 3.8% 3.6% 3.7% 2.7% 2.7% 3.0% 3.0% 2.1% 0.8% Q3/21 Q4/21 Q1/2
Slide 19: Germany service revenues: growing across the board
Germany service revenues: growing across the board Total service revenue growth (organic)1 Mobile service revenue growth (organic) Impacted by Lebara % yoy % yoy contract termination 2.7% 2.3% 2.5% 2.1% 2.0% 2.0% 1.8% 1.6% 1.2% 0.6% Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Revenue
Slide 20: Germany FTTH on track with buildout and monetization
Germany FTTH on track with buildout and monetization Progress with FTTH buildout Progress with monetization Homes passed, mn Share of ≥ 100 Mbps contracts Retail broadband ARPA2 % of broadband base €/month 33.0 33.3 34.2 32.5 New Collaborations 25.0 17.6 ~5.4 Own 3.4 10.0 buildout1 2019 2020 2021 20
Slide 21: Germany ongoing strong execution and digitization
Germany ongoing strong execution and digitization Service Digitization Customer satisfaction First contact resolution App penetration E-sales share1 TRI*M % +5% % % 52 55 66 24 25 69% 69% 43 56 61% 19 42 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021 Employee satisfaction Customer compl
Slide 22: Germany consistent growth
Germany consistent growth Total service revenue Adj. EBITDA AL % growth yoy, organic % growth yoy, organic CMD: 2.5–3.0% CAGR 2020–2024 3.7 2.8 2.4 1.8 1.7 1.5 0.8 0.7 0.6 0.1 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 • 2021 positively impacted by non-recurring public sector revenues • 2022
Slide 23: Other segments Review Q3/2022
Other segments Review Q3/2022
Slide 24: T-Mobile US consistent growth leader
T-Mobile US consistent growth leader Key opportunities Service revenue (US GAAP)1 Customer growth % growth yoy, organic Postpaid net adds in mn • SMRA 8.3% • B2B 6.1% 6.3% 6.6% 5.2% • Home internet 2017 2.8 3.6 • Sprint Integration 2017 2018 2019 2020 2021 2018 3.1 4.5 Key advantages Adj. EBITDA (US
Slide 25: T-Mobile US strong financial growth
T-Mobile US strong financial growth Revenues (IFRS) Adj. EBITDA AL (IFRS)2 US$ bn US$ bn -1.0% -0.9% 19.6 19.4 yoy decline in handset 6.8 6.7 yoy decline in handset Other revenues 4.9 4.1 leasing revenues leasing revenues US$0.5 bn1 US$0.5 bn1 Service revenues 14.7 15.3 Q3/21 Q3/22 Q3/21 Q3/22 Servi
Slide 26: T-Mobile US highest postpaid phone growth since merger
T-Mobile US highest postpaid phone growth since merger Total postpaid net additions1 5G EXTENDED RANGEMore than 5G ULTRA CAPACITY AT&T and Postpaid phone net additions1 mn Verizon combined mn Highest since merger 1.8 1.7 0.8 0.9 1.6 1.3 1.3 0.7 0.7 0.6 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q3/21 Q4/21 Q1/22
Slide 27: Europe fastest growing large European telco
Europe fastest growing large European telco FTTH (1 Gbps)1 Total service revenue growth Digitization Organic, % • 1.4 mn additional homes passed in 2021 • App penetration 64% • 7 mn homes YE 21 • Truck Rolls reduced by 200k in 2021 leading 1.8% 1.9% 2.0% to a significant CO2 reduction. 0.4% 0.7% 201
Slide 28: Europe 19th consecutive quarter of organic EBITDA growth
Europe 19th consecutive quarter of organic EBITDA growth Revenues (as reported) Adj. EBITDA AL (as reported) € mn € mn -1.1% -5,3% 2,880 2,848 1.105 1.046 decline driven by sale decline driven by sale of Romania fixed of Romania fixed and Hungarian special tax Q3/21 Q3/22 Q3/21 Q3/22 Revenues (organ
Slide 29: GD/Towers strong growth
GD/Towers strong growth Total sites Austria Recurring rental revenues 000 +0.9k € mn DFMG 40.1 41.0 7.0 7.1 +6.7% 245 261 33.0 33.91 1.2k new build Q3/21 Q3/22 Q3/21 Q3/22 Opex AL per site Adj. EBITDA € 000 € mn +9.1% 2.9 2.9 220 240 EBITDA AL: +40.2% (+9.7% w/o 50mn 230 benefit from 164 discontinue
Slide 30: Systems Solutions turnaround continues
Systems Solutions turnaround continues Revenue drivers Revenue Transformation drivers % growth yoy, organic IDC savings € bn • Public Cloud +19%1 1.1% 0,39 • Digital Solutions +14%1 2021 0,06 • Ongoing legacy decline (MIS -14%1 ) -1.0% -1.1% 2020 0,11 -2.1% • MIS now down to 32% of TSI revenues vs.
Slide 31: Systems Solutions steady recovery
Systems Solutions steady recovery Order entry Revenues Adj. EBITDA AL € bn € mn € mn +6.5% +1.9% +12.2% 2.6 2.8 910 927 83 74 9M/2021 9M/2022 Q3/21 Q3/22 Q3/21 Q3/22 Revenues (organic) Adj. EBITDA AL (organic) % growth yoy % growth yoy 16.5% 16.4% • Revenues stabilizing, helped by growth 14.1% busin
Slide 32: Outlook
Outlook
Slide 33: Inflation exposure multiple safeguards in place, challenges being actively addressed
Inflation exposure multiple safeguards in place, challenges being actively addressed € bn in 2021 Group as % of Rev. Mitigations • US: 2/3 secured via PPAs • GER: Comprehensive multi-year hedging and removal of renewable energy Energy costs 1.5 1.4% surcharge create stable outlook for costs • Scope
Slide 34: Guidance 2022 raised for the third time
Guidance 2022 raised for the third time Adj. Core EBITDA AL (organic) TM US Adj. EBITDA AL (organic) TM US € bn DT Ex US DT Ex US € bn ~36.5 ~37.0 >37.0 ~35.5 ~35.9 >35.9 21.3 ~21.6 ~21.7 22.3 ~22.7 ~22.8 14.2 14.3 14.3 14.2 14.3 14.3 • Guidance raised for T-Mobile US and Orig. Guidance Guidance New
Slide 35: Inflation exposure multiple safeguards in place, challenges being actively addressed
Inflation exposure multiple safeguards in place, challenges being actively addressed € bn in 2021 Group as % of Rev. Mitigations • US: 2/3 secured via PPAs • GER: Comprehensive multi-year hedging and removal of renewable energy Energy costs 1.5 1.4% surcharge create stable outlook for costs • Scope
Slide 36: 9M 2022 main takeaways
9M 2022 main takeaways • TM US: strong merger execution, adj. core EBITDA up 7%, industry-leading CMD targets 2024 customer growth, guidance raised for the 3rd time this year Adj. EPS in €/share • DT ex US: 4.3% organic adj. EBITDA AL growth; Germany 24 and EU 19 successive quarters of organic EBITD
Slide 37: Longer term TSR comparisons
Longer term TSR comparisons 1 Year Performance 3 Year Performance 5 Year Performance 10 Year Performance DT 243% DT 22% DT 40% DT 54% ORA 88% KPN 10% KPN 17% KPN 19% KPN 49% ORA 10% ORA (18%) ORA (9%) VOD 7% TEF 5% VOD (22%) VOD (35%) BT (26%) VOD 1% TEF (36%) BT (43%) BT (24%) BT (40%) TEF (46%) TE
Slide 38: Further questions please contact the IR department
Further questions please contact the IR department Investor Relations Contact details Phone +49 228 181 – 8 88 80 E-Mail [email protected] Contact details for all IR representatives: www.telekom.com/ircontacts IR Webpage IR Twitter Account IR YouTube Channel www.telekom.com/investors www