Deutsche Telekom. Bond Investor Information December 2016

Transcription

1 Deutsche Telekom Bond Investor Information December 2016

2 andreas puy VP Investor relations 2

3 OUR strategy LEADING EUROPEAN TELCO INTEGRATED IP NETWORKS BEST CUSTOMER EXPERIENCE WIN WITH PARTNERS LEAD IN BUSINESS TRANSFORM PORTFOLIO EVOLVE FINANCIAL TARGETS & EFFICIENCY ENCOURAGE LEADERSHIP & PERFORMANCE DEVELOPMENT 3

4 indirect cost savings will fund investments for the transformation bn bn OPEX AND CAPEX: DIGITAL TRANSFORMATION, IP TRANSFORMATION, PAN-EUROPEAN NETWORK Capex CAPEX: INS NETWORK illustrative BENEFITS STEADY STATE FROM EARLY 2020IES FIN. BENEFITS: OPEX SAVINGS Segments Germany Europe Functional Areas Technology / Platforms Service COMMERCIAL BENEFITS Enlarged fiber and LTE footprint and increased bandwidth for customers Faster time to market Easy to partner 1 Excl. special factors. Measure related effects incl. savings. PanNet w/o transport & access. INS Opex in German fixed network also included 4

5 Financials and Targets 2016: Strong momentum continues, targets re-iterated bn Revenue Adj. EBITDA FCF CAGR % +2-4% +10% 2016 Guidance ($/ : 1.11) Increase Around 21.2 bn 2 Around 4.9 bn 1) CAGRs as per CMD 2015 guidance 2) Of which handset lease and data stash $ 0.7 billion 5

6 LEADING European TELCO: guidance Re-iterated Ongoing execution Customers (9M/16) Demand for fiber in Germany continues unabated 6.1 million German homes with fiber 1.8 million net adds in 9M Growth story in the US continues 6.1 million net adds FY forecast raised for the third time Investments and innovation (9M/16) Further strengthening of spectrum position in the US and Europe USD 4 bn note purchase commitment with TMUS Continued high investments (excl. spectrum) of 8.2 billion (+5.5%) in networks and transformation Ongoing product and technology innovation Financial results (9M/16) Strong growth continues Revenue up 4.2% yoy Adj. EBITDA up 9.4% FCF up 14.0% Net debt/adj. EBITDA at 2.3x down from 2.5x one year ago 300Mbit/s 6

7 german total service revenues: strong performance in mobile fixed impacted by difficult comp Mobile service revenues Fixed line service revenues 1,2 Total service revenues 1,2 Q4/14 +1,8% -2.2% -0.9% Q1/15 +2,8% -2.3% -0.6% Q2/15 +0,1% -2.0% -1.3% Q3/15-0,4% -0.7% 3-0.6% 3 Q4/15-0,4% -1.4% -1.1% Q1/16-1,7% -0.5% -0.9% Q2/16-0,8% 0.4% 4 0.0% 4 Q3/16 +0,2% -1.4% 5-0.8% 5 1) Total service revenues is a sum of fixed line and mobile service revenues. We define fixed line service revenues as fixed network core business revenues less fixed hardware revenues plus wholesale services fixed network revenues.. From Q2/16 onwards, we classify CPEs recurring rent revenues as fixed service revenues, and thus also part of total service revenues. Without this reclassification, fixed line service revenue growth rate would be -1.6% in Q3/16, whereas TSR growth rate would be -1.0% in Q3/16. Old growth rates have not been restated. 2) Percentage changes for Q4/14 Q4/15 not restated 3) Revenue in Q3/15 benefitted from special factor related to settlement agreements concerning charged fees from previous years. Adjusted growth rate at -1.3% for fixed service revenues, respectively -1.0% for total service revenues 4) Revenue in Q2/16 impacted by a negative special factor related to a settlement agreement. Adjusted growth rate at +0.7% for fixed service revenues under definition in Q2/16 (see 1), respectively +0.2% for total service revenues under definition in Q2/16 (see 1) 5) Revenue in Q3/15 impacted by a positive one-off effect in wholesale. Adjusted for this effect, fixed line service revenue trend would have been -0.6%, total service revenue trend in Q3/16 would have been -0.3% 7

8 TMUS: strong growth in all key metrics Revenue and service revenue Net adds US-$ bn +13.1% +17.5% Total revenue Service revenue in 000 Total net adds 2,312 2,062 2,221 1,881 1, Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Branded: Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Postpaid 1,085 1,292 1, Prepay Wholesale Adj. EBITDA and margin (in %) Branded customers: postpaid phone and prepay ARPU US-$ bn % US-$ (US GAAP) Phone Prepay Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 1) Wholesale includes MVNO and machine-to-machine (M2M). Amounts may not add up due to rounding. 8

9 Stephan Wiemann Markus Schaefer SVP Group Treasury VP Debt Capital Markets 9

10 Financial Policy: A balanced approach between equity and bond investors FINANCE STRATEGY IS OUR BALANCED TRAINING PLAN... II EQUITY STRATEGY LEADING EUROPEAN TELCO III DEBT RELIABLE SHAREHOLDER REMUNERATION POLICY INTEGRATED IP NETWORKS BEST CUSTOMER EXPERIENCE WIN WITH PARTNERS LEAD IN BUSINESS UNDISPUTED ACCESS TO DEBT CAPITAL MARKETS DIVIDEND 1 Linked to FCF development Planned floor at 0.50 per share Attractive option: Dividend in kind I VALUE CREATION: ROCE > WACC INFRASTRUCTURE TRANSFORMATION Support fast IP migration and transform network infrastructure COST TRANSFORMATION Reduce indirect cost PORTFOLIO MANAGEMENT Deliver on preferred business model (integrated + B2C/B2B) and value generation RATING A-/BBB NET DEBT/ADJ. EBITDA 2 2.5x EQUITY RATIO 25 35% LIQUIDITY RESERVE covers maturities of coming 24 months 4 RISK MANAGEMENT Maintain low risk country portfolio 1 Subject to necessary AGM approval and board resolution 10

11 FINANCIALS: balance sheet ratios in target corridor bn 30/09/ /12/ /03/ /06/ /09/2016 Balance sheet total Shareholders equity Net debt Net debt/adj. EBITDA Equity ratio 27.0% 26.5% 26.8% 25.8% 26.3% Comfort zone ratios Rating: A-/BBB 2 2.5x net debt/adj. EBITDA 25 35% equity ratio Current rating Fitch: BBB+ stable outlook Moody s: Baa1 stable outlook S&P: BBB+ stable outlook Liquidity reserve covers redemption of the next 24 months 1) Ratios for the interim quarters calculated on the basis of previous four quarters. 11

12 dt gets credit for its prudent financial policy FINANCE STRATEGY IS OUR BALANCED TRAINING PLAN... Operational strength Strong market position in Germany and Europe Strong growth in the US Successful track record in cost reduction with further potential Strong focus on Free Cash Flow Future dividends linked to FCF development Financial discipline Prudent financial policy Well balanced maturity profile Disciplined M&A strategy No share-buy-back program in place Since 2013 dividend in kind saved more than EUR 4.0 bn in cash bps CDS Levels Telefonica Vodafone AT&T BT Orange Verizon Deutsche Telekom EUR bn OTE TMUS DTAG/DTIF Maturity profile 1) > Bonds & Loans 12

13 Funding of TMUS by DT Case by case logic: Win/win for TMUS and DT FINANCE STRATEGY IS OUR BALANCED TRAINING PLAN... DT extended its $4bn commitment from 30 November until 31 May 2017 Significant interest costs savings for DT and for TMUS (TMUS 8-K references to $17mm/ month for themselves) Strict self funding approach changed to case-by-case logic after TMUS has gained financial strengths 13

14 Deutsche Telekom debt Investor Relations team FINANCE STRATEGY IS OUR BALANCED TRAINING PLAN... Stephan Wiemann Senior Vice President Group Treasury Andreas Puy Vice President Investor Relations Markus Schaefer Vice President Debt Capital Markets Christoph Lüttig Debt Capital Markets

15 q&a Session andreas puy Stephan Wiemann markus schaefer VP Investor relations SVP Group Treasury VP Debt capital markets more Information: 15

16 Backup 16

17 Liquidity Position and recent financing measures Liquidity position Q Financing Measures in 2016 Strong liquidity reserve position: EUR 12.9 bn firm bilateral lines available unconditionally committed no MAC clauses diversified: 22 banks 3 year tenor, staggered maturities CPs outstanding EUR 1.0 bn residual amount EUR 11.9 bn Maturities of next 24 months several times covered March: April: Sep.: Oct.: June: EUR 4.5bn bond (4/7/12Y) EUR 0.5bn bond (5Y) USD 2.75bn bond (3/5/7Y) GBP 0.3bn bond (7Y) ~EUR 7.8bn bonds EUR 1.0bn dividend in kind 17

18 RATING: DT, A STABLE CREDIT IN THE TELECOM SECTOR Moody s S&P Fitch DT EU Peers Non- European Peers Long-term rating Baa1 BBB+ BBB+ Outlook Stable Stable Stable Short-term rating P-2 A-2 F2 Rating trends (S&P) 2004 Change November 2016 Deutsche Telekom BBB+ BBB+ BT Group A- BBB+ KPN A- BBB- Orange BBB+ BBB+ Telecom Italia BBB+ BB+ Telefonica A BBB Telekom Austria BBB BBB Vodafone A BBB+ Average A- BBB Verizon A+ BBB+ AT&T A+ BBB+ Telstra AA- A Average A+ BBB+ Deutsche Telekom's rating has been stable over the last few years, whereas the rating of most of our competitors has fallen 18

19 Q3/2016: Financial Highlights mn Q3 9M Change Change Revenue 17,099 18, % 51,369 53, % Adj. EBITDA 5,165 5, % 14,765 16, % Adj. net profit 1,040 1, % 3,154 3, % Net profit 809 1, % 2,308 4, % Adj. EPS (in ) % % EPS (in ) % % Free cash flow 1 1,308 1, % 3,548 4, % Cash capex 2 2,698 2, % 7,803 8, % Net debt 47,868 48, % 47,868 48, % 1) Free cash flow before dividend payments and spectrum investment 2) Excl. spectrum: Q3/15: 115 million; Q3/16: 1,146 million; 9M/15: 3,769 million; 9M/16: 2,250 million 19

20 9M 2016: Highlights Innovation/best networks Entertain mobile TV included in MagentaEINS 2 Gbps LTE speed demonstrated by T-Mobile Austria Efficiency First Pan-Net factory launched in Hungary World s first NB-IoT end-toend Investments ( bn) Cash capex (excl. spectrum) 7.8 Regulation +5.5% 8.2 9M/16 spectrum spend USA Europe 9M/15 9M/16 Total YOY change indirect costs (excl. US) in billion 2015 H1/ Slightly behind last year s run rate due to IP-Migration Nahbereich Green light for vectoring roll-out announced in September Interconnection Ongoing proceedings regarding fixed and mobile interconnection European framework Draft published Roaming Ongoing discussions regarding FUP/wholesale caps 20