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Deutsche Telekom. M arch 2005 DT Workshop Nils Paellmann Bernie Scholtyseck

Deutsche Telekom. M arch 2005 DT Workshop Nils Paellmann Bernie Scholtyseck. Disclaimer.

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Deutsche Telekom. M arch 2005 DT Workshop Nils Paellmann Bernie Scholtyseck

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  1. Deutsche Telekom.March 2005DT WorkshopNils PaellmannBernie Scholtyseck

  2. 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 intended to identify forward-looking statements. Forward-looking statements are based on current plans, estimates, and projections, and therefore you should not place too much reliance on them. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control, including, without limitation, those factors set forth in “Forward-Looking Statements” and “Risk Factors” contained in Deutsche Telekom’s annual report on Form 20-F. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom’s actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom does not intend or assume any obligation to update these forward-looking statements. • This presentation contains a number of non-GAAP figures, such as EBITDA and EBITDA adj. for special influences, EBITDA margin, OIBDA, adj., capex, adj. net income, free cash flow, and gross and net debt. These non-GAAP figures should not be viewed as a substitute for our GAAP figures. Our non-GAAP measures may not be comparable to non-GAAP measures used by other companies. To interpret the non-GAAP measures, please refer to the Backup materials accompanying this presentation and the “Reconciliation to pro forma figures” posted on Deutsche Telekom’s investor relations website under www.deutschetelekom.com.

  3. Deutsche Telekom.Today’s agenda • Deutsche Telekom – About us • T-Mobile • T-Com • T-Systems • Deutsche Telekom - Strategy and Outlook 2005

  4. Deutsche Telekom.A global telco with a large US presence. • Europe’s largest integrated telecommunications carrier • 2004 net revenue of €57.9 billion – up 3.7% (organic up 5.8%) • 2004 adj. EBITDA of €19.4 billion – up 5.9% (organic up 7.1%) • 2004 net income of €4.6 billion – up 269.8% • Attractive dividend of €0.62 per share – dividend yield of 4% • Market cap of $86 billion (March 11, 2005) • Listed on NYSE (ticker: DT) • 3 main growth areas: mobile, broadband, and business customers • 77.4 million mobile customers, incl. 17.3 million at T-Mobile USA • 4.2 million net adds at T-Mobile USA in 2004 – No. 2 position in US • 5.8 million domestic DSL lines – No. 1 position in Europe • 248,000 employees worldwide, including 23,500 at T-Mobile USA

  5. Deutsche Telekom.Structure aligned to industry growth areas. • Retail and approx. 2.6 million very small enterprises (mass market) • Wholesale business (national as well as international) • Infrastructure for fixed line

  6. Deutsche Telekom.Highlights 2004 - Robust operational performance. Revenue (reported) (€ bn) Revenue (organic) (€ bn) +5.8% +3.7% 58.6 57.9 55.4 55.8 Adj. EBITDA (reported) (€ bn) Adj. EBITDA (organic) (€ bn) 19.5 19.4 +7.1% +5.9% 18.2 18.3 Percentages calculated on the basis of exact figures. FY 2003 FY 2004

  7. Deutsche Telekom.Highlights 2004 -Free Cash Flow yield and EPS. Free Cash Flow yield1 16.3% 15.6% 8.8% 1 Yield based on average share prices. Earnings per share (€) 1.1 0.3 -5.9 FY 2002 FY 2003 FY 2004

  8. Deutsche Telekom.Leading position in the fastest growing markets in Europe. Mobile subscribers1 (millions) • Market positions of mobile operations at year end 2004:Hungary: #1 Poland: #1Croatia: #1 Slovakia: #2Macedonia: #1 CZ: #2 • DSL customers2 increased by 141% to 265,000 at year end 2004 • Adj. EBITDA margins FY 2004:Matav: 41.7%ST: 46.7%T-HT: 49.1% 21.2 +22% 17.4 Revenue Eastern Europe2 (€ millions) 986 +2.3% 964 FY 2003 Q4/03 FY 2004 Q4/04 1 Mobile operations in Hungary, CZ, Croatia, Poland, Slovakia and Macedonia. 2 Including Matav, Slovak Telecom and T-Hrvatski Telekom.

  9. T-Mobile‘Internet in your Pocket’. ‘Office in your Pocket’ • Hundreds of millions of customers are familiar with the broadband world • The next step is to enable them to replicate what they already do – the way they already do it – when they‘re mobile • Seamless, high speed access. Delivered to date: • Internet Browser for mobile devices • Server presenting content for mobile devices • Fast access • Attractive tariffs Multimedia Net Card BB 7100t SDA BB 7290 BB 7730 Nokia 9300 MDA III

  10. T-MobileThe most highly regarded service company. • TM US was ranked #1 wireless carrier in overall customer satisfaction by J.D. Power • TM Germany was again awarded “Best network in Germany” by Connect for the sixth time in a row • TM US had more than 400,000 BlackBerry users; more than 170,000 sidekick users at the end of 2004 • In Europe T-Mobile had more than 200,000 users of data centric devices (BlackBerry, MDA, data card) at the end of 2004 delivering significantly higher ARPU than average

  11. T-Mobile USA:Superior execution – delivering scale benefits. • Number 2 in net adds in 2004 – 17.3 million customers at YE ‘04 • Net adds up over 30%1 to 4.2 million in 2004 from 3.2 million in 2003 • Blended ARPU2 of $55 in Q4, consistent with Q3 Net revenue3 and adj. EBITDA3 ($ million) +39% +61% FY 2003 FY 2004 • Calculated on the basis of exact figures. • In accordance with US GAAP. • In accordance with German GAAP.

  12. T-Com Re-Invent -Exploit technological leadership. TRIPLE PLAY Push on network innovation: - Powerful and state-of-the-art network - Prepared for NGN1 via overlay platform - VoIP is already available New levels of bandwidth up to 25 MB: - DSL AMs closer to the customer - Planned increase in bandwidth:6 Mbit/s mid 2005 / 25 Mbit/s Pilot WiMAX2 trials to increase DSL coverage Broadcast TV Feeder Network VoD3 + iTV4 DSLAM Set -Top Box (STB) Shopping, Voting, Games... If required, time-shifted TV Fast Internet Copper pair T-Net/ISDN 1 Next Generation Network (NGN) 2 Worldwide interoperability for Microwave Access (WiMAX) 3 Video on Demand (VoD) 4 interactive Television

  13. T-ComThe broadband potential – DSL subs up almost 50%. Broadband customers (millions) • 6.1 million DSL customers at Deutsche Telekom: 5.8 million (incl. resale) in Germany and 0.3 million in CEE • 697,000 DSL net adds in Q4/04 at Deutsche Telekom: 628,000 (incl. resale) in Germany and 69,000 in CEE • 236,000 customers migrated to higher bandwidth offering in Q4/04 (2 or 3 Mbit/s ADSL). 10% of base now in higher bandwidth products • Successful introduction of resale proven by 246,000 DSL lines sold • 315,000 new subs to DSL rate plans at T-Online in Q4/04 6.056 +49% 4.069 FY 2003 FY 2004

  14. T-Com Domestic business -Rebalancing continues. Development of core fixed-line revenues1 (€ million) • Domestic core fixed-line revenues –1.7% yoy in 2004 • Access revenues: up 7.9% yoy in 2004 • Calling revenues: down 13.7% yoy in 2004 • T-Com: adj. EBITDA up approx. 2%2 to € 10.5 billion in 2004 • Calling revenues include only network communication part of revenues, i.e. excluding other services revenues (see also Backup). • Adjusted for the sale of cable in 2003.

  15. T-Systems.2004:IT as clear differentiator and growth driver. IT revenues T-Systems (€ billion) • Strong Order Book of € 13,4 billion demonstrates successful focus on sales • Revenue growth in IT services basically offsets decline in TC revenues 5.848 +4.8% 5.581 TC revenues T-Systems (€ billion) 5.033 -6.8% 4.690 FY 2003 FY 2004

  16. Strategy 2005.Excellence to create shareholder value Excellence • The leading services company in the industry - worldwide • “Customer centricity” - from product development to marketing • Customer perceives Group as one unit • “T” stands for innovation, quality and efficiency Excellenceprogram 2005-2007 Attractivereturn on capital • Profitable growth – Europe’s fastest growing telecommunications company • Aligned to 3 strategic business areas: Broadband/Fixed Network, Mobile Communications and Business Customers • Sustained value creation in all areas of the Group

  17. Outlook 2005.Continuing our strategy of profitable growth. • At least one year for full benefits of restructuring into three strategic units • Adj. EBITDA expected between € 20.7 and 21.0 billion under IFRS • Capex at € 7.5 to 8 billion • Free cash flow expected to be between € 7.5 - 8 billion • Other planned cash outs: • € 1.9 billion Cingular network in California and Nevada (took place in January) • Up to € 2 billion additional spectrum in the U.S. • US$ 255 million already committed in Auction 58 • Estimated maximum of € 2.9 billion T-Online • € 1.6 billion already spent in tender offer • € 2.6 billion dividend • No material change in net debt/adj. EBITDA ratio expected in 2005 • Future development of dividend payments dependent on net profits

  18. Achievements I.Net debt close to the lowest level since privatization. Net debt € bn 70.00 62.8 61.1 57.4 60.00 52.0 46.6 50.00 42.3 38.3 37.9 40.00 35.2 32.9 30.00 20.00 10.00 0.00 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003

  19. Achievements II.Lasting increase in adjusted EBITDA and Free Cash Flow. Adjusted EBITDA and Free Cash Flow € bn

  20. Deutsche Telekom.Highlights 2004 -€ 10.2 billion free cash flow. Cash Capex (€ billion) Free cash flow (€ billion) Net debt (€ billion) 10.2 6.6 50 10.5 46.6 6.4 45 6.1 6.2 6.0 9.0 8.3 6.0 40 35.2 5.8 35 5.6 7.5 5.4 30 5.2 6.0 25 5.0 FY 2003 FY 2004 FY 2003 FY 2004 Dec-03 Dec-04

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