Telefónica Deutschland - Investor presentation August 2021 - Telefónica Deutschland
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Telefónica Deutschland Investor presentation August 2021
Disclaimer
This document contains statements that constitute forward-looking statements and expectations about Telefónica Deutschland Holding AG (in the following “the Company” or
“Telefónica Deutschland”) that reflect the current views and assumptions of Telefónica Deutschland's management with respect to future events, including financial projections and
estimates and their underlying assumptions, statements regarding plans, objectives and expectations which may refer, among others, to the intent, belief or current prospects of the
customer base, estimates regarding, among others, future growth in the different business lines and the global business, market share, financial results and other aspects of the
activity and situation relating to the Company. Forward-looking statements are based on current plans, estimates and projections. The forward-looking statements in this document
can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking
nature of discussions of strategy, plans or intentions. Such forward-looking statements, by their nature, are not guarantees of future performance and are subject to risks and
uncertainties, most of which are difficult to predict and generally beyond Telefónica Deutschland's control, and other important factors that could cause actual developments or
results to materially differ from those expressed in or implied by the Company's forward-looking statements. These risks and uncertainties include those discussed or identified in
fuller disclosure documents filed by Telefónica Deutschland with the relevant Securities Markets Regulators, and in particular, with the German Federal Financial Supervisory
Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin). The Company offers no assurance that its expectations or targets will be achieved. Analysts and investors, and
any other person or entity that may need to take decisions, or prepare or release opinions about the shares / securities issued by the Company, are cautioned not to place undue
reliance on those forward-looking statements, which speak only as of the date of this document. Past performance cannot be relied upon as a guide to future performance. Except
as required by applicable law, Telefónica Deutschland undertakes no obligation to revise these forward-looking statements to reflect events and circumstances after the date of
this presentation, including, without limitation, changes in Telefónica Deutschland’s business or strategy or to reflect the occurrence of unanticipated events. The financial
information and opinions contained in this document are unaudited and are subject to change without notice. This document contains summarised information or information that
has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information, including if it is necessary, any fuller
disclosure document published by Telefónica Deutschland. None of the Company, its subsidiaries or affiliates or by any of its officers, directors, employees, advisors,
representatives or agents shall be liable whatsoever for any loss however arising, directly or indirectly, from any use of this document its content or otherwise arising in connection
with this document. This document or any of the information contained herein do not constitute, form part of or shall be construed as an offer or invitation to purchase, subscribe,
sale or exchange, nor a request for an offer of purchase, subscription, sale or exchange of shares / securities of the Company, or any advice or recommendation with respect to
such shares / securities. This document or a part of it shall not form the basis of or relied upon in connection with any contract or commitment whatsoever. These written materials
are especially not an offer of securities for sale or a solicitation of an offer to purchase securities in the United States, Canada, Australia, South Africa and Japan. Securities may
not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended, or an exemption there from. No money, securities or other
consideration from any person inside the United States is being solicited and, if sent in response to the information contained in these written materials, will not be accepted.
2
Key reasons to invest
Germany Established Player Operational Value Proposition
Attractive and dynamic Leveraging Excellence Attractive shareholder returns
telecoms market economies of scale on strong fundamentals
Digital transformation
drives growth
3
Economic recovery expected in Germany w/ gradual lifting of C-19
measures since May
GDP Growth1
[%]
Current Trends
• Dynamic yet rational mobile market
• Data growth with continued CAGR of >50%
Unemployment Rate1
[%] • Soft convergent market environment
• 3 strong mobile networks
Consumer Spend1
[EUR bn] Future Trends
• 5G use cases & demand to accelerate
• Fixed-Mobile-Substitution becoming increasingly relevant
Business Climate Index2 99.7 • Potential 4th urban MNO
[2015 = 100, seasonally adj.] 90.7
• 3 integrated (mobile + fixed) players
2019 2020e May 2021
1 ifo 2
Before Covid-19 After Covid-19 (Jun 21) ifo (Apr 21), forecast by tradingeconomics.com 4
Competitive Environment
Rational & balanced market1 Market development2
Mobile service revenues2 (EUR bn)
-0.7% +0.8%
17.7 17.6 17.7
2019 2020e 2021e
Fixed BB retail revenues2 (EUR bn) Fiber Cable DSL
0.4% 2.7%
8.9 8.9 9.1
0.3 0.3 0.4
• Rational market following 4 to 3 consolidation 1.8 1.8 2.0
• Tiered mobile portfolios enabling data monetisation 6.8 6.8 6.8
2019 2020e 2021e
5
Successful first half of ‘investment for growth’ programme
Updating FY21 outlook to ‘slightly positive’ yoy growth
We democratise access to the sustainable digital future to create a better everyday life for everyone
Boost Revenues H1 2021
Outperform the market
Revenue yoy OIBDA1 yoy Capex/Sales
Mobile Growth
+2.9% +8.2% 13.6%
Gaining rural share & +1.9%2 +3.5%3
reinforcement in urban
Net Adds4 O2 Churn5
Smart Bundling (incl. FMS) ~594k 0.9%
Capturing value & reducing churn
Attack in B2B
Targeting fair SME share ESG at the heart
of our strategy National Roaming Agreement
1 Adjusted for exceptional effects 2 Excl. non-recurrent special factors 3 Excl. non-recurrent special factors & received social security payments 4 O2 Postpaid excl. 124k M2M 5 O2 Postpaid
6
Swift business recovery following re-opening of economy in Q2 21
O2 GROSS ADDS O2 CHURN PREPAID TOP-UP BOOKINGS
Channel mix At historic lows Recovered
Gradual recovery of int’l roaming revenues since phased re-opening
>50% of Q2 19 level
(pre-pandemic nonEU)
7
ESG at the heart of TEF D’s strategy throughout the pandemic
Launch of Responsible Business Plan 2025 – Digital. Sustainable. Connected.
ESG strategy fully integrated in overall business strategy Responsible Business Plan 2025
✓ RBP goal: Creation of sustainable value and minimisation of risks
✓ RBP 2020: Achieved key targets
✓ RBP 2025: Ambitious future targets incl. climate protection strategy
2004 2021
2004 2005 2012 2012 2015 2019 2020 2020
ISO 14001 CR-Report Launch Launch ISO 50001 Sustainability ESG Climate
certification corporate Eco Index certification linked loan DAX50 protection
accelerator strategy 2025
Wayra
2016 – 2020 2021 – 2025
RBP 2020 RBP 2025
8Awarded ‘very good’ rating for mobile and fixed networks
Mobile network equalisation
2017 2018 2019 2020
Broadest fixed-line footprint via TAA
‘very good’ 3rd
‘very good’
sequential
‘very good’
2019 2020 2021
• Added Tele Columbus to TAA portfolio
• Launched first municipality on UGG fibre network
9Rapid 5G rollout – data growth accelerated with highspeed mobile network
O2 5G Network rapidly expanding Data traffic more than doubling every 2 years
10GB
avg. usage1
5G in more
than 80 cities
1O Free Postpaid
2
Normalised C/S following completion of
’investment for growth’ programme
Whitespot sharing
More than 2.000 Greyspot sharing
5G antennas
on 3.6 GHz spectrum Mobile pact
MIG
10Updating FY21 outlook to ‘slightly positive’ yoy growth
FY21 outlook1 Actuals H1 21 Updated FY21 outlook1
+2.9%
Revenues Flat to slightly positive yoy 3,636 3,743 Slightly positive
+1.9%3 H1 20 H1 21
+8.2%
Broadly stable to
OIBDA2 slightly positive
yoy 1,085 1,173 Slightly positive
+3.5%4 H1 20 H1 21
C/S 17-18% 13.6% 475 508 phasing 17-18%
H1 20 H1 21
Virtual AGM on 20 May – paid dividend of EUR 0.18/share
1Including regulatory & C-19 impacts 2 Adjusted for exceptional effects 3 Excl. non-recurrent special factors 4 Excl. non-recurrent special factors & received social security payments
11Sustained focus on own customers FY21 – key operational activities
Mobile Growth
Business Consumer Gaining rural share & Improve products and services along
reinforcement in urban key NPS drivers
Mass-
market Focus on important brand KPIs to drive
future business with highest efficiency
Smart Bundling (incl. FMS)
Service
Provider &
MVNO
Market
Share Capturing value & Leverage enriched TAA portfolio
Manage
reducing churn
ARPU
Encourage willingness-to-pay and
Churn
No-frills enhance loyalty
Leverage momentum to gain B2B
Reseller & Ethnic Attack in B2B market share
Targeting fair SME share
Enhance network CEX & expand 5G footprint
12Strong operational and financial momentum with focus on profitable growth
Revenues (EURm) Accelerating MSR trends (EURm)
+4.3%1
+5.7% +3.5%1 -3.3% +0.0% +1.3% -0.3% +7.4%
yoy
MSR 1,275 1,361 1,359 1,307 1,370
yoy
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
+14.4% -2.1% +4.4% +2.3% -1.2%
1,893 Handset
451
yoy 322 311 347 318
Q2 21
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
+4.3% +6.7% +7.0% +3.9% +3.5%
Fixed 193 198 202 200 200
yoy
MSR Handset Fixed Other
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
1 Excl. non-recurrent special factors
13Excellent trading momentum supported by online channels
Mobile Net Adds (k) Postpaid (ex M2M) M2M
Fixed Net Adds (k)
O2 Postpaid
Churn 1.1% 1.0% 1.0% 1.0% 0.8% Churn 0.8% 0.9% 0.9% 1.0% 0.9%
490 455
308 13
236 262 10
435 374 6
158 261 220 -1
-7
78 47 55 42 82
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Mobile Postpaid ARPU (EUR) Postpaid ARPU (ex M2M) O2 postpaid ARPU Fixed ARPU (EUR)
O2 Postpaid ARPU ARPU
yoy -1.3% +0.6% yoY +1.7% +2.4% +3.4% +0.7% +1.6%
+0.5% ex roaming
23.8 23.7 23.9 23.9 24.2
13.3 13.9 13.6 13.2 13.6
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
14Strong OIBDA growth
Q2 2021 (EURm) OIBDA1 (EURm)
28
-557
-145
1,893 -609
595 639 612
552 562
2
612
Revenue Other Supplies Personnel Other Exceptional OIBDA adj. Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Income3 expenses expenses4 effects5 for
exceptional OIBDA +10.8%
effects yoy -5.1% +0.8% +3.2% +5.5%
+3.6%2
1 Adjusted for exceptional effects
2 Excl. non-recurrent special factors & received social security payments
3 Adjusted for capital gains/losses related with the sale of assets OIBDA
4 Includes Group fees and impairment losses in accordance with IFRS9 margin 30.9% 31.8% 31.6% 30.3% 32.3%
5 Mainly restructuring expenses
15FCF dynamics reflect usual seasonality with FCFaL already positive in H1 –
underpinning solid financial position
EURm WC movements -253
3
-508
1.157 9
-158 -45 -59 -7 -10 382 -368 14
OIBDA Net effect from CapEx ex CapEx Prepayments Restructuring Other WC Equity Others FCF pre Lease FCFaL
sale of assets spectrum1 payables1 movements investments dividends & payments
spectrum
payments2
Leverage4 (EURm)
1.6x
53 535
1.4x 131 21
-7
-14
3,168 3,888
Net Debt3 FCFaL Lease liabilities/ROU Spectrum Equity Others Dividend Net Debt3
31.12.20 payment investments 30.06.2021
1 Excluding additions from capitalised right-of-use assets and investments in spectrum 2 FCF pre dividends & spectrum payments is defined as the sum of cash flow from operating activities & cash flow from investing activities
3 Net financial debt includes current and non-current interest-bearing financial assets and interest-bearing liabilities as well as cash and cash equivalents and excludes payables for spectrum
4 Leverage ratio is defined as net financial debt divided by the OIBDA for the last twelve months adjusted for exceptional effects
16Continuing strong financing profile post dividend payment
Net Financial Debt Financing and Interest Mix1
Committed to maintain Fitch BBB investment grade rating Promissory
Notes Syndicated
Leverage limit under 723 18% Loan Float
1.4x 19% 750
financing policy
Undrawn 25%
31.12. Bond
3,168 15% 47%
2020 600 11%
13% Bilateral
Telfisa 4% 75%
15% RCFs
454
1.6x 5%
510
EIB Loan
30.06. Leverage EIB Loan
3,888 600 Money
2021 150
0.9x headroom Market Fix
200
Liquidity Position Maturity Profile2
754
1.864 388 352
2.512
242 215
97
648 75
Cash & Cash Equivalents Undrawn RCF’s Liquidity
/Loans / Ext. Overdraft 2021 2022 2023 2024 2025 '26-'30 '31+
Money Market Prom. Notes EIB 2016 EIB 2019 Bond
1 Excludes bilateral RCFs. SynLoan maturity max including 2nd extension option 2 Interest mix excludes undrawn facilities17Strong operational and financial momentum drives profitable growth –
updating FY21 outlook to ‘slightly positive’ yoy growth
Excellent trading momentum
Q2 postpaid net additions more than doubling yoy
Accelerating revenue growth
Driven by sustained MSR and fixed revenue momentum
Strong OIBDA growth
Result of improved revenue quality and effective cost management
FCFaL with usual seasonality while already positive in H1
Solid B/S and strong liquidity position, leverage with comfortable headroom to BBB-rating
Updating FY21 revenue and OIBDA outlook to ‘slightly positive’ yoy growth
18Christian Kern Director Investor Relations +49 179 9000 208 christian.kern@telefonica.com Marion Polzer, CIRO Head of Investor Relations +49 176 7290 1221 marion.polzer@telefonica.com Eugen Albrecht, CIRO Senior Investor Relations Officer +49 176 3147 5260 eugen.albrecht@telefonica.com
Appendix
Risk Low: 16.4 (Low) | Exposure Score: 38.2 (Medium) | Management Score: 63.2 (Strong)
Rating: AA
Grade: Prime B- (Good)
FTSE Russel Successfully listed (4.3 of 5 pts)
Successfully listed
Successfully listed (65%)
21Future-proof spectrum set-up to enable best customer experience
private
Utilisation today 4G/5G 4G 2G/4G 2G/4G 3G/4G 4G 5G
4G
2x30 2x30 2x35 1x40 2x75 2x60 2x70 1x50 1x300
Total availability
MHz MHz MHz MHz MHz MHz MHz MHz MHz
50
70
Total spectrum holding
2x10
2x10 90
2x10
2x20 2x20
1&1 Drillisch 2x25
1&1 Drillisch
2x5
Telefónica Deutschland 2x10 2x20
Telefónica Deutschland 2x10 2x10 2x15
2x10 2x15 1x20 90
Vodafone 2x10 2x10 1x20
Vodafone 2x10
2x20 1x25
Deutsche Telekom 2x10 2x10 2x15 1x20 2x15 2x10 1x5
Deutsche Telekom
Frequencies 700 MHz 800 MHz 900 MHz 1,500 MHz SDL 1,800 MHz 2,100 MHz1 2,600 MHz 2,600 MHz TDD 3,500 MHz TDD
Frequencies
Maturity 2019-2033 2010-2025 2017-2033 2015-2033 2010-2025 2010-2025 2010-2025 2010-2025 2019-2040
Maturity
2017-2033 2021-2040
1 From2021, additional 19.2 MHz TDD
From 1 January 2026: 1&1 Drillisch: 2x10 MHz; Telefónica Deutschland Group: 2x10 MHz; Vodafone: 2x20 MHz; Deutsche Telekom: 2x20 MHz 22P&L
Revenue structure (EUR) OIBDA1 (EUR) OIBDA adj. for exceptional effects
Fixed Handset MSR Other revenues
OIBDA
2,023 30.9% 31.8% 31.6% 30.3% 32.3%
1,873 1,850 1,893 Margin
1,790 202
193 198 200 200
311 451 318
322 347
1,361 1,359 1,307 1,370 552.4 595.2 639.3 561.5 611.9
1,275 0
3 11 -4 5
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
OpEx split2 (EUR) CapEx3 (EUR)
Supplies Personnel expenses Other
C/S 14.0% 13.4% 18.2% 12.3% 14.8%
1,442
1,266 1,336 1,333 1,311
368
251 251 280
228
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
1 Adjusted for exceptional effects 2 Includes impairment losses in accordance with IFRS 9 3 Excluding additions from capitalised right-of-use assets 23Mobile KPIs
Postpaid net adds1 (k) Prepaid net adds (k)
208
91
435 -109
374 -247
261 220
158 -366
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Mobile customer base (k) LTE customer base (m)
Postpay ex M2M Prepay M2M
43,517 44,032 44,275 44,428 44,974
1,308 1,355 1,410 1,452 1,534
19,323 19,531 19,283 19,175 19,266
30.8
25.3 26.6 26.5 26.7
22,885 23,146 23,581 23,801 24,175
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
1 excluding M2M 24Mobile KPIs
Postpaid ARPU ex M2M (EUR) Prepaid ARPU (EUR)
13.9 13.6 13.6 5.8 6.4 6.3 6.0 6.3
13.3 13.2
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Churn rate (%)
O2 postpaid Total postpaid (ex M2M)
-0.8%
-1.0% -1.0% -1.0%
-1.1%
-1.0%
-1.3% -1.3%
-1.4% -1.4%
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
25O2 Free unlimited portfolio
O2 Free Unlimited
O2 Free Unlimited Max
O2 Free Unlimited Smart
Basic
Unlimited usage
Max. Speed 2 MBit/s 10 MBit/s 300 Mbit/s
4G 4G / 5G 4G / 5G
Network Flexible contract duration:
monthly contract termination
VOICE/SMS flat
Best-fit by speed-classes
EU Roaming
99 99 99
Monthly fee
24/m contract
29. 39. 59. Future ready with 5G
26O2 Free volume-based portfolio
Price – Value Tip
O2 Free L BOOST: Doubling data and
O2 Free S O2 Free M adding multiple devices
3 GB 20 GB 60 GB
Data volume
225 Mbit/s 225 Mbit/s 300 Mbit/s Flexible contract duration:
Max. Speed monthly contract termination
4G 4G 4G / 5G
Network
VOICE/SMS flat All customer needs supported
by max speed
EU Roaming
99 99 99
Monthly fee
24/m contract
19. 29. 39. Future ready with 5G
27Fixed KPIs
Retail broadband net adds (k) DSL VDSL Fixed accesses (k) VDSL
13 2,245 2,252 2,261 2,254 2,253
6 10
41 34 35
9 10 1,762 1,798 1,807 1,817
1,729
-16 -11
-28 -27 -26 -1
-7
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Fixed retail ARPU (EUR)
23.8 23.7 23.9 23.9 24.2
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
28O2 my Home portfolio – technology agnostic approach
O2 my Home L O22 my Home XL
O2 my Home S O2 my Home M O2 my Home L
O2 my Home S
Max. Speed 10 MBit/s 100 MBit/s 250 MBit/s
Max. Speed 102 MBits/s
Upload MBit/s 50 MBit/s 100
Upload MBit/s
40 MBits/s 250
Upload MBit/s
40 MBits/s
Upload 2 MBits/s Upload 10 MBits/s Upload 40 MBits/s Upload 40 MBits/s
Voice flat to German
Technologyfixed networks
Optional
Voice flat to German
fixed networksHomeBox 2
FRITZ!Box 7490
Optional FRITZ!Box 7590 2.99 mthl 2.99 mthl -
HomeBox 2 2.99
4.99 mthl
mthl 2.99 mthl 2.99
4.99 mthl
mthl - -
FRITZ!Box 7490 4.99
5.99 mthl
mthl 4.99 mthl 4.99
5.99 mthl
mthl -
5.99 mthl
FRITZ!Box 7590 Monthly fee 5.99 mthl 5.99 mthl 5.99 mthl 5.99 mthl
24m contract
99
Monthly fee
24m contract 24.24. 99 99 99
29. 29. 99
34.
34.
99 99
44.44. 99
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