Q1 2008 Conference call. Deutsche Telekom. May 8, 2008 1 - PowerPoint PPT Presentation

Q1 2008 Conference call. Deutsche Telekom. May 8, 2008 1

Disclaimer. This presentation contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They include, among others, statements as to market potential and financial guidance statements, as well as our dividend outlook. They are generally identified by the words “expect,” “anticipate,” “believe,” “intend,” “estimate,” “aim,” “goal,” “plan,” “will,” “seek,” “outlook” or similar expressions and include generally any information that relates to expectations or targets for revenue, adjusted EBITDA, earnings, operating profitability or other performance measures, as well as personnel related measures and reductions. Forward-looking statements are based on current plans, estimates and projections. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control, including those described in the sections “Forward-Looking Statements” and “Risk Factors” of the company’s Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission. Among the relevant factors are the progress of Deutsche Telekom’s workforce reduction initiative and the impact of other significant strategic or business initiatives, including acquisitions, dispositions and business combinations and cost-saving initiatives. In addition, regulatory rulings, stronger than expected competition, technological change, litigation and supervisory developments, among other factors, may have a material adverse effect on costs and revenue development. Further, an economic downturn in Europe or North America, and changes in exchange and interest rates, may also have an impact on our business development and availability of capital under favorable conditions. 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 can offer no assurance that its expectations or targets will be achieved. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. Deutsche Telekom does not reconcile its adjusted EBITDA guidance to a GAAP measure because it would require unreasonable effort to do so. As a general matter, Deutsche Telekom does not predict the net effect of future special factors because of their uncertainty. Special factors and interest, taxes, depreciation and amortization (including impairment losses) can be significant to Deutsche Telekom’s results. In addition to figures prepared in accordance with IFRS, Deutsche Telekom presents non-GAAP financial performance measures, including EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net profit, free cash flow, gross debt and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the chapter “Reconciliation of pro forma figures”, which is posted on Deutsche Telekom’s Investor Relations webpage at www.telekom.com. Q1 2008 Conference call May 8, 2008 2

Agenda. Deutsche Telekom Q1 2008 results conference call . � Introduction Stephan Eger Head of Investor Relations � Q1 2008 Highlights René Obermann CEO � Q1 2008 Financials Dr. Karl-Gerhard Eick CFO and Deputy CEO � Q&A If you like to ask a question, please press ”* 1” on your touchtone telephone Q1 2008 Conference call May 8, 2008 3

Q1 2008. Highlights. René Obermann, CEO 4

Q1 2008 Highlights. � Revenue -3.1% yoy to €15.0 billion – organic growth +0.4% � Adj. EBITDA stable at €4.7 billion – organic growth 1.1% (+3.1% assuming constant F/X). Well on track to achieve FY guidance � FCF at €1.6 billion (from €0.5 billion in Q1/07). Well on track to achieve FY guidance � Net income more than doubled to €924 million – adjusted net income up 33.2% yoy to €750 million � Adj. group personnel expenses down by 6.0% yoy to €3.3 billion � Net group headcount reduction of 9,400 employees (as of 3/31/08 yoy) Q1 2008 Conference call May 8, 2008 5

Management update: Focus, fix and grow. Improve com- petitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements Q1 2008: � DSL retail market share of net adds at 43% – strong DSL retail net adds of 539k � BBFN Germany: � Cost savings continued in Q1: cost base reduced by €0.3 billion � Domestic adj. EBITDA up 0.5% yoy, margin improved to 34.5% from 32.2% in Q1/07 � Successful customer retention: Broadband churn reduced from 1.6% to 1.1% quarter on quarter 1 � Attractive new voice and data tariffs launched by T-Mobile Germany � Robust contract customer growth (+210k) at T-Mobile Germany in Q1/08 � T-Mobile Germany: adj. EBITDA margin improved to 36.7% 1 Monthly churn rate Q1 2008 Conference call May 8, 2008 6

Domestic broadband market. Stabilizing the broadband market share. Broadband lines in million 20.8 19.5 1.3 18.3 17.2 1.0 16.3 0.8 Development Q1/08: 0.7 6.6 0.6 Cable 6.0 � 539k retail DSL net adds 5.4 5.0 4.6 ULL, others � Stabilized retail broadband market share of 3.4 3.5 46% since 3 quarters 3.5 3.5 3.4 BBFN Resale � Approx. 460k line losses excl. ALL-IP migration 9.6 9.0 8.5 8.0 7.6 BBFN Retail � Est. 120k migrations to ALL-IP of resale DSL � 590k ULL net adds Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 DTAG retail net add 42 % 41 % 46 % 43 % 42 % market share* *Net add market share for 2007 adjusted on base of new BNetzA figures, 2008 own estimates. Rounded figures. Q1 2008 Conference call May 8, 2008 7

T-Mobile Germany. Improved margin. Service revenues (€ billion) Achiev evemen ents Q Q1/08: � Improved financial trends: 1.75 1.71 � Service revenues: -2.2% yoy vs. -3.0% yoy in Q1/07 � Adj. EBITDA: -1.1% yoy vs. -11.4% yoy in Q1/07 -2.2% � Adj. EBITDA margin: 36.7% vs. 35.9% in Q1/07 � Contract net adds of 210k in Q1/08 � Contract churn: 1.1% in Q1/08 vs. 1.2% in Q1/07 Q1/07 Q1/08 � Attractive new voice and data tariffs launched, e.g.: Adj. EBITDA (€ million) � Max L (€79.95): 0 Cent/min all German networks 700 692 � MyFaves L (€24.95): 0 Cent/min to 5 numbers in German fixed line and other T-Mobile customers -1.1% � web’n’walk L (€34.95): laptop flat rate � MOU per contract customer up about 6% yoy in Q1/08 – total contract MOU up 13% yoy Q1/07 Q1/08 Q1 2008 Conference call May 8, 2008 8

Management update: Focus, fix and grow. Improve competitiveness Grow abroad Mobilize the Build network- in Germany and with mobile Internet centric ICT CEE Achievements Q1 2008: � T-Mobile improves international revenues (+1.7% yoy in Q1/08; +7.6% organic growth) � T-Mobile improves international adj. EBITDA (+5.8% yoy in Q1/08, +12.7% organic growth) � Strong international contract net adds: 1.2 million in Q1/08 (not including acquired SunCom base) � Acquisition of SunCom (closed on 2/22) added 1.1 million customers to T-Mobile USA base � 3G network launch in New York City on May 5 � CEE Mobile 1 with double-digit revenue and EBITDA growth 1 Poland, Czech Republic, Hungary, Croatia, Slovakia, Macedonia, and Montenegro. Q1 2008 Conference call May 8, 2008 9

Grow abroad with mobile: T-Mobile USA. Continued strong growth despite economic slowdown. Total revenues (US$) up 14.1% in Q1/08 Service revenues (US$ billion) � (organic 12.5%) Service revenues (US$) up 14.5% in Q1/08 � 4.5 Adj. EBITDA margin: 27.9% in Q1/08, up from 3.9 � +14.5% 27.0% in Q1/07 Contract churn: 1.7% in Q1/08 (from 1.9%) � Q1 net increase in customer base: 2.1 million � Q1/07 Q1/08 Net adds: 981k (versus 980k in Q1/07 and 951k � in Q4/07), of which 732k contract Adj. EBITDA (US$ billion) 1.1 million consolidation of SunCom (2/22) � More than 5.5 million myFaves customers � 1.45 1.23 Continuing success of FlexPay � 30.8 million customer base +18.0% � Very strong messaging growth: almost 33 billion � SMS/MMS in Q1/08 from 16 billion in Q1/07 3G launch in New York City on May 5 Q1/07 Q1/08 � Q1 2008 Conference call May 8, 2008 10

Grow abroad with mobile: CEE 1 countries. Delivering double-digit growth. Total revenues up 10.8% in Q1/08 (organic Service revenues (€ billion) � +5.5%) Service revenues up 11.7% in Q1/08 � 1.335 1.195 Adj. EBITDA up 14.5% in Q1/08 (organic +9.1%) � +11.7% Adj. EBITDA margin in CEE countries up 1.4pp to � 42.2% yoy in Q1/08 Contract net adds: 407k in Q1/08 � Strong yoy non-voice revenue growth Q1/08: Q1/07 Q1/08 � Total up 28.3% to €256 million � Adj. EBITDA (€ million) Without messaging up 86.4% to €77 million � Low contract churn in key markets in Q1/08: 592 � 517 PTC: 0.7% � +14.5% T-Mobile CZ: 0.5% � T-Mobile Hungary: 0.9% � T-Mobile HR: 0.6% � Stable cash contribution of €371 million Q1/07 Q1/08 � 1 Poland, Czech Republic, Hungary, Croatia, Slovakia, Macedonia, and Montenegro. Q1 2008 Conference call May 8, 2008 11