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DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012BONN, DECEMBER 6-7, 2012WWW.TELEKOM.COM/CMD12
AGENDA: DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2012THURSDAY, DECEMBER 6th, 2012                                             ...
DISCLAIMER.This compilation of documents contains forward-looking statements that reflect the current views of Deutsche Te...
SAFE HARBOR STATEMENT.Additional Information and Where to Find ItThis compilation of documents also relates to a proposed ...
DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012GROUP STRATEGY & OUTLOOKRENÉ OBERMANN                           5
KEY MESSAGES.        1 Key objectives achieved against industry trend – 2012 guidance reiterated                2 Signifi...
REVIEW 2010 – 2012                     7
FROM TELCO TO TELCO PLUS.     Telco                                                                                       ...
2010 – 2012: ACHIEVEMENTS.   Valuation increase €1.7 bn of DT’s                            “One Company” in Germany and   ...
2010 – 2012: TMUS BUILDING CHALLENGER POSITION.          AT&T                NETWORK                 VERIZON              ...
2010 – 2012: PERFORMANCE TOWARDS AMBITION LEVEL.                                                   GROUP AMBITION LEVEL 20...
2010 – 2012: DT WITH ABOVE AVERAGE SHAREHOLDER RETURNS.                                                     TSR1          ...
MARKET & TRENDS                  13
WE INVEST FOR LONG TERM GROWTH.     Telco                                                                                 ...
INDUSTRY SITUATION AND MAJOR TRENDS. PRESSURES                                                                            ...
REGULATION: NEW PROSPECTS FOR HIGHER INVESTMENT LEVELS.    NEW EU REGULATORY POLICY PROPOSAL1                             ...
MARKET PROJECTIONS. TELECOMMUNICATION                                                                                     ...
TRANSFORMATION OF REVENUE MIX.    DEUTSCHE TELEKOM GROWTH AREAS AND AMBITION 2015       REVENUE MIX DT GROUP             M...
STRATEGY 2013 – 2015                       19
WE INVEST FOR LONG TERM GROWTH.     Telco                                                                                 ...
STRATEGIC OBJECTIVES 2013 – 2015 PER SEGMENT.       GERMANY                 EUROPE                  USA                   ...
TELCO PLUS.                            Seamless                                                                           ...
INTEGRATED NETWORK STRATEGY GERMANY. 1 LTE rollout       +    2 Fiber rollout                                             ...
NETWORK MODERNIZATION US + APPLE PARTNERSHIP. NETWORK MODERNIZATION PROGRESSING RAPIDLY                            APPLE P...
FINANCIAL OUTLOOK                    25
INVESTING INTO DT’S FUTURE – CAPEX AND FCF PROFILES.                                                    CAPEX PROFILE 2012...
INVESTING INTO DT’S FUTURE – FINANCIAL SUMMARY.                         EQUITY                                            ...
2013 GUIDANCE &MID TERM AMBITION                    28
DT GROUP GUIDANCE 2013 AND MID TERM AMBITION.                                        GUIDANCE 2013               MID TERM ...
KEY MESSAGES.        1 Key objectives achieved against industry trend – 2012 guidance reiterated                2 Signifi...
DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012T-MOBILE USA.JOHN LEGERE, PRESIDENT AND CEONEVILLE RAY, CTOBRAXTON CARTER, VICE CH...
KEY MESSAGES.        MetroPCS combination accelerates Challenger strategy.        Clear path toward 100 million LTE POP ...
APPLE PARTNERSHIP.             TMUS is excited to announce it has entered into an agreement with Apple to bring          ...
REVIEW 2010 – 2012                     34
RECAP—JAN 2011 INVESTOR DAY TARGETS BEFORE AT&T DEAL.                                                                     ...
IN 2011 – 12, WE HAVE MADE PROGRESS ACROSS MULTIPLE FRONTS.              2011                                             ...
MARKET TRENDS                37
ATTRACTIVE MACRO CONDITIONS IN US.                            GDP GROWTH                                                  ...
NO-CONTRACT TO DRIVE WIRELESS GROWTH IN US. TOTAL CONNECTIONS                                                             ...
STRATEGY 2013 – 2015RE-INVIGORATE GROWTH                       40
T-MOBILE HAS ACCELERATING MOMENTUM.                                                              APPLE PARTNERSHIP        ...
LAUNCHING LTE ON A STRONG NETWORK FOUNDATION.     AMAZING                                                            MULTI...
DELIVERING STRONG 4G PERFORMANCE AND COVERAGE.                                                                  AMAZING   ...
NETWORK MODERNIZATION IS PROGRESSING RAPIDLY.                                                              AMAZING        ...
MODERNIZATION IMPROVES COVERAGE AND RELIABILITY.                                                                          ...
T-MOBILE AND METROPCS: MIGRATION NOT INTEGRATION.                                                              AMAZING    ...
METROPCS STRENGTHENS STRONG LTE SPECTRUM POSITION.                                                                        ...
METROPCS’ DAS NETWORK TO ENHANCE COVERAGE & CAPACITY.                                                                   AM...
CHALLENGING STATUS QUO WITH A DISRUPTIVE APPROACH.      AMAZING             VALUE                 TRUSTED                 ...
LAUNCHED A SET OF INNOVATIVE SERVICE OFFERINGS.                              VALUE                                        ...
100% MOVE TO VALUE PLANS IN 2013                                                                                        VA...
BEST SMARTPHONES AT THE LOWEST OUT-OF-POCKET PRICES.                                                                VALUE ...
DRAMATICALLY IMPROVING OUR CUSTOMER EXPERIENCE.                                                                      TRUST...
RESULTING IN ONGOING CHURN IMPROVEMENT.                                                           TRUSTED                 ...
AGGRESSIVELY RE-ESTABLISHING T-MOBILE AS A POWERFUL                                                          TRUSTEDMOBILE...
… BECOMING THE UN-CARRIER IN 2013.           We are going after issues that frustrate consumers in this industry, differen...
CONTINUE EXPANSION INTO B2B AND NO-CONTRACT.      AMAZING                                                          MULTI- ...
STRONG BRANDED NO-CONTRACT MOMENTUM,                                                           MULTI-                     ...
TRANSACTION ENHANCES AND ACCELERATES T-MOBILE’S                           MULTI-                                          ...
INVESTING IN MVNO FOR GROWTH AND INCREASED COVERAGE.                                           MULTI-                     ...
INVESTING IN B2B FOR ADDITIONAL AND DIVERSIFIED GROWTH.                                                                   ...
METROPCS ACCELERATES COST TRANSFORMATION.      AMAZING                                                            MULTI-  ...
TRANSFORMING COST STRUCTURE TO ENHANCE CHALLENGER                                                                         ...
CHALLENGER STRATEGY IS ACCELERATING.     AMAZING                                                           MULTI-         ...
FINANCIAL OUTLOOK                    65
2013 GUIDANCE.                                                                                                            ...
MID TERM AMBITION                    67
OUR COMBINED LONG-TERM AMBITION FOR NEWCO. NEWCO WITH METROPCS PROJECTED GROWTH                                           ...
EXPECT METROPCS DEAL TO CLOSE IN H1 2013.                 Regulatory approval process on track, and we expect to get appro...
SUMMARY.              MetroPCS combination accelerates Challenger strategy.              Clear path toward 100 million L...
DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012EUROPE AND TECHNOLOGYCLAUDIA NEMAT                           71
SUMMARY.           1   We achieved a slow down of the historical revenue decline, improved our competitive position as    ...
REVIEW 2010 – 2012                     73
IN 2010 TARGETS FOR SEE AND MOBILE-ONLY COUNTRIES WERE SET –WE ACHIEVED MOST OF THEM.                                     ...
AFTER BUSINESS REVIEW IN 2011, WE IMPLEMENTED A NEWLEADERSHIP PARADIGM.      CHANGED LEADERSHIP PARADIGM – KEY ELEMENTS   ...
1   COMMERCIAL DRIVE:    WE SLOWED DOWN HISTORICAL REVENUE DECLINE.        WE DECREASED REVENUE DECLINE…                  ...
1   COMMERCIAL DRIVE: WE IMPROVED OUR COMPETITIVE POSITION…     REVENUE MARKET SHARE PERFORMANCE IN CORE MARKETS    vs. ma...
1   … WHILE IMPROVING ROCE, AND KEEPING CAPITAL PRODUCTIVITY ON    BENCHMARK LEVEL.        DT EUROPE OP. ROCE1            ...
2   DIFFERENTIATED STEERING CREATES RELEVANT FOCUS.                      NATCO CLUSTERS                                   ...
MARKET TRENDS                80
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Deutsche Telekom Capital Markets Day 7th Dec 2012

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Deutsche Telekom Capital Markets Day 2012 including Group Strategy, USA, Europe, Germany, Systems Solutions and France.
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Transcript of "Deutsche Telekom Capital Markets Day 7th Dec 2012"

  1. 1. DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012BONN, DECEMBER 6-7, 2012WWW.TELEKOM.COM/CMD12
  2. 2. AGENDA: DEUTSCHE TELEKOM CAPITAL MARKETS DAY 2012THURSDAY, DECEMBER 6th, 2012 FRIDAY, DECEMBER 7th, 201217:00 – 17:30 Registration 9.00 – 10:00 Europe (incl. Q&A) Claudia Nemat17:30 – 18:15 Group Strategy and Outlook René Obermann 10:00 – 11:00 Germany Niek Jan van Damme John Legere 11:00 – 11:15 Coffee Break18:15 – 19:00 USA Neville Ray Braxton Carter Systems Solutions Reinhard Clemens 11:15 – 12:15 (incl. Q&A) Klaus Werner19:30 Evening Event @ T-Gallery 12:15 – 13:00 Finance Timotheus Höttges Product & Innovation @ DT Thomas Kiessling 13:00 – 13:30 Lunch 3 parallel breakout Q&A 13:30 – 14:30 sessions for DT Group, Top Management Live webcasted Germany, USAAll dates CET (Bonn); GMT (London) -1 h, ET (New York) -6 h, PST (San Francisco) -9 h 14:30 – 15:00 End 2
  3. 3. DISCLAIMER.This compilation of documents contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect tofuture events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits fromoperations, depreciation and amortization, cash flows and personnel-related measures. You should consider them with caution. Such statements aresubject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control. Among the factors thatmight influence our ability to achieve our objectives are the progress of our workforce reduction initiative and other cost-saving measures, and the impactof other significant strategic, labor or business initiatives, including acquisitions, dispositions and business combinations, and our network upgrade andexpansion initiatives. In addition, stronger than expected competition, technological change, legal proceedings and regulatory developments, amongother factors, may have a material adverse effect on our costs and revenue development. Further, the economic downturn in our markets, and changes ininterest and currency exchange rates, may also have an impact on our business development and the availability of financing on favorable conditions.Changes to our expectations concerning future cash flows may lead to impairment write downs of assets carried at historical cost, which may materiallyaffect our results at the group and operating segment levels. If these or other risks and uncertainties materialize, or if the assumptions underlying any ofthese statements prove incorrect, our actual performance may materially differ from the performance expressed or implied by forward-lookingstatements. We can offer no assurance that our estimates or expectations will be achieved. Without prejudice to existing obligations under capital marketlaw, we do not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise.In addition to figures prepared in accordance with IFRS, Deutsche Telekom also presents non-GAAP financial performance measures, including, amongothers, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net income, free cash flow, gross debt and netdebt. 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 definethese terms in different ways. 3
  4. 4. SAFE HARBOR STATEMENT.Additional Information and Where to Find ItThis compilation of documents also relates to a proposed transaction between MetroPCS Communications, Inc. (“MetroPCS”) and Deutsche Telekom AG (“Deutsche Telekom”) in connection with T-Mobile USA, Inc. (“T-Mobile”).The proposed transaction will become the subject of a proxy statement to be filed by MetroPCS with the Securities and Exchange Commission (the “SEC”). This document is not a substitute for the proxy statement or any otherdocument that MetroPCS may file with the SEC or send to its stockholders in connection with the proposed transaction. MetroPCS’ investors and security holders are urged to read the proxy statement (including all amendmentsand supplements thereto) and all other relevant documents regarding the proposed transaction filed with the SEC or sent to MetroPCS’ stockholders as they become available because they will contain important information aboutthe proposed transaction. All documents, when filed, will be available free of charge at the SEC’s website (www.sec.gov). You may also obtain these documents by contacting MetroPCS’ Investor Relations department at +1 (214)570 – 4641, or via e-mail at investor.relations@metropcs.com. This communication does not constitute a solicitation of any vote or approval.Participants in the SolicitationMetroPCS and its directors and executive officers will be deemed to be participants in any solicitation of proxies in connection with the proposed transaction, and Deutsche Telekom and its directors and executive officers may bedeemed to be participants in such solicitation. Information about MetroPCS’ directors and executive officers is available in MetroPCS’ proxy statement dated April 16, 2012 for its 2012 Annual Meeting of Stockholders. Otherinformation regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filedwith the SEC regarding the proposed transaction when they become available. Investors should read the proxy statement carefully when it becomes available before making any voting or investment decisions.Cautionary Statement Regarding Forward-Looking StatementsThis compilation of documents includes “forward-looking statements” for the purpose of the “safe harbor” provisions within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Any statements made inthis compilation of documents that are not statements of historical fact, including statements about our beliefs, opinions, projections, and expectations, are forward-looking statements and should be evaluated as such. Theseforward-looking statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “views,” “projects,” “should,” “would,” “could,” “may,” “become,” “forecast,” and othersimilar expressions.All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of MetroPCS,Deutsche Telekom and T-Mobile and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to, the possibility that the proposed transaction is delayed or does not close, including due to thefailure to receive the required MetroPCS stockholder approvals or required regulatory approvals, the taking of governmental action (including the passage of legislation) to block the transaction, the failure to satisfy other closingconditions, the possibility that the expected synergies will not be realized, or will not be realized within the expected time period, the significant capital commitments of MetroPCS and T-Mobile, global economic conditions,disruptions to the credit and financial markets, fluctuations in exchange rates, competitive actions taken by other companies, natural disasters, difficulties in integrating the two companies, disruption from the transaction making itmore difficult to maintain business and operational relationships, possible disruptions or intrusions of MetroPCS’ or T-Mobile’s network, billing, operational support and customer care systems which may limit or disrupt their abilityto provide service, actions taken or conditions imposed by governmental or other regulatory authorities and the exposure to litigation. Additional factors that could cause results to differ materially from those described in theforward-looking statements can be found in the MetroPCS’ 2011 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 and other filings with the SEC available at the SEC’s website(www.sec.gov).The forward-looking statements speak only as to the date made, are based on current assumptions and expectations, and are subject to the factors above, among others, and involve risks, uncertainties and assumptions, many ofwhich are beyond our ability to control or ability to predict. Neither MetroPCS’ investors and security holders nor any other person should place undue reliance on these forward-looking statements. Neither MetroPCS, DeutscheTelekom nor any other party undertake any duty to update any forward-looking statement to reflect events after the date of these documents, except as required by law. 4
  5. 5. DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012GROUP STRATEGY & OUTLOOKRENÉ OBERMANN 5
  6. 6. KEY MESSAGES. 1 Key objectives achieved against industry trend – 2012 guidance reiterated  2 Significant investments in Germany and the US  3 Agreement with Apple for T-Mobile US  4 Chance to return to modest growth by 2014 driven by   revenue stabilization in Germany in 2014  return to underlying growth in Europe in 2014  return to growth at TMUS 5 Investments lead to lower FCF. Dividend lowered to a prudent and sustainable level  6
  7. 7. REVIEW 2010 – 2012 7
  8. 8. FROM TELCO TO TELCO PLUS. Telco Telco Plus 2010 2012 2015  Strategy implementation on track  Industry situation  Finance strategy & 3 yr dividend plan  Telco Plus strategy and strategic executed objectives 2013 – 2015 8
  9. 9. 2010 – 2012: ACHIEVEMENTS. Valuation increase €1.7 bn of DT’s “One Company” in Germany and stake – good operational development 3 major markets Improved position after AT&T deal €4.5 bn Save for Service savings FIX TRANSFORM break-up achieved one year ahead of plan Broadband share kept broadly stable, “Telekom IT” established – €1 bn IT 4pp margin enhancement spend reduction by 2015 Growth areas overall mostly on track 3 year dividend program for 2015 ambition Good relative TSR and valuation Corporate innovation priorities performance versus peers INNOVATE INVESTORS defined Strict M&A discipline and good Partnering accelerating deal execution 9
  10. 10. 2010 – 2012: TMUS BUILDING CHALLENGER POSITION. AT&T NETWORK VERIZON TOWER MetroPCS BREAK-UP MODERNIZATION SPECTRUM SWAP TRANSACTION COMBINATION  AWS spectrum and  $4 bn network  Enable more  $2.5 bn proceeds  Creating the leading $3 bn cash investment efficient network  Maintaining value carrier received as break-  Site upgrades and  Higher LTE operational flexibility  Improved spectrum up fee spectrum re-farming coverage position 10
  11. 11. 2010 – 2012: PERFORMANCE TOWARDS AMBITION LEVEL. GROUP AMBITION LEVEL 2012 (COMMUNICATED IN 2010) GROUP WIDE TV CUSTOMERS 5.5 – 6.0 mn GROUP WIDE MOBILE CUSTOMERS >140 mn GROUP WIDE FIXED BROADBAND RETAIL CUSTOMERS >18 mn >€6 bn mobile internet revenues REVENUES German revenues stabilized SAVE FOR SERVICE 2010-2012 €4.2 bn savings, of which €1.8 bn net savings in GER & SEE FCF Increasing from 2010 level of around €6.2 bn ROCE + >150bps €3.4 bn per annum, €0.70 minimum dividend per share SHAREHOLDER REMUNERATION 2010-2012 + up to €1.2 bn share buybacks 11
  12. 12. 2010 – 2012: DT WITH ABOVE AVERAGE SHAREHOLDER RETURNS. TSR1 EV/EBITDA2,3 5YR CDS (BPS)3 RATINGS3,4 SINCE 2010 2010 2012 2010 2012 2010 2012 37.3% 4.7x 4.8x 64 68 A- A- 13.5% 4.8x 4.7x 74 91 BBB+ BBB+ -21.6% 5.1x 3.8x 119 292 BBB BBB -27.0% 6.1x 4.7x 91 264 A- BBB -34.0% 5.3x 3.7x 46 124 A- A- -53.1% 5.7x 4.1x 55 170 BBB+ BBBSource: Company Information, FactSet, Bloomberg, Citi, Standard & Poors.1 Total Shareholder Return 25.02.2010 – 30.11.2012. 2 EV/EBITDA calendarised for 2010 and 2012. 3 End of Jan 2010 and Nov 2012. 4 S&P Ratings 12
  13. 13. MARKET & TRENDS 13
  14. 14. WE INVEST FOR LONG TERM GROWTH. Telco Telco Plus 2010 2012 2015  Strategy implementation on track  Industry situation  Finance strategy & 3 yr dividend plan  Telco Plus strategy and strategic executed objectives 2013 – 2015 14
  15. 15. INDUSTRY SITUATION AND MAJOR TRENDS. PRESSURES OPPORTUNITIES TOUGH ECONOMIC SATURATED MARKETS, IP TRANSFORMATION CHANGING REGULATION GROWTH MARKETS SITUATION CONTINUED PRICE PRESSURE Virtual PBX Efficient QoS Networks 15
  16. 16. REGULATION: NEW PROSPECTS FOR HIGHER INVESTMENT LEVELS. NEW EU REGULATORY POLICY PROPOSAL1 IMPLICATION FOR GERMANY  Reliable regulatory framework until 2020  ULL charges stable until 2020  No cost regulation for optical fiber/NGA networks if sufficient competition and non-discrimination Encouraging comments have to  NGA networks also include VDSL, FTTC – materialize and are a precondition for vectoring also supported by the EU increased network investments “I intend to produce durable regulatory guidance, to apply at least until 2020.” (Neelie Kroes)11 EC Digital Agenda Statement , 07/12/2012, SPEECH 12-552 and MEMO 12-554. 16
  17. 17. MARKET PROJECTIONS. TELECOMMUNICATION INFORMATION & COMMUNICATIONS TECHNOLOGY€ bn € bn 242 6312 217 31 3% Connected Home1 28 158 525 43 18% 84 Mobile Internet 18% Cloud Services & 82 Virtualized IT Traditional 146 -3% 473 communication Conventional 2% 127 ICT 443 2011 2015 2011 2015 p.a. Growth markets Traditional markets1 Incl. TV 2 Intelligent Networks partially included.Source: DT planning for footprint, based on market insights and various external sources (e.g., Gartner, IDC, Analysys Mason). 17
  18. 18. TRANSFORMATION OF REVENUE MIX. DEUTSCHE TELEKOM GROWTH AREAS AND AMBITION 2015 REVENUE MIX DT GROUP MOBILE INTERNET ≈€10 bn 100% 24% CONNECTED HOME ≈€7 bn 40 – 45% ONLINE CONSUMER SERVICES ≈€2 bn T-SYSTEMS EXTERNAL (INCL. CLOUD) ≈€7 bn 76% 55 – 60% INTELLIGENT NETWORKS ≈€1 bn 20101 2015 Growth areas Traditional areas1 Beginning of 2010. 18
  19. 19. STRATEGY 2013 – 2015 19
  20. 20. WE INVEST FOR LONG TERM GROWTH. Telco Telco Plus 2010 2012 2015  Strategy implementation on track  Industry situation  Finance strategy & 3 yr dividend plan  Telco Plus strategy and strategic executed objectives 2013 – 2015 20
  21. 21. STRATEGIC OBJECTIVES 2013 – 2015 PER SEGMENT. GERMANY EUROPE USA DBU T-SYSTEMS Market Unit: Stabilize revenues Return to underlying Reinvigorate growth Generate Profitable growth in 2014 growth in 2014 double-digit growth Telekom IT: Spend reduction 21
  22. 22. TELCO PLUS. Seamless Best-in-class connectivity More innovation Secure cloud customer for the by cooperation solutions experience Gigabit Society Corporate Innovation Priorities Dynamic Cloud Services INNOVATE Intelligent Networks SMB Business Marketplace Continued efficiency improvement, target €2 bn TRANSFORM Telekom IT All IP Transformation K1 & Customer Experience Transformation Europe Mobile Internet Push Europe COMPETE Network Modernization US + Apple Partnership Integrated Network Strategy Germany 22
  23. 23. INTEGRATED NETWORK STRATEGY GERMANY. 1 LTE rollout + 2 Fiber rollout e  LTE: 85% coverage in 2016 v e r ag n d co + Fiber: around 65% coverage oadba  B est br in 2016 with an option towards 80% (subject to 3 Vectoring public co-funding) + Hybrid Devices LTE DSL 4 Hybrid access 23
  24. 24. NETWORK MODERNIZATION US + APPLE PARTNERSHIP. NETWORK MODERNIZATION PROGRESSING RAPIDLY APPLE PARTNERSHIPmn population 225 225 225 4G LTE 200 200 4G HSPA PCS 170 4G HSPA AWS  TMUS has entered into an 100 100 agreement with Apple to bring products to market together next year 0  TMUS 2013 financial guidance incorporates all financials 2012 YE H1 2013 2013 YE related to this agreement 4G (LTE AND HSPA) COVERAGE 24
  25. 25. FINANCIAL OUTLOOK 25
  26. 26. INVESTING INTO DT’S FUTURE – CAPEX AND FCF PROFILES. CAPEX PROFILE 2012 – 2015 Integrated Network Strategy € bn +1.2  Gross Capex FTTC/Vectoring: ≈€6 bn 9.8 9.5  Capex Germany: 8.3  2013: ≈€3.4 bn  2014: ≈€4.1 bn  2015: ≈€4.3 bn 2012e 2013e 2015e Network modernization & PCS integration FCF PROFILE 2011 – 2015 € bn  Network modernization gross Capex: $4 bn 6.4 ≈6 ≈6  Capex TMUS: ≈5  2013: ≈$4.7–4.8 bn  2014: ≈$3.0 bn  2015: ≈$3.1 bn 2011 2012e 2013e 2015e 26
  27. 27. INVESTING INTO DT’S FUTURE – FINANCIAL SUMMARY. EQUITY TELCO PLUS DEBT New Shareholder Undisputed access Remuneration policy COMPETE TRANSFORM INNOVATE to debt capital markets  Dividend1  Rating: A-/BBB  FY 2012: €0.70 VALUE CREATION  Net debt/adj. EBITDA:  FY 2013: €0.50 2-2.5x  EFFICIENCY MANAGEMENT Equity ratio: 25 – 35%  FY 2014: €0.50  Reduce costs by €2 bn2 and increase ROCE to 5.5% (+150bp)  FY 2015: re-visit  Liquidity reserve:  PORTFOLIO MANAGEMENT covering maturities  Attractive option: No big M&A, Strategic review of Scout and EE of coming 24 months Dividend in kind  RISK MANAGEMENT Low risk country portfolio (85% of SotP) STAKEHOLDER MANAGEMENT STAKEHOLDER MANAGEMENT1 Subject to necessary AGM approval and board resolution.2 Cum delta by 2015 vs. 2012 base line. 27
  28. 28. 2013 GUIDANCE &MID TERM AMBITION 28
  29. 29. DT GROUP GUIDANCE 2013 AND MID TERM AMBITION. GUIDANCE 2013 MID TERM AMBITION (EXCL./INCL. PCS) (INCL. PCS) GROUP REVENUES Growing 2014 GROUP Adj. EBITDA ≈€17.4 bn/≈€18.4 bn Growing 2014 GROUP FCF ≈€5 bn/≈€5 bn ≈€6 bn 2015 GROUP Adj. EPS Improvement to ≈€0.8 2015 GROUP ROCE Improvement to ≈5.5% 2015 SHAREHOLDER REMUNERATION POLICY DPS €0.50/DPS €0.50 Review 2015 29
  30. 30. KEY MESSAGES. 1 Key objectives achieved against industry trend – 2012 guidance reiterated  2 Significant investments in Germany and the US  3 Agreement with Apple for T-Mobile US  4 Chance to return to modest growth by 2014 driven by   revenue stabilization in Germany in 2014  return to underlying growth in Europe in 2014  return to growth at TMUS 5 Investments lead to lower FCF. Dividend lowered to a prudent and sustainable level  30
  31. 31. DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012T-MOBILE USA.JOHN LEGERE, PRESIDENT AND CEONEVILLE RAY, CTOBRAXTON CARTER, VICE CHAIRMAN AND CFO, METROPCS 31
  32. 32. KEY MESSAGES.  MetroPCS combination accelerates Challenger strategy.  Clear path toward 100 million LTE POP coverage by mid-year 2013, 200 million by end of year 2013 – with 2x10 MHz in nearly 90% of Top 25 service areas, expanding to at least 2x20 MHz in 90% of Top 25 service areas in 2014+.  TMUS has entered into an agreement with Apple to bring products to market together next year – impact fully included in go forward financials.  Bringing together a set of innovative propositions to fundamentally challenge status quo, TMUS will become the “Un-carrier”.  2013 will be year of investments. This will have a positive impact on EBITDA from 2014 onwards.  Ambition: reconfirming 5-year CAGRs including 3 – 5% revenue growth. 32
  33. 33. APPLE PARTNERSHIP.  TMUS is excited to announce it has entered into an agreement with Apple to bring products to market together next year  Details to be provided closer to device launch  Go forward financials fully reflect estimated impact of Apple products on our business:  Included in 2013 guidance  Accretive to EBITDA and oFCF starting in 2014 33
  34. 34. REVIEW 2010 – 2012 34
  35. 35. RECAP—JAN 2011 INVESTOR DAY TARGETS BEFORE AT&T DEAL. TARGETS 2012E (US GAAP) SERVICE REVENUE ($ BILLION) Increasing 17.2 (-6.7% yoy) CONTRACT DATA ARPU 1,2 $18 $19 SMARTPHONE PENETRATION2 50% 57% CONTRACT CHURN 1,2 1.8% 2.3% EBITDA MARGIN (%) Low 30s 28% OFCF (EXCL. SPECTRUM) ($ BILLION) Increasing 2.2 (-27% yoy)1 Based on branded contract data ARPU and branded contract churn 2 Q1-Q3 actual 35
  36. 36. IN 2011 – 12, WE HAVE MADE PROGRESS ACROSS MULTIPLE FRONTS. 2011 2012 AMAZING 4G  Launched America’s largest 4G network  Cleared PCS spectrum, launched modernization SERVICES  Introduced 25+ 4G smart phones  HSPA 1900 available across major markets by YE VALUE LEADER  Innovated with nation’s only SIM-only contract plans  Launched truly unlimited nationwide 4G data plans TRUSTED  Converted 1,400 stores to new format BRAND  Unveiled refreshed store design  Expanded distribution presence MULTI-  Expanded MVNO partnership SEGMENT  Advanced Walmart partnership PLAYER  Announced MetroPCS deal  Launched Monthly 4G plans  Launched B2B push CHALLENGER  Aggressively re-contracted base BUSINESS  Transformed cost structure MODEL  Announced MetroPCS deal  Launched comprehensive churn programs  On track to achieve $900 million gross savings 36
  37. 37. MARKET TRENDS 37
  38. 38. ATTRACTIVE MACRO CONDITIONS IN US. GDP GROWTH PRIVATE CONSUMPTION GROWTH % % 4 4 USA USA 3 3 Better macro- 2 2 economic EU EU outlook 1 1 in the U.S. 0 0 -1 -1 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015  Economic recovery in the U.S. leads to lower unemployment figures and expected rise in consumer spending  European economy weaker than U.S. following crisisSource: Oxford Economics. 38
  39. 39. NO-CONTRACT TO DRIVE WIRELESS GROWTH IN US. TOTAL CONNECTIONS 2012 – 15 CONNECTIONS GROWTH RATE(end base in millions, including CE) (CAGR %) +4% 453 4% 433 444 417 396 368 322 324 Contract 315 320 305 +2% 289 1% 102 113 122 129 No-contract 79 91 +10% 2012 2013 2014 2015 2016 2017 Western Europe USSource: Ovum Market Forecast, August 2012 Source: Ovum Market Forecast, August 2012 39
  40. 40. STRATEGY 2013 – 2015RE-INVIGORATE GROWTH 40
  41. 41. T-MOBILE HAS ACCELERATING MOMENTUM. APPLE PARTNERSHIP METROPCS COMBINATION TOWER TRANSACTION VERIZON SPECTRUM SWAP NETWORK MODERNIZATION AT&T SPECTRUM 41
  42. 42. LAUNCHING LTE ON A STRONG NETWORK FOUNDATION. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G LEADER BRAND SEGMENT BUSINESS PLAYER MODEL SERVICES Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. LTE affordable hero Un-carrier Brand platform transformation devices Improved B2B growth coverage 42
  43. 43. DELIVERING STRONG 4G PERFORMANCE AND COVERAGE. AMAZING 4G SERVICES NEW YORK T-MOBILE 4G DELIVERING COMPETITIVE PERFORMANCE 16.03  T-Mobile’s 4G (HSPA+) network beat Verizon LTE 6.70 6.51 4.83 average download speeds in more than a third of cities tested CHICAGO 8.19 7.90 9.02  “T-Mobile’s HSPA+ 42 is the 4G dark horse. It’s really fast, covers a lot of the country, and is 2.39 inexpensive”Fastest MobileNetworks 2012 PC Magazine SAN FRANCISCOJune 2012Avg. download 13.04speed in Mbps 7.21 6.81 4.72 T-Mobile VZW ATT Sprint HSPA+ LTE LTE WiMax 43
  44. 44. NETWORK MODERNIZATION IS PROGRESSING RAPIDLY. AMAZING 4G SERVICES$4 BILLION 4G NETWORK EVOLUTION PLAN 4G NETWORK COVERAGE: ACCELERATED LTE COVERAGE million State of the art, Release 10-capable equipment at 37,000 cell sites across T-Mobile’s 4G network 225 225 225 200 200 2x10 MHz LTE will be rolled out to nearly 170 90% of the Top 25 service areas in 2013 100 100 First carrier in North America to broadly deploy radio-integrated antennas 0 UMTS 1900 enabled, 2012 YE H1 2013 2013 YE advanced radio receivers 4G LTE 4G HSPA PCS 4G HSPA AWS 44
  45. 45. MODERNIZATION IMPROVES COVERAGE AND RELIABILITY. AMAZING 4G SERVICES IMPROVED COVERAGE (EARLY MARKET RESULTS, INDEXED) ENHANCED RELIABILITY IN-HOME (EXPECTED NATIONAL RESULTS)Increased traffic capture attributable to improved cell site coverage +15-20% +29% +10% -74% -34% Data traffic Voice traffic Blocked calls Dropped calls Current in- After modernization home coverage After modernization Before modernization 45
  46. 46. T-MOBILE AND METROPCS: MIGRATION NOT INTEGRATION. AMAZING 4G SERVICESKEY ENABLERS MIGRATION PLAN T-Mobile’s network has the capacity to support  Rapidly transition MetroPCS subscribers to NewCo customer migration network MetroPCS LTE customers will be able to use the  MetroPCS customers completely migrated to NewCo T-Mobile LTE network without changing handsets network by H2 2015 MetroPCS customers will be offered HSPA/LTE  Re-farm MetroPCS spectrum to create additional handsets, leveraging GSM price point advantages capacity for LTE on NewCo network Handset upgrade cycle (60%+ per year) facilitates  CDMA network to be decommissioned—not integrated rapid MetroPCS customer migration 46
  47. 47. METROPCS STRENGTHENS STRONG LTE SPECTRUM POSITION. AMAZING 4G SERVICES KEY ENABLERS POST-TRANSACTION LTE SPECTRUM WE’RE DEPLOYING THE “NEXT GENERATION” OF LTEMHz  Combined spectrum enables contiguous LTE 2x20 MHzNew York 50  Effective doubling of LTE speedLos Angeles 50Dallas  Contiguous LTE spectrum alleviates the need for carrier 60 aggregation technologyPhiladelphia 40  Combined and contiguous spectrum assets increaseDetroit 50 efficiency by 20%Boston 50San Francisco 50Tampa  Next Generation LTE features 50Sacramento 50  Better consistency of speeds across coverage areaLas Vegas 50  Improved antenna performance (through higher orderOrlando 50 MIMO) enables higher speeds  Introduction of features to enable small cell capabilities T-Mobile Incremental from Metro PCS deal 47
  48. 48. METROPCS’ DAS NETWORK TO ENHANCE COVERAGE & CAPACITY. AMAZING 4G SERVICESDAS (DISTRIBUTED ANTENNA SYSTEM)  Re-use and upgrade MetroPCS’ DAS network  6,000 DAS nodes (especially in dense urban areas such as New York and Philadelphia)  Will be upgraded to include HSPA+ and expanded LTE Repeater Repeater capacity and performance BTS  Benefits  Increases network density Network of spatially separated antenna nodes  Improves customer coverage and capacity Connected to a common source via a transport medium (DAS generally used for in-building or “hot spots”) Provides wireless service within a geographic area or structure 48
  49. 49. CHALLENGING STATUS QUO WITH A DISRUPTIVE APPROACH. AMAZING VALUE TRUSTED MULTI- CHALLENGER 4G SEGMENT BUSINESS SERVICES LEADER BRAND PLAYER MODEL Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. LTE affordable hero Un-carrier Brand platform transformation devices Improved B2B growth coverage 49
  50. 50. LAUNCHED A SET OF INNOVATIVE SERVICE OFFERINGS. VALUE LEADER VALUE ~80% of current post paid  Limited subsidy, lower price activations in our stores are  EIP financing option Value plans BYOD  Bring your own device 1.7M+ iPhones on the network today  Trade-in options for device UNLIMITED 30 – 35% of activations are  Nationwide 4G unlimited plans with higher MRC 50
  51. 51. 100% MOVE TO VALUE PLANS IN 2013 VALUEUNMATCHED VALUE, LOVED BY CONSUMERS, ENABLES FUTURE MOVES. LEADERCUSTOMER VALUE PROPOSITION EARLY IMPACT Fair and simple pricing  Improved CLV: 1 to 2 months extended life over Enables lowest out-of-pocket handset expense with 24 month contract period vs. Classic plans Equipment Installment Plans (EIP)  12 – 15% of activations are BYOD Allows for upgrade flexibility Enables Bring Your Own Device (BYOD) METRICS (OVER 2-YEAR CONTRACT TERM) VALUE VS. CLASSIC DELTA Increased customer life time +1 to 2 months Reduced acquisition cost (handset subsidy) ($200 – 250) Improved un-discounted CLV +$25 – $50 51
  52. 52. BEST SMARTPHONES AT THE LOWEST OUT-OF-POCKET PRICES. VALUE LEADER2012 Q4 DEVICES SMARTPHONE UNITS SOLD IN MILLIONS (POSTPAID ONLY) 2.6 2.5 2.1 2.3 1.8 +28% Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 2013 pricing enabled by value plans SMARTPHONE % IN BRANDED CONTRACT BASE 49% 53% 54% 57% 44% +13 pts Q3’11 Q4’11 Q1’12 Q2’12 Q3’12 Apple partnership will further enhance our portfolio 52
  53. 53. DRAMATICALLY IMPROVING OUR CUSTOMER EXPERIENCE. TRUSTED BRANDWHAT WE HAVE ACCOMPLISHED IN 2012 WHAT WE PLAN TO ACHIEVE IN 2013+ New retail formats Improve customer experience along all touch points  ~1,440 stores converted and across life cycle  Observed activation lift of  Empower front-line employees to do the right thing ~3-4% in converted stores for the customer  Ensure consistency of policies Other improvements 3Q11 3Q12  Invest in systems for providing superior experiences across all interactions -13% -10% -43%  Turn detractors into supporters with programs such as voice of customer Contract care Dropped Handset calls per customer call rate exchanges (Android) 53
  54. 54. RESULTING IN ONGOING CHURN IMPROVEMENT. TRUSTED BRAND BRANDED CONTRACT CHURN KEY INITIATIVES%  Improvements in sales and on-boarding experience3.0 2011  Aggressive re-contracting  Smart rate plan migration  Significant improvement in credit management and fraud detection2.5 2012  Voice of the Customer Program  Systematic ongoing customer communication2.00.0 Q1 Q2 Q3 Q4 54
  55. 55. AGGRESSIVELY RE-ESTABLISHING T-MOBILE AS A POWERFUL TRUSTEDMOBILE BRAND… BRANDKEY ACTIONS EARLY IMPACTDrive reconsideration and greater loyalty through improved coverage  Consideration up by ~10%  Improved perception on network dependability and speed by 10 – 12%  Coverage satisfaction scores for customers in August increased by Network modernization more than 10% YOY Signature offer as the only nationwide 4G carrier with truly unlimited data Towers ad campaign explicitly demonstrating the depth and breadth of coverage BYOD 55
  56. 56. … BECOMING THE UN-CARRIER IN 2013. We are going after issues that frustrate consumers in this industry, differentiating our service, and returning to profitable growth 56
  57. 57. CONTINUE EXPANSION INTO B2B AND NO-CONTRACT. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G LEADER BRAND SEGMENT BUSINESS SERVICES MODEL PLAYER Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. LTE affordable hero Un-carrier Brand platform transformation devices Improved B2B growth coverage 57
  58. 58. STRONG BRANDED NO-CONTRACT MOMENTUM, MULTI- SEGMENTDRIVEN BY MONTHLY 4G. PLAYERMONTHLY 4G BRANDED NO-CONTRACT ENDING SUBSCRIBERS million +23% 5.7 4.6 Q3’11 Q3’12 BRANDED NO-CONTRACT REVENUES $ milllion +38% 450 325 Single brand SoGA leadership since March 2012 +365k branded prepaid net adds in 3Q12 Q3’11 Q3’12 58
  59. 59. TRANSACTION ENHANCES AND ACCELERATES T-MOBILE’S MULTI- SEGMENTNO-CONTRACT GROWTH. PLAYER OPPORTUNITIES FOR METROPCS Greatly expands on-network coverage Provides international roaming options Access to faster, broader 4G/LTE network Wider handset choices 59
  60. 60. INVESTING IN MVNO FOR GROWTH AND INCREASED COVERAGE. MULTI- SEGMENT PLAYER SIGNING NEW AND INNOVATIVE MVNO PARTNERS ENDING SUBSCRIBERS million +11% 3.5 3.9  Innovative online “social commerce” distribution model, leveraging social networks Q3’11 Q3’12  45k+ subscribers in first two months of launch REVENUES $ million +15% 110 126 Q3’11 Q3’12 60
  61. 61. INVESTING IN B2B FOR ADDITIONAL AND DIVERSIFIED GROWTH. MULTI- SEGMENT PLAYER ENDING SUBSCRIBERS1SALES million +5% Growing B2B presence in retail Growing B2B sales force toward medium-term 6.0 6.3 goal of +1,000 FTEs Expanding indirect sales programMARKETING Q3’11 Q3’12 Launched stackable/shared voice plans New MBB & shared data plans BUILDING A PORTFOLIO OF ATTRACTIVE B2B CUSTOMERS Open Europe roaming planCAPABILITIES Marketing Automated Engine & E-Commerce solutions Integration with salesforce.com Leveraging DT relationship1 Includes B2B Corporate Liable and Individual Liable subscribers 61
  62. 62. METROPCS ACCELERATES COST TRANSFORMATION. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G LEADER BRAND SEGMENT BUSINESS SERVICES PLAYER MODEL Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. LTE affordable hero Un-carrier Brand platform transformation devices Improved B2B growth coverage 62
  63. 63. TRANSFORMING COST STRUCTURE TO ENHANCE CHALLENGER CHALLEN- GERMODEL AND ACHIEVE VALUE CREATION OBJECTIVES. BUSINESS MODEL Synergies from  Savings from decommissioning transition to single redundant network sites network $5– $6 billion NPV1 Capture efficiencies  Savings from realizing efficiencies in common support & economies of scale functions, maximizing scale benefits through MetroPCS deal 1 ~$1 billion NPV Re-invent and re-  $900 million gross incremental savings in 2012; Re-investing ~$300 million in key areas of growth invest for growth like B2B, advertising  Incremental re-invent savings ~$500M in 2013; $350M in 2014; $100M in 20151 NPV calculated with 9% discount rate and 38% tax rate 63
  64. 64. CHALLENGER STRATEGY IS ACCELERATING. AMAZING MULTI- CHALLENGER VALUE TRUSTED 4G SEGMENT BUSINESS LEADER BRAND SERVICES PLAYER MODEL Advantaged Delightful customer Branded no- MetroPCS Innovative value plans spectrum experience contract expansion deal synergies Amazingly MVNO Cost Next Gen. LTE affordable hero Un-carrier Brand platform transformation devices Improved B2B growth coverage 64
  65. 65. FINANCIAL OUTLOOK 65
  66. 66. 2013 GUIDANCE. T-MOBILE T-MOBILE WITH STAND-ALONE METRO PCS2 US GAAP 2012E 2013E 2013E SERVICE REVENUE ($B) 17.2 16.4 – 16.6 20.8 – 21.0 EBITDA ($B) 4.9 4.5 – 4.6 5.8 – 6.0 MARGIN 28% 27% – 28% 27% – 29% CASH CAPEX ($B) 2.71 3.3 – 3.4 4.7 – 4.8 2013 impact of Value plan and other initiatives estimated to be ($300 million) to ($600 million) on cash flows.1 Excludes Verizon spectrum swap 2 Full year pro forma, includes synergies and integration expenses 66
  67. 67. MID TERM AMBITION 67
  68. 68. OUR COMBINED LONG-TERM AMBITION FOR NEWCO. NEWCO WITH METROPCS PROJECTED GROWTH PRINCIPAL SOURCES OF REVENUE GROWTH FOR NEWCO:  CONTRACT OFFERS – flat growth EXPECTED 5-YEAR GROWTH Revenue 3-5% Stabilize subs in 2013, followed by modest sub growth beginning 2014 % CAGR EBITDA 7-10%  NO-CONTRACT OFFERS – 80 – 90% of growth  FOCUSED GEOGRAPHIC EXPANSION OF METROPCS BRAND – 10 – 20% of growth Free cash flow1 15-20%  ADDITIONAL GEOGRAPHIC EXPANSION (not in current plan) Target profitability 34-36% (% of service revenue)1 Free cash flow defined as EBITDA minus CapEx 68
  69. 69. EXPECT METROPCS DEAL TO CLOSE IN H1 2013. Regulatory approval process on track, and we expect to get approval by the expiration of FCC the FCC’s self-imposed 180-day clock — April 24, 2013. DOJ process proceeding well. We have received a second request for information which DOJ is normal course for a deal of this size. Team Telecom review has begun and will likely take into account our existing national CFIUS security agreement. CFIUS review will likely commence after January 1. MetroPCS Proxy statement has been released and is currently under review by SEC. We SEC expect revised Proxy early in the new year followed by MetroPCS shareholder vote. Integration planning process is proceeding well with focus on linking essential systems INTERNAL and beginning customer migration soon after close. 69
  70. 70. SUMMARY.  MetroPCS combination accelerates Challenger strategy.  Clear path toward 100 million LTE POP coverage by mid-year 2013, 200 million by end of year 2013 – with 2x10 MHz in nearly 90% of Top 25 service areas, expanding to at least 2x20 MHz in 90% of Top 25 service areas in 2014+.  TMUS has entered into an agreement with Apple to bring products to market together next year – impact fully included in go forward financials.  Bringing together a set of innovative propositions to fundamentally challenge status quo, TMUS will become the “Un-carrier”.  2013 will be year of investments. This will have a positive impact on EBITDA from 2014 onwards.  Ambition: reconfirming 5-year CAGRs including 3 – 5% revenue growth. 70
  71. 71. DEUTSCHE TELEKOMCAPITAL MARKETS DAY 2012EUROPE AND TECHNOLOGYCLAUDIA NEMAT 71
  72. 72. SUMMARY. 1 We achieved a slow down of the historical revenue decline, improved our competitive position as well as operating ROCE, despite a tough environment 2 Our focus: Ensure a sustainable cash contribution, stemming against the macro trend 3 Our aspiration:  Return to underlying revenue growth from 2014 onwards through our growth areas, especially Mobile Internet and B2B/ICT  Reduction of indirect costs through a radical transformation of our delivery model (esp. All-IP Transformation, e-Company, Technical Services Transformation) 4 Our leadership paradigm:  Differentiated steering of NatCos, according to market position, to create relevant focus  ONE DT (Europe): Cross-NatCos cooperation to leverage economies of scale 72
  73. 73. REVIEW 2010 – 2012 73
  74. 74. IN 2010 TARGETS FOR SEE AND MOBILE-ONLY COUNTRIES WERE SET –WE ACHIEVED MOST OF THEM. COUNTRIES AMBITION LEVEL 2012 ACHIEVEMENTS 2012 Greece  Market share1 service revenues: stable  50.3% (Q2/12) Hungary Croatia  Market share1 EBITDA: stable  57.4% (Q2/12) Slovakia SEE Romania  OPEX: €0.3 bn net savings  €0.8 bn net savings (FY12e) Bulgaria Macedonia  TV revenues2: around €500 mn2 (like-for-like €350 mn)  around €270 mn2 (FY12e) Montenegro Albania  TV customers YE: > 3.0 mn  2.9 mn (FY12e)  Adj. EBITDA margin: cont. cost efficiency & improve margin  -4.7% & 34.0% (Q1-Q3/12) Poland  Service Revenue Leadership3: become No. 1  No. 3 (Q3/12)  Market share service revenues3: increase  23.7% (Q3/12) The Netherlands  Synergy from Orange integration: increase run rate by 30%  €130 mn reached in ‘10 MOBILE ONLY  Market share service revenues3: further stabilize market position  38.6% (Q3/12) Czech Rep.  Fixed broadband revenues: double revenues  €32.3 mn (FY12e)  Market share service revenues3: increase  28.4% (Q3/12) Austria  Shift to direct: direct share ~ 60%  55.5% (Q1-Q3/12)1 Total telco markets in SEE footprint; stable FX; non disclosing competitors estimated by DT 2 Definition changed, since 2010 only pure TV product rev. included. Like-for-like ambition 2012 ca €350 mn 3 DT Estimates 74
  75. 75. AFTER BUSINESS REVIEW IN 2011, WE IMPLEMENTED A NEWLEADERSHIP PARADIGM. CHANGED LEADERSHIP PARADIGM – KEY ELEMENTS FROM… TO… 1 COMMERCIAL DRIVE  Focus on cash contribution  Focus on quarterly EBITDA  Focus on revenue + cost  Strengthened commercial functions 2 SMART STEERING  Individual country perspectives only  Creation of business segment Europe  One size fits all  Differentiated steering according to NatCo’s market position 75
  76. 76. 1 COMMERCIAL DRIVE: WE SLOWED DOWN HISTORICAL REVENUE DECLINE. WE DECREASED REVENUE DECLINE… … IN SPITE OF TOUGH ENVIRONMENT Europe Total Rev. Ø GDP growth2 -2.0%p € bn, adjusted for FX +0.4% -6.2% -3.3% -1.6% 11.9 FY 2010 FY 2012 12 11.2 10.8 10 Ø MTR in footprint EURc3 -47% 8 7.03 3.76 6 YE 2009 YE 2012 4 2 EU roaming retail EUR/min -33% 0 9M 20101 9M 2011 9M 2012 0.43 0.29 YE 2009 YE 2012 1 2010 adjusted for UK deconsolidation 2 Source: Oxford Economics as of August 2012. 3 Company estimates 76
  77. 77. 1 COMMERCIAL DRIVE: WE IMPROVED OUR COMPETITIVE POSITION… REVENUE MARKET SHARE PERFORMANCE IN CORE MARKETS vs. main peers against… Market position +2.4 +2.2 +2.5 +1.7 4 strengthened… +0.5 outperformed Czech Romania Slovakia Romania Czech peers/ 8 leadership Rep. Rep. fostered Leadership +0.1 +0.3 position defended… Hungary Greece -0.1 Poland 7 under- Market position -0.3 3 performed weakened… The -0.5 Austria Slovakia Netherlands -4.2 Q3/11 yoy Q3/12 yoy One-off in Q3/2011: high +x.y Market Share ∆ prepaid ARPU peak due dev. yoy in %p, Mob. Service Rev. to expiry of a promotion; Q3/12 vs. Q3/11 Total Mobile Rev. without the effect Cosmote outperformed competition Source: Company Estimates 77
  78. 78. 1 … WHILE IMPROVING ROCE, AND KEEPING CAPITAL PRODUCTIVITY ON BENCHMARK LEVEL. DT EUROPE OP. ROCE1 DT EUROPE CAPEX/REVENUE RATIO2 like-for-like CAGR: like-for-like +12% 13-14% 12.9% 14% Benchmark range for 11-12% mobile/fixed/integrated 10.8% operators3 11% margin Adj. EBITDA vs. 2012: FY 2010 FY 2012e 2010 FY 2010 FY 2012e development to 34.4% from 34 .7% 1 without equity UK, including spectrum 2 without spectrum 3 Source: Oliver Wyman benchmark 78
  79. 79. 2 DIFFERENTIATED STEERING CREATES RELEVANT FOCUS. NATCO CLUSTERS STRATEGIC DIRECTION KPIS/AMBITIONS SENIOR LEADERS  The undisputed, most admired industry leader  Radical gross opex reduction Greece Croatia  Business model transformation  Stabilize topline Hungary Macedonia  Keep leading market position  Increase Blue Ocean topics1 revenue share JUNIOR LEADERS WITH A  Leverage leadership in fixed for improving mobile,  Increase mobile revenue CHALLENGE IN MOBILE esp. by capitalizing on fixed/mobile merger  Increase integrated customer base FMC Romania Slovakia Montenegro  Business model transformation  Radical gross opex reduction MOBILE RUNNER-UPS  Go for market leadership:  Increase total revenue market share Poland PL total revenues, CZ mobile data revenue  Increase mobile data revenue share Czech Rep. SMART ATTACKERS  Increase total revenue, esp. in B2B & mobile data The Netherlands Albania  Unconventional capex-light moves  Reduce capex Austria 1 B2B-ICT, Mobile Internet, TV/broadband, adjacent industries (online consumer services and energy) Bulgaria not in scope 79
  80. 80. MARKET TRENDS 80
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