Deutsche Telekom Ag S/Adr

Good afternoon. Welcome to Deutsche Telekom's conference call. At our customer's request, this conference will be recorded and uploaded to the Internet. May I now hand you over to Mr. Hannes Wittig.

And now with the mic. Good afternoon, everyone, and welcome to our live Q1 2022 webcast and conference call. As you can see with me today, our CFO, Christian Iblek, and Srini Gopalan, who heads our German business. Christian will first go through a few highlights. Srini will update you on the German business. and talk about the German segment performance. Afterwards, Christian will talk about the other segments and our group financials and outlook. And then we have time for Q&A. Before I hand over to Christian, please, as always, pay attention to our disclaimer, which you'll find in the presentation. And now I hand over to Christian.

Thank you, Johannes, and welcome to Q1's 22 results call. Look, we had strong results on both sides of the Atlantic, and we continue to make progress against our strategic priorities. Let me just start off with the U.S., who has reported two weeks ago, I think, all up, very strong growth on all key financials, very strong customer growth, and that led, obviously, to the guidance increase, which the U.S. team has already announced. Outside the U.S., we delivered a very strong EBITDA growth of 6%. Overall, we generated more than $2 billion of free cash flow, and we confirm our guidance. On top, and that is more related to the strategic direction of Deutsche Telekom, we closed the deal in the Netherlands. We created the joint venture in Germany with IFM Glasfaser Plus. We set up a joint venture together with Vodafone in the Czech Republic. And we invested part of the sales proceeds of the Dutch business, meaning $2.4 billion, into acquiring further shares in the U.S., which now puts us at a 48.4% shareholding. So on a group level, if you add everything up, very strong growth on the financial metrics, including the adjusted EPS, which we're going to see later on, a sequential decline in financial debt, And we incorporate the U.S. guidance increase, obviously, into our group guidance. So let's move on the financials page number five. And let's start with a reported view. So revenues up by a little bit more than 6%. Adjusted EBITDA was growing by 7%. Adjusted EPS grew in that given quarter by 80% to $0.45 per share, and our free cash flow enjoyed a nice $1.2 billion increase to $3.8 billion, which is 46% relative to last year. Our financial debt before leases is on a year-by-year basis pretty much stable. If you include the leases, it has increased by 5%. Page number six, let's move on to the organic perspective, and you see how we grew. T-Mobile US obviously grew with 0.3% on adjusted EBITDA. You know this effect is coming from the unwinding of the handset lease business, which we inherited from Sprint. If you basically take a look at the core EBITDA figure, it grew by more than 10%. Germany maintained its constant momentum and grew by another 3.6% in the previous quarter. The European segment grew by 6.9%. I think that's stunning. And it's really impressive how they turned around the business. Group development grew by 19%. And if you exclude the health for sale effect of the Dutch business, it would have been 11.4%. And EVG Systems had a very, very good growth in EBITDA. It grew by 18%. So all up, the ex-US business grew by 6.1% this given quarter. Germany is now 22 quarters in a row with consecutive EBITDA growth. Europe is chasing Germany with 17 quarters. And my ask to the two segments, meaning Srini and Dominic, please repeat. So for the group, our organic revenue after leases grew by 2.4%. So I talked about the core EBITDA performance of the U.S. with 10.5%. If you apply that metrics on a group perspective, our growth would have been 8.5%. So if we're taking a look at the organic service revenue growth, it grew by 4.7%, which is a billion in that given year. And that's an acceleration compared to the previous year and the fourth quarter. And the organic service revenue ex-US grew by 1.6% in the Q1 results. Moving to page number seven. You see how the cash flow developed. So, driven by growth from cash flow operations, which was almost $1.1 billion, our free cash flow grew up by $1.2 billion. And we were able to compensate higher capex spendings of almost $400 million by having less lease payments. And that mainly reflects a prepayment which took place in the U.S. in Q3 of the last year. If we're moving to the adjusted net profit, it grew by a billion to more than $2.2 billion. And that is very much driven by the adjusted EBITDA growth. It's also driven by a better financial result, which is the options and the forward, which appreciate it on a year-by-year basis. And the lower depreciation is basically coming from the transition to growth. from the handset leasing business towards the EIP business in the U.S. So all are very, very good results. Obviously, if our results are getting better, we have to pay more taxes. And since there's a big growth coming from the U.S., we also have to pay the minorities. And that basically explains the $2.2 billion adjusted net profit. So let's move on to the next page, and that is financial debt. And you can see that the financial debt has decreased by 2.5 billion to 98 billion, and that is very much driven by the free cash flow which we generate in Q1. It's also driven by the sales proceeds, meaning the Dutch business and Glasfaser Plus. And then there is obviously increases coming from the U.S. One is the payment for the spectrum of the auction, $110. Obviously, the dollar has appreciated relative to Q4 by two cents. That basically increases our U.S.-based debt by $1.3 billion. And we have an increase of financial liabilities due to the extension of the Crown Castle deals coming from the U.S. If you include leases all up, you see that our leverage ratio has increased to 3.1, but it's very much driven by the 12-year deal arrangement which T-Mobile U.S. created with Crown Castle. And excluding leases, we're getting closer to, I would say, the upper end of the ratio with 2.6, because the upper end of the ratio is 2.5. So let me move on to an overview of networks and take a look on the overall performance and start with the usual networks slide. You see that we have now almost 11 million European homes. So that comprises Germany and the European segment with FTTH infrastructure. In Germany, we're going towards 4 million. The ultra-capacity network in the U.S. is now passing 225 million homes, and you know the target by the end of the year is 260. And in Germany, we're leading way ahead of competition when it comes to 5G coverage. On customers, You see that we have seen momentum on both sides of the Atlantic, and we recorded strong growth. And that holds true for mobile. It also holds true for broadband and TV. So all up, I think, very good results. And now I would like to hand it over to Srini to give you a little bit more deep dive on the German operations. Srini, please.