Deutsche Telekom Ag S/Adr

Good afternoon and 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 Witte.

Good afternoon, everyone, and welcome to our live 2022 second quarter and half year webcast and conference call. As you can see with me today, our CEO, Tim Hutges, and our CFO, Christian Illig. Tim will first go through a few highlights for the half year, followed by Christian, who will talk about the segments and our group financials in greater detail. And then we have time for Q&A. Before I hand over to Tim, as always, please pay attention to our disclaimer that you find in the presentation. And now I hand over to Tim.

Hannes, thank you Hannes, and welcome to our first half and second quarter 2020 earnings call. We had another strong quarter, good results on both sides of the Atlantic, and we made continued progress against our strategic priorities. T-Mobile reported two weeks ago they delivered strong growth in all key financial numbers, strong customer growth, and a guidance upgrade, as usual. Outside of the U.S., we also delivered 4.4% organic EBITDA growth in the first half, over $3 billion free cash flow, And a guidance upgrade, as expected. A couple of weeks ago, we announced our tower deal with Digital Bridge and Brookfields. Great guys. We are taking 10.7 billion euros off the table. It's good for the winter. And we keep 49% of a great and well-positioned asset so that we have a lot of, let's say, influence and impact on the future prospects of this entity. Today, good news for you, we are rising our 22 guidance on both sides of the Atlantic for the group. And so we remain well on track for all our capital market targets. I have to say, we are ahead of our capital markets targets in almost every category. The flywheel keeps working. Moving on to organic IFRS, on the next page, T-Mobile US EBITDA was slightly down, but this is intentionally because we are unwinding handset leases. Without this, our growth in the US would have been 7.9% growth. We are in a telco, yeah? Don't forget that. Germany remains strong as well, growth of 3.3%. And the European segment was another one, another time very strong, 5.7% growth, despite the new Hungarian revenue tax, which I really hate. Group development grew 15%. Antisystems grew another 15.7%. Even here, we see that our transformation is on a good way. Germany has now delivered 23 consecutive quarters of EBITDA growth. Europe, 18 quarters. And for the group, organic group EBITDA grew by 0.7%. Excluding T-Mobile's handset lease, our core EBITDA RL grew by 6.5% year-on-year. I think this is the most important number for us here operationally. Organic service revenues for the group are up by 4.5%. So far this year, I think even good results. Organic service revenues ex-US are up by 1.8%. Now let's look at our market-leading networks. We now pass over 11 million European homes with FTTH, of this close to 4 million already in Germany. We are on track for our planned 2 million fibre homes, which we are passing this year in Germany, and the machine is really scaling up. Our ultra-capacity 5G network passes 235 million U.S. homes way ahead of our competition and on track of 260 million by year-end. I think now our brand proposition in the U.S. is paying off more and more. I get the feedback from customers. We win all the network tests. We are really leading 5G in the U.S. This week, T-Mobile agreed to acquire a highly attractive and complementary portfolio of 600 MHz frequencies. to further strengthen our network leaderships. And for the ones in this group who are not technicians, the 600 megahertz is backbone. This is really the working band which is carrying a lot of traffic. In the future, it will significantly help us to extend even our spectrum leadership in the U.S. and the capacity plan which we are having. U.S. is really a strategic spectrum play. We cover 93% of Germany with 5G and 37% in Europe, up from 29% at year-end. And there are a lot of discussions going on, you know, how we can accelerate as well in this field. Our customer growth remains strong. Mobile customer growth accelerated on both sides of the Atlantic. Our fixed line growth was a little bit slower, partially due to temporary impact of the new German telecom laws. But definitely, and Christian will talk about that later on, much stronger than from our competition. Coming to ESG. ESG is on the top of our agenda, by the way, not only from strategic targets, but as well on a day-to-day business when it comes to the energy efficiency of our company. We are making good progress against our environmental targets with a 10% year-on-year decline in energy use in Germany. By the way, it's 14%. And a 7% improvement in energy intensity for the group. We are also delivering on our social agenda. with multiple initiative. And please have a look in YouTube, Instagram, TikTok, wherever you want, you know, on our latest campaign against hated armed speech in the internet, highly recognized. Company against hate speech, support for refugees, our T-Mobile project for helping 10 million people in the U.S. There are a lot of activities going on in this social category. But we will push further on these topics, especially on greater diversity, which should be recognized. Given the importance of this, this year I decided to take over the responsibility organizationally for ESG and be assured that we will now even make an acceleration on this ESG agenda going forward. We have started by extending ESG targets beyond the board of management to all DT managers. So this is already implemented. I'm happy to announce that we will host an ESG day for investors and our media people on the 12th of October to give you very much details about our activities which we are taking. T-Mobile raised its guidance two weeks ago. Today, we are also raising our full-year guidance for our ex-US business and for the Group as a whole. Second time this year, by the way. You can see our new guidance on page 8. When looking to these numbers, please keep in mind that we are much richer than what you see here, because these numbers are based on an exchange rate of $1.18, while consensus is based on $1.08. Also remember that our guidance excludes the first quarter contribution from T-Mobile Netherlands. This was 190 million EBITDA. We now expect 14.3 billion EBITDA and 3.8 billion free cash flow, both up 100 million and both ex-Netherlands. For the group, we now expect guidance for adjusted group EBITDA RL of around 37 billion EBITDA. For group free cash flow, we reiterate more than, and more than means more than, 10 billion. And for adjusted EBITDAs, we reiterate more than, I mean more than, $1, sorry, €1.25. That said, given our strong first half and the strong US dollar, the emphasis here is clearly on the more than. Let me wrap up this overview with the next page. I love it. Here you can see our strategic agenda that we showed you at our last Capital Markets Day. We are rapidly delivering on this agenda, both on the operational and on the portfolio side. I'm always surprised how constructive a company can work from its home office perspective and how fast things get executed. But anyway, that's a side comment. We just see that everything is on track or already executed. Still some homework to do. Our leverage is not yet back in the corridor. On the contrary, the strong dollar has pushed things out a little bit further. We now own 48.4% of T-Mobile, not yet the majority which we desire. Thanks to T-Mobile's Swift and highly successful merger integration, we're getting close to the point where a buyback can be launched. I'm getting so many questions. What will we do when the buyback comes? I think the answer is about balance. balanced capital allocation. Surely, we will want a good portion of the TMUS shareholder returns in cash. On the other hand, it would be unwise to rule out some further TMUS stake increases. Our North Star is long-term sustainable growth in DT earnings per shares. And again here, with more than 90 cents after the first half year, I feel in a very good position. With that, let me hand over to Christian, who has worked day and night on getting all the details for you for the Q2 results. And he will guide you now through every single detail. And I have a break.