DGAP-News: Telefónica Deutschland Holding AG: Preliminary results for January to September 2018
DGAP-News: Telefónica Deutschland Holding AG / Key word(s): 9-month figures/Preliminary Results Telefónica Deutschland Holding AG: Preliminary results for January to September 2018 30.10.2018 / 07:30 The issuer is solely responsible for the content of this announcement.
MUNICH, 30 October 2018 Preliminary results  for January to September 2018 Telefónica Deutschland on track for full year outlook  on solid revenue and OIBDA trends and announces dividend proposal for the FY 2018 - O2 Free portfolio fuels data growth and supports ARPU-up strategy, reflected in trading and churn metrics - Underlying  revenue flat year-on-year in the first nine months, while underlying3 MSR remained positive year-on-year - Strong OIBDA  growth of +6.0% year-on-year in the period January to September on the back of commercial momentum and ~EUR 90 million of OIBDA-relevant synergies year to date, partly bringing forward synergies from network consolidation from 2019 into 2018 - Re-iterating full year outlook but narrowing OIBDA4 range to "slightly positive" year-on-year on the back of successful synergy capture - Dividend proposal of EUR 0.27 per share for the financial year 2018, up +3% year-on-year Third quarter 2018 operational & financial highlights - Mobile postpaid saw +233 thousand net additions in Q3 2018, with continued strong demand for the O2 Free and Blau portfolios; while the contribution from partners remained solid (57% share of gross additions in the third quarter) in a rational market. Churn in the O2 brand remained low and improved year-on-year to 1.4%, reflecting the sustained focus on retention activities. Total postpaid churn was 1.6% - The LTE customer base was up +9.4% year-on-year to 17.2 million at the end of September 2018. The adoption of larger data packages in our O2 Free portfolio further fuelled data growth of LTE customers in O2 consumer postpaid with +15% quarter-on-quarter and +65% year-on-year growth to 3.9 GB per month - Underlying3 revenue was -0.4% lower year-on-year at EUR 1,843 million (-0.8% year-on-year at EUR 1,836 million as per IAS 18 reporting). Including negative regulatory impacts of EUR -13 million mainly from roaming, revenue was EUR 1,830 million, 1.1% lower year-on-year - Underlying  mobile service revenue maintained a positive trend and came in at EUR 1,351 million, +0.6% year-on year (flat year-on-year at EUR 1,344 million as per IAS 18 reporting), with tailwinds from the refreshed O2 Free portfolio. On a reported basis, mobile service revenue reached EUR 1,339 million, -0.4% year-on-year - Handset revenue was at EUR 299 million, up +2.8% year-on-year, with continued high demand for smartphones but with tougher comps vs prior year due to stock clearance activities in Q3-2017 - Fixed-line revenue fell -10.6% year-on-year to EUR 191 million. We have finalised the wholesale customer migration as a prerequisite for the planned shutdown of the legacy infrastructure. Fixed retail revenue was down -2.4% year-on-year, as promotional activities and a higher bundle share offset the positive contribution from VDSL - OIBDA adjusted for exceptional and regulatory effects  reached EUR 494 million, up +5.6 year-on-year and was positively impacted by an additional ~EUR 25 million of OIBDA-relevant synergies as we are making strong progress with the network consolidation. As per IAS 18 reporting, OIBDA  growth was +3.8% year-on-year, reaching EUR 486 million, excluding negative regulatory effects of EUR 17 million. The OIBDA margin adjusted for exceptional and regulatory effects expanded by +1.5 percentage points year-on-year to 26.8% - CapEx  amounted to EUR 316 million (+24.5% year-on-year). The Capex peak in the third quarter is the result of the final stage of network consolidation, while also pushing ahead with the LTE rollout. Incremental Capex synergies amounted to ~EUR 10 million in Q3-2018 (~EUR 35 million in January-September) and were mainly related to network - Consolidated net financial debt  was EUR 1,591 million as of the end of September 2018. With a leverage ratio of 0.9x we remained in line with our leverage target Progress of integration activities and network update In the third quarter, we pushed ahead with the network integration, with the clear target to complete this final integration project by the end of 2018. Region by region, our consolidated network becomes available to more and more customers. Recent network test results are confirming the positive effects of the consolidation efforts, i.e. the connect magazin awarded the O2 network a "good" grade in the local network test in Munich (830 points). Telefónica Deutschland network is now on par with Deutsche Telekom and slightly ahead of Vodafone in terms of network coverage in Munich; in terms of voice and data supply quality our network in Munich even ranks ahead of both competitors. In parallel to finalising the network integration, we are pushing ahead with the LTE rollout across Germany. In almost all cities in Germany we are densifying our network with additional LTE elements to improve network performance where our customers live and work. Simultaneously, we are also rolling out LTE to municipalities in less populated areas that are not yet covered with LTE. Furthermore, we are focusing on expanding LTE along key traffic infrastructure routes, such as motorways and rail routes. In the third quarter 2018 alone, we have built almost 2,000 new LTE sites and upgraded existing sites with additional LTE capacity. Thus, our network has already gained a total of around 5,000 LTE stations in 2018. Additionally, since 4 September 2018, O2 and Vodafone customers with HD Voice-enabled handsets are benefitting from the best possible voice standard. Since August, customers with corresponding handsets have been able to use Enhanced Voice Services (EVS) when making cross-network calls using VoLTE. To further drive the expansion of our network, we signed the national mobile pact to ensure cooperation with other operators in July as well as the mobile pacts in Bavaria and Hesse in September. Politics, network operators and central municipal associations are aiming for a joint approach with regards to improve mobile coverage in Germany. In addition, we are joining forces with Deutsche Telekom to speed up the expansion of our mobile network even further. In early October, we agreed to connect at least 5,000 mobile sites of Telefónica Deutschland to the high-performance fibre-optic network of Deutsche Telekom. In order to prepare our network for the 5G rollout, we are pushing ahead with a number of innovative projects with various partners, e.g. the 5G Connected Mobility project with Ericsson. Together with Samsung Electronics, we are testing Fixed Wireless Access (FWA) technology in Hamburg. FWA is intended to enable high-speed transmission of several gigabits per second into the household, and at the same time, minimise the need for the complex installation of fibre into the building. Overall, we are paving the way to becoming the "Mobile Customer and Digital Champion" in Germany on the back of expense measures for network quality. We are building a fully integrated, modern and efficient network and, in addition, are also laying the optimal foundation for future network technologies, such as 5G. Digital transformation As part of our transformation programme Digital4Growth (D4G), we consistently place our customers' needs and their user experience in the digital age at the centre of all our activities. Our clear focus lies on making use of innovative, new technologies to design simpler, faster and better processes. For instance, we want to ensure a consistent and positive user experience across all channels, to respond in real-time to changing customer requirements and changes in the market and to participate in the growth opportunities from big data analytics. The 'My O2' app puts a clear focus on customer experience by offering mobile freedom in the digital world. In a test conducted by the connect magazine in September 2018, our app scored particularly well in the category "functional performance and handling", and was praised for its "modern design and clear structure" as well as for its "smooth operation". In order to continuously improve customer experience in the areas of service, network and products, we also rely on artificial intelligence (AI) and data analytics. AI, for instance, is successfully used to simplify maintenance and optimisation of our mobile network, as well as to analyse social media content. Further possible applications include data analytics for better traffic management, the acceleration of service requests and the networking of employees among each other. In order to develop further AI-based solutions and make them available for our company and our customers, we have set up a Centre of Excellence for Artificial Intelligence where data experts are working on future proof solutions. Commercial update In the third quarter of 2018, the German mobile market remained dynamic yet rational across segments, with a clear focus on profitable growth on the back of growing data usage and the monetisation of tariffs with large data volumes. We have launched the following initiatives to further support and promote these targets: - O2 Unlimited tariffs: On 21 August 2018, we launched our Unlimited portfolio without speed or volume limitations. The O2 Free Unlimited plan provides our customers with unlimited mobile communication services for EUR 59.99. The O2 my All in One plan is available for EUR 79.99 and includes an additional fixed-line connection with telephone and internet flat rate, as well as the O2 Connect multi-card option at no additional charge. - O2 Free Business Unlimited tariff: For business customers, we launched the O2 Free Unlimited tariff on 1 October 2018. The plan costs EUR 80.00 and offers unlimited LTE high-speed data volume, voice and SMS services throughout Europe for up to five devices, plus additional roaming features for other countries. At EUR 84.20 it also included a fixed-line connection with voice and internet flat rate. - O2 my Office tariffs: On 16 October 2018, we launched a new DSL portfolio. The L-tariff offers download speeds of up to 100 Mbit/s for EUR 39.99, the M-tariff up to 50 Mbit/s for EUR 34.99, and the S tariff up to 10 Mbit/s for EUR 29.99. All plans include unlimited voice into all German fixed and mobile networks. - Sales partnership with Nintendo Deutschland: Since 23 August 2018, O2 customers are enabled to digitally buy games for their Nintendo consoles directly via the O2 Apps & Entertainment Store and pay for them via their mobile phone bill. - The progress we are making on our way to becoming Germany's "Mobile Customer and Digital Champion" is also reflected in a number of awards that we received lately, laying proof to our sustained focus on customer experience. - A number of well-known German tech magazines recognised our 'comeback', our position as 'price-value leader' in the market, our improved network quality, as well as our range of digital services including our successful O2 banking app. Financial outlook 2018  Telefónica Deutschland's third quarter and first nine months 2018 results were in line with expectations. Thus, we re-iterate our full year 2018 outlook. However, we narrow the range for OIBDA  from "flat to slightly positive" to "slightly positive" in the light of the current operating performance, mainly on the back of successful synergy capture. In particular, we are bringing ~EUR 20 million of network consolidation-related savings at OIBDA level forward from 2019 to 2018. We are thus updating our full-year target for incremental OIBDA11-relevant synergy contribution in 2018 from ~EUR 80 million to ~EUR 100 million. The total cumulated target of ~EUR 900 million Operating Cash Flow savings in 2019 remains unchanged. We continue to focus on profitable growth, while maintaining the flexibility to invest into the market to benefit from the revenue-growth opportunities arising from accelerated data usage in a dynamic, yet rational market environment. With regards to negative regulatory effects, we confirm EUR 30-50 million at revenue and EUR 40-60 million at OIBDA-level on the back of a steady adoption of customers into the EU-regulated tariffs and the usage elasticity effects from data roaming. We continue to monitor these trends closely. We have strong confidence in our ability to generate Free Cash Flow, while maintaining financial flexibility on the back of a conservative financial profile with a leverage target of at our below 1.0x  net debt to OIBDA. In line with our guidance for three consecutive years of dividend growth between 2016 and 2018, the management board of Telefónica Deutschland aims to propose a dividend of EUR 0.27 per share (+3% year-on-year) to the AGM in May 2019. Actual Updated 9M 2018 2017 Outlook 2018 1. #footnote_13 Revenue EUR Broadly stable EUR 5,376 million; -0.3% y-o-y 7,296 y-o-y (excl. Based on IAS 18 million negative
EUR 5,393 effects of EUR million; flat y-o-y Based on 30-50m) implementation of IFRS 15 as 1 January 2018 OIBDA Adj. for EUR Slightly EUR 1,394 million; +4.0% y-o-y exceptional 1,840 positive y-o-y Based on IAS 18 effects million (excl.
EUR #footnote_14 regulatory 1,421 million; +6.0% y-o-y effects of EUR Based on implementation of 40-60m) IFRS 15 as 1 January 2018 Capex to Sales 13% Approx. 12-13% 13.8% Ratio Dividend EUR Annual Dividend proposal of EUR 0.26/sha- dividend 0.27/share to AGM in May 2019 re growth for 3 Resolved consecutive by AGM, years (2016 - 17 May 2018) 2018 Telefónica Deutschland operating performance in the first nine month of 2018 As of 30 September 2018 Telefónica Deutschland's customer accesses were 47.3 million (-4.3% year-on-year), including 43.0 million mobile accesses (-4.0% y-o-y). The reduction was mainly due to a -11.4% year-on-year decrease in the mobile prepaid base to 21.1 million customers due to changes in the regulatory environment in 2017, as well as a base correction in the last quarter of 2017. Mobile postpaid reached 22.0 million customers, up +4.3% year-on-year. At the end of September, our mobile postpaid base represented 51.1% of our total mobile base, an increase of +4.1 percentage points year-on-year. Based on market standards for inactivity accounting, we had 45.4 million mobile customer accesses and 49.6 million accesses in total. In fixed, the DSL retail customer base was -0.9% lower year-on-year at 2.1 million accesses. We have now completed the wholesale customer migration as a prerequisite for the planned shutdown of the legacy infrastructure. Mobile postpaid saw +723 thousand net additions in the first nine months of 2018 with +233 thousand in the third quarter. This compares with +551 thousand and +183 thousand in the same periods of the prior year and shows the success of our recent portfolio initiatives with a clear focus on value generation and aiming for fair market share. In a rational market, the share of partner brands remained solid and contributed 59% of gross additions in the period until September and 57% in the third quarter. Telefónica Deutschland maintains its primary focus on customer retention and customer base development. Mobile prepaid trends are stabilising although the impact of regulatory changes (legitimation check and roaming legislation) introduced in the summer of the last year remain visible. As a result, we continue to see lower customer demand for prepaid offers and registered -829 thousand net disconnections in the first nine months of 2018, inlcuding -145 thousand in the third quarter and compared to -535 thousand and -30 thousand in the respective prior-year periods. Postpaid churn was stable at 1.6% both in the nine months period as well as in the third quarter of 2018. O2 consumer postpaid churn remained on low levels and saw a year-on-year improvement of 0.1 percentage points to 1.4% in the first nine months as well as in the third quarter of 2018. Smartphone penetration  at the end of September was 64.9% across brands and segments, up +6.3 percentage points year-on-year. The LTE customer base grew +9.4% year-on-year to 17.2 million accesses as of 30 September 2018, driven by the increasing demand for high-speed mobile data services and the good reception of the updated O2 Free portfolio. ARPU accretive effects from O2 Free in the first nine months of 2018 were partly offset by the continued impact of regulatory changes and mix-shift effects in the base. The blended mobile ARPU came to EUR 10.0 in the first nine months and EUR 10.2 in the third quarter, up +3.1% and +4.2% year-on-year respectively. Postpaid ARPU continues to see a stable trend and fell -4.6% year-on-year to EUR 14.9 in reported terms in the nine months period and -4.6% year-on-year to EUR 15.0 for July to September respectively. Prepaid ARPU reached EUR 5.8 in the January to September period and EUR 6.0 in the third quarter, +12.8% and +15.8% higher year-on-year respectively, mainly driven by the base correction in the final quarter of 2017, which had no impact on mobile service revenue. The fixed retail ARPU was slightly lower year-on-year in the period up to September 2018 and came to EUR 24.6 (-0.7% year-on -year) and EUR 24.4 in the third quarter (-1.8% year-on-year). The fixed retail broadband customer base was broadly flat (-0.9% year-on-year) at approx. 2.1 million accesses. In the first nine months of the year we saw -18 thousand net disconnection (+6 thousand net additions in the third quarter). The demand for VDSL remained solid with +237 thousand net additions in the first nine months and +59 thousand in the third quarter 2018. Fixed wholesale accesses registered -188 thousand net disconnections in the period January to September (-8 thousand in the third quarter) and the wholesale customer migration is now finalised as a prerequisite for the planned decommissioning of the ULL broadband access infrastructure. Telefónica Deutschland financial performance in the first nine month of 2018 Revenue reached EUR 5,355 million in the first nine months of 2018, -0.7% year-on-year in reported terms (-1.1% year-on-year in the third quarter to EUR 1,830 million). Excluding a regulatory drag of EUR 39 million in the nine months period (EUR 13 million in Q3), revenue was flat year-on-year with EUR 5,393 million in the nine months period (-0.3% year-on-year at EUR 5,376 million as per IAS 18 reporting) and down -0.4% in the third quarter to 1,843 million (-0.8% year-on-year to EUR 1,836 million as per IAS 18 reporting). Mobile service revenue reached EUR 3,937 million (-0.4% year-on-year) on a reported basis in the first nine months and EUR 1,339 million (-0.4% year-on-year) in the third quarter of 2018. Excluding regulatory effects of EUR 38 million (EUR 12 million in Q3), underlying mobile service revenue trends remained positive with +0.5% year-on-year growth in the first nine months of the year at EUR 3,975 million (+0.2% as per IAS 18 reporting at EUR 3,961 million) and +0.6% year-on-year in Q3 (flat year-on-year as per IAS 18 reporting). Tailwinds from the O2 Free portfolio were partly offset by remaining headwinds from OTT trends and mix-shift effects in the legacy base. Mobile data revenue declined -3.0% year-on-year to EUR 2,170 million in the period January to September and -0.8% year-on-year to EUR 744 million in the third quarter, reflecting ongoing OTT-trends affecting SMS-revenues and the demand from customers for higher data bundles. As a percentage of data revenues, non-SMS data revenues increased +4.4 percentage points year-on-year to 85.0% in the first nine months. Handset revenues were +7.1% higher year-on-year at EUR 827 million in the first nine months and +2.8% higher at EUR 299 million in the third quarter of the year, with continued strong demand for smartphones. Fixed revenue saw a further decline to EUR 582 million (-11.0% year-on-year) in the period January to September and to EUR 191 million (-10.6% year-on-year) in the third quarter. This was mainly the result of the expected reduction in fixed wholesale revenues on the back of the migration. VDSL demand remained solid while fixed retail revenue trends weakened slightly (-1.5% year-on-year until September 2018 and -2.4% year-on-year in the third quarter) as a result of the lower customer base, promotional activities and the higher share of bundles in the customer base. Other income was EUR 117 million compared to EUR 97 million in the first nine months of 2017 (EUR 49 million in Q3 vs 38 million in Q3 2017). Operating expenses showed a -1.3% year-on-year reduction in the nine months period and -1.6% year-on-year in the third quarter, reaching EUR 4,148 million and EUR 1,418 million respectively. This is the result of the in-year phasing of incremental integration savings, maintaining a stringent value focus. Operating expenses include exceptional  costs of EUR 49 million in the first nine months of 2018 (EUR 17 million in the third quarter), which were mainly related to the network consolidation. - Supplies totalled EUR 1,747million in the period until September (-0.7% lower year-on-year) and EUR 622 million in July to September (-0.8% year-on-year). Hardware cost of sales (50% of supplies in the third quarter) were higher year-on-year in line with the demand for handsets, while connectivity-related cost of sales (41% of supplies in the third quarter) were lower year-on-year, as lower costs for voice termination compensated higher wholesale costs for outbound roaming - Personnel expenses contain restructuring costs of EUR 3 million in the nine months up to September 2018 and EUR 22 million in same period of 2017 respectively; thereof EUR 2 million in the third quarter of 2018 and EUR 9 million in prior year period. Adjusted for restructuring costs, personnel expenses were flat (-0.1% year-on-year) at EUR 448 million in the first nine months of 2018 and -1.8% lower year-on-year in the third quarter as inflation-related salary adjustments in 2018 were offset by savings related to the employee restructuring programme - Other operating expenses fell by -1.1% year-on-year to EUR 1,950 million for the period January to September and included exceptional16 effects of EUR 46 million. In the third quarter other operating expenses came to EUR 649 million (-1.2% year-on-year) and included exceptional16 effects of EUR 15 million. Commercial costs and non-commercial costs made up 59% and 38% respectively in the period January to September 2018 Operating Income before Depreciation and Amortisation (OIBDA) amounted to EUR 1,324 million in the first nine months of 2018,+2.8% year-on-year (EUR 1,297 million and+0.7% year-on-year based on IAS 18). In the third quarter of 2018, OIBDA reached EUR 461 million, +3.2% year-on-year (EUR 452 million, +1.3% year-on-year based on IAS 18). OIBDA adjusted for exceptional and regulatory  effects increased +6.0% year-on-year to EUR 1,421 million in the first nine months (+4.0% year-on-year to EUR 1,394 million based on IAS 18) and +5.6% year-on-year to EUR 494 million in the third quarter (+3.8% year-on year to EUR 486 million based on IAS 18). Exceptional effects amounted to EUR 49 million and EUR 17 million respectively and were mainly related to the network consolidation. Usage elasticity effects related to the European roaming legislation were the main driver of a negative regulatory drag of EUR -48 million (EUR -17 million in the third quarter period). In-year savings from OIBDA-relevant integration activities came approx. EUR 90 million year to date (~EUR 25 million in the third quarter) as the network consolidation is progressing well and in the full year we were able to bring forward ~EUR 20 million of savings from 2019 to 2018. Thus, the OIBDA margin increased by +1.5 percentage points year-on-year to 26.3% in the first nine months of the year. Group fees were at similar levels to prior year and amounted to EUR 28 million in the period January to September 2018 and to EUR 9 million in the third quarter. Depreciation & Amortisation was EUR 1,416 million in the January to September period, a decrease of -1.7% year-on-year compared to the same period of 2017, mainly due to the extended useful life of network equipment as a result of network integration measures. The operating loss the first nine months 2018 was EUR -92 million compared to an operating loss of EUR -152 million in the same period of 2017. The net financial expenses for the Jan-Sept period came to EUR -31 million versus EUR -26 million in prior year. The Company reported no material income tax expenses in the first nine months of 2018. The net loss for the nine months period of 2018 was EUR -123 million, compared to a net loss of EUR -178 million in the same period of the prior year. CapEx  increased +7.6% year-on-year to EUR 740 million and due to in-year phasing was up +24.5% year-on-year to EUR 316 million in the third quarter, as we have entered the final stage of network consolidation while also pushing ahead with LTE rollout. Capex-related incremental synergies amounted to approx. EUR 35 million in the first nine months of the year. Operating cash flow (OIBDA minus CapEx18) in the January to September period 2018 reached EUR 584 million, a decrease of -2.7% year-on-year due to the before mentioned in-year phasing of Capex. Free cash flow (FCF)  amounted to EUR 301 million until September 2018 compared to EUR 268 million in the prior year, up +12.3% year-on-year. Working capital movements and adjustments were negative in the amount of EUR -253 million in the nine months period, reflecting the usual seasonality. Working capital was driven by seasonal prepayments for leased line and mobile site rental (EUR -32 million), an increase in Capex payables (EUR +22 million), a reduction in restructuring provisions (EUR -27 million) as well as other working capital movements in the amount of EUR -216 million. The latter include silent factoring transactions for handset receivables in the gross amount of EUR 478 million which were offset by other working capital movements including a reduction in trade and other payables. Consolidated net financial debt  was down to EUR 1,591 million at the end of September 2018 (EUR 1,797 million as of 30 June 2018) as a result of FCF dynamics with the typical in year phasing. The leverage ratio came to 0.9x, in line with our leverage target of at or below 1.0x. APPENDIX - DATA TABLES Please refer to the following link to access the download of the data tables. Thank you. https://www.telefonica.de/investor-relations-en/publications/financial-publications.html Further information Telefónica Deutschland Holding AG Investor Relations Georg-Brauchle-Ring 50 80992 München Dr. Veronika Bunk-Sanderson, Director Communications & Investor Relations Marion Polzer, Head of Investor Relations Eugen Albrecht, Senior Investor Relations Officer Pia Hildebrand, Investor Relations Officer Sophia Patzak, Investor Relations Officer Saskia Puth, Office Manager Investor Relations (t) +49 89 2442 1010 email@example.com www.telefonica.de/investor-relations 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.  Unless indicated otherwise, all financial KPIs and year-on-year comparisons published in this document are prepared in accordance with IFRS accounting standards as adopted by the European Union. Financial KPIs for 2018 therefore include the effects of the implementation of IFRS 15 as of 1 January 2018  The effects from the implementation of IFRS15 as of 1 January 2018 and IFRS16 as of 1 January 2019 are not reflected in the financial outlook. For more information, please refer to the materials of the quarterly reporting during the period  Excluding the negative impact from regulatory changes (mainly the European roaming regulation)  Adjusted for exceptional effects and excluding the negative impact from regulatory changes (mainly the European roaming regulation)  Excluding the negative impact from regulatory changes (mainly the European roaming regulation)  Exceptional effects were EUR 14 million of restructuring expenses and EUR 3 million acquisition related consultancy fees in the period July to September 2018 and regulatory effects amounted to EUR 17 million in the same period of 2018  Adjusted for exceptional effects and excluding the negative impact from regulatory changes (mainly the European roaming regulation)  Including additions from capitalised finance leases and excluding capitalised costs on borrowed capital for investments in spectrum  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 the payables for the spectrum auction  The effects from the implementation of IFRS15 as of 1 January 2018 and IFRS16 as of 1 January 2019 are not reflected in the financial outlook. For more information, please refer to the materials of the quarterly reporting during the period  Adjusted for exceptional effects and excluding the negative impact from regulatory changes (mainly the European roaming regulation)  Not considering the expected impacts form the implementation of IFRS 16 as of 1 January 2019  The effects from the implementation of IFRS15 as of 1 January 2018 and IFRS16 as of 1 January 2019 are not reflected in the financial outlook. For more information, please refer to the materials of the quarterly reporting during the period  Exceptional effects such as restructuring costs or the sale of assets are excluded  Defined as the number of active mobile data tariffs over total mobile customer base, excluding M2M and data-only accesses  Exceptional effects were EUR 46 million of restructuring expenses (mostly in other expenses) and EUR 3 million of acquisition related consultancy fees in the period January to September 2018  Exceptional effects were EUR 46 million of restructuring expenses and EUR 3 million of acquisition related consultancy fees in the period January to September 2018; regulatory effects amounted to EUR 48 million in the period January to September 2018  Including additions from capitalised finance leases and excluding capitalised costs on borrowed capital for investments in spectrum  Free cash flow pre dividends and payments for spectrum (FCF) is defined as the sum of cash flow from operating activities and cash flow from investing activities and does not contain payments for investments in spectrum as well as related interest payments  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 the payables for the spectrum auction
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Language: English Company: Telefónica Deutschland Holding AG Georg-Brauchle-Ring 50 80992 München Germany Phone: +49 (0)89 24 42 0 Internet: www.telefonica.de ISIN: DE000A1J5RX9 WKN: A1J5RX Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange MDAX TecDAX End of News DGAP News Service