Outlook & Financial strategy

Forecast: 

For 2023, we expect further growth:
- Our sales are expected to slightly grow in 2023.
- Adjusted EBITDA (after leases) in 2023 is expected to be more than € 40.8 billion, compared with € 39.3 billion in 2022.
-Free cash flow (after leases) is expected to be more than € 16.0 billion in 2023 compared with € 11.5 billion in 2022.

To keep the expectations clear of the impact of currency fluctuations, all figures refer to constant exchange rates (average exchange rates of the previous year; € 1 = $ 1.05).

Dividend
For the fiscal year 2022 was announced to be € 0.70 after € 0,64 in 2021. As in previous years, the dividend distribution is tax-free.

In the years to come, we intend to pay out 40 to 60 percent of adjusted earnings per share, which should increase to over €1.75 by 2024. 

In the consensus you find an overview of the average expectations by securities analysts for earnings per share and dividends per share for the coming years.

Operations:

Germany: Telekom Deutschland will maintain its clear market leadership. We accelerate the roll-out of our networks: by 2024, we will reach around 10 million households with FTTH and increase our 5G coverage to over 97 percent. This will enable us to accelerate growth in the residential and business customer segments. By systematically exploiting the opportunities offered by digitization, we will reduce costs and improve our earnings and return on equity.

USA: T-Mobile US continues to grow its customer base in B2C and B2B thanks to the superior network quality. 

Europe: The positive trend of recent years in the traditional communications markets of our Europe operating segment will continue in the next years. Growth is being driven by a further increase in demand for mobile data and broadband and pay TV lines.

System Solutions: We want to be the preferred provider of IT services. As part of an extensive transformation program, we have driven forward the establishment and expansion of growth themes and improved the efficiency of our existing business.

Financial strategy
Deutsche Telekom’s corporate strategy is supported by a financial strategy, which focuses on three key aspects.

1. Attractive Payout-Policy for Shareholders
Our dividend policy is to pay out 40 to 60 percent of the adjusted net income per share (EPS). The dividend for 2022 was announced to be € 0.70 after € 0.64 in 2021 (+9.3%). We guarantee a minimum dividend of € 0.60 per share.

2. Security for providers of debt capital
Deutsche Telekom seeks to have undisputed access to the debt capital markets at any time. Solid balance sheet ratios are meant to guarantee this access. Therefore Deutsche Telekom sets itself the following comfort zone targets/ratios:

Rating: A-/BBB

Ratio net debt/adj. EBITDA AL: 2.25 – 2.75x

Equity ratio: 25-35%

Liquidity reserve covering maturities of coming 24 months

3. Increase of Return on Capital Employed
The Finance Strategy supports the group wide transformation project to become the Leading Digital Telco. We want to become quality leader in our domestic market both in terms of mobile communication and fixed networks. The financial strategy, which supports the sustainable increase in value has a focus on the following three aspects:

Return on Capital Employed: We aim to increase return on capital employed in the long-term. For the fiscal year 2022 we recorded a ROCE of 4.5 percent. Our ambition for 2024 is a return on capital employed of more than 6.5 percent.

Portfolio Management: We continue to focus on our core business, but at the same time, retain a presence in growth areas with strong partners.