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Andreas Leigers

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Guidance raised: Deutsche Telekom continues growth course in 2022

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  • Net revenue up 6.2 percent to 28 billion euros in the first quarter of 2022
  • Adjusted EBITDA AL up 6.8 percent to 9.9 billion euros 
  • Free cash flow AL up 46.3 percent to 3.8 billion euros 
  • Net profit quadrupled following sale of T-Mobile Netherlands
  • Guidance for 2022 financial year raised: adjusted EBITDA AL of more than 36.6 billion euros, free cash flow AL of more than 10 billion euros planned
  • Positive development of mobile service revenues in Germany 
  • Demand for fixed-network alternatives at T-Mobile US
  • Strong growth figures in the Europe segment 

The Group is holding its course. Following the strong 2021 financial year, Deutsche Telekom continued its growth in the first three months of 2022. Revenue increased 6.2 percent to 28 billion euros, with service revenues growing even faster by 10 percent. Adjusted EBITDA AL recorded growth of 6.8 percent compared with the prior-year period and amounted to 9.9 billion euros. In organic terms – adjusted for exchange rate effects and changes in the composition of the Group – revenue increased by 1.7 percent, service revenue by 4.7, and adjusted EBITDA AL by 2.4 percent.

“This was a strong start to the new year,” said CFO Christian Illek at the presentation of the quarterly figures in Bonn. “We are continuing to grow on an organic basis and are therefore in a position to raise our guidance for 2022.” 

The Group now expects to post adjusted EBITDA AL of more than 36.6 billion euros in 2022, up from the previous guidance of around 36.5 billion euros. Free cash flow AL, which was expected to amount to around 10 billion euros, is now expected to exceed 10 billion euros. 

In terms of cash capex excluding expenses for mobile spectrum, the Group invested 4.7 billion euros in the first quarter, 8.8 percent more than a year earlier. At the same time, free cash flow AL increased by 46.3 percent to 3.8 billion euros.

Net profit in the first quarter was more than four times higher than in the first quarter of the prior year at 3.9 billion euros. This increase was primarily driven by the sale of 50 percent of the FTTH company GlasfaserPlus to IFM and the completion of the transaction in the Netherlands. Adjusted net profit increased by 86.3 percent to 2.2 billion euros. 

Germany: Strong development of mobile service revenues 

The Germany segment continued to grow in the first quarter of 2022. Revenue increased slightly by 0.9 percent to 6.0 billion euros. Adjusted EBITDA AL rose significantly by 3.6 percent year-on-year, reaching 2.4 billion euros. And investments increased even more – by 4.9 percent.

In operational terms, the market leader strengthened its position. Mobile services revenues increased substantially against the prior-year period, up by 2.5 percent. Telekom recorded 193,000 branded contract customer additions. 5G coverage increased by more than 11 percentage points compared with the first quarter of 2021 to reach around 92 percent. 

The company recorded 55,000 new broadband customers in Germany in the first quarter, a year-on-year increase of 2.3 percent in the customer base. The number of fiber-optic-based lines (FTTx, retail and wholesale) increased to 17.4 million. This means that around 73 percent of retail broadband customers are already using the fiber-optic infrastructure. 

United States: Demand for fixed-network alternatives

At the end of March 2022, T-Mobile US had 109.5 million customers, which corresponds to growth of more than 6.1 million within a year. In the first quarter of 2022 alone, 1.3 million new mobile postpaid customers were added. High Speed Internet emerged as a new growth area for the company, with customers in rural areas in particular swapping their fixed-network lines for mobile solutions. In the first quarter alone, 348,000 customers opted for this solution. The customer base has now nearly reached one million at 984,000, almost five times as high as a year earlier.

Total revenue at T-Mobile US increased by 1.9 percent in the reporting quarter to 20.3 billion U.S. dollars. Adjusted EBITDA rose by 0.7 percent to 6.9 billion U.S. dollars. Excluding the effect of the decline in terminal equipment lease business, adjusted core EBITDA, i.e., earnings in organic terms, grew by more than 10 percent. T-Mobile US raised the guidance range for synergies from the Sprint merger for 2022 to between 5.2 and 5.4 billion U.S. dollars, up from the previous range of between 5.0 and 5.3 billion U.S. dollars. The company also increased the number of postpaid net customer additions expected in 2022: from the prior guidance of between 5.0 and 5.5 million to between 5.3 and 5.8 million.

Europe: Growth trend continues 

The Europe segment is reporting strong growth again in the first quarter of 2022. Adjusted EBITDA AL grew 6.9 percent year-on-year in organic terms. Organic segment revenue grew by 4.2 percent, with high-value service revenues performing particularly well: mobile service revenues were up 2.2 percent, growth in fixed-network service revenues was 4.8 percent. 

The customer base also continued to grow in the Europe segment. 150,000 new mobile contract customers were added and 70,000 new broadband customers. 59 percent of broadband households now use fixed-mobile convergence products, with 196,000 new users added in the first quarter of 2022. 

Systems Solutions: New deals at the start of the year

T-Systems delivered a strong start to the 2022 financial year. Order entry recorded particularly good figures compared with the first quarter of the prior year. The volume was up by 23.1 percent to 1.1 billion euros.

In organic terms, adjusted EBITDA AL increased by 18.1 percent year-on-year in the first quarter of 2022 to 73 million euros, thanks to further cost-cutting. Revenue remained almost stable in organic terms, decreasing slightly by 0.8 percent to 1.0 billion euros.

Group Development: Sale of T-Mobile Netherlands completed

The sale of T-Mobile Netherlands was completed on March 31. As a result, the Dutch company is included in the Group’s figures for the last time. In the first quarter, T-Mobile Netherlands recorded 47,000 mobile contract additions, and generated revenue of 536 million euros and adjusted EBITDA AL of 190 million euros.

In the cell tower business, revenue grew by 6.4 percent in organic terms year-on-year to 284 million euros. At the same time, adjusted EBITDA AL increased by 10.2 percent in organic terms to 173 million euros. On a like-for-like basis, the number of sites increased by 1,000 compared with a year earlier to 40,500.
 

The Deutsche Telekom Group at a glance



Q1

2022

millions of €

Q1

2021

millions of €

Change

%

FY 2021

millions of €

Net revenue

28,023

26,390

6.2

108,794

Proportion generated internationally

%

76.7

76.4

0.3p

77.0

Service revenue

22,287

20,257

10.0

84,057

Adjusted EBITDA

11,436

10,698

6.9

43,175

Adjusted EBITDA AL

9,873

9,245

6.8

37,330

Net profit
(after non-controlling interests)

3,949

936

n.a.

4,176

Adjusted net profit (after non-controlling interests)

2,238

1,201

86.3

5,862

Free cash flow AL

3,781

2,585

46.3

8,810

Cash capexa

7,173

12,272

-41.5

26,366

Cash capexa

(before spectrum)

4,658

4,283

8.8

17,978

Net debt

135,947

129,530

5.0

132,142

Number of employeesb

216,109

224,385

-3.7

216,528

Of which in Germany

84,470

88,409

-4.5

85,160

a. Cash outflows for investments in property, plant, and equipment, and intangible assets (excluding goodwill).
b. At reporting date.


Operating segments: Development of operations



Q1

2022

millions of €

Q1

2021

millions of €

Change

%

FY
2021

millions of €

Germany

Total revenue

5,994

5,942

0.9

24,164

Adjusted EBITDA AL

2,388

2,305

3.6

9,520

United States

Total revenue

18,048

16,483

9.5

68,359

US-$

20,251

19,866

1.9

80,806

Adjusted EBITDA AL

6,172

5,706

8.2

22,697

US-$

6,927

6,876

0.7

26,871

Europe

Total revenue

2,704

2,729

-0.9

11,384

Adjusted EBITDA AL

976

946

3.2

4,007

Systems Solutions

Order entry

1,097

891

23.1

4,174

Total revenue

996

1,015

-1.9

4,019

Adjusted EBITDA AL

73

62

17.7

286

Group Development

Total revenue

825

782

5.5

3,165

Adjusted EBITDA AL

356

316

12.7

1,307


Operating segments: Development of customer numbers in the first quarter of 2022

Mar. 31, 2022

thousands

Dec. 31, 2021

thousands

Change

thousands

Change

%

Germany

Mobile customers

53,968

53,211

757

1.4

Of which contract customers

23,165

23,129

36

0.2

Fixed-network lines

17,480

17,525

-45

-0.3

Broadband lines

14,533

14,478

55

0.4

Of which optical fibera

10,584

10,379

205

2.0

Television (IPTV, satellite)

4,018

4,001

17

0.4

Unbundled local loop lines (ULLs)

3,487

3,622

-135

-3.7

United States

Customers

109,541

108,719

822

0.8

Of which postpaid customers

88,423

87,663

760

0.9

Of which prepaid customers

21,118

21,056

62

0.3

Europeb

Mobile customers

45,584

45,816

-232

-0.5

Of which contract customers

25,803

26,575

-772

-2.9

Fixed-network lines

7,814

7,802

12

0.2

Broadband customers

6,451

6,381

70

1.1

Television (IPTV, satellite, cable)

4,050

4,019

31

0.8

Group Development

Netherlands

Mobile customers

6,949

6,939

10

0.1

Fixed-network lines

754

739

15

2.0

Broadband lines

744

728

16

2.2

a. Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH/B).
b. Since January 1, 2022, 921,000 contract customers of a service provider in Austria are no longer reported among our customers. The prior-year figures have not been adjusted retrospectively.


Operating segments: Development of customer numbers in year-on-year comparison

Mar. 31, 2022
thousands

Mar. 31, 2021
thousands

Change

thousands

Change

%

Germany

Mobile customers

53,968

49,091

4,877

9.9

Of which contract customers

23,165

22,509

656

2.9

Fixed-network lines

17,480

17,562

-82

-0.5

Broadband lines

14,533

14,211

322

2.3

Of which optical fibera

10,584

9,758

826

8.5

Television (IPTV, satellite)

4,018

3,896

122

3.1

Unbundled local loop lines (ULLs)

3,487

3,968

-481

-12.1

United Statesb

Customers

109,541

103,437

6,104

5.9

Of which postpaid customers

88,423

82,572

5,851

7.1

Of which prepaid customers

21,118

20,865

253

1.2

Europec

Mobile customers

45,584

45,454

130

0.3

Of which contract customers

25,803

26,995

-1,192

-4.4

Fixed-network lines

7,814

9,114

-1,300

-14.3

Broadband customers

6,451

7,000

-549

-7.8

Television (IPTV, satellite, cable)

4,050

5,092

-1,042

-20.5

Group Development

Netherlands

Mobile customers

6,949

6,798

151

2.2

Fixed-network lines

754

693

61

8.8

Broadband lines

744

680

64

9.4

a. Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH/B).
b. As of July 1, 2021, T-Mobile US acquired 716,000 postpaid phone customers and 90,000 other postpaid customers through the acquisition of assets directly associated with the mobile operations of Shentel. The prior-year figures have not been adjusted retrospectively.
c. Since January 1, 2022, 921,000 contract customers of a service provider in Austria are no longer reported among our customers. The prior-year figures have not been adjusted retrospectively.


This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They are generally identified by the words “expect,” “anticipate,” “believe,” “intend,” “estimate,” “aim,” “goal,” “plan,” “will,” “seek,” “outlook,” or similar expressions and include generally any information that relates to expectations or targets for revenue, adjusted EBITDA AL, or other performance measures. Forward-looking statements are based on current plans, estimates, and projections, and should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control. They include, for instance, the progress of Deutsche Telekom’s staff-related restructuring measures and the impact of other significant strategic or business initiatives, including acquisitions, dispositions, and business combinations. In addition, movements in exchange rates and interest rates, regulatory rulings, stronger than expected competition, technological change, litigation and regulatory developments, among other factors, may have a material adverse effect on costs and revenue development. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom’s actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its expectations or targets will be achieved. Without prejudice to existing obligations under capital market law, Deutsche Telekom does not assume any obligation to update forward-looking statements to account for new information or future events or anything else. In addition to figures prepared in accordance with IFRS, Deutsche Telekom presents alternative performance measures, e.g., EBITDA, EBITDA AL, adjusted EBITDA, adjusted EBITDA AL, adjusted EBITDA margin AL, core EBITDA, adjusted EBIT, EBIT margin, adjusted net profit/loss, adjusted earnings per share, free cash flow, free cash flow AL, gross debt, and net debt. These measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Alternative performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways.


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