- Group's net revenue expected to grow
- Adjusted EBITDA set to rise by just under 4 percent
- Free cash flow to increase by around 12 percent
- New Group Development operating segment launched
Deutsche Telekom plans to continue its profitable growth course in 2017. A further revenue increase is to bring adjusted EBITDA up by just under 4 percent to around 22.2 billion euros. At the same time, the Group expects free cash flow to total some 5.5 billion euros, putting it around 12 percent higher than the 2016 level. Under the Group's shareholder remuneration policy, the dividend follows free cash flow growth and is thus set to rise in equal measure. The ongoing increase of customer numbers in the United States and improving results in the German home market continue to be the main driver of revenue and earnings.
The forecast is consistent with the growth rates announced at the Capital Markets Day in 2015, which included average increases in revenue of 1 to 2 percent, in adjusted EBITDA of 2 to 4 percent, and in free cash flow of around 10 percent on an annual basis in the years 2014 through 2018.
When looking at the individual operating segments, it is important to note that the Group structure has changed. Since January 1, 2017, Deutsche Telekom has reported on the new Group Development operating segment. The objective of the new unit is to actively manage and increase the value of selected subsidiaries and equity investments of the Group. These include T-Mobile Netherlands, Deutsche Funkturm (DFMG), and Deutsche Telekom Capital Partners (DTCP), as well as the equity investments in BT, Scout24, and Ströer. The Group functions of mergers & acquisitions and strategic portfolio management have also been assigned to Group Development. The approach of integrated, value-driven management aims to give the subsidiaries and equity investments the level of entrepreneurial freedom they need to promote their strategic further development. The new segment is headed up by Thorsten Langheim, Executive Vice President of Deutsche Telekom.
The changes to the Group structure affect the comparability of revenue and earnings figures, in particular for the Germany and Europe operating segments, from where T-Mobile Netherlands and DFMG have been transferred. The relevant data is disclosed on a pro-forma basis in the table below. Further, the pro-forma revenue of the T-Systems segment is less than the reported figure for 2016 following the transfer of Group-internal IT business to the Board of Management Department for Technology and Innovation at GHS.
Comments on the table:
a Significant changes in the organizational structure and in the composition of the consolidated group included up to the date of preparation of the consolidated financial statements and the combined management report.
b On a like-for-like basis.
c Strato and tolino are included in the expected figures.
This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These forward-looking statements include statements with regard to the expected development of revenue, earnings, profits from operations, depreciation and amortization, cash flows, and personnel-related measures. They 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. Among the factors that might influence Deutsche Telekom's ability to achieve its objectives are the progress of its staff restructuring initiatives and other cost-saving measures, and the impact of other significant strategic, labor, or business initiatives, including acquisitions, dispositions, business combinations, and network upgrade and build-out initiatives. In addition, stronger than expected competition, technological change, legal proceedings, and regulatory developments, among other factors, may have a material adverse effect on cost and revenue development. Further, an economic downturn in the markets, and changes in interest and currency exchange rates, may also have an impact on Deutsche Telekom's business development and the availability of financing on favorable conditions. Changes to Deutsche Telekom's expectations concerning future cash flows may lead to impairment write downs of assets carried at historical cost, which may materially affect the results at the Group and operating segment levels. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, the actual performance may materially differ from the performance expressed or implied by forward-looking statements. There is no assurance that the estimates or expectations 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 take new information or future events into account or otherwise.
In addition to figures prepared in accordance with IFRS, Deutsche Telekom also presents alternative performance measures, including, among others, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT, adjusted net profit, free cash flow, gross debt, and net debt. These performance 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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