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Andreas Leigers

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Deutsche Telekom continues growth course

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  • Net revenue up 5.9 percent to 28.2 billion euros in the second quarter of 2022 
  • Adjusted EBITDA AL up 5.0 percent to 9.9 billion euros 
  • Free cash flow AL at 2.8 billion euros
  • Adjusted net profit up 15.7 percent to 2.4 billion euros 
  • Guidance for the 2022 financial year raised: adjusted EBITDA AL of around 37 billion euros, free cash flow AL of more than 10 billion euros anticipated
  • Strong financial figures in Germany 
  • Record customer growth at T-Mobile US
  • Growth course in the Europe segment continues unabated
  • Partnership deal agreed for GD Towers

Deutsche Telekom presented strong earnings again in the second quarter of 2022, enabling it to raise its guidance for the second time this year. The Group’s adjusted EBITDA AL is now expected to reach around 37 billion euros, up from the previous guidance of more than 36.6 billion euros. This is attributable both to the positive development of business at T-Mobile US and to the strong performance outside the United States. Free cash flow AL is still expected to reach more than 10 billion euros for the full year. The business excluding the United States is expected to make a contribution that is around 0.1 billion higher than anticipated previously. 

“We continue to grow, despite the difficult economic environment,” said Tim Höttges, Chairman of the Board of Management at Deutsche Telekom. “We are well on track this year to meet our ambitious targets announced at the 2021 Capital Markets Day. Our investments are paying off.” 

Net revenue increased by 5.9 percent in the second quarter to 28.2 billion euros. High-value service revenues developed particularly well, growing by 10.8 percent. Adjusted EBITDA AL increased by 5.0 percent compared with the prior-year period to 9.9 billion euros. 

In organic terms, i.e., adjusted for exchange rate effects and changes in the composition of the Group, revenue in the second quarter remained more or less unchanged at the prior-year level. Service revenues increased by 4.3 percent in the three-month period. Adjusted EBITDA AL decreased slightly by 0.9 percent on account of the shift away from the former Sprint’s handset leasing model.

In terms of cash capex excluding expenses for mobile spectrum, the Group invested around 5 billion euros between April and June, i.e., 16.3 percent more than in the second quarter of 2021. Free cash flow AL was at the prior-year level of 2.8 billion euros.

Adjusted net profit increased by 15.7 percent in the second quarter to 2.4 billion euros, driven in particular by higher earnings from operations. Reported net profit declined, primarily due to higher expenses for the integration of Sprint in the United States. 

Germany: revenue and earnings continue to grow 

The Germany segment delivered strong financials in the second quarter of 2022. Revenue grew by 2.7 percent year-on-year to 6.1 billion euros. Adjusted EBITDA AL recorded even stronger
growth of 3.1 percent to 2.4 billion euros in the second quarter. This corresponds to an EBITDA AL
margin of 40.0 percent and earnings growth for 23 quarters in a row.

In mobile communications, service revenues grew by 2.6 percent, continuing the high-level growth of the previous quarters. Branded contract net additions of 194,000 substantially exceeded the prior-year quarter.

Telekom remains the strongest broadband provider in the German market, which was weaker overall in the second quarter. 45,000 broadband net additions were recorded between April and June. The number of fiber-optic-based lines (FTTx, retail and wholesale) increased to 17.7 million. This means that around 75 percent of retail broadband customers are already using the fiber infrastructure. 

United States: customer growth at record level

In the second quarter of 2022, the mobile postpaid net additions were at a record level of 1.7 million: the best-ever customer growth in a second quarter, more than the competitors AT&T and Verizon in this quarter combined. The total customer base increased to 110 million, up 5.2 million year-on-year. 

Total revenue at T-Mobile US decreased slightly by 1.1 percent in the reporting quarter to 19.8 billion U.S. dollars. This was due to the decline in revenue from handset leasing, due to the planned gradual withdrawal from this Sprint business model. Adjusted EBITDA AL declined by 2.4 percent to 6.7 billion U.S. dollars. Core adjusted EBITDA (U.S. GAAP), i.e., earnings adjusted for the effect of handset leasing, increased by 10.4 percent in organic terms. Thanks to the fact that the integration of Sprint has continued to progress well and rapidly, T-Mobile US is raising its guidance for the synergies from the business combination to between 5.4 and 5.6 billion U.S. dollars in 2022, up from the previous range of between 5.2 and  5.4 billion U.S. dollars. As a result, earnings in the U.S. business are expected to rise much more than previously planned to adjusted EBITDA AL of around 22.7 billion euros, instead of the previous guidance of more than 22.4 billion euros. The number of postpaid customers is expected to increase by 6 to 6.3 million, around 600,000 net additions more than were expected after the end of the first quarter.

Europe: growth course continues unabated

The European national companies continued to grow unabated in the second quarter. Adjusted EBITDA AL grew 4.5 percent year-on-year in organic terms, making 18 successive quarters of growth. 

Revenue also recorded organic growth of 4.2 percent. The reported revenue of 2.7 billion euros was 2.7 percent lower than in the prior-year quarter. The difference between the reported and organic figures essentially results from the sale of the Romanian fixed-network business at the end of September 2021. 

243,000 mobile contract net additions were recorded in the second quarter. Broadband net additions were at the same level as in the previous quarter at 70,000. 186,000 new users were won for fixed-mobile convergence products. 

Systems Solutions: stable business development with earnings growth

The second quarter was largely stable at T-Systems. Revenue was on a par with the prior-year level at 1.0 billion euros. Adjusted EBITDA AL again recorded substantial growth: up 13.9 percent to 82 million euros. Order entry stood at 930 million euros. 

Group Development: partnership deal agreed for GD Towers

On July 14, Deutsche Telekom announced the sale of a 51 percent stake in GD Towers, the Group’s cell tower business in Germany and Austria, to DigitalBridge and Brookfield. The Group will continue to report on the development of the ongoing business until the transaction is closed.

At the end of the quarter, GD Towers featured 40,700 sites. Revenue increased by 4.6 percent in organic terms in the second quarter to 285 million euros. Adjusted EBITDA AL amounted to 174 million euros, an increase of 7.2 percent in organic terms. 

The significant decline in the reported figures for revenue and earnings in the segment resulted from the sale of T-Mobile Netherlands, which was completed at the end of the first quarter of 2022. 

The Deutsche Telekom Group at a glance



Q2

2022

millions of €

Q2

2021

millions of €

Change

%

H1

2022

millions of €

H1

2021

millions of €

Change

%

FY 2021

millions of €

Net revenue

28,168

26,593

5.9

56,191

52,983

6.1

108,794

Proportion generated internationally

%

78.6

80.5

-1.9p

77.7

78.4

-0.7p

77.0

Service revenue

22,891

20,657

10.8

45,178

40,913

10.4

84,057

Adjusted EBITDA

11,476

10,877

5.5

22,912

21,575

6.2

43,175

Adjusted EBITDA AL

9,891

9,418

5.0

19,763

18,662

5.9

37,330

Net profit
(after non-controlling interests)

1,460

1,879

-22.3

5,409

2,815

92.1

4,176

Adjusted net profit (after non-controlling interests)

2,445

2,113

15.7

4,683

3,315

41.3

5,862

Free cash flow AL

2,759

2,766

-0.3

6,540

5,350

22.2

8,810

Cash capexa

5,086

4,322

17.7

12,259

16,593

-26.1

26,366

Cash capexa

(before spectrum)

4,984

4,287

16.3

9,642

8,570

12.5

17,978

Net debt (including leasing)

146,104

127,972

14.2

132,142

Number of employeesb

210,595

221,909

-5.1

216,528

Of which in Germany

83,365

87,477

-4.7

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



Q2

2022

millions of €

Q2

2021

millions of €

Change

%

H1

2022

millions of €

H1

2021

millions of €

Change

%

FY 2021

millions of €

Germany

Total revenue

6,064

5,903

2.7

12,059

11,844

1.8

24,164

Adjusted EBITDA AL

2,426

2,354

3.1

4,815

4,659

3.3

9,520

United States

Total revenue

18,626

16,643

11.9

36,673

33,126

10.7

68,359

US-$

19,834

20,063

-1.1

40,084

39,929

0.4

80,806

Adjusted EBITDA AL

6,337

5,737

10.5

12,509

11,444

9.3

22,697

US-$

6,748

6,917

-2.4

13,674

13,793

-0.9

26,871

Europe

Total revenue

2,747

2,823

-2.7

5,451

5,551

-1.8

11,384

Adjusted EBITDA AL

986

994

-0.8

1,961

1,940

1.1

4,007

Systems Solutions

Order entry

930

1,128

-17.6

2,027

2,019

0.4

4,174

Total revenue

1,005

1,006

-0.1

2,001

2,021

-1.0

4,019

Adjusted EBITDA AL

82

72

13.9

155

134

15.7

286

Group Developmenta

Total revenue

291

780

-62.7

1,115

1,563

-28.7

3,165

Adjusted EBITDA AL

164

318

-48.4

519

634

-18.1

1,307

a. The sale of T-Mobile Netherlands was consummated on March 31, 2022. As such, T-Mobile Netherlands has not been part of the Group since April 1, 2022 (Group Development segment). The contributions for the first quarter of 2022 are still included in operational development due to the cumulative view.

Operating segments: development of customer numbers in the second quarter of 2022

June 30, 2022

thousands

Mar. 31, 2022

thousands

Change

thousands

Change

%

Germany

Mobile customers

54,551

53,968

583

1.1

Of which contract customers

23,402

23,165

237

1.0

Fixed-network lines

17,437

17,480

-43

-0.2

Broadband lines

14,578

14,533

45

0.3

Of which optical fibera

10,836

10,584

252

2.4

Television (IPTV, satellite)

4,039

4,018

21

0.5

Unbundled local loop lines (ULLs)

3,351

3,487

-136

-3.9

United States

Customers

110,023

109,541

482

0.4

Of which postpaid customers

88,787

88,423

364

0.4

Of which prepaid customers

21,236

21,118

118

0.6

Europeb

Mobile customers

46,459

45,584

875

1.9

Of which contract customers

26,046

25,803

243

0.9

Fixed-network lines

7,839

7,814

25

0.3

Broadband customers

6,521

6,451

70

1.1

Television (IPTV, satellite, cable)

4,067

4,050

17

0.4

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

June 30, 2022
thousands

June 30, 2021
thousands

Change

thousands

Change

%

Germany

Mobile customers

54,551

50,272

4,279

8.5

Of which contract customers

23,402

22,682

720

3.2

Fixed-network lines

17,437

17,555

-118

-0.7

Broadband lines

14,578

14,304

274

1.9

Of which optical fibera

10,836

9,971

865

8.7

Television (IPTV, satellite)

4,039

3,933

106

2.7

Unbundled local loop lines (ULLs)

3,351

3,853

-502

-13.0

United Statesb

Customers

110,023

104,789

5,234

5.0

Of which postpaid customers

88,787

83,848

4,939

5.9

Of which prepaid customers

21,236

20,941

295

1.4

Europec

Mobile customers

46,459

45,788

671

1.5

Of which contract customers

26,046

27,172

-1,126

-4.1

Fixed-network lines

7,839

9,111

-1,272

-14.0

Broadband customers

6,521

7,050

-529

-7.5

Television (IPTV, satellite, cable)

4,067

5,098

-1,031

-20.2

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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