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Andreas Fuchs

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Deutsche Telekom sets itself significantly higher financial targets for the 2021 financial year and plans to raise dividend

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  • Revenue up 2.1 percent in organic terms in the third quarter to 26.9 billion euros
  • Adjusted EBITDA AL up 0.2 percent in organic terms to 9.7 billion euros; excluding effect of U.S. terminal equipment leases, up by 6.7 percent in organic terms
  • Strong growth in free cash flow AL and net profit 
  • Full-year guidance for EBITDA AL raised from at least 37.2 billion euros to around 38 billion euros, guidance for free cash flow AL of around 8.5 billion euros, up from at least 8.0 billion euros
  • Dividend to increase to 0.64 euros per share
  • Business in Germany very successful
  • T-Mobile US raises guidance again
  • Europe continues to grow
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Following a good third quarter, Deutsche Telekom has raised its guidance for the full year once again. The Group now expects to report adjusted EBITDA AL of around 38 billion euros, up from the previous guidance of at least 37.2 billion euros. Free cash flow AL is now expected to total around 8.5 billion euros. That is up from the previous forecast of at least 8.0 billion euros. Both T Mobile US and the Group’s business outside of the United States contribute to this raised guidance. Deutsche Telekom began the 2021 financial year with a forecast for adjusted EBITDA AL of around 37 billion euros after a comparable prior-year figure of 35.0 billion euros. For free cash flow AL, the original target was around 8 billion euros, compared with 6.3 billion euros in the prior year.

The dividend is also set to rise based on the strong performance. Subject to the relevant approvals, the Board of Management plans to pay out a dividend of 0.64 euros per share, up from 0.60 euros for the 2020 financial year.

In the third quarter of 2021, net revenue grew by 2.1 percent in organic terms – excluding changes in the composition of the Group and exchange rate effects – to 26.9 billion euros. Adjusted EBITDA AL increased by 0.2 percent in organic terms to 9.7 billion euros. Also adjusted for the effects from the reduction in terminal equipment leases in the United States, adjusted EBITDA AL (core adjusted EBITDA AL) in the Group increased by 6.7 percent in organic terms. On a reported basis, revenue increased by 1.8 percent and adjusted EBITDA AL decreased by 0.3 percent.

“Our businesses are performing even better than expected,” said CEO Tim Höttges. “Following strong figures in the first nine months, we are setting the bar for 2021 a little higher.”

In the three-month period, net profit reached 0.9 billion euros, up 8.8 percent on the same quarter in the prior year. Adjusted for special factors, net profit decreased by 13.0 percent in the third quarter to 1.3 billion euros.

Worldwide, Deutsche Telekom invested 4.4 billion euros before expenses for mobile spectrum. That is 2.9 percent less than in the third quarter of 2020. Free cash flow AL totaled 2.9 billion euros in the reporting quarter, almost 80 percent more than in the prior-year period.

Germany: Revenue and earnings grow

For Telekom Deutschland, the third quarter of 2021 was marked by strong financial figures. Revenue increased 2.5 percent year-on-year to 6.0 billion euros. Adjusted EBITDA AL recorded an even greater increase of 3.9 percent to 2.5 billion euros, resulting in an adjusted EBITDA AL margin of 41.0 percent.

These positive figures are rooted in sustained customer growth. The number of broadband customers increased by 90,000 between July and September. Telekom is growing much faster than the market in this area. More than 70 percent or more than 10 million of Telekom’s broadband customers use fiber-optic-based products (FTTH, FTTC/vectoring). Almost 4 million customers are now using the television service MagentaTV.

In mobile communications, service revenues increased by 2.0 percent in the third quarter, underlining Telekom’s leadership in the German mobile market. Branded contract net adds amounted to 182,000.

United States: Synergy target raised

T-Mobile US recorded another quarter of strong customer growth. The number of postpaid customers grew by 1.3 million between July and September, outstripping every other provider in the United States. As of September 30, the U.S. company had 106.9 million customers, over 6 million more than a year earlier.

Total revenue increased by 2.3 percent in the third quarter to 19.8 billion U.S. dollars. Adjusted EBITDA AL declined by 2.9 percent to 6.8 billion U.S. dollars. T-Mobile US raised the target for synergies from the business combination with Sprint for 2021 from between 2.9 and 3.2 billion U.S. dollars to between 3.2 and 3.5 billion U.S. dollars.

Europe: Roaming picks up again

The European national companies have accelerated their growth once again. Adjusted EBITDA AL grew by 5.4 percent year-on-year in organic terms in the third quarter of 2021 to 1.1 billion euros, while revenue increased by 1.2 percent in organic terms to 2.9 billion euros. Among other things, the revitalized tourist traffic compared with 2020 on the back of the relaxation of the pandemic-related restrictions had a positive impact, resulting in a recovery in roaming revenues.

The mobile contract customer base recorded particularly encouraging growth of 258,000 in the third quarter. At 55,000, growth in the broadband customer base remained stable against the previous quarters. In addition, the national companies gained 170,000 new users of fixed-mobile convergence products between July and September.

Group Development: Sale of TMNL agreed

On September 7, Deutsche Telekom announced the sale of T-Mobile Netherlands (TMNL) to WP/AP Telecom Holdings – a consortium of private equity funds advised by Apax Partners and Warburg Pincus. The Group will continue to report on the development of the Dutch business until the transaction is closed. Mobile contract net additions reached 52,000 in the third quarter. While revenue at T-Mobile Netherlands increased by 3.9 percent year-on-year in organic terms to 515 million euros, adjusted EBITDA AL, adjusted for one-time effects, increased by 10.8 percent in organic terms.

At the end of the quarter, Group Development’s cell tower business comprised 40,100 sites in Germany and Austria, 1,200 sites more than a year earlier on a like-for-like basis. Total revenue from the cell tower business increased by 4.5 percent year-on-year in organic terms to 270 million euros in the third quarter of 2021. At the same time, adjusted EBITDA AL grew 6.2 percent in organic terms to 164 million euros. 

Systems Solutions: Substantial growth in digital solutions

In the third quarter, T-Systems recorded a positive business development. Order entry grew by 15.1 percent compared with the weak prior-year quarter to 0.8 billion euros. Revenue increased 1.7 percent to 1.0 billion euros. 

There was also an increase in the earnings metrics. Adjusted EBITDA AL reached 80 million euros in the third quarter, 3.9 percent more than in the prior-year period.
 

The Deutsche Telekom Group at a glance



Q3

2021

millions of

Q3

2020

millions of

Change

%

Q1-Q3

2021

millions of

Q1-Q3

2020

millions of

Change

%

FY
2020

millions of

Net revenue

26,877

26,393

1.8

79,860

73,377

8.8

100,999

Proportion generated internationally %

73.6

77.2

-3.6p

76.8

75.3

1.5p

75.5

Adjusted EBITDA

11,139

11,102

0.3

32,714

29,936

9.3

40,374

Adjusted EBITDA AL

9,661

9,692

-0.3

28,323

26,065

8.7

35,017

Net profit
(after non-controlling interests)

889

817

8.8

3,705

2,487

49.0

4,158

Adjusted net profit (after non-controlling interests)

1,313

1,509

-13.0

4,627

4,072

13.6

5,715

Free cash flow ALa

2,940

1,634

79.9

8,290

5,347

55.0

6,288

Cash capexb

4,666

4,763

-2.0

21,260

12,880

65.1

18,694

Cash capexb

(before spectrum)

4,362

4,490

-2.9

12,932

11,512

12.3

16,980

Net debt

130,375

124,521

4.7

120,227

Number of employeesc

216,265

227,584

-5.0

226,291

Of which in Germanyc

86,517

90,435

-4.3

89,032

Comments on the table:
Sprint has been included in Deutsche Telekom’s consolidated financial statements as a fully consolidated subsidiary since April 1, 2020. Sprint is included in the figures for the third quarter of 2021, i.e., the reporting quarter, and for the prior-year quarter for the full three months in both cases. In the cumulative figures, Sprint is included for nine months in the first three quarters of 2021 and for just six months (April to September) in the first three quarters of 2020.
a   Before dividend payments and spectrum investment, before interest payments for zero-coupon bonds in the first quarter of 2020, and before repayment of forward-payer swaps at T-Mobile US.
b  Cash outflows for investments in property, plant and equipment, and intangible assets (excluding goodwill).
c   At the reporting date.


Operating segments: development of operations



Q3

2021

millions of

Q3

2020

millions of

Change

%

Q1-Q3

2021

millions of

Q1-Q3

2020

millions of

Change

%

FY
2020

millions of

Germany

Total revenue

5,990

5,842

2.5

17,835

17,525

1.8

23,790

Adjusted EBITDA AL

2,456

2,364

3.9

7,115

6,864

3.7

9,188

United Statesa

Total revenue

16,807

16,569

1.4

49,933

44,024

13.4

61,208

US-$

19,811

19,374

2.3

59,740

49,613

20.4

70,117

Adjusted EBITDA AL

5,771

5,994

-3.7

17,215

15,458

11.4

20,997

US-$

6,803

7,003

-2.9

20,596

17,429

18.2

24,033

Europeb

Total revenue

2,905

2,880

0.9

8,456

8,344

1.3

11,335

Adjusted EBITDA AL

1,105

1,064

3.9

3,046

2,953

3.1

3,910

Systems Solutions

Order entry

802

697

15.1

2,821

2,485

13.5

4,564

Total revenue

971

955

1.7

2,992

3,082

-2.9

4,159

Adjusted EBITDA AL

80

77

3.9

215

207

3.9

279

Group Developmentb, c, d

Total revenue

787

719

9.5

2,349

2,142

9.7

2,883

Adjusted EBITDA AL

340

284

19.7

975

836

16.6

1,101

Comments on the table:
Reassignment between the operating segments. 
Consistent with efforts to implement the Group strategy pillar “Lead in business productivity,” Deutsche Telekom combined its B2B telecommunications business within its Germany operating segment as of July 1, 2020. This transfer affected the Germany, Europe, Systems Solutions, and GHS operating segments.
Moreover, effective January 1, 2021, Deutsche Telekom reassigned the responsibility for business and profit and loss for Deutsche Telekom IoT GmbH from the Systems Solutions operating segment to the Germany operating segment. Prior-year comparatives for the development of operations, customer numbers, headcount, and order entry were adjusted retrospectively. This internal reorganization does not affect the figures at Group level.
a   Sprint has been included in Deutsche Telekom’s consolidated financial statements as a fully consolidated subsidiary since April 1, 2020.
b  As of January 1, 2021, the Austrian cell tower business was reassigned from the Europe operating segment to the Group Development operating segment. Prior-year comparatives were not adjusted.
c   First-time consolidation of the Dutch MVNO and SIM provider Simpel as of December 1, 2020.
d  As of June 1, 2021, the Dutch cell tower business was sold to DIV and subsequently contributed into Cellnex Netherlands.


Operating segments: development of customer numbers in the third quarter of 2021

Sept. 30, 2021

thousands

June 30, 2021

thousands

Change

thousands

Change

%

Germany

Mobile customers

52,184

50,272

1,912

3.8

Of which contract customers

22,914

22,682

232

1.0

Fixed-network lines

17,543

17,555

-12

-0.1

Broadband lines

14,394

14,304

90

0.6

Of which fibera

10,175

9,971

204

2.0

Television (IPTV, satellite)

3,966

3,933

33

0.8

Unbundled local loop lines (ULLs)

3,744

3,853

-109

-2.8

United States

Customersb

106,920

104,789

2,131

2.0

Of which postpaid customersb

85,913

83,848

2,065

2.5

Of which prepaid customersb

21,007

20,941

66

0.3

Europe

Mobile customers

46,391

45,788

603

1.3

Of which contract customers

27,430

27,172

258

0.9

Fixed-network lines

9,126

9,111

15

0.2

Broadband customers

7,114

7,059

55

0.8

Television (IPTV, satellite, cable)

5,132

5,098

34

0.7

Group Development

Netherlands

Mobile customers

6,894

6,853

41

0.6

Fixed-network lines

721

707

14

2.0

Broadband lines

709

695

14

2.0

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. Prior-year comparatives were not adjusted.


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

Sept. 30, 2021
thousands

Sept. 30, 2020
thousands

Change

thousands

Change

%

Germany

Mobile customersa

52,184

47,564

4,620

9.7

Of which contract customersa

22,914

25,684

-2,770

-10.8

Fixed-network lines

17,543

17,602

-59

-0.3

Broadband lines

14,394

13,997

397

2.8

Of which fiberb

10,175

9,246

929

10.0

Television (IPTV, satellite)

3,966

3,787

179

4.7

Unbundled local loop lines (ULLs)

3,744

4,235

-491

-11.6

United States

Customersc

106,920

100,362

6,558

6.5

Of which postpaid customersc

85,913

79,732

6,181

7.8

Of which prepaid customersc

21,007

20,630

377

1.8

Europe

Mobile customers

46,391

45,743

648

1.4

Of which contract customers

27,430

26,628

802

3.0

Fixed-network lines

9,126

9,062

64

0.7

Broadband customers

7,114

6,856

258

3.8

Television (IPTV, satellite, cable)

5,132

4,977

155

3.1

Group Development

Netherlands

Mobile customersd

6,894

5,761

1,133

19.7

Fixed-network lines

721

661

60

9.1

Broadband lines

709

647

62

9.6

Comments on the table:
Reassignment between the operating segments. 
Consistent with efforts to implement the Group strategy pillar “Lead in business productivity,” Deutsche Telekom combined its B2B telecommunications business within its Germany operating segment as of July 1, 2020. This transfer affected the Germany, Europe, Systems Solutions, and GHS operating segments.
Moreover, effective January 1, 2021, Deutsche Telekom reassigned the responsibility for business and profit and loss for Deutsche Telekom IoT GmbH from the Systems Solutions operating segment to the Germany operating segment. Prior-year comparatives for the development of operations, customer numbers, headcount, and order entry were adjusted retrospectively. This internal reorganization does not affect the figures at Group level.
a  From January 1, 2021, around 3.6 million SIM cards of a service provider that were previously reported under contract customers are now reported under prepaid customers. Prior-year comparatives were not adjusted.
b Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH/B).
c  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. Prior-year comparatives were not adjusted.
d  The acquisition of the Dutch MVNO and SIM provider Simpel effective December 1, 2020 increased the mobile customer base by around one million. Prior-year comparatives were not adjusted.

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.

​​​About Deutsche Telekom: Company profile


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