Comparison of the Group’s expectations with actual figures

In the 2017 Annual Report, we outlined expectations for the 2018 financial year for our financial and non-financial key performance indicators anchored in our management system. The following tables summarize the pro-forma figures for 2017, the results expected for the reporting year, and the actual results achieved in 2018. The performance indicators that we also forecast in the 2017 Annual Report and their development are presented in the individual sections.

We once again look back on a successful financial year. Our performance in 2018 was dominated by substantial growth in revenue and adjusted EBITDA. Revenue reached EUR 75.7 billion, achieving the expected rate of increase – adjusted for exchange rate effects and changes in the composition of the Group, this increase was even more pronounced. Adjusted EBITDA also followed this trend, reaching EUR 23.3 billion – adjusted for exchange rate effects and changes in the composition of the Group, it even surpassed our expectations of EUR 23.6 billion by EUR 0.2 billion. Adjusted for exchange rate effects and changes in the composition of the Group, free cash flow exceeded our expectations by EUR 0.1 billion. At EUR 12.2 billion, cash capex (before spectrum investment) fell short of the figure forecast. Adjusted for exchange rate effects and changes in the composition of the Group, this shortfall amounts to just under EUR 0.2 billion, due primarily to lower capital expenditure in our Systems Solutions operating segment.

Our key performance indicator ROCE (return on capital employed) declined by 1.1 percentage points in the reporting year to 4.7 percent. This negative trend was due to a decrease in net operating profit after taxes (NOPAT) while the average amount of net operating assets (NOA) increased slightly over the year. NOPAT was impacted by negative special factors of EUR 2.2 billion in 2018, in particular due to expenses for staff-related measures and for non-staff-related restructuring totaling EUR 1.3 billion, as well as impairment losses totaling EUR 0.7 billion recognized primarily on goodwill. Even the significant improvement in adjusted EBITDA could not completely offset these effects. In the prior year, NOPAT had been affected by negative special factors of EUR 0.4 billion, while positive special factors, such as the reversal of impairment losses previously recognized for spectrum licenses at T-Mobile US (EUR 1.7 billion) or the sale of Strato (EUR 0.5 billion) and of further shares in Scout24 AG (EUR 0.2 billion), had an off-setting effect. Overall, NOPAT amounted to EUR 5.9 billion in 2018, down from EUR 6.8 billion in 2017. NOA increased from EUR 118.9 billion to EUR 124.0 billion in 2018 as a result of growth in intangible assets and property, plant and equipment, as well as an increase in the present value of unrecognized rental and lease obligations, reflecting Deutsche Telekom’s consistently high level of investment.

We are also very well on track with our non-financial key performance indicators, especially with regard to the development of fixed-network and mobile customer numbers. In our United States operating segment in particular, we again recorded continued strong mobile customer additions, both in the postpaid and prepay segments. The customer growth in our Europe operating segment is largely a result of the fixed-network lines added as part of the acquisition of UPC Austria. Even without this effect, the number of fixed-network lines grew by 3.2 percent. At the end of the reporting year, customer satisfaction came in at 67.7 points versus 67.2 points at the start of the year. Changes to the revenue shares contributed by each country and steps to harmonize the statistical units in the countries led to us recalculating the baseline figure for 2018 on the basis of the new structures these changes entailed. The new baseline thus diverges from the figure of 68.8 reported as of December 31, 2017. This moderate upward trend is attributable to a slight increase in the Europe operating segment. Germany and Systems Solutions each essentially matched their prior-year levels. Our goal for the coming years is to achieve a steady overall improvement in customer satisfaction. Order entry at our Systems Solutions operating segment improved markedly in 2018, thanks in part to the successful conclusion of major deals in the traditional IT business. Order entry in our growth areas also developed very well in the reporting year. For further information on the trends in our main financial and non-financial key performance indicators, please refer to the relevant passages in this section as well as in the section “Development of business in the operating segments”.