Germany For further information on changes resulting from the first-time application of the IFRS 16 “Leases” accounting standard, please refer to the section “Management of the Group.” Customer development (XLS:) Download thousands Dec. 31, 2019 Dec. 31, 2018 Change Change % Dec. 31, 2017 Mobile customers 46,189 44,202 1,987 4.5 43,125 Contract customers 25,291 25,435 (144) (0.6) 25,887 Prepay customers 20,898 18,767 2,131 11.4 17,238 Fixed-network lines 17,824 18,625 (801) (4.3) 19,239 Of which: retail IP-based 17,479 15,356 2,123 13.8 11,996 Retail broadband lines 13,730 13,561 169 1.2 13,209 Of which: optical fiber 8,529 7,236 1,293 17.9 5,803 Television (IPTV, satellite) 3,618 3,353 265 7.9 3,139 Unbundled local loop lines (ULLs) 4,638 5,236 (598) (11.4) 6,138 Wholesale broadband lines 7,372 6,722 650 9.7 5,639 Of which: optical fiber 5,863 4,970 893 18.0 3,783 Total In Germany we continue to be market leader both in terms of fixed-network and mobile revenues. This success is attributable to our high-performance networks. We offer best customer experience with award-winning network quality – in the fixed network as in mobile communications – and with a broad product portfolio and excellent service. Thanks to the sustained popularity of our convergent MagentaEINS offering, our MagentaEINS customer base totaled 4.7 million at the end of 2019. High demand for mobile rate plans with included data volumes resulted in an increase in the number of branded contract customers under the Telekom and congstar brands. Our initiatives in the automotive sector drove growth in the number of prepay customers. We made further headway with our IP transformation program, and by the end of 2019 had migrated 24.8 million retail and wholesale lines to IP, bringing the total migration level to 99 percent of all lines. We continued to see strong demand for our fiber-optic-based lines. As of the end of the reporting year, the number of these lines had increased to around 14.4 million overall. In other words, we connected 2,186 thousand lines to our fiber-optic network in Germany in 2019. With the progress made in fiber-optic rollout and vectoring technology, we also successfully drove forward the marketing of higher bandwidths. Mobile communications We won a total of 1,987 thousand mobile customers in 2019. Of these, 549 thousand were contract customers under our Telekom and congstar brands. The number of mobile contract customers with resellers (service providers) decreased, primarily due to the volatile developments at some of our service providers. The number of prepay customers increased by 2,131 thousand. The StreamOn option, with which customers can stream certain music, gaming, or video services without reducing their included data allowance, was extremely popular. At the end of 2019, around 3.1 million customers were using this option, up by almost 70 percent year-on-year. Fixed network Due to the persistently challenging development in the fixed-network market, primarily owing to aggressive pricing offers of competitors, we are pursuing new paths in marketing with innovative products. Our focus is on convergent offerings and their further development – for instance, MagentaTV with exclusive access to a wide range of additional content in the Megathek library and via popular streaming services – as well as TV lines and fiber-optic lines. The number of broadband lines continues to rise steadily, with the growth in fiber-optic-based lines particularly marked. This year, we recorded an increase of 265 thousand in the number of TV customers. In the traditional fixed network, the number of lines decreased by 801 thousand. Our MagentaZuhause rate plans offer a comprehensive product portfolio for the fixed network based on IP technology and rate plan-specific bandwidths. MagentaZuhause Hybrid bundles fixed-network and mobile technology in a single router. To date, 519 thousand customers have selected this innovative product. Wholesale As of December 31, 2019, fiber-optic lines accounted for 48.8 percent of all lines – 7.2 percentage points higher than at the end of 2018. This growth was driven largely by high demand for our contingent model. The number of unbundled local loop lines decreased by 598 thousand or 11.4 percent compared with the end of the prior year. This is due first to the move to higher-quality fiber-optic lines, and second to retail customers switching to cable operators. In addition, our wholesale customers are migrating their retail customers to their own fiber-optic lines. The total number of lines in the wholesale sector increased slightly against the prior year. Development of operations (XLS:) Download millions of € 2019 2018 Change Change % 2017 a Comparatives for 2018 were calculated on a pro forma basis for the redefined key performance indicators resulting from the introduction of the IFRS 16 accounting standard. TOTAL REVENUE 21,886 21,700 186 0.9 21,931 Consumers 11,621 11,543 78 0.7 11,797 Business Customers 6,181 6,082 99 1.6 6,017 Wholesale 3,739 3,720 19 0.5 3,747 Other 345 355 (10) (2.8) 370 Profit from operations (EBIT) 4,063 3,969 94 2.4 4,276 EBIT margin % 18.6 18.3 19.5 Depreciation, amortization and impairment losses (4,256) (4,042) (214) (5.3) (3,828) EBITDA 8,319 8,012 307 3.8 8,104 EBITDA ALa 8,295 7,918 377 4.8 n.a. Special factors affecting EBITDA (425) (598) 173 28.9 (308) EBITDA (adjusted for special factors) 8,744 8,610 134 1.6 8,412 EBITDA AL (ADJUSTED FOR SPECIAL FACTORS)a 8,720 8,516 204 2.4 n.a. EBITDA AL margin (adjusted for special factors)a % 39.8 39.2 n.a. CASH CAPEX (4,349) (4,240) (109) (2.6) (4,214) Total revenue Total revenue was up slightly year-on-year by 0.9 percent, mainly due to an increase of 2.4 percent in mobile business thanks to higher service and terminal equipment revenues. Higher IT and broadband revenues year-on-year had a positive effect on fixed-network business and almost completely offset the decrease in fixed-network revenue (primarily from voice components). Revenue from Consumers grew by 0.7 percent year-on-year. Volume-driven declines in revenue from voice components continue to strongly impact on traditional fixed-network business. By contrast, revenue from broadband business increased. Mobile business also grew – by 1.9 percent. Revenue from Business Customers increased by 1.6 percent. Mobile revenues increased year-on-year by 3.5 percent and IT revenues by 19.0 percent. In the fixed network, by contrast, a decline was recorded in traditional voice telephony, due largely to the increasing number of customers moving to flat-rate plans in connection with the migration to IP. Wholesale revenue was up slightly on the prior-year level, by 0.5 percent. Positive revenue contributions, largely from our contingent model and a regulation-induced price increase in ULL monthly charges, offset the generally declining level of revenues in ULL and voice business driven by volume losses. EBITDA AL, adjusted EBITDA AL EBITDA AL amounted to EUR 8.3 billion in 2019, an increase of 4.8 percent against the prior year. In addition to the positive contributions from the development of revenue, this increase was primarily due to lower personnel costs, mainly as a result of a lower headcount, and a decline in expenses recognized as special factors for socially responsible instruments in connection with the staff restructuring. The successful implementation of efficiency and digitalization measures also had a positive impact. Adjusted EBITDA AL increased by 2.4 percent to EUR 8.7 billion year-on-year due to the reasons mentioned. Our adjusted EBITDA AL margin increased to 39.8 percent, up from 39.2 percent in the prior year. EBIT Profit from operations increased by 2.4 percent to around EUR 4.1 billion year-on-year. EBIT was negatively affected by higher depreciation, amortization and impairment losses on account of sustained high investments in our network infrastructure. Cash capex Cash capex increased by 2.6 percent year-on-year. As part of our integrated network strategy, we again made significant investments in the broadband and fiber-optic rollout, our IP transformation, and our mobile infrastructure. schließen Vectoring Vectoring is a noise-canceling technology that removes the electro-magnetic interference between lines, enabling higher bit rates. However, in order to cancel noise, the operator must have control over all lines. This means that other operators cannot install their own technology at the cable distribution boxes. schließen Fiber-optic lines Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH). schließen IP - Internet Protocol Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications. schließen Router A coupling element that connects two or more sub-networks. Routers can also extend the boundaries of a network, monitor data traffic, and block any faulty data packets. schließen Contingent model Contract concluded over a long period of time with defined advance payment and minimum purchase requirement. In return, the resellers pay a reduced monthly charge for VDSL. This allows them to put together interesting offers for their own consumers without having to invest in fiber-optic lines of their own. This improves the utilization of Telekom Deutschland GmbH’s existing VDSL network. The current “contingent model” is being developed further to reflect the network build-out in terms of availability and bandwidth. schließen Retail The sale of goods and services to end users, as opposed to resale or wholesale. schließen Fiber-optic lines Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH). schließen Wholesale Refers to the business of selling services to third parties who sell them to their own retail customers either directly or after further processing. schließen ULL - Unbundled Local Loop Competitors whose own networks do not reach into customers’ premises can rent unbundled local loop lines from Deutsche Telekom. Their networks end at the local exchanges. The ULL bridges the distance between the local exchange and the termination point on the customer’s premises or in their home, so it is also known as the “last mile.”
