Deutsche Telekom at a glance
- We look back on a successful 2020 financial year and are well on track to meeting our growth forecast: Net revenue increased by 25.4 % to EUR 101.0 billion. In organic terms, revenue increased by EUR 2.9 billion or 3.0 %.
- Including the revenue contributions from the acquired entity Sprint and including exchange rate differences, our United States segment posted an increase in revenue of 51.4 %. In organic terms, revenue was up 5.0 % against the prior year.
- In our Germany and Europe segments, revenue on an organic basis remained on a par with the prior-year level. Revenue in the Europe segment was down 2.2 % on account of exchange rate effects.
- In our Systems Solutions operating segment, revenue decreased by 5.6 % year-on-year due to the decline in both traditional IT business and project business. The development of the digital solutions business was particularly affected by the impact of the coronavirus pandemic.
- In our Group Development segment, the 3.1 % increase in revenue was driven mainly by operational growth at T‑Mobile Netherlands and DFMG.
EBITDA AL (adjusted for special factors)a
- Adjusted EBITDA AL grew by 41.6 % to EUR 35.0 billion. All segments, with the exception of Systems Solutions, contributed to this growth. Excluding exchange rate effects and changes in the composition of the Group, our adjusted EBITDA AL increased by EUR 2.6 billion or 7.9 %.
- Adjusted EBITDA AL rose sharply by 88.6 % in our United States segment as a result of the acquisition of Sprint and, in particular, the growth in service and terminal equipment revenues. In organic terms, adjusted EBITDA AL grew by 10.8 % year-on-year.
- Our Germany segment recorded an increase in adjusted EBITDA AL of 1.6 %. In Europe the trend remained stable, with adjusted EBITDA AL up 2.1 % in organic terms. Adjusted EBITDA AL grew substantially in our Group Development segment, by 6.6 %.
- At 34.7 %, the Group’s adjusted EBITDA AL margin increased by 4.0 percentage points against the prior-year level. The adjusted EBITDA AL margin was 38.8 % in Germany, 34.5 % in Europe, and 34.3 % in the United States.
- EBIT increased by EUR 3.3 billion to EUR 12.8 billion.
- EBITDA AL was negatively affected by special factors of EUR 1.8 billion compared to expenses of EUR 1.6 billion in the prior year. Expenses of EUR 1.5 billion were recorded in connection with the business combination of T‑Mobile US and Sprint; this contrasted with expenses of EUR 0.5 billion in the prior year. Further expenses of EUR 0.4 billion in the first half of 2020, primarily in connection with the coronavirus pandemic, had been classified as special factors in the United States segment. Positive special factors in the amount of EUR 1.6 billion related to the partial reversal of impairment losses on spectrum licenses at T‑Mobile US. Other special factors in both the reporting year and the prior year were primarily attributable to staff-related measures.
- Depreciation and amortization were EUR 7.8 billion higher than in the prior year due in particular to the acquisition of Sprint.
- Impairment losses on non-current assets reduced EBIT by EUR 0.8 billion.
- Net profit increased by EUR 0.3 billion to EUR 4.2 billion.
- Loss from financial activities increased by EUR 1.9 billion to EUR 4.1 billion, largely due to an increase in finance costs of EUR 1.9 billion as a result of the financial liabilities acquired from Sprint and the restructuring begun in connection with this business combination and the related increase in financing, including the handling charges incurred for a briefly utilized bridge loan facility. Other financial income/expense was unchanged at EUR 0.1 billion. This was attributable, on the one hand, to positive effects from the measurement of the stock options to buy shares in T‑Mobile US received from SoftBank and, on the other, to lower measurement effects from embedded derivatives at T‑Mobile US compared with the prior year and higher interest expense from the measurement of provisions and liabilities.
- Tax expense came to EUR 1.9 billion compared with EUR 2.0 billion in the prior year.
- Profit attributable to non-controlling interests increased by EUR 1.2 billion to EUR 2.6 billion, mainly in our United States segment.
- Adjusted earnings per share amounted to EUR 1.20 compared with EUR 1.04 in the prior year.
- Net debt increased by EUR 44.2 billion to EUR 120.2 billion compared with the end of 2019.
- This increase was mainly attributable to the transfer of liabilities in connection with the business combination with Sprint (EUR 43.5 billion) and additions of lease liabilities (EUR 14.3 billion) primarily as a result of the modification of existing agreements with American Tower on the lease and use of cell sites in the United States. Other factors with an increasing effect were dividend payments (EUR 3.1 billion), including to non-controlling interests, as well as the acquisition of spectrum (EUR 1.7 billion) and forward-payer swaps concluded for borrowings at T‑Mobile US (EUR 1.1 billion).
- Free cash flow (EUR 10.8 billion), exchange rate effects (EUR 8.0 billion) as well as the sale of Sprint’s prepaid business to DISH (EUR 1.2 billion) in particular reduced net debt.
Cash capex (before spectrum investment)
- Cash capex (before spectrum investment) increased by EUR 3.9 billion to EUR 17.0 billion, largely on account of the inclusion of Sprint and the ongoing 5G network build-out in the United States. In Germany and Europe we continued to invest in the provision of broadband and fiber-optic technology and in 5G as part of our integrated network strategy.
- Cash capex (including spectrum investment) increased by EUR 4.3 billion to EUR 18.7 billion. In the reporting period, the United States segment acquired spectrum licenses for a total amount of EUR 1.1 billion. A further EUR 0.4 billion was attributable to spectrum acquisitions in the Europe segment and EUR 0.2 billion to spectrum acquisitions in the Group Development segment. The prior-year figure included EUR 1.2 billion for the acquisition of mobile spectrum licenses, which primarily related to the United States segment.
Free cash flow AL (before dividend payments and spectrum investment)a, b
- Free cash flow AL (before dividend payments and spectrum investment) decreased by EUR 0.7 billion year-on-year to EUR 6.3 billion.
- Excluding interest payments for zero-coupon bonds and the premature termination of forward-payer swaps in the United States segment, net cash from operating activities increased by EUR 4.4 billion. This was attributable in particular to the sustained positive performance of the operating segments, especially in the United States including Sprint.
- The increase was partially offset by EUR 3.9 billion higher cash capex (before spectrum investment) and in particular by higher interest payments, mainly as a result of the financial liabilities recognized and the restructuring begun in connection with the acquisition of Sprint, and the related increase in financing. Our contractual termination of a revolving factoring agreement in the Germany segment, and higher repayments of lease liabilities primarily in the United States segment, also had a negative effect.
- ROCE (return on capital employed) decreased by 0.5 percentage points in the reporting period to 4.6 %.
- This was due to stronger percentage growth in average operating assets (NOA) than in net operating profit after taxes (NOPAT). Both NOPAT and average NOA were affected by the business combination of T‑Mobile US and Sprint.
- Average NOA increased due in particular to the spectrum licenses; property, plant and equipment; and right-of-use assets acquired in the Sprint transaction, as well as the modification of the leases concluded with American Tower. In addition, the development of NOA reflects our consistently high investment volume. The positive development in NOPAT was driven primarily by a substantial increase in EBIT at T‑Mobile US.
For further information, please refer to the section “Development of business in the Group.”
For further information on the level of achievement of our main financial and non-financial key performance indicators, please refer to the relevant section “Development of business in the Group – Comparison of the Group’s expectations with actual figures.”
a aComparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined in 2019 following the introduction of the IFRS 16 accounting standard.
b bBefore interest payments for zero-coupon bonds and before termination of forward-payer swaps at T‑Mobile US.