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Comparison of the Group’s expectations with actual figures

In the 2019 Annual Report, we outlined expectations for the 2020 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 2019, the results expected for the reporting year, and the actual results achieved in 2020. The performance indicators that we also forecast in the 2019 Annual Report and their development are presented in the individual sections.

Comparison of the expected financial key performance indicators with actual figures

 

 

 

 

 

 

Pro forma figures
for 2019a

Expectations
for 2020

Results
in 2020

ROCE

%

5.1

n.a.b

4.6

Net revenue

billions of €

80.5

increase

101.0

Profit (loss) from operations (EBIT)

billions of €

9.5

increase

12.8

EBITDA AL (adjusted for special factors)c

billions of €

24.7

minimum 35

35.0

Free cash flow AL (before dividend payments and spectrum investment)c, d

billions of €

7.0

minimum 6.0

6.3

Cash capex (before spectrum investment)c

billions of €

(13.1)

(around 17)

(17.0)

Rating (Standard & Poor’s, Fitch)

 

BBB+

from A- to BBB

BBB, BBB+

Rating (Moody’s)

 

Baa1

from A3 to Baa2

Baa1

a

The effects of the business combination with Sprint are not included in the pro forma figures for 2019.

b

The expected ROCE published in the 2019 combined management report (2019 Annual Report) is no longer comparable due to the inclusion of Sprint since April 1, 2020. The figure forecast in 2019 no longer reflects the impact of the business combination with Sprint on NOA and NOPAT. Based on the pro forma figure for 2019 of 5.1 % we expected a “slight decrease” with the Group structure existing at that point in time.

c

Contrary to the forecasts published in the 2019 combined management report (2019 Annual Report), we adjusted the guidance for 2020 for EBITDA AL (adjusted for special factors), free cash flow AL (before dividend payments and spectrum investment), and cash capex (before spectrum investment) during the course of the year (Interim Group Reports as of June 30, 2020 and September 30, 2020).

d

Before interest payments for zero-coupon bonds and before termination of forward-payer swaps at T‑Mobile US.

Comparison of the expected financial key performance indicators with actual figures

 

 

 

 

 

 

 

Pro forma figures
for 2019a

Expectations
for 2020

Results
in 2020

 

ROCE

%

5.1

n.a.b

4.6

 

Net revenue

billions of €

80.5

increase

101.0

 

Profit (loss) from operations (EBIT)

billions of €

9.5

increase

12.8

 

EBITDA AL (adjusted for special factors)c

billions of €

24.7

minimum 35

35.0

 

Free cash flow AL
(before dividend payments and spectrum investment)c, d

billions of €

7.0

minimum 6.0

6.3

 

Cash capex (before spectrum investment)c

billions of €

(13.1)

(around 17)

(17.0)

 

Rating (Standard & Poor’s, Fitch)

 

BBB+

from A- to BBB

BBB, BBB+

 

Rating (Moody’s)

 

Baa1

from A3 to Baa2

Baa1

 

a

The effects of the business combination with Sprint are not included in the pro forma figures for 2019.

b

The expected ROCE published in the 2019 combined management report (2019 Annual Report) is no longer comparable due to the inclusion of Sprint since April 1, 2020. The figure forecast in 2019 no longer reflects the impact of the business combination with Sprint on NOA and NOPAT. Based on the pro forma figure for 2019 of 5.1 % we expected a “slight decrease” with the Group structure existing at that point in time.

c

Contrary to the forecasts published in the 2019 combined management report (2019 Annual Report), we adjusted the guidance for 2020 for EBITDA AL (adjusted for special factors), free cash flow AL (before dividend payments and spectrum investment), and cash capex (before spectrum investment) during the course of the year (Interim Group Reports as of June 30, 2020 and September 30, 2020).

d

Before interest payments for zero-coupon bonds and before termination of forward-payer swaps at T‑Mobile US.

Comparison of the expected non-financial key performance indicators with actual figures

 

 

 

 

 

 

Pro forma figures
for 2019a

Expectations
for 2020

Results
in 2020

Customer satisfaction (TRI*M index)

 

67.3

slight increase

72.2

Employee satisfaction (commitment index)b

 

4.0

stable trend

4.0

Fixed-network and mobile customers

 

 

 

 

Germany

 

 

 

 

Mobile customers

millions

46.2

increase

48.5

Fixed-network lines

millions

17.8

slight decrease

17.6

Retail broadband lines

millions

13.7

slight increase

14.1

United States

 

 

 

 

Postpaid customers

millions

47.0

increase

81.4

Prepaid customers

millions

20.9

slight increase

20.7

Europe

 

 

 

 

Mobile customers

millions

46.2

stable trend

45.6

Fixed-network lines

millions

9.1

stable trend

9.1

Broadband customers

millions

6.7

increase

7.0

Systems Solutions

 

 

 

 

Order entryc

billions of €

4.7

stable trend

4.6

a

The effects of the business combination with Sprint are not included in the pro forma figures for 2019.

b

Commitment index as per the 2019 employee survey.

c

Pro forma figure for 2019 adjusted retrospectively during the year (Interim Group Report as of September 30, 2020) in connection with the realignment of the B2B telecommunications business.

Comparison of the expected non-financial key performance indicators with actual figures

 

 

 

 

  

 

 

Pro forma figures
for 2019a

Expectations
for 2020

Results
in 2020

 

Customer satisfaction (TRI*M index)

 

67.3

slight increase

72.2

 

Employee satisfaction (commitment index)b

 

4.0

stable trend

4.0

 

Fixed-network and mobile customers

 

 

 

 

 

Germany

 

 

 

 

 

Mobile customers

millions

46.2

increase

48.5

 

Fixed-network lines

millions

17.8

slight decrease

17.6

 

Retail broadband lines

millions

13.7

slight increase

14.1

 

United States

 

 

 

 

 

Postpaid customers

millions

47.0

increase

81.4

 

Prepaid customers

millions

20.9

slight increase

20.7

 

Europe

 

 

 

 

 

Mobile customers

millions

46.2

stable trend

45.6

 

Fixed-network lines

millions

9.1

stable trend

9.1

 

Broadband customers

millions

6.7

increase

7.0

 

Systems Solutions

 

 

 

 

 

Order entryc

billions of €

4.7

stable trend

4.6

 

a

The effects of the business combination with Sprint are not included in the pro forma figures for 2019.

b

Commitment index as per the 2019 employee survey.

c

Pro forma figure for 2019 adjusted retrospectively during the year (Interim Group Report as of September 30, 2020) in connection with the realignment of the B2B telecommunications business.

We look back on a successful financial year. The business combination of T‑Mobile US and Sprint in the United States is a major success. Our performance in 2019 was once again dominated by substantial growth in revenue and adjusted EBITDA AL. At EUR 101.0 billion, revenue increased by much more than expected. This is partly due to the fact that the effects of the transaction with Sprint had not been included in the guidance for 2020. But even assuming a comparable composition of the Group and excluding exchange rate effects, we recorded an increase of EUR 2.9 billion or 3.0 %. Adjusted EBITDA AL also followed this trend, increasing substantially year-on-year to EUR 35.0 billion. EBIT also echoed this clear growth trend, up by EUR 3.3 billion. At EUR 6.3 billion, we exceeded the guidance for free cash flow AL (before dividend and spectrum investment), which we had revised upwards in the course of the year to EUR 6.0 billion. At EUR 17.0 billion, cash capex (before spectrum investment) exactly matched our most recent guidance figure. ROCE (return on capital employed) decreased by 0.5 percentage points in the reporting period to 4.6 %. This was mainly down to the assets acquired from Sprint, in particular spectrum licenses.

We are also well on track with our non-financial key performance indicators. In addition to substitution effects, this is thanks to our good coronavirus crisis management: the focus on expanding digital sales channels was one factor contributing to a near normalization of customer development. As such, the customer numbers in our Germany and Europe operating segment developed in line with expectations. In the United States operating segment, we again recorded strong postpaid customer additions: including the customers acquired in connection with the Sprint transaction and the adjustment of the customer base carried out in the course of the year, the number of customers increased by 5.5 million. By contrast, the development in the number of prepaid customers fell short of our original expectation on account of the specific adjustments made to the customer base during the year in order to harmonize the customer definition in connection with the Sprint transaction. Order entry in our Systems Solutions operating segment initially fell short of our expectations earlier in the year. The effects of the coronavirus pandemic resulted in delays in current projects and the postponement of deal closures, especially with our automotive customers in the digital solutions area. The resulting mid-year lull in order entry, however, was almost completely offset by the year-end with a number of major deals signed in other areas.

At the end of the reporting year, customer satisfaction came in at 72.2 points compared with an adjusted baseline figure of 67.9 points at the start of the year. Following changes to the revenue shares contributed by each country and in order to create an equivalent basis for comparing the Group’s expectations with actual figures, we recalculated the baseline figure for 2020 on the basis of the new structures these changes entailed. The new baseline thus diverges from the figure of 67.3 reported as of December 31, 2019. The Germany, Europe, and Systems Solutions operating segments contributed to the positive development with improvements in customer loyalty. Our goal for the coming years is to further improve customer satisfaction in all areas.

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.”

Postpaid
Customers who pay for communication services after receiving them (usually on a monthly basis).
Glossary
Prepaid
In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
Glossary