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Germany

Customer development

thousands

 

 

 

 

 

 

Dec. 31, 2020

Dec. 31, 2019

Change

Change
%

Dec. 31, 2018

Mobile customers

48,526

46,189

2,337

5.1

44,202

Contract customers

26,037

25,291

746

2.9

25,435

Prepaid customers

22,490

20,898

1,592

7.6

18,767

Fixed-network lines

17,590

17,824

(234)

(1.3)

18,625

Retail broadband lines

14,118

13,730

388

2.8

13,561

Of which: optical fiber

9,515

8,529

986

11.6

7,236

Television (IPTV, satellite)

3,864

3,618

246

6.8

3,353

Unbundled local loop lines (ULLs)

4,101

4,638

(537)

(11.6)

5,236

Wholesale broadband lines

7,733

7,372

361

4.9

6,722

Of which: optical fiber

6,433

5,863

570

9.7

4,970

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. We want to offer our customers a seamless and technology-neutral telecommunications experience. To this end we market not only fixed-network and mobile products, but also convergence products such as our brand-new MagentaEINS Plus rate plan, introduced in September 2020. This new offering bundles our connectivity services for home and on the move in a single contract. Our MagentaEINS convergence product remains very popular among customers, with some 5.1 million customers having opted for MagentaEINS by the end of 2020. That corresponds to an increase of 7.5 % against year-end 2019.

We continued to see strong demand for our fiber-optic-based lines. As of the end of December 2020, the total number of lines had increased to over 15.9 million. In other words, we connected a further 1.6 million lines to our fiber-optic network in Germany in 2020. 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 2.3 million mobile customers in 2020. Of these, 649 thousand were high-value contract customers under our Telekom and congstar brands. Sustained high demand for mobile rate plans with included data volumes alongside our multiple award-winning network quality continues to drive this trend. The number of mobile contract customers with resellers (service providers) increased, primarily due to the volatile developments at some of our service providers. We have added 1.6 million prepaid customers since the start of the year, largely on the back of our automotive offerings targeted specifically at business customers.

For further information on our awarding-winning network quality, please refer to the section “Highlights in the 2020 financial year.”

The StreamOn option, with which customers can stream certain music, gaming, or video services without reducing their included data allowance, remains very popular. At the end of 2020, almost 4 million customers were using this option, up by around 30 % 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. Our focus is on convergence offerings and further development of such products: We offer MagentaTV with exclusive access to a wide range of additional content in the Megathek library and via popular streaming services, and with TV lines and fiber-optic-based lines and, since September 2020, our MagentaEINS Plus rate plan. Our brand-new convergence product offers customers Germany-wide unlimited data plus added benefits for the community and no minimum contract term.

The number of broadband lines increased by 388 thousand to over 14.1 million in 2020. After completing the IP migration, broadband customer additions were up significantly compared with 170 thousand additions in 2019. We added 246 thousand TV customers in 2020, increasing the customer base by 6.8 % compared with the end of the prior year. In traditional fixed-network business, the number of lines declined by 234 thousand. This marked a considerable reduction in line losses compared with the prior-year period, which had been affected in particular by the migration of consumers to IP. As expected, the number of fixed-network lines therefore declined slightly to around 17.6 million lines.

Wholesale

As of December 31, 2020, fiber-optic-based lines accounted for 54.4 % of all lines – 5.5 percentage points higher than at the end of 2019. This growth was driven largely by high demand for our contingent model. The number of unbundled local loop lines decreased by 537 thousand compared with the end of the prior year, partly as a result of the shift to higher-value fiber-optic-based lines and partly from consumers switching to cable providers. In addition, our wholesale customers are migrating their retail customers to their own fiber-optic-based lines. The total number of wholesale lines at the end of 2020 was around 11.8 million.

Development of operations

millions of €

 

 

 

 

 

 

 

 

2020

2019

Change

Change
%

2018

Total revenue

 

23,779

23,730

49

0.2

23,662

Consumers

 

11,723

11,602

121

1.0

11,523

Business Customers

 

8,861

8,954

(93)

(1.0)

9,032

Wholesale

 

2,983

2,944

39

1.3

2,874

Other

 

212

230

(18)

(7.8)

233

Profit (loss) from operations (EBIT)

 

4,085

4,327

(242)

(5.6)

4,181

EBIT margin

%

17.2

18.2

 

 

17.7

Depreciation, amortization and impairment losses

 

(4,440)

(4,341)

(99)

(2.3)

(4,116)

EBITDA

 

8,525

8,668

(143)

(1.6)

8,296

Special factors affecting EBITDA

 

(751)

(453)

(298)

(65.8)

(628)

EBITDA (adjusted for special factors)

 

9,276

9,121

155

1.7

8,924

EBITDA ALa

 

8,480

8,630

(150)

(1.7)

8,202

Special factors affecting EBITDA ALa

 

(751)

(453)

(298)

(65.8)

(628)

EBITDA AL (adjusted for special factors)a

 

9,231

9,083

148

1.6

8,829

EBITDA AL margin (adjusted for special factors)a

%

38.8

38.3

 

 

37.3

Cash capexb

 

(4,172)

(4,414)

242

5.5

n.a.

a

Comparatives for 2018 were calculated on a pro forma basis for the key performance indicators redefined as of January 1, 2019 following the introduction of the IFRS 16 accounting standard.

b

Retrospective changes in connection with realignment of the B2B telecommunications business have not been applied to cash capex for the 2018 financial year.

Total revenue

In 2020 we generated total revenue of EUR 23.8 billion, which was up slightly by 0.2 % year-on-year. Growth in fixed-network business, driven largely by broadband revenue growth of 5.7 % and a 2.3 % rise in revenue from variable call charges, offset declining revenues in mobile communications business. Overall, revenue was affected by the effects of the coronavirus pandemic, such as temporary travel restrictions, lockdowns, and the deteriorated economic situation. This had a negative impact on roaming, visitor, and terminal equipment revenues, and resulted in delays or postponements to current orders in B2B telecommunications business.

Revenue from Consumers grew by 1.0 % 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 grew by 4.8 % while revenue from fixed-network terminal equipment increased by 5.6 % on the back of strong terminal equipment leasing business. Mobile business declined by 1.1 % primarily due to lower revenues from mobile terminal equipment business. In addition, negative trends in roaming and visitor revenues in consequence of the coronavirus pandemic had an impact.

Revenue from Business Customers declined by 1.0 %. IT revenues increased by 3.4 % and mobile revenues declined by 0.9 % compared with the prior-year period. Business customer operations were also affected by the aforementioned negative impact of the coronavirus crisis, particularly in mobile business. The B2B telecommunications business, which was integrated into the Germany operating segment effective July 1, 2020, reported a decline in revenue at the end of 2020 of 3.2 % year-on-year. This is attributable to the deteriorated economic situation in consequence of the coronavirus pandemic and to market-related factors such as price erosion and competitive pressure in solutions business.

For further information on the realignment of the B2B telecommunications business, please refer to the section “Group organization.”

Wholesale revenue was up at the end of 2020 by 1.3 % year-on-year. The positive trend in the number of fiber-optic-based lines, driven mainly by the contingency model, continued in 2020 with an increase of 9.7 % compared with the end of 2019 and partially offset the decrease in revenues from declining volumes of unbundled local loop lines. The coronavirus pandemic had positive effects on voice revenues in the second and fourth quarter of 2020.

Adjusted EBITDA AL, EBITDA AL

EBITDA AL adjusted for special factors increased by EUR 148 million or 1.6 % year-on-year to EUR 9.2 billion. Our adjusted EBITDA AL margin increased to 38.8 %, up from 38.3 % in the prior year. The main reasons for this increase are a sound operational development, driven by high-value revenue growth and enhanced cost efficiency. Lower personnel costs resulting, among other factors, from the smaller headcount and the ongoing implementation of efficiency enhancement and digitalization measures reduced costs. Higher expenses recognized as special factors for socially responsible instruments in connection with the staff restructuring, in particular the dedicated retirement program, had an offsetting effect. EBITDA AL decreased in 2020 by 1.7 % year-on-year to EUR 8.5 billion.

EBIT

Profit from operations was down 5.6 % year-on-year to around EUR 4.1 billion, partly as a result of the slightly lower EBITDA level together with higher depreciation, amortization and impairment losses year-on-year, mainly on account of higher depreciation of property, plant and equipment.

Cash capex

Cash capex decreased by EUR 242 million or 5.5 % compared with the prior-year period. This is mainly due to the fact that cash outflows in connection with the acquisition of 5G mobile spectrum licenses in the 2019 financial year were shown in cash capex and, since 2020, have been presented in net cash from/used in financing activities on account of the payment plan agreed with the Federal Republic of Germany. Cash capex also declined as a result of the changed accounting treatment of grants receivable from funding projects for the broadband build-out as of the start of the third quarter of 2019. Capital expenditure totaled around EUR 4.2 billion in 2020, with much of this figure going towards the build-out of our 5G and fiber-optic networks. The number of households connected by pure fiber-optic lines increased to over 2 million at the end of 2020. In mobile communications, our customers benefit from greater LTE network coverage. As of December 31, 2020, we supplied 98.7 % of households in Germany with LTE. More than two thirds of the German population can already use 5G.

5G
New communications standard (launched from 2020), which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things.
Glossary
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.
Glossary
Fiber-optic lines
Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH).
Glossary
Fixed-network lines
Lines in operation excluding internal use and public telecommunications, including IP-based lines. The totals reported in the combined management report were calculated on the basis of precise figures and rounded to millions or thousands. Percentages were calculated on the basis of the figures shown.
Glossary
IP – Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
Glossary
LTE – Long-Term Evolution
4G mobile communications technology that uses, for example, wireless spectrum on the 800 MHz band freed up by the digitalization of television. Powerful TV frequencies enable large areas to be covered with far fewer radio masts. LTE supports speeds of over 100 Mbit/s downstream and 50 Mbit/s upstream.
Glossary
Mobile customers
In the combined management report, one mobile communications card corresponds to one customer. The totals were calculated on the basis of precise figures and rounded to millions or thousands. Percentages were calculated on the basis of the figures shown (see also SIM card).
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
Retail
The sale of goods and services to end users, as opposed to resale or wholesale.
Glossary
Roaming
Refers to the use of a communication device or just a subscriber identity in a visited network rather than one’s home network. This requires the operators of both networks to have reached a roaming agreement and switched the necessary signaling and data connections between their networks. Roaming comes into play, for example, when cell phones and smartphones are used across national boundaries.
Glossary
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.”
Glossary
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 in the street cabinets.
Glossary
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.
Glossary