Statement by the Board of Management on the expected development of the Group
In 2020, we broke new ground: the business combination of T‑Mobile US and Sprint has made us a Group generating revenue of over EUR 100 billion, with almost 230,000 employees worldwide and a unique 5G spectrum position on our most important mobile communications markets. At the same time, we successfully continued our growth course on both sides of the Atlantic despite the difficult economic environment as a result of the coronavirus pandemic. Furthermore, it is already clear that the synergies arising from the business combination of T‑Mobile US and Sprint are impacting on our results faster than previously expected. We want to use this strong starting position going forwards to underpin our success with solid financial growth rates, further extend our technology leadership with the best state-of-the-art networks, and thereby continue to systematically implement our Leading European Telco strategy.
As communicated at our 2018 Capital Markets Day, we are targeting the following compound annual growth rates (CAGR) for the period from 2017 through 2021 – taking into account the implications of the business combination of T‑Mobile US and Sprint:
- Revenue: 1 to 2 %
- Adjusted EBITDA: 2 to 4 %
- Free cash flow (before dividend payments and spectrum investment): around 10 %
For 2021, we expect to post the following year-on-year trends, assuming a comparable consolidated group and constant exchange rates:
- Revenue is likely to increase again slightly in 2021. We expect service revenue to increase.
- Adjusted EBITDA AL is expected to be EUR 37.0 billion in 2021. In the reporting year, adjusted EBITDA AL came in at EUR 35.0 billion; on a like-for-like basis, i.e., adjusted for comparability with the adjusted EBITDA AL forecast for 2021, adjusted EBITDA AL stood at EUR 37.6 billion.
- Free cash flow AL is expected to grow to around EUR 8.0 billion in 2021. Free cash flow AL in 2020 was EUR 6.3 billion; on a like-for-like basis, i.e., adjusted for comparability with the free cash flow AL forecast for 2021, free cash flow AL stood at EUR 6.6 billion.