Our corporate strategy: Leading European Telco

Since 2014, we have been aligning all of our corporate activities with our Leading European Telco strategy – with the aim of becoming Europe’s leading telecommunications provider.

This strategy has proved very successful: In terms of market capitalization, we are Europe’s highest-value telecommunications company (as of December 31, 2020). Not only is our Group stable, but it is growing, too – as confirmed by our key financial KPIs and customer development on both sides of the Atlantic. We raised our full-year guidance for 2020 in the course of the year, despite the coronavirus pandemic. Nevertheless, the pandemic has not left us unscathed. For example, temporary travel restrictions have resulted in lower roaming and visitor revenues. Our terminal equipment business also felt the squeeze, as did our corporate customer business. While it is impossible to quantify the long-term impact of the coronavirus pandemic, we see it as both a risk and an opportunity: One the one hand, we expect to see appreciable effects on the economy as a whole, while on the other the pandemic has given a boost to the digitalization trend. Additional trends are emerging that affect both us as a Group and society as a whole:

• The parallel build-out of broadband and mobile infrastructure (optical fiber and 5G) calls for high investments and innovative approaches to implementation.
• Competition in the telecommunications sector is intense and changing: Not only are telecommunications companies using the digital transformation to enhance their core business efficiency, but we are also seeing companies from other industries pushing onto the market with lean, software-based production models. Providers such as Google and Microsoft are expanding into the global connectivity field.
• As data availability continues to grow and artificial intelligence becomes more advanced, new usage scenarios are opening up both in internal production processes (such as data-driven network build-out) and in business-to-customer interaction (e.g., hyper-personalization). At the same time, we need to equip people with the relevant skills and expertise to keep pace with these developments, and define new standards for handling data responsibly in the digital society.
• The rising tide of digitalization and data availability goes hand in glove with the potential for abuse – reflected in trends such as the huge surge in cybercrime, which has rapidly escalated from targeted attacks to high-volume crime. These trends can both dramatically affect the stability of critical infrastructure and influence political relations. Political and economic relations are under increasing influence from the growing importance and economic power of a handful of global tech enterprises, known as hyperscalers that primarily operate from the United States (Microsoft, Google, Amazon) and China (Tencent, Alibaba).
• Sustained economic globalization, world population growth, and increasing use of digital technologies all put a strain on the available resources. It is thus imperative that we find a sustainable, more ecological way of doing business and act with a greater focus on social responsibility.

We are tackling these developments head on – and with measurable success: Unlike our European competitors, our share price recovered to pre-crisis levels following the general downturn at the height of the first coronavirus wave. This is thanks not least to our coherent Group strategy. We continue to systematically implement our Leading European Telco strategy. Despite over 50 % of our revenue coming from the United States, we are still pursuing our ambition to become the Leading European Telco. Because this is how we see ourselves: We are a European company with a strong U.S. arm. In parallel, we leverage our international footprint to generate synergies across the Group and to carry weight alongside the global tech giants. Our goal here is not to micromanage all local units, but to provide a strategic framework and to utilize local strengths (networks, competitive standing).

Our claim to leadership ranges over the dimensions of customer experience, technology, and business customer productivity. From this we derive three specific areas of operation with which we are creating the foundation for future organic growth. Because only if we grow can we sustainably secure our earnings performance and continue to meet the demands of our investors. Two areas of operation contribute to this growth target and provide a framework for our actions: “Save for growth investments,” and “Simplify, digitalize, accelerate & act responsibly.”

Corporate strategy: Leading European Telco