Supporting areas of operation

Save for growth investments

Future growth requires adequate investment. To this end, we are investing in our own innovativeness as well as integrating successful new developments from outside our Company. Thanks to our strict cost discipline, we generate the funds we need to finance this investment and safeguard our competitiveness. We will therefore systematically continue on this path of cost transformation. In the long term, we also want to be Europe’s leading telecommunications provider in terms of efficiency.

We take a value-oriented approach to managing our investment portfolio. Business areas that cannot be adequately developed within the Group are disposed of. Consequently, we concluded an agreement concerning the sale of the 54 % stake in Telekom Romania Communications S.A., which operates the Romanian fixed-network business, to Orange Romania. The transaction, which comprises a purchase price of EUR 268 million, is subject to approval by the authorities as well as other closing conditions. The transaction is expected to be closed in the second half of 2021. On the other hand, we bolster our growth ambitions by means of equity investments and acquisitions. In this context, T‑Mobile US and Sprint combined their two businesses effective April 1, 2020 to form the “all-new,” larger T‑Mobile US. The new T‑Mobile US created by the business combination has market capitalization of around USD 167 billion (based on the share price of the new T‑Mobile US on December 31, 2020). Moreover, we secured call options to increase our holding in T‑Mobile US (from SoftBank shares) and appointed an experienced new management team. Not only is the combination of business activities under an all-new T‑Mobile US consistent with our strategy of successfully developing our U.S. business (including market capitalization growth of over 400 % so far in the last five years), it will also bolster the customer-oriented Un-carrier strategy and allow us to roll out 5G technology across the United States faster and better than our competitors. The course is already set: In the reporting year we moved up to the #2 spot in terms of customer numbers in the U.S. mobile communications market, we won more than 5.5 million new customers in 2020 alone, and we continue to grow. Going forward our focus is on becoming #1 in the U.S. market and leveraging the planned synergies from the business combination worth around USD 43 billion (after integration costs). In the Netherlands, too, we have completed the integration of Tele2 Netherlands and continue to grow on this stronger basis. We successfully launched ourselves as an FMC provider and secured the spectrum necessary to maintain our leading position in terms of network coverage. We also acquired the Dutch MVNO and SIM provider Simpel as of December 1, 2020 along with its customer base of around 1 million customers nationwide. With a total of 6.8 million customers, we are now the Netherlands’ largest provider of mobile communications.

Simplify, digitalize, accelerate & act responsibly

Simplicity in our offers and in our organization makes the digital transformation of our core business easier. In this way, we increase our implementation speed – both in the interaction with customers and in the implementation of new, strategic initiatives. This is why we want to become simpler, more digital, and ultimately more agile.

There are two main thrusts to our pursuit of simplicity. First, we want to offer our customers intuitive products and simple rate plans, like MagentaEINS Plus, MagentaTV, or the unlimited MagentaMobil XL plan. Going forward, we want to significantly further reduce product complexity. Second, we want our internal operation to be as efficient as possible, i.e., in terms of time and costs. Hence we will scrutinize our organization, processes, and decision-making procedures and further optimize them wherever possible.

The digitalization of our core business is helping us to improve customer experience and increase our efficiency. Our service apps are now firmly established in Germany and Europe as central, digital customer interfaces and we have worked to continually add more services. We interact with 62 % of customers in our European national companies digitally, via the service apps. The MeinMagenta app in Germany also has a penetration rate of over 56 % and receives positive ratings, with the iOS version rated 4.3/5 stars, for example. Thanks to our ongoing investments in digitalizing our processes, we were also able to respond rapidly to the unexpected challenges posed by the coronavirus pandemic, transitioning our 16,000 service center employees in Germany to home working within one weekend. 80,000 colleagues in Germany and up to 180,000 employees worldwide have represented Deutsche Telekom from their own homes. Throughout all of this, we maintained our productivity levels. Employee satisfaction increased considerably in parallel, reaching 80 % in the pulse survey taken in November 2020, thus it is around 8 percentage points higher than the level in the employee survey in November 2019. Long term, our plan is to digitalize virtually all value creation stages in their entirety. To this end, we are implementing more agile IT solutions and systematically expanding our expertise in innovative technologies like artificial intelligence. Data-based analyses are already helping us to maintain our hardware more proactively, understand customer needs better, and manage our networks more efficiently.

Yet, to achieve simplicity and take the digital transformation forward, we need new organizational forms, expertise, and a cultural change – in short, we need to master a whole host of new skills if we are to handle current and future challenges. We tackled these developments head on with measures such as the introduction of the Youlearn initiative to promote a culture of self-paced learning in our everyday working life. What is more, we rolled out Percipio (an intelligent learning platform also dubbed the “Netflix of learning”) and integrated Coursera as a provider of digital further-training courses offered by top-ranking universities, thus providing our employees with a high-quality training service. The increase in our digital learning rate from 46 % to 63 % and over 170,000 registrations for Percipio since the third quarter of 2019 validate our efforts in this area. We do this because we firmly believe that providing a state-of-the art learning environment is central to our obligation as an employer to act responsibly.

In parallel, we fulfill our responsibility to society by systematically aligning our core business processes with the principle of sustainability. We have expanded our existing climate strategy to include a new Group program. Our aim with “We care for our Planet” is to make a meaningful contribution toward protecting the climate and conserving resources. With over 2.1 million devices either refurbished and reintroduced into circulation or sent by us directly for recycling, our customers actively help to conserve resources and protect the climate. In the fixed network alone, more than 800,000 routers and receivers distributed under our lease model were returned, professionally refurbished, and made ready for re-use. Moreover, in 2020 we introduced a sustainability standard for our packaging, removing single-use plastics in favor of recyclable materials and environmentally friendly colorings. All new Telekom-branded (or “T-branded”) devices and already up to 25 % of devices from third-party manufacturers fulfill these requirements. Our Group entities in Germany, Magyar Telekom in Hungary, OTE in Greece, T‑Mobile Netherlands, T‑Systems Iberia, T‑Systems in India as well as all T‑Systems and GBS entities in Russia met 100 % of their electricity requirements from renewable sources. By the end of 2021, we also plan to have fully converted our entire Deutsche Telekom network, across the entire gamut from mobile telecommunications to the high-speed DSL network, to renewable electricity. Above and beyond this, we are supporting a responsible approach to digitalization, e.g., with our campaigns for digital civil courage (#TAKEPART – No hate speech) and promoting digital democracy projects (dabei-geschichten.telekom.com).

In summary, our Leading European Telco strategy is reflected in our goal to be

the leading European telecommunications provider.

• We want to be a leader in terms of customer experience, technology, and the implementation of advances in productivity for our business customers. Because only when we lead can we grow and meet the demands of our investors in the long term.
• This growth will be made possible by carefully managing our financial resources and systematically transforming the Company to be simple, digital, and agile in every sense.
• We play a responsible and active role in society. We are a partner, not just at a social level, but also at a political one, and we work in the interests of ensuring the open, forward-looking development of all countries in which we are active.