Highlights in the 2020 financial year

Board of Management

Dr. Dirk Wössner resigned from his position as the Board of Management member for Germany effective midnight on October 31, 2020. Srini Gopalan previously responsible for the Europe Board of Management department was appointed the new Board of Management member for Germany effective November 1, 2020. Dominique Leroy was appointed to the Board of Management also effective November 1, 2020 to succeed Srini Gopalan as the new Board of Management member for Europe.

The Board of Management department for Data Privacy, Legal Affairs and Compliance (DRC) was dissolved effective the end of Dr. Thomas Kremer’s term of office on March 31, 2020. The individual units of the DRC Board department were reassigned to other Board of Management departments (Finance, Human Resources, and Technology and Innovation) as of January 1, 2020. Birgit Bohle has headed up the extended Human Resources and Legal Affairs Board of Management department since January 1, 2020. Until his departure for reasons of age, Dr. Kremer supported the transition to the new structures as part of a designated mandate.

For further information on changes in the composition of the Board of Management, please refer to the section “Group organization” in the combined management report.

Business and other transactions

Realignment of the B2B telecommunications business in the Germany operating segment. Consistent with our efforts to systematically implement the Group strategy pillar “Lead in business productivity,” with effect from July 1, 2020, TC Services and Classified ICT, portfolio units previously assigned to the Systems Solutions operating segment, as well as Telekom Global Carrier (TGC) and Network Infrastructure (NWI), which had formerly been disclosed under the Europe operating segment and the Group Headquarters & Group Services segment respectively, have been combined in the Germany operating segment. As part of these transactions, the assets and liabilities assigned to the business areas were transferred to the Germany operating segment. In the Systems Solutions operating segment, the realignment of the B2B telecommunications business in combination with the effects of the coronavirus pandemic triggered ad hoc impairment testing, which identified a reduction in the business outlook for IT operations. The result was the recognition of a non-cash impairment loss of EUR 0.5 billion on non-current assets of the Systems Solutions cash-generating unit.

For further information on the realignment of the B2B telecommunications business and on the different consummation dates under company law, please refer to the section “Group organization” in the combined management report and the disclosures in Note 36 “Segment reporting” in the notes to consolidated financial statements.

For further information on the impairment losses recognized following ad hoc testing, please refer to the disclosures in Note 6 “Intangible assets” in the notes to the consolidated financial statements.

Business combination of T‑Mobile US and Sprint. T‑Mobile US and Sprint combined their two businesses effective April 1, 2020 to form the “all-new,” larger T‑Mobile US. The transaction had previously passed through various approval processes involving numerous national and regional courts and authorities in the United States. The business combination gave T‑Mobile US a more comprehensive spectrum portfolio. This portfolio provides a much stronger basis for T‑Mobile US to significantly expand nationwide coverage and to extend its mobile network capacities, which translates into clear potential for sustained customer growth. As of July 1, 2020 a major prerequisite of the U.S. Department of Justice (DoJ) for approving the merger was duly fulfilled: the sale of Sprint’s prepaid business to U.S. satellite TV operator DISH Network. A deal was also signed to sell spectrum to DISH.

For further information on the business combination of T‑Mobile US and Sprint, please refer to the section “Group organization” in the combined management report and the section “Summary of accounting policies – Changes in the composition of the Group and other transactions” in the notes to the consolidated financial statements.

T‑Mobile US and American Tower expand agreement to rent and use cell sites. On September 14, 2020, T‑Mobile US and American Tower signed an agreement on the lease and use of cell sites. This was a modification to existing agreements with American Tower. The agreement gives T‑Mobile US greater flexibility in the course of merging the mobile networks of T‑Mobile US and Sprint and of the 5G network build-out.

Acquisition of Simpel by T‑Mobile Netherlands. On December 1, 2020, T‑Mobile Netherlands acquired the Dutch MVNO and SIM provider Simpel. Simpel had previously exclusively marketed SIM-only subscriptions through its own website. These SIM cards operated on the T‑Mobile Netherlands network. This acquisition secures mobile market shares, creates synergies, and makes us more competitive in the consumer market.

Agreed sale of Telekom Romania Communications. On November 6, 2020, OTE concluded an agreement with Orange Romania concerning the sale of the 54 % stake in Telekom Romania Communications, which operates the Romanian fixed-network business, to Orange Romania. The transaction is subject to approval by the authorities as well as other closing conditions.

Reversal of impairment losses

Impairment losses on spectrum licenses previously acquired by T‑Mobile US were partially reversed, increasing the carrying amount by EUR 1.6 billion. In part, the reasons leading to the impairment loss recognized in 2012 no longer exist, thus giving rise to the reversal. An initial reversal of the impairment in the amount of EUR 1.7 billion had already been recognized in 2017. The measurement of Sprint’s licenses in connection with the purchase price allocation following the business combination of T‑Mobile US and Sprint indicated a further increase in the licenses’ value. This triggered a remeasurement of the PCS licenses held by T‑Mobile US on the basis of a market value approach.

Coronavirus pandemic

The coronavirus pandemic left its mark on 2020. The introduction of measures to contain the global spread of coronavirus (COVID-19) had manifold implications for our Group activities. For example, major trade fairs, which we support as partners, such as Digital X and Hannover Messe, became virtual events. Deutsche Telekom AG also elected to hold its shareholders’ meeting online on June 19, 2020 as permitted under the new statutory regulations.

Voice calls rose in both the mobile and fixed networks. Our multi-billion investments in the network infrastructure have paid off throughout the pandemic: our networks were running stably even under substantially higher loads. We fulfilled our responsibility as an employer by introducing comprehensive rules and protective and supportive measures to help employees work from home while continuing to safeguard service for our customers in parallel. At our sites and in our shops, we rolled out strict hygiene and safety measures with the support of hygiene experts. Home working drove up demand for web conferencing, video calls, video consulting hours, online shopping, and other similar applications. Classic TV, TV streaming services, and gaming products were also extremely popular. We support our business customers during the crisis with offerings such as Teams from Microsoft 365 and Cisco Webex meetings, while schools can take advantage of our cloud-based web conferencing facilities to provide virtual lessons. In close collaboration with SAP and other partners, we realized the coronavirus tracing app (Corona-Warn-App) on behalf of the Federal Government. The app is now available to all EU citizens. With the app, the development partners digitalized the tracing process that is needed to successfully break chains of infection and help contain the coronavirus pandemic.

It goes without saying that 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: On 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.

Investments in networks

5G spectrum auctions. In the United States and the countries of our Europe operating segment, a number of 5G spectrum auctions were held in the reporting year, at which T‑Mobile US and our national companies in Austria, the Netherlands, Hungary, Greece, Slovakia, and the Czech Republic were each able to successfully secure spectrum. With these spectrum acquisitions we can now forge ahead with the rapid build-out of 5G infrastructure to all our footprint countries and bring 5G services to our customers. New base stations are being added continually.

For further information on spectrum awards, please refer to the section “The economic environment” in the combined management report.

Network build-out in Germany. Our network build-out focused on 5G and optical fiber in the reporting year. We continued to make huge strides with our fixed and mobile expansion activities despite the coronavirus pandemic. Two thirds of the German population can already use 5G. Our tech teams have upgraded around 45,000 antennas at about 17,000 cell sites with 5G technology in the last twelve months. In addition, we built 1,500 new cell sites in the reporting year. The LTE network also grew in 2020 to reach 98.7 % of households. We installed another around 5,000 brand-new antennas this year. Mobile data volumes rose once again to reach another all-time high: In 2020, 1.6 billion gigabytes traveled through the network. Data traffic over 5G is also growing month by month.

For more details, please refer to our media information.

In the fixed network, the fiber-optic build-out took center stage. Since the start of 2020, we have expanded fiber-optic (FTTH) coverage to around 600,000 additional households in Germany. Thus a total of around two million households in Germany have the option of a direct connection to Deutsche Telekom’s fiber-optic network. More than 33 million households in Germany can subscribe to a plan with up to 100 Mbit/s on our fixed network. In the reporting year, we once again increased bandwidths for over 4 million households by deploying fiber-optic cables and upgrading our technologies. In total, we have now laid more than 590,000 kilometers of fiber-optic cable Germany-wide.

Network build-out in the United States. In 2020 T‑Mobile US further expanded its 5G network leadership, delivering 5G speeds in more places in the United States with the largest (nearly 1.6 million square miles) 5G network. The 5G network covers some 280 million people via the 600 MHz band and 106 million people with Ultra Capacity 5G in the 2.5 GHz band. Ultra Capacity 5G is available in more than 2,000 cities and towns across the country, including major markets such as Chicago, Houston, Los Angeles, New York City, Philadelphia, and Washington D.C., delivering download speeds in the 300 Mbit/s range and peak speeds hitting 1 Gbit/s on compatible 5G devices. The coverage of 106 million people surpassed the company’s aggressive goal of 100 million Americans by the end of 2020.

Network build-out in Europe. Despite the pandemic, we made good progress with building out the networks in the countries of our Europe operating segment. A number of our national companies, namely Greece, Hungary, Croatia, and Austria, became the first regional providers in their respective nations to offer 5G services commercially. Cosmote has been offering its customers 5G services in Greece’s largest mobile network since December 2020. Magyar Telekom in Hungary launched its commercial 5G service back in the second quarter of 2020 and has continued since then to build out its 5G network. Our 5G pioneer Magenta Telekom has been offering unlimited 5G internet at 1,200 5G-capable sites across Austria since the end of 2020, thereby reaching around 40 % of Austrian households and businesses. 5G has been available for customers of T‑Mobile Polska since June 2020. At the end of October 2020, Hrvatski Telekom launched Croatia’s first commercial 5G network, which covers around one million people in eight Croatian cities. T‑Mobile Czech Republic and Slovak Telekom also launched commercial 5G services in the reporting year. As of December 31, 2020, we also covered 97.6 % of the population in our European countries with LTE, reaching a total of around 108 million people.

We also continued to build out the fixed network in 2020 with good results. In total, we had connected one million households to the fiber-optic network in our Europe operating segment by December 31, 2020. 36 new areas throughout Greece, for example, now have access to 100 % fiber-to-the-home (FTTH) through the country’s largest fiber-optic network. Since the beginning of this year, over 100,000 new FTTH lines have been added – a 70 % increase over the end of 2019. As of the end of 2020, Slovak Telekom enabled a total of around 753,000 households in Slovakia to use a fiber-optic line, with more than 120,000 of these households connected in the reporting year.

Our network speaks IP. The migration of German fixed-network lines to the Internet Protocol (IP) was completed by the end of 2020. A total of around 25.3 million fixed-network customers are now using the network of the future. By the end of December 2020, the share of IP-based lines in Europe accounted for 92.9 % of all our fixed-network lines.

Employees

In late March 2020 in the midst of the coronavirus pandemic, we concluded a new collective agreement in record time. The collective agreement applies nationwide to around 60,000 employees, trainees, and students on dual study programs. Despite the prevailing economic uncertainty, this outcome meant we could offer (planning) certainty early on both for the employees covered by the collective bargaining round and for the company, and send a clear and positive signal for the economy.

For further information on our HR topics, please refer to the section “Employees” in the combined management report.

Corporate responsibility

“We care for our Planet.” We have expanded the focus of our Group strategy to include the additional aspects of responsibility, climate protection, and resource conservation. A first milestone has already been reached: Since January 1, 2020, our customers in Germany have been surfing on the “green network,” meaning that Deutsche Telekom’s domestic power needs are met by electricity from 100 % renewable sources. By 2021, all electrical power for the Group will come from renewable energy sources. Our “We care for our Planet” program includes further specific initiatives that aim to protect the climate and conserve resources, such as climate neutrality.

For further information on our sustainability topics, please refer to the section “Corporate responsibility and non-financial statement” in the combined management report.

Innovation

Flying cell towers. Deutsche Telekom is researching the possibility of closing gaps in network coverage with flying drones within the next few years. The drones would act as flying mobile antennas. Timotheus Höttges presented the project together with partner Stratospheric Platforms following successful testing in October 2020.

Hallo Magenta: Smart Speaker Mini. We presented our Smart Speaker Mini with integrated voice assistant in the second quarter of 2020. It allows users to conveniently operate services including MagentaTV, Magenta SmartHome, and telephone services with voice commands. The Smart Speaker Mini complies with European data privacy directives and also meets our own strict privacy standards.

MagentaTV stick. After concluding successful beta testing, our new MagentaTV stick has been available to buy since the end of March 2020. This powerful streaming technology enables customers to watch MagentaTV and other streaming services such as Disney+, Netflix, Prime Video, and YouTube on any TV with an HDMI port – via a Wi-Fi connection from any internet provider.

For further information on our innovations, please refer to the section “Innovation and product development” in the combined management report.

Cooperation and partnerships

Extension of partnership agreements on fiber-optic usage. In the fourth quarter of 2020, Deutsche Telekom extended its existing partnership agreements with Telefónica Deutschland and Vodafone concerning their long-standing cooperation in the fixed network. As part of these partnerships, we will continue to grant Telefónica and Vodafone access to our broadband network and extend usage to existing and future FTTH fiber-optic networks. Subject to the necessary regulatory approval, the partnerships are set to take effect in spring 2021.

Fiber-optic joint venture in Münster. Partners Telekom Deutschland and the city of Münster’s public utility company Stadtwerke Münster signed a memorandum of understanding in July 2020 to make high-speed fiber-optic internet (FTTH) available to some 160,000 households in Münster by 2030. This will involve connecting around 40,000 buildings to the fiber-optic network. The agreement is a major innovation project for both parties that will combine our products and services with Stadtwerke Münster’s strengths as a municipal utility company with longstanding experience in infrastructure realization.

Fiber-optic partnership with EWE. In January 2020, Telekom Deutschland joined forces with EWE to form the Glasfaser Nordwest joint venture. The joint venture, with its head office in Oldenburg, Lower Saxony, aims to provide up to 1.5 million households and business locations across the region with fiber-optic infrastructure. Glasfaser Nordwest connected the first customers to the fiber-optic network in October 2020.

5G technology joint venture. SK Telecom (SKT) and Deutsche Telekom announced in November 2020 that they had entered into an agreement to establish a 5G technology joint venture. The new company will accelerate the development of innovative 5G solutions at both companies. Its primary focus will be on solutions for in-house services directed initially at the European market.

For more details, please refer to our media information.

Digital pact with the federal state of Saxony-Anhalt. Under an agreement signed in July 2020, Deutsche Telekom will continue to build out the region’s broadband and mobile networks, connect all schools to the fiber-optic network, participate in innovative projects as a partner to universities, support municipal digitalization projects, and focus in particular on bringing 5G to the region. In return, Saxony-Anhalt will improve the framework conditions for all telecommunications companies by ensuring the availability of potential cell site locations, raising funds, and simplifying grant and approval processes.

5G labs open in Germany and the United States. Together with the Cologne University of Applied Sciences (TH Köln) and the University of Cologne’s GATEWAY Excellenz Start-up Center, we opened the 5G Co:Creation Lab at TH Köln’s Mülheim location. At the Lab, university-based start-up founders will have exclusive opportunities to cooperate with industry partners in testing and refining their ideas within a new, state-of-the-art 5G network. It is open both to the students at Cologne’s universities and to start-up founders throughout the federal state of North Rhine-Westphalia. In the United States, partners T‑Mobile US, Intel, and NASA founded the 5G Open Innovation Lab (5G OI Lab) in May of this year to provide developers with access to platforms, businesses, and markets for testing new 5G use cases. In September 2020, 16 further companies were selected as the 5G OI Lab’s second cohort. T‑Mobile US is also running its 2020 Accelerator program, which offers companies the opportunity to work directly with the provider to develop and market 5G products.

European campus networks. Together with our partner Ericsson we switched on private 5G campus networks in the 2020 reporting year for the BMW Group plant in Leipzig and at the Center Connected Industry on the RWTH Aachen University campus. T‑Mobile Polska has put Poland’s first 5G- and LTE-based campus network into operation for the hub4industry consortium. Meanwhile, T‑Mobile Czech Republic and VŠB – Technical University of Ostrava have completed work on the first 5G-ready private campus network. Hrvatski Telekom and the Faculty of Electrical Engineering and Computing of the University of Zagreb launched the first 5G campus network in Croatia, which allows the scientific and business community, students, and start-ups to work on development projects based on 5G technology in the field of Internet of Things (IoT), Industry 4.0, automation, robotics, and artificial intelligence applications.

Roaming becomes reality in the European IoT network. We currently offer NarrowBand IoT (NB-IoT) roaming in nine of our footprint markets. In pursuit of our plans to offer roaming in the IoT network (Internet of Things) across large swaths of Europe, we made corresponding adjustments to the existing roaming agreements with partners in eight European countries. This brings mobile roaming services for the machine and sensor network to countries including Finland, Belgium, the Netherlands, Italy, England, and Switzerland. These steps to expand our partner network address rising customer demand for international coverage.

Expansion of partnership with Microsoft. Deutsche Telekom and Microsoft have extended and intensified their existing partnership. The overarching goal is to help business customers of all sizes accelerate their cloud transformation initiatives. By combining Microsoft’s cloud capabilities with our Cloud Migration Framework and telecommunications services, we enable customers to increase their productivity, build more flexible and resilient operational processes, and deliver and use new cloud offerings faster.

For more details, please refer to our media information.

Expansion of collaboration with Amazon Web Services (AWS). At AWS re:Invent 2020, T‑Systems and AWS announced a multi-year strategic collaboration agreement (SCA). Customers will benefit from faster cloud migration of applications, computer and storage solutions, and enhanced security for T‑Systems cloud solutions.

For more details, please refer to our media information.

Partnership for an innovative TV market. Mediengruppe RTL Deutschland and Telekom Deutschland have agreed on a new initiative for innovations in the German TV market, the aim of which is to develop the streaming and personalized advertising growth markets together. As part of the first step, we began integrating TVNOW Premium, the booming streaming service from Mediengruppe RTL, into our MagentaTV product. The offering is to become an integral part of the new MagentaTV Smart and MagentaTV Smart Flex plans.

Cross-border logistics in Europe. The EU is developing a new common data platform for logistics within the FENIX project. For this purpose, the project partners are using Deutsche Telekom’s Data Intelligence Hub. The new “data network” links all logistics partners within the EU and connects supply chains, flows of goods, and modes of transport, minimizing bottlenecks in the logistical supply of EU Member States. The common platform simplifies the exchange of information across European borders while protecting the environment.

For more details, please refer to our media information.

Cooperation for Gaia-X. OVHcloud and T‑Systems have agreed to cooperate following the Gaia-X European cloud initiative’s principles and to develop a joint Openstack public cloud platform. Their goal is to create a trusted public cloud offering for European markets and all sectors for which data sovereignty and GDPR compliance are key, including the public sector, essential infrastructure operators, and companies operating in strategic or sensitive areas of public interest.

Major Swiss deal for T‑Systems. T‑Systems has won a major deal to provide application development and operation services for the Swiss Federal Railways (SBB). The contract, worth around EUR 170 million, has a basic term of five years with options to extend for a maximum of five additional years. T‑Systems’ subsidiary Multimedia Solutions will develop and operate software for SBB, including web and cloud applications, mobile apps, and geographical information systems.

“Made in Europe” data analytics for the ECB. The European Central Bank (ECB) has commissioned T‑Systems to build and set up a new enterprise analytics platform. To implement the data element of its business strategy and to achieve greater technology integration, the ECB plans to move to the new SPACE analytics platform that will significantly expedite data analytics. T‑Systems, together with its partners Cloudera and Ultra Tendency, will build and operate the new SPACE platform as part of a five-year contract. Alongside operation and maintenance, the partners will also provide training and support for the ECB.

Products, rate plans, and services

MagentaEINS Plus: fixed network and mobile communications in a single contract. With our MagentaEINS Plus offering, we are the first provider in the German market to bundle connectivity for home and on the move in a single contract with no minimum term. Customers and their communities nationwide can benefit from unlimited data volumes at home over their domestic internet connection and enjoy mobile surfing including 5G with up to 100 or 250 Mbit/s. EU roaming including Switzerland also comes bundled as well as one gigabyte of data outside the EU.

Innovations in the cloud. The MagentaGaming cloud service combines network, software, and innovation: Our high-performance servers stream games directly from the cloud to the customer’s computer or device. This service signals the end of long download times or the purchase of additional hardware. Voice telephony is also undergoing cloudification: In future, we will manage our customer lines centrally from cloud data centers based in Germany. Virtualizing these network functions both speeds up the fixed network and makes it much more efficient. For developers, we now offer the Cloud Topology Designer: a new tool for building applications for the Open Telekom Cloud, Google Cloud, and AWS using drag and drop. The High-Performance Computing Center in Stuttgart (HLRS) put its new “Hawk” supercomputer into operation in February 2020. T‑Systems customers can use it via the Deutsche Telekom public cloud and it is as scalable as any other cloud resource.

Prepaid offerings. At the start of 2020 we launched a range of new MagentaMobil prepaid plans and answered our customers’ requests by making 5G available to prepaid customers. 5G is now available as an add-on option starting from the M rate plan. Customers must have a 5G-ready device and can activate the add-on options quickly and conveniently using the MeinMagenta app. Since summer 2020 we have also been making the authentication process for prepaid cards sold in stores much easier. A certified procedure is now in place that lets our retail partners use in-store electronic card readers to read the personal data stored on the customer’s ID document. In-store data readouts must be authorized by the Federal Office of Administration (Bundesverwaltungsamt). Telekom Deutschland is the first mobile communications provider to obtain this authorization.

Broader cybersecurity portfolio. We launched a raft of new offerings over the course of the year as part of our security portfolio: Together with WatchGuard, we developed Business Network Protect Complete to offer comprehensive cybersecurity for smaller businesses. The solution uses a Wi-Fi router and firewall combined in one unit. As of mid-April 2020, we also offer the Magenta Security Shield package with integrated cyber defense for large corporations and SMEs.

Full-service packages in Telekom service. Our new service packages make it easy for customers to optimize their at-home connectivity. The Concierge Service assigns a dedicated personal advisor offering professional home-networking support on the spot for consumers switching to Deutsche Telekom from another provider, moving house, or building their own home. After initial set-up, our Digital Home Service assists with all questions relating to remote working, home schooling, and the smart home. We have added three new Wi-Fi packages to our mesh Wi-Fi solutions that ensure customers can enjoy stable, interruption-free Wi-Fi with the required signal strength at home. Our Speed Home WiFi router boosts the Wi-Fi signal to ensure it even carries through thick walls, reinforced concrete, and under-floor heating.

Awards

We once again won a number of awards in the reporting year. Major awards can be seen in the following graphic.

For information on further awards received for our CR and HR activities, please refer to the section “Employees” in the combined management report.

Major awards in 2020

For further information on the aforementioned highlights in the 2020 financial year, please refer to www.telekom.com/en/media/media-information.