Germany

Customer development

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 the 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. Hence, alongside fixed-network and mobile communications products, we also market convergence products. At the end of May 2021, we launched MagentaEINS Unlimited with unlimited data across Germany. Our MagentaEINS family of FMC products remains very popular among customers, with some 5.3 million customers having opted for MagentaEINS by the end of 2021. We added 217 thousand customers compared to the end of the prior year.

Demand remained high for our fiber-optic-based lines. The total number of these customer lines increased to around 17.2 million overall by the end of December 2021, which means a further 1.2 million customers in Germany received a fiber-optic-based line from us in the course of 2021. With the progress made in fiber-optic rollout, we also successfully drove forward the marketing of higher bandwidths.

Mobile communications

We won a total of some 5.0 million mobile customers in 2021. Of these, 666 thousand were high-value contract customers under our Telekom and congstar brands. Steady demand for mobile rate plans with included data volumes alongside our multiple award-winning network quality continues to drive this trend. Since January 1, 2021, the customers of a service provider previously reported under contract customers have been reported under prepaid customers. Allowing for this change in disclosure, we have added around 4.2 million prepaid customers since the start of the year, largely on the back of our automotive offerings targeted specifically at business customers.

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 2021, 4.6 million customers were using this option, up by 16.0 % year-on-year.

Fixed network

The fixed-network broadband market hosts a large number of players with differing infrastructures – from national through to regional providers. In order to consolidate our position on the market as Germany’s leading telecommunications provider, we continue to add new offerings to our portfolio.

The number of broadband lines increased to around 14.5 million in 2021. Demand for our retail fiber-optic-based lines was the biggest driver here, accounting for 864 thousand lines. We recorded an increase of 137 thousand in the number of TV customers compared with year-end 2020. In traditional fixed-network business, the number of lines declined slightly by 65 thousand. This marked a considerable reduction in line losses compared with the prior-year period. As expected, the number of fixed-network lines was 17.5 million lines.

Wholesale

As of December 31, 2021, fiber-optic-based lines accounted for 58.6 % of all lines – 4.2 percentage points more than at the end of 2020. This growth is a result of demand for quota-based agreements under the “contingent model,” and subsequently for the new commitment agreements which were successfully introduced on April 1, 2021. Rising demand among consumers for higher-bandwidth lines also contributed to the increase. The number of unbundled local loop lines decreased by 479 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 other 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 2021 was around 11.6 million.

Development of operations

Total revenue, service revenue

In 2021 we generated total revenue of EUR 24.2 billion, which was up by 1.6 % year-on-year. The growth in service revenues of 1.5 % was attributable to increased revenue in the fixed-network core business, largely broadband-driven, and to higher mobile service revenues. 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 effect on roaming and visitor revenues. It also resulted in delays or postponements to current orders in B2B telecommunications business.

Revenue from Consumers increased by 4.1 % compared with the prior year. Volume-driven declines in revenue from voice components continued to impact on traditional fixed-network business. By contrast, revenue from broadband business grew by 6.9 %, due in part to the positive effects from increased customer appreciation for stable data lines. Fixed-network terminal equipment business posted growth of 9.2 % on the back of strong demand on the customer side for terminal equipment lease models. Mobile business increased by 4.7 %, primarily due to higher revenues from mobile terminal equipment business and a positive trend in the number of customers opting for our secondary brand, congstar.

Revenue from Business Customers was up slightly by 0.2 % year-on-year. IT revenue grew by 5.4 % against the prior year, mainly due to concerted efforts to drive forward digitalization in the SME sector. Overall, mobile revenue was up 2.1 % year-on-year, partly on the back of positive revenues from terminal equipment business and sustained customer additions. In organic terms, i.e., mainly assuming constant exchange rates and adjusted for the reassignment of Deutsche Telekom IT (DT IT) Russia, DT IT Slovakia, and DT IT Hungary to the Group Headquarters & Group Services segment, revenue increased by 2.0 % year-on-year.

Wholesale revenue was down at the end of 2021 by 7.2 % year-on-year. The positive trend in the number of fiber-optic-based lines continued, with an increase of 5.4 % compared with the prior year. However, this was not enough to offset the decrease in revenues of 11.7 % from declining volumes of unbundled local loop lines. In addition, the positive contribution in the prior-year period from the transition to the IFRS 16 Leases accounting standard, which reduced the customer retention period in connection with the lease of unbundled local loop lines, no longer applied in the reporting period. Since April 1, 2021, the transition to the new commitment agreements to replace the former quota-based agreements has led to sharper declines in revenue in the reporting year. This is primarily due to the fact that under the new commitment model the annual payments are initially lower compared to the up-front payments that had been made under the quota-based agreements under the contingent model. The annual commitment payments will rise over the course of subsequent years. Voice revenue was down against the prior year, which had contained higher, largely coronavirus-induced, revenues in this area.

For further information on the entry into force of the commitment agreements, please refer to the section “The economic environment – Regulation.”

Adjusted EBITDA AL, EBITDA AL

EBITDA AL adjusted for special factors increased by EUR 332 million or 3.6 % year-on-year to EUR 9.5 billion. Our adjusted EBITDA AL margin increased to 39.4 %, up from 38.6 % 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.

In contrast to the effects described under EBITDA AL, lower 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 increased in 2021 by 5.9 % year-on-year to EUR 8.9 billion.

EBIT

Profit from operations was up 24.7 % year-on-year to EUR 5.0 billion, driven by the positive EBITDA AL trend together with lower depreciation, amortization, and impairment losses year-on-year, mainly on account of substantially lower amortization of intangible assets due to the expiry of the amortization of UMTS licenses.

Cash capex

Cash capex decreased by EUR 75 million or 1.8 % compared with the prior year. Capital expenditure totaled around EUR 4.1 billion in 2021, with much of this figure going towards the build-out of our 5G and fiber-optic networks. The number of households passed by our fiber-optic network increased to around 3.4 million by the end of 2021. In mobile communications, our customers benefit from greater LTE network coverage. As of December 31, 2021, we covered 99 % of households in Germany with LTE. Over 90 % of German households can already use 5G.