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. For us, the goal of becoming Leading Digital Telco also means being the leading telecommunications provider in terms of efficiency. The digital transformation is key to further enhancing cost efficiency throughout our entire value chain: from the customer interface, to our production processes, through to the management of our own infrastructure and supply chains. We will therefore systematically continue on this path of cost transformation.

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 completed the sale of the 54 % stake in Telekom Romania Communications, which operates the Romanian fixed-network business, to Orange in the reporting year. But we also believe that value orientation means realizing value when the time is right and the conditions attractive. In this context, after reviewing strategic options, we agreed with WP/AP Telecom Holdings IV in the reporting year to sell our subsidiary T‑Mobile Netherlands. We had pursued a clear strategy aimed at increasing T‑Mobile Netherlands’ value and positioned the company as a challenger in the market. We thus transformed it into one of Europe’s fastest-growing mobile communications companies (based on EBITDA AL). The sale was agreed based on an enterprise value of EUR 5.1 billion, which roughly corresponds to adjusted EBITDA AL of the last twelve months multiplied by a factor of 8.7. The transaction is subject to approval by the authorities as well as other closing conditions. Equally, we bolster our growth ambitions by means of equity investments and acquisitions. In this context, we agreed a share swap with SoftBank in the reporting year that increased Deutsche Telekom’s stake in T‑Mobile US to 46.8 %. We are also weighing plans to invest a portion of the proceeds from the planned sale of T‑Mobile Netherlands to further increase our stake in T‑Mobile US. We expect the total stake to be around 48.4 % upon completion of these two transactions. This is in line with our strategic decision to increase our stake in T‑Mobile US to more than 50 % and secure the existing control over the U.S. subsidiary in the long term. This marks a further milestone in our U.S. success story, where we also posted strong operational growth in the reporting year: We further consolidated our position as #2 on the U.S. mobile communications market in terms of customer numbers, adding 5.5 million new customers in 2021 alone. Moreover, the realization of synergies from the business combination with Sprint is also surpassing expectations. In the reporting year, T‑Mobile US realized synergies of USD 3.8 billion versus the USD 2.9 to 3.2 billion originally planned.

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 Unlimited, or MagentaTV Entertain. Going forward, we want to significantly further reduce product complexity. Our ambition is for our services to be available around the clock via a single click. Thanks to an IP migration which has been successfully concluded, we can now remotely perform setup and maintenance work to the line in increasingly more households – depending on the router. The technical provisioning of nine out of ten broadband lines is already successful on the first attempt. Second, we want our internal operation to be as efficient as possible, i.e., in terms of time and costs. We are making promising progress with the introduction of greater agility into our IT activities. For example, in the last three years we have more than tripled the development speed for new software or software-driven products in Germany. Today we have an average time-to-market in Germany of 2.7 months, and in Europe of just 1.5 months. We want to cut these times even further and achieve a time-to-market of one month in Europe and two in Germany by 2024. Above and beyond this, we will continue to scrutinize our organization, processes, and decision-making procedures and further optimize them in future, wherever possible.

The digitalization of our core business is helping us to improve customer experience and increase our efficiency. Our sales and service apps are now firmly established in Germany and Europe as key digital customer interfaces and we have worked to continually add more services. Our European national companies interact with more than 64 % of customers digitally, via the service app. The MeinMagenta app in Germany now has a penetration rate of over 65 %. Another factor that plays into an outstanding and, above all, personalized experience is a 360° view of our customers across all channels, both online and offline. Magenta View is our front-end platform for all employees with direct customer contact, delivering all necessary customer data from a single source. At the end of the reporting year, over 10,000 colleagues in Germany were already benefiting from Magenta View. Long term, our plan is to digitalize virtually all value creation stages in their entirety. To this end, we are 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. The advancing digitalization is also influencing our own approach to collaboration. We had already successfully introduced mobile working even before the coronavirus pandemic struck, and in 2020 together with the employees’ representatives adopted a “Manifesto on the new way of working.” Our goal is to optimize our collaborative activities by combining the best of both worlds (mobile and on-site working). And because it is important to give our employees guidance as they navigate the world of virtual and hybrid working, we also offer targeted training opportunities. In 2021, for instance, we delivered over 31,000 training sessions on tools designed to improve virtual collaboration. Among our employees, acceptance for digital tools has risen further: 86 % feel that digital tools support them in daily collaborative work (+4 % compared with the pulse survey in November 2020).

However, simplicity and digitalization also call for new organizational forms, expertise, and a cultural change. We took action to further improve our customer centricity, which included reorganizing customer service with the Team of Experts approach in Germany and the United States. The assignment of the teams of customer service experts to a geographic region has two major benefits: first, it brings us even closer to the customer, and, second, the interdisciplinary teams allow us to provide help faster than before. However, in the digital age we need to build up new skills that will enable us to meet current and future challenges. In 2021, we offered more “Explorer journeys” – programs addressing specific innovation topics – than ever, with the goal of equipping as many employees as possible with the skills that will be needed in the future. Around 6,000 employees signed up for programs in 2021 on topics such as big data, digital marketing, artificial intelligence, or software development. With our Youlearn initiative – aimed at entrenching self-paced learning in our everyday working life – we continued to drive forward our employees’ options for upgrading their skills. What is more, we provide our employees with a high-quality training service in the form of Percipio (an intelligent learning platform also dubbed the “Netflix of learning”) and Coursera (a provider of digital further-training courses offered by top-ranking universities). The more than 180,000 Percipio registrations since the third quarter of 2019 show that our efforts have been worthwhile. Providing a state-of-the-art learning environment and protecting the health and well-being of our employees is central to our role as an employer committed to responsible action. Our coronavirus vaccination campaign was very well received, with a total of 45,500 appointments taken up for first, second, and mix-and-match vaccinations. Also in the reporting year we introduced the option for employees to increase their participation in the Company’s success via the Shares2You employee share program. All employees at participating Group companies have the opportunity to invest in Deutsche Telekom AG shares once a year. We match every two shares purchased with one free share. More than 36,000 employees took part in the Shares2You program in 2021. That our efforts are paying off is validated by our employee satisfaction levels: The question on Mood is comparable to the former question on Satisfaction and, as before, remains at the very high level of 80 %.

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 #GreenMagenta is to make a meaningful contribution toward protecting the climate and conserving resources. We have taken back over 2.2 million devices either to refurbish or to send directly for recycling, so that we and our customers actively help conserve resources and protect the climate. 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 more than 60 % of the new packaging for smartphones that we source from our suppliers meet these criteria. Since 2021, 100 % of our electricity requirements for all Group units have been met from renewable sources. We plan to become twice as energy efficient by 2024, based on the data volume in the network in relation to the power consumed in this context. To help us achieve this goal, we are decommissioning legacy platforms – including PSTN, migrating to more efficient technology – such as the switch from 3G to 5G, using highly efficient data centers, and deploying AI. From a long-term perspective, we will also achieve savings from the migration from copper to fiber-optic technology. These measures will enable us to maintain stable power consumption in Germany and Europe through 2024, despite rapidly rising data volumes, growing numbers of active network components, and the further densification of our networks. Above and beyond this, we are supporting a responsible approach to digitalization. Our #GoodMagenta label denotes projects, programs, and initiatives that make a positive contribution to social and societal challenges in the digital world, for instance, our campaigns for civil courage online (#TAKEPART – No hate speech) and digital democracy projects (dabei-geschichten.telekom.com/en/home/).

Our strategy is expressed succinctly in our goal to become the Leading Digital Telco:

• We want to be a leader in terms of digital living and working, and in 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.
• We want to better utilize our existing assets and skills not only in our core business, but also to develop new, digital business models (Magenta Advantage).
• The key technical driver for our growth areas is “Telco as a platform”: the best integrated network infrastructure – provided by us and by partners – as well as cloud-based customer and network-service platforms. The basis for this is and remains our ongoing commitment to building out the fiber-optic and 5G networks.
• We promote continued growth 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 societal 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.