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Europe

Customer development

thousands

 

 

 

 

 

 

 

 

Dec. 31, 2021

Dec. 31, 2020

Change

Change
%

Dec. 31, 2019

Europe, totala

Mobile customers

45,816

45,619

197

0.4

46,165

Contract customers

26,575

26,844

(269)

(1.0)

26,245

Prepaid customers

19,241

18,775

466

2.5

19,920

Fixed-network linesb

7,802

9,084

(1,282)

(14.1)

9,105

Of which: IP-basedb

7,767

8,439

(672)

(8.0)

8,311

Broadband customersb, c

6,381

6,943

(562)

(8.1)

6,672

Television (IPTV, satellite, cable)b, d

4,019

5,046

(1,027)

(20.4)

4,945

Unbundled local loop lines (ULLs)/
wholesale PSTN

1,932

2,246

(314)

(14.0)

2,294

Wholesale broadband linesd

865

684

181

26.5

533

Greece

Mobile customers

7,045

6,914

131

1.9

7,365

Fixed-network lines

2,624

2,589

35

1.4

2,638

Broadband customers

2,306

2,185

121

5.5

2,033

Romaniaa

Mobile customers

3,691

4,683

(992)

(21.2)

4,916

Fixed-network lines

0

1,444

(1,444)

(100.0)

1,560

Broadband customers

0

912

(912)

(100.0)

1,014

Hungary

Mobile customers

5,634

5,427

207

3.8

5,369

Fixed-network lines

1,821

1,759

62

3.5

1,703

Broadband customersc

1,417

1,321

96

7.3

1,231

Poland

Mobile customers

11,542

11,198

344

3.1

10,954

Fixed-network linesb

29

31

(2)

(6.5)

18

Broadband customersb

77

32

45

n.a.

18

Czech Republic

Mobile customers

6,297

6,178

119

1.9

6,265

Fixed-network lines

645

606

39

6.4

533

Broadband customers

391

368

23

6.2

320

Croatia

Mobile customers

2,276

2,253

23

1.0

2,274

Fixed-network lines

875

885

(10)

(1.1)

908

Broadband customers

633

625

8

1.3

621

Slovakia

Mobile customers

2,502

2,441

61

2.5

2,428

Fixed-network lines

880

865

15

1.7

860

Broadband customers

633

607

26

4.3

576

Austria

Mobile customers

5,258

5,074

184

3.6

5,019

Fixed-network lines

593

569

24

4.2

549

Broadband customers

656

635

21

3.3

612

Othere

Mobile customers

1,572

1,451

121

8.3

1,576

Fixed-network lines

336

335

1

0.3

335

Broadband customers

268

259

9

3.5

249

a

The number of lines and customers in Romania decreased in the fourth quarter of 2021 due to the sale of Telekom Romania Communications, which operates the Romanian fixed-network business, effective September 30, 2021.

b

The comparatives for fixed-network lines, broadband and TV customers in Poland were adjusted retrospectively as part of the standardization of the underlying customer definition.

c

The prior-year comparatives for broadband customers in Hungary were adjusted retrospectively as part of the standardization of the underlying customer definition.

d

The comparatives for TV customers in Croatia were adjusted retrospectively as part of the standardization of the underlying customer definition.

e

“Other”: national companies in North Macedonia, Montenegro, and the lines of the GTS Central Europe group in Romania.

Total

Excluding the effect from the sale of Telekom Romania Communications, the number of customers in our Europe operating segment grew once again year-on-year, exceeding our expectations to some extent. For example, we recorded fixed-network net customer additions on an organic basis. Our MagentaOne convergent product portfolio, in particular, generated growth compared with year-end 2020 of 15.5 % in FMC customers thanks to ongoing demand. We are working flat out to build out our fixed-network infrastructure with state-of-the-art optical fiber. The number of broadband customers likewise increased by 5.8 % in organic terms. On the same basis, the mobile business also recorded an increase of 2.8 % in customer numbers, with increases in both the number of high-value contract customers and the number of prepaid customers. Our build-out of the 5G network is making good progress: most of our national companies have already launched the commercial sale of 5G products and services.

Mobile communications

Our Europe operating segment had a total of 45.8 million mobile customers as of December 31, 2021, marking a stable trend compared with the end of 2020. The number of high-value contract customers decreased slightly by 1.0 %, largely as a result of the effect from the sale of Telekom Romania Communications on September 30, 2021: Romanian FMC customers, i.e., customers who use both a fixed-network line and a mobile communications service were assigned to the fixed-network business in line with our steering definition. As a result, the corresponding SIM cards were no longer included as of the end of 2021. Without this effect, the number of contract customers increased by 3.0 %. By contrast, the contract customer base grew at our other national companies, especially in Poland, Hungary, and the Czech Republic. Overall, contract customers accounted for 58.0 % of the total customer base. In parallel with pure customer development, we have successfully pursued the more-for-more principle in our product portfolio, so as to sustainably increase value per customer. In addition, thanks to our integrated network strategy our customers benefited from greater coverage with fast mobile broadband. As of December 31, 2021, we covered 98.2 % of the population in the countries of our operating segment with LTE, reaching around 109 million people in total. The footprint countries of our operating segment are also making excellent headway with 5G. As of the end of 2021, our national companies covered 28.9 % of the population (in particular in Greece, Croatia, and Austria) with 5G.

The prepaid customer base recorded growth of 2.5 % compared with the end of 2020. Growth in countries including Poland and Austria more than offset the declines reported especially in Romania. In addition, we offer our prepaid customers high-value contract plans with the resulting number of contract conversions also contributing positively to contract customer business.

Fixed network

The broadband business declined by 8.1 % compared with the end of the prior year to total 6.4 million customers. Excluding the effect from the sale of the Romanian fixed-network business, the number of customers grew by 5.8 %. This increase was mainly driven by the national companies in Greece, Hungary, and Poland. By continuing to invest in innovative fiber-optic technologies, we are systematically building out our fixed-network infrastructure. At the end of the fourth quarter of 2021, a total of around 7.0 million households (coverage of 27.9 %) were provided with the option by our national companies to subscribe to a direct connection to our high-speed fiber-optic network with speeds reaching up to 1 Gbit/s. The number of IP-based lines increased to account for 99.6 % of all fixed-network lines in the same period. The number of fixed-network lines in our Europe operating segment declined by 14.1 % overall to 7.8 million. Excluding the effect from the sale of the Romanian fixed-network business, the number of lines grew by 2.1 % year-on-year.

The TV and entertainment business had a total of 4.0 million customers as of December 31, 2021, down by 20.4 % compared with the end of the prior year. Excluding the effect from the sale of the Romanian fixed-network business, the customer base grew by 5.5 %. With both telecommunications providers and OTT players offering TV services, the TV market is already saturated in many countries of our segment.

FMC – fixed-mobile convergence

Our portfolio of convergent products, MagentaOne, was highly popular with consumers across all of our national companies. As of December 31, 2021, we had 6.3 million FMC customers; this corresponds to growth of 1.0 % compared with the end of the prior year. Excluding the effect from the sale of the Romanian fixed-network business, the customer base grew by 15.5 %. Our national companies, in particular in Greece, Hungary, Poland, the Czech Republic, and Austria, contributed to this growth. We have also seen accelerated growth in the marketing of our MagentaOne Business product to business customers.

Development of operations

millions of €

 

 

 

 

 

 

 

 

2021

2020

Change

Change
%

2019

Total revenue

 

11,384

11,335

49

0.4

11,587

Greece

 

3,078

2,940

138

4.7

2,943

Romania

 

709

951

(242)

(25.4)

980

Hungary

 

1,769

1,734

35

2.0

1,872

Poland

 

1,427

1,453

(26)

(1.8)

1,486

Czech Republic

 

1,146

1,072

74

6.9

1,088

Croatia

 

908

917

(9)

(1.0)

960

Slovakia

 

790

773

17

2.2

785

Austria

 

1,351

1,302

49

3.8

1,276

Othera

 

301

283

18

6.4

298

Service revenueb

 

9,638

9,630

8

0.1

n.a.

Profit (loss) from operations (EBIT)

 

1,814

1,278

536

41.9

1,109

EBIT margin

%

15.9

11.3

 

 

9.6

Depreciation, amortization and impairment losses

 

(2,576)

(2,875)

299

10.4

(3,114)

EBITDA

 

4,390

4,153

237

5.7

4,223

Special factors affecting EBITDA

 

11

(188)

199

n.a.

(141)

EBITDA (adjusted for special factors)

 

4,380

4,341

39

0.9

4,364

EBITDA AL

 

4,018

3,722

296

8.0

3,769

Special factors affecting EBITDA AL

 

11

(188)

199

n.a.

(141)

EBITDA AL (adjusted for special factors)

 

4,007

3,910

97

2.5

3,910

Greece

 

1,265

1,199

66

5.5

1,212

Romania

 

147

153

(6)

(3.9)

141

Hungary

 

536

520

16

3.1

551

Poland

 

385

378

7

1.9

383

Czech Republic

 

471

430

41

9.5

448

Croatia

 

355

337

18

5.3

360

Slovakia

 

327

335

(8)

(2.4)

327

Austriac

 

487

496

(9)

(1.8)

467

Othera

 

34

63

(29)

(46.0)

20

EBITDA AL margin (adjusted for special factors)

%

35.2

34.5

 

 

33.7

Cash capex

 

(1,905)

(2,216)

311

14.0

(1,816)

The contributions of the national companies correspond to their respective unconsolidated financial statements and do not take consolidation effects at operating segment level into account.

a

“Other”: national companies in North Macedonia, Montenegro, and the GTS Central Europe group in Romania, as well as the Europe Headquarters.

b

The definition of “service revenue” was not applied consistently Group-wide for the years prior to 2020.

c

As of January 1, 2021, the Austrian cell tower business was transferred from the Europe operating segment to the Group Development operating segment. Prior-year comparatives were not adjusted.

Total revenue, service revenue

Total revenue generated in our Europe operating segment by the end of the reporting year was EUR 11.4 billion, a year-on-year increase of 0.4 %. In organic terms – i.e., adjusted for the sale of Telekom Romania Communications, which operates the Romanian fixed-network business, on September 30, 2021, and assuming constant exchange rate effects – revenue increased by 2.4 % year-on-year. Service revenue remained stable year-on-year, growing by 2.0 % in organic terms. Regulatory intervention, in addition to the consequences of the coronavirus pandemic, continued to have a negative effect on the organic development of revenue in the reporting year.

Organic revenue growth was mainly driven by the strong performance of the mobile business, especially the increase in mobile service revenues with higher margins, slight increases in roaming and visitor revenues, and higher revenues from terminal equipment sales. Fixed-network service revenues, by contrast, developed slightly better. The strong performance of the broadband business in particular helped to offset the declines in voice telephony revenues, which were in line with expectations. Systems solutions business declined overall.

Looking at the development by country, our national companies in Greece, Hungary, Austria, and the Czech Republic recorded the best organic development of revenue.

Revenue from Consumers increased in organic terms by 2.5 % year-on-year, due mainly to higher mobile revenue: both service revenues and sales of mobile terminal equipment increased. In the fixed network, revenue from broadband/TV business increased thanks to our innovative TV and entertainment offerings as well as the continuous rollout of fiber-optic technology. This more than offset the decline in revenue from voice telephony. In addition, the higher number of FMC customers had a positive impact on revenue.

Revenue from Business Customers remained stable year-on-year in organic terms. The stable upward trend in mobile business over the course of the year offset the slight decline in demand in the fixed-network business. The number of SIM cards increased by 3 % year-on-year on the back of the development of business in Poland, Hungary, and Austria. This was a consequence of the widespread utilization of mobile working in our European companies. The strong IT revenues of the previous year could not be replicated in 2021 due to the sale of the Romanian fixed-network business and the new licensing rules in Croatia. Nevertheless, we reported sustained growth in demand and revenues in our productivity, cloud computing, smart cities, and security solution portfolios.

Adjusted EBITDA AL, EBITDA AL

Our Europe operating segment generated adjusted EBITDA AL of EUR 4.0 billion in the reporting year, up 2.5 % year-on-year. In organic terms, i.e., adjusted for the sale of the Romanian fixed-network business and the transfer of the Austrian cell tower business to the Group Development operating segment, and assuming constant exchange rates, adjusted EBITDA AL increased by 5.4 %, thus continuing to make a positive contribution to earnings. In addition to the positive revenue effects, savings in indirect costs, including due to lower personnel costs, contributed to this development.

Looking at the development by country, the increase in adjusted organic EBITDA AL was largely attributable to the positive trend at virtually all of our national companies, but in particular in Greece, Austria, Romania, Croatia, and Hungary.

EBITDA AL increased by 8.0 % year-on-year to EUR 4.0 billion. Special factors improved from EUR ‑188 million to EUR 11 million. The reason for this change was the reversal of other provisions for personnel costs recognized by OTE in 2010 and 2011 in connection with an additional payment of EUR 134 million to the Greek social insurance fund IKA-ETAM as a result of corresponding proceedings concluded in September 2021. The sale of Telekom Romania Communications resulted in a loss on deconsolidation of EUR 29 million, which was recognized as a special factor. In organic terms, EBITDA AL grew by 11.1 %.

Development of operations in selected countries

Greece. In Greece, revenue increased by 4.7 % year-on-year to EUR 3.1 billion. The encouraging development in mobile business is mainly attributable to the addition of new contract customers, with associated increases in both terminal equipment sales and service revenues. As travel activity increasingly returns to more normal levels, there was also a positive trend in visitor revenues. The intensive fiber-optic and vectoring build-out, together with the resulting higher numbers of customers, had an increasingly positive impact on the fixed-network business. Fixed-network revenues increased in the reporting year, mainly driven by strong growth in the broadband business. The systems solutions business also contributed to revenue growth.

In 2021, adjusted EBITDA AL in Greece stood at EUR 1.3 billion, a significant increase of 5.5 % against the prior year. This is attributable to a revenue-related increase in the net margin. Savings in indirect costs had a positive effect.

Hungary. Revenue in Hungary totaled EUR 1.8 billion in the 2021 financial year, an increase of 2.0 % despite negative exchange rate effects. In organic terms, revenue was up 4.1 % against the prior-year level. The biggest driver of this increase was mobile communications business, mainly on account of higher service revenues. In addition, growth in the number of contract customers had positive effects on terminal equipment business. Fixed-network operations also increased slightly year-on-year, with rising TV and broadband service revenues, both driven once again by larger customer bases. Systems solutions business posted a slight decline in revenue. Our MagentaOne convergence products continued to perform well, with further customer additions and corresponding revenue.

Adjusted EBITDA AL stood at EUR 536 million, up 3.1 % year-on-year. In organic terms, adjusted EBITDA AL grew by 5.1 %. This growth is attributable in particular to higher revenues, which more than offset the rise in costs.

Poland. Our revenue in Poland decreased by 1.8 % in the reporting year to EUR 1.4 billion. This decline was due to negative exchange rate effects. In organic terms, revenue increased slightly by 0.9 %, with the mobile business posting the largest increase. Growth in the number of contract customers had a positive effect on terminal equipment business. Higher roaming and visitor revenues were also recorded. Systems solutions business grew markedly in 2021. The number of FTTH customers in the fixed-network business also increased significantly, creating the basis for further broadband growth. This is reflected in higher broadband and TV service revenues, and is also thanks to our successful partnership agreements on network infrastructure.

Adjusted EBITDA AL stood at EUR 385 million in 2021, up 1.9 % year-on-year. In organic terms, adjusted EBITDA AL increased by 4.6 %, mainly on the back of the increase in revenue.

Czech Republic. In the reporting period, revenue in the Czech Republic stood at EUR 1.1 billion, up 6.9 % on the prior-year level. Organic growth was 3.6 % on account of positive exchange rate effects. Mobile revenues were a major driver of this trend, mainly on the back of increased service revenues (excluding visitor revenues) with higher margins, and higher terminal equipment revenues. In addition, broadband and TV business in the fixed network were yet again the key driver of growth in service revenues, thus bearing out our fiber-optic investment strategy. The number of broadband customers increased substantially year-on-year. We also generated additional revenue in the area of systems solutions.

Adjusted EBITDA AL increased by 9.5 % year-on-year to EUR 471 million. In organic terms, earnings grew by 6.2 % year-on-year, driven mainly by revenue.

Austria. Revenue in Austria totaled EUR 1.4 billion in the 2021 financial year. This increase of 3.8 % was mainly attributable to growth in mobile revenues, driven above all by an increase in higher-margin service revenues. The sale of mobile terminal equipment also made a positive contribution to revenue. Visitor revenues also had a modest positive effect. Service revenues in the fixed-network business also developed encouragingly. The broadband business generated substantial growth rates, due among other factors to a larger customer base and higher-value rate plans.

Adjusted EBITDA AL decreased as of December 31, 2021 by 1.8 % year-on-year to EUR 487 million. In organic terms, i.e., excluding the transfer of the Austrian cell tower business to the Group Development operating segment, adjusted EBITDA AL increased substantially by 9.7 % due to the positive revenue effect. A key contribution comes from the realization of synergies and from the expansion of convergent product offerings.

EBIT

Our Europe operating segment recorded an increase in EBIT of EUR 536 million in the reporting year. In addition to an increase in EBITDA of EUR 237 million, depreciation, amortization and impairment losses decreased by EUR 299 million, with depreciation and amortization down year-on-year. This was mainly a result of the suspension of depreciation and amortization in connection with Telekom Romania Communications due to the fact that it was held for sale until September 30, 2021. In addition, depreciation and amortization was lower on account of the transfer of the Austrian cell tower business to the Group Development operating segment. In the third quarter of the prior year, ad hoc impairment losses totaling EUR 160 million had been recognized on non-current assets of the Romanian mobile business, which is to remain in the Group. This impairment was triggered by the discontinuance of the previously existing MVNO agreements in connection with the sale of the Romanian fixed-network business, which was still being planned at that time.

Cash capex

In the 2021 financial year, the Europe operating segment reported cash capex of EUR 1.9 billion, down 14.0 % year-on-year. This decrease is due to a decline in cash outflows for the acquisition of spectrum licenses, primarily in Hungary and Greece. We continue to invest in the provision of broadband and fiber-optic technology and in 5G as part of our integrated network strategy.

5G
New communications standard (launched from 2020), which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things.
Glossary
AL – After Leases
Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account when determining our financial performance indicators. “EBITDA after leases” (EBITDA AL) is calculated by adjusting EBITDA for depreciation of the right-of-use assets and for interest expenses on recognized lease liabilities. When determining “free cash flow after leases” (free cash flow AL), free cash flow is adjusted for the repayment of lease liabilities.
Glossary
Cloud computing
Refers to the dynamic provision of infrastructure, software, or platform services online. Apart from a high level of automation and virtualization, the services provided have to be multi-client-capable and include standardized hardware and software. Customers source these services on demand and pay based on actual usage. The communication infrastructure may be the internet (public cloud), a corporate network (private cloud), or a mix of the two (hybrid cloud). Dynamic Services is a T-Systems product for the flexible procurement of ICT resources and services.
Glossary
FMC – Fixed-Mobile Convergence
The merging of fixed-network and mobile rate plans for customers that have both fixed-network and mobile contracts with Deutsche Telekom.
Glossary
FTTH – Fiber To The Home
In telecommunications FTTH means that the fiber-optic cable is terminated right in the user’s home or apartment.
Glossary
Fixed-network lines
Lines in operation excluding internal use and public telecommunications, including IP-based lines. The totals reported in the combined management report were calculated on the basis of precise figures and rounded to millions or thousands. Percentages were calculated on the basis of the figures shown.
Glossary
IP – Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
Glossary
LTE – Long-Term Evolution
4G mobile communications technology that uses, for example, wireless spectrum on the 800 MHz band freed up by the digitalization of television. Powerful TV frequencies enable large areas to be covered with far fewer radio masts. LTE supports speeds of over 100 Mbit/s downstream and 50 Mbit/s upstream.
Glossary
MVNO – Mobile Virtual Network Operator
Company that offers mobile minutes at relatively low prices without subsidized handsets. A mobile virtual network operator does not have its own wireless network, but uses the infrastructure of another mobile operator to provide its services.
Glossary
Mobile customers
In the combined management report, one mobile communications card corresponds to one customer. The totals were calculated on the basis of precise figures and rounded to millions or thousands. Percentages were calculated on the basis of the figures shown (see also SIM card).
Glossary
Optical fiber
Channel for optical data transmission.
Glossary
Prepaid
In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
Glossary
Roaming
Refers to the use of a communication device or just a subscriber identity in a visited network rather than one’s home network. This requires the operators of both networks to have reached a roaming agreement and switched the necessary signaling and data connections between their networks. Roaming comes into play, for example, when cell phones and smartphones are used across national boundaries.
Glossary
SIM card – Subscriber Identification Module card
Chip card that is inserted into a cell phone to identify it in the mobile network. Deutsche Telekom counts its customers by the number of SIM cards activated and not churned. Customer totals also include the SIM cards with which machines can communicate automatically with one another (M2M cards). The churn rate is determined and reported based on the local markets of the respective countries.
Glossary
Vectoring
Vectoring is a noise-canceling technology that removes the electro-magnetic interference between lines, enabling higher bit rates. However, in order to cancel noise, the operator must have control over all lines. This means that other operators cannot install their own technology in the street cabinets.
Glossary