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Statement by the Board of Management on the expected development of the Group

We successfully continued our growth course on both sides of the Atlantic again in 2021. We want to surpass the strong development of the last few years and lead the Group into the future with sustainable growth. We presented our medium-term strategy and the financial outlook at our Capital Markets Day in May 2021. We have already passed key milestones to secure control of T‑Mobile US in the long term and, on this side of the Atlantic too, significant transactions have been closed and reorganizations completed. We want to use this strong starting position going forwards to underpin our success with solid financial growth rates, further extend our technology leadership with the best state-of-the-art networks, and thereby implement our Leading Digital Telco strategy.

This ties in with our financial targets for the period through 2024, which we communicated at our Capital Markets Day in May 2021. From 2020 through 2024, we aim to achieve the following compound annual growth rates (CAGR) or targets for our key financial performance indicators:

  • Net revenue is expected to increase by an average of 1 to 2 %; service revenue by an average of 3 to 4 %.
  • Adjusted EBITDA AL is expected to increase by 3 to 5 % on average; adjusted core EBITDA AL, i.e., adjusted EBITDA AL excluding revenues from terminal equipment leases in the United States, is expected to increase by 5 to 6 % on average.
  • Free cash flow AL (before dividend payments and spectrum investment) is expected to increase steadily, exceeding EUR 18 billion in 2024.
  • Earnings per share (adjusted for special factors) is expected to exceed EUR 1.75 in 2024.

For 2022, we expect to post the following year-on-year trends, assuming a comparable consolidated group and constant exchange rates:

  • Net revenue is initially likely to remain stable in 2022. We expect service revenue to increase slightly.
  • Adjusted EBITDA AL is expected to be around EUR 36.5 billion in 2022. In the reporting year, adjusted EBITDA AL came in at EUR 37.3 billion; on a like-for-like basis, i.e., adjusted for comparability with the adjusted EBITDA AL forecast for 2022, adjusted EBITDA AL stood at EUR 36.5 billion. We expect adjusted core EBITDA AL to increase by around 5 % in 2022.
  • Free cash flow AL is expected to grow to around EUR 10 billion in 2022. Free cash flow AL in 2021 was EUR 8.8 billion; on a like-for-like basis, i.e., adjusted for comparability with the free cash flow AL forecast for 2022, free cash flow AL stood at EUR 8.4 billion.
  • We expect a slight increase for earnings per share (adjusted for special factors) in 2022.
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.