From Leading European Telco to Leading Digital Telco

Since 2014, we have been aligning all of our corporate activities with our Leading European Telco strategy – with the aim of becoming Europe’s leading telecommunications provider. This strategy has been tremendously successful for us. Deutsche Telekom is Europe’s leading telecommunications company by a clear margin: in terms of market capitalization, revenue, and earnings (as of December 31, 2021). And our Group continues to grow, as confirmed by our most important financial performance indicators and customer development on both sides of the Atlantic. We raised our full-year guidance for 2021 three times in the course of the year, despite the coronavirus pandemic. And last but not least, at 79 %, understanding and support of our strategy among the workforce is at an all-time high (employee survey, November 2021). In short, over the past seven years we have found the right balance: rigorously implementing our Group strategy on the one hand, while in parallel anticipating changes in our ecosystem early on and adapting the strategy with pinpoint precision to new market conditions as and when necessary. We find ourselves in an extremely positive situation, but rather than use it as an opportunity to relax, we see it as the perfect launchpad to leverage our strong position and prepare Deutsche Telekom for future demands. After all, the telecommunications industry faces change on an almost unprecedented scale. Digitalization is the main catalyst for a number of key trends:

• Digitalization is shaping demand among consumers and business customers alike: Consumers want their product and service experiences to be fully customized to their personal needs, context-sensitive, and to work seamlessly. For business customers, requirements are driven by the new way of working: digital, hybrid, and app-centric. They expect secure connectivity as well as flexible service and product models that integrate easily and securely into workflows – and all from a single source and “as-a-service.”
• We are seeing companies from other industries pushing onto the market with lean, software-defined production models. Providers such as Google, Microsoft, and Amazon Web Services are expanding into the global connectivity field and increasingly providing network functions in their cloud environments. More and more, they are positioning themselves as vendors of connectivity services not only to telcos, but also as partners for business customers.
• Alternative network providers and technologies (e.g., satellite connectivity) are gaining in relevance and can be both a risk (in terms of substitution of parts of our core business) and opportunity for us (e.g., network coverage in sparsely populated areas). The connectivity market continues to fragment further, bringing ever-greater complexity. Especially among business customers with international footprints, demand is growing for a one-stop shop offering global network orchestration and a network customized to individual business cases. At the same time, the parallel build-out of broadband and mobile infrastructure (optical fiber and 5G) calls for telecommunications companies to commit to high investments and find innovative approaches to implementation, for instance by using third-party infrastructure or partnering with investors.
• Sustained economic globalization, world population growth, and increasing use of digital technologies all put a strain on the available resources. It is thus imperative that we find a sustainable, more ecological way of doing business and act with a greater focus on social responsibility.
• The acquisition of new skills and expertise is another vital aspect of digital transformation. The challenge here lies in quickly building up a critical mass of digital talent. Flexible work models, global recruitment processes, and responsible corporate action are gaining relevance.

In light of these trends, we aim to transform ourselves from our position as Leading European Telco into the Leading Digital Telco. With our unique footprint on both sides of the Atlantic, we are already excellently positioned in the Western tech sphere to achieve this. We are a global enterprise with a considerable presence in Europe, European roots and values, and an extremely strong business in the United States. Our goal is clear: We want to align ourselves long-term with the needs of our customers and transform ourselves into a digital company to hold our own against new competitors and continue our growth course. Our future growth is based on three pillars: “Lead in digital life & work,” “Lead in business productivity,” and “Magenta Advantage.” Building and operating the best convergent networks remains at the core of our strategy and is an important driver for our growth areas. We realize our aim to lead in technology by investing not only in network infrastructure, but also in establishing cloud-based service platforms in line with our strategy: “Build & scale Telco as a platform.” We leverage our international footprint to generate synergies across the Group and to carry weight alongside the global tech giants.

The two areas of operation, “Save for growth investments” and “Simplify, digitalize, accelerate & act responsibly,” support our growth target and provide the guidelines for our actions. Our Group strategy does not aim to micromanage all local units, but to provide a strategic framework and to utilize local strengths (networks, competitive standing).

Group strategy: Leading Digital Telco