Strategic areas of operation
Lead in digital life & work: Best convergent networks+ & perfect service
Our aspiration is to offer customers the best network experience, anytime, anyplace – whether at home or at work, our network should work seamlessly and across all technologies. That’s why we market fixed-network and mobile communications in convergent products (fixed-mobile convergence (FMC)). By the end of the reporting year, some 5.3 million customers in Germany had opted for MagentaEINS; that is over 200 thousand more than in the prior year. The national companies of our Europe operating segment won around 840 thousand new customers for MagentaOne and similar FMC offerings in 2021. To continue on this path of growth, we work continuously to improve our convergent portfolio. We took another step in this direction with the launch of our new MagentaEINS Unlimited offering, available throughout Germany. Customers who subscribe to this service enjoy unlimited data at home and on the go, and can flexibly add family members to the product bundle via one or more of our Community Card EINS SIM cards, enabling them to also benefit from unlimited data. We also increasingly offer home broadband products in the United States, on the basis of our leading mobile network. In pursuit of our goal to become the leading digital telecommunications company, we want to offer more than simply the best connectivity: What really counts is the network experience. For this reason we offer our customers additional services that turn our network leadership aspiration into a first-hand experience. We reached some key milestones in this regard in the reporting year. Our MagentaTV product has been repositioned throughout our entire European footprint to aggregate linear television, including extensive features, with access to content from the biggest video-on-demand providers, and exclusive content. In 2021, we further enhanced the TV experience, entering into new partnerships with major content providers in Germany (including DAZN), and launching our new MagentaTV Entertain rate plan, which is available as an ISP-neutral option, i.e., with internet from any provider, and includes RTL+ and Disney+. Our national companies in Europe rolled out an Android-based TV platform with a Deutsche Telekom-specific user interface to deliver an even more personalized user experience (in Greece, Slovakia, and the Czech Republic). The addition of almost 140 thousand TV customers in Germany and, on an organic basis, around 210 thousand in our European subsidiaries shows that we are on the right track. Of equally high priority for us is ensuring seamless product integration across our portfolio. This led in 2021 to us launching our own operating system for the digital household, called Magenta HomeOS. In interaction with Deutsche Telekom services (television, smart home, routers, MagentaCloud, voice control functions) and partner services, Magenta HomeOS acts as a “connector” to open up entirely new use cases. To start with, customers can share Wi-Fi access with guests via a QR code, check and restart their home network via a TV, or display photos from the MagentaCloud on their TV screen.
Perfect customer service, supported by digitalization, continues to be another powerful lever to help set us apart from the competition. For this reason, we launched several quality enhancement initiatives in the reporting year. These include, in Germany, the Digital Home Service (phone or on-premise assistance to help with all home network-related topics, such as Wi-Fi, television, smart home, etc.). Moreover, we resolve 54.7 % of customer inquiries at the first contact. Above and beyond this, in our national companies in Europe we further optimized the OneApp platform to deliver a digital sales and service experience. Following its successful market launch in all countries, the platform has improved the customer experience (e.g., customers can set up and manage their router via the app and use the integrated chat function to talk to staff or service bots) and enabled us to monetize our offerings (e.g., in-app coupons and loyalty program, new customers can conclude prepaid and postpaid contracts). Several awards validate our efforts in this regard, including the Connect service tests (outright winner of the hotline and service app tests in Germany and Austria, issues 05/2021 and 10/2021). In the United States, too, we are reaping the rewards of our focus on customer-centricity: numerous surveys rank T‑Mobile US ahead of its competitors for service quality (e.g., the J.D. Power study rated T‑Mobile US the mobile carrier with the best customer service in the United States for the 22nd time in succession).
We measure customer satisfaction using the globally recognized TRI*M method. We use the results of this performance indicator to improve our customer contact processes, and our products and services. At the same time, we determine the loyalty of our customers towards Deutsche Telekom. The results are presented as a performance indicator, the TRI*M index, which ranges between minus 66 and plus 134 points. At the end of the reporting year, the score for the Group (excluding T‑Mobile US) came in at plus 73.4 points versus an adjusted value of 72.7 points at the start of the year (both determined on a comparable basis). Our goal for the coming years is to achieve a further improvement in customer satisfaction.
Lead in business productivity: Software-defined, secure, global networks, IoT & digitalization
In the reporting year, we once again maintained our market-leading position (in terms of revenue) as a provider of telecommunications services for business customers in the Germany operating segment and posted growth slightly above the level reached last year. Secure, reliable global connectivity is essential to the advancing digitalization of critical processes in companies and industry associations. We remain a dependable partner to German industry thanks to our product portfolio of international communications solutions that combine the strengths of our national network infrastructure with our international networks. We also continued to post growth in IT revenue from business customers in our Germany operating segment (up 5.4 % compared with 2020), mainly from pushing digitalization in small and medium-sized enterprises. In our national companies in Europe, revenue with business customers remained stable year-on-year in organic terms, primarily on the back of stable development in our mobile business. IT business declined year-on-year. Demand for our productivity, cloud, smart cities and security solution portfolio continued to grow.
Going forward, we want to remain the partner of choice for multinational corporations with cross-border connectivity needs, and to this end are investing in robust, global fixed-network and mobile connectivity and providing a one-stop shop for connectivity through the orchestration of our own networks and those of our partners. In the medium term, we want to respond to changing customer needs with end-to-end, cloud-based, modular network services and dynamically adapt our networks. Application programming interfaces (APIs) will even make it possible in future to automatically manage individual network parameters in real time. To this end, over the coming years we plan to radically overhaul our own network and IT landscape, transforming it into a modular, software-defined production environment with integration capabilities for customized app and IT landscapes.
As major topics like the Internet of Things (IoT) and cybersecurity become more relevant, security and network solutions (network, IT, and cloud computing) are beginning to merge into highly secure, end-to-end solutions. Security functions which were once purchased separately are increasingly becoming part of the connectivity product itself, like new-generation firewalls that are already integrated into some SD-WAN solutions, and SASE suites that deliver SD-WAN in combination with cloud security from a single source. We will continue to develop the core elements of our B2B portfolio, comprising our MPLS (Multiprotocol Label Switching; dedicated IP-VPN solutions) and SD-WAN products, as a whole to take account of network and security aspects. Security is an integral component of every one of our products and services (e.g., campus networks, IoT) – and that goes for every link in the communication chain: from the user via the terminal equipment, Wi-Fi/mobile communications/LAN, to access networks and corporate networks, transport networks, and data centers. “Security by Design” is our goal here – from development and operation to management of the network services by us and our customers.
Our business with “traditional” IT outsourcing services for international corporate customers has been in decline for a number of years now, mainly due to persistent intense competition. It is for this reason that our Systems Solutions operating segment has been undergoing a profound transformation since 2018. For our corporate customers, we are pursuing a “Leading European vertical full-service player” strategy. Specifically, we are focusing our systems solutions business on value creation aligned with core customer needs in respect of digitalization (advisory services, cloud computing, and digital solutions). For selected industries (automotive, healthcare, public sector, and public transport), we will increase our offer of vertical, industry-specific solutions based on our expertise. The focus here is on profitable growth.
Magenta Advantage: New business models based on DT assets
In our core business, we create essential values and skills not found in other companies. We call these the “Magenta Advantage.” For example, we have over 248 million mobile customers across our entire footprint and are a strong pay-TV provider in Europe with around 8 million customers. In our B2B segment, our long-standing relationships give us access to the biggest companies across all industries worldwide. Looking ahead, we want to better leverage our assets and skills, not only in our core business, but also to scale new digital business models. The past has already shown us how the Magenta Advantage helps to build value in new business. One example in this context is 1nce (a Deutsche Telekom investment). The cloud-based IoT connectivity solution developed by 1nce outside of Deutsche Telekom, based on our M2M connectivity, now gives us access to entirely new segments and secures our position in the IoT environment in the long term. Moving forward, we want to use the Magenta Advantage more systematically and on a broader basis – in the interests of our customers, partners, and Deutsche Telekom. For example, we want to use the digital reach of our sales and service apps to give our customers access to exclusive digital partner services and tap new revenue sources. For smaller companies and start-ups in particular, access to our customer base is extremely valuable when they want to grow fast in heavily fragmented markets. We are plowing our energies first of all into creating the right conditions within our Company: building APIs and more to simplify partner integration and establishing our OneApp across our entire footprint for even greater reach. Genuine value added for customers is only possible with personalized suggestions that match up with their needs and interests. To make this possible, we need to expand our capabilities in the fields of data analysis and segmentation. The core of our brand promise, “Reliability, security, and trust,” remains the same and protecting our customers’ data and privacy is still our top priority. Another important component is our strategic partnership with SoftBank. SoftBank is a global investment holding with stakes in numerous leading start-ups from a wide range of industries. In the reporting year, we reached initial partnership agreements with three portfolio companies (TIER Mobility, Revolut, GoStudent) and launched the first successful pilot projects in selected national companies in Europe.
Our growth areas are based on our networks and our technology, which together form the core of our value creation. That is why we are systematically building out and interlinking our fixed and mobile networks so that we can offer our customers the fastest possible connection at top quality, anytime, anyplace. Group-wide we invested around EUR 18.0 billion (not including spectrum investment) primarily in building and operating networks, with around EUR 5.5 billion of this figure earmarked for Germany alone. This makes us the biggest investor among all of our German competitors. In pursuit of outstanding quality and an even quicker and more efficient network build-out, we are also striking out in new directions, for example, with the use of artificial intelligence (AI) to ensure infrastructure is built out in line with demand, as well as exploring partnerships and joint ventures. Integrated management improves the capacity utilization of our infrastructure and increases efficiency in operations and maintenance.
Fiber optic-based fixed networks are the basis for the best integrated network experience. With fiber-optic lines to over 7.0 million households, virtually all of our national companies in Europe are leading the fiber-optic build-out: In Greece, for example, we have the largest fiber-optic network nationwide, with FTTH available to more than 560,000 households and businesses, and in Slovakia we offer FTTH to almost 950,000 households. At the end of 2021, our fiber-optic network in Germany consisted of around 650,000 kilometers of fiber-optic cable. In 2021, we thus made fiber-optic lines (FTTH) available to around 1.2 million more households. Looking ahead, we are set to substantially increase the pace of the fiber-optic build-out further. By 2030, every household and every business in Germany is to have a fiber-optic line. Telekom Deutschland will build the majority of these. By the end of 2024, we are set to make around 10 million fiber-optic lines available. We have also entered into partnerships with other companies, helping further our goals (e.g., founding the joint venture Glasfaser NordWest together with EWE, and the open access cooperation with M-net). We give equal priority to building out to rural areas as we do to urban centers, and are planning to bring optical fiber to a total of 8 million rural households by 2030. Together with the Australian investor IFM, the fiber-optic build-out company GlasfaserPlus is to add a further 4 million households in rural areas to this target. But our competitors also need to play their part. Deutsche Telekom is building out the network on the basis of open access. The new networks are open for use by competitors. Our efforts are paying off. In Germany, we took the #1 spot again in 2021 for the best fixed-network offering (Connect, issue 08/2021) and the best fixed-network internet provider (CHIP, issue 05/2021). In the third quarter of 2021, Magenta Telekom in Austria won the award for fastest fixed-network internet access (Ookla speedtest awards) and was rated best-in-test for fixed-network broadband internet for the third time in succession (Connect, issue 11/2021).
In mobile communications, we set ourselves apart from our competitors with the outstanding quality of our network. We operate over 90,000 mobile communications antennas across Germany covering 99 % of households with LTE. Our national companies in Europe cover 98.2 % of the population, or around 109 million people, with LTE. With the fifth-generation mobile communications standard (5G), we are creating a highly reliable mobile network with extremely low latency and high data throughput. Over 63,000 antennas now transmit 5G across Germany, with over 90 % of households already being able to use this next-generation mobile standard. The goal is to achieve 90 % geographic coverage in Germany by the end of 2025. As of the end of 2021, our national companies covered 28.9 % of the population in our European footprint with 5G. In Croatia, Hrvatski Telekom is spearheading the expansion of 5G networks and services with a total of over 600 5G base stations in operation and a 5G network already covering 48 % of the population. With the purchase of additional spectrum at the August 2021 auction, our Croatian subsidiary has created the necessary conditions to further consolidate its 5G leadership. T‑Mobile Polska operated 3,500 5G base stations across Poland at the end of 2021. With a view to refarming the released spectrum for the faster and better performing LTE/4G and 5G services, companies including T‑Mobile Polska and Telekom Deutschland shut down 3G spectrum in the reporting year.
We have regularly come out on top in independent network tests. Our German network once again won the “big three” network tests in 2021: by Connect (issue 01/2022), CHIP (issue 01/2022), and Computer Bild, issue 25/2021). Magenta Telekom was voted Austria’s most popular mobile network operator in 2021 for the eighth time in succession by Connect readers (issue 05/2021) and received the top verdict of “very good” in the CHIP mobile network test. We also won awards for the mobile networks of our national companies in Greece (Ookla) and once again in Croatia (Umlaut, Ookla). In the United States, we have the fastest and most reliable 5G network with the best coverage (Umlaut 5G network test, Ookla 5G network test, PCMag 5G network test). We currently cover more than 310 million people via the 600 MHz band, and over 210 million people with Ultra Capacity 5G in the 2.5 GHz band and millimeter wave (mmWave) spectrum. This is thanks in large part to our superior spectrum position from the business combination with Sprint.
Going forward, we will continue to invest heavily in building out 5G infrastructure. For this, we need conditions to be in place that are both fair and reliable. Our goal is to use the best-in-class integrated network infrastructure for our products and services. To this end, we complement our own infrastructure with that of strategic partners and also consider alternative access networks (wireline, cable, optical fiber, 4G/5G, satellites, HAPS, etc.). Our partnership with Eutelsat marks the first of many steps in this direction, and has enabled us to offer satellite-based broadband internet in Germany since the end of 2021. The technology for this is provided by Eutelsat’s Konnect satellite, via which households in remote areas or with limited access can benefit from powerful networks. The delivery of connectivity and services based on our own and our partners’ infrastructure is reliant on technology- and domain-agnostic orchestration capabilities. These are found in a separate technical control layer above the actual infrastructure, which allows us to manage the “network of networks.” We are modernizing our NT/IT architecture to ensure the necessary orchestration capabilities are in place. Our focus is on leveraging the full potential of network automation, cloudification and disaggregation to make our production considerably faster, more flexible and more cost-efficient. Disaggregation, or the separation of hardware and software, makes it possible to add new vendors. Today, more than 90 % of all suppliers in our infrastructure are large, traditional companies. Going forward, we want to significantly increase the proportion of smaller, more innovative suppliers, enabling us to integrate innovations into our networks more quickly and flexibly and thus also making them available to our customers.
We are adapting our production platform to meet the customer needs of the future, by building a cloud-based, scalable, modular platform and opening up access to selected parts of this platform to third parties (e.g., service providers and app developers) via open interfaces (APIs). Our goal is to make connectivity, services, and data (e.g., location data, connection conditions, and user behavior) combinable with new applications as needed. The benefits of this architecture include shorter development cycles, faster exploitation of revenue potential, more automated and significantly more cost-effective production, scalability across business units and borders, and a substantially better customer experience by virtue of personalized digital interactions.