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 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 manage our investment portfolio with the aim of enhancing value. Value orientation for us also means realizing value when the time is right and the conditions attractive. In this context, the sale of T‑Mobile Netherlands was completed in 2022. We used part of the resulting cash inflow of EUR 3.6 billion to further increase our stake in T‑Mobile US (by 1.7 percentage points). After examining strategic options, we also signed an agreement with DigitalBridge and Brookfield in the reporting year to sell a 51 % stake in the GD Towers business entity, which operates the cell tower business in Germany and Austria in the Group Development operating segment. Deutsche Telekom will retain a 49.0 % stake, benefiting from future value upside at GD Towers. The transaction was consummated on February 1, 2023. We are also weighing plans to invest a portion of the funds received to further increase our stake in T‑Mobile US. 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.
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 MagentaTV MegaStream. 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, since 2020 we have increased the development speed for new software or software-driven products in Germany and Europe by around 30 %. Today, our average time to release for purely software-based adaptations is around 2.4 months in Germany (e.g., personal customer dialog for consumers, digital order management for business customers) and around 1.4 months in Europe. We want to cut these times even further and achieve a time-to-market of 1 month in Europe and 2 months 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 around 67 % of customers digitally via the service apps. In Germany, the figure stands at 42 % following migration to the OneApp platform. In connection with the migration, the collection of app-specific metrics (e.g., app penetration) was harmonized in Germany to ensure Europe-wide comparability within the Group. We are optimistic that penetration will return to its former strength as we further expand the functionalities of the MeinMagenta app. 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, almost 25,000 colleagues in Germany were 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.
However, simplicity and digitalization also call for new skills and a cultural change. In 2022, we continued our specific offering of programs focused on future issues, the Explorer Journeys. With these programs, we want to prepare as many employees as possible for the skills that will be required in the future. Since its launch in 2020, more than 10,000 employees have registered for courses in areas such as software development, AI, data analytics, digital marketing, and user experience (UX). 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 training courses offered by prestigious universities), from which more than 178,000 employees benefit. Since 2021, we have been enabling our employees to increase their participation in the Company’s success through the share program Shares2You. In the reporting year, 37,911 employees took advantage of the program. That our efforts are paying off is validated by our employee satisfaction levels: The question on Mood, as before, remains at the very high level of 81 %.
For further information about our people strategy, please refer to the section “Employees.”
In parallel, we fulfill our responsibility to society by systematically aligning our core business processes with the principle of sustainability. We revised and further refined our sustainability strategy in the reporting year: climate protection, circular economy, diversity and team performance, as well as digital responsibility and participation are our four key action areas. As well as our target of making our entire value chain climate-neutral by 2040 at the latest, we want to achieve a 100 % circular economy for terminal equipment by 2030. We have taken back over 4.5 million devices in Germany and Europe either to refurbish or to send them directly for recycling, so that we and our customers actively help conserve resources and protect the climate. Deutsche Telekom’s suppliers, too, are to achieve a fully circular economy for technologies, devices, and network technology by 2030. 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 more than two thirds 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. Under the motto “No hate speech,” Deutsche Telekom is supporting, for example, projects for media literacy in society and against cyberbullying. Deutsche Telekom has taken its social responsibility seriously through various crises: whether with technical support at the start of the coronavirus pandemic or with free SIM cards for refugees from the war in Ukraine.
For further information on our sustainability strategy, please refer to the section “Combined non-financial statement.”
Our strategy is expressed succinctly in our ambition 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.