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Letter from the Chairman of the Board of Management

Letter from the Chairman of the Board of Management

Dear shareholders,

Dear friends of Deutsche Telekom,

2022 was a watershed year. What many of us considered impossible finally came to pass: war in Europe. Even now, around a year after Russia launched its attack on Ukraine, nothing has changed – much to the sorrow of those affected. We all hope that this terrible conflict will be brought to an end as soon as possible.

The impacts of this war can be felt the world over. Energy costs have truly exploded since then and inflation has reached unfathomable heights. And all the while, people’s faith in political institutions and established systems is dwindling. Anyone just relying on tried-and-tested methods and refusing to let go risks getting left behind in future. The word “crisis” is truly omnipresent. It’s hardly possible to focus exclusively on business matters under these circumstances. Milton Friedman’s famous statement, “The business of the business is business,” has perhaps never seemed as outdated as in 2022.

For us as a company, all of this throws up some very complex questions: How are we to act when the world has been turned upside down? What role can Deutsche Telekom assume when the conditions for companies and households have changed so drastically in such a short space of time? There are no easy answers. Even so, I am convinced that we have a special responsibility in times like these – and we are rising to this responsibility.

We are guaranteeing stability by staying on track and making sure our business continues to operate reliably. We are not allowing ourselves to get carried away by overblown forecasts or pipe dreams, and we are not taking any undue risks. We keep our word. We consistently deliver on what we have promised. We are conscious of our strengths, but stay humble. It is our aim to reduce uncertainty and build trust. To provide a firm footing and be an anchor of stability. We keep looking forward, even in times of difficulty. That is what Deutsche Telekom stands for.

Tim Höttges, Chairman of the Board of Management of Deutsche Telekom AG (photo)
We are guaranteeing stability by staying on track and making sure our business continues to operate reliably. We are not allowing ourselves to get carried away by overblown forecasts or pipe dreams, and we are not taking any undue risks. We keep our word. We consistently deliver on what we have promised.
Tim Höttges
Chairman of the Board of Management

We are conscious of our strengths, but stay humble. It is our aim to reduce uncertainty and build trust. To provide a firm footing and be an anchor of stability. We keep looking forward, even in times of difficulty. That is what Deutsche Telekom stands for.

Dear shareholders,

I am convinced that it is more important now than ever that businesses do not let themselves be paralyzed when faced with these developments. We will not be deterred and will instead continue working according to a long-term strategy. This is the right course of action for Deutsche Telekom. We want to keep growing, and that’s the focus of our business. We are resolutely driving forward the digital transformation of Deutsche Telekom. We are navigating the way carefully through these stormy times, while remaining calm.

A glance at our 2022 financial figures shows this has been a success: in the United States, in our European national companies, and in our home market of Germany, we have increased revenues and generated higher earnings on a like-for-like basis. Net revenue increased once again, up 6.1 % to EUR 114.4 billion as of the end of the financial year – a result which, just a few years ago, seemed far out of our grasp. It is particularly pleasing to see how on a like-for-like basis we achieved growth in service revenues on both sides of the Atlantic, a key factor for the Company’s results. This has helped us secure our spot in the league of the world’s largest telecommunications companies. In organic terms, i.e., based on constant exchange rates and comparable corporate structure, we are staying on track for our medium-term growth targets.


net revenue

The excellent development of business on both sides of the Atlantic has been crucial to this. In other words, Deutsche Telekom is the sole telecommunications provider in the Western world with a successful business in both the United States and Europe. Adjusted EBITDA AL, i.e., adjusted EBITDA taking account of depreciation of right-of-use assets and interest expenses on lease liabilities, increased by 7.7 %, coming in at EUR 40.2 billion. In organic terms, we grew by 1.7 %. Free cash flow AL increased by 30.2 % to EUR 11.5 billion and was thus well into the double-digit growth range.

There are numerous reasons for these positive developments: In the United States, T‑Mobile US keeps growing and breaking records. Across the entire year, our colleagues managed to win over more than 6.4 million new customers for mobile communications contracts. This helped our U.S. subsidiary top the industry’s leaderboard and exceed the guidance which had already been raised over the course of the year. We are seeing a similar picture with convergent fixed-mobile offerings (high-speed internet): T‑Mobile US has reached 2.0 million new customers in this market, gaining a strong foothold in this competitive business area. We see great potential here for the future, particularly in more rural areas of the United States.

CEO Mike Sievert and his team received their well-deserved reward for years of outstanding performance in August when T‑Mobile US became the world’s most valuable telecommunications company. The new number one, ahead of long-time incumbents Verizon and AT&T. No other German company has ever achieved this kind of success on the highly important U.S. market. Thanks to its 5G network, the best by far, and current popularity among young people, we see further opportunities for growth for our Un-carrier. All this shows it was worth T‑Mobile US also investing in network leadership in the United States. It’s also a great success for Deutsche Telekom since we have been treading the path toward the merger with Sprint together with the T‑Mobile US team. Deutsche Telekom already owns 49 % of the shares in T-Mobile US by now, taking the treasury shares held by T-Mobile US into account. We are also still pursuing a defined plan which will secure the majority stake for us in the medium term.


brand value

Our activities on our home continent form the second pillar of our business. We have been at the forefront of our industry for years in Germany and Europe and are a clear market leader. The current perception of our brand is also in keeping with all of these developments. In January 2023, Deutsche Telekom received the accolade of most valuable brand in Europe for the very first time. The ranking was based on the Brand Finance Global 500 report. With a brand value of USD 62.9 billion, we took the eleventh spot in the worldwide ranking. This reflects our success in terms of customer perception. It also confirms that we are on course to becoming the Leading Digital Telco.

For this to happen, we need to keep delighting people with our Company and products and services. This can only happen if our customers are able to experience our best network and use it to go online and make calls. The best connectivity and the best service – that’s what the people expect from Deutsche Telekom, and in 2022 we made another record investment to achieve just that. Around EUR 21 billion was largely spent on the build-out of our global infrastructure, more than EUR 5.7 billion of which was invested in Germany alone.

We have more than just purely economic considerations in mind here. We consider the build-out of our networks to be an integral part of our responsibility to society. That is our aspiration as the leading telecommunications provider in the Western world. It’s clear that digitalization won’t be successful in the long run without investing in infrastructure. However, it’s just as clear that these investments must also pay off for the companies involved. We’re doing very well in this area in Europe. We have seen organic earnings growth in this segment for the past five years – that’s twenty successive quarters. That’s an outstanding result.

Our technicians and engineers have made an incredible effort over the past year to push ahead with the digitalization goal in Germany. We have set another record in the rollout of fiber-to-the-home (FTTH) lines. We reached our goal of 2 million new lines in 2022, thus nearly doubling the rollout volume of the previous year of around 1.2 million lines. In the current year we plan to vastly increase the pace of the build-out once again and enable up to 3 million additional households to connect to our high-speed fiber-optic network.

We will continue to base our strategy on three pillars. In addition to our own build-out and the subsidized projects, joint ventures and partnerships are becoming more and more important. This is increasing the speed of the network build-out. Over the past year, our second joint venture GlasfaserPlus got itself up and running and has been working to speed up the FTTH rollout ever since: the company added around 90,000 FTTH lines in its first year, making it the fastest growing fiber-optic start-up in the country. At the same time, we’ve found additional partners for collaborative build-out projects in places like Bochum, Garbsen, Bietigheim-Bissingen, and Coburg, to mention just a few. Build-out partnerships also send a signal to the industry and policy makers: future-proof digitalization truly begins to take shape whenever two partners are able to agree on fair, normal market conditions and build an open fiber-optic network together.

Nationwide fiber-optic coverage will continue to be a priority for us in the long term, which also means strengthening Germany as a location for business in general. Our goal remains unchanged: by 2030, all households in Germany should have access to a fiber-optic line with gigabit speeds. This is, and will remain, a gargantuan task which we cannot achieve on our own. That’s why our competitors will also have to do their bit, as we have always underlined in the past.

The achievements of the past year are reflected in the T-Share price: in January 2023, it passed the EUR 20 mark for the first time in 20 years. That means Deutsche Telekom is worth more than EUR 100 billion. We’ve left the other European telcos far behind us – as of the end of 2022, Deutsche Telekom was worth more than Vodafone, Telefónica, Orange, and British Telecom put together. I’m very proud of Deutsche Telekom’s development.

We’re also way ahead of our biggest European competitors when it comes to the performance of the T­-Share and total shareholder return, the sum of the share price performance and reinvested dividends. The total shareholder return for the T-Share amounted to 18.6 % over the past year. Just to compare: the DAX 40 fell by 12.4 % over this period, while the index for the European telecommunications sector declined by 14.1 %.


total shareholder return

We want as many people as possible to participate in this success: our customers, our employees, and naturally those who invest in our Company too: our shareholders. Many of you have stuck with us through thick and thin. Without you, our investors, there would be no Deutsche Telekom. That’s why we intend to increase the dividends for the 2022 financial year to 70 eurocents per share. Provided we get the approval of the shareholders’ meeting, of course. That’s an increase of almost 10 %. We have based this proposal on long-term adjusted earnings per share and, to this end, excluded numerous positive one-time effects which occurred in 2022, particularly from the measurement of derivatives and as a result of the increased capital market interest rates. With this proposal, we are setting an example of reliability in these difficult times.

We create the necessary investment leeway for implementing our strategy by restructuring our portfolio and making it viable for the future. In July 2022, for example, we agreed to sell a 51.0 % stake in our cell tower business in Germany and Austria to DigitalBridge and Brookfield. Deutsche Telekom’s remaining stake of 49.0 % enables us to keep benefiting from future increases in the business’ value. At the same time, we fine-tuned the focus of our T‑Systems business – as a digitalization partner to major companies, T‑Systems is on the right path for achieving sustainable growth.

Dear shareholders,

Despite the difficult circumstances, our results for 2022 are excellent. This is not something we take for granted. For this reason, I am truly delighted about this outstanding performance. Another record-breaking year in which we have taken important steps for Deutsche Telekom’s digital transformation and modernized our networks. Over 200,000 Deutsche Telekom employees all over the world have played their part in this. They help make our Company the anchor of stability that our society so urgently needs in difficult times.

Best regards,

Tim Höttges

Refers to the mobile communications standard launched in 2020, which offers data rates in the gigabit range, mainly over the 3.6 GHz and 2.1 GHz bands, converges fixed-network and mobile communications, and supports the Internet of Things.
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.
A telecommunications network operator.
FTTH – Fiber To The Home
In telecommunications FTTH means that the fiber-optic cable is terminated right in the user’s home or apartment.
Fiber-optic lines
Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH).