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)). Successfully so: at the end of the reporting year, the number of customers subscribing to FMC or comparable offerings in our Germany and Europe operating segments had increased to 13.8 million. To continue on this path of growth, we work continuously to improve our convergent portfolio and make our customer offerings more attractive. Take, for example, the Telekom loyalty bonus program in 2023, which aimed to win over our existing fixed-network customers also as mobile customers.

For further information on the development of our customer figures, please refer to the section “Development of business in the operating segments.”

In pursuit of our goal to become the Leading Digital Telco, we want to offer more than simply the best connectivity: what really counts for us 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 further milestones in this regard in the reporting year. Our MagentaTV product has been expanded throughout our entire European footprint to aggregate linear television with extensive features on the one hand, and provide access to content from the biggest video-on-demand providers on the other. In 2023, we continued our efforts to further enhance the TV experience: for instance, in Germany, we will broadcast every match of the UEFA EURO 2024 soccer championships, including pre- and post-match coverage. We also initiated measures to benefit from the abolition of the “Nebenkostenprivileg” in Germany. This meant housing companies were previously able to pass on cable TV and internet service fees as ancillary rental costs to tenants. The change in the law allows tenants to conclude their own contracts with TV providers as of July 1, 2024. We are addressing this new customer group, to which we previously had no direct access, with attractive offers to switch to MagentaTV. Our national companies in Europe further rolled out the Android-based TV platform with a Deutsche Telekom-specific user interface to deliver an even more personalized user experience (2023: Croatia and Montenegro). The addition of 205 thousand TV customers in Germany and around 152 thousand in our national companies in Europe shows that we are on the right track.

Perfect customer service, supported by digitalization, continues to be another powerful lever to help set us apart from the competition. That is why we offer our customers a huge array of service tools, such as a digital home service (phone or on-site advice on all home network issues), our digital assistant, our callback service, or switching advice. In addition, we place great importance on finding a quick solution to our customers’ issues. In 2023, we increased our first-call resolution rate again, i.e., the customer issues we resolve directly at the first point of contact (69.0 %; 2022: 56.1 %). In addition, we further developed the OneApp platform for a digital sales and service experience in our European national companies and in Germany. The OneApp platform not only improves the customer experience (e.g., by setting up and managing the router or monitoring internet usage behavior in the home network via the app), it also enables us to monetize our offerings (e.g., our Magenta Moments loyalty program and in-app coupons, upselling of fixed-network/fiber-optic contracts). Our ratings validate our efforts in this regard. For instance, in the Connect service tests our overall score is “very good” for our hotline and “outstanding” for our service app in Germany and Austria, (issue 10/2023). We are also the best-in-class provider as rated by Chip magazine in its mobile, DSL and fixed network, TV streaming, and hosting tests. Focus Money magazine awarded our Shops the Service King award for the seventh consecutive time in its Deutschland Test Study 2023. 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 “Wireless Customer Care Mobile Network Operator Performance” rated T‑Mobile US the mobile carrier with the best customer service in the United States for the 12th time in succession).

We measure customer satisfaction using the globally recognized TRI*M method. We use the results of this non-financial 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, this indicator (excluding T‑Mobile US) came in at 76.2 points versus an adjusted value of 75.0 points at the start of the year (both determined on a comparable basis). The values achieved in particular for our Germany and Systems Solutions operating segments, as well as across most of the Europe operating segment, put us in a leading position relative to the respective benchmarks. With the exception of the Europe operating segment, where our goal is to post slight improvements in some areas, we plan to maintain these positions for 2024. In 2021, we added the Net Promoter Score (NPS) as a further metric. NPS measures the ratio of enthusiastic customers (promoters) to unhappy customers (detractors). For example, a score of 10 means that the share of promoters exceeds the share of detractors by 10 percentage points. We improved our NPS in all of our operating segments with consumer operations (Germany, United States, Europe) over the course of the reporting year. For example, our NPS in Germany was up by 4 points. In the United States, we not only defended our top NPS score but even improved it further against the prior year. This success is largely down to the various measures we have been pushing in recent months, like topping up data volume at the beginning of June 2023 for existing postpaid customers who use our Young rate plans in Germany.

Lead in business productivity: Software-defined, secure, global networks, IoT & digitalization

In the reporting year, we 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 prior-year level. As a trusted partner, we drive forward the digitalization of our customers based on global, secure connectivity, flexible software-based networks, and end-to-end security solutions. And in future, these activities will increasingly be based on integrated offerings (combining fixed network, mobile communications, and IT) and further strengthen our portfolio in the IT environment. The MagentaBusiness Collaboration product family, for example, already combines flexible communications solutions and tools for collaborative work in a seamless overall solution. In 2022, we introduced, among other products, the Microsoft Teams | X solution, which we further expanded in 2023: the mobile add-on for Microsoft Teams enables customers to integrate their existing mobile phone number in Microsoft Teams for even smoother collaboration. However, integrated offerings also require digitalization expertise beyond connectivity (e.g., presales, integration), since small and medium-sized enterprises in particular are increasingly looking for solutions from a single source. In the reporting year, we continued to post organic growth in IT revenue from business customers in our Germany operating segment. Our national companies in Europe also recorded substantial growth in revenue with business customers across all areas (mobile, fixed network, IT). Growth was strongest in the Europe operating segment, where our IT solutions business posted a revenue increase of 6.7 %. Demand for our productivity, cloud, and security solution portfolio continued to grow in 2023.

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. We already entered into a strategic partnership with the software company Teridion in 2022, which enables us to offer our business customers improved secure connectivity to network their locations across the globe. The partnership and related investment in Teridion by Deutsche Telekom underlines how important the issue of software-based networks is for us. In the medium term, we want to respond to changing customer needs with fully cloud-based, modular network services and dynamically adapt our networks. 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. We made the first network APIs commercially available in the reporting year: under the brand Magenta Business API, we offer developers and business customers easy access to communication APIs and new network APIs.

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 or of security solutions, like new-generation firewalls that are already integrated into some SD-WAN solutions, and Secure Access Service Edge (SASE) suites that deliver SD-WAN in combination with cloud and application security from a single source. We will continue to develop the core elements of our B2B portfolio, comprising our Multiprotocol Label Switching (MPLS) solutions and SD-WAN products, holistically, taking 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, through to access 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. Since 2022, we have bundled Deutsche Telekom Security and the security business in Germany, Austria, Switzerland, Hungary, and Slovakia under the Germany operating segment to bring security and network solutions closer together from an organizational perspective.

IT business for corporate customers is moving away from traditional IT outsourcing services towards new cloud-based services and digital solutions. The vision of our Systems Solutions operating segment is to become the “leading European vertical full-service IT player.” The vision concentrates in particular on the DACH region, where we are already a leading IT service provider (in terms of revenue). Our strategic focus is on fulfilling the core customer requirements of digitalization: advisory, cloud services, and digital solutions. For selected industries (automotive, healthcare, public sector, and public transport), we additionally offer industry-specific solutions. We are increasingly making use of AI, too, to help improve customer solutions and internal processes. We already handed greater autonomy and entrepreneurial responsibility to our portfolio units in 2022, with the goal of scaling the respective business significantly faster and accelerating growth. We rely increasingly on partnerships to support us in this regard and are also expanding nearshoring and offshoring capacities.

Magenta Advantage: New business models based on DT capabilities

In our core business, we apply strategic measures to create special assets and capabilities, including, for example, 252.2 million mobile customers, 8.6 million TV customers, and access to the largest companies in the world across industries. We call the edge we can achieve through these assets and capabilities Magenta Advantage. We want to use this advantage in a targeted way to develop new, digital business models to complement our core business. For example, we would like to further leverage our digital reach and brand strength advantage in a more targeted manner to make exclusive offers from partners available to our customers, to reward their loyalty and – where possible – to generate additional revenue. In 2023, we began to reap the first rewards of our loyalty program Magenta Moments, which has its own section in the MeinMagenta/OneApp in Germany and our national companies in Europe. Since the start of 2023, we have delighted more than 4.7 million customers in Germany (since its launch even more than 5.3 million customers) with exclusive offerings from partners such as booking.com, Rituals, Netflix, Disney+, and Octopus Energy. Overall in 2023, we enabled more than 170 moments for our customers with external partnerships, Telekom Highlights, competitions, and priority tickets for music events. Roll-out in our national companies began in the third quarter of 2023, and the program is now running in five countries. We have since won around 2 million users in these regions and enabled over 1 million transactions. Our network of active partnerships already extends to over 500 national and international brands such as Booking, Flixbus, and Wolt. The approach is paying off: customer satisfaction, measured using NPS, is higher among Magenta Moments users than among non-users. In the future, we plan to build up further capabilities for data analysis and segmentation and continuously improve the personalization of our offers. The core of our brand promise, “Reliability, security, and trust,” remains the same and protecting our customers’ data and privacy is our top priority. On top of this, we also use our Magenta Advantage to invest locally in digital business models. Examples of these are the online delivery service Box and the payment service Payzy in Greece.

Build and scale telco as a platform

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 because our strategic goal is to offer our customers the fastest possible connection at top quality, anytime, anyplace. Group-wide, in 2023, we invested more than EUR 16 billion (not including spectrum investment) primarily in building and operating networks, with EUR 5.7 billion of this figure spent in Germany alone. This makes us the biggest single 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 AI to ensure infrastructure is built out in line with demand and to increase automation in infrastructure planning and construction. 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 integrated network experiences. As a consequence, we are working flat out to build out our fixed-network infrastructure with state-of-the-art optical fiber. In the reporting year, we invested more than EUR 2.5 billion in building out our fiber-optic infrastructure in Germany – significantly more than any other competitor. We increased the number of broadband customers in the Europe operating segment by 4.6 % compared with the end of 2022 to 7.0 million. A total of 9.1 million households (coverage of around 35 %) in the footprint of our European national companies have access to our high-performance fiber-optic network. In Germany, we made fiber-optic lines (FTTH) available to more than 2.5 million more households and companies by the end of 2023. In 2024, we want to maintain the same high build-out pace and give around 2.5 million new households access to fiber. This will put us on target to meet our own goal of making more than 10 million fiber-optic lines available by the end of 2024. By 2030, every household and every business in Germany is to have a fiber-optic line. Our aspiration is for Telekom Deutschland to build the majority of these. To this end, we are expanding our team and hired more than 2,000 additional fiber-optic experts and technicians in the reporting year. We also established our own civil engineering company in 2023 (Deutsche Telekom Tiefbau GmbH) to address the pressing need for civil engineering capacities on the market. The company is a wholly-owned subsidiary of Telekom Deutschland and will focus on connecting homes. It is set to hire around 230 employees through the end of 2024. In addition, we have agreed partnerships with other companies that will contribute to our strategic goals (e.g., collaboration with Glasfaser Ruhr, with the city of Münster’s public utility company Stadtwerke Münster, and with 179 cities and municipalities in the gigabit region of Stuttgart in Germany). But urban centers are not the only ones to benefit from the network build-out: we also plan to cover a total of 8 million households in rural areas with optical fiber by 2030. The fiber-optic build-out companies GlasfaserPlus and Glasfaser NordWest are set to add a further 5 million households overall to this target. We also rely on cooperations in our national companies in Europe to help drive forward the fiber-optic build-out (e.g., Alpen Glasfaser in Austria, Vectra in Poland). 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.

The positive response shows that our efforts are paying off. We received further awards in 2023: Deutsche Telekom has been voted #1 by Connect readers in Germany (04/2023) in several categories including best Fixed Network Operator. Funke Mediengruppe’s consumer magazine Imtest (09/2023 issue) rates Deutsche Telekom “very good” in its broadband and fixed network test in Germany. The trade magazine Connect rates Deutsche Telekom best-in-class for its fixed network in Germany (07/2023 issue) and Austria (08/2023 issue). Magenta in Austria is ranked best overall B2B internet provider in the ÖGVS consumer study. And our Austrian network wins fastest fixed-network internet in Austria in the 2023 Ookla® Speedtest Award.

In mobile communications, we set ourselves apart from our competitors with the multi-network-test-winning quality of our network. With 5G, we are creating a highly reliable mobile network with extremely low latency and high data throughput. Over 80,000 antennas now transmit 5G across Germany. As of the end of 2023, over 10,000 of these antennas in more than 800 towns, cities, and communities were using the fast 5G spectrum in the 3.6 GHz band. By the end of 2023, 95.9 % of the population of Germany was already covered by our 5G network. By the end of 2025, 5G is set to cover 90 % of Germany, reaching 99 % of the population. We additionally want to offer 5G standalone for consumers in 2024. Deutsche Telekom’s business customers already use this technology with functions like network slicing, e.g., for live TV broadcasts or in 5G campus networks for industry and research. As of the end of 2023, our national companies covered on average 67.2 % of the population in our European footprint with 5G. T‑Mobile US’ 5G network covered around 98 % of the U.S. population at the end of the reporting year, with over 300 million people benefiting from Ultra Capacity 5G.

We regularly top the independent network tests: Connect readers (2023) rate Deutsche Telekom best in the categories Mobile Network Operator and Network Operator Prepaid Cards, while our secondary brand congstar wins the category Mobile Communications Provider. T‑Mobile US’ mobile network has once again been awarded best-in-class with regards to speed in the Ookla® Speedtest Global Index and the Umlaut Audit Report (07/2023). Our national companies in Greece, Croatia, the Czech Republic, and Austria, too, receive Ookla and Umlaut awards for both the fastest and best mobile networks.

Our strategic goal is to be able to use the best-in-class integrated network infrastructure for our products and services. That is why we are complementing our own infrastructure with that of strategic partners, while also considering alternative access networks (e.g., satellites or high-altitude platform systems, HAPS). T‑Mobile US and SpaceX already announced joint plans in 2022 that will enable our U.S. subsidiary to bring cell phone connectivity to its customers in parts of the United States previously without cell tower coverage using SpaceX’s Starlink satellites. With this technology, T‑Mobile US is planning to provide coverage for text messages and participating messaging apps, practically everywhere in the United States, Puerto Rico, and territorial waters. The next step for the two companies will be to drive forward the build-out of voice and data coverage. In the future, satellite communication will be used to enhance classic terrestrial IoT networks (NB-IoT, LTE-M, 4G, and 5G), an area that Deutsche Telekom IoT is working on in collaboration with specialists Intelsat and Skylo.

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 suppliers. We made significant progress in respect of the Open Radio Access Network in the reporting year. One big change is that components from various different technology suppliers are now interoperable, and the first such antenna system has been transmitting in the commercial network since December 2023, providing coverage to areas of New Brandenburg. Nokia and Fujitsu supply the necessary technology components. Today, around 80 to 90 % of all suppliers in our infrastructure are large, traditional companies. Going forward, we want to take into consideration even more smaller, 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 cloud-based, scalable, modular platforms and opening up access to selected parts of these platforms 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.