Dear shareholders,
Dear friends of Deutsche Telekom,
2023 was complex and challenging. In these uncertain times, the calls to focus exclusively on ourselves are growing louder. We often hear that people are overwhelmed by the complexity of interdependencies. That their worries about the future are being ignored by politicians. As is their need for safety and security. That nations can’t act because their hands are tied. It is effective rhetoric. Extreme views are gaining traction because they offer easy answers and promise even easier solutions. Yet it is a fallacy to believe that such ideologies would effect positive change. Just as it is to believe that greater isolation and less migration begets prosperity.
One of our biggest strengths as Europe lies in integrating people from diverse backgrounds, who possess wide-ranging talents and skills, into our working environment. We offer them an opportunity for inclusion in our free and democratic society. In return, they apply their talent and productivity to helping maintain this basic order. The resulting social cohesion is fundamental to modern, functioning, and diverse democracies.
It makes us happy that people of all religions, genders, and cultures, from across all four corners of the globe, come together at Deutsche Telekom for our customers. This helps not only our Company to grow, but also each individual to grow personally. Many people working at Deutsche Telekom have a migratory background. They do a great deal for our Company. They are part of us. Against this backdrop, it is even more important that hundreds of thousands of people Germany-wide took to the streets in support of civil liberties and diversity in January 2024. Because that is the hallmark of a vibrant civil society.
Dear shareholders,
In these uncertain times, Deutsche Telekom has kept doing what it does best: It showed stability over the last year. Remained dependable. Ran its business successfully. And – like in the years before – rose to its responsibility as a stabilizing element of our society. You could also say: we never stop trying to live up to the trust that people place in us. This is decisive for Deutsche Telekom.
Our businesses continue on their growth course. We are keenly focused on pursuing our transformation into the Leading Digital Telco. We stay on our chosen path, our sights set on what is ahead. And we remain optimistic.
The year just ended gives us good reason to be. 2023 was an outstanding year for Deutsche Telekom in terms of performance. We improved our key financial figures on both sides of the Atlantic. Our adjusted EBITDA AL grew by 0.7 % to EUR 40.5 billion. In organic terms, we grew by 4.0 %. Free cash flow AL increased by 40.7 % to EUR 16.1 billion. This puts us ahead of our guidance for the 2023 financial year.
The primary reason for this: more and more people worldwide trust in Deutsche Telekom and its products. In the United States, our subsidiary T‑Mobile US once again delivered industry-leading customer growth and earnings. Ahead of long-time incumbents Verizon and AT&T. Across the entire year, our colleagues won around 5.7 million new customers for a mobile communications contract with our U.S. subsidiary. T‑Mobile US remains the number one for customer growth on the most important mobile communications market globally. More than 300 million people can access T‑Mobile US’ ultra-fast 5G network, the country’s best mobile infrastructure. The most important foundation for future growth is therefore in place.
Since 2023, we have held the majority stake in this industry-leading network. Taking the treasury shares held by T‑Mobile US into account, our ownership stake in T‑Mobile US was over 50 % at the end of 2023. We also have strategically expanded our ownership position in T‑Mobile US by way of a capital increase from the agreement we reached with SoftBank in 2021. To achieve this, our shareholders accepted that the capital increase would have a minor dilutive effect on their share in Deutsche Telekom. We intend to reverse this effect in part with our share buy-back, which we have begun in 2024. We are now honoring the trust of our shareholders, exactly as we said we would.
I can only reiterate the strategic relevance of the U.S. investment. We are strong in the United States. With the integration of Sprint almost complete, we are now seeing strong growth in earnings and free cash flow at our T‑Mobile US – exactly as we planned. Since 2019, the year before the business combination with Sprint, T‑Mobile US has more than doubled its adjusted EBITDA and more than tripled its free cash flow. The company’s market capitalization has almost tripled since then, and the value of our stake has substantially more than doubled. Since the fourth quarter of 2023, T‑Mobile US also has started paying a dividend. This aids our record investments in Germany and in our European subsidiaries.
On our home continent, we have been at the top of our industry for many years. The “T” shines out in Germany and in our national companies. We intend to build on this leading position by winning more and more people with the best network experience, and offering them the best connectivity with high-speed internet and best-in-class service.
Our technicians and engineers brought us closer to this goal over the past year. They pushed themselves to the limits of their abilities, setting yet another new record for the build-out of fiber to the home (FTTH): last year, Deutsche Telekom gave more than 2.5 million households in Germany access to a fiber-optic line. This brought the total number of households able to connect to our FTTH network to around 8 million at the end of 2023. We will pass the 10 million mark in 2024.
Our 5G build-out, too, is industry-leading. At present, around 96 % of the population of Germany can access our 5G mobile network, thanks to more than 80,000 antennas across Germany transmitting 5G, 10,000 of these using the ultra-fast 3.6 GHz band.
In the long term, nationwide coverage with the networks of the future – optical fiber and 5G – is decisive for safeguarding Germany’s future as a place to do business. We want to play our part in ensuring that all households in Germany have access to a fiber-optic line with gigabit speeds by 2030. In concrete terms, we intend to build out more than 25 million lines. But this is a gargantuan task, and our competitors must also pull their weight. Deutsche Telekom can contribute, but it cannot digitalize Germany singlehandedly.
Our “T” is now one of the top 10 most valuable brands worldwide. We are ninth in the ranking, and the most valuable brand in Europe. The latest Brand Finance report values the “T” at USD 73.3 billion. This success places Deutsche Telekom in an exclusive circle that includes global tech giants like Apple, Microsoft, and Google, who occupy the top three spots, highlighting the depth of strength in the technology sector.
In this dynamic environment, it is all the more impressive that Deutsche Telekom is now considered the most valuable telecommunications brand worldwide. This result is validation of our investments in the best networks, best service, and our commitment to digital technologies, as well as the work of our people. Deutsche Telekom is more than just a company that stands for the promise: Connecting your world. Today, it is THE provider to the Western world.
Dear shareholders,
We also saw the price of the T-Share perform impressively well over the past year. After passing the EUR 20 mark in 2023 for the first time in several years, in January 2024 our share price hit EUR 23.22, its highest level for more than 22 years. At 20.3 %, total shareholder return for the entire year 2023 – i.e., including re-invested dividends – is on par with development of the DAX 40. Over a three-, five-, and even ten-year horizon, an investment in T-Shares has outperformed both an investment in the DAX and in all major European industry peers.
We want those who have shown confidence in us to also participate in this success: our shareholders. Many of them have remained loyal to us for decades, and we have weathered some storms together. Without them, our investors, Deutsche Telekom as it stands today would not exist. On the basis of the strong earnings performance, we intend to increase the dividend for the 2023 financial year to EUR 0.77 per share. Provided we get the approval of the shareholders’ meeting, of course. Just like last year, this is an increase of 10 %, and this step is in line with our communicated dividend policy. It is yet further testimony to Deutsche Telekom’s dependability and stability.
This is further corroborated by the rating agencies: Our major ratings are once again within our target range of BBB+/Baa1 with a stable outlook. The average share price set by the stock analysts tracking us is well over EUR 26. This also shows the huge confidence the financial market has in us.
Dear shareholders,
Despite the complex circumstances, our results for 2023 are excellent. That’s an outstanding achievement. But we are not complacent about our success. We can see how rapidly new technologies like artificial intelligence are rising to prominence. And we have identified where we must step on the gas if we want to be the Leading Digital Telco worldwide. We are taking the necessary action. For instance, with our Global Telco AI Alliance with SK Telecom, e&, and Singtel.
But at the same time, we act with caution and adhere to our ethical principles. Just so our customers know: Around 200,000 people work at Deutsche Telekom worldwide, and they take their responsibility seriously. With them, we are in the best hands, including when it comes to critical topics like artificial intelligence. We trust in Deutsche Telekom.
Best regards,
Tim Höttges