Expectations for the operating segments

Below, we explain the market expectations and the expectations for the financial and non-financial performance indicators of our operating segments. We assume a comparable consolidated group and constant exchange rates for the development of our performance indicators.

We presented more information on the expected development of the operating segments at our Capital Markets Day in October 2024.

Our Group Development operating segment no longer makes a significant contribution to the expectations of the Group’s significant performance indicators. For this reason our forecast does not provide a separate presentation of the figures for this segment or a corresponding explanation.

Germany

Revenues increased in the German market for telecommunications services in 2024. According to a forecast by the consulting firm Analysys Mason, revenues are expected to continue growing in 2025. Demand for mobile and fixed-network communications is expected to remain stable in an environment with a moderate economic growth outlook. Declines in revenue due to sustained intense price competition and the decline in traditional fixed-network telephony will be more than offset by growing demand for mobile internet and fast connectivity in the consumer and business customer area. In the mobile market, revenues are expected to increase by 1.4 % in 2025. In the fixed-network market, the number of broadband lines will continue to rise; revenues are expected to increase by 2.4 %.

At the end of 2024, three providers with nationwide network infrastructure were active in the mobile market. 1&1 is currently building a fourth mobile network while simultaneously making use of wholesale national roaming services. There are also several providers active without having their own network infrastructure. The level of competition in the mobile market is expected to remain high. We lead the market for network coverage: At the end of 2024, 98.0 % of the population in Germany had access to our 5G network. With the continued build-out, we want to continuously improve our network quality. By 2025, we aim to have a 5G network covering 99 % of the population of Germany.

The market for fixed-network broadband hosts a large number of providers with differing infrastructures. We are assuming that cable network operators and providers with their own fiber-optic networks will keep competition high. But also providers without their own fixed-network infrastructure further contribute to the intensity of competition. In the fixed network, we want to provide fiber-optic-based products to more customers. We continued to roll out FTTH in the reporting year, giving 2.5 million households access to fiber through our own build-out efforts and through partnerships. In the coming year, too, we want to give another approximately 2.5 million households the opportunity to use a fiber-optic line from us. We are increasing the utilization rate of our broadband infrastructure by our own retail business as well as through partnerships with wholesale providers.

In summer 2024, the “Nebenkostenprivileg” was abolished. This meant many tenants in apartment buildings previously paid for their cable TV as part of ancillary rental costs. The change in the law now means tenants are free to choose which TV provider they sign with. Many have already switched, with providers of IPTV services being the main beneficiaries. We have increased our TV customer base to 4.6 million. Competition for TV customers remains fierce, and we address this by continuously improving our TV products with partnerships and innovative features.

Our goal is to further build on our market position as leading telecommunications provider. To achieve this, we are systematically investing in our networks. We want to turn customers into fans and enhance our efficiency. For our business customers, we want to enhance our comprehensive digitalization portfolio in the areas of IT, IoT, cloud and security applications, and more.

In our Germany operating segment, we expect a slight increase in revenue and service revenue in both 2025 and 2026, primarily due to growing mobile and broadband revenues. We expect customer numbers to grow in both business areas.

In each of the next two years, we expect to post year-on-year increases in earnings in our Germany operating segment. For 2025, we expect adjusted EBITDA AL of around EUR 10.8 billion, driven in particular by revenue growth and a simultaneous reduction in indirect costs, mainly through digitalization and automation. We expect adjusted EBITDA AL to increase again in 2026. We expect our cash capex (before spectrum investments) to remain stable in 2025, increasing slightly in 2026.

United States

The greater ICT sector in the United States is considered to be the backbone of the country’s economy and sees steady and significant R&D investment from major market players. ICT underpins the operations of all enterprises, public safety groups, and the government. Overall, the ICT market remains highly competitive, marked by low market concentration. (Source: Mordor Intelligence)

According to GSMA overall mobile revenues are expected to increase annually with continued subscriber growth, data consumption increases, and growth in the device market. GSMA forecasts monthly data usage per smartphone at 66 GB in 2029. While data usage per user is expected to increase, the growth rate of that usage is expected to taper steadily. Leading industry associations such as GSMA expect the United States to continue to lead global migration to 5G. 5G subscription uptake in North America continues. Likewise, this uptake in North America is expected to be at a globally-leading 412 million total connections by 2030. By 2030, 5G is expected to carry 80 % of all mobile data traffic, globally; whereas T‑Mobile US itself already carries over 50 % of mobile traffic on 5G. (Sources: Ericsson Mobility Report, GSMA)

More mid-band spectrum has allowed for higher quality multi-band 5G. In 2024 Fixed Wireless Access (FWA) for home and enterprise is the main tech behind fixed broadband growth. Verizon is said to want to have 8 to 9 million FWA subscribers by 2028. Similarly, T‑Mobile US said it aimed to increase its wireless broadband subscriber base to 12 million by the end of 2028. 5G is also growing in Enterprise, with deployments of wireless WAN to offices. According to Ericsson, mid-band 5G network coverage has now reached a point where consumer, enterprise and government innovations across the broader tech ecosystem can accelerate.

GSMA expects over half of all mobile connections running on 5G networks by 2029, and Ericsson forecasts 5G overtaking 4G globally in 2027, with 71 % of all subscriptions on 5G already in North America by the end of 2024. T‑Mobile US expanded its 5G network leadership with the highest 5G availability according to independent network testing and more 5G coverage than its peers, utilizing the 600 MHz spectrum holdings it acquired in April 2017. T‑Mobile US’s continued deployment of mid-band spectrum, including the most recently allocated in early 2024, also drives the operator’s expansion of 5G coverage.

The advent of Open RAN adoption could impact the vendor market, which had seen RAN revenues slow significantly in 2024. Both AT&T and Verizon have put out strong estimates for their own Open RAN adoption schedules. T‑Mobile US in September 2024 announced a partnership with Nvidia, Ericsson, and Nokia to advance the future of mobile networking with AI at the center.

In fixed-network services, fiber-to-the-home (FTTH) continued to expand in 2024. According to the Fiber Broadband Association (FBA) 2024 set records for fiber deployments in the United States: with 10.3 million new homes passed with fiber, with 76.5 million total fiber-accessible homes. T‑Mobile US is pursuing regulatory approval of two fiber transactions that could collectively see an estimated 12 to 15 million total homes or more served by fiber by 2030.

After completing merger integration with Sprint, T‑Mobile US continued to execute its profitable growth initiatives, carrying great momentum into 2025. As reported in its Capital Markets Day in September 2024, T‑Mobile US expects to see strong growth in its key financial metrics, while also aiming to grow the 5G broadband customer base and to gain profitable market share. T‑Mobile US continues to focus on creating shareholder value and providing a combination of best network and value experience in the U.S. wireless industry. Key elements of the company’s focus include consistently and profitably outgrowing the competition, and making the necessary investments to position the company for long term success. With ongoing investments in the network and in digitalization, T‑Mobile US plans to extend its network leadership position by innovative technologies like network slicing, 5G Advanced, and over time, AI RAN, to deliver AI-powered, transformative customer experiences. T‑Mobile US customer growth initiatives center on attracting and retaining a loyal customer base fueled by long-term structural advantages with its best network, best value, and best experience combination.

T‑Mobile US expects a continued increase in postpaid customers in 2025 and 2026 and a stable trend in prepaid customers. Subscriber growth is based on further expansion in underpenetrated growth sectors, such as smaller markets and rural areas, including network seekers, continued opportunity in Small and Medium-sized Businesses, enterprise and government, broadband growth, and new businesses. All of these drivers have helped fuel industry leading customer and financial growth over the last few years.

T‑Mobile US expects an increase in service revenues and total revenues in 2025 and 2026, driven by ongoing profitable share taking, postpaid account and ARPA growth, broadband growth, and expansion into new businesses.

For 2025, T‑Mobile US expects adjusted EBITDA AL of USD 32.3 billion, which is based upon the midpoint of US GAAP guidance of USD 33.1 to 33.6 billion Core Adjusted EBITDA minus around USD 1.0 billion accounting bridge between US GAAP and IFRS, and a strong increase in adjusted EBITDA AL in 2026 as it focuses on delivering profitable customer growth and driving further operating efficiencies in the business through the company’s digital transformation.

Excluding expenditures relating to spectrum, T‑Mobile US has reported lower cash capex in recent years after reaching peak levels post Sprint Merger from its accelerated network integration and the rapid pace of its 5G network deployment. The company expects cash capex to increase in 2025 to fund continued network leadership and ongoing investment in core business growth and evolution and a stable trend in 2026, reflecting greater capital efficiencies from the 5G network build.

Europe

Economic activity saw a gradual recovery in the countries of our Europe operating segment in the reporting year. We assume that the European economy will continue to brighten overall in 2025 too, supported by several factors, including moderate inflation of around 2 % according to the European Central Bank’s forecast. Analysys Mason expects total revenue for telecommunications services to grow slightly for the countries of our operating segment in 2025 and 2026. Demand for mobile services with corresponding revenues is expected to increase slightly in 2025 and 2026. In the fixed network, customer demand for a fast, reliable broadband connection will remain a key growth driver over the next two years, with forecast growth of around 3 %. The trend towards increased data usage continues unabated, especially in households that have not previously had sufficiently fast broadband lines. In many Central and Eastern European countries, there is still the possibility of increasing broadband network coverage, especially in our national companies, being previously pure wireless providers. Demand for AI-powered solutions that enhance productivity, improve personalization, and support decision-making is likely to grow further, particularly in the business customer segment. As a result, companies of all sizes are taking robust measures to ensure cybersecurity and data protection, to improve their competitiveness on the market, and to strengthen their strategic independence.

We aspire to continue developing into the Leading Digital Telco in the coming years. All national companies in the Europe operating segment except for Romania are integrated providers of telecommunications services, have high brand recognition levels, and are very significant players in their respective home markets. We always put our customers at the heart of everything we do. In the consumer segment, for example, we want to use AI and data to make our convergent products and services significantly more personalized and tailor them to specific target groups. We continue striving to give our network quality an emotional component through the TV business, which is key for our FMC business. We will therefore continue investing to acquire (co-)exclusive rights to broadcast national and international sports events, such as soccer leagues, or the rights to TV movies/series. Entering into partnerships with local and international OTT providers is also part of our strategy. In the reporting year, for example, we announced a partnership with the streaming service Netflix, which we are rolling out via our national companies in Europe. Besides content, the product experience is a further key factor in the success of our TV business, which is why we continue standardizing our TV platforms and terminal equipment. According to Analysys Mason, pay-TV business is set to grow by almost 6 % in both 2025 and 2026, driven by streaming services, which are expected to overtake traditional TV business for the first time starting 2025.

Digital interaction with our customers is a key factor in meeting customer needs in a more personalized and efficient way, and positioning products and innovative services on the market more quickly. Our service app (OneApp) is already used by more than two thirds of our customers, and was recently expanded to include the Magenta AI feature in collaboration with Perplexity AI. The app helps us monetize our product portfolio and bring down costs by reducing service cases through self-service and preventive maintenance. We also offer a number of other channels for interaction, such as our digital retail platform OneShop and our digital payment solution Payzy. In customer interactions – whether digital or in person – we want to ensure that we can offer our customers the best customer experience every time. Thus, we believe we can retain and further build on our first place in customer satisfaction rankings of telecommunications companies in the respective countries (as measured by the TRI*M index, which is based on empirical research).

We intelligently use our network infrastructure – fast fiber-optic networks and the accelerated rollout of 5G – to make our contribution to digitalization. In all our footprint countries, we have gradually refarmed the spectrum used for 3G to increase LTE and 5G capacity. We also successfully began operating 5G Standalone (5G SA) in Greece and Hungary, and can now offer our customers this state-of-the-art technology. Automation and AI are used, e.g., to support fiber-optic planning or to reduce energy consumption in our mobile communications networks. The build-out of fiber-optic technology is also progressing further. By the end of 2026, we aim to increase our fiber-optic coverage – from 10.1 million at present – by a further 2 million households, connecting around 5 million households by the end of 2026 to achieve a utilization rate of 39 %.

In the B2B business, the growing demands of digitalization pose challenges for us. We want to offer our customers a stand-out network experience, using our expanded 5G coverage and tailored 5G solutions to develop sustainable and customizable business models for specific industries. These also include modern digital infrastructure for integrated IT and communications solutions, as well as services enabled through platform-based offerings. Our next-generation portfolio includes AI-powered solutions such as chatbots, digital assistants, and intelligent recommendation engines. We offer augmented functions to enhance the digital experience, e.g., 24/7 support, self-service portals, and customer success managers.

In our Europe operating segment, we expect a positive trend in customer numbers in the next two years, primarily thanks to the focus on delivering the best network experience, the best customer experience in interaction with us (“Win the hearts of our customers”), and the best FMC experience for consumers and business customers alike. We expect the number of mobile customers to increase slightly in both 2025 and 2026. We expect the number of fixed-network lines to remain stable in both 2025 and 2026. We expect the number of broadband customers to increase in both 2025 and 2026 and the number of TV customers to also increase slightly in both years.

We expect revenues for our Europe operating segment to increase in 2025 and again in 2026, measured on a comparable basis, i.e., at constant exchange rates and given an unchanged organizational structure, and comparable market conditions as well as decisions by regulators. We also expect service revenues to increase in both years.

We expect adjusted EBITDA AL to increase to EUR 4.6 billion in 2025, followed by a further increase in 2026. We assume that the trend on the energy market will remain challenging for the time being. In order to be better prepared for rising energy prices, we continue to conclude long-term power purchase agreements with local suppliers in the respective European countries. In some countries of our operating segment, inflation resulted in higher collective salary agreements being concluded in the reporting year. In addition, highly intense competition in the markets of our operating segment could potentially put pressure on our margins. In order to realize cost-cutting potential, we intend to increase our productivity by also using AI and exploit the benefits of digitalization, for instance by automating processes.

To maintain our technology leadership, we continue to invest in fiber-optic and 5G technologies of our integrated networks and plan to maintain the high overall level of investments over the next few years. We expect cash capex (before spectrum investment) to increase slightly in 2025 and 2026.

Systems Solutions

Overall, we expect growth rates in the IT market to remain fairly constant in the coming years, while pressure from innovations, costs, and intense competition is likely to persist. Nevertheless, we expect ongoing digitalization to drive further growth in demand for solutions from the areas of cloud services, big data, and automation of business processes using artificial intelligence (AI), as well as IT security (cybersecurity).

At the same time, this market is undergoing a radical transformation, e.g., due to ongoing standardization and automation, demand for smart services, and the changes being wrought by cloud services in outsourcing business. Further challenges have arisen in the shape of digitalization, the growing importance of cybersecurity, and AI. Traditional IT business will continue to decline, while cloud services and cybersecurity may achieve double-digit growth rates. With the aim of achieving a significant shift in the revenue mix towards our growth areas, we are continuing to drive forward expansion of the growth business (e.g., digitalization, public cloud, sovereign cloud, cloud migration), while at the same time stabilizing and making further cost savings in established IT business (e.g., infrastructure solutions). In line with this, our plan is to continue investing increasingly in growth markets – especially in digitalization (e.g., AI, SAP S/4HANA), multi- and hybrid cloud services, and cybersecurity.

In terms of revenue and market share, we are among the top IT service providers in the European IT market and in Germany. Our very high levels of customer satisfaction – with a TRI*M score of over 95 – are a core element in maintaining this position in the long term as well as in playing a leading role in digitalization.

Overall, we forecast slight growth in order entry for the Systems Solutions operating segment in 2025 and again in 2026. We also expect revenue and service revenue to increase slightly in 2025 and 2026. Adjusted EBITDA AL is expected to increase in 2025, reaching around EUR 0.4 billion. We expect adjusted EBITDA AL to increase again in 2026. We expect cash capex (before spectrum investment) to remain stable in both 2025 and 2026.

Group Headquarters & Group Services

In Group Headquarters & Group Services, we are reaffirming our efficiency ambitions and continuing our efforts to pass on the envisaged cost reductions to the operating segments in the coming years. Specifically, this means reducing intragroup cost allocations by providing our services more cost-effectively, to support a positive contribution to earnings in the operating segments. We remain committed to taking responsibility for a sustainable future and continue to implement our targeted ESG activities. On this basis, we will continue to centrally procure carbon credits for the Group, in addition to carrying out extensive energy-saving construction measures. We are also systematically transitioning our vehicle fleet to e-mobility and are able to realize further optimizations in our real estate portfolio by bundling technical infrastructure.

The strategy of the Board of Management department Technology and Innovation for the period 2024 through 2027 focuses on four areas: global economies of scale, technological sovereignty, autonomous networks, and data-driven artificial intelligence (AI). Deutsche Telekom plans to make its technology and product platforms available on a global scale. This includes further developing applications and products for business customers such as campus networks and security technologies, e.g., Magenta Security on Net. We also plan to unify and further develop the operating systems for our routers, and intensify interaction with our customers via apps. We are strengthening our technological independence by deploying Open RAN technology (Open Radio Access Network). Open RAN is a shift towards open interfaces and greater variety of providers in the Radio Access Network. Over 3 thousand Open RAN-compatible cell sites are set to be in operation by 2027. We are also developing our own RAN management system to better monitor our costs and the customer experience.

We continually modernize and automate our networks in pursuit of our vision to create autonomous networks, able to run with minimal human intervention and maximal efficiency due to AI and automation. AI is being integrated into all processes to boost productivity and enhance customer experience, such as using AI chatbots in customer hotlines and generative AI in the MeinMagenta app (Magenta AI). By 2027, 10 million users per month are set to benefit from this. In network management, incident tickets will be created and resolved automatically. AI will enhance energy efficiency in the access network, based on a modern IT organization delivered by the Board of Management department. We use cloud solutions and state-of-the-art software to standardize our infrastructure, pouring the savings captured into further innovation projects. Innovations in technology and products are aligned with the goal of safeguarding network and technology leadership alongside enhanced customer satisfaction in the Germany, Europe, and United States operating segments.