Telecommunications market
Demand for high-speed broadband – over both the fixed and mobile networks – remains high. According to estimates by the consulting firm Analysys Mason, fixed network data traffic in Europe reached a volume of 1,016 exabytes in 2024, an increase of 13 % compared with the prior year. Mobile data traffic increased by 16 % to 141 exabytes. Ericsson forecasts that global mobile data traffic will triple by 2030. In the fixed network, development will be primarily driven by the ongoing shift from linear television to on-demand services. Furthermore, there is a growing share of high-resolution content and the trend towards live-streaming of sports events. In mobile communications, the main forces driving growth in traffic are the growing consumption of short videos, intensive use of social media, and in some countries, the prevalence of Fixed Wireless Access (FWA).
The global telecommunications market is set to grow further. According to estimates by Analysys Mason, global revenue from telecommunications services grew in 2024 by 2.0 % year-on-year. Revenue growth from conventional telecommunications services is mainly driven by higher spending on data services. Analysys Mason expects the build-out of fiber-optic networks and the growing demand for faster broadband lines to drive up average spend per user for fixed-network lines, especially in North America and Western Europe. Analysys Mason also expects revenue growth in the North American mobile market to remain consistently higher than in Europe over the coming years.
The telecommunications industry continues to be characterized by intense competition. Consumers benefit from a greater range of products to choose from. In the fixed network, established telecommunications companies are competing intensively with cable network operators, city network operators, and resellers, who predominantly make use of regulated wholesale products. Financial investors are involved in building out regional and supra-regional fiber-optic networks. In addition, internet companies are also further intensifying the competitive pressure. Moreover, three or four mobile network operators operate in each of our markets using their own network infrastructure. On top of this, we are seeing mobile virtual network operators (MVNOs) becoming established in many markets using the network infrastructure of traditional mobile network operators.
In view of this, the question is whether the intense regulation of telecommunications markets in the European Union (EU) is still justified. Two landmark reports – the Letta Report, published in April 2024 on the future of the EU Single Market, and the Draghi Report published in September 2024 on the future of EU competitiveness – call for reforms to strengthen the competitiveness of the European telecommunications sector. The main focal points here are on deregulation, consolidation, spectrum reform, and fairness in the digital ecosystem. As such, both reports seize on action areas that the European Commission already raised in its white paper published in February 2024 on the future of digital infrastructure. The new European Commission, which took office on December 1, 2024, regards the Draghi report in particular as a cornerstone of its economic policy for the next five years. For 2025, the European Commission plans to table a legislative proposal (Digital Network Act) that is based on the proposals from the white paper and the recommendations of the Draghi Report, and could incorporate parts of it.
Germany
While the German economy is stagnating, the telecommunications industry is continuing its upwards trend. In January 2025, the industry association Bitkom estimated that total revenue in the telecommunications industry in Germany had increased by 1.8 % year-on-year to EUR 74.3 billion in the reporting year. Revenue in the area of telecommunications equipment grew by 3.5 %, in telecommunications services by 1.4 %, and in telecommunications terminal equipment by 2.7 %.
According to an estimate by the industry association VATM, the number of broadband lines in Germany increased to 37.7 million lines by the end of the first half of 2024. The build-out of modern fiber-optic networks continues: in addition to established telecommunications companies, public utility companies, municipalities, and special purpose associations, as well as investor-driven network operators, are also active. Increasingly, FTTB/H lines are marketed as alternatives to VDSL/vectoring lines and cable network lines. In the TV services market, a large number of customers switched their TV provider in summer 2024 owing to the abolition of the privilege for property owners or housing companies to pass on cable TV and internet service fees as ancillary rental costs to tenants (“Nebenkostenprivileg”). IPTV providers in particular saw their TV customer bases increasing.
According to Analysys Mason, service revenue in the German mobile communications market increased by 1.4 % to EUR 19.6 billion compared with 2023, driven mainly by the uninterrupted upswing in data usage. Sustained price and competitive pressure offset the additional demand for data. Mobile data usage continues to increase strongly on the back of growing use of products such as mobile video apps. Connected devices like smartwatches and fitness trackers (wearables) are growing in popularity. Alongside established apps for IP messaging and social networks, etc., apps for tracking fitness, vital, and health data or using mobile payment services are also gaining traction and pushing up demand for high-speed mobile broadband, large data volumes, and extra SIM cards in the rate plan portfolios.
The digitalization of both private and business applications continues. Demand is also growing in industry for connectivity to allow machines and production sites to be networked. The growing use of artificial intelligence increases efficiency, reduces costs, and at the same time, enables greater customer satisfaction due to faster, tailored services.
United States
To meet the ongoing demand for faster networks in 2024, U.S. broadband providers continued to expand their network capacities with further wireless and fiber deployments.
According to independent network tests, T‑Mobile US’s network delivered best-in-class 5G availability and higher coverage than its competitors at the end of 2024, covering around 54 % of the land area of the United States. AT&T has coverage of around 30 %, while Verizon had the lowest 5G coverage in the United States as of the beginning of November 2024 at around 13 %.
Fixed Wireless Access (FWA), which provides high-speed internet to homes and businesses, continues to drive fixed broadband growth, putting the United States at the forefront of this area. Wireless providers have used FWA to enter the fixed broadband market, while fixed internet service providers with access to 5G spectrum use FWA to complement broadband access in locations where fiber networks are not present. In the United States, FWA has also been used to help bridge the digital divide in rural locations where laying fiber is not economical. T‑Mobile US and Verizon are leading in FWA expansion in the United States: At the end of the third quarter of 2024, T‑Mobile US reported around 6 million broadband customers, and Verizon 4.2 million.
U.S. telecommunications providers also pushed ahead with the FTTH build-out in the reporting year. AT&T offers fiber-optic services in parts of 21 U.S. federal states, primarily in towns and cities of the Midwest and the South. According to the U.S. Federal Communications Commission (FCC), AT&T covered around 12 % of households with fiber-optic lines in 2024, Verizon around 9 %. Fiber deployments are expected to further accelerate with the support of the federal Broadband Equity Access and Deployment Program (BEAD). The BEAD program provides USD 42.45 billion to fund primarily fiber-based broadband expansion projects in unserved and underserved areas of the United States. The United States began awarding grants in the reporting year, such that the build-out is expected to accelerate in 2025.
Carriers in the United States are continuing to evaluate options for a shift in communications network architecture from closed proprietary interfaces toward Open Radio Access Network (Open RAN) deployment. AT&T plans to run 70 % of its 5G network traffic via Open RAN by the end of 2026. Verizon is also a huge driver of Open RAN and reports using more than 130 thousand Open RAN-capable antennas in its network. On September 18, 2024, T‑Mobile US announced a partnership with Nvidia, Ericsson, and Nokia to drive forward the future of mobile networking, including Open RAN, with AI at its heart.
In April 2024, the FCC adopted net neutrality regulations, which were then challenged before the court. In January 2025, a U.S. court of appeal lifted the regulations on the grounds that the FCC did not have the requisite powers to issue the regulations under the relevant legislation. However, the net neutrality regulations continue to apply in a number of U.S. states.
Europe
Economic activity saw a gradual recovery in the countries of our Europe operating segment in the reporting year. After a difficult 2023, dominated by high inflation, geopolitical tensions, and energy price rises, the economic conditions gradually stabilized. Inflation fell in the countries of our segment, mainly due to lower energy prices. In the EU, inflation fell to an average of 2 %. This decline contributed to a recovery in purchasing power. Despite the first cuts in interest rates, households and companies remained restrained, thereby dampening momentum. The labor markets continued to be robust, with employment rates remaining stable. Private consumption was up slightly, bolstered by real wage growth and abating inflation.
Consumer spending on telecommunications products and services in Europe remained relatively stable in 2024. Demand for broadband lines, especially those with higher bandwidths, remained consistently high. These developments are also reflected in Analysys Mason’s figures for the fixed-network business (excluding systems solutions) for the first half of 2024: the business grew, driven in particular by the sharp increase in broadband business, by around 6 %. This offset the decline in revenues from voice telephony.
Mobile revenues increased, too, by almost 5 % according to Analysys Mason, driven by an increase in data usage per SIM card and the rising popularity of data-intensive apps. In addition, the build-out of 5G networks drove demand for higher-value rate plans and increased investments in telecommunications infrastructure.
The market players in our European footprint again focused their acquisition activities in the reporting year on becoming providers of convergent product bundles comprising fixed-network and mobile services (FMC). There was significant activity in the Greek market in 2024: For example, a number of public ICT tender procedures were carried out. Furthermore, our Greek national company entered into an agreement with Nova on the mutual sharing of sports content. Nova’s ownership is expected to change in 2025. Market players also invested in their high-speed infrastructure. In Hungary, the ICT group 4iG continued with its strategy of acquiring smaller market players. The expansion extends further to the Western Balkans. Yettel underwent a change in ownership at the end of the reporting year.
FMC remains a strategic focus for the European markets. This is reflected in strong growth in the convergent customer base and in revenue in the reporting year. According to Analysys Mason, the number of FMC customers continued to grow year-on-year in the first half of 2024 by around 3 % and revenues by around 5 %. This trend can also be seen at our national companies: Revenues from convergent products recorded double-digit growth in 2024 compared with the prior year. MagentaOne was still our top product and the most popular choice among our customers. This has a significant impact on reducing the number of customers leaving and improving the customer experience compared with non-convergent customers. As FMC continues to mature in most European markets, they are increasingly focusing on value creation and personalization. We updated our FMC portfolio in our national companies, e.g., Greece and Slovakia. In the process, we combine monetary and non-monetary incentives and services, which are tailored to all customer needs. The competition doubled the convergent product offering through the merging of telecommunications providers. For instance, 4iG’s takeover of Vodafone and UPC Hungary positioned 4iG as a strong convergent provider alongside Magyar Telekom.
Subscription-based streaming services continued to rise in the reporting year – with both international and local services gaining in relevance. Local pay-TV providers also continue to have an extended content mix. They are able, for example, to include attractive sports offerings in their portfolio, because it is easier to acquire sports rights for the individual markets. So for example, RTL+ in Hungary has secured parts of the UEFA club competitions (e.g., UEFA Champions League). Offering customers access to live sports streaming, e.g., via licensed or own channels, is and remains an attractive anchor point in the portfolio of pay-TV providers, although the price trend is making refinancing increasingly difficult. That is why we have reached an agreement with competitor Nova in Greece that enables us to offer the Nova sports channels on our TV platform. In return, Nova broadcasts our sports channels. For customers, this means they have almost every sports event broadcast in the Greek market available on one platform. This not only increases the attractiveness of pay TV and creates higher penetration, it also has positive effects on pay-TV piracy, which is very widespread in Greece. This also shows that it is possible to grow in traditional pay TV: While these revenues grew by around 3 % in the first half of 2024 according to Analysys Mason, and streaming services recovered, with growth of around 12 %, our TV customer base also continued to grow in our national companies.
In 2024, developments in the European telecommunications market were dominated by technological advances, regulatory changes, cybersecurity concerns, competition, a focus on sustainability and green initiatives, supply chain challenges, rising energy costs, and geopolitical uncertainty. Influenced by the European Commission’s Green Deal, the telecommunications sector will take on a central role as strategic partner to strengthen Europe’s ability to work towards greater resilience and accelerated digitalization. In 2024, applications using artificial intelligence (AI) were developed at an unprecedented speed and innovations and the integration of AI in all business processes were driven forward. The European markets also continued with the rapid introduction of technologies like 5G, competitive broadband networks, and digital services like software-defined networks, cybersecurity and cloud computing, thereby laying the foundations for the digital and green transformation.
Systems Solutions
In the IT industry, the revenue volume that can be addressed by our Systems Solutions operating segment in our core market of Germany, Austria, and Switzerland (DACH) under the T‑Systems brand increased by 3.8 % in the reporting year to EUR 47 billion. Companies continue to invest in digital solutions.
In the DACH region, in terms of IT services, demand has grown further for public cloud services and cybersecurity services, as has the importance of digitalization. The cloud market addressed by T‑Systems and the market for digital services in this region grew by 4.2 % and 3.6 %, respectively, in 2024. Our focus industries also developed positively, with the healthcare market growing by 5.9 %. The public sector recorded similar market growth of 5.3 %, while the market for IT services in the automotive sector grew by just 2.7 %.
Competitive and price pressure persisted in all submarkets of our Systems Solutions operating segment. This was due on the one hand to competitors from traditional IT services business, such as IBM, Atos, and Capgemini, and on the other to cloud providers such as Amazon Web Services, Microsoft Azure, and Google Cloud. Prices were eroded further by providers of services that are delivered primarily offshore (e.g., Tata Consultancy Services, Infosys, Wipro, and Accenture).