Market expectations and 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 up to and including the 2027 financial year at our 2024 Capital Markets Day.

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 further in the German market for telecommunications services in 2025. Independent market studies expect growth to continue in 2026, driven by rising demand for mobile internet, higher data volumes, and the growing demand for fiber-optic-based broadband lines.

We are witnessing a shift among customers towards the use of more data-centric applications, video streaming, and cloud-based services, which is offsetting revenue declines in traditional voice services. Network quality and reliable data coverage continue to be crucial in this context, especially for data-intensive applications, working from home, streaming, or digitalized business processes. At the same time, the competitive pressure remains high in an environment shaped by dynamic price trends in mobile communications and strong competition from cable and fiber providers in the fixed network.

In 2025 the mobile market was dominated by the increasing availability of data flat rate offerings and further growth in demand for mobile data communication. Retail revenue increased by 1.4 % in 2025 and is predicted to grow by 1.0 % in 2026 (Analysys Mason). The network build-out in Germany is making headway, and by October 2025 the Bundesnetzagentur put 5G coverage from at least one provider at 95.0 % of Germany, and total nationwide broadband mobile coverage at around 98.0 %. The providers are likely to continue expanding their 5G networks in 2026, with competitive momentum remaining high.

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. 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 – and intend to maintain a similar pace in 2026. In addition to single-family homes, our focus is increasingly also on connecting multi-dwelling units. Cooperation models with regional operators and wholesale partnerships are core elements of our rollout and monetization strategy. At the same time, the number of homes connected is lagging across the industry as a whole.

The abolition of the “Nebenkostenprivileg” as of July 1, 2024 has fundamentally changed the TV reception options available to tenants, with demand shifting clearly in favor of internet-based TV offerings (IPTV/streaming). Our TV customer base grew to 4.8 million in the year just ended, although competition in this segment remains high. We use product differentiation (partner ecosystems, exclusive content, a better user experience) and bundled offerings to garner customer retention.

We expect our mobile customer base to continue growing through 2026 and 2027, and our retail broadband lines to remain stable in 2026 before returning to moderate growth in 2027 driven by an increase in the fiber customer base. Alongside pure connections, our focus is on monetization through upselling (speed, value-added services, as well as IT, security, and cloud offerings geared predominantly to business customers). We aim to realize efficiency gains and improve conversion rates through the use of digitalization and automation in sales and service.

In our Germany operating segment, we expect a slight increase in revenue and service revenue in both 2026 and 2027, primarily due to growth in mobile revenues and the fiber customer base. We expect customer numbers to grow in both business areas through 2027.

In each of the next two years, we expect to post year-on-year increases in earnings in our Germany operating segment. For 2026, we expect adjusted EBITDA AL of around EUR 11.0 billion, driven in particular by revenue growth and an improved cost item, mainly through digitalization and automation. We expect adjusted EBITDA AL to increase again in 2027. We expect our cash capex (before spectrum investments) to increase slightly in 2026 and again in 2027.

United States

The United States ICT market size reached USD 1.50 trillion in 2025 and is forecast to reach USD 2.15 trillion by 2030. Investments in hyperscale data centers and enterprise spending on cloud computing and edge IT are key drivers, as are IT services and IT security spending.

According to 6WResearch, over 570+ colocation and hyperscale self-built data center projects in the United States are expected to add over 100 Gigawatt of capacity. By geography, markets in Virginia, Texas, Arizona, Illinois, Nevada, Georgia and Ohio are the primary beneficiaries of the capacity buildout.

One estimate expects the U.S. Cloud Computing market to grow at a Compound Annual Growth Rate (CAGR) of 9.8 % between 2025 and 2031. This growth is propelled by the use of multi-cloud and hybrid deployment models, the growing need for scalable and reasonably priced IT infrastructure, increasing adoption of cloud-based analytics, Artificial Intelligence (AI), and machine learning tools. Growing deployment of cloud-based edge computing and Internet of Things applications as well as rising expenditures on cloud-based compliance and cybersecurity solutions are additional factors for the growth of the cloud computing market.

Midband spectrum auctions scheduled by the Federal Communications Commission for 2026 and expected for 2027 are expected to stimulate further demand for telecommunications network inputs as carriers use the acquired spectrum to continue to build out wireless networks.

Federal broadband support via the USD 42.45 billion Broadband Equity Access and Deployment (BEAD) program is providing additional spending on network equipment and managed services as network providers expand high-speed connectivity in un- and underserved regions in the United States.

Starting in the first quarter of 2026, T‑Mobile US will report the total number of postpaid accounts instead of the total number of postpaid and prepaid customers. From T‑Mobile US’ perspective, this better reflects the focus of its business, which is aimed at increasing valuable customer relationships to enhance the company’s value. Accordingly, as part of this transition, we will forecast the total number of postpaid accounts for the United States operating segment.

A postpaid account is generally defined as a billing account number that generates revenue. Postpaid accounts generally consist of customers that are qualified for postpaid service utilizing phones, 5G broadband gateways, fiber connections, mobile internet devices (including tablets and hotspots), wearables, DIGITS and other connected devices (including SyncUP and IoT), where they generally pay after receiving service.

T‑Mobile US expects a continued increase in postpaid accounts in 2026 and 2027. Postpaid account growth is based on further expansion in underpenetrated growth sectors, such as smaller markets and rural areas, network seekers everywhere, including those in Top 100 markets, 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 2026 and 2027, driven by ongoing profitable share taking, postpaid account and ARPA growth, broadband growth, and expansion into new businesses.

For 2026, T‑Mobile US expects adjusted EBITDA AL of USD 36.2 billion, which is based upon the midpoint of US GAAP guidance of USD 37.0 to 37.5 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 2027 as it focuses on delivering profitable account growth and driving further operating efficiencies in the business through the company’s digital, AI, technology, and network transformation.

In 2025, the company accelerated greenfield network deployment builds and network optimization efforts. The company expects cash capex in 2026 of approximately USD 10.1 billion to fund continued network leadership and ongoing investment in core business growth, including network optimization efforts as part of UScellular integration.

Europe

Economic activity saw a slight recovery in the countries of our Europe operating segment in the reporting year. The European Commission expects growth in the EU will continue in 2026. Despite the rapidly changing geopolitical and geoeconomic environment, as well as continuing market uncertainties – including weaknesses in the industrial sector and restrained business and consumer behavior – economic activity will be buoyed by a robust labor market, falling inflation, and easing financing conditions. Analysys Mason forecasts a slight rise in both total and mobile revenues for 2026 and 2027. In the fixed network, fast, reliable broadband connections remain a key growth driver with revenue predicted to rise by around 3 %. The trend towards increased data usage continues, especially in households that have not previously had sufficiently fast broadband lines. Analysys Mason similarly expects the pay TV business as a whole (including OTT providers) to grow by around 5 % annually over the next two years, driven by streaming services, which overtook traditional TV business for the first time in 2025. In parallel, demand is rising for AI‑powered productivity enhancement and personalization solutions. Companies of all sizes are ramping up investments in cybersecurity and data protection to safeguard their competitiveness and strategic independence.

We aspire to continue developing into the Leading Digital Telco in the coming years. All national companies in the Europe operating segment are integrated providers of telecommunications services, have high brand recognition levels, and are very significant players in their respective home markets.

Digital interaction with our customers remains a key factor in meeting customer needs in a more personalized and efficient way, and positioning products and digital services in our European markets more quickly. Our service app (OneApp) is already used by more than two thirds of our customers and is establishing itself as the central digital interface. Whether digital or in person, we want to continue offering a standout customer experience and retain and further build on our customer satisfaction leadership in the European markets, based on the empirically researched TRI*M index.

We continue striving to give our network quality an emotional component through the TV business, which is key for our FMC business, alongside excellent content and a better product experience. In our nine pay TV markets we will continue to offer a comprehensive portfolio of different content partners, whether linear or on-demand. Due to the market heterogeneity in this segment, we pursue local strategies which address the divergent competitive situations in each country. We are also working to standardize the TV product.

We intelligently use our network infrastructure – fast fiber-optic networks and the accelerated rollout of 5G – to make our contribution to digitalization. Having reframed the spectrum used for 3G to increase LTE and 5G capacity in all our footprint countries, we are now working intensively on plans to decommission the 2G networks. We successfully began operating 5G Standalone in Austria, following rollout to Greece and Hungary in the prior year. All other countries are set to follow by 2027 to give all customers the opportunity to benefit from 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 progressing further. By the end of 2027, we aim to increase our fiber-optic coverage (homes passed) from 11.3 million at present to around 13.5 million households, connecting around 5.2 million households (homes connected) by the end of 2027 to achieve a utilization rate of 39 %.

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 2026 and 2027. We expect the number of fixed-network lines to remain stable in both 2026 and 2027. We expect the number of broadband as well as TV customers to grow in both 2026 and 2027.

We expect revenues for our Europe operating segment to increase slightly in 2026 and again in 2027, 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 slightly in both years.

We expect adjusted EBITDA AL to increase to EUR 4.8 billion in 2026, followed by a further increase in 2027. We assume that the trend on the energy market will remain challenging. 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 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 continue at this level in 2026 and 2027.

Systems Solutions

Overall, we expect growth rates in the IT market to remain fairly unchanged in the coming years, while pressure from the high pace of innovation, costs, and intense competition is likely to persist. At the same time, 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 cybersecurity.

The market is undergoing a radical structural transformation that opens up numerous opportunities, driven mostly by increased standardization and automation, growing demand for smart services, and the evolution of the outsourcing business towards flexible, cloud-based models. The ongoing digital transformation is additionally increasing the importance of innovative topics such as cybersecurity and the widespread use of artificial intelligence, unlocking attractive growth potential. While traditional IT business may decline further, we expect cloud services and cybersecurity to continue to achieve double-digit growth rates.

Against this backdrop, our aim is to achieve a significant shift in the revenue mix towards our growth areas by systematically driving forward expansion of our growth business – e.g., in the areas of digitalization, sovereign cloud, industrial AI cloud, future cloud infrastructure, Open Telekom Cloud, private generative AI, and cloud professional services. At the same time, we are working to stabilize and realize further efficiency gains in established IT business (e.g., infrastructure solutions). In line with this, our plan is to continue focusing our investments in growth markets, especially in AI and data intelligence, multi- and hybrid cloud services, and cybersecurity. Given the growing strategic relevance of defense, going forward we will manage our activities in this area as an independent focal sector, to enhance our existing focal sector portfolio of automotive, healthcare, and public, as well as intragroup business.

In terms of revenue and market share, we are among the top providers in the European IT service market – in particular in Germany. Our high levels of customer satisfaction – with a TRI*M score of 99 – are a core element in maintaining this position and in playing a leading role in digitalization.

Overall, we forecast growth in order entry for the Systems Solutions operating segment in 2026 and again in 2027. We also expect revenue and service revenue to increase in 2026 and 2027. Adjusted EBITDA AL is expected to increase slightly in 2026, reaching around EUR 0.4 billion. We expect adjusted EBITDA AL to increase in 2027, and cash capex (before spectrum investment) to remain stable in both 2026 and 2027.

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 are addressing the major challenges posed by the standardization of Group processes and are intently focused on the transformation of the Group entities concerned, in particular through the increased use of digital tools, which promise to unlock significant efficiency gains for our business. Our commitment to a sustainable future is reflected in the continued electrification of our vehicle fleet and the optimization of our real estate portfolio in terms of energy efficiency. We additionally plan to make greater use of environmentally friendly synthetic diesel fuels both for our vehicles and for the heating systems in our real estate portfolio.

The strategy of the Product and Technology Board of management department in the coming years systematically focuses on four key areas: global economies of scale, technological sovereignty, autonomous networks, and data-driven artificial intelligence (AI).

The goal is to scale technology and product platforms Group-wide to sustainably enhance speed, efficiency, and the customer experience. With the organizational realignment of the Networks and IT areas, we are creating clear, crosscutting responsibilities. This will leverage global synergies and accelerate the development and scaling of technology and product innovations – including such new growth topics as B2B solutions and security offerings.

A further focus is on unifying and further developing central platforms, with measures including a common operating system for routers and the expansion of digital customer interfaces, such as the MeinMagenta app. These activities enable us to deliver a consistent user experience across all countries and segments. We are strengthening our technological independence with the ongoing deployment of Open RAN technology. Open RAN is a shift towards open interfaces and greater variety of providers in the Radio Access Network (RAN). We are also developing our own RAN management system to better monitor our costs and the customer experience.

In parallel, we systematically modernize and automate our networks in pursuit of our vision to create AI-assisted autonomous networks that are able to run with minimal human intervention. AI is used throughout the entire value chain in areas ranging from network management to customer service to software development, through the use of AI-powered chatbots and more. AI is also enhancing energy efficiency, in particular in the access network – based on a powerful, modern IT organization delivered by Deutsche Telekom. Cloud-based solutions, standardized software platforms, and the targeted use of AI create a future-proof technological basis and capture efficiencies which are used to power future innovations.

Overall, the activities of the Product and Technology Board department contribute to safeguarding Deutsche Telekom’s network and technology leadership and enhancing the customer experience in the Germany, Europe, and United States operating segments.