Germany

For information on changes resulting from the first-time application of the IFRS 16 “Leases” accounting standard, please refer to the section “Group organization, strategy, and management.”

Customer Development

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thousands

 

 

 

 

 

 

Mar. 31, 2019

Dec. 31, 2018

Change
Mar. 31, 2019/
Dec. 31, 2018
%

Mar. 31, 2018

Change
Mar. 31, 2019/
Mar. 31, 2018
%

Mobile customers

44,657

44,202

1.0

42,730

4.5

Contract customers

25,195

25,435

(0.9)

25,102

0.4

Prepay customers

19,462

18,767

3.7

17,628

10.4

Fixed-network lines

18,414

18,625

(1.1)

19,149

(3.8)

Of which: retail IP-based

16,065

15,356

4.6

12,843

25.1

Retail broadband lines

13,608

13,561

0.3

13,357

1.9

Of which: optical fiber

7,609

7,236

5.2

6,232

22.1

Television (IPTV, satellite)

3,419

3,353

2.0

3,193

7.1

Unbundled local loop lines (ULLs)

5,050

5,236

(3.6)

5,846

(13.6)

Wholesale broadband lines

6,975

6,722

3.8

5,993

16.4

Of which: optical fiber

5,285

4,970

6.3

4,135

27.8

Total

In Germany we continue to be market leader both in terms of fixed-network and mobile revenues. This success is attributable to our high-performance networks. We offer best customer experience with multi-award-winning network quality – in the fixed network as in mobile communications and service – and with a broad product portfolio. Thanks to the sustained popularity of our convergent MagentaEINS offering, our MagentaEINS customer base totaled 4.4 million at the end of the first quarter of 2019.

High demand for mobile rate plans with included data volumes resulted in an increase in the number of branded contract customers under the Telekom and congstar brands. Our initiatives in the automotive sector drove growth in the number of customers.

We made further headway with our transformation program, and by the end of the first quarter of 2019 had migrated 22.9 million and wholesale lines to IP, bringing the total migration level to 90 percent of all lines.

We continued to see strong demand for our fiber-optic products. As of the end of the first quarter of 2019, the number of lines had increased to 12.9 million overall. In other words, we connected 688 thousand lines to our fiber-optic network in Germany in the first three months of 2019. With the progress made in fiber-optic rollout and technology, we also drove the marketing of higher bandwidths.

Mobile communications

We won a further 455 thousand in the first quarter of 2019 compared with year-end 2018. Of these, a total of 132 thousand were contract customers under our Telekom and congstar brands. The number of mobile contract customers with resellers (service providers) decreased, primarily due to the volatile developments at some of our service providers. The number of prepay customers increased by 695 thousand.

Fixed network

Due to the persistently challenging development in the fixed-network market, primarily owing to aggressive pricing offers of competitors, we are pursuing new paths in marketing. Our focus is on convergent offerings and their further development – for instance, MagentaTV with exclusive access to a wide range of additional content – as well as TV lines and . As a result, since the start of the year the number of broadband lines has grown by 47 thousand and the number of TV customers by 66 thousand. In the traditional fixed network, the number of lines decreased by 211 thousand.

Our MagentaZuhause rate plans offer a comprehensive product portfolio for the fixed network based on IP technology and rate plan-specific bandwidths. MagentaZuhause Hybrid bundles fixed-network and mobile technology in a single . To date, 490 thousand customers, primarily based in rural areas, have selected this innovative product.

Wholesale

At the end of the first quarter of 2019, fiber-optic lines accounted for 44.0 percent of all lines – 2.4 percentage points higher than at the end of 2018. This accelerated growth was driven largely by high demand for our . The number of lines decreased by 186 thousand or 3.6 percent compared with the end of the prior year. This is due first to the move to higher-quality fiber-optic lines, and second to retail customers switching to cable operators. In addition, wholesale customers are migrating their retail customers to their own . In wholesale, the number of lines stood at 12 million at the end of the first quarter of 2019.

Development of operations

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millions of €

 

 

 

 

 

 

 

 

Q1 2019

Q1 2018

Change

Change %

FY 2018

a

Prior-year comparatives were calculated on a pro-forma basis for the redefined key performance indicators resulting from the introduction of the IFRS 16 accounting standard.

TOTAL REVENUE

 

5,357

5,325

32

0.6

21,700

Consumers

 

2,833

2,813

20

0.7

11,543

Business Customers

 

1,510

1,491

19

1.3

6,082

Wholesale

 

931

932

(1)

(0.1)

3,720

Other

 

83

90

(7)

(7.8)

355

Profit from operations (EBIT)

 

863

935

(72)

(7.7)

3,969

EBIT margin

%

16.1

17.6

 

 

18.3

Depreciation, amortization and impairment losses

 

(1,083)

(980)

(103)

(10.5)

(4,042)

EBITDA

 

1,946

1,915

31

1.6

8,012

EBITDA ALa

 

1,940

1,891

49

2.6

7,918

Special factors affecting EBITDA

 

(168)

(167)

(1)

(0.6)

(598)

EBITDA (adjusted for special factors)

 

2,114

2,082

32

1.5

8,610

EBITDA AL (ADJUSTED FOR SPECIAL FACTORS)a

 

2,108

2,058

50

2.4

8,516

EBITDA AL margin (adjusted for special factors)a

%

39.4

38.6

 

 

39.2

CASH CAPEX

 

(1,216)

(1,145)

(71)

(6.2)

(4,240)

Total revenue

Total revenue was up slightly year-on-year by 0.6 percent. In mobile business, revenue increased by 2.4 percent. Higher IT and broadband revenues had a positive effect on fixed-network business. This was sufficient to almost completely offset the year-on-year decrease in fixed-network revenue (primarily from voice components).

Revenue from Consumers grew by 0.7 percent year-on-year. Volume- driven declines in revenue from voice components continue to strongly impact on traditional fixed-network business. By contrast, revenue from broadband business increased.

Revenue from Business Customers increased by 1.3 percent. Mobile revenue increased by 1.5 percent and IT revenue by 36.9 percent compared with the prior-year quarter. In the fixed network, by contrast, a decline was recorded in traditional voice telephony, due largely to the increasing number of customers moving to flat-rate plans in connection with the migration to .

Wholesale revenue in the first quarter of 2019 remained on a par with the prior-year quarter due to the revenue contributions from our contingent model.

EBITDA AL, adjusted EBITDA AL

EBITDA AL amounted to EUR 1,940 million in the first quarter of 2019, an increase of 2.6 percent against the prior-year quarter. This was attributable largely to reduced personnel costs – mainly as a result of the lower headcount – and the successful implementation of further efficiency and digitalization initiatives. EBITDA AL adjusted for special factors increased by 2.4 percent to EUR 2,108 million year-on-year due to the reasons mentioned. Our adjusted EBITDA AL margin increased to 39.4 percent, up from 38.6 percent in the prior-year quarter.

EBIT

Profit from operations decreased by 7.7 percent year-on-year to EUR 863 million due to higher depreciation, amortization and impairment losses on account of sustained high investments in our network infrastructure.

Cash capex

Cash capex increased by 6.2 percent compared with the first quarter of 2018. As part of our integrated network strategy, we again made significant investments in the broadband and fiber-optic rollout, our IP transformation, and our mobile infrastructure.

Prepay/prepaid
In contrast to postpay contracts, prepay communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
IP - Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
Retail
The sale of goods and services to end users, as opposed to resale or wholesale.
Vectoring
Vectoring is a noise-canceling technology that removes the electro-magnetic interference between lines, enabling higher bit rates. However, in order to cancel noise, the operator must have control over all lines. This means that other operators cannot install their own technology at the cable distribution boxes.
Mobile customers
In the combined management report, one mobile communications card corresponds to one customer. The totals were calculated on the basis of precise figures and rounded to millions or thousands. Percentages were calculated on the basis of the figures shown (see also SIM card).
Fiber-optic lines
Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH).
Router
A coupling element that connects two or more sub-networks. Routers can also extend the boundaries of a network, monitor data traffic, and block any faulty data packets.
Contingent model
Contract concluded over a long period of time with defined advance payment and minimum purchase requirement. In return, the resellers pay a reduced monthly charge for VDSL. This allows them to put together interesting offers for their own consumers without having to invest in fiber-optic lines of their own. This improves the utilization of Telekom Deutschland GmbH’s existing VDSL network. The current “contingent model” is being developed further to reflect the network build-out in terms of availability and bandwidth.
ULL - Unbundled Local Loop
Competitors whose own networks do not reach into customers’ premises can rent unbundled local loop lines from Deutsche Telekom. Their networks end at the local exchanges. The ULL bridges the distance between the local exchange and the termination point on the customer’s premises or in their home, so it is also known as the “last mile.”
Fiber-optic lines
Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH).
IP - Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.