Germany Customer development (XLS:) Download thousands Mar. 31, 2020 Dec. 31, 2019 ChangeMar. 31, 2020/Dec. 31, 2019% Mar. 31, 2019 ChangeMar. 31, 2020/Mar. 31, 2019% Mobile customers 46,960 46,189 1.7 44,657 5.2 Contract customers 25,475 25,291 0.7 25,195 1.1 Prepay customers 21,485 20,898 2.8 19,462 10.4 Fixed-network lines 17,711 17,824 (0.6) 18,414 (3.8) Of which: retail IP-based 17,510 17,479 0.2 16,065 9.0 Retail broadband lines 13,813 13,730 0.6 13,608 1.5 Of which: optical fiber 8,787 8,529 3.0 7,609 15.5 Television (IPTV, satellite) 3,678 3,618 1.7 3,419 7.6 Unbundled local loop lines (ULLs) 4,505 4,638 (2.9) 5,050 (10.8) Wholesale broadband lines 7,445 7,372 1.0 6,975 6.7 Of which: optical fiber 5,994 5,863 2.2 5,285 13.4 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 award-winning network quality – in the fixed network as in mobile communications – and with a broad product portfolio and excellent service. We want to offer our customers a seamless and technology-neutral telecommunications experience. Hence, alongside fixed-network and mobile communications products, we also market convergence products. Our MagentaEINS convergence product remains very popular among customers, with more than 4.7 million subscribers at the end of the first quarter of 2020. We continued to see strong demand for our fiber-optic-based lines. As of the end of the first quarter of 2020, the total number of lines had increased to some 14.8 million. In other words, we connected 389 thousand lines to our fiber-optic network in Germany in the first three months of 2020. With the progress made in fiber-optic rollout and vectoring technology, we also successfully drove forward the marketing of higher bandwidths. Mobile communications We won a further 771 thousand mobile customers in the first three months of 2020 compared with year-end 2019. Of these, a total of 141 thousand were contract customers under our Telekom and congstar brands. Sustained high demand for mobile rate plans with included data volumes continues to drive this trend. The number of mobile contract customers with resellers (service providers) increased slightly, primarily due to the volatile developments at some of our service providers. We have added 587 thousand prepay customers since the start of the year, largely on the back of our automotive offerings targeted specifically at business customers. The StreamOn option, with which customers can stream certain music, gaming, or video services without reducing their included data allowance, remains extremely popular. At the end of the first quarter of 2020, around 3.3 million customers were using this option, up by almost 63 percent year-on-year. 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 further development of such products – for instance, MagentaTV with exclusive access to a wide range of additional content in the Megathek library and via popular streaming services – as well as TV lines and fiber-optic-based lines. The new Disney+ streaming service was launched on March 24, 2020 with Deutsche Telekom as the exclusive release partner in Germany. The number of broadband lines increased by 83 thousand compared with year-end 2019, while the number of TV customers increased by 60 thousand in the first three months of 2020. In the traditional fixed network, the number of lines decreased by 113 thousand. Our MagentaZuhause rate plans offer a comprehensive product portfolio for the fixed network based on IP technology and rate plan-specific bandwidths. Wholesale At the end of the first quarter of 2020, fiber-optic-based lines accounted for 50.2 percent of all lines – 1.3 percentage points higher than at the end of 2019. This growth was driven largely by high demand for our contingent model. The number of unbundled local loop lines decreased by 133 thousand compared with the end of the prior year, partly as a result of the shift to higher-value fiber-optic-based lines and partly from consumers switching to cable providers. In addition, our wholesale customers are migrating their retail customers to their own fiber-optic-based lines. The total number of wholesale lines at the end of the first quarter of 2020 was around 12.0 million. Development of operations (XLS:) Download millions of € Q1 2020 Q1 2019 Change Change % FY 2019 TOTAL REVENUE 5,405 5,357 48 0.9 21,886 Consumers 2,873 2,833 40 1.4 11,621 Business Customers 1,522 1,510 12 0.8 6,181 Wholesale 937 931 6 0.6 3,739 Other 73 83 (10) (12.0) 345 Profit from operations (EBIT) 903 863 40 4.6 4,063 EBIT margin % 16.7 16.1 18.6 Depreciation, amortization and impairment losses (1,071) (1,083) 12 1.1 (4,256) EBITDA 1,974 1,946 28 1.4 8,319 EBITDA AL 1,968 1,940 28 1.4 8,295 Special factors affecting EBITDA (196) (168) (28) (16.7) (425) EBITDA (adjusted for special factors) 2,170 2,114 56 2.6 8,744 EBITDA AL (ADJUSTED FOR SPECIAL FACTORS) 2,164 2,108 56 2.7 8,720 EBITDA AL margin (adjusted for special factors) % 40.0 39.4 39.8 CASH CAPEX (1,036) (1,216) 180 14.8 (4,349) Total revenue In the first quarter of 2020, we generated total revenue of EUR 5.4 billion, which was up slightly by 0.9 percent year-on-year. This was due in particular to the strong performance in mobile business, which posted growth of 1.6 percent from higher service and terminal equipment revenues, as well as higher IT and broadband revenues from fixed-network business. This increase was sufficient to offset the decrease in fixed-network revenue (primarily from voice components). Revenue from Consumers grew by 1.4 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. Mobile business also grew – by 1.4 percent. Revenue from Business Customers increased by 0.8 percent. Mobile revenues increased by 2.0 percent and IT revenues by 11.2 percent compared with the same period of last year. 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 IP. Wholesale revenue was up slightly in the first quarter of 2020 by 0.6 percent year-on-year. Positive revenue contributions, largely from our contingent model, offset the general decline in revenues from unbundled local loop lines and voice services due to volume losses. EBITDA AL, adjusted EBITDA AL In the first quarter of 2020, we increased EBITDA AL by EUR 28 million or 1.4 percent to around EUR 2.0 billion. The main reasons for this increase are a sound operational development, driven by revenue growth and enhanced cost efficiency. Lower personnel costs resulting mainly from the smaller headcount and the ongoing implementation of efficiency enhancement and digitalization measures reduced costs. Higher expenses recognized as special factors for socially responsible instruments in connection with the staff restructuring had an offsetting effect. Adjusted EBITDA AL therefore increased by EUR 56 million or 2.7 percent year-on-year to EUR 2.2 billion. Our adjusted EBITDA AL margin increased to 40.0 percent, up from 39.4 percent in the prior-year period. EBIT Profit from operations was up 4.6 percent year-on-year to EUR 903 million due to the higher EBITDA level together with lower depreciation, amortization, and impairment losses. Cash capex Cash capex decreased by 14.8 percent year-on-year, mainly as a result of the changed accounting treatment of grants receivable from funding projects for the broadband build-out as of the start of the third quarter of 2019. As part of our integrated network strategy, we continue to invest in the broadband and fiber-optic rollout, and in our mobile infrastructure. For instance, in the first three months of 2020 we connected 208 new LTE sites to our network in Germany. schließen 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. schließen 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). schließen 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. schließen IP - Internet Protocol Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications. schließen 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. schließen 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.” schließen Wholesale Refers to the business of selling services to third parties who sell them to their own retail customers either directly or after further processing. schließen Retail The sale of goods and services to end users, as opposed to resale or wholesale. schließen LTE - Long-Term Evolution New generation of 4G mobile communications technology using, for example, wireless spectrum on the 800 MHz band freed up by the digitization of television. Powerful TV frequencies enable large areas to be covered with far fewer radio masts. LTE supports speeds of over 100 Mbit/s downstream and 50 Mbit/s upstream, and facilitates new services for cell phones, smartphones, and tablets.
