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Europe

Customer development

thousands

 

 

 

 

 

 

 

 

Mar. 31, 2021

Dec. 31, 2020

Change
Mar. 31, 2021/
Dec. 31, 2020
%

Mar. 31, 2020

Change
Mar. 31, 2021/
Mar. 31, 2020
%

Europe, total

Mobile customers

45,454

45,619

(0.4)

45,916

(1.0)

Contract customersa

26,995

26,844

0.6

26,253

2.8

Prepaid customersa

18,459

18,775

(1.7)

19,664

(6.1)

Fixed-network lines

9,117

9,084

0.4

9,096

0.2

Of which: IP-based

8,511

8,439

0.9

8,347

2.0

Broadband customersb

7,001

6,943

0.8

6,729

4.0

Television (IPTV, satellite, cable)

5,105

5,057

0.9

4,940

3.3

Unbundled local loop lines (ULLs)/ wholesale PSTN

2,039

2,242

(9.1)

2,298

(11.3)

Wholesale broadband lines

730

684

6.7

557

31.1

Greece

Mobile customers

6,840

6,914

(1.1)

7,311

(6.4)

Fixed-network lines

2,597

2,589

0.3

2,637

(1.5)

Broadband customers

2,220

2,185

1.6

2,065

7.5

Romania

Mobile customers

4,592

4,683

(1.9)

4,777

(3.9)

Fixed-network lines

1,432

1,444

(0.8)

1,504

(4.8)

Broadband customers

872

912

(4.4)

978

(10.8)

Hungary

Mobile customersa

5,456

5,427

0.5

5,378

1.5

Fixed-network lines

1,769

1,759

0.6

1,718

3.0

Broadband customersb

1,342

1,321

1.6

1,253

7.1

Poland

Mobile customers

11,205

11,198

0.1

10,982

2.0

Fixed-network lines

33

31

6.5

26

26.9

Broadband customersb

43

32

34.4

13

n.a.

Czech Republic

Mobile customers

6,185

6,178

0.1

6,267

(1.3)

Fixed-network lines

615

606

1.5

568

8.3

Broadband customers

377

368

2.4

350

7.7

Croatia

Mobile customers

2,256

2,253

0.1

2,248

0.4

Fixed-network lines

882

885

(0.3)

897

(1.7)

Broadband customers

627

625

0.3

620

1.1

Slovakia

Mobile customers

2,452

2,441

0.5

2,409

1.8

Fixed-network lines

865

865

0.0

859

0.7

Broadband customers

614

607

1.2

583

5.3

Austria

Mobile customers

5,034

5,074

(0.8)

4,998

0.7

Fixed-network lines

578

569

1.6

553

4.5

Broadband customers

645

635

1.6

617

4.5

Otherc

Mobile customers

1,433

1,451

(1.2)

1,545

(7.2)

Fixed-network lines

346

335

3.3

334

3.6

Broadband customers

261

259

0.8

250

4.4

a

In Hungary, efforts to standardize the underlying customer definition resulted in the assignment of M2M cards exclusively to the prepaid customer segment effective January 1, 2020.

b

The prior-year comparatives for broadband customers in Poland and Hungary were adjusted retrospectively as part of the standardization of the underlying customer definition.

c

“Other”: national companies of North Macedonia, Montenegro, and the lines of the GTS Central Europe group in Romania.

Total

Last year, customer development was initially hampered by the lockdown measures imposed by the governments in response to the coronavirus pandemic. Our crisis management clearly paid off over the remainder of the year: the focus on expanding digital sales channels, such as our service app and service center services, almost brought customer development back to normal. When lockdown measures were reimposed during the third coronavirus wave it did not slump again until the end of March 2021. Our MagentaOne convergent product portfolio, in particular, generated growth of 3.3 % in FMC customers thanks to ongoing demand. We are working flat out to build out our fixed-network infrastructure with state-of-the-art optical fiber. The number of broadband customers has increased marginally to 7.0 million.

In mobile business, we recorded slight growth in high-value contract customers, which only partially offset the decline in the prepaid customer base. Seven national companies have already launched the commercial sale of 5G products and services.

Mobile communications

In the Europe operating segment, we had 45.5 million mobile customers at the end of the first quarter of 2021, which is stable compared with the end of 2020. The number of high-value contract customers increased slightly by 0.6 %. The contract customer bases developed positively in almost all of our national companies, with growth recorded in particular in Austria, Croatia, Romania, and the Czech Republic. Overall, contract customers account for 59.4 % of the total customer base. In addition to our innovative services and rate plans, this growth is driven by our product portfolio, which is based on the “more for more” principle. Our customers can select high-value add-on services – e.g., more data – for a small additional monthly fee. This data volume can also be used for video streaming and gaming services. In addition, thanks to our integrated network strategy our customers benefited from greater coverage with fast mobile broadband. As of March 31, 2021, we covered 97.7 % of the population in the countries of our operating segment with LTE, reaching around 108 million people in total.

By contrast, the prepaid customer base declined slightly, in line with expectations, in particular in Romania and Greece. This was due in part to the negative impact of the coronavirus pandemic. But also, our market approach is focused on contract rate plans and we offer our prepaid customers attractive high-value contract rate plans. Already, significantly more than one third of new contract customer adds are former prepaid customers who have taken advantage of these offerings. Furthermore, inactive SIM cards are deactivated from the customer base at regular intervals.

Fixed network

The broadband business recorded slight growth in the first quarter of 2021 compared with the end of the prior year to a total of 7.0 million customers. The customer bases of almost all national companies, especially in Greece, Hungary, Poland, the Czech Republic, and Slovakia saw substantial growth. Romania was the exception. By continuing to invest in innovative fiber-optic technologies, we are systematically building out our fixed-network infrastructure. Thus, we increased household coverage with optical fiber at our four largest national companies to 4.3 million households as of March 31, 2021. The number of IP-based lines increased to account for 93.4 % of all fixed-network lines by the end of March 2021. The total number of fixed-network lines in our Europe operating segment edged up on the prior-year level to 9.1 million.

The TV and entertainment business had a total of 5.1 million customers as of March 31, 2021, up by a marginal 0.9 % compared with the end of the prior year. With both telecommunications providers and OTT players offering TV services, the TV market is already saturated in many countries of our segment.

FMC – fixed-mobile convergence

Our portfolio of convergent products, MagentaOne, was highly popular with consumers across all of our national companies. In the first quarter of 2021, we had 5.9 million FMC customers; this corresponds to growth of 3.3 % compared with the end of the prior year. Our national companies in Greece, Hungary, and Austria in particular contributed to this growth.

Development of operations

millions of €

 

 

 

 

 

 

 

 

Q1 2021

Q1 2020

Change

Change %

FY 2020

Total revenue

 

2,729

2,759

(30)

(1.1)

11,335

Greece

 

717

707

10

1.4

2,940

Romania

 

210

237

(27)

(11.4)

951

Hungary

 

406

427

(21)

(4.9)

1,734

Poland

 

341

360

(19)

(5.3)

1,453

Czech Republic

 

269

266

3

1.1

1,072

Croatia

 

219

214

5

2.3

917

Slovakia

 

190

186

4

2.2

773

Austria

 

326

313

13

4.2

1,302

Othera

 

70

66

4

6.1

283

Profit (loss) from operations (EBIT)

 

385

348

37

10.6

1,278

EBIT margin

%

14.1

12.6

 

 

11.3

Depreciation, amortization and impairment losses

 

(645)

(659)

14

2.1

(2,875)

EBITDA

 

1,029

1,007

22

2.2

4,153

Special factors affecting EBITDA

 

(10)

(39)

29

74.4

(188)

EBITDA (adjusted for special factors)

 

1,039

1,046

(7)

(0.7)

4,341

EBITDA AL

 

936

897

39

4.3

3,722

Special factors affecting EBITDA AL

 

(10)

(39)

29

74.4

(188)

EBITDA AL (adjusted for special factors)

 

946

936

10

1.1

3,910

Greece

 

298

288

10

3.5

1,199

Romania

 

37

34

3

8.8

153

Hungary

 

106

114

(8)

(7.0)

520

Poland

 

95

96

(1)

(1.0)

378

Czech Republic

 

111

110

1

0.9

430

Croatia

 

79

76

3

3.9

337

Slovakia

 

84

79

5

6.3

335

Austriab

 

125

123

2

1.6

496

Othera

 

11

17

(6)

(35.3)

63

EBITDA AL margin (adjusted for special factors)

%

34.7

33.9

 

 

34.5

Cash capex

 

(485)

(438)

(47)

(10.7)

(2,216)

The contributions of the national companies correspond to their respective unconsolidated financial statements and do not take consolidation effects at operating segment level into account.

a

“Other”: national companies of North Macedonia, Montenegro, and the GTS Central Europe group in Romania, as well as the Europe Headquarters.

b

As of January 1, 2021, the Austrian cell tower business was reassigned from the Europe operating segment to the Group Development operating segment. Prior-year comparatives were not adjusted.

Total revenue

Our Europe operating segment generated total revenue of EUR 2.7 billion in the first quarter of 2021, a slight year-on-year decrease of 1.1 %. In organic terms, i.e., assuming constant exchange rates, revenue increased slightly against the prior-year level, despite the difficult economic situation in consequence of the coronavirus pandemic.

Organic growth was driven by the strong performance of the mobile business, especially the increase in revenues from terminal equipment sales and in higher-margin service revenues (excluding roaming and visitors). By contrast, the fixed-network business recorded a decline in revenues. The systems solutions business declined compared with the prior-year period, especially in Romania; revenue from voice telephony also recorded substantial losses.

Looking at the development by country, our national companies in Austria, Greece, Croatia, and the Czech Republic recorded the best organic development of revenue in the first quarter of 2021. This offset the decline in revenue in Romania and Poland in particular. In Romania, the downward trend was mainly due to declining systems solutions revenues.

Revenue from Consumers remained stable against the prior-year quarter. Higher revenue from mobile terminal equipment business compensated for the coronavirus-induced decline in higher-margin service revenues. In the fixed network, revenue from broadband/TV business increased thanks to our innovative TV and entertainment offerings as well as the continuous rollout of fiber-optic technology. This offset the decline in revenue from voice telephony. In addition, the higher number of FMC customers had a positive impact on revenue.

Operations with Business Customers in Europe were unable to match the prior-year results, posting a contraction of 3.8 % in the first quarter of 2021 due to the sharp decline in revenue at the fixed-network business held for sale in Romania. One year into the coronavirus pandemic, B2B business is characterized in particular by more cautious decision-making processes and shifting demand. Yet, all trends point to growth, which we observed both in stronger mobile revenues in the first quarter of 2021 almost across our entire footprint, and in ICT business – for instance, with our private cloud solutions in Greece and Hungary. Our security solutions in Poland also generated strong revenue growth year-on-year.

Adjusted EBITDA AL, EBITDA AL

Our Europe operating segment generated adjusted EBITDA AL of EUR 946 million in the first quarter of 2021, up 1.1 % against the prior-year quarter, despite the impact of the coronavirus pandemic. In organic terms, i.e., assuming constant exchange rates and adjusted for the reassignment of the Austrian cell tower business to the Group Development operating segment, adjusted EBITDA AL increased by 4.1 %, thus continuing to make a positive contribution to earnings. In addition to the positive revenue effects, savings in indirect costs, primarily due to lower personnel, marketing, and travel costs, contributed to this development.

Looking at the development by country, the increase in adjusted organic EBITDA AL was largely attributable to the positive trend at almost all of our national companies, but in particular in Austria and Greece. A contrasting development was reported in particular at the national company in Hungary.

EBITDA AL increased by 4.3 % year-on-year to EUR 936 million. The expense arising from special factors was well below the prior-year level. In organic terms, EBITDA AL grew by 7.5 %.

Development of operations in selected countries

Greece. In Greece, revenue increased by 1.4 % against the prior-year quarter to EUR 717 million. The encouraging development in mobile operations was mainly driven by higher revenue from terminal equipment sales. This growth offset the negative effects from the decline in fixed-network business, especially lower TV revenues, which were only partially offset by an increase in revenue in the broadband business due to the momentum in the fiber-optic and vectoring rollout.

In the first quarter of 2021, adjusted EBITDA AL in Greece stood at EUR 298 million, which was an increase of 3.5 % against the prior year: the stable net margin, driven largely by higher direct costs, was offset in full by savings in indirect costs, in particular personnel costs.

Hungary. Revenue in Hungary totaled EUR 406 million in the first quarter of 2021, a decrease of 4.9 % against the prior-year quarter. This decline was due to negative exchange rate effects. In organic terms, revenue was up 1.2 % against the prior year. Mobile business grew, driven by higher service revenues, due in part to much higher data usage. Fixed-network operations developed positively, with rising TV and broadband revenues, both driven by larger customer bases. Our MagentaOne convergence products also continued to perform well, with customer additions and a corresponding increase in revenue.

Adjusted EBITDA AL stood at EUR 106 million, down 7.0 % year-on-year. In organic terms, adjusted EBITDA AL decreased marginally by just 1.2 % compared with the prior-year period. This decline was mainly due to higher expenses in connection with indirect costs.

Poland. Our revenue in Poland decreased by 5.3 % in the first quarter of 2021 to EUR 341 million. This decline was due to negative exchange rate effects. In organic terms, revenue decreased only slightly by 0.5 %. While fixed-network revenue remained stable, the mobile business recorded slight losses as a result of reduced revenue from national roaming.

Adjusted EBITDA AL stood at EUR 95 million in the first quarter of 2021, down 1.0 % year-on-year. In organic terms, adjusted EBITDA AL increased by 4.1 %, mainly on the back of lower costs.

Czech Republic. In the first quarter of 2021, revenue in the Czech Republic stood at EUR 269 million, an increase of 1.1 % against the prior-year level. In organic terms, i.e., assuming constant exchange rates, revenue increased by 2.8 %. The fixed-network business is increasingly establishing itself as a key driver of growth, with the continuous investments in our fiber-optic network paying off in terms of customer numbers: the broadband customer base grew by 7.7 % compared with the prior-year quarter. Mobile revenues were up on the prior-year level, mainly due to increased revenue from terminal equipment. Business with higher-margin service revenues (excluding roaming and visitors) also increased its contribution to revenue. However, these two effects only partially offset the declines in roaming and visitor revenues resulting from the coronavirus pandemic.

Adjusted EBITDA AL increased by 0.9 % year-on-year to EUR 111 million in the first quarter of 2021. In organic terms, earnings grew by 3.3 % year-on-year largely driven by the growth in revenue.

Austria. Revenue in Austria totaled EUR 326 million in the first quarter of 2021. This increase of 4.2 % was mainly attributable to higher mobile terminal equipment sales. Business with higher-margin service revenues (excluding roaming and visitors) also contributed positively to revenue. These two effects more than offset the declines in roaming and visitor revenues resulting from the coronavirus pandemic. Revenue in the fixed-network business also developed encouragingly. The broadband business in particular generated positive growth rates, among other things as a result of a larger customer base.

Adjusted EBITDA AL increased as of March 31, 2021 by 1.6 % year-on-year to EUR 125 million. In organic terms, i.e., excluding the reassignment of the Austrian cell tower business to the Group Development operating segment, adjusted EBITDA AL increased substantially by 14.4 %. In addition to the positive revenue effects, a reduced cost base also contributed to this growth, with an increase in direct costs in consequence of the market approach being more than offset by a decrease in indirect costs, also as a result of the acquisition of UPC Austria.

EBIT

Our Europe operating segment recorded an increase in EBIT of EUR 37 million in the first quarter of 2021. In addition to an increase of EUR 22 million in EBITDA, depreciation and amortization were below the level the prior-year quarter, mainly due to depreciation and amortization being suspended in the first quarter of 2021 as a result of the fixed-network business in Romania being held for sale.

Cash capex

In the first quarter of 2021, the Europe operating segment reported cash capex of EUR 485 million, up 10.7 % year-on-year. This increase is due to a rise in cash outflows for the acquisition of spectrum licenses, primarily in the Czech Republic. Excluding the acquisition of spectrum, cash capex was slightly down against the prior-year quarter. We continue to invest in the provision of broadband and fiber-optic technology and in 5G as part of our integrated network strategy.

5G
New communications standard (launched from 2020), which offers data rates in the gigabit range, converges fixed-network and mobile communications, and supports the Internet of Things.
Glossary
FMC – Fixed-Mobile Convergence
The merging of fixed-network and mobile rate plans for customers that have both fixed-network and mobile contracts with Deutsche Telekom.
Glossary
Fixed-network lines
Lines in operation excluding internal use and public telecommunications, including IP-based lines. The totals reported in the combined management report were calculated on the basis of precise figures and rounded to millions or thousands. Percentages were calculated on the basis of the figures shown.
Glossary
ICT – Information and Communication Technology
Information and Communication Technology
Glossary
IP – Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
Glossary
LTE – Long-Term Evolution
4G mobile communications technology that uses, for example, wireless spectrum on the 800 MHz band freed up by the digitalization 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.
Glossary
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).
Glossary
Optical fiber
Channel for optical data transmission.
Glossary
Prepaid
In contrast to postpaid contracts, prepaid communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
Glossary
Roaming
Refers to the use of a communication device or just a subscriber identity in a visited network rather than one’s home network. This requires the operators of both networks to have reached a roaming agreement and switched the necessary signaling and data connections between their networks. Roaming comes into play, for example, when cell phones and smartphones are used across national boundaries.
Glossary
SIM card – Subscriber Identification Module card
Chip card that is inserted into a cell phone to identify it in the mobile network. Deutsche Telekom counts its customers by the number of SIM cards activated and not churned. Customer totals also include the SIM cards with which machines can communicate automatically with one another (M2M cards). The churn rate is determined and reported based on the local markets of the respective countries.
Glossary
Service revenues
Revenues generated with mobile customers from services (i.e., revenues from voice services – incoming and outgoing calls – and data services), plus roaming revenues, monthly charges, and visitor revenues.
Glossary
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 in the street cabinets.
Glossary