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Systems Solutions

Order entry

millions of €

 

 

 

 

 

Q1 2021

FY 2020

Q1 2020

Change
Q1 2021/
Q1 2020
%

Order entry

891

4,564

888

0.4

Development of business

The first three months of 2021 were dominated by the refocusing of our systems solutions business on growth and future viability and the acceleration of our transformation program, while the effects of the coronavirus pandemic continued to impact on our business.

Under the transformation program, we further aligned our organization, workflows and capacities, and fine-tuned the strategy for our portfolio. Stand-alone portfolio units assume responsibility not only for our growth areas (e.g., public cloud and security) but also for our traditional IT business. Consistent with our efforts to implement the Group’s strategy pillar “Lead in business productivity,” we transferred our IoT (Internet of Things) portfolio unit to the Germany operating segment effective on January 1, 2021.

Furthermore, the effects of the coronavirus pandemic on the global economy continue to impact on the financial position of our business customers. There is still restraint in the awarding of new contracts, although a positive trend is emerging in our growth areas. As a result, order entry in our Systems Solutions operating segment was up by 0.4 % year-on-year in the first three months of 2021, in line with our expectations.

Development of operations

millions of €

 

 

 

 

 

 

 

 

Q1 2021

Q1 2020

Change

Change %

FY 2020

Total revenue

 

1,015

1,062

(47)

(4.4)

4,159

Of which: external revenue

 

798

840

(42)

(5.0)

3,237

Profit (loss) from operations (EBIT)

 

(27)

(50)

23

46.0

(534)

Special factors affecting EBIT

 

(56)

(38)

(18)

(47.4)

(582)

EBIT (adjusted for special factors)

 

29

(12)

41

n.a.

48

EBIT margin (adjusted for special factors)

%

2.9

(1.1)

 

 

1.2

Depreciation, amortization and impairment losses

 

(80)

(103)

23

22.3

(720)

EBITDA

 

53

52

1

1.9

185

Special factors affecting EBITDA

 

(36)

(38)

2

5.3

(209)

EBITDA (adjusted for special factors)

 

89

91

(2)

(2.2)

394

EBITDA AL

 

26

21

5

23.8

70

Special factors affecting EBITDA AL

 

(36)

(38)

2

5.3

(209)

EBITDA AL (adjusted for special factors)

 

62

60

2

3.3

279

EBITDA AL margin (adjusted for special factors)

%

6.1

5.6

 

 

6.7

Cash capex

 

(49)

(25)

(24)

(96.0)

(235)

Total revenue

Total revenue in our Systems Solutions operating segment decreased by 4.4 % year-on-year in the first three months of 2021 to EUR 1.0 billion, reflecting the coronavirus-induced contraction of the IT market in Western Europe. The decline is driven by traditional IT infrastructure business, whereas our growth areas are recording substantial growth, especially the areas of public cloud (up 29.3 %) and digital solutions (up 9.4 %).

Adjusted EBITDA AL, EBITDA AL

In the first three months of 2021, adjusted EBITDA AL at our Systems Solutions operating segment increased by 3.3 % year-on-year to EUR 62 million. Efficiency effects from our transformation program and effects from increased revenue in all of our growth areas exceeded the decline in earnings in the traditional IT infrastructure business. EBITDA AL increased by EUR 5 million compared with the prior year to EUR 26 million. Special factors were down EUR 2 million on the prior year, at EUR ‑36 million.

Adjusted EBIT, EBIT

Adjusted EBIT at our Systems Solutions operating segment increased by EUR 41 million year-on-year in the first three months of 2021 to EUR 29 million, mainly on the back of lower depreciation and amortization as a result of a non-cash impairment loss on non-current assets in the third quarter of the prior year and a consequent reduction in the depreciation and amortization base. EBIT increased by EUR 23 million compared with the prior year to EUR ‑27 million. Special factors were up EUR 18 million on the prior year, at EUR ‑56 million, mainly on account of a non-cash impairment loss on non-current assets recognized in the first quarter of 2021, which was also related to the ad hoc impairment testing carried out in the Systems Solutions cash-generating unit in the third quarter of the prior year.

Cash capex

Cash capex in the Systems Solutions operating segment stood at EUR 49 million in the first three months of 2021, compared with EUR 25 million in the prior-year quarter. This was primarily due to front-loaded investments compared with the prior year. Going forwards, we will continue to focus our investments on developing our growth business.

IoT – Internet of Things
The IoT enables the intelligent networking of things like sensors, devices, machines, vehicles, etc., with the aim of automating applications and decision-making processes. Deutsche Telekom’s IoT portfolio ranges from SIM cards and flexible data rate plans to IoT platforms in the cloud and complete solutions from a single source.
Glossary