Germany

Customer development

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 the 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 family of FMC products, including MagentaEINS Unlimited, remains very popular among customers, with around 5.4 million customers in total having opted for these products by the end of March 2022. The customer base is thus higher compared with the prior year.

Demand remained high for our fiber-optic-based lines. The total number of these customer lines increased to around 17.4 million overall by the end of March 2022, which means a further 264 thousand customers in Germany received a fiber-optic-based line from us in the first three months of 2022. With the progress made in fiber-optic rollout, we also successfully drove forward the marketing of higher bandwidths.

Mobile communications

The number of high-value mobile contract customers under the Telekom and congstar brands grew by 193 thousand customers overall. Steady demand for mobile rate plans with included data volumes alongside our multiple award-winning network quality continues to drive this trend. As of January 1, 2022, a portion of consumers previously reported under contract customers were reclassified as prepaid customers. Allowing for this change in disclosure, we have added 544 thousand prepaid customers since the start of the year, largely on the back of our automotive offerings targeted at business customers.

Fixed network

The fixed-network broadband market hosts a large number of players with differing infrastructures – from national through to regional providers. In order to consolidate our position on the market as Germany’s leading telecommunications provider, we continue to add new offerings to our portfolio.

The number of broadband lines increased to over 14.5 million in the first quarter of 2022. Demand for our retail fiber-optic-based lines was the biggest driver here, accounting for 205 thousand lines. We recorded an increase of 17 thousand in the number of TV customers compared with year-end 2021. In the traditional fixed network, the number of lines decreased by 45 thousand, bringing the number of fixed-network lines to around 17.5 million.

Wholesale

As of March 31, 2022, fiber-optic-based lines accounted for 60.0 % of all lines – 1.4 percentage points more than at the end of 2021. This growth is a result of demand for the commitment agreements which were successfully introduced on April 1, 2021. Rising demand among retail customers for higher-bandwidth lines also contributed to the increase. The number of unbundled local loop lines decreased by 135 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 other 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 March 2022 was around 11.5 million.

Development of operations

Total revenue, service revenue

In the first three months of 2022, we generated total revenue of EUR 6.0 billion, which was up slightly by 0.9 % year-on-year. The growth in service revenues of 1.0 % was attributable to increased revenue in the fixed-network core business, largely broadband-driven, and to higher mobile service revenues. In organic terms, service revenues were up 0.6 % year-on-year.

Revenue from Consumers increased by 2.7 % compared with the prior-year period. Revenue from broadband business grew by 6.4 %, due in part to the positive effects from increased customer appreciation for stable data lines and high bandwidths. Fixed-network terminal equipment business posted growth of 4.4 % on the back of strong demand on the customer side for terminal equipment lease models. Volume-driven declines in revenue from voice components continued to impact on traditional fixed-network business. Mobile business increased by 2.4 % thanks to higher service revenues, mainly due to positive customer development in our second brand “congstar” and general trends of recovery, including a return to travel and other recreational activities.

Revenue from Business Customers was down slightly by 0.7 % year-on-year. If the one-time effect from the public sector is taken into account, operating revenue would have increased by 0.7 %. The mobile business grew by 5.5 % due to positive revenue from terminal equipment business and ongoing customer additions. By contrast, IT revenue declined on an operational basis by 6.2 %, due in part to the chip shortage.

Wholesale revenue was down at the end of March 2022 by 2.3 % year-on-year. The positive trend in the number of fiber-optic-based lines continued, with an increase of 4.3 % compared with the prior-year period. However, this was not enough to offset the decrease in revenues of 12.1 % from declining volumes of unbundled local loop lines. Since April 1, 2021, the transition to the commitment agreements to replace the former quota-based agreements has led to sharper declines in revenue compared with the prior-year period. This is primarily due to the fact that under the new commitment model the annual payments are initially lower compared to the up-front payments that had been made under the quota-based agreements under the contingent model. The annual commitment payments will rise over the course of subsequent years. Voice revenue was down against the prior-year period, mainly due to declining volumes.

Adjusted EBITDA AL, EBITDA AL

EBITDA AL adjusted for special factors increased by EUR 83 million or 3.6 % year-on-year to EUR 2.4 billion. In organic terms, too, adjusted EBITDA AL grew by 3.6 % year-on-year. Our adjusted EBITDA AL margin increased to 39.8 %, up from 38.8 % in the prior year. The main reasons for this increase are a sound operational development, driven by high-value revenue growth, and enhanced cost efficiency. Lower personnel costs resulting, among other factors, from the smaller headcount and the ongoing implementation of efficiency enhancement and digitalization measures reduced costs.

The effects described under adjusted EBITDA AL included the gain resulting from the deconsolidation of GlasfaserPlus and an initial payment on account made in connection with the catastrophic flooding in July 2021, both recognized as special factors. Expenses for socially responsible instruments in connection with the staff restructuring, in particular the dedicated retirement program, also had an effect. In the first three months of 2022, our EBITDA AL increased by EUR 1.8 billion to EUR 4.0 billion.

For further information on the joint venture GlasfaserPlus with IFM, please refer to the section “Group organization, strategy, and management.”

EBIT

Profit from operations (EBIT) amounted to EUR 3.0 billion. The positive EBITDA AL trend together with the gain resulting from the deconsolidation of GlasfaserPlus contributed to this increase.

Cash capex

Cash capex increased by EUR 42 million or 4.9 % compared with the prior-year period. Capital expenditure totaled around EUR 902 million in the first three months of 2022, in particular for the build-out of the fiber-optic and 5G networks. The total number of households in Germany passed by our fiber-optic network grew again in the first quarter of 2022. In mobile communications, our customers benefit from greater LTE and 5G network coverage. Over 91.6 % of German households can already use 5G.