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, a broad product portfolio, and good service. We want to offer our customers a seamless and technology-neutral telecommunications experience. We regularly adapt our product portfolio to address the needs of our customers.

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.

Mobile communications

The number of high-value mobile contract customers under the Telekom and congstar brands grew by 274 thousand customers overall. Sustained high demand for mobile rate plans with data volumes continues to drive this trend. The number of prepaid customers grew by 1.6 million compared with December 31, 2022, primarily from the automotive industry.

Fixed network

Demand remained high for our fiber-optic-based lines, with the total number increasing to 19.3 million since the end of 2022. Two key factors are driving this strong growth: demand for higher bandwidths, and the technical migration of customer lines to optical fiber under our “Turn customers into fans” (Kunden zu Fans machen) initiative, which concluded at the end of 2022.

The number of broadband lines remained at a high level, increasing by 74 thousand compared with December 31, 2022 to 14.8 million. Almost 42 % of the customers subscribed to a rate plan with speeds of 100 Mbit/s or higher. We recorded an increase of 50 thousand in the number of TV customers compared with year-end 2022. The number of fixed-network lines stood at 17.3 million.

Wholesale

As of March 31, 2023, fiber-optic-based lines accounted for 63.2 % of all lines – 0.9 percentage points more than at the end of 2022. This growth is a result of the demand for our commitment agreements. Ongoing demand among retail customers for higher-bandwidth lines also contributed to the increase. The number of unbundled local loop lines decreased by 119 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 2023 was 11.1 million.

Development of operations^a

Revenue, service revenue

In the first quarter of 2023, we generated revenue of EUR 6.1 billion, which was up by 3.0 % year-on-year. In organic terms, revenue increased by 2.3 % year-on-year. The growth in service revenues of 2.4 % was attributable to increased revenue in the fixed-network core business, largely broadband-driven, and in mobile business. Another revenue driver was the partnership business. In organic terms, service revenue increased by 1.6 % year-on-year.

Revenue from Consumers increased by 1.4 % compared with the prior year. Revenue from broadband business continued to grow, due in part to the positive effects from customer appreciation for stable data lines and high bandwidths. Fixed-network terminal equipment business also posted growth on the back of 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 declined slightly on account of terminal equipment business. Mobile service revenues remained stable, despite a network switchover of a portion of our prepaid customers.

Revenue from Business Customers was up by 3.8 % year-on-year. This was due in part to the IT business. The mobile business grew thanks to higher service revenues as a result of ongoing growth in the customer base, and from the terminal equipment business. In organic terms, revenue increased by 2.1 % year-on-year.

Wholesale revenue declined by 1.0 % year-on-year in the first quarter of 2023. The positive trend in the number of fiber-optic-based lines held steady, with a year-on-year increase of 2.7 %. However, this was not enough to fully offset the decrease in revenues, among other things from declining volumes of unbundled local loop lines.

Adjusted EBITDA AL, EBITDA AL

Adjusted EBITDA AL increased by EUR 0.1 billion or 4.0 % year-on-year to EUR 2.5 billion. In organic terms, adjusted EBITDA AL grew by 3.1 % year-on-year. Our adjusted EBITDA AL margin increased to 40.5 %. The main reasons for this increase are a sound operational development, driven by high-value revenue growth, and enhanced cost efficiency. Organic factors also include the smaller headcount and ongoing implementation of efficiency enhancement and digitalization measures.

EBITDA AL decreased by EUR 1.6 billion to EUR 2.4 billion. In the prior-year quarter, special factors included the gain on deconsolidation of GlasfaserPlus (EUR 1.7 billion) and initial payments on account received from insurance companies in connection with damage sustained in the catastrophic flooding in July 2021 (EUR 0.1 billion). Expenses for socially responsible instruments in connection with staff restructuring were at the prior-year level.

Profit/loss from operations (EBIT)

Profit from operations amounted to EUR 1.4 billion, a decrease of 52.1 % year-on-year. This decline is primarily attributable to the gain recognized in the prior year on the deconsolidation of GlasfaserPlus. Depreciation, amortization and impairment losses were up against the prior-year level, mainly resulting from the sale and leaseback of sold passive network infrastructure in Germany in connection with the sale of GD Towers.

For further information on the sale of GD Towers, please refer to the section “Group organization, strategy, and management.”

Cash capex (before spectrum investment), cash capex

Cash capex increased by EUR 285 million or 31.6 % compared with the prior year. Capital expenditure totaled around EUR 1.2 billion in the first three months of 2023, in particular for the fiber-optic build-out. The number of households passed by our fiber-optic network had increased to around 5.7 million by the end of March 2023. In mobile communications, 95.1 % of German households can already use 5G.