Highlights in the second quarter of 2021

For further information on these and other events, please refer to our media information.

Business and other transactions

Combination of the cell tower business in the Netherlands and creation of an infrastructure fund. On January 21, 2021, Deutsche Telekom, Cellnex Telecom, and the newly established independently managed investment company Digital Infrastructure Vehicle (DIV) signed an agreement to merge Deutsche Telekom’s and Cellnex’s respective Dutch subsidiaries for mobile infrastructure. Following approval of the deal by the national competition authority, the Dutch cell tower company T‑Mobile Infra was sold to DIV effective June 1, 2021 and subsequently contributed into Cellnex Netherlands.

For further information on the combination of the cell tower business in the Netherlands and the set-up of an infrastructure fund, please refer to the section “Group organization, strategy, and management” in the interim Group management report and the section “Changes in the composition of the Group and other transactions” in the interim consolidated financial statements.

Capital Markets Day 2021

In May 2021, we presented our medium-term strategy and the financial outlook at our Capital Markets Day in Bonn. Our forecast for growth through to 2024 remains at a consistently high level: We expect revenue to grow annually by 1 to 2 % and adjusted EBITDA AL by 3 to 5 %. Free cash flow AL is to reach more than EUR 18 billion by 2024. Our strategy is focusing on customer experience, B2B, sustainability, network build-out, and digitalization. We will continue to invest massive amounts, with most of these capital expenditures going into optical fiber and 5G. The dividend will continue to track the development in adjusted earnings per share. This figure is set to rise from the 2020 level of EUR 1.20 to more than EUR 1.75 by 2024. Subject to approval by the relevant bodies, 40 to 60 % of adjusted earnings per share is to be paid out. The dividend floor introduced in November 2019 of EUR 0.60 per share still applies. In addition, we plan to secure the majority stake (> 50 %) in T‑Mobile US by 2025 and benefit from the return of capital announced by the U.S. subsidiary. We will continue to strategically review our holding in T‑Mobile Netherlands and our cell tower portfolio with an eye to leveraging value potential and strategic opportunities.

For further information, please refer to our media report.

Rating

In June 2021 the rating agency Moody’s upgraded the rating outlook for Deutsche Telekom AG from Baa1/negative to Baa1/stable.

Investments in networks

Network build-out in Germany. On June 30, 2021 we switched off our UMTS (3G) network across Germany and began using the freed-up spectrum for the faster and better performing LTE/4G and 5G services. In the second quarter of 2021, we upgraded over 800 additional sites for 5G. We thus now offer 5G to 82.4 % of German households. Furthermore, our LTE network covered 98.9 % of German households at the end of the second quarter of 2021.

A total of around 2.5 million households in Germany had the option of a direct connection to our fiber-optic network (FTTH, FTTB) as of the end of the second quarter of 2021. We continue to ramp up our fiber-optic build-out campaign across Germany: The announcement of our FTTH ambition level for Berlin in March 2021 was followed, in May and June of this year, by a series of further targets, including our FTTH program for Hamburg, Frankfurt/Main, Düsseldorf, and Munich.

Network build-out in the United States. T‑Mobile US’ Ultra Capacity 5G network in the 2.5 GHz and millimeter-wave (mmWave) bands covered 165 million people across the United States as of the end of the second quarter of 2021. In parallel, the company is forging ahead with the build-out of 5G via the 600 MHz band, which is already available to some 305 million people nationwide. According to Ookla®, T‑Mobile US’ 5G network covered 92 % of the interstate highway miles across America in June 2021, giving connectivity to T‑Mobile US customers for gaming, snapping, tiktoking, and more at 5G speeds when traveling the country.

Network build-out in Europe. Our national companies in Europe, too, worked systematically to build out their networks throughout the second quarter of 2021. By the end of June, Cosmote in Greece had already met its 2021 full-year 5G coverage target, reaching over 50 % of the population. Our 5G network currently reaches 29 cities and islands. In addition, 5G coverage in the cities of Athens and Thessaloniki totals over 90 %. Cosmote has now set a new target for nationwide 5G coverage of 60 % of the population by year-end 2021. Hrvatski Telekom’s 5G network was available in 76 towns and cities across Croatia by June 2021, bringing high-speed 5G to around 2 million people. In Austria, Magenta Telekom put the country’s first 5G site running on the new 700 MHz spectrum in operation in May 2021, after having purchased two-thirds of the 700 MHz band at the last 5G auction in September 2020. Hundreds of 700 MHz sites are set to follow this year, and plans are in place to continually roll out further sites over the next few years. Magenta Telekom’s 5G network currently covers over one-third of the Austrian population. At the end of the second quarter of 2021, we also covered 97.8 % of the population in our European countries with LTE, reaching a total of around 108 million people.

At the end of the second quarter of 2021, a total of around 6.3 million households in our national companies had the option to subscribe to a direct connection to our high-speed fiber-optic network with speeds reaching up to 1 Gbit/s.

Making the cloud greener. T‑Systems has launched a research project at the Biere data center in Saxony-Anhalt. Together with the Fraunhofer IFF in Magdeburg, T‑Systems experts are developing measures for improved sustainability in the operation of data centers. The long-term goal: a data center that is energy self-sufficient thanks to an intelligent interplay of regenerative generation, storage, and flexible consumers. On the one hand, this reduces the load on the power grid. On the other, increased self-sufficiency strengthens the resilience of the data center.

For further information, please refer to our media report.

Cooperations and partnerships

For a seamless mobile network along rail tracks in Germany. Together with Deutsche Bahn, we intend to substantially improve mobile reception on trains. In future, passengers using our mobile network are to be able to make calls and surf the internet on all routes without interruption. By 2026 at the latest, coverage gaps along all railway lines in long-distance and regional services are to be eliminated. Both companies have agreed to jointly invest a sum in the hundreds of millions that will allow us to build out our mobile network along Deutsche Bahn’s railway lines, close any gaps, and significantly increase the network’s performance.

For further information, please refer to our media report.

T‑Mobile US and Zyter partner to deliver virtual healthcare solutions. In April 2021, T‑Mobile US and Zyter announced a preferred partnership to deliver virtual healthcare solutions – including telehealth, remote patient monitoring, and digital collaboration for care teams – to more healthcare organizations and their patients across the United States. Together, the companies are making virtual care more accessible to more people, which serves to improve patient outcomes, reduce readmission rates, and increase overall patient wellbeing.

Partnership for manufacturing of the future. T‑Systems and GFT are collaborating on the industrial Internet of Things. Together, they offer the manufacturing industry solutions for analyzing big data for machines, production, and planning – end-to-end and directly on the workshop floor. To do this, the partners are combining GFT’s Digital Twin platform “sphinx open online” with edge computing from T‑Systems and artificial intelligence from the cloud.

For further information, please refer to our media report.

Products, rate plans, and services

MagentaEINS Unlimited. We have extended the range of our MagentaEINS FMC products. With MagentaEINS Unlimited, customers benefit from a fixed and mobile contract of their choice from Deutsche Telekom with unlimited data across Germany and including 5G at home and on the move. The product bundles can also be extended to include further family members via corresponding partner cards. We have created a separate mobile rate plan for the new Unlimited packages: MagentaMobil EINS offers unlimited voice minutes and texts in all German networks. MagentaEINS Unlimited combines mobile connectivity with our fixed-network product MagentaZuhause in a choice of sizes: L, XL, XXL, or Giga.

UEFA EURO 2020 on MagentaTV. The UEFA EURO 2020 tournament kicked off on June 11, 2021 and we broadcast all matches live and in Ultra HD on MagentaTV – including 10 exclusive matches such as Portugal vs. France, where the defending European champions took on the reigning world champions. We presented extensive match coverage with a team of experts, alongside plenty of extra soccer-related content. And MagentaTV customers no longer need to stay home to watch the soccer: From the beach to the beer garden, all matches were available to watch directly on smartphones or tablets.

T‑Mobile US’ next Un-carrier move: #5GforAll. In April 2021, T‑Mobile US rang in the #5GforAll era with a sweeping set of initiatives including a free 5G phone upgrade. Now, everyone in America can trade in any mobile phone and get a 5G smartphone for free. All of the around 60 million customers of our U.S. subsidiary’ competitors, still on limited data plans and/or with limited 5G access, can upgrade to unlimited data with access to T‑Mobile US’ full 5G network for the same price – or less – than their existing plans. T‑Mobile US also launched T‑Mobile Home Internet, a simple and fast Wi-Fi broadband solution over the mobile network. The T‑Mobile Hometown promise is a commitment that extends over the next few years to bring 5G to rural America, hire 7,500 new employees in small towns and rural communities, and provide USD 25 million in grants for community development projects.

MWC 2021: Telekom Tech Grounds. As part of Mobile World Congress 2021 on June 28/29, 2021, we hosted a new digital conference format called Telekom Tech Grounds, with the theme “Exploring human-centered technology.” The conference showcased the ways in which technological solutions can contribute to a future-ready society. Participants were offered an immersive experience of the latest innovations and a virtual platform to exchange ideas on how tech innovations can already help to bring improvements today. At the conference, together with Ericsson and Samsung Electronics, we announced the successful realization of 5G end-to-end network slicing. This is the world-first implementation of multi-vendor 5G end-to-end (E2E) network slicing with a commercially available 5G device. We also announced the switch-on of our O-RAN Town in Neubrandenburg. O-RAN Town will deliver open RAN-based 4G and 5G services at up to 25 sites. The first sites are now in operation and integrated into the live network of Telekom Deutschland. The winners of the hubraum Network Sustainability Awards 2021 were also honored at Telekom Tech Grounds.

For further information, please refer to our media report.

Hannover Messe. T‑Systems presented its new artificial intelligence (AI) offering for the first time at Hannover Messe in April 2021. AI Solution Factory bundles the development, testing, introduction, and operation of AI solutions for production and logistics. It is a modular kit of hardware, software, connectivity, and security. T‑Systems also premiered its Campus Edge Framework. The offering combines network solutions such as 5G with infrastructure and services from Amazon Web Services to create managed solutions. T-Systems orchestrates and integrates all edge computing components and, if desired, relieves customers of administration, maintenance, and contract management. Other topics included Catena X, security, SAP, digital supply chains, and how data can reduce the carbon footprint.

For further information, please refer to our media report.

Digital Home Service. Home networks that run smoothly have become more important than ever. The number of connected devices in our homes is growing constantly, bringing added complexity. Our Digital Home Service was launched in April 2021 for all applications in the digital home. The service helps customers optimize their home Wi-Fi and set up computers, tablets, smartphones, and MagentaTV. The no-fuss, full-service package also answers all questions relating to smart home applications, firewalls, and suitable virus protection.

Awards

The illustration below shows the main awards received in the second quarter of 2021.