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Europe

Customer development

thousands

 

 

 

 

 

 

 

 

 

 

June 30, 2022

Mar. 31, 2022

Change
June 30, 2022/
Mar. 31, 2022 
%

Dec. 31, 2021

Change
June 30, 2022/
Dec. 31, 2021 
%

June 30, 2021

Change
June 30, 2022/
June 30, 2021 
%

Europe, totala, b

Mobile customers

46,459

45,584

1.9

45,816

1.4

45,788

1.5

Contract customers

26,046

25,803

0.9

26,575

(2.0)

27,172

(4.1)

Prepaid customers

20,413

19,781

3.2

19,241

6.1

18,616

9.7

Fixed-network lines

7,839

7,814

0.3

7,802

0.5

9,111

(14.0)

Broadband customers

6,521

6,451

1.1

6,381

2.2

7,050

(7.5)

Television (IPTV, satellite, cable)

4,067

4,050

0.4

4,019

1.2

5,098

(20.2)

Unbundled local loop lines (ULLs)/ wholesale PSTN

1,849

1,886

(2.0)

1,932

(4.3)

1,996

(7.4)

Wholesale broadband lines

937

909

3.1

865

8.3

774

21.1

Greece

Mobile customers

7,275

7,130

2.0

7,045

3.3

6,935

4.9

Fixed-network lines

2,621

2,619

0.1

2,624

(0.1)

2,605

0.6

Broadband customers

2,329

2,315

0.6

2,306

1.0

2,252

3.4

Romaniaa

Mobile customers

3,941

3,821

3.1

3,691

6.8

4,582

(14.0)

Fixed-network lines

0

0

n.a.

0

n.a.

1,409

(100.0)

Broadband customers

0

0

n.a.

0

n.a.

841

(100.0)

Hungary

Mobile customers

5,811

5,727

1.5

5,634

3.1

5,503

5.6

Fixed-network lines

1,848

1,836

0.7

1,821

1.5

1,778

3.9

Broadband customers

1,461

1,440

1.5

1,417

3.1

1,361

7.3

Poland

Mobile customers

12,107

11,845

2.2

11,542

4.9

11,290

7.2

Fixed-network lines

29

29

0.0

29

0.0

30

(3.3)

Broadband customers

107

91

17.6

77

39.0

53

n.a.

Czech Republic

Mobile customers

6,373

6,338

0.6

6,297

1.2

6,205

2.7

Fixed-network lines

673

659

2.1

645

4.3

625

7.7

Broadband customers

411

401

2.5

391

5.1

380

8.2

Croatia

Mobile customers

2,318

2,275

1.9

2,276

1.8

2,273

2.0

Fixed-network lines

872

872

0.0

875

(0.3)

881

(1.0)

Broadband customers

642

637

0.8

633

1.4

630

1.9

Slovakia

Mobile customers

2,460

2,479

(0.8)

2,502

(1.7)

2,479

(0.8)

Fixed-network lines

858

867

(1.0)

880

(2.5)

865

(0.8)

Broadband customers

636

639

(0.5)

633

0.5

620

2.6

Austriab

Mobile customers

4,557

4,394

3.7

5,258

(13.3)

5,067

(10.1)

Fixed-network lines

601

598

0.5

593

1.3

582

3.3

Broadband customers

661

659

0.3

656

0.8

650

1.7

Otherc

Mobile customers

1,617

1,574

2.7

1,572

2.9

1,453

11.3

Fixed-network lines

337

335

0.6

336

0.3

335

0.6

Broadband customers

273

269

1.5

268

1.9

263

3.8

a

The number of lines and customers in Romania decreased in the fourth quarter of 2021 due to the sale of Telekom Romania Communications, which operates the Romanian fixed-network business, effective September 30, 2021.

b

Since January 1, 2022, 921 thousand contract customers of a service provider in Austria are reported as wholesale customers and no longer as our own customers. The prior-year figures have not been adjusted retrospectively.

c

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

Total

In the Europe operating segment, all key performance indicators for customer development improved in organic terms compared with the end of 2021. Our convergent product portfolio, in particular, generated growth compared with year-end 2021 of 6.1 % 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 by 2.2 %. In organic terms, the mobile business also recorded an increase of 3.5 % in customer numbers, with increases in both the number of high-value contract customers and the number of prepaid customers. Our build-out of the 5G network is making good progress. Almost all of our national companies have already launched the commercial sale of 5G products and services.

Mobile communications

We had a total of 46.5 million mobile customers at the end of the first half of 2022; an increase of 1.4 % compared with the end of 2021. The number of contract customers decreased slightly by 2.0 %, largely as a result of the fact that we no longer include the SIM cards of a service provider in Austria in our customer base since January 1, 2022 but instead count them as wholesale customers. Without this effect, the number of contract customers increased slightly by 1.5 %. By contrast, the contract customer base grew at our other national companies, especially in Poland, Hungary, the Czech Republic, and Greece – with the exception of Slovakia. Overall, contract customers accounted for 56.1 % of the total customer base. In parallel with pure customer development, we have successfully continued the “more-for-more” offering in our product portfolio, so as to sustainably increase value per customer. In addition, thanks to our integrated network strategy our customers benefited from greater coverage with fast mobile broadband. The footprint countries of our operating segment are also making excellent headway with 5G. As of the end of the first half of 2022, our national companies covered 36.5 % of the population (in particular in Greece, Croatia, and Austria) with 5G.

The prepaid customer base recorded growth of 6.1 % compared with the end of 2021. Customer additions were significantly higher in Poland in particular. Many refugees fleeing the war in Ukraine entered neighboring countries, in particular Poland. Our national companies are providing support, for example, by issuing prepaid SIM cards. As part of our ordinary business activities, we offer our prepaid customers high-value contract plans with the resulting number of contract conversions also contributing positively to contract customer business.

Fixed network

The broadband business increased by 2.2 % compared with the end of 2021 to total 6.5 million customers. This growth is mainly driven by the national companies in Hungary, Poland, Greece, and the Czech Republic. By continuing to invest in fiber-optic technologies, we are systematically building out our fixed-network infrastructure. At the end of the first half of 2022, a total of around 7.4 million households (coverage of 29.2 %) were provided with the option by our national companies to subscribe to a direct connection to our high-speed fiber-optic network with speeds reaching up to 1 Gbit/s. The utilization rate remained stable at around 32 %. The number of fixed-network lines increased further, reaching 7.8 million at the end of the first half of the year.

The TV and entertainment business had a total of 4.1 million customers as of June 30, 2022, up by 1.2 % compared with the end of the prior year. This was attributable among other things to the acquisition of exclusive rights to broadcast sports events. 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 and digitalization

Our portfolio of convergent products, MagentaOne, was highly popular with consumers across all of our national companies. At the end of the first half of 2022, we had 6.7 million FMC customers; this corresponds to growth of 6.1 % compared with the end of the prior year. Our national companies in Greece, Hungary, Austria, Poland, and the Czech Republic in particular contributed to this growth. As of June 30, 2022, FMC customers accounted for 59.3 % of the broadband customer base. We have also seen accelerated growth in the marketing of our MagentaOne Business product to business customers.

We continue to expand our digital interaction with customers, which means we can meet customer needs in a more personalized and efficient way, and position products and innovative services on the market more quickly. 64 % of our customers use our service app.

Development of operations

millions of €

 

 

 

 

 

 

 

 

 

 

 

H1 2022

H1 2021

Change
%

Q1 2022

Q2 2022

Q2 2021

Change
%

FY 2021

Total revenue

 

5,451

5,551

(1.8)

2,704

2,747

2,823

(2.7)

11,384

Greece

 

1,521

1,476

3.0

748

773

759

1.8

3,078

Romania

 

157

427

(63.2)

78

78

217

(64.1)

709

Hungary

 

865

830

4.2

437

427

424

0.7

1,769

Poland

 

691

689

0.3

342

349

349

0.0

1,427

Czech Republic

 

600

549

9.3

295

305

280

8.9

1,146

Croatia

 

425

442

(3.8)

209

216

223

(3.1)

908

Slovakia

 

391

384

1.8

192

198

194

2.1

790

Austria

 

678

652

4.0

342

335

327

2.4

1,351

Othera

 

158

146

8.2

75

83

76

9.2

301

Service revenue

 

4,572

4,732

(3.4)

2,264

2,308

2,407

(4.1)

9,638

Profit (loss) from operations (EBIT)

 

889

810

9.8

446

443

425

4.2

1,814

EBIT margin

%

16.3

14.6

 

16.5

16.1

15.1

 

15.9

Depreciation, amortization and impairment losses

 

(1,235)

(1,292)

4.4

(619)

(617)

(648)

4.8

(2,576)

EBITDA

 

2,124

2,102

1.0

1,065

1,059

1,073

(1.3)

4,390

Special factors affecting EBITDA

 

(18)

(25)

28.0

(1)

(16)

(15)

(6.7)

11

EBITDA (adjusted for special factors)

 

2,142

2,127

0.7

1,066

1,075

1,088

(1.2)

4,380

EBITDA AL

 

1,944

1,915

1.5

975

969

979

(1.0)

4,018

Special factors affecting EBITDA AL

 

(18)

(25)

28.0

(1)

(16)

(15)

(6.7)

11

EBITDA AL (adjusted for special factors)

 

1,961

1,940

1.1

976

986

994

(0.8)

4,007

Greece

 

633

602

5.1

314

319

304

4.9

1,265

Romania

 

25

81

(69.1)

12

14

44

(68.2)

147

Hungary

 

243

239

1.7

127

116

133

(12.8)

536

Poland

 

198

195

1.5

98

100

100

0.0

385

Czech Republic

 

252

231

9.1

125

127

120

5.8

471

Croatia

 

160

163

(1.8)

79

81

85

(4.7)

355

Slovakia

 

174

162

7.4

86

89

78

14.1

327

Austria

 

252

249

1.2

124

128

123

4.1

487

Othera

 

24

18

33.3

11

12

8

50.0

34

EBITDA AL margin (adjusted for special factors)

%

36.0

34.9

 

36.1

35.9

35.2

 

35.2

Cash capex

 

(766)

(871)

12.1

(362)

(404)

(386)

(4.7)

(1,905)

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 in North Macedonia, Montenegro, and the GTS Central Europe group in Romania, as well as the Europe Headquarters.

Total revenue, service revenue

Our Europe operating segment generated total revenue of EUR 5.5 billion in the first half of 2022, a slight year-on-year decrease of 1.8 %. In organic terms – i.e., adjusted for the sale of the Romanian fixed-network business on September 30, 2021, and assuming constant exchange rate effects – revenue increased by 4.2 % year-on-year. Service revenue declined year-on-year, but grew by 3.6 % in organic terms. Regulatory interventions such as the reduction in termination rates had a negative impact on our organic development of revenue in the first half of 2022.

Organic revenue growth was mainly driven by the strong performance of the mobile business, especially the increase in mobile service revenues with higher margins, increases in roaming and visitor revenues, and volume-driven increases in revenues from terminal equipment sales. Fixed-network service revenues developed better compared with the prior-year period. The strong performance of the broadband and TV business and higher wholesale revenues in particular helped to offset the declines in voice telephony revenues, which were in line with expectations. The systems solutions business made a positive contribution to revenue overall.

All countries contributed to the growth in revenue in organic terms, with our national companies in Hungary, Greece, Austria and the Czech Republic recording the best development by country.

Revenue from Consumers increased in organic terms by 3.2 % year-on-year, due in part to the mobile business, where both service revenues and sales of mobile terminal equipment increased. In the fixed network, revenue from broadband and TV business increased thanks to our innovative TV and entertainment offerings as well as the continuous rollout of fiber-optic technology. This more than offset the decline in revenue from voice telephony. In addition, the higher number of FMC customers had a positive impact on revenue.

Organic growth in the Business Customer unit increased year-on-year in the first half of 2022 to 4.7 % across all product categories (fixed network, mobile communications, and systems solutions). The upward trend in mobile revenue is attributable to rising service revenues in particular in Austria, Greece, Hungary, and Croatia, as well as to higher terminal equipment revenues. The positive trend in systems solutions business was driven mainly by activities in the Czech Republic, Poland, Greece, and Hungary. Growth in professional data communication products used for site-to-site connection was driven by the new SD-X and SD-WAN digital services as well as sustained demand for high-performing broadband internet lines. Our new growth areas of security and cloud computing posted double-digit revenue growth rates.

Adjusted EBITDA AL, EBITDA AL

Our Europe operating segment generated adjusted EBITDA AL of EUR 2.0 billion as of the end of the first half of 2022, up slightly by 1.1 % against the level in the prior-year period. In organic terms, i.e., adjusted for the sale of the Romanian fixed-network business, and assuming constant exchange rates, adjusted EBITDA AL increased by 5.7 %, again making a significant positive contribution to earnings, with an organic net margin more than sufficient to offset the rise in indirect costs. The latter is a result of the extra profit tax imposed by the Hungarian regulatory authorities in June 2022, which had an effect of EUR 31.1 million in the second quarter of 2022.

Looking at the development by country, the increase in adjusted organic EBITDA AL was attributable to the positive trends at all of our national companies, but in particular in Greece, Hungary, Romania, and Slovakia.

EBITDA AL increased by 1.5 % year-on-year to EUR 1.9 billion. Special factors were reduced slightly year-on-year. In organic terms, EBITDA AL grew by 6.2 %.

Development of operations in selected countries

Greece. As of June 30, 2022, revenue in Greece increased by 3.0 % year-on-year to EUR 1.5 billion. The intensive fiber-optic and vectoring build-out, together with the resulting higher numbers of customers, continued to have a positive impact on the fixed-network business. Fixed-network revenues increased, mainly driven by strong growth in the broadband and TV business. Wholesale revenues also increased as a result of a successful increase in the volume of international calls on our networks. The continued encouraging development in mobile business is mainly attributable to the addition of new contract customers. Visitor and roaming revenues increased substantially thanks to travel returning to more normal levels despite the coronavirus pandemic. Our convergence products also performed well, with further customer additions and corresponding revenue. The systems solutions business also contributed to revenue growth.

In the first half of 2022, adjusted EBITDA AL in Greece stood at EUR 633 million, which was a substantial increase of 5.1 % against the prior year. In addition to a higher net margin, this positive trend was also supported by lower indirect costs.

Hungary. Revenue in Hungary totaled EUR 865 million in the first six months of 2022, an increase of 4.2 % despite negative exchange rate effects. In organic terms, revenue was up 9.8 % against the prior-year period. The biggest driver of this increase was mobile business, mainly on account of higher service revenues. In addition, contract customer additions had positive effects on terminal equipment business. Fixed-network revenue also increased year-on-year. We also recorded increased service revenues in the broadband and TV business, both driven again by larger customer bases. Our convergence products also continued to perform well, with further customer additions and corresponding revenue. Systems solutions business also contributed to revenue growth.

Adjusted EBITDA AL stood at EUR 243 million, up 1.7 % year-on-year. In organic terms, adjusted EBITDA AL grew by 8.1 %. This growth is attributable in particular to significantly higher revenues, which more than offset the substantial rise in costs, driven mainly by the newly imposed extra profit tax in the amount of EUR 31.1 million.

Poland. Our revenue in Poland remained stable at EUR 691 million in the first half of 2022. In organic terms, revenue increased slightly by 2.3 %. Mobile revenues were up slightly, with contract customer additions also having a positive effect on terminal equipment business. In addition, higher roaming and visitor revenues offset the regulatory-induced reduction in termination rates. The number of FTTH customers in the fixed-network business also increased significantly, creating the basis for further broadband growth. This is reflected in higher broadband service revenues, and is also thanks to our successful partnership agreements on network infrastructure. Wholesale revenues were also negatively impacted by the regulatory-induced reduction in fixed-network termination rates. The number of customers using our convergence products increased again substantially in the first six months of 2022. This had a corresponding positive impact on revenues. Revenue also grew markedly in the systems solutions business.

Adjusted EBITDA AL stood at EUR 198 million in the first half of 2022, up 1.5 % year-on-year. In organic terms, adjusted EBITDA AL increased by 3.7 %, mainly on the back of a revenue-related increase in the net margin.

Czech Republic. Revenue in the Czech Republic stood at EUR 600 million, an increase of 9.3 % against the first half of the prior year. Excluding positive exchange rate effects, organic growth was 4.2 %. The realignment of our systems solutions business paid off: we recorded a substantial increase in revenue in this business area. The mobile and fixed-network businesses also contributed to revenue growth, although they were subject to a regulatory-induced reduction in termination rates. Our convergence products recorded further customer additions and corresponding revenue growth.

Adjusted EBITDA AL increased by 9.1 % compared with the first half of the prior year to EUR 252 million. In organic terms, earnings grew by 3.6 %.

Austria. Revenue generated in Austria totaled EUR 678 million in the first six months of 2022. This increase of 4.0 % was mainly attributable to growth in mobile revenues, with roaming and visitor revenues having a clearly positive impact. Service revenues in the fixed-network business also developed encouragingly. The broadband business generated substantial growth rates, due among other factors to a larger customer base and higher-value rate plans. Acceptance of our convergence products increased substantially again, also impacting positively on revenues.

Adjusted EBITDA AL increased by 1.2 % year-on-year to EUR 252 million. This revenue-induced increase more than offset the increase in costs.

Profit/loss from operations (EBIT)

Our Europe operating segment recorded an increase in EBIT of EUR 79 million in the first half of 2022. In addition to an increase in EBITDA of EUR 22 million, depreciation, amortization and impairment losses decreased – in Croatia and Slovakia in particular – by EUR 57 million, with depreciation and amortization in particular down on the prior year.

Cash capex

In the first half of 2022, the Europe operating segment reported cash capex of EUR 766 million, down 12.1 % year-on-year. This decrease is mainly due to lower cash outflows for the acquisition of spectrum licenses, primarily in the Czech Republic. The sale of the Romanian fixed-network business also resulted in lower cash capex. 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
AL – After Leases
Since the start of the 2019 financial year, we have taken the effects of the first-time application of IFRS 16 “Leases” into account when determining our financial performance indicators. “EBITDA after leases” (EBITDA AL) is calculated by adjusting EBITDA for depreciation of the right-of-use assets and for interest expenses on recognized lease liabilities. When determining “free cash flow after leases” (free cash flow AL), free cash flow is adjusted for the repayment of lease liabilities.
Glossary
Cloud computing
Refers to the dynamic provision of infrastructure, software, or platform services online. Apart from a high level of automation and virtualization, the services provided have to be multi-client-capable and include standardized hardware and software. Customers source these services on demand and pay based on actual usage. The communication infrastructure may be the internet (public cloud), a corporate network (private cloud), or a mix of the two (hybrid cloud). Dynamic Services is a T-Systems product for the flexible procurement of ICT resources and services.
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
FTTH – Fiber To The Home
In telecommunications FTTH means that the fiber-optic cable is terminated right in the user’s home or apartment.
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
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
SD-WAN – Software-Defined Wide Area Network
SD-WAN simplifies the management and operation of a WAN by decoupling the network hardware from its control mechanism. This concept is similar to the way in which software-defined networking implements virtualization technology in order to improve the management and operation of data centers. A key application of SD-WAN is to allow companies to build higher-performance WANs using lower-cost and commercially available internet access. This would enable companies to partially or wholly replace private WAN connection technologies.
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
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
Wholesale
Refers to the business of selling services to third parties who sell them to their own retail customers either directly or after further processing.
Glossary