Germany

For information on changes resulting from the first-time application of the IFRS 16 “Leases” accounting standard, please refer to the section “Group organization, strategy, and management.”

Customer development

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thousands

 

 

 

 

 

 

 

 

Sept. 30, 2019

June 30, 2019

Change
Sept. 30, 2019/
June 30, 2019
%

Dec. 31, 2018

Change
Sept. 30, 2019/
Dec. 31, 2018
%

Sept. 30, 2018

Change
Sept. 30, 2019/
Sept. 30, 2018
%

Mobile customers

45,598

44,827

1.7

44,202

3.2

43,646

4.5

Contract customers

25,138

24,974

0.7

25,435

(1.2)

25,179

(0.2)

Prepay customers

20,460

19,853

3.1

18,767

9.0

18,466

10.8

Fixed-network lines

17,996

18,228

(1.3)

18,625

(3.4)

18,809

(4.3)

Of which: retail IP-based

17,158

16,614

3.3

15,356

11.7

14,493

18.4

Retail broadband lines

13,683

13,636

0.3

13,561

0.9

13,504

1.3

Of which: optical fiber

8,231

7,913

4.0

7,236

13.8

6,896

19.4

Television (IPTV, satellite)

3,544

3,477

1.9

3,353

5.7

3,291

7.7

Unbundled local loop lines (ULLs)

4,770

4,913

(2.9)

5,236

(8.9)

5,402

(11.7)

Wholesale broadband lines

7,282

7,126

2.2

6,722

8.3

6,495

12.1

Of which: optical fiber

5,719

5,503

3.9

4,970

15.1

4,685

22.1

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 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. Thanks to the sustained popularity of our convergent MagentaEINS offering, our MagentaEINS customer base totaled 4.6 million at the end of the third quarter of 2019.

High demand for mobile rate plans with included data volumes resulted in an increase in the number of branded contract customers under the Telekom and congstar brands. Our initiatives in the automotive sector drove growth in the number of customers.

We made further headway with our transformation program, and by the end of the third quarter of 2019 had migrated 24.4 million and wholesale lines to IP, bringing the total migration level to 97 percent of all lines.

We continued to see strong demand for our fiber-optic products. As of the end of the third quarter of 2019, the number of lines had increased to around 14 million overall. In other words, we connected 1,744 thousand lines to our fiber-optic network in Germany in the first nine months of 2019. With the progress made in fiber-optic rollout and technology, we also drove the marketing of higher bandwidths.

Mobile communications

We won a further approximately 1,396 thousand in the first nine months of 2019 compared with year-end 2018. Of these, a total of 452 thousand were contract customers under our Telekom and congstar brands. The number of mobile contract customers with resellers (service providers) decreased, primarily due to the volatile developments at some of our service providers. The number of prepay customers increased by 1,693 thousand.

Fixed network

Due to the persistently challenging development in the fixed-network market, primarily owing to aggressive pricing offers of competitors, we are pursuing new paths in marketing. Our focus is on convergent offerings and their further development – for instance, MagentaTV with exclusive access to a wide range of additional content in the Megathek library and via other popular streaming services – as well as TV lines and . We continue to see growth in our broadband lines. The number of TV customers increased by 191 thousand in the first nine months of 2019. In the traditional fixed network, the number of lines decreased by 629 thousand.

Our MagentaZuhause rate plans offer a comprehensive product portfolio for the fixed network based on technology and rate plan-specific bandwidths.

Wholesale

At the end of the third quarter of 2019, accounted for 47.5 percent of all lines – 5.9 percentage points higher than at the end of 2018. This accelerated growth was driven largely by high demand for our . The number of lines decreased by 466 thousand or 8.9 percent compared with the end of the prior year. This is due first to the move to higher-quality fiber-optic lines, and second to customers switching to cable operators. In addition, our wholesale customers are migrating their retail customers to their own fiber-optic lines. In wholesale, the number of lines stood at around 12.1 million as of September 30, 2019.

Development of operations

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millions of €

 

 

 

 

 

 

 

 

 

 

 

 

Q1
2019

Q2
2019

Q3
2019

Q3
2018

Change
%

Q1-Q3
2019

Q1-Q3
2018

Change
%

FY
2018

a

Prior-year comparatives were calculated on a pro forma basis for the redefined key performance indicators resulting from the introduction of the IFRS 16 accounting standard.

TOTAL REVENUE

 

5,357

5,388

5,472

5,441

0.6

16,217

16,088

0.8

21,700

Consumers

 

2,833

2,861

2,909

2,923

(0.5)

8,604

8,556

0.6

11,543

Business Customers

 

1,510

1,514

1,539

1,500

2.6

4,562

4,483

1.8

6,082

Wholesale

 

931

927

940

930

1.1

2,798

2,789

0.3

3,720

Other

 

83

86

84

88

(4.5)

253

261

(3.1)

355

Profit (loss) from operations (EBIT)

 

863

892

1,238

1,096

13.0

2,992

2,985

0.2

3,969

EBIT margin

%

16.1

16.6

22.6

20.1

 

18.4

18.6

 

18.3

Depreciation, amortization and impairment losses

 

(1,083)

(1,144)

(961)

(996)

3.5

(3,188)

(2,964)

(7.6)

(4,042)

EBITDA

 

1,946

2,036

2,199

2,093

5.1

6,181

5,949

3.9

8,012

EBITDA ALa

 

1,940

2,028

2,193

2,071

5.9

6,161

5,880

4.8

7,918

Special factors affecting EBITDA

 

(168)

(125)

(61)

(129)

52.7

(354)

(481)

26.4

(598)

EBITDA (adjusted for special factors)

 

2,114

2,161

2,260

2,222

1.7

6,535

6,430

1.6

8,610

EBITDA AL (ADJUSTED FOR SPECIAL FACTORS)a

 

2,108

2,153

2,254

2,200

2.4

6,515

6,361

2.4

8,516

EBITDA AL margin (adjusted for special factors)a

%

39.4

40.0

41.2

40.4

 

40.2

39.5

 

39.2

CASH CAPEX

 

(1,216)

(1,069)

(1,066)

(1,134)

6.0

(3,351)

(3,242)

(3.4)

(4,240)

Total revenue

Total revenue was up slightly year-on-year by 0.8 percent, mainly due to an increase of 2.6 percent in mobile business thanks to higher service and terminal equipment revenues. In the fixed network, IT and broadband revenues were higher than in the first three quarters of 2018 and almost completely offset the decrease in fixed-network revenue (primarily from voice components).

Revenue from Consumers grew by 0.6 percent year-on-year. Volume-driven declines in revenue from voice components continue to strongly impact on traditional fixed-network business. By contrast, revenue from broadband business increased. Mobile business also grew by 2.1 percent.

Revenue from Business Customers increased by 1.8 percent. Mobile revenues increased by 3.6 percent and IT revenues by 22.3 percent compared with the same period of last year. In the fixed network, by contrast, a decline was recorded in traditional voice telephony, due largely to the increasing number of customers moving to flat-rate plans in connection with the migration to IP.

Wholesale revenue was up slightly after the first three quarters of 2019 by 0.3 percent year-on-year. Positive revenue contributions, largely from our and a regulation-induced price increase in ULL monthly charges, offset the general revenue declines in and voice business.

EBITDA AL, adjusted EBITDA AL

EBITDA AL amounted to EUR 6.2 billion in the first nine months of 2019, an increase of 4.8 percent against the prior-year period. In addition to the positive contributions from the development of revenue, this increase was also primarily due to lower personnel costs, mainly as a result of a lower headcount and a decline in expenses for socially responsible instruments in connection with the staff restructuring. The successful implementation of efficiency and digitalization measures also had a positive impact. Adjusted EBITDA AL increased by 2.4 percent to EUR 6.5 billion year-on-year due to the same reasons. Our adjusted EBITDA AL margin increased to 40.2 percent, up from 39.5 percent in the prior-year period.

EBIT

Profit from operations was up 0.2 percent year-on-year to around EUR 3.0 billion due to higher depreciation, amortization and impairment losses on account of sustained high investments in our network infrastructure.

Cash capex

Cash capex increased by 3.4 percent compared with the first nine months of 2018. As part of our integrated network strategy, we again made significant investments in the broadband and fiber-optic rollout, our transformation, and our mobile infrastructure.

Prepay/prepaid
In contrast to postpay contracts, prepay communication services are services for which credit has been purchased in advance with no fixed-term contractual obligations.
IP - Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
Retail
The sale of goods and services to end users, as opposed to resale or wholesale.
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 at the cable distribution boxes.
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).
Fiber-optic lines
Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH).
IP - Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.
Fiber-optic lines
Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH).
Contingent model
Contract concluded over a long period of time with defined advance payment and minimum purchase requirement. In return, the resellers pay a reduced monthly charge for VDSL. This allows them to put together interesting offers for their own consumers without having to invest in fiber-optic lines of their own. This improves the utilization of Telekom Deutschland GmbH’s existing VDSL network. The current “contingent model” is being developed further to reflect the network build-out in terms of availability and bandwidth.
ULL - Unbundled Local Loop
Competitors whose own networks do not reach into customers’ premises can rent unbundled local loop lines from Deutsche Telekom. Their networks end at the local exchanges. The ULL bridges the distance between the local exchange and the termination point on the customer’s premises or in their home, so it is also known as the “last mile.”
Retail
The sale of goods and services to end users, as opposed to resale or wholesale.
Contingent model
Contract concluded over a long period of time with defined advance payment and minimum purchase requirement. In return, the resellers pay a reduced monthly charge for VDSL. This allows them to put together interesting offers for their own consumers without having to invest in fiber-optic lines of their own. This improves the utilization of Telekom Deutschland GmbH’s existing VDSL network. The current “contingent model” is being developed further to reflect the network build-out in terms of availability and bandwidth.
ULL - Unbundled Local Loop
Competitors whose own networks do not reach into customers’ premises can rent unbundled local loop lines from Deutsche Telekom. Their networks end at the local exchanges. The ULL bridges the distance between the local exchange and the termination point on the customer’s premises or in their home, so it is also known as the “last mile.”
IP - Internet Protocol
Non-proprietary transport protocol in Layer 3 of the OSI reference model for inter-network communications.