Deutsche Telekom Q1 up 3.5%; MagentaTV gains
May 9, 2019
Deutsche Telekom saw growth in all areas in the first quarter of 2019, continuing the Group’s success from its record year of 2018. In organic terms, i.e., adjusted for exchange rate effects and changes in the composition of the Group, net revenue increased by 3.5 per cent to €19.5 billion.
“We got off to a successful start to the year,” said Tim Höttges, CEO of Deutsche Telekom. “Deutsche Telekom has much more to offer than just our sensational success in the United States. We are seeing positive trends throughout the Group.”
The Group reconfirmed its guidance for the current financial year. Deutsche Telekom expects to report adjusted EBITDA AL of around €23.9 billion and free cash flow AL of around €6.7 billion for the 2019 full year.
Germany – MagentaTV gains ground
In Germany, the positive business trends of the prior year in terms of customer numbers and financial figures continued in the first quarter of 2019.
Some 4.4 million customers now use MagentaEINS, a convergence product package of fixed-network and mobile communications. That is 17.1 per cent more than a year ago. 53 per cent of branded mobile contract customers now use MagentaEINS packages, an increase of 9 percentage points in a year.
The number of customers with fiber-optic-based products (FTTH, FTTC/vectoring) increased by 688,000 in the quarter, reaching 12.9 million at the end of March, up 24 per cent year-on-year. Interest in these products rose tangibly with the launch of MagentaTV, the next development level in Deutsche Telekom’s IP TV offering. 66,000 new MagentaTV customers were recorded in the quarter just ended, taking the total number to 3.4 million, an increase of 7.1 per cent compared with March 2018.
Deutsche Telekom retained its leading position on the German mobile market. Service revenues increased again substantially by 2.8 per cent compared with the first quarter of 2018. The trend in adjusted EBITDA AL in the Germany operating segment was also very positive in the reporting period, with an increase of 2.4 per cent to 2.1 billion. Revenue increased 0.6 per cent to €5.4 billion.
United States – record setting continues
For the last six years now, T-Mobile US has recorded more than one million customer additions in every single quarter. Between January and March 2019, 1.65 million net additions were recorded, including one million branded postpaid customers. Not only is the company constantly winning over new customers, at the same time, customer loyalty is also increasing. Churn fell yet again to a historic low. For branded postpaid customers, it stood at 0.88 per cent in the first quarter, down from 1.07 per cent in the prior year.
T-Mobile US’ financial performance indicators also reached unprecedented levels in the first quarter. Total revenue increased by 7 per cent to $11.1 billion. Adjusted EBITDA AL reached $3 billion, an increase of 6.2 per cent year-on-year.
Europe – boom in convergent product bundles
European national companies remain on course for growth in 2019. While revenue increased by 2.8 per cent to €2.9 billion compared with the first quarter of 2018, adjusted EBITDA AL increased by as much as 5.2 per cent to €0.9 billion. The first-time consolidation of UPC Austria had a positive effect. In organic terms, revenue increased by 0.4 per cent, adjusted EBITDA AL by 1.5 per cent.
The business with convergence products bundling fixed-network and mobile communications once again recorded fast growth. Within the space of one year, the number of users of such convergent offers rose 54 per cent to 3.8 million. More than 42 per cent of broadband households now use convergence products, up more than 10 percentage points within a year. Greece in particular recorded a strong performance.
Systems Solutions – strong development in growth areas
The positive trend in T-Systems’ business from the end of last year continued through the first three months of 2019. At €1.6 billion, order entry was up 6.8 per cent against the first quarter of 2018, primarily driven by new deals in growth areas such as SAP, public cloud, and health.
Revenue declined 2.1 per cent to €1.6 billion. There was a general decline in the volume of traditional IT and telecommunications business in Western Europe. T-Systems also terminated contracts in unprofitable business areas. The increase in growth areas was not yet sufficient to fully offset this decline. The results were improved by efficiency enhancements from the ongoing transformation of T-Systems. Adjusted EBITDA AL recovered compared with the prior-year quarter, which had been impacted by start-up costs for new business areas. It increased by 53 per cent to €92 million.