Deutsche Telekom has reported record full year revenue, profit growth in all operating segments, and a further increase in investments.

Revenue grew by 6.4 per cent in 2019 compared with the prior year to €80.5 billion. Adjusted EBITDA AL increased by 7.2 per cent to €24.7 billion. Free cash flow AL increased by 15.9 per cent to €7.0 billion. This means Deutsche Telekom hit its uprated forecast for 2019.

“This is a historic day for Deutsche Telekom,” said Tim Höttges, CEO of Deutsche Telekom. “We have confirmed our position as the clear number one in our industry in Europe with these record results.”

Cash capex before spectrum investment stood at €13.1 billion in 2019, 7.6 per cent above the prior-year level. This increase was due to the accelerated 5G build-out in the US. Net profit increased by 78.5 per cent to €3.9 billion. Negative special factors like the settlement agreement in the toll arbitration proceedings and impairment losses in the prior year compared with a range of much smaller effects in 2019. Adjusted for special factors, net profit increased by 8.9 per cent to €4.9 billion.

For the 2020 financial year, Deutsche Telekom expects another increase in revenue. Adjusted EBITDA AL is expected to grow to around €25.5 billion of which around €13.9 billion will come from business outside of the US. As in 2019, growth is expected in all operating segments. The Group expects free cash flow of around €8 billion. All these figures are based on constant exchange rates and exclude changes in the composition of the Group.

Germany – networks and customer base continue to grow

The focus in Germany in the reporting year was on building out superfast internet connections, with some 28 million households and business locations now being able to use super vectoring with bandwidths of at least 250 Mbit/s. There were 14.4 million fibre-optic-based lines in the Telekom network at the end of 2019, 2.2 million more than a year earlier. More than 3.6 million customers use the internet-based MagentaTV service. 74,000 new customers signed up in the fourth quarter of 2019 alone. 4.7 million customers have opted for the MagentaEINS product package. Consequently, the share of mobile contract customers with MagentaEINS increased from 51 per cent to 57 per cent.

Mobile service revenues increased by 1.4 per cent in the quarter, clearly confirming Deutsche Telekom’s market leadership. In the Germany operating segment as a whole, revenue rose by 0.9 per cent in 2019 to €21.9 billion. Adjusted EBITDA AL for the full year increased by 2.4 per cent compared with 2018 to €8.7 billion.

United States – success story continues

T-Mobile US ended the year with 86 million customers, 6.4 million more than a year earlier. 2019 was the sixth year in succession with more than five million customer additions. The company recorded more than a million net additions to branded postpaid phone customers in the fourth quarter. Thus, T-Mobile US led the US mobile market in this most important customer metric for the 24th quarter in a row.

The huge number of new customers is paying off. T-Mobile US increased total revenue by 5 per cent in 2019 to $45.2 billion. Adjusted EBITDA AL increased by 4.7 per cent compared with the prior year to $12.5 billion.

Europe – growth accelerates

Revenue and earnings growth has been gaining pace for two years now in the Europe operating segment. In organic terms, revenue increased by 1.4 per cent year-on-year in 2019 to €12.2 billion. Adjusted EBITDA AL rose 3.1 per cent to €4 billion, driven by cost reductions and improved margins. In the fourth quarter, the organic growth rates were even higher, at 3.8 per cent for revenue and 5.7 per cent for adjusted EBITDA AL.

One of the success factors of the past year was fixed-mobile convergence products. Nearly 4.8 million customers now use such offers, 45.3 per cent more than a year earlier. The percentage of broadband households that have opted for a product bundle also increased in this period from 39.9 per cent to 49.1 per cent. Product bundles lead to lower churn rates and higher revenues per household. Other customer figures also went up. The number of broadband lines grew 4.2 per cent during the year to 6.7 million, the number of mobile contract customers increased by 3.4 per cent to 27.6 million.

Systems Solutions – strong in new orders

T-Systems ended the year with a strong trend in order entry. The order volume was up 8.2 per cent in 2019 at €7.3 billion, also largely driven by the growth areas.

Revenue declined slightly by 1.9 per cent in the full year to €6.8 billion. Business in growth areas such as public cloud or security, each posting double-digit growth rates, was not sufficient to fully offset declines in traditional IT. At €0.5 billion, the annual target for adjusted EBITDA AL was achieved. The growth of 17.4 per cent was primarily attributable to the ongoing transformation of the company. A further increase is expected for 2020.

Group Development – T-Mobile Netherlands continues to grow

Business developed very positively in the Netherlands over the past year. Revenue increased by 44.5 per cent compared with 2018 to €1.9 billion. Adjusted EBITDA AL rose by 21.5 per cent to €0.5 billion. This increase was mainly driven by the takeover of Tele2. But even without this effect, T-Mobile Netherlands recorded growth of 1.6 per cent in revenue and of 19.4 per cent in adjusted EBITDA AL. The company’s outstanding market position was underlined by the addition of 83,000 new mobile customers and 18,000 broadband customers in the fourth quarter alone.

With 34,300 sites at the end of 2019, the number of sites in Germany in the cell tower business rose by 1,800 year-on-year. Revenue in this business area increased by 2.5 per cent on a like-for-like basis compared with 2018 to €0.9 billion.

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