Deutsche Telekom “on track”
February 23, 2023
Deutsche Telekom has reported that it is “on track” despite unsteady market conditions. The German telco group exceeded its guidance for 2022, which it raised multiple times throughout the year. Total revenue increased by 6.1 per cent compared with 2021 to €114.4 billion. Service revenue increased by 10.6 per cent to €91.9 billion. Adjusted EBITDA AL was up by 7.7 per cent to €40.2 billion. Deutsche Telekom posted strong growth in free cash flow AL of 30.2 per cent to reach €11.5 billion.“The upheavals in the world, and their consequences, are not without their effects on Deutsche Telekom,” said Tim Höttges, Chairman of the Board of Management. “But by continuing to execute our strategy, we were nevertheless able to meet all of our targets in 2022.”Net profit almost doubled to €8 billion euros. Adjusted for special factors, net profit increased by 54.9 per cent year-on-year to €9.1 billion. As announced in November 2022, the dividend is expected to increase to 70 eurocents per share.Under the guidance for 2023, adjusted EBITDA AL is set to grow by 4 per cent to reach around €40.8 billion. Germany: Strong customer growth
Growth in mobile continues. In the closing quarter of 2022 alone, Telekom posted 225,000 net branded contract customer additions. Mobile service revenues grew between October and December 2022 by 3.5 per cent year-on-year.The positive trend in the fixed network continued, with 74,000 broadband customer additions between October and December. The MagentaTV customer base grew by 51,000 in the reporting quarter. 12.1 million or 82 per cent of broadband consumers are now using fiber-optic infrastructure (FTTH, VDSL/vectoring). Deutsche Telekom met its build-out target for 2022 with the addition of another 2 million FTTH households, bringing the total to 5.4 million.Our most important financial KPIs likewise developed positively. In the Germany operating segment, adjusted EBITDA AL for the full year increased by 3.2 per cent compared with 2021 to €9.8 billion. Revenue increased 1.9 per cent to €24.5 billion, while service revenues grew to €21.5 billion.United States: Synergies rise further
T-Mobile US added 6.4 million new postpaid customers in 2022. A key driver of this trend was the lower churn rate among former Sprint customers. As of the year-end, 2.6 million customers were using the high-speed internet, i.e., wireless internet access. That is 2 million more than one year ago.T-Mobile US is systematically scaling back the terminal equipment lease business for its customers, which was taken over as part of the business combination with Sprint. This has a reducing effect on total revenue. In the year just ended, the T-Mobile US service revenues relevant for the development of earnings grew by 7 per cent against 2021 to $61.2 billion. Adjusted core EBITDA AL – ie adjusted for the effects of the reduction in the lease business – grew by 8.4 per cent to $25.5 billion.For 2023, T-Mobile US expects to unlock synergies from the takeover of Sprint of $7.2 to $7.5 billion, at least 20 per cent more than in the prior year. The decommissioning of the Sprint network after the first half of 2022 also contributes to these synergies. By contrast, the integration costs in the current year are not expected to exceed $1 billion, down from $5 billion in 2022. The company expects its postpaid customer base to grow by between 5 and 5.5 million.Europe: Growth despite headwind
Business in the national companies in Europe proved resilient in the face of negative influences in 2022. The closing quarter marked 20 successive quarters of growth in adjusted EBITDA AL on an organic basis. This was achieved despite prevailing headwinds in the form of rising energy prices and the supplementary telecommunications tax imposed in Hungary. For the full year, the increase was 3.1 per cent. Revenue increased in organic terms by 3.9 per cent in 2022, driven mainly by growth in mobile service revenues.Customer numbers continued their stable upward trend. The number of mobile contract customers increased by 823,000 in 2022 to 26.5 million. The broadband customer base grew by 308,000 to 6.7 million, while the number of TV customers increased by 112,000 to 4.1 million. The number of customers using fixed-mobile convergence products grew by 741,000 and passed the 7 million mark.