Deutsche Telekom posts 25.4% revenue jump, calls for EU consolidation

26 February 2021 | Melanie Mingas

Cover

Deutsche Telekom has posted a 25.4% increase in group revenues for the full year 2020, reaching €101 billion for the period.

It's a result chief executive Tim Höttges attributed to the T-Mobile/Sprint merger, however, despite calling for consolidation in the European market, he said Deutsche Telekom is not currently engaged in any active merger talks.

On the financial results, Höttges (pictured) said: “We made history in 2020. We added a substantial and important chapter to Deutsche Telekom’s story.

“We closed a groundbreaking deal in the United States, improved our market position in Europe and at the same time made an important contribution to managing the impact of the coronavirus pandemic with our stable networks.”

Excluding the merger and exchange rate impact, revenue grew by 3% over the full year when compared to 2019.

Free cash flow came in above guidance at €6.3 billion in 2020 and adjusted net profit increased by 15.5% to reach €5.7 billion. On the outlook for 2021, Deutsche Telekom expects free cash flow of around €8.0 billion.

Adjusted EBITDA AL saw an even more pronounced increase, rising by 41.6% to €35 billion euros, and by 7.9% in organic terms. Free cash flow AL amounted to €6.3 billion, exceeding guidance, which itself was raised in November.  

Cash capex investments were up almost 30% year on year at €17 billion, , with most of it going into networks on both sides of the Atlantic and the company claimed a lead on 5G in the US and Germany.

Adjusted net profit increased 15.5% year-on-year to reach €5.7 billion, whereas unadjusted net profit was up 7.5% to €4.2 billion.

As expected, roaming declines resulted in a 1.7% drop in service revenues compared with the prior year, however "adjusted for the coronavirus effect", there was an increase of 1.1%.

Telekom recorded 206,000 in branded customer additions; compared to 97,000 in Q4 2019.

Europe

Recording stable performance across Europe, operations on the continent generated revenues of €11.3 billion for the full year.

In the fourth quarter alone, the number of mobile contract customers increased by 219,000 and the number of broadband customers by 87,000. The number of users of converged fixed-mobile product packages increased by 248,000. At year-end, the customer base was 19.5 percent larger than a year earlier.

Meanwhile in Germany, it was all about broadband. There, between October and December, the company won 121,000 new broadband customers, the highest figure "for many years". At the end of the year, Telekom counted 14.1 million broadband customers, up 388,000 on last year.

Despite the growing market share, Tim Hoettges said in a news conference early Friday, the 100-plus operators currently active in the European market need to consolidate to relieve financial pressures on the industry. However, he was quick to clarify that Deutsche Telekom is not in active merger talks.

He was quoted as saying: "The industry is in a dilemma that it can only escape through cost synergies. I believe deeply that European consolidation is necessary.”

“We are open to light or heavy partnerships,” he said, indicating that some form of equity participation could be part of any deal.