Deutsche Telekom exceeds its guidance in the 2021 financial year and plans further growth
Via Deutsche Telekom
Feb 24, 2022
- Revenue up by 7.7 percent to 108.8 billion euros
- Adjusted EBITDA AL up by 6.6 percent to 37.3 billion euros
- Free cash flow AL up by 40.1 percent to 8.8 billion euros
- Guidance for 2021 exceeded based on constant exchange rates
- Adjusted net profit of 5.9 billion euros: plus 2.6 percent, adjusted earnings per share of 1.22 euros
- Guidance for 2022: free cash flow AL of around 10 billion euros, adjusted EBITDA AL of around 36.5 billion euros, adjusted core EBITDA AL to rise by around 5 percent
- Strong customer growth in Germany
- T-Mobile US: strong increase in synergies from merger with Sprint
- Adjusted EBITDA AL of more than 4 billion euros for the first time in the Europe segment
Expectations exceeded. Deutsche Telekom increased its financial figures in 2021. The Group’s total revenue grew by 7.7 percent in the 2021 financial year to 108.8 billion euros, with service revenues increasing by 6.5 percent to 84.1 billion euros. Adjusted EBITDA AL rose by 6.6 percent year-on-year to 37.3 billion euros. Based on constant exchange rates, i.e., those used for the 2021 guidance, the Group reached 38.2 billion euros, exceeding its forecast for adjusted EBITDA AL, which had just been raised in November. Free cash flow AL totaled 8.8 billion euros. That is an increase of around 40.1 percent compared with 2020. The dividend proposed to the shareholders’ meeting on April 7 is 0.64 euros per share.
“We won’t let up,” said Tim Höttges, CEO of Deutsche Telekom. “Profits are growing in all areas. The Group’s successful course continues.”
In 2021, Deutsche Telekom invested 18.0 billion euros worldwide, excluding expenses for mobile spectrum. 5.9 percent more than in the previous year. Adjusted net profit increased by 2.6 percent to 5.9 billion euros; on an unadjusted basis, it increased by 0.4 percent to 4.2 billion euros.
For the current financial year, the Group expects free cash flow AL of around 10 billion euros. Adjusted EBITDA AL is expected to reach 36.5 billion euros. The comparison with 2021 must take into account changes in the composition of the Group, primarily the deconsolidation of T-Mobile Netherlands, and effects from the reduction of the terminal equipment lease business in the United States. The figure adjusted for these lease effects – adjusted core EBITDA AL – is expected to increase by around 5 percent in 2022 on a like-for-like basis. Adjusted earnings per share are expected to reach more than 1.25 euros, compared to 1.22 euros in 2021. Deutsche Telekom also confirmed its target of at least 1.75 euros for 2024.
Germany: Growth trajectory continues
In its home market, Deutsche Telekom can look back on a year of substantial growth in customer numbers and of strong earnings. In the broadband business, the Company recorded 360,000 customer additions, thus significantly increasing its market share in 2021. At year-end, 17.2 million (retail and wholesale) customers were using a fiber-optic based line (FTTH, VDSL/vectoring), 1.2 million more than a year earlier.
In mobile communications, Telekom recorded growth in branded contract customers of 666,000 for the full year. The clear market leadership in terms of mobile service revenues was reinforced. In the fourth quarter, this figure was up 2.3 percent against the prior-year period.
The Germany operating segment increased total revenue by 1.6 percent year-on-year in the 2021 financial year to 24.2 billion euros. Growth in adjusted EBITDA AL was even stronger: up 3.6 percent to 9.5 billion euros.
United States: Positive outlook
T-Mobile US ended the year with 108.7 million customers, an increase of 6.7 million within 12 months. More than 2.9 million of these additions related to the particularly profitable postpaid phone segment.
Total revenue increased by 15.2 percent to 80.8 billion U.S. dollars. At the same time, adjusted EBITDA AL increased by 11.8 percent to 26.9 billion U.S. dollars. The business combination with Sprint is paying off. Last year, synergies leveraged in shared functions, sales, and networks amounted to 3.8 billion U.S. dollars. In 2022, this figure is expected to rise to between 5.0 and 5.3 billion U.S. dollars, thereby exceeding the integration costs of the merger on a full-year basis for the first time since the business combination with Sprint as of April 1, 2020.
Europe: Milestone reached
The Europe operating segment generated adjusted EBITDA AL of more than 4.0 billion euros within a year for the first time. In organic terms, i.e., adjusted for exchange rate effects and changes in the composition of the Group, this was 5.4 percent more than in the prior year. This indicator for earnings performance had increased organically year-on-year in every quarter of the last four years. Service revenues grew by 2.0 percent in organic terms in 2021 to 9.6 billion euros.
Customer numbers increased in all areas in 2021. The European national companies won 770,000 new mobile contract customers in total. The number of broadband customers went up by 350,000. The number of users of convergent fixed-mobile product bundles increased by 842,000.
Systems Solutions: Delivered in terms of earnings
Revenue declined by 3.4 percent in the year just ended to 4.0 billion euros. Order entry was 8.5 percent down year-on-year at 4.2 billion euros.
Group Development: Cell tower business continues to grow
The cell tower business in the Group Development segment performed very well in the year just ended. In organic terms, revenue increased in 2021 by 5.4 percent year-on-year to 1.1 billion euros. At the same time, adjusted EBITDA AL grew 6.3 percent in organic terms to 0.6 billion euros. The comparison on an organic basis is adjusted for the sale of the Dutch cell towers. The number of cell sites grew by 1,100 in organic terms in the past 12 months to 40,600.
The sale of T-Mobile Netherlands (TMNL), announced in September, is not yet complete. As such, the TMNL figures are included in full in the consolidated data for 2021. In the past year, the Dutch business recorded 192,000 mobile contract additions. Total revenue amounted to 2.1 billion euros, adjusted EBITDA AL to 0.7 billion euros.
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