- Organic Service Revenue Growth: 4% in the first half of 2024.
- Organic EBITDA AL Growth: 6% in the first half of 2024.
- Operating Free Cash Flow Growth: 26% in the first half of 2024.
- Adjusted Earnings Per Share Growth: 23% in the first half of 2024.
- Dividend Payout: EUR 0.70 per share.
- Share Buyback: 43 million shares year-to-date.
- Organic Group Service Revenue Growth: 4.1% in Q2 2024.
- Ex-US Organic Service Revenue Growth: 3.7% in the first half of 2024.
- Ex-US EBITDA AL Growth: 4% in the first half of 2024.
- Fiber-to-the-Home (FTTH) Expansion: 3.6 million additional European homes passed in the last 12 months.
- Postpaid Phone Net Additions: 1.3 million in the first half of 2024.
- High-Speed Internet Customer Growth: 400,000+ in the last quarter.
- Germany Organic Revenue Growth: 3.6% in Q2 2024.
- Germany EBITDA AL Growth: 1% in Q2 2024 (3% excluding one-off payment).
- Germany Mobile Service Revenue Growth: 3.7% in Q2 2024.
- Germany Fixed Service Revenue Growth: Improved in Q2 2024.
- FTTH Customer Growth: 113,000 year-over-year in Q2 2024.
- TV Customer Growth: 80,000 year-over-year in Q2 2024.
- Europe Organic Revenue Growth: 7% year-over-year in Q2 2024.
- Europe Organic EBITDA AL Growth: 9% year-over-year in Q2 2024.
- T-Systems Organic Revenue Growth: 2.1% in Q2 2024.
- Adjusted EBITDA Growth: 32% in Q2 2024.
- Free Cash Flow Growth: 49% in Q2 2024.
- Adjusted Net Profit Growth: 31% year-over-year in Q2 2024.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deutsche Telekom AG (DTEGF, Financial) reported strong operational momentum with 4% organic service revenue growth and 6% organic EBITDA AL growth in the first half of 2024.
- T-Mobile raised its 2024 free cash flow guidance, reflecting positively on the group's overall financial outlook.
- The company paid out EUR 0.70 per dividend and bought back 43 million DT shares, contributing to a near 23-year high in share trading.
- Deutsche Telekom AG (DTEGF) achieved significant network expansion, passing 3.6 million additional European homes with fiber-to-the-home in the last 12 months.
- The company reported strong customer growth in both the US and Europe, with T-Mobile adding nearly as many postpaid customers as last year and raising their subscriber guidance for the year.
Negative Points
- Broadband net additions were slower than last year, indicating potential challenges in maintaining growth in this segment.
- The German EBITDA AL growth was only 1% due to a one-off payment from a wage agreement, which could impact profitability.
- The company faces potential headwinds from a 6% increase in salaries due to union agreements, which could affect cost structures in the fourth quarter.
- There are ongoing challenges with regulatory and subsidy processes in Germany, which could impact the speed and efficiency of network rollouts.
- The US fiber strategy involves significant long-term investments and partnerships, which may carry risks and uncertainties in execution and returns.
Q & A Highlights
Q: Tim, first of all, looking forward to having a DJ on our next call, so I think definitely a great idea. If I can start with my first question is on, I guess, a big picture strategic question ahead of the Capital Markets Day. You mentioned in your introduction the fact your shares are up close to 100% in total return terms in the last five years. So clearly, it's been a very impressive journey. When we look at the business, Europe has done extremely well, but the US has been the big value driver overall. And I guess I'm wondering how you think about the relative weight of importance of Europe and US as we look at the next five years, obviously without wanting to preempt too much around what you say at CMD. And I guess my thinking is, as you mentioned again in your introduction, you've done close to $11 billion of M&A between UScellular and fiber acquisitions in the last three, four months, so clearly very active in the US Just any sort of high-level thoughts on how you think about Europe and how that fits into that picture, too. And then the second one was a more operational question on Germany. On Germany, your KPIs they're very strong, but I'm trying to understand how would you think about your retail pricing strategy in Germany. In the last 6, 12 months, we've seen a lot of moves across the industry by operators trying to do more for more price increases or maybe trying to do CPI linked price increases. But if we look at what you've done in the last few quarters, you actually doubled data on mobile without a price hike and you've cut price on fiber to try and drive penetration of fiber. So clearly, your strategy is very different to your peers in terms of commercializing your business. So I'm just trying to understand how we should think about that. How do we think about your flywheel in terms of how you monetize your German retail business going forward? Thank you.
A: So Akhil, first question, not easy to answer that. Look, at the end of the day, for all the markets and by the way, in Europe, we are looking to all the 10 markets differently. We are looking for organic improvements but as well for unorganic moves there. So then we evaluate the opportunity and, let's say, look on the returns on whatever we have in mind. And then we select according to the financial capabilities the group has, which one we are prioritizing. Looking to the US market on fiber, we thought with the moves we recently announced, from a forward-looking perspective, these are the most attractive moves we can do within our group. There is not so much unorganic growth in Europe, especially under the current legislation and regulation, which we see when it comes to intramarket consolidation. And even the idea of expanding outside of the footprint is coming with high risks and the returns in the classical core business are more exciting in this regard. We are not saying it's Europe or US. It's the business opportunity. And looking forward for the next five years, I think we have to make sure that both legs we are standing on are having opportunities to create additional values. Remember, we talked in one of the previous calls about the next EUR50 billion to EUR70 billion market cap for Deutsche Telekom and where it could come from, this is the question. And I can tell you one thing, people, like a lot of investors, have underestimated the performance in Europe, which we have reached there with expanding our 5G and especially our fiber network there. So I think we are trying to balance it out. The size of the US will always be bigger than the size of our European entity. So overall, this business is bigger. It's 80% of the total already. So we are open for both markets for ideas. And at the end of the day, it is a strategic financial decision. It's always about operational performance and portfolio on a long-term view. I hope that we can give you a little bit more understanding about what we are aiming for on the Capital Markets Day. But it's not that we are weighting one or the other market here. If Europe is changing its regulatory setup and we are encouraged by a lot of discussions which are taking place in this early stage of building a new commission here, I think I still believe and hope that Europe will see a change within the next five years going forward. With regard to German operations, look, it's very consistent to what we have said in our strategy, what we're doing here. Our KPIs are strong, and yes, our customer growth has been very encouraging. The foundation for that one is always this outstanding 5G network. And the extension of that network for the rural areas, our performance compared to our competition has gotten better and better. And by the way, we just got another award, 14th award, consecutive award in a row for the best network from, I think, it was the CHIP Magazine this time. So now what's the way forward on German mobile? The issue here is we have said that it cannot be that the market is split in two pieces. There is this classical kind of branded market with the big players. And there is this 50% unbranded market, where a lot of, let's say, alternative players with MVNOs are playing. And we are now trying to bring into our customer base them all together. So we are looking to get more branded SIM into our businesses. And that is why we are attracting as well the lower end of the market. We want to have the children, we want to have the low users of mobile phones in the Deutsche Telekom footprint as well. We want to have the whole family and not only pieces of the family. We do not want to have only, let's say, the top-end market. We want to be inclusive with our brand. And that is why we have extended our family cards. And that is why we extended as well one of the weak spots in our tariff portfolio, which is the -- which are the load tariffs which is this [EUR 25] for 5 gig offer, which we recently announced. On top of that, we introduced the MagentaEINS Advantage. We call it the Mobile Happy Hour. And you have to think of it as a kind of substitute like the previous stream on product, which was not allowed anymore. And with this, we want to deepen even the engagement, the digital engagement of our customers in mobile use here. So I think overall, we look to do things and to change things in a nondisruptive way by creating value for customers by a better network, by an attractive portfolio, by simplicity of family plans. And we do not want to dilute our service revenues. The opposite is the case. We want to engross our ARPU, and I see us, and if you look to our service revenues on a good way of that one. And by the way, we do want to do things our competition cannot copy-paste easily. And I think with the family plans, for instance, we gained some advantage already.
Q: A couple of questions on my side. The first will be on US fiber. We already had the con call from local management and they rule out any sizable deals of
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
