Friday, February 26, 2021
Sales sound barrier broken
Telekom sees itself in the Champions League
For Telekom, the Corona year is not a year of crisis – on the contrary. Because business in the USA is booming in the wake of the takeover of a competitor, the group has exceeded the 100 billion euro annual turnover mark for the first time in its history. CEO Höttges rejoices.
Deutsche Telekom experienced the best year in its company's history during the Corona crisis. Boosted by the merger of the US subsidiary T-Mobile US with the smaller competitor Sprint, the group turnover rose by a quarter to 101 billion euros in 2020 and was thus in the three-digit range for the first time. "We are now in the Champions League," said Telekom boss Tim Höttges.
"We look to the future with confidence and optimism," said Höttges. The Bonn-based group plans to grow slightly in the current year as well and increase the adjusted operating result excluding leasing expenses to 37 billion euros. In 2020, the result jumped 41.6 percent to 35 billion euros thanks to the workhorse T-Mobile US. Adjusted net income increased by 15.5 percent to 5.7 billion euros.
"Attack on the Duopoly"
For the USA, where the integration of Sprint is progressing rapidly, Höttges has long since identified the next target: "The attack on the duopoly of AT&T and Verizon with the long-term goal of becoming number one." Since the merger of Sprint and T-Mobile US, there are only three players on the other side of the Atlantic. Höttges considers takeovers and mergers to be inevitable in Europe too.
"The industry suffers from indebtedness. We have to invest more with lower sales per customer," he justified his stance. Therefore synergies have to be sought. A European consolidation is an "economic necessity". Höttges did not want to be more specific: "We talk about transactions when we have them." Telekom is already negotiating in Poland and the Czech Republic, where the company has not yet had access to a fiber optic network. "We are currently examining how we can get access to infrastructure in these countries," said Höttges. Telekom is open to partnerships.
The accelerated digitization and the costly 5G construction has also brought movement into the market with radio masts. At the end of January, Deutsche Telekom and the Spanish radio mast operator Cellnex announced that they would be merging their radio tower business in the Netherlands. How the Bonn-based company will deal with its own radio tower business, which now has 35,700 locations, is still open, according to CFO Christian Illek. Partnerships as well as an IPO are possible. Competitor Vodafone will bring its radio mast subsidiary Vantage Towers to the Frankfurt stock exchange before the end of March.
Large customers hold the money together
As in 2020, Telekom expects the Corona crisis to have a negative impact in the form of lower roaming income from idle travel and on the T-Systems system business in the amount of around 200 million euros. Business with major customers remains a problem child. They did not want to invest on a large scale during the crisis, which brought T-Systems to a minus in the adjusted operating result of six percent to 235 million euros. The realignment of the telecommunications division, which began in 2018 and which is accompanied by the shedding of thousands of jobs, is therefore dragging on.
In the current year, Telekom, which now supplies 241.8 million people worldwide with mobile communications, wants to spend more money in order to expand the networks in Germany, Europe and the USA and to convert them to the new 5G mobile communications standard. After almost 17 billion euros last year, around 18.4 billion euros are now being invested – among other things, 1.2 million households are to be equipped with a fiber optic connection.
In view of the high expenditure, the shareholders will have to be content with a dividend of 60 cents per share, as announced in November. A large part of the distribution goes to the federal government, which remains the largest single shareholder and holds almost 32 percent.
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