Earnings call transcript: Deutsche Telekom Q2 2025 sees slight revenue miss, stock dips

Deutsche Telekom, a prominent player in the Diversified Telecommunication Services industry according to InvestingPro, reported its financial results for the second quarter of 2025, revealing a net revenue of €28.7 billion, which fell slightly short of the €28.76 billion forecast. The earnings announcement led to a 3.08% decline in the company’s stock price, closing at €31.16. Despite the revenue miss, the company showed strength in other areas, such as a 1.7% increase in adjusted EBITDA and robust performance from T-Mobile US. The company’s strong financial health is reflected in its perfect Piotroski Score of 9, indicating excellent operational efficiency and financial stability.

Key Takeaways

• Deutsche Telekom’s Q2 2025 revenue slightly missed expectations.
• Stock price decreased by 3.08% following the earnings report.
• T-Mobile US service revenue increased by 6.1% YoY.
• Adjusted EBITDA rose by 1.7% YoY, indicating operational efficiency.
• The company launched several innovative products, including an AI smartphone.

Company Performance

Deutsche Telekom’s overall performance in Q2 2025 demonstrated resilience amid competitive pressures in the telecommunications industry. The company managed to grow its adjusted EBITDA by 1.7% year-over-year, reaching €11 billion. T-Mobile US continued to be a strong performer, with a notable 6.1% increase in service revenue, contributing significantly to the group’s financial health.

Financial Highlights

• Revenue: €28.7 billion (+1% YoY)
• Adjusted EBITDA: €11 billion (+1.7% YoY)
• Adjusted net profit: €2.5 billion (+1.1% YoY)
• Net debt: Decreased to €2.7 billion
• Leverage ratio: Improved from 2.31 to 2.11

Market Reaction

Deutsche Telekom’s stock price fell by 3.08% following the earnings release, closing at €31.16. This decline reflects investor concerns over the slight revenue miss and ongoing competitive challenges in the market. The stock remains within its 52-week range but is trending towards the lower end, indicating cautious investor sentiment.

Outlook & Guidance

Looking ahead, Deutsche Telekom expects its EBITDA to exceed €45 billion in 2025, with free cash flow surpassing €20 billion. The company plans to double its annual fiber buildout to 1 million lines by 2027, underscoring its commitment to enhancing digital infrastructure and innovation. According to InvestingPro data, analysts maintain a positive outlook with a consensus recommendation of 2.06 (Buy), with price targets ranging from €125 to €158. The company’s low beta of 0.42 suggests relatively stable stock performance compared to the broader market.

For deeper insights into Deutsche Telekom’s valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, explore the full Pro Research Report available on InvestingPro.

Executive Commentary

CEO Tim emphasized the company’s focus on value, stating, "We need to focus on value, all of us." He also highlighted the importance of fiber infrastructure in Germany, asserting, "Germany needs a broadband infrastructure based on fiber." These comments reflect Deutsche Telekom’s strategic priorities in navigating market challenges.

Risks and Challenges

• Slow growth in the German broadband market poses a challenge for revenue expansion.
• Intense competition in the telecommunications sector could pressure margins.
• High costs associated with FTTH buildout in Germany compared to other countries like Spain.
• Subdued investment climate for alternative networks may impact growth initiatives.

Q&A

During the Q&A session, analysts inquired about Deutsche Telekom’s AI Gigafactory plans in North Rhine-Westphalia and strategies to mitigate broadband losses in Germany. The company also addressed its hybrid network strategy and reiterated its commitment to diversity and corporate values, reflecting a comprehensive approach to addressing market challenges and opportunities.

Full transcript - Deutsche Telekom (DTE) Q2 2025:

Tim, CEO/Management Board Member, Deutsche Telekom: Members can supply with FTTH to increase by just 1,200,000 this year. For the previous year, VATM had expected an increase of around 2,000,000 households members can cover. As you can see, the intense competition in Germany is taking its toll, which is also reflected in our main competitors’ business figures. All competitors are currently under pressure. Hardly anyone are running back their cost of capital.

The expectation is that the industry will invest a lot of money though. With period and amortization period of twenty to thirty years, the circumstances for earning back the money invested are not good in this country. The market is losing value added overall and the profit pool is shrinking for all participants as the numbers from the previous quarters show. In light of this, and this may sound surprising, I take no satisfaction from the situation of our competitors. What can be done about this?

We need to focus on value, all of us. We need to increase willingness to buy and drive down the cost of the fiber build out in this country. Policymakers can support us in this after all. They are the ones who set the framework conditions. But we as an industry need to do our homework too.

After all, we are not building for just for the sake of it, but rather to safeguard Germany’s competitiveness as a business hub for future generations. And that is why we backed the Made for Germany initiative launched by German industry. Made for Germany sends exactly the right signal. Now more than ever, we need to stand united with other top companies and policymakers. Through investments and constant dialogue between the economy and makers, we together with the other companies pledging their support want to make a difference to Germany’s competitiveness as a business location.

The goal now is to translate solidarity and spirit of progress into specific measures. And this also holds true for the telecommunications industry. Deutsche Telekom is ready to play its part in this. And I hope that all other players in our industry in Germany will play their part too. However, they and we need to be given the opportunity to do this and scope for investment must be created.

It gives me no pleasure when our competitors shrink. With that, let’s move on to mobile communications where our infrastructure is also industry leading. In Germany, our mobile network has been recognized by Konnect and Umlaut as the best in a large European country. And we’re not stopping here. Deutsche Telekom is building an ultra capacity network.

This will double the capacity in our network. In the future, 85% of locations will offer a download capacity of 10 gigabits per second per cell. We can do this through frequencies and intelligent bundling through a faster fiber connection of cell sites and through the use of more efficient technologies. You can see on this slide here how our project is progressing. And this is not just a thing for the future, this project is already happening right now in our current infrastructure.

In The United States, Ookla has once again confirmed T Mobile US’s network is the best nationwide. Not only that, two weeks ago T Mobile US launched its T satellite service following successful better testing and we’re excited to see what the future will bring here. We are taking big leaps with the topics of digitalization and artificial intelligence as well. And we’re sticking steadfastly to our strategy. As we announced last year, we are massively driving our digital transformation with the help of AI.

Let me give you a few current examples and these are just a few examples of what we are really doing. Over 30% of German workforce already use our AI powered knowledge tool AskTEA. AI now creates about 10% of our software codes in the company. We use collaborative AI systems in our networks known as AgenTeq networks to prevent errors operation and ensure connection stability around the clock. And the Frac Magenta or Ask Magenta chat and voice service solved 1,600,000 customer requests in the first half of the year, equivalent of around 133,000 call center hours.

And our service agents now use these free capacities to focus on more complex customer inquiries. By 2027, Deutsche Telekom will save around EUR800 million outside of The U. S. Through artificial intelligence and the targeted use of data. And we’re on track to achieve that.

Our customer loyalty program Magenta Moments also keeps growing because loyalty matters at Deutsche Telekom. 4,800,000 customers already use Magenta Moments. But Deutsche Telekom has long been more than just connectivity. We consistently tap into new areas of growth. The launch of our AI smartphone for Europe is imminent.

I have it here in fact. Of course, I’ll leave it in the box, but at the next press conference, you’ll be able to already use it yourselves. And together with NVIDIA, we plan to to pioneers in this field quite clearly. And this happens even before the gigabit AI factory debate has been finished in this country. So we offer our customers a fast track to AI even before the AI Gigafactories for Europe are built.

Another example is the digital advertising business. The keyword here is ad tech. I already mentioned Vista and Bliss. And in Europe, we’ve established UTIC for this purpose, all of which requires a massive investment from us. Ladies and gentlemen, our investments transformations all have one thing in common, namely our desire to deliver an even better customer experience, and this is bearing fruit.

People are coming to us. They’re choosing Deutsche Telekom. In The U. S, the first half of the year was our best ever in terms of mobile customer net adds. More than 3,000,000 postpaid customers also chose T Mobile Outside of The U.

S, customer growth was at a solid level. In Germany and Europe, we won more than 790,000 contract customers with our mobile rate plans. In the fixed network, the number of broadband customers outside of The United States increased slightly. Customer additions in Europe amounted to around 105,000 overall. I am happy to sustained growth in our FTTH customer base.

In the first half of the year, we added more than 260,000 customers to our high speed fiber optic network in Germany. Double our annual build out rate to 1,000,000 lines by 2027. Given this target, we welcome the new digital ministry’s proposals to accelerate the fiber build out and to cut red tape and everyone in Germany. We want to improve here. In fact, we have to by ramping up our investments in regional and commercial customer loyalty measures, particularly in areas with parallel network infrastructures.

We also launched a hybrid broadband product last week that can offer stable speeds in the household of up to 500 megabits per second. Growth in the TV customer base slowed against the prior year period as a result of special factor in 2024, which was the Euro twenty twenty four Championships. In Germany and Europe, we recorded total net adds of around 74,000. That’s in addition to around 80,000 new over the top customers in Germany, so OTT, over the top. These are customers who want to watch TV from us regardless of their Internet provider.

Systems, business is very encouraging. Our system solutions business reports strong growth in order entry and revenue. We’ve done our homework over the past few years and as a result, we’ve reduced downtime, tapped into new market potential in the areas of healthcare and defense and significantly improved in terms of software expertise. In this way, we can better support our customers in terms of digitalization and the use of AI. And that is precisely the kind of differentiation that I talked about at the beginning of my talk and we are striving for that across all business areas.

Ladies and gentlemen, as I mentioned, T Mobile US has raised its guidance for customer growth and financial metrics. We are reflecting this today in our group guidance. We now expect to achieve EBITDA of more than €45,000,000,000 and free cash flow of more than €20,000,000,000 for the full year 2025. All of our other targets remain unchanged. Thank you for listening.

And I will now hand you over to Christian Elek.

Christian Elek, CFO, Deutsche Telekom: Yes. Thanks, Tim, and good morning from my part. After Tim focused on the main developments over the last quarter, I want to focus on the financials. First of look at the financial metrics and then talk about the development in the segments and the operating segments and look at some of the key financials in the second quarter like debt ratio, etcetera. Reported net revenue rose in the second quarter 1% to EUR 28,700,000,000.0 in these three months.

That’s growth of about EUR €277,000,000 And this includes reducing effect due to the weaker dollar. It’s $05 weaker than the previous quarter in that had reducing effect of EUR $944,000,000 from changes in the exchange rates. Reported service revenue grew by 1.2% to EUR 24,400,000,000.0. That’s an increase of EUR $296,000,000. The dollar played a role value of the dollar played a role here with a negative effect of €789,000,000 Reported adjusted EBITDA in the group rose by 1.7% to €11,000,000,000 that’s growth of $180,000,000 and exchange rates impacted this, but to a tune of EUR $369,000,000 once again.

This brings me to the development of the operating segments in the second quarter, which was already ported on the July 23 for T Mobile U. S. The strong customer growth is driven and the stellar performance also is driven by the accommodation we offer to our customers of the best network, the best value for money and the best customer experience. And in second quarter, postpaid net additions of $1,700,000 were achieved in the three month period. That’s a clear increase against the $1,300,000 net additions in the prior year period.

This exceeded our projections. And as you’ve heard, this has led to T Mobile raising the guidance for and also growth in postpaid net additions to between 6,100,000.0 and 6,400,000.0 Particularly encouraging is valuable postpaid phone customers’ net additions stood at 830,000 We have never achieved a figure like that. That’s an increase of $150,000 year on year. And that that translates in 150,000 new customers. And this despite a slight increase in churn, increased from 0.8 to 0.9%.

This was due to price adjustments made in April, which resulted in customer side contract optimizations. This was already planned, however. In five gs, high speed Internet, we call that that’s the broadband offering through the Internet, high speed Internet. 454,000 new customers opted for T Mobile’s five gs, with customer base growing to 7,300,000 by the 2025. This put net additions at over 400,000 for thirteen consecutive quarters.

And so you can see that this increase puts us on the right track to achieve our long term goal of 12,000,000 customers for this product by 2028. This brings me to the financial metrics. Based on U. S. GAAP and in local currency, you see the difference vis a vis the Europe.

Reported service revenue rose by 6.1% to USD 17,400,000,000.0. That’s growth of USD 1,000,000,000, marking the strongest increase in the industry for this key figure in The U. S. Adjusted core EBIT rose by 6.4% to $8,500,000,000 That’s also a growth of $514,000,000 year on year. And you can see the figures broken down on the chart.

The main drivers here are, first of all, the increase in the number of customers, 1,700,000 customers in the last quarter alone. Secondly, the increased profitability per account. The average monthly revenue per account increased by 5% year on year in the second quarter. And the average revenue per postpaid phone customers also rose by a good 3% to $50.62 This brings me to the trends in the business in Germany. Here, the broadband market is characterized by low market growth.

And we are seeing a lot fewer net adds in the market than in previous years. There’s strong competition also due to the promotional Vodafone. And this is reflected in the figures for the quarter. And alternative network operators have also grown. The number of broadband lines at telecom declined by 20,000 in the second quarter compared with an increase in the previous year.

So that’s where it rose 41,000 number of customers. In business, when consumers were focusing on an increase in value, and that’s why we’re very pleased to see retail’s consumer revenue per line increasing by 3.5% year on year. We see that customers with lines offering transmission speeds of 100 megabits or faster, this figure has risen by 700,000 compared to the 2024. Also, using an FTTH line here, we see an increase of 137,000 in the second quarter. That’s an increase a significant increase compared to the same period in the previous year, where the number of lines used in this portfolio increased by 44.

TV net adds with a line increased by 23,000. That sounds relatively limited compared to the previous year’s figure of 114,000. But we should note that we had broadcasting of the twenty twenty four UEFA European champions championships on Magenta TV in the previous year. Also, the rescission of the Nebenklassenpruvlieg. That’s the privilege for property owners to pass on cable TV and Internet services.

And also, in the first three months from April to June 2025, we also won around 40,000 OTT TV net adds. The mobile communications market in Germany is marked by pretty aggressive competition. And Deutsche Telekom continues to focus on building out its network and market leadership. And this is to be a driver with segmentation. Branded contact net adds increased by 185,000

This was below the level of the prior year quarter. And the reason for this was due to the fact that we lost two key customer accounts in this second And we were encouraged though by the development in the number of own branded customers here. Net additions in the second quarter rose around 80% year on year. And this proves the new mobile communications portfolio, NextMagenta four point zero, is being accepted and well received by customers. Despite the aggressive competition, we were able to keep contract customer churn steady at the low rate of prior year quarter of 0.8%.

Service revenues in Germany rose by 1.1% in organic terms in the 2025. Mobile service revenues increased by 2% year on year in organic terms. That means we are on track to meet our guidance of between 22.5%. In Germany, the fixed network business service revenues increased by 0.8% year on year in organic terms. Comparisons with the prior year period are difficult because of revenues being strongly affected in the second quarter by one off events in the second quarter.

Broadband revenues increased by 2.7% year on year and in the prior year. Segment total revenue in Germany declined by 1.3% year on year. This is due, first of all, to the temporary increase in revenue as a result of the European championship last year. Also, a ruling by the European Court of Justice regarding accounting rules and premature renewals of contracts had to be changed, and that had a negative effect on revenue as well. This brings us to reported adjusted EBITDA in the Germany segment, which increased 2% in the second quarter to €2,600,000,000 In organic terms, earnings also increased 2% or €51,000,000 Now let me switch to the Europe operating segment.

Here, we saw very robust growth in customer numbers and an improvement year on year. We won 2 109,000 mobile contract net adds, up from 180,000 in the prior year record. Also broadband net adds stood at 65,000. FMC net adds rose by 156,000, slightly up from the previous year. Furthermore, we recorded 15,000 TV net adds.

Reported revenue in Europe segment increased by 1.4% in the three month period to €3,100,000,000 That’s a growth of €43,000,000 Exchange rate effects had a slight net reducing effect of around 13,000,000 on revenue. And you see that in looking at it from an organic perspective too, where the increase in the segment revenue was 2.1%. But both in mobile service revenues, which increased by 2.7%, fixed network service revenues also rose 2.5. Reported adjusted EBIT in the Europe segment rose by 5.6% to €1,200,000,000 And in organic terms, earnings increased by 6.3% or €69,000,000 This indicates constant growth for thirty consecutive quarters in the Europe segment organically. And that puts the Europe segment on track to meet our guidance from the twenty twenty four Capital Markets Day, where we announced a target of growth in earnings of 4% to 5%.

This brings me to T Systems, which really turned in excellent results, almost 12% increase in order entry year on year to more than €1,000,000,000 This was mainly driven by cloud digital and road charging. We’re also seeing momentum in the public sector where we’re talking about IT and digitalization. We have we are out in front there and the development is accelerating. Reported EBITDA increased by 10.2% to EUR 96,000,000. That puts T Systems on track to achieve the target we set at the twenty twenty four Capital Markets Day of average earnings growth of over 5% per year.

Now let me turn to the group financials. First of all, our key free cash flow. Here we saw a decline in the 2025 year on year, where the figure was 6.7% or €352,000,000 I should remind you here that we had a very strong first quarter, including with free cash flow, and translates into a growth of 17.8%, almost 18% for the first half of ’twenty compared to the 2024. The effect of the dollar development was significant here. And we also see a seasonal impact on working capital.

But in sum total, as we’ve heard, our forecast has been increased to over 20,000,000 And with cash CapEx, that’s risen as well. That was planned. In the first quarter, we said that we didn’t spend as much as originally planned, and we will be picking up our CapEx expenditures. And that explains development of free cash flow in the second quarter. With regard to adjusted net profit for the group, we see an increase of 1.1% year on year to €2,500,000,000 That’s an increase of 27,000,000 The exchange rate of the dollar also had an impact here.

Also, the conclusion of the integration of Sprint helped us, however. And we saw at the same time a decline in adjusted EBIT of €115,000,000 despite the reducing effect of around four twenty eight million euros from the weaker dollar. Also, this was primarily due to the loss of positive nonrecurring items, like provisions recognized for the German civil servant health insurance fund. Otherwise, there was an increase in tax expense and also the share of net profit attributable to noncontrolling interest. Net debt had a very good development, and it decreased to €2,700,000,000 mostly driven through three effects.

First of all, free cash flow, which I mentioned of €4,900,000,000 that reduced the debt. Also, the exchange rate effects from the U. S. Dollar of €5,300,000,000 And on the whole, this led to a decrease in €5,300,000,000 And the sale of $3.45 also contributed to this development. Also payment of a dividend, which we paid out in April, plus the dividends distributed in The U.

S. To U. S. Minority shareholders also affected this. But it’s not surprisingly that also this stock buyback share buyback with T Mobile US, that accounted for around €2,300,000,000 And also, that’s per quarter.

Also, you’ve heard about the M and A that we’ve been doing, also buyback of shares by Deutsche Telekom of €500,000,000 This brings me to the debt ratio, the leverage ratio we call it. Without leasing, it went from 2.31 it declined after 2.31 a year ago to 2.11. And if we look at net debt, including leases to adjusted EBITDA, that was 2.51 at the end of the 2025, down from 2.78 the previous year. And we are ahead of the target set at the twenty twenty four Capital Markets Day of less than or equal to point seven five. So that’s not surprising.

We’re very pleased that the deals have contributed to this. And with that, I would turn the floor to Filip. Thank

Tim, CEO/Management Board Member, Deutsche Telekom: you, Christian. Now let’s continue with the Q and welcome to use the chat function to pose your question there. And I don’t have to read it out necessarily, but if you like, I can do that of course. Mrs. Kesebier, I can see you as the first speaker here.

Thank you. My question relates to the AI Gigafactory. Can you tell us when we can expect an update here? And I would also like to know where would you like to build this factory in Europe? And maybe you can also tell us something about diverting opinions on the previous consortium about that?

Well, we are very much interested in building this gigabit factory. As I said in my talk, we are now building this factory or actually we will start building it in the 2026 using NVIDIA chips. And such chips can already be used to test AI functionalities and that later on they can be used for the gigabit factory. Secondly, with the gigabit factory, we want to be part of the European tender. I think there are almost 100 applicants and we are one of them.

Our partnership very much focuses on the state of Northern Westphalia. So we considering a site in the state of Northern Westphalia and we are in talks with various parties including with RWE about possible sites where approval procedures have already been finalized for electricity and water, but a final decision has not yet been made. So we are working closely together with the state of North Rhine Westphalia here and with other stakeholders. That’s the current state of affairs for the factory, but of course things can still change. However, we are very much committed to that.

In addition, we’ve set up a partnership with Brookfields and NVIDIA. These are our big partners for the gigabit factory. I’m not aware of diverging opinions on a consortium. In fact, there weren’t even any discussions about that. We just put in a bid for this tender and we believe it’s good to have competition here.

Overall, we need more sovereignty and higher capacities. And in the media, I’ve heard about speculations about discrepancies and conflicts, but I never actually saw that myself and I haven’t been involved in any such difficult negotiations. Thank you. Let’s continue with the gentleman from Handelsblatt. Well, apparently, well, we can see you, but I gather from your reaction that you can’t hear us.

Well, we’ll get back to you. And in the meantime, let’s continue with Julian from Bloomberg. Good morning. We can hear you. Your question please.

Julian, Bloomberg Reporter, Bloomberg: Good morning. I have two questions for you. One of the key metrics, obviously, that investors are focused on this morning is particularly the broadband losses in Germany. How do you plan to counter those broadband losses? Should we expect any price decreases, for example, or do you maintain keeping the strategy of higher value customers?

I also wanted to ask about your T Mobile stake. How do you see that evolving? Should we expect any increases anytime soon? Thank you.

Management Representative, Deutsche Telekom: So let me start with the T Mobile case. As you know, we’ve started selling into the T Mobile shareholding starting from I think it was June 12, and we’re continuously selling into this. We’re happy with the shareholding right now. We will disproportionately sell into the share buyback, but at a lower degree relative to what T Mobile is buying back. So you should expect a slight increase in the shareholding, but only a slight increase.

I think this is very consistent with what we said early on. And let me start with the broadband net adds. I think we’re still pursuing a value strategy. And you heard about the shrinking profit pool from Tim in his previous presentation. And there are the three main things are: first, focusing on the MDUs and getting monetization in the MDUs the second one is we have selective retention measures.

Our churn has to be stabilized, and that will obviously help on the net add number. And the third one is we introduced regional pricing. So that we basically adjust to the regional pricing environment relative to have a German wide pricing. And I think from a product perspective, we introduced a new hybrid offering, which basically upgrades a fixed line with a mobile broadband access, and you get higher speeds. This is basically the toolkit which we’re applying right now.

Me add to

Management Representative, Deutsche Telekom: one sentence again here. Look, I’m not happy that our main competitors here in Germany are all shrinking. By the way, they’re not only shrinking from their customer numbers, they’re even shrinking from their service revenue numbers. So the consequence of losing service revenues, you have less EBITDA. And if you have less cash, you cannot invest into future technologies.

And Germany needs a broadband infrastructure based on fiber. So therefore, this whole development here in the German market is worrying. I’m not happy about that. Now the worst answer would be to enter into a price war because then you would destroy even more value in this market. What we have to do is to differentiate ourselves.

Magenta Ions, Magenta Tifau, combining mobile and fiber and converged offerings and even the superior service which we are bringing to the market, these are our main areas of focus right now. We are encouraged about the take up rates on FTTH. You have seen the numbers. This is good. So these are the areas on differentiating in this environment here.

Overall, I can tell you one of the problems of our industry is that, to give you one head number here, the build out of FTTH in Germany is 8x more expensive than, for instance, in Spain. This is due to build out obligations, which we have, the approval phases and all these kind of things. So earning money in this ecosystem of fiber in Germany is getting more and more difficult. And I think that is a challenge which you see with all the numbers in these industries, and that is something where we have to find answers going forward.

Julian, Bloomberg Reporter, Bloomberg: I’m curious about the alt net market then in Germany. I’m here based in The U. K, and right now, there’s this incredibly competitive market with more than 100 alternates. Would you like to see something more similar to that kind of very competitive market in Germany with a lot more investors coming in?

Management Representative, Deutsche Telekom: Look, what we’re seeing is a subdued investment climate in Germany. You see that some of the Altnets clearly articulated that they only honor the commitments they have given, but they’re not planning to basically expand the build out. You’ve seen the BATM numbers, which indicate a 1,200,000 increase in homes passed. So there’s definitely not an acceleration. So from this perspective, right now, we don’t see that there’s increased interest of altnets to basically accelerate the build out.

I think the focus is monetizing what they have and trying to connect as many customers as they have.

Tim, CEO/Management Board Member, Deutsche Telekom: Thank you, Julian. There is another question in the same context from the chat. That’s also to do with broadband in Germany. Question is, Breko are criticizing your new hybrid offer. They are saying that telecom just bought time and just continued to sell copper, hence delaying the fiber rollout.

And he says that the group is still trying to make the most of this outdated technology, which is copper, by combining it with five gs. So little wonder that the demand for fiber is low. Well, I had a hard time as the telecom spokesperson here to even read that out, but what is the reaction? Well, first of all, our claim is that we offer services nationwide using different technologies. And with vectoring, we can offer bandwidths of up to two fifty megabits, in fact even up to 500 megabits now.

And customers Germany and abroad, they don’t care about the technology they’re using. They only care about the bandwidth that they can use and the service quality and to what extent they can use that service at home. So I don’t like this debate in Germany, but that’s the way it is. But we will always do what we can to improve our service for our customers and that’s why we also have hybrid offers in place. I mean, what’s the problem for a customer in a rural area for instance using a hybrid router that gives them speeds of up to 500 megabits per second?

We do have the capacities in our mobile network. In fact, we have this excellent mobile network and that’s why we want to combine it with other options, making it possible for customers to use higher bandwidths. Secondly, why shouldn’t we offer unbreakable unbreakable options to the customers? If you have a connection which isn’t reliable, but you always have the mobile connection as a backup then especially as a business customer, you always have an excellent backup option. So to my mind, that’s not dumping.

That actually helps us to stand apart from our competitors because it means that we can offer more high quality lines to our customers while at the same time providing them with higher bandwidths. And we can do that much faster because it will still take years before all customers will have an FTTH line. So I think these are just competitors who criticizing us. But they could do the same. Yes, and the delay in the fiber rollout, that’s a bit of a stereotype that keeps on cropping up.

But we said we’ll take things step by step, first fiber to the curb, then fiber to the home. And yes, I think at some stage, we should put this debate to rest. Now let’s continue with the next question. Thank you. I have three questions in fact.

The first of which refers to your competition against Vodafone. Vodafone have started not differentiating between coaxial and optical fiber cables anymore. Do you think that this is one of the reasons for the downturn in the fixed network here because a lot of people don’t even understand what they’re buying from them anymore. Secondly, some people have expressed criticism of your methods to gain new customers. You are using the Rangers, for instance, who are trying to win over new customers for the fiber business.

And one company company said that they are not even willing to work with them. Would you agree that this may be a bit of an aggressive method to gain new customers? And the third question refers to business customers. You mentioned that you lost one big company. Did they actually go to Telefonica instead?

And do you think that there is a certain likelihood that business customers are more willing to switch to other providers now? Let me start with a broadband topic. There are three things. First of all, market growth is weaker this year than it used to be. So if you have fewer new customers in the market, then competition for the current broadband market becomes more intense.

That’s one thing. Secondly, in the past quarter, Vodafone also lost customers, 23,000 to be precise and that even though they did a lot of promotions. So what they announced in their quarterly call still remains to be seen. We need to wait and see whether Vodafone really focuses on value. We do.

And thirdly, Deutsche Telekom and competitors, of course, are losing customers because there’s been a change in strategy on the part of other stakeholders. And these are the three drivers for the broadband business in Germany. Let me also briefly comment on the business customers that you mentioned. We’re not going to talk about the customer we mentioned for reasons of confidentiality, but it was such a big customer that this actually led to a drop in the number of net adds in the second quarter. But we don’t think that this is actually a change of

But I think that we can achieve a 2.5% increase in mobile service revenues and that we’re on track to achieving that in line with our capital market goal. I also wanted to say something about the ranges that you mentioned. Company that is trying to gain new customers for us. I think it is very important not just for Deutsche Telekom, but also for other players to make sure that customers accept our fiber network and that they ultimately subscribe to it and buy these lines. I mean companies such as Vodafone and ourselves and others, when we build out the network then we inform the customers about the build out immediately, which means that we ring the doorbell and we talk to them, we tell them what needs to be done in order to install the line, etcetera.

And I don’t think that we are molesting customers in any sort of way. But then customers are free to say, I don’t like that and I’m not going to make a deal with someone showing up at my doorstep. I’d rather go to the tea to a telecom shop. That’s fine. But I look at it as a kind of service that we are offering to people to also consult them.

But if they don’t want that, then of course we accept it. But when it comes to any transactions at people’s homes directly, this must be subject to clear cut rules. And we always need to make sure that customers don’t feel that we are taking advantage of them. You need to have authorized partners who can prove who they are using a QR code that the customer can scan and then they can call up our service agents to figure out that this is really an agent commissioned by Deutsche Telekom. We have a code of conduct and if there are any breaches of this code of conduct, then we take relevant measures.

We want to absolutely ensure that our customers are safe and secure, but at the same time, we want to offer them the best possible service. Of course, there may individual cases where that doesn’t work entirely. Maybe the case you mentioned was something along these lines and then that certainly wasn’t what we intended. But when we go to see our customers at their homes, we really want to inform them about the fiber technology and how it works. And we want to improve awareness and raise acceptance because right now acceptance of the fiber network is too low.

That’s That’s the problem for the industry at all. We are building this infrastructure but it is not fully utilized.

Christian Elek, CFO, Deutsche Telekom: Yeah, just to add to what Tim said. There’s people who aren’t more mobile and there’s others who are. So this is just a help from service. And I wanted to also underscore the topic of code of conduct. There’s a whole package of measures here, and we’ll be glad to go into detail on that, and quality assurance measures, things like that, how it happens.

A lot’s been done. And also, we can talk about the individual cases in more detail that you mentioned here. We’ll be glad to do that, to do a deep dive with our partners from Ranger there. So if that question’s been answered, I’d like to go to Mr. Engelman and then the next one on the list.

Mr. Engelman. Yeah, I hear you. I hope you can hear me. Good morning.

Mr. Hudkutz, you mentioned mentioned the build out of fiber optic for multi tenant houses or multi family houses is not proceeding as hoped for. What would you like to see also the big associations for these kind of apartment buildings and agreements with them haven’t accelerated things as planned. What could you imagine could happen with regard to the cost borne by tenants, for example? Could that that help the situation?

Then another question, services rendered on-site by customers. Could you talk also about breakdown dividends? How much of the dividend do you pay in Europe comes from The U. S? That’s another question.

I’d be interested in that. Mr. Engmann, with regard to build out, I’d say that first of all, we’ve added 5,900,000.0 to the list of houses we want to provide with fiber optics. And we also have introduced a new service where we don’t put fiber below or in the facade so it doesn’t have

Management Representative, Deutsche Telekom: to be

Christian Elek, CFO, Deutsche Telekom: buried. And procedure where you can lay these cables and they’re visible too. This is an innovation that we’ve introduced in the market. So we’re doing a lot to reduce the cost and make it easier for people to get really fiber optics and make it more attractive to them. And also, the Federal Agency for Digital has presented a revision of the telecommunications act in Germany.

And this has initiated a whole procedure. And one of the issues there is build out of fiber in apartment buildings. And this is being done by one provider right now. And only one provider per building is allowed to do that. They’re obligated to provide open access to other providers.

And for the apartment building owners and the tenants, this would reduce the prices. The first provider connects the building to fiber optic. And then this infrastructure is available for alternative providers. And they can use that and And the apartment buildings could be reduced through this.

There’s supposed to be free options for tenants and owners to determine themselves independently of the existing coaxial coaxial infrastructure what provider they want to use. So there’s not to be any restrictions for consumers, in other words. And this is apparently going to be put on a secure footing by by the revised law. And that’s why we really welcome this initiative by the Federal Ministry of Digital Affairs. And we’re interested in working in a partnership like way with other telecommunications companies in Germany.

But that’s a precondition for this to happen, too. And also with associations for apartment buildings. But that would be one way to really quickly move forward with the fiber optic supply for people living in apartment buildings and not have to bury cable everywhere. Yeah, and your question on dividends. You could look at that two ways.

First of all, the payment of the dividend to DTAG, that includes all dividend payments basically. And you have to look at it from in terms of total free cash flow, 3,000,000,000 from The U. S, also $4,000,000,000 that we pay from DTAG and a a couple €100,000,000 from our companies in Croatia, Hungary, and Greece. So we’re talking about roughly €8,000,000,000 and we achieve about 20,000,000 in free cash flow. Or you can look at it another way and look at 4,400,000,000.0 payout by DTAG.

If you only assign that to us, then you add the free cash flow from The US on top of that. So 3,600,000,000.0 free cash flow in Europe minus the minority stake plus 52% is 16.4. And that puts you significantly above EUR 11,000,000,000. So that’s another way to look at it. It doesn’t matter which perspective you look at it from, though.

Okay then, with that, I’d like to slowly wrap things up and close the round of questions. We have two still on the list, though. Can you hear us? Yes. I can hear you.

Can you hear me? Yes. Please Please ask your question. I have two questions. First of all, the fiber optic build out which you would like to accelerate with a civil engineering company.

And in Kunigsvintur, there’s been criticism of all kinds of deficiencies and problems that make people have to wait to get fiber optics. And so if you want to accelerate things, how can you go about that? How can you do this? And then the other question relates to the diversity program. Here you said, given the growing American business, where’s the red line where you say, hey, we’re not going to proceed further with requirements that are imposed by the US government.

We’re gonna stick to our values. And do you wanna say, hey, these are our values, and going to reaffirm these values in the face of other intentions there? Koenigsventure is a beautiful town, and we want it to stay beautiful. And because of that, we have to look at each individual case with regard to build out. If it leads to quality problems for buildings or has a detrimental effect on buildings.

We don’t want that. And that’s why we’ve deliberately organizational measures. If we see any build out measures detracting from building quality, that we will make sure that together with our partners, we take countermeasures. So we are not building out less. Point 5,000,000 households will be added this year.

And unlike other competitors, we haven’t slowed down our build out, and we’re going full speed ahead here. And 130,000 new FTTH connections were added in the second quarter. Momentum, but it has to be done with the right precision too. And we are looking at new automation tools and planning tools so that we can impact and also keep the impact of building measures, build out measures, at a minimum, really. And that’s our claim.

At the end of the day, we don’t want to make customers unhappy because damage done to building infrastructure or neighborhoods. And you might have heard that in Koenigs Winter, you’re having a thirtieth anniversary right now, and we’re part of that. We have a very diverse culture here at telecom. And you’ve probably noticed there how we have respect for each individual and also people’s different views. And that throughout the entire telecom group, diversity has always made us stronger in all of our business segments.

And we’ve always attached value to diversity because it helps our performance and to achieve our targets. And that’s why here we’re a multinational, multi ethnic, multi language board of management, too, working here in Bonn. And that shows how we really take these values and diversity seriously. We have very clear values for our company group, and we reaffirm these. They stand at the forefront of our internal communication.

Nothing has changed there, and nothing will change. And given this, I don’t see any real issue of us caving in to measures taken by other governments. In all of our companies, including in The US, we haven’t changed our values. We have certain programs and policies. And these are accepted by the US government, and they’re in conformity with laws there.

And that goes for other countries as well. If other countries change their laws and regulations, that doesn’t mean we can’t stick to our values. Yeah, Kunigsvinter is a build out area for fiber optic. And we’ll provide you some separate detailed information about the build out of fiber optic in Kunig Zwitter. And with that, I have an eye on the clock because we have another event we have to go to, and I would ask for the next question.

Tim, CEO/Management Board Member, Deutsche Telekom: Morning. I hope you can hear me. Yes, we can. Two things. First, quite a simple thing.

You sold frequencies in The U. S, but frequencies are a core asset, aren’t they? So why would you sell them in the first place? And secondly, it looks as if in Germany everybody wants more gigabit for ever less money. Where will all this lead to?

After all, cost of rolling out the network are also exploding. How are you going to deal with this? Let me start with the last question. You’re right, Mr. Gajek.

Competition for capacities is very fierce right now. In fact, we have overcapacities in the market and we’ll have yet a new competitor as well and I’ve commented on that before. Nobody really needs that in this country. It will only mean that consumer prices will be even lower, but then we won’t have enough money infrastructure rollout because you can only spend every euro just once as my mother always said. So yes, in the current environment, all companies are trying to make

I don’t know to what extent that will help them to cover the costs of their companies. All I can tell you is our strategy is to have the best service, the best infrastructure in the market. And yes, we offer premium prices as well compared to our competitors. But then our customers, they acknowledge it because it comes with the best quality. And therefore, we won’t be involved in the price battles that we are seeing in Germany right now.

Yet, we are concerned about it. And there are some companies out there that always talk about their value strategies supposedly without then really focusing on value after all. That’s not a good thing. But we can prove that we are pursuing a value oriented differentiation strategy. As far as spectrum is concerned, well, when rolling out the network in The U.

S, we are mostly using the 600 megahertz spectrum there, which is the kind of load network that is the most important thing. And then you have the two gigahertz network for instance which provides the backbone for the five gs network which made us the network leader there. And the spectrum we are selling now is outside of these bandwidths. Incidentally, we just sold 3.45 GHz spectrum for the price of $2,000,000,000 but at the same time, we also got 600 MHz spectrum in return for it. So that will reinforce our backbone there.

It will mean that we have less complexity in our infrastructure which means that we can offer even higher bandwidths. In The U. S, you can trade with spectrum because you actually own it, you don’t just rent it. And when selling spectrum, you usually use that to optimize things. It’s a bit like a trade off.

You are getting better network quality in return for that sale of spectrum. All right. So Mr. Buchen will now ask the last question. I hope you can hear me.

Yes, we can. Thank you for all your information on the FTTH rollout in houses. And here’s a question that I hope you won’t find provocative. Dear Mr. Hodges, why do you allow that some Deutsche Telekom employees are not actually telling the truth when it comes to delays of the fiber rollout in MDU homes.

For instance, sometimes they say that they were still waiting for approvals or that the advisory board said that they don’t want want the network to be rolled out or that other residents in the house don’t want it, all of which was wrong. And then applications are not even processed at all, even though all the approvals have been given, all the relevant signatures have been provided and everybody wants it. And I’m not just talking about individual cases here. We’ve also seen cases where we were given fake news, fake information and I had a hard time figuring this out by now. We have 100% connectivity with three providers.

So, if you really want to improve the take up rates at telecom, you really need to make sure that your employees are not providing false information. Why would you allow that in the first place? Well, first of all, this would not be in my vested interest, right? Obviously, I can’t speak on behalf of every individual who’s out there on behalf of Deutsche Telekom. And I look at that as constructive feedback, which encourages me to look into it of course.

Can I ask that you send us more detailed information about these individual cases so that we can use that to figure out what happened? Second of all, why should we pursue such a strategy as a company? After all, our strategy is to roll out the fiber network as quickly as possible. After all, we’re investing billions and we want to monetize that. And if we can’t generate relevant revenues then our factories will remain empty, will end up empty and that’s why we need to convince customers to use that network.

And that’s what we refer to as homes connected. This is the number we want to drive up. That’s our goal. And why would we want to damage the relations we have with janitors, housekeepers which are currently based on trust? This would not be in line with our company and we don’t want to provoke anyone.

At the same time, I can’t rule out that there may be errors in the company, errors may occur and I apologize for them and I would ask that you send us the information so that I can look into these individual cases specifically. Yes, please send us some information. You do have the relevant e mail addresses that you can use for that. We are now going to wrap our call here. Thank you very much for joining us.

And as Tim already mentioned, this is our AI phone. In the first quarter, this was presented at the Mobile World Congress for the first time and on the August 14, we will be proud to present it to you at 9AM. You’re cordially invited to either come to Bonn or to join us online for a video conference. And then you will will be able to witness the debut of this AI phone and you can also test it if you’re on-site. So thanks a lot for joining us here.

I wish you all a pleasant day and we’re saying hello from Bonn. Thank you. Goodbye.

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