T-Home and T-Mobile in Germany are to be merged to create a single company in order to increase their competitiveness. Deutsche Telekom has therefore invited its shareholders to an extraordinary shareholders' meeting in Hanover on November 19 to ask for their approval for the restructuring of its business in Germany.
"Now is the right time to merge our mobile and fixed-network business. Two healthy, competitive business areas will become even stronger by joining forces," said Chairman of the Board of Management René Obermann. This is the Group's response to the challenges facing the industry. This will put Deutsche Telekom in a better position to offer integrated solutions and services for fixed network and mobile communications from a single source. The Group is also continuing to focus on efficient planning and the simplification of systems and wholesale products.
Deutsche Telekom has been working with a more regionally and functionally oriented focus with its new management structure since July of this year. The aim of the restructuring is to bring together the Group's domestic fixed- network business and its domestic mobile business within a new Germany company. There is an enormous potential, said Mr. Obermann. On the one hand, customers with fixed-network and mobile contracts with Deutsche Telekom are considerably more loyal. On the other hand, he said, "just one in five of our 29 million customer households currently has a fixed-network and a mobile contract with Deutsche Telekom. If we were to persuade just one percent of the remaining customers to sign up for a second contract, our revenue could increase by up to EUR 100 million per year."
The planned merger will make Deutsche Telekom more competitive in its domestic business compared to other globally structured telecommunications companies that offer integrated fixed-network and mobile solutions. Within the Deutsche Telekom Group the Hungarian company Magyar Telekom, for example, is already very successful as an integrated provider.
All restructuring steps have been drawn up in agreement with the employees' representatives to make sure that they are implemented in a spirit of partnership. "This step is all about customers," Obermann emphasized. The goals of the new Germany company were to offer customers improved services, to generate competitive advantages, and to increase the ability to innovate. Overall, the company expects the spin-off to generate a medium-term boost up to earnings of EUR 0.6 billion.
This press release contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. These also include statements on market potential, statements on finance guidance, as well as on the dividend outlook. They are generally identified by the terms "expect," "anticipate," "believe," "intend," "estimate," "aim for," "goal," "plan," "will," "strive for," "outlook," or similar expressions and often include information that relates to net revenue expectations or targets for adjusted EBITDA, profit or loss, earnings performance, and other indicators, as well as personnel-related measures and workforce adjustments. Forward-looking statements are based on current plans, estimates, and projections. They should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom's control, including those described in the sections "Forward-Looking Statements" and "Risk Factors" of the Company's Form 20-F annual report filed with the U.S. Securities and Exchange Commission. Among the relevant factors are the progress of Deutsche Telekom's workforce reduction initiative, the restructuring of operating activities in Germany, and the impact of other significant strategic or business initiatives, including acquisitions, dispositions, business combinations, and cost reduction measures. In addition, regulatory decisions, stronger-than-expected competition, technological change, litigation and regulatory developments, among other factors, may have a material adverse effect on costs and revenue development. Furthermore, changes in the economic and business environments – for example, the current economic slump – in markets where we, our subsidiaries and affiliates operate, the enduring instability and volatility on the global financial markets, as well as exchange rate and interest rate fluctuations can also adversely affect our business development and the availability of capital at favorable terms. If these or other risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, Deutsche Telekom's actual results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its expectations or targets will be met. Deutsche Telekom does not assume any obligation to update forward-looking statements to take new information or future events into account or otherwise. Deutsche Telekom does not reconcile its adjusted EBITDA guidance to a GAAP measure because it would require unreasonable effort to do so. As a rule, Deutsche Telekom does not predict the net effect of future special factors due to their uncertainty. Special factors and interest, taxes, depreciation and amortization (including impairment losses) can have a significant effect on Deutsche Telekom's results.
In addition to figures prepared in accordance with IFRS, Deutsche Telekom presents non-GAAP financial performance measures, including EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted EBT, adjusted net profit, free cash flow, gross debt, and net debt. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Non-GAAP financial performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways. For further information relevant to the interpretation of these terms, please refer to the chapter "Reconciliation of pro forma figures" posted on Deutsche Telekom's website (www.telekom.com) under the link "Investor Relations."