- Net revenue up 3.6 percent in organic terms in the third quarter to 28.5 billion euros; service revenues up 3.8 percent in organic terms to 24.1 billion euros
- Adjusted EBITDA AL up 6.4 percent year-on-year in organic terms to 11.1 billion euros
- Free cash flow AL grows by 32.0 percent to 6.2 billion euros
- Adjusted net profit up 3.0 percent to 2.3 billion euros
- Target leverage ratio achieved
- Guidance for adjusted EBITDA AL of the Group raised to around 43.0 billion euros for 2024
- Germany: Fiber use continues to grow
- United States: Further industry-leading growth in customer numbers
- Europe: Growth trajectory continues
- Systems Solutions: Sustained uptrend
Delivered as promised. Deutsche Telekom remained on course for success in the third quarter of 2024, in line with the plans recently outlined by the company at its Capital Markets Day in mid-October. Revenue increased in the period from July to September by 3.6 percent year-on-year in organic terms – i.e., excluding exchange rate fluctuations and changes in the composition of the Group – to 28.5 billion euros. Service revenues grew by 3.8 percent in organic terms to 24.1 billion euros. Adjusted EBITDA AL increased in the reporting period by 6.4 percent in organic terms to 11.1 billion euros. The growth rates for reported figures, i.e., not in organic terms, were slightly lower due solely to the arithmetical effect of exchange rate fluctuations: Revenue was up by 3.4 percent, service revenue by 3.7 percent, and adjusted EBITDA AL by 5.8 percent.
“The growth momentum continues unabated on both sides of the Atlantic,” said Christian Illek, CFO of Deutsche Telekom. “At the same time, we have successfully brought our leverage ratio back down to below our target value.”
The ratio of net debt (including lease liabilities) to adjusted EBITDA was 2.64 at the end of September, down from 2.94 one year earlier and back below the target value of 2.75. Stronger free cash flow AL, which grew year-on-year by 28.3 percent in the first nine months of 2024, contributed to this development. At 6.2 billion euros, free cash flow AL was up 32.0 percent year-on-year in the third quarter of 2024. In October, the rating agency Moody’s raised the long-term rating outlook of Deutsche Telekom to positive. The Deutsche Telekom share has now reached a 23-year high.
Reported net profit came in at 3.0 billion euros, up by more than 50 percent against the prior-year comparative. On an adjusted basis, net profit increased by 3.0 percent to 2.3 billion euros. The difference between these two figures is mainly due to net positive special factors from the measurement of several financial investments prompted by a reduction in discount rates following changes in the capital market environment. Adjusted earnings per share reached 1.43 euros after nine months, up by 16 percent as against the same period in 2023, putting this figure on track to reach the full-year target of over 1.75 euros.
In view of the positive development of business both at T-Mobile US and in business outside of the United States, the Group has raised its full-year guidance. Deutsche Telekom now expects to report adjusted EBITDA AL of around 43.0 billion euros, up from the previous guidance of around 42.9 billion euros. This relates to T-Mobile US raising the mid-point of its guidance range by 50 million U.S. dollars, and to an expected increase in earnings of now 0.1 billion euros contributed by business outside of the United States. The guidance for free cash flow AL remains unchanged at around 19.0 billion euros.
Deutsche Telekom previously announced its plans for shareholder remuneration at its Capital Markets Day. The company is set to pay out a record dividend of 90 eurocents per share in the coming year for the current financial year, subject to approval by the relevant bodies. Deutsche Telekom is also planning share buy-backs for 2025 with a volume of up to 2 billion euros.
Germany: Fiber use continues to grow sharply
Use of fiber is gathering pace. In the third quarter, a record 131,000 customers opted for a fiber plan from Deutsche Telekom. This compares to 77,000 FTTH lines activated in the prior-year period. Broadband net adds totaled 38,000. 49 percent of retail broadband customers now use a rate plan offering speeds of up to 100 MBit/s and more. The number of new TV customers increased significantly to 76,000, up from 51,000 TV net adds in the prior-year period.
Deutsche Telekom once again posted a strong quarter on its domestic market with 327,000 branded mobile contract net adds. Mobile service revenues grew by 2.1 percent year-on-year between July and September.
Revenue in the Germany operating segment grew by 2.5 percent in the third quarter to 6.5 billion euros. Adjusted EBITDA AL rose by 3.5 percent to 2.7 billion euros, resulting in a margin of 42.2 percent.
United States: Further industry-leading growth
T-Mobile US once again pulled ahead of its competitors with strong growth in key customer metrics in the third quarter of 2024. The postpaid customer base grew by 1.6 million, while the number of postpaid phone customers was up by 865,000. The churn rate in the key postpaid phone customer segment dropped to 0.86 percent, reaching a record low for a third quarter.
Service revenues increased by 5.2 percent in the quarter just ended to 16.7 billion U.S. dollars. At the same time, adjusted EBITDA AL rose 7.8 percent year-on-year to 8.0 billion euros. With these growth rates, the company is once again leading the industry.
Europe: Growth trajectory continues
Revenue and earnings continued to grow in the national companies in Europe in the third quarter. Adjusted EBITDA AL increased by 8.0 percent in organic terms to 1.2 billion euros. Revenue grew in the same period by 4.2 percent in organic terms compared with the prior-year period to 3.1 billion euros. The key service revenues increased by 4.7 percent.
The mobile contract customer base grew by 176,000 in the third quarter to 27.8 million, while the number of users of fixed-mobile convergence products passed the 8 million mark for the first time on the back of 143,000 FMC net adds in the same three months. The number of broadband customers increased by 47,000, and the number of TV customers by 41,000. Greece was the biggest contributor with 24,000 TV net adds, thanks in part to an attractive portfolio of sports broadcasting rights.
Systems Solutions: Sustained uptrend
T-Systems underpinned the solid uptrend of recent times with consistently positive financial performance indicators. In the period July to September, the company recorded an increase in order entry of 18.0 percent year-on-year in organic terms to 870 million euros. Revenue grew in the same period by 3.3 percent in organic terms to 991 million euros.
Adjusted EBITDA AL increased by 17.0 percent in organic terms to 102 million euros. T-Systems contributed to the increase in value of the Group with a positive cash contribution of 28 million euros, up from 18 million euros in the third quarter of the previous year.
The Deutsche Telekom Group at a glance
Comments on the table
New partners for the cell tower business
On July 13, 2022, Deutsche Telekom agreed to sell a 51.0 percent stake in the tower business companies in Germany and Austria (GD Towers) to DigitalBridge and Brookfield. The transaction was consummated on February 1, 2023. From this date onward, GD Towers is no longer included in the Group’s figures as a fully consolidated entity.
The sale resulted in a gain on deconsolidation, recognized in reported net profit, in the first quarter of 2023 of 12.9 billion euros. This extraordinary income has been eliminated from the adjusted net profit for the first nine months of 2023 and full-year 2023.
The stake in the cell tower business retained by Deutsche Telekom of 49.0 percent has been recognized using the equity method since February 1, 2023.
The GD tower company DFMG Deutsche Funkturm GmbH continues to build and operate passive infrastructure for Deutsche Telekom’s mobile network. This primarily comprises the concrete or steel mast, its foundation, the power connection, cooling, and climate control. It does not include the active network technology (primarily the antennas) or the fiber-optic circuits. These remain the property of Deutsche Telekom.
a) Cash outflows for investments in property, plant, and equipment, and intangible assets (excluding goodwill).
b) At reporting date.
Operating segments: Development of operations
Operating segments: Development of customer numbers in the third quarter of 2024
Comments on the table
a. Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH/B).
Operating segments: Development of customer numbers in year-on-year comparison
Comments on the table
a. Sum of all FTTx access lines (e.g., FTTC/VDSL, vectoring, and FTTH/B).
This media information contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. They are generally identified by the words “expect,” “anticipate,” “believe,” “intend,” “estimate,” “aim,” “goal,” “plan,” “will,” “seek,” “outlook,” or similar expressions and include generally any information that relates to expectations or targets for revenue, adjusted EBITDA AL, or other performance measures. Forward-looking statements are based on current plans, estimates, and projections, and 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. They include, for instance, the progress of Deutsche Telekom’s staff-related restructuring measures and the impact of other significant strategic or business initiatives, including acquisitions, dispositions, and business combinations. In addition, movements in exchange rates and interest rates, regulatory rulings, stronger than expected competition, technological change, litigation and regulatory developments, among other factors, may have a material adverse effect on costs and revenue development. 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 achieved. Without prejudice to existing obligations under capital market law, Deutsche Telekom does not assume any obligation to update forward-looking statements to account for new information or future events or anything else. In addition to figures prepared in accordance with IFRS, Deutsche Telekom presents alternative performance measures, e.g., EBITDA, EBITDA AL, adjusted EBITDA, adjusted EBITDA AL, adjusted EBITDA margin AL, core EBITDA, adjusted EBIT, EBIT margin, adjusted net profit/loss, adjusted earnings per share, free cash flow, free cash flow AL, gross debt, and net debt. These measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Alternative performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways.
About Deutsche Telekom: Deutsche Telekom at a glance
