Deutsche Telekom invests almost EUR 30 billion over three years in the future of telecommunications

• EUR 6 billion to be invested in broadband roll-out in Germany using optical fiber (FTTC) and vectoring
• Innovative hybrid box combines the strengths of LTE and vectoring
• USD 4 billion for network modernization in the United States
• T-Mobile USA has entered into an agreement with Apple to bring products to market together next year
• Dividend for 2012 confirmed, attractive dividend of EUR 0.50 planned for 2013 and 2014
• Forecast for 2013 (including MetroPCS): free cash flow of around EUR 5 billion, adjusted EBITDA of around EUR 18.4 billion
• Group targets revenue growth from 2014 and free cash flow of around EUR 6 billion for 2015

The demand for broadband will continue to grow significantly both in mobile communications and in the fixed network. Deutsche Telekom is therefore substantially stepping up investments in broadband networks and products over the coming three years in order to improve its competitive position in the long term. Group capex including MetroPCS is to grow to around EUR 9 to 10 billion, bringing the total up to almost EUR 30 billion. The focus is on Germany, where activities will center around building out the LTE network as well as rolling out optical fiber and vectoring technology in the fixed network. On top of that, a hybrid solution is planned for launch that combines LTE and vectoring, thereby increasing bandwidths. In the U.S., the roll-out of the national LTE network is on the agenda. In addition, T-Mobile USA has entered into an agreement with Apple to bring products to market together next year.

At its Capital Markets Day in Bonn, Deutsche Telekom also announced its overall planning which factors in this period of higher investments, and a free cash flow guidance for 2013 of around EUR 5 billion from which a dividend of 50 euro cents is to be paid out both in 2013 and in the following year. Free cash flow of around EUR 6 billion is targeted for 2015. Deutsche Telekom forecasts adjusted EBITDA of around EUR 17.4 billion for 2013. Once the MetroPCS deal is closed in the first half of 2013 as planned, this figure - on a pro-forma basis assuming the inclusion of MetroPCS from the beginning of the year - will increase to EUR 18.4 billion. The Group's net revenue and adjusted EBITDA are scheduled to grow again from 2014. The Board of Management has approved the corresponding planning and passed it on to the Supervisory Board for resolution along with a recommendation to that effect from the Finance and Audit Committees.

"Hesitation now means playing catch-up later. We are investing in the future - with resolve and a clear strategy," said René Obermann, Chairman of the Board of Management of Deutsche Telekom. "The investment plans we have presented today will lay the foundation for future growth. And it is the people in Germany in particular who will benefit more than ever from the modern infrastructure."

"These investment plans will ensure Deutsche Telekom remains absolutely sound and reliable over the long term," added CFO Timotheus Höttges. "We are going against the flow with our high investments in these times of economic challenges - because we have worked hard to establish sound balance sheet ratios and now have the necessary leeway. Our dividend planning offers our investors both an attractive return and planning reliability."

With clear statements regarding targeted financial ratios - net debt to adjusted EBITDA is to stay between 2 and 2.5, and a liquidity reserve that at a minimum is able to cover all maturities of the next 24 months - the Group intends to keep its A-/BBB rating and safeguard unrestricted access to the capital market. Along with a two-year dividend proposal for 2013 and 2014, looking ahead beyond the period of increased investments, the shareholder remuneration policy will be considered again from 2015. The plan is to give shareholders the choice of a dividend in kind or a cash dividend. This gives investors the opportunity to leave funds in the company, to improve financial ratios further and to benefit even more from the success of their investment in the long term. "We are pioneers of this innovative solution in Germany," said Chief Financial Officer Timotheus Höttges. Both the cash dividend and the share-based dividend in kind is tax-free for investors resident in Germany. All statements relating to dividends are subject to resolutions by the relevant boards and committees as well as the shareholders' meeting.

The finance strategy continues to focus on absolute transparency and reliability; a strategy that, in the period since 2010, has already generated a total return (dividend plus share price performance) for investors of 13.5 percent, clearly outperforming other former state-owned telecommunications industry monopolists across Europe. It contributes to the Group strategy of transforming the company from a "telco" to a "telco plus". Options for changes to the portfolio are also examined as part of the finance strategy, in particular the possibility of Everything Everywhere going public, as well as the strategic evaluation of the Scout group.

High-speed Internet access on a scale never seen before - this is the goal of Deutsche Telekom for its domestic market. The key aspects are:

• Acceleration of the LTE build-out in order to have 85 percent of the population covered by 2016 with data transmission rates of up to 150 Mbit/s.
• Build-out of the optical fiber network (FTTC) to cover around 65 percent of the population within the same time frame, thereby enabling more coverage than the cable network operators. Deployment of the new vectoring technology, provided a corresponding regulatory framework is in place, will increase VDSL data transmission rates to up to 100 Mbit/s.
• In future, innovative hybrid-box technology will feed traffic in both directions via vectoring and LTE. This will make download speeds of up to 200 Mbit/s possible and upload speeds of up to 90 Mbit/s.

Deutsche Telekom invests almost EUR 30 billion over three years in the future of telecommunications

Source: Press release (ENG)