Deutsche Telekom focuses on growth
- René Obermann: Positive about results of strategy roll-out so far
- CEO confirms growth forecasts
- Timotheus Höttges will become new CEO on January 1, 2014
- Thomas Dannenfeldt to be new CFO
- Proposed dividend of EUR 0.70 per share for 2012
Ahead of the shareholders' meeting of Deutsche Telekom AG, departing Chairman of the Board of Management René Obermann had positive information to report on Thursday about the strategy roll-out and confirmed the Group's growth forecasts. "We are investing in order to grow again. In 2014, we want to stabilize revenue in Germany, in Europe we expect income - adjusted for regulatory and exchange rate effects - to rise and we also anticipate growth in the United States." He also underlined the significance of key decisions by the regulators regarding the direction of the industry and the recently concluded business combination of T-Mobile USA and MetroPCS.
"We are seeing encouraging developments with the key issue of regulated network access and vectoring, which turns the copper cable into a high-speed line. If the Federal Network Agency maintains its line and issues the rulings it has announced, we will flick the switch and invest additional billions in the network roll-out," said René Obermann. "Our new management in the United States is generating significant momentum. The business combination with MetroPCS marks a fresh start on the U.S. market."
Telekom's strategy of transforming itself from a telco into a "telco plus" focuses on growth areas such as mobile Internet, connected home, intelligent networks, and cloud services in order to combat revenue losses in traditional telecommunications services. "We are working to change this with innovations and investment in our new networks and platforms. Unlike many competitors, we are actually increasing our capital expenditure to almost EUR 30 billion in the next three years," Obermann pointed out. By 2015, the growth areas should be contributing 40 to 45 percent of total revenue, compared with 24 percent in 2010. The main driver is mobile Internet, where revenue is to grow to around EUR 10 billion by 2015.
Last December, René Obermann announced his resignation with effect from December 31, 2013. Yesterday evening, the Supervisory Board officially appointed the current CFO and since January 1, 2013 deputy CEO, Timotheus Höttges, as CEO with effect from January 1, 2014. At the same time, Thomas Dannenfeldt was appointed his successor to the position of CFO. The Supervisory Board also extended the contract of Niek Jan van Damme, head of the company's German operations, ahead of time.
In operating terms, Deutsche Telekom has laid decisive strategic foundations for the future and continued to stabilize its financial position with Obermann at the helm. Recent key developments include:
- The Federal Network Agency's draft decision on vectoring is heading in a direction compatible with the planned broadband expansion in the German fixed network. Vectoring will allow bandwidth to be doubled instantaneously. In the coming years, investments of around EUR 6 billion are planned for the roll-out of vectoring and optical fiber to offer transmission speeds of up to 100 MBit/s.
- These investments are to be underpinned by differentiated price models for surfing in the fixed network from 2016 onward. The new rate plans are expected to include much higher volumes of data than the average customer needs. But if users need still more volume, add-ons will be available for just a few euros. Flat rates will still be offered for frequent heavy users for around 10 to 20 euros more per month than they currently pay. "The alternative would be for the network to be slower for everyone or more expensive for everyone. I don't think that's ok. Faster for everyone, more expensive for a few - that is fair," said Obermann.
- The regulatory decision on unbundled local loop prices: For the first time, the prices have not been cut - they have actually been raised slightly. In doing so, the Federal Network Agency is implementing the new European regulatory policy and enabling investments to be made in the future.
- On May 1, John Legere, CEO of T-Mobile US, Inc., the new company created with the business combination of MetroPCS and T-Mobile USA, rang the bell at the New York Stock Exchange, opening the new TMUS share's first day of trading. This marks the U.S. launch of a company with over 43 million subscribers and a combined (pro forma) revenue of around USD 24.8 billion in 2012. T-Mobile USA's improved standing is being boosted thanks to the addition of the iPhone to its portfolio from April 12, 2013, with around 500,000 devices being sold to new and existing subscribers in the first four weeks.
These major developments have been instrumental in ensuring that guidance for the 2012 financial year was achieved. Adjusted EBITDA totaled EUR 18.0 billion, free cash flow exceeded the expected level at EUR 6.2 billion. Net debt was reduced by more than EUR 3 billion over the year.
Against this stable backdrop, the Supervisory Board and Board of Management have proposed a dividend of EUR 0.70 per share and will be focusing on stability and reliability for shareholders. Since March 1, 2007, the Telekom share has generated a total shareholder return of 16.2 percent as of May 10, 2013. Total return for the period from the beginning of 2012 through May 10, 2013, stands at 15.3 percent, meaning that it has outperformed the large majority of telecommunications stock in Europe and the DJ Euro STOXX Telecommunications sector index during this period.
More info on Deutsche Telekom website
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