Deutsche Telekom revises its guidance upwards once more, fueled by its robust performance in Europe.
![Deutsche Telekom revises its guidance upwards once more, fueled by its robust performance in Europe.](https://willowtechgroup.com/wp-content/uploads/2023/08/Deutsche-Telekom-lifts-guidance-again-on-Europe-strength.jpg)
Once again, Deutsche Telekom has revised its full-year earnings guidance, indicating further positive trends for European telecommunications operators.
This adjustment follows the recent elevation of guidance by the group’s T-Mobile US unit across various metrics. Although this certainly influenced Deutsche Telekom’s decision, considering that T-Mobile US contributes to nearly two-thirds of turnover and earnings, the telecom giant highlighted the involvement of its European operations as well.
“With T-Mobile US having already raised its guidance in the United States, the group is now increasing its guidance for adjusted EBITDA AL. This adjustment reflects high expectations for the business in Germany and Europe,” stated Deutsche Telekom in its second-quarter results announcement.
Consequently, Deutsche Telekom anticipates posting full-year 2023 earnings of approximately €41 billion, up from the previous guidance of €40.9 billion. This figure had already been upgraded from the initial predictions, as EBITDA AL was raised from €40.8 billion in Q1. While the first increase was primarily driven by the US market, the mention of high expectations on the European front implies that this situation is more nuanced.
At the group level, reported adjusted EBITDA AL grew by 1.5% to €10 billion, marking a 3.8% organic increase. Out of this sum, €6.6 billion originated in the US, indicating a 3.4% increase, or a 5.8% rise in dollar terms. Meanwhile, Germany experienced commendable growth of 4.1%, reaching €2.5 billion.
Organic service revenue climbed by 3.2%, or 1.4% on a reported basis, reaching €23 billion. Net revenue, however, declined by 2.4% to €27.2 billion, largely due to the planned exit from the terminal equipment business in the US, as stated by Deutsche Telekom. In contrast, Germany observed a 1.9% revenue increase to €6.2 billion, while the company’s other European operations reported a noteworthy 6.2% growth in total revenue.
The Chief Executive of the German incumbent, Tim Höttges, expressed optimism, emphasizing the continuation of a positive trend.
“Our businesses are progressing well despite complex market environments,” noted Tim Höttges. “This is evidenced by our organic growth rates in service revenues, earnings, and free cash flow.”
Deutsche Telekom celebrated strong customer growth in its domestic market, highlighting that “customer growth continued unabated in all areas.”
During Q2, broadband revenues were a driving force for growth, with the operator adding 67,000 broadband customers. Furthermore, FTTx customers expanded by 248,000, reaching 12.5 million. Of these, 833,000 customers were connected via FTTH, a notable 38% year-on-year growth.
Mobile customers increased by 1.6 million in the quarter, reaching 57.7 million. This included the addition of 354,000 contract customers and 319,000 branded net additions, the latter figure more than doubling the count from the same quarter of the previous year.
While Deutsche Telekom did not provide a comparative figure, it highlighted that churn for contract customers remained low at 0.8%.
“Customer satisfaction pays off,” stated Deutsche Telekom, referencing its strong performance in the domestic market.
Indeed, who would have anticipated it?