• Organic Service Revenue Growth: 3.7% for the group; 2.9% excluding the US.
• Organic EBITDA Growth: 6% for the group; 6.5% excluding the US.
• Free Cash Flow Growth: 19% year-over-year.
• Adjusted Earnings Per Share Growth: 19% year-over-year, reaching EUR 1.90.
• T-Mobile US Core EBITDA Growth: 10.1% in Q4.
• Germany EBITDA Growth: 2.6% for the full year.
• Europe EBITDA Growth: 8.1% for the full year.
• T-Systems EBITDA Growth: 12.3% for the full year.
• Fiber to the Home Expansion: 3.3 million additional European homes passed in the last 12 months.
• Postpaid Net Additions: 6 million in the US; 2 million in Europe for 2024.
• Broadband Net Adds: Slower growth compared to the previous year.
• Energy Consumption Reduction: 2% reduction despite increased data usage.
• 2025 Guidance: Group EBITDA around EUR 44.9 billion; Free Cash Flow around EUR 19.9 billion; Adjusted EPS around EUR 2.

• Warning! GuruFocus has detected 8 Warning Signs with DTEGF.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Deutsche Telekom AG (DTEGF) reported the highest EBITDA, free cash flow, and adjusted earnings in the company's history for 2024.
• The company achieved 3.7% organic service revenue growth and 6% organic EBITDA growth, with a 19% increase in free cash flow and adjusted earnings per share.
• T-Mobile US reported strong results with a positive outlook for 2025, contributing to the group's overall performance.
• Deutsche Telekom AG (DTEGF) expanded its fiber network, passing 3.3 million additional European homes with fiber to the home, reaching over 20 million homes.
• The company reduced its energy consumption by 2% despite a 30% increase in data usage, demonstrating efficiency improvements.

Negative Points

• The German broadband market showed a slowdown, with lower broadband net adds compared to the previous year, which the company aims to address.
• The competitive environment in the German mobile market is aggressive, with increased promotions from competitors like Vodafone and Telefonica.
• The company's leverage ratio increased to 2.78, above the target of 2.75, partly due to currency impacts and M&A activities.
• There was a dip in IT revenues in Germany, particularly in the public sector, which the company expects to recover in upcoming quarters.
• The company faces challenges in the German fixed line market, with slower market growth and increased retention efforts by competitors like Vodafone.

Q & A Highlights

Q: How is the competitive environment in Germany affecting Deutsche Telekom's mobile and fixed-line business? A: Timotheus Hoettges, CEO, explained that the competitive intensity in Germany has increased, particularly in mobile, due to Vodafone's actions and aggressive promotions by competitors. Deutsche Telekom is focusing on maintaining its leadership through superior network quality and customer service, rather than engaging in aggressive price competition. In fixed-line, the market is growing slowly, and Vodafone's retention efforts have impacted Deutsche Telekom's performance. The company aims to improve its broadband market share and fiber monetization.

Q: What is Deutsche Telekom's stance on satellite communications as a potential threat or opportunity? A: Timotheus Hoettges stated that satellite communications are not seen as a significant threat in Europe due to the high coverage of 5G services. In the US, satellite services make sense for uncovered areas, but in Europe, the focus is on terrestrial coverage and 5G expansion. The company is testing satellite services as an adjacency but does not view them as a major commercial opportunity.

Q: Can you explain the assumptions behind Deutsche Telekom's EPS guidance and the IFRS EBITDA bridge? A: Christian Illek, CFO, noted that the EPS guidance is based on an exchange rate of $1.08 and includes a $1 billion US GAAP to IFRS bridge, primarily due to increased share-based compensation in the US. The guidance does not yet account for the EBITDA impact of pending US acquisitions, expected to close by mid-year.

Q: What is the rationale behind Srini Gopalan's move to T-Mobile US, and what impact is expected? A: Timotheus Hoettges explained that Srini Gopalan's move to T-Mobile US as COO is strategic, aimed at enhancing transatlantic collaboration and leveraging his expertise in fiber and digitization. This move is expected to strengthen synergies between Deutsche Telekom and T-Mobile US and support strategic initiatives.

Q: How does Deutsche Telekom plan to manage its leverage ratio amid currency fluctuations and M&A activities? A: Christian Illek emphasized the company's commitment to maintaining a leverage ratio of 2.75, despite currency impacts and planned M&A activities. The company may consider selling into the T-Mobile US share buyback if necessary to manage debt levels.

Q: What are Deutsche Telekom's expectations for the German fixed-line market, given recent performance? A: Timotheus Hoettges acknowledged the slowdown in broadband net adds and attributed it to market maturity and Vodafone's retention efforts. The company plans to focus on fiber build-out and ARPA growth to improve performance and expects better results in the coming quarters.

Q: How does Deutsche Telekom view the potential impact of geopolitical changes on its cloud business? A: Timotheus Hoettges highlighted the importance of data center infrastructure for European sovereignty and the potential for increased local cloud infrastructure investments. While the company is exploring opportunities, its current focus remains on core investments.

Q: What is Deutsche Telekom's approach to pricing strategy in German broadband and mobile markets? A: The company is focused on upselling higher-speed fiber services and maintaining competitive pricing to attract customers. In mobile, Deutsche Telekom uses tactical promotions to test market sensitivity but remains confident in its network quality and customer value proposition.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.