Deutsche Telekom bullish on 2023 after topping guidance

Strong performances in Germany and the US have put Deutsche Telekom on a solid financial footing going into this year.

The German incumbent on Thursday said it expects earnings before interest, tax, depreciation and amortisation after leases (EBITDA AL) to grow to €40.8 billion this year, compared to pro forma EBITDA AL of €39.3 billion in 2022. It expects free cash flow after leases to grow by at least 40% to more than €16 billion.

DT’s upbeat outlook comes after it exceeded its guidance for 2022, with full-year revenue growing 6.1 percent year-on-year to €114.4 billion. It is no mean feat given DT raised its guidance multiple times last year, most recently in November, when it increased its EBITDA AL forecast to more than €37 billion from its previous target of around €37 billion. Not only that, but net profit almost doubled to €8 billion from €4.2 billion.

DT capped off 2022 with a strong fourth quarter, as group revenue grew 4% to €29.8 billion, and EBITDA AL jumped 10.6% to €9.96 billion from €9.01 billion.

As per usual, the telco’s domestic and US operations gave the standout performances.

In Germany, DT added 225,000 postpaid mobile customers, driving mobile service revenue up by 3.5% compared to Q4 last year. It also added 372,000 fibre customers during the quarter, increasing its overall broadband based by 74,000. As a result, revenue in Germany grew slightly to €6.4 billion from €6.3 billion, while earnings increased 2.9% to €2.5 billion.

T-Mobile US’ latest results have already been covered, but when it comes to their impact on its parent, it seems the strength of the dollar was the biggest factor. DT’s US arm turned over €19.8 billion in Q4, up 8.3% on the prior year. However, in dollars, revenue was actually down 3.3% to $20.2 billion.

“T-Mobile US is systematically scaling back the terminal equipment lease business for its customers, which was taken over as part of the business combination with Sprint. This has a reducing effect on total revenue,” Deutsche Telekom explained in its earnings report. Q4 service revenue at T-Mobile US grew to €15.2 billion from €12.8 billion.

The US and Germany helped to offset a lacklustre year in Europe, which saw revenue fall 1.2% to €11.2 billion. In Q4, revenue came in at €2.9 billion, flat compared to last year. Full-year EBITDA AL inched down to €3.9 billion from €4 billion, and in Q4 it fell to €956 million from €962 million.

“The upheavals in the world, and their consequences, are not without their effects on Deutsche Telekom,” said chairman and CEO Tim Höttges, in a very brief statement. “But by continuing to execute our strategy, we were nevertheless able to meet all of our targets in 2022.”

DT FY 22

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