Transcription modifiée de la conférence téléphonique ou de la présentation des résultats de DTE.DE 14-May-20 12:00 pm GMT

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Bonn 15 mai 2020 (Thomson StreetEvents) – Transcription révisée de la conférence téléphonique ou de la présentation des résultats de Deutsche Telekom AG jeudi 14 mai 2020 à 12 h 00 GMT

* Christian P. Illek

Deutsche Telekom AG – Président du conseil d’administration, PDG et membre du conseil consultatif sur la confidentialité des données

* Andrew J. Lee

Bonjour et bienvenue à la conférence téléphonique de Deutsche Telekom. À la demande de nos clients, cette conférence sera enregistrée et téléchargée sur Internet.

Puis-je maintenant vous remettre à M. Hannes Wittig.

Oui. Je vous remercie. Bonjour à tous et bienvenue à notre conférence téléphonique du premier trimestre 2020. Je suis accompagné aujourd’hui de notre PDG, Tim Höttges; et notre directeur financier, Christian Illek. Tim passera d’abord par ses faits saillants de ce trimestre, suivi de Christian, qui parlera des états financiers du trimestre et fera quelques plongées profondes. Après cela, nous avons du temps pour les questions et réponses, un peu moins que d’habitude si vous le permettez car nous avons des rendez-vous urgents après. Avant de passer la parole à Tim, veuillez prêter attention à notre clause de non-responsabilité habituelle, que vous trouverez dans la présentation.

Et maintenant, j’ai le plaisir de passer la parole à Tim.

Timotheus Höttges, Deutsche Telekom AG – Président du conseil d’administration, PDG et membre du comité consultatif sur la confidentialité des données [3]

Oui. Merci, Hannes, et bienvenue à tous de mon côté. Je veux parler de nos bons résultats au premier trimestre. Et en plus, je veux vous donner une mise à jour sur la façon dont COVID-19 a impacté notre entreprise et pourquoi nous restons confiants pour atteindre nos objectifs déclarés pour l’année 2020. Christian sera suivi par une analyse plus approfondie de nos résultats du premier trimestre, ainsi que des informations financières supplémentaires.

Permettez-moi de commencer par mes faits saillants. Nous avons clôturé la fusion américaine le 1er avril depuis le siège social. Nous avons donc obtenu toutes les approbations restantes. Nous avons pu lever 19 milliards de dollars peu de temps après la clôture malgré les pics de turbulence du marché et à de meilleures conditions que prévu dans notre cas de fusion initial. Entre parenthèses, j’étais un peu nerveux en attendant, mais c’est devenu beaucoup plus positif. Nous confirmons les synergies cibles et travaillons actuellement à une mise en œuvre rapide, qui se passe bien. En Allemagne, pendant ce temps, nous avons revu nos plans pour couvrir plus de la moitié du pays avec la 5G, et ce déjà en 2020.

La forte dynamique commerciale et financière que nous avons réalisée en 2019 s’est poursuivie au premier trimestre 2020. Des deux côtés de l’Atlantique, tous les segments progressent sur une base de rentabilité. Notre EBITDA a augmenté à deux chiffres au premier trimestre. Oui, vous l’avez bien entendu. Notre EBITDA a progressé à deux chiffres, et ce malgré, disons, l’impact de la crise mondiale du COVID-19. Il semble que nos opérations soient très résistantes. Nous avons pu agir rapidement avec un soutien de crise décisif et généreux pour nos clients. Nos réseaux et nos opérations de service ont parfaitement résisté dans toutes les géographies et technologies. Nous sommes restés dans notre zone de confort de levier annoncée et nous avons confirmé notre dividende. Donc, sur la base de nos performances au premier trimestre et sur la base de ce que nous voyons jusqu’à présent, nous nous voyons sur la bonne voie pour nos prévisions 2020.

Avant de passer en revue les détails, regardons un bref résumé de notre performance financière du T1 à la page 4. Restons simples. Tous les segments ont encore progressé ce trimestre. À la page 5, nous présentons certains de nos investissements clés en dehors des États-Unis. En Allemagne, nous couvrons plus de 35 millions de lignes en fibre, dont 1,7 million en connectivité gigabit. Dans l’UE, nous dépassons désormais 3,4 millions en fibre complète, ce qui porte l’empreinte totale, y compris l’Allemagne, à un peu plus de 5 millions. C’est 1 million de plus qu’il y a 1 an. Nous avons maintenant 250 000 clients en super vectorisation alors que la demande commence à s’accélérer. Et en Allemagne, nous avons réduit notre délai informatique de mise sur le marché à 5 mois, soit moins du tiers de ce qu’il était en 2017.

Dans la pénétration des applications, notre segment européen a atteint 57%. Nos réseaux se distinguent et continuent de remporter tous les prix. À propos, c’est le premier trimestre le plus réussi que nous ayons jamais vu à Deutsche Telekom. Nous avons remporté le récent test de connexion pour les meilleurs réseaux mobiles globaux, à la fois en Allemagne et en Europe et en tant qu’opérateur multi-pays pour toute l’Europe. Nous avons remporté tous les tests du réseau mobile allemand. Nous avons remporté tous les tests de ligne fixe allemands. Nous avons remporté tous les tests de service, et nous avons remporté le test de la meilleure plate-forme IPTV allemande avec des notes presque complètes. Et nous avons été nommés l’une des 3 premières entreprises allemandes axées sur la clientèle, aux côtés d’Amazon et [Meller]. Nos paramètres de service client que nous vous avons montré à la mi-février continuent de s’améliorer.

Passons à la diapositive 6. Début mai, tous les opérateurs allemands ont rencontré Bundesnetzagentur pour déclarer leur couverture 4G. D’après ce que nous avons appris, je peux vous dire que nous ne sommes pas seulement loin devant Telefonica Deutschland, nous sommes également loin devant Vodafone. Mais le leadership du réseau ne concerne pas uniquement la 4G. Il s’agira de plus en plus de la 5G. Il y a quelques semaines, et je l’ai déjà mentionné, nous avons révélé un grand plan pour la 5G en Allemagne, et laissez-moi vous donner les détails. Au lancement, nous réorganiserons une partie de notre spectre 3G. Et dès que notre spectre 3G nouvellement acquis sera disponible, nous aurons deux fois 15 mégahertz de 2,1 gigahertz sur 5G. 2.1 est excellent pour la 5G car cette gamme de spectre combine vitesse et bonne propagation. Nous allumerons la 5G en 2,1 gigahertz et au moins la moitié de l’Allemagne dès cette année.

En plus de cela, nous aurons les 20 premières villes couvertes avec 3,6 gigahertz. À l’avenir, nous exploiterons d’autres gammes de spectre, telles que les fréquences de 700 mégahertz. Nous avons donc un mélange de bande basse, bande médiane, bande haute, ce qui est, par rapport à mes concurrents, nettement meilleur, et nous nous déploierons plus rapidement que quiconque. Ainsi, en comparant les engagements de Vodafone avec les nôtres, nous aurons déjà 4 fois plus de couverture d’ici la fin de l’année en ce qui concerne la 5G. Je suis très enthousiasmé par ce plan d’accélération, que nous avons présenté pendant la crise de la couronne, et il montre que nous maintenons notre leadership clair sur le marché mobile allemand.

À la page 7, nous parlons de la croissance de la clientèle, et elle reste forte. Nous sommes très reconnaissants de la confiance, surtout en ces temps difficiles. Les titulaires sont les gagnants, et nous le voyons à nouveau. Dans notre empreinte européenne, nous avons ajouté 1,4 million de clients convergents. En Allemagne, près de 15 millions de foyers sont desservis par nos produits en fibre. Et nous avons constaté une croissance forte et régulière de la clientèle mobile des deux côtés de l’Atlantique. Il fut un temps où les gens critiquaient notre déploiement de vectorisation et de super vectorisation. Nous sommes désormais en mesure de servir plus de 80% des ménages allemands. Et nous sommes le gardien de la numérisation en Allemagne et en particulier pour tous les clients commerciaux. Donc, toute la charge de trafic dans la crise COVID est gérée sur notre réseau, et nous n’avons pas eu une seule panne dans nos réseaux pendant la crise jusqu’à présent.

Permettez-moi maintenant, à la page 8, de parler de la façon dont nous avons abordé le coronavirus. Ceux qui me connaissaient savent que je suis réticent à la louange, mais je suis vraiment, vraiment fier de la façon dont notre entreprise, nos employés ont réagi à la crise. Très tôt, bien avant les autres, nous avons annoncé de nombreuses offres pour aider les personnes touchées par le verrouillage, pas seulement en Allemagne, mais permettez-moi de me concentrer ici en Allemagne et de donner quelques exemples. Immédiatement après la fermeture ici, nous avons donné gratuitement 10 Go de données mobiles supplémentaires. Des millions de clients se sont inscrits pour cela via notre application, les clients résidentiels et les clients commerciaux. Pour aider les familles bloquées, nous avons donné 6 mois de Disney + gratuitement. Jusqu’à présent, nous avons plus de 0,5 million de preneurs sur cette nouvelle proposition, exclusive à Deutsche Telekom.

Nous avons soutenu les entreprises allemandes avec plusieurs offres gratuites et l’utilisation a augmenté de nombreux multiples. Nous parlons ici d’équipes et principalement de Webex de Cisco. Nous avons donné Webex aux écoles gratuitement, et nous avions 40 000 preneurs qui permettent à 1 million d’élèves depuis le début de la crise. Et à la demande du gouvernement allemand, nous nous sommes associés à SAP pour développer une application de traçage COVID-19, ce qui montre la confiance que le gouvernement a en nous. Donc, c’est une très longue liste de choses. Et je peux vous dire que nous avons prouvé que nous prenons la responsabilité de la société et que nous ne nous arrêterons pas dans les mois à venir.

À la page 9, nous montrons l’impact de la crise COVID-19 sur nos opérations. Et encore une fois, nous utilisons l’Allemagne comme exemple. Nous avons maintenu les réseaux opérationnels. Il n’y a eu aucune interruption, zéro. Au moment où nous parlons, chaque minute, nous activons environ 70 000 conférences Webex ou similaires sur notre infrastructure de ligne fixe. En une semaine, nous avons permis à 16 000 employés de service de travailler à domicile. Notre service sur le terrain disposait d’un équipement de protection suffisant et restait pleinement opérationnel. Actuellement, 180 000 employés de Deutsche Telekom travaillent à distance. Tous nos KPI de service étaient stables et certains encore meilleurs qu’avant la crise. Les plaintes, par exemple, ont diminué d’un quart.

Notre ratio de santé des employés s’améliore à périmètre constant. C’est étonnant. Prenons un exemple. En Allemagne, nous avons 6 000 personnes sur le terrain et nous avons eu un meilleur ratio de santé qu’avant COVID, et il en va de même pour le temps d’inactivité et la gestion de nos employés de service qui travaillent à domicile. La productivité a augmenté de 8 points de pourcentage. En ce qui concerne la distribution, comme nos magasins étaient fermés, nous avons vu des ajouts bruts un peu moins élevés, mais nous avons également vu un taux de désabonnement nettement inférieur à la normale, je devrais dire, encore plus faible. Dans tous les cas, nos canaux numériques et nos centres d’appels entrants ont repris une grande partie du mou. Donc, en somme, dans l’ensemble, les performances commerciales n’ont pas été fortement affectées. Au moment où nous parlons, la plupart de nos magasins sont ouverts aux clients et fonctionnent à nouveau. L’activité commerciale commence lentement à se normaliser. À l’avenir, il sera intéressant pour nous de tirer parti des enseignements tirés de la crise, de notre efficacité, de l’expérience client numérique de nos réseaux.

À la page 10, la bonne nouvelle est que, sur la base de notre solide premier trimestre et de ce que nous voyons jusqu’à présent, nous nous sentons en mesure de réitérer nos indications comme indiqué. Et en passant, nous réitérons nos conseils. La plupart des opérateurs de télécommunications ne donnent pas d’engagement clair en ce qui concerne les orientations pour cette année. De toute évidence, COVID-19 apporte des vents contraires à court terme et à long terme à toutes les activités, en particulier sur les revenus. Et Christian – il vous montrera plus tard la sensibilité de ces paramètres. Mais positivement, au niveau de l’EBITDA, il y a beaucoup de mesures d’atténuation que nous avons prises et que nous pouvons prendre à l’avenir. Et nos prévisions pour 2020 ont également été prudentes.

En fin de compte, nos perspectives de groupe changeront lorsque nous intégrerons pleinement Sprint. La semaine dernière, T-Mobile a guidé le deuxième trimestre et a déclaré qu’il fournirait des prévisions pour l’année entière avec ses résultats du deuxième trimestre. Et nous refléterons ensuite cela dans les perspectives du groupe. Cela dit, nos orientations déclarées sont inchangées. Nous prévoyons toujours 13,9 milliards d’euros hors EBITDA américain. Ceci n’est bien sûr pas affecté par la fusion américaine. Sans la fusion, nous nous attendons toujours à ce que le cash-flow libre passe de 7 à 8 milliards d’euros cette année, comme indiqué. Et encore une fois, nous confirmons notre dividende de 0,60 EUR 2019 avant notre AGA virtuelle de juin. Je pense que c’est un autre environnement très, très fort en ces temps difficiles de COVID.

Permettez-moi maintenant de passer la parole à Christian pour un certain nombre d’autres plongées profondes. Christian, à toi.

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Christian P. Illek, Deutsche Telekom AG – Directeur financier et membre du directoire [4]

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Merci, Tim, et bienvenue de mon côté. Permettez-moi de commencer par les données financières clés de la page 12. Les revenus publiés ont donc augmenté de 2,3% ce trimestre. Organiquement, il aurait été de 1,1%, ce qui se compare à une croissance de 2,8% en 2019. Sur un EBITDA ajusté, après la croissance des baux, comme Tim l’a déclaré, nous avons progressé à deux chiffres. C’était 10,2%. Sur une base organique, cela aurait été de 9%, contre 4,2% l’année précédente. Si nous jetons un coup d’œil à nos activités aux États-Unis, le BAIIA a augmenté de 3,8%. Cela se compare à 4,7% en 2019. Cela se retourne sur une base organique. Ici, notre croissance en ’20 est de 4,2%. Cela se compare à 3,7% en 2019. Je peux donc dire que si vous regardez les chiffres du T1, nous suivons confortablement les prévisions de 2% à 3% du TCAC de la journée des marchés des capitaux.

Le flux de trésorerie disponible global, comme Tim l’a déclaré plus tôt, a diminué de 17% ce trimestre. Et cela vient d’un ralentissement du fonds de roulement ou, plus précisément, nous avons pris une décision consciente de réduire de 700 millions d’euros notre exposition à l’affacturage dans notre empreinte T-Mobile ex US. Le bénéfice par action ajusté a augmenté de 8% ce trimestre, très similaire au taux d’exécution de 2019. Et la dette nette, selon la définition que vous prenez, a augmenté de 7,7%, il s’agit de la définition d’IFRS 16 ou, dans l’ancienne définition, 8,6%.

Permettez-moi, avant de passer à l’examen de la performance du segment, de vous donner un aperçu de la mesure dans laquelle nous sommes touchés par la crise COVID-19 et quels sont les domaines auxquels nous sommes exposés. Et permettez-moi d’abord d’effacer le visuel. Donc, ce que vous voyez dans la colonne de gauche au milieu, c’est essentiellement l’exposition maximale que nous aurions si tout ce que nous avions prévu était supprimé. De toute évidence, cela ne se produira pas. Dans la colonne de droite, vous voyez l’impact que nous avons observé jusqu’à présent.

Permettez-moi donc de commencer par les revenus de l’itinérance au détail. Donc, en ce qui concerne l’itinérance au détail, nous avons prévu environ 350 millions d’euros de revenus cette année en dehors des États-Unis, et nous avons eu un premier trimestre assez décent, nous n’y avons donc pas vu beaucoup d’impacts autres que les 2 dernières semaines. Mais au cours du mois d’avril, nous avons pu constater que les revenus de l’itinérance au détail avaient en réalité diminué de 80%, ce qui, et c’est quelque chose qui témoigne de la qualité de l’équipe de prévision, était anticipé par l’équipe au cours de ce mois donné. dans une large mesure. Si vous entrez dans les revenus du combiné, c’est évidemment un grand nombre. Dans l’ancienne empreinte américaine, nous vendons essentiellement des combinés d’une valeur de 3,5 milliards d’euros. En fermant les magasins, nous avons vu que ces taux de vente ont baissé de 20%. Et comme nous avons de nouveau rouvert les magasins, nous devons maintenant voir comment cela se développe au fil du temps.

Les revenus des TIC, c’est le nombre total que nous avons ici. Ce que nous constatons actuellement, c’est que, particulièrement dans le secteur des grands projets, nous constatons un certain nombre de retards dans les projets. Cela est également dû au fait que nous avons un verrouillage et que les gens ne peuvent pas communiquer de la même manière qu’avant, ou vous n’êtes pas autorisé à entrer dans les locaux du client. Mais gardez à l’esprit que 80% des revenus de T-Systems sont contractuellement engagés pour l’année 2020. Et donc, nous n’avons qu’à travailler sur les 20% restants.

Il y a un effet négatif, ou, pour le dire autrement, positif, qui provient des revenus des appels fixes. Et ce sont les revenus hors forfait, dont nous parlons. En raison du nombre important de personnes travaillant à domicile, nous avons pu constater une augmentation significative des revenus dans ces catégories. Et vous pouvez voir l’impact, nous avons prévu environ 600 millions d’euros dans l’empreinte européenne. Et au cours des mois, mars et avril, ces revenus ont augmenté de 33%, soit 1/3, par rapport à ce que nous avions prévu au préalable pour la crise. Évidemment, nous devons voir comment cela évolue avec le temps. Mais c’est – je dirais, c’est un avantage corona que nous devons également reconnaître ici.

Et sur les créances irrécouvrables, vous pouvez voir que nos chiffres ont toujours été assez faibles. En Allemagne, nous prévoyons juste avec 0,6% des revenus, et le reste de l’empreinte, c’est 1,4%. Au total, cela représente environ 300 millions d’euros. Jusqu’à présent, nous avons vu un impact limité, mais c’est évidemment un impact qui se déclenchera plus tard et dépend fortement de notre ampleur – combien de temps la crise durera, car plus elle durera, cet impact augmentera évidemment. Mais jusqu’à présent, nous ne voyons rien. Comme Tim l’a dit plus tôt, donc, en fin de compte, nous sommes affectés négativement par la crise corona, mais nous avons des mesures d’atténuation en place, que nous sommes toujours confiants de maintenir essentiellement les prévisions à l’EBITDA de 13,9 milliards d’euros pour nos opérations en dehors des États-Unis.

Passons au graphique suivant, qui est la croissance du BAIIA. Et vous pouvez voir essentiellement la croissance de l’EBITDA sur une base organique dans notre empreinte hors États-Unis, et vous voyez le taux de croissance aux États-Unis. Je pense que les deux chiffres parlent d’eux-mêmes. Je pense donc que c’est une très belle évolution, et nous en sommes vraiment satisfaits. Sur le graphique suivant, page n ° 15, passez au flux de trésorerie disponible. Et comme je l’ai dit, le cash-flow libre a baissé de 17% par rapport à l’année précédente. Et c’est parce que nous avons pris cette décision consciente de réduire l’affacturage de 700 millions d’euros. Si vous vous ajustez essentiellement pour cet impact, en fait, le cash-flow libre aurait augmenté de 400 millions d’euros dans ce – dans ce trimestre en cours par rapport à l’année dernière.

Ce que vous pouvez également voir, dans une perspective à plus long terme, que nous avons commencé avec cette réduction de l’affacturage dès 2018, et c’est un programme continu. Tout est donc intégré dans les 8 milliards d’euros de flux de trésorerie disponibles que nous vous avons fournis des deux côtés de l’Atlantique. Mais permettez-moi également de profiter de l’occasion pour vous fournir un aperçu plus approfondi des flux de trésorerie disponibles aux États-Unis. Lors du Capital Markets Day en 2018, nous avons quantifié le cash-flow libre ex américain à 3,3 milliards d’euros. C’était en ’17. Et nous avons obtenu une augmentation d’environ 4 milliards d’euros en 2021. Et je dirais qu’il est juste de dire que cela ne se reflète pas dans le consensus actuel.

Maintenant, lorsque vous regardez notre nombre de flux de trésorerie disponible consolidé à partir de 2019 de 7 milliards d’euros, et que vous retirez le flux de trésorerie disponible américain de T-Mobile de l’équation, vous nous obtiendrez alors un flux de trésorerie disponible de 3 milliards d’euros hors performance américaine dans l’année ’19. Donc – et maintenant nous examinons comment cela se passe essentiellement en 2020. En 2020, nous prévoyons essentiellement de disposer de 3,3 milliards d’euros de cash-flow libre, mais cela inclut, encore une fois, une accélération de la réduction de notre exposition affacturage de 700 millions d’euros. Donc, à cet égard, je dirais que nous sommes sur une bonne voie pour atteindre ces 4 milliards d’euros d’ici 2021. Et évidemment, si nous visons ce taux de 4 milliards d’euros, comme 2020 l’indique, nous ne nous arrêterons pas ’21 et vous fournir un meilleur chiffre si possible.

Passons à l’effet de levier. Et nous avons changé leur point de vue sur l’effet de levier ou nous avons ajouté un point de vue supplémentaire sur l’effet de levier, juste pour le bien de l’argument selon lequel certains concurrents fournissent essentiellement une perspective antérieure à IFRS 16. Donc, vous voyez maintenant les deux perspectives de notre côté. Si vous jetez un coup d’œil à notre ratio de levier dans l’IFRS 16 classique, y compris la perspective des contrats de location, je dirais, Q-over-Q, il n’y a pas eu beaucoup de changement. Il reste essentiellement à 2,64, ce qui se situe toujours dans la partie supérieure du trimestre ou 2,25 à 2,75.

Si vous souscrivez des baux et ajustez l’EBITDA en fonction de l’impact du leasing, nous serions alors – dans l’ancien monde, où notre ratio était de 2 à 2,5, puis le ratio de levier serait de 2,36. Donc – et enfin, mis à part la perspective de l’effet de levier, permettez-moi de répéter à nouveau que nous sommes très heureux d’avoir refinancé le pont de fusion américain en avril, que nous ayons immédiatement récupéré le prêt intersociétés de 8 milliards de dollars qui nous aide à couvrir essentiellement nos échéances en dehors des États-Unis jusqu’à la fin de 2021.

Permettez-moi maintenant d’entrer dans la performance opérationnelle des entreprises. Commençons donc avec l’Allemagne, comme d’habitude. L’EBITDA AL a donc, encore une fois, progressé de 2,7%. Et vous voyez que cela est tout à fait conforme, un cran plus élevé que les taux de croissance que nous avons vus au cours des 4 trimestres précédents, mais nous sommes vraiment satisfaits des performances de croissance de l’EBITDA en Allemagne. La croissance totale des revenus de services s’est à nouveau accélérée à 1,4%, ce qui a été essentiellement soutenu par 3 facteurs. L’une est des ajouts nets à large bande plus élevés. La deuxième est la forte performance du mobile. Et le troisième est une réduction des pertes de ligne par rapport à l’année précédente. Cela soutient donc cette croissance.

Si nous passons à la page suivante, vous voyez nos revenus de services mobiles augmenter de 1,7% ce trimestre. Et cela incluait tout type d’effet d’itinérance que vous incluriez dans le nombre Q1. Et cela inclut évidemment tous les impacts réglementaires. Sans réglementation, cette croissance aurait été de 2,4%. Les revenus fixes se sont améliorés pour atteindre un taux de croissance de 1,2%, ce qui se compare à une évolution essentiellement aplatie en 2019, et elle était largement tirée par les performances de gros, mais également par une très large bande passante et des performances d’ajout net, comme nous l’avons vu en Allemagne. .

En passant au graphique suivant, vous pouvez voir nos performances commerciales sur mobile. Encore une fois, nos ajouts nets – les ajouts nets de notre marque sont à peu près au même rythme que l’année précédente. C’est 141 000 ajouts nets que nous constatons. MagentaOne couvre désormais 80% des contrats mobiles. Notre taux de désabonnement est descendu séquentiellement à 0,8% au premier trimestre. Et nous constatons une croissance saine de l’utilisation des données mobiles de 61%, ce qui soutiendra évidemment notre stratégie More For More. Et juste pour vous donner une information supplémentaire, nous avons maintenant 3,3 millions de clients sur StreamOn, soit une augmentation de 8% depuis le début de l’année.

Passer à la performance fixe. Et permettez-moi de commencer par le net à large bande ajoute. Ainsi, le net à large bande ajoute au premier trimestre 83 000. Il s’agit de la meilleure performance depuis 8 trimestres, ce qui nous donne en fait une part nette ajoutée dans ce trimestre donné de plus de 40%. Et vous savez que c’est notre aspiration. Nous voulons avoir une part nette d’ajout de 40%. Il y a en fait 2 raisons à cela. De toute évidence, une des raisons est la fin de la migration IP du marché de masse, et vous pouvez le voir également sur les pertes de ligne où je me lance, mais aussi sur les clients qui dépendent de l’opérateur historique tout au long de la crise, et cela contribue évidemment à nos performances.

Si nous examinons nos pertes en ligne, les pertes en ligne sont tombées à 113 000, ce qui se compare à 211 000 l’année précédente. Ainsi, comme nous vous l’avons dit plus tôt, une fois que nous aurons finalisé la migration ATM, vous verrez un nombre de pertes de ligne nettement inférieur. Et nous nous attendons à ce que ce comportement reste là pour le reste de l’année. Nous avons ajouté environ 390 000 nouvelles connexions de fibre, dont plus de 250 000 provenaient de la vente au détail. Le ralentissement du commerce de gros, je pense, est dû à 2 effets. La première est que notre expansion géographique est plus lente, mais nous pouvons également voir que Vodafone déplace évidemment les clients de notre réseau vers leur réseau en cas de chevauchement. Et nous sommes satisfaits de la croissance du net TV add, comme vous pouvez le voir en Allemagne, avec un plus de 60 000.

Donc, en ce qui concerne les chiffres financiers, vous pouvez voir que les revenus fixes ont augmenté de 0,5%. Nous sommes satisfaits de la croissance du haut débit. La croissance des revenus est de 4,3%. En outre, la vente en gros soutenait et est conforme à nos orientations à moyen terme. Donc, dans l’ensemble, nous sommes vraiment satisfaits du développement de l’activité fixe. Mais gardez à l’esprit, je vous l’ai dit, qu’il y a un, je dirais, un impact induit par COVID, qui est les revenus hors forfait, qui soutient évidemment ce résultat également.

Passer aux États-Unis. Et je pense que les États-Unis vous ont déjà donné leurs résultats. Donc, la plupart d’entre vous en sont probablement parfaitement conscients. La croissance étonnante de l’EBITDA de 14,5%. Et cela a évidemment été soutenu par une très forte croissance des revenus de services de 5,9% et a été ajusté pour les coûts de fusion et les facteurs spéciaux liés à la couronne. Il s’agissait de 117 millions de dollars. Mais même si vous excluez ces 2 impacts, l’EBITDA aurait été en avance sur le consensus. Aux États-Unis, ce que nous pouvons constater, c’est que le nombre net d’ajouts a considérablement baissé. Cela est dû à la fermeture de leurs magasins. Les revenus, et c’est à la page suivante, restent généralement stables. Et aussi aux États-Unis, une très bonne performance réseau.

Sur le spectre, nous avons acquis environ 700 mégahertz de spectre d’ondes millimétriques à l’échelle nationale, ce qui nous amène à un total maintenant bien supérieur à 1 000 mégahertz de spectre millimétrique. Nous avons donc maintenant une position très agréable, qui est la bande basse, la bande médiane et les ondes millimétriques. Et nous sommes super contents de cette position. Et bien sûr, nous avons clôturé la fusion Sprint à partir du 1er avril.

Maintenant, l’équipe travaille vraiment à plein régime et je pense que l’équipe américaine vous a donné une vision positive des synergies de fusion. Et à la fin de la journée, vous pouvez voir l’impact immédiat de la fusion en ce moment, car T-Mobile a essentiellement ajouté des capacités d’itinérance aux clients Sprint et ils soutiennent ces clients maintenant dans leur réseau. Nous avons en fait signé un contrat de location de spectre de 3 ans avec Columbia Capital et nous avons commencé à allumer un spectre de 2,5 gigahertz sur le réseau T-Mobile dans de nombreux marchés, y compris à New York. Donc – et ce qui aide, évidemment, c’est que 80% des clients Sprint ont un casque, qui peut être pris en charge par le réseau T-Mobile. Nous sommes donc vraiment confiants et optimistes sur le développement des États-Unis.

Passons donc aux performances préliminaires, et je reste bref car Braxton vous l’a signalé. Il s’agirait donc de chiffres pro forma pour 2019, et l’entité combinée aurait un chiffre d’affaires de 71 milliards de dollars, un EBITDA ajusté d’environ 24 milliards de dollars et une dette nette de 81 milliards de dollars, dont 20 milliards proviennent de contrats de location simple. Mais s’il vous plaît, il est important que vous traitiez ces chiffres à titre indicatif, et nous vous donnerons des chiffres plus précis à la fin une fois que nous aurons clôturé le deuxième trimestre et communiqué ces résultats.

Déménagement en Europe. Résultats en Europe, encore une fois, très bons. Nous sommes vraiment satisfaits du développement du segment. Les revenus ont augmenté de 0,4%. EBITDA AL, 1,9%. Sur une base organique, le chiffre d’affaires a augmenté de 2% et l’EBITDA de 3,4%. Cela vient d’une faiblesse de certaines devises d’Europe de l’Est. Et rappelez-vous que nous avons déconsolidé l’Albanie de l’équation. Ainsi, si vous envisagez plus longuement le développement du segment européen, ils affichent désormais une croissance de l’EBITDA en 9 trimestres consécutifs. Donc – et la croissance, que j’aime beaucoup, vient de 2 angles. Cela vient des revenus de service, mais aussi d’une réduction continue des coûts. Et je pense que c’est le moyen le plus stable pour augmenter les performances de l’EBITDA.

Deuxièmement, jetez un œil aux numéros de clients. Le contrat net ajoute le mobile, en hausse de 110 000. Le net à large bande augmente, en hausse de 50 000. FMC net ajoute, en hausse de 240 000, mais nous avons maintenant plus de 50% de tous les ménages dans l’empreinte européenne bénéficiant d’une offre de convergence de notre société. Donc – et le net TV ajoute est à peu près en ligne avec le trimestre précédent, et ils sont entraînés par les performances de la Roumanie.

T-Systems. Je pense que sur T-Systems, nous progressons dans la transformation. Vous pouvez voir que nous constatons sur les 12 derniers mois une augmentation de 3,4% de la saisie des commandes. Les revenus sont généralement stables d’une année sur l’autre, mais nous constatons une amélioration de la performance du BAIIA, et cela est principalement dû à la transformation des coûts. Comme nous vous l’avons déjà informé, nous transférons la partie télécommunications du portefeuille T-Systems dans le segment allemand. Il est prévu que cela soit finalisé d’ici le milieu de 2020, et nous sommes convaincus que nous allons les respecter, et nous voyons des signes très positifs, je dirais, en particulier sur la croissance du cloud public, comme vous pouvez voir, qui a augmenté de 28% au premier trimestre.

Développement du Groupe, très bonne performance, tant en croissance du chiffre d’affaires qu’en croissance de l’EBITDA, chiffre d’affaires en hausse de 3,8%, EBITDA ajusté, en hausse de 5,5%. Ceci est très alimenté, et vous pouvez le voir sur la page suivante, par la très bonne performance sous-jacente, en particulier de l’activité T-Mobile Netherlands. Ils ont augmenté leur base d’ajout net mobile de 67 000 personnes. Le chiffre d’affaires des services mobiles en organique a augmenté de 5,5%. Et nous avons toujours une entreprise haut débit saine. Cela vous permet donc d’atteindre un taux de croissance de près de 11% d’une année à l’autre.

Alors GD Towers, je pense que l’histoire continue. Nous avons ajouté 1 800 sites – sites physiques au cours de la dernière année. Nous continuons d’augmenter nos revenus locatifs récurrents. Nous essayons de faire baisser les coûts afin de générer l’EBITDA. Donc, tout va bien, je pense, nous sommes vraiment satisfaits de l’activité des tours, de son évolution. Bien que nous voyions actuellement dans l’environnement COVID que les 2000 sites prévus, que nous voulions construire en Europe – en Europe, désolé, en Allemagne, sont un peu trop optimistes car nous sommes retardés par des retards réglementaires. Et donc, nous devons revoir ce nombre, ce qui va être les perspectives finales.

Permettez-moi donc de terminer à la page 31 sur le flux de trésorerie disponible. Alors ici, vous voyez le pont. Donc, le cash-flow libre, évidemment, nous avons un impact négatif provenant du cash-flow opérationnel, qui est négatif de 500 millions d’euros. Mais gardez à l’esprit qu’une réduction de 700 millions d’euros de l’affacturage est incluse. Globalement, nos charges d’intérêts ont augmenté de 1,5 milliard d’euros. Cela comprend le remboursement de l’obligation zéro de 1,6 milliard d’euros, et c’est pourquoi vous voyez que ce nombre est retiré de ce pont. Nous avons un CapEx légèrement inférieur dans l’empreinte que nous attribuons essentiellement aux États-Unis et également à l’Allemagne, et nous avons d’autres effets, ce qui nous donne essentiellement le nombre d’EUR 1,3 milliard.

Comme je l’ai dit plus tôt, si l’on tient compte de l’équation, ce flux de trésorerie disponible après les baux aurait été de l’ordre de 2 milliards de dollars cette année. Donc, comme je l’ai dit, nous sommes confiants, ils ont été intégrés dans nos prévisions de 8 milliards d’euros, et nous sommes confiants d’y arriver, comme nous l’avons dit pour cette année. Donc sur la dette nette. Dette nette, vous voyez essentiellement l’effet des flux de trésorerie IFRS, qui est de 2,3 milliards d’euros. C’est avant le remboursement des dettes de location. Ils représentent environ 1 milliard d’euros. Donc, ce que vous voyez, c’est que le remboursement des baux et des baux nouvellement acquis se résorbent essentiellement.

C’est 1 milliard d’euros de chaque côté. Évidemment, nous devons réfléchir à l’acquisition du spectre millimétrique aux États-Unis. Nous avons eu, je dirais, 2 effets non opérationnels, je les appellerais. Les États-Unis ont essentiellement obtenu, avant leur refinancement, 9,6 milliards d’euros. Ils ont obtenu le taux d’intérêt sans intérêt. Et nous avons essentiellement signé pour un swap à terme qui a évolué dans une direction différente, en particulier du quatrième trimestre au premier trimestre de cette année. Cela nous impose donc essentiellement un milliard d’euros. Et il y a un effet de flux de trésorerie disponible, et il y a aussi un effet négatif provenant des dérivés incorporés des prêts américains de T-Mobile, qui représentent environ 400 millions d’euros.

Je dirais donc que je vais laisser où nous en sommes en ce moment, où nous parlons des ratios de levier, qui sont toujours dans le couloir, qui est de 2,6, et je l’ouvre pour des questions.

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Hannes Wittig, Deutsche Telekom AG – Responsable IR [5]

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Merci, Christian. Merci, Tim. Et maintenant, nous pouvons commencer avec la partie Q&R.

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Questions et réponses

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Hannes Wittig, Deutsche Telekom AG – Responsable IR [1]

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(Instructions de l’opérateur) Je commence donc par Akhil chez JP Morgan.

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Akhil Dattani, JP Morgan Chase & Co, Division de la recherche – MD et analyste des télécommunications européennes [2]

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J’en ai 2. Donc, le premier est uniquement sur COVID et, je suppose, une vue d’ensemble sur la façon dont cela pourrait et a un impact sur l’entreprise. Tim, vous avez mentionné au début que COVID mettait en évidence le rôle essentiel que jouent les entreprises. Vous avez souligné la forte demande que vous voyez sur votre réseau. Je suppose que je veux simplement comprendre comment vous pensez de la façon dont cela pourrait développer et faire évoluer la relation que vous entretenez avec les régulateurs et les politiciens. De toute évidence, cela a été un gros sujet de discussion pour vous au cours des derniers trimestres. Désireux de voir si vous pensez que cela peut et fera évoluer cette pensée.

And then the second thing, on the ex U.S. free cash flow, it’s very helpful to get that data today. In the slide that you presented, if I understood it correctly, you’re showing that you’ve generated a relatively similar sort of EUR 3 billion between 2017 and 2019 per annum, if we add back the factoring impact. Obviously, this year, there’s quite a big step-up, the EUR 4 billion, ex the factoring, which is obviously what the target rate is for 2021. Can you just help us better understand what the moving parts are there to give us that sort of acceleration, just to help us better understand and think about what the trajectory might be going forward?

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [3]

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Akhil, thank you. Let me highlight this COVID situation. And the first moment, and we should not say that, but we saw that as an opportunity to reposition our business, especially in the political environment and in society. And therefore, we immediately — after 1 or 1.5 weeks we launched these big initiatives around Webex for free, about Disney+ for free, about the 10-gig for every customer. So we said we make your life easier with digitization, with our networks during the crisis. On top of that, we had initiatives like 10,000 smartphones for the closed elderly houses and elderly homes, so to keep these people in contact with their spouses. So — and this was highly regarded, well-regarded in society here in Germany. In my office — and I haven’t started with that yet, but in my office, I have a list of all the appreciations and thank yous which we have got from politicians, from the industries, from big customers. Some of them really had trouble because they were not prepared for the crisis. They had not sufficient VPN services. They didn’t have the Webex tools intact and the like. And our organization was unbelievable fast in the way of delivering. You can write the question, well, this is not the normal time to market in normal times, but it is interesting to see how society and companies are working when there is a big societal purpose to be handled. Now I can tell you, I just saw another ratio around the DAX companies and there were people asked about what they think about the service orientation of the company, and Deutsche Telekom moved up by 14 places, 14 places in that crisis. So I think there is something — some credit cum capital we build up on this one.

Now to be honest, today, I would not place any regulator or any politicians. Our critics, our criticizers are very, very quiet. They’re not showing up, but they are there, and we know that. There’s people who always know things better, and they’re only looking for their political selfish interest or they’ve looked for lower consumer prices. They’re still alive, but they’re very, very quiet these days in our markets. So we haven’t seen a big change in the political landscape. I think I will use this new normal to address the relevance of infrastructure and the need of this superior infrastructure networks because we know one thing, the new normal is not going to be the old situation. It’s going to be totally different. We expect to see many more homeworkers, so we need new products and skills for homeworkers. We will see more relevance for network infrastructure. I think Deutsche Telekom has proven how reliable our networks were. I always stress the issue of how much money was invested in the past, and that is now proving the right thing. We had no need for extra capacities. Our networks were never, in any region, at the limit of its capacities. So I think it’s a great start. Our political leaders are on another topic. I had very intense discussion with Thierry Breton, for instance, which were very encouraging, because he understands the industry and he understands the language of what our problems and challenges are. I get a lot of, let’s say, positive feedback from Berlin. But nevertheless, let’s see whether they’re taking actions afterwards. This acceleration law is on its way. The IT security law is on its way. It’s getting approved soon, with regard to the vendors we are using for our 5G build-out. So there are decisions coming soon, but I would say the sentiment is much better, but action hasn’t been taken.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [4]

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So Akhil, on the free cash flow question, and this is roughly out of what’s in my head. Between ’17 and ’18, why have we seen basically a negative development? Remember, we didn’t have the same growth in EBITDA as we have seen it in ’19. And secondly, remember, in ’18, we had peak CapEx, and that was the reason why we said, okay, we have to come down from that level. From ’18 to ’19, I think, we’re seeing a stronger EBITDA growth. We obviously stick to our CapEx guidance. But in ’19, we had a lot of special factors which impacted our free cash flow growth. And we hope that this basically plays out in a more even way in the future.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [5]

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Next question is from Polo at UBS, please.

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Polo Tang, UBS Investment Bank, Research Division – MD & Head of Telecom Research [6]

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So 2 questions. The first one is on COVID-19, but asking it maybe in a slightly different way, because bigger picture, if we fast forward 12 months, what do you think the longer-term impact will be on the consumer side? So do you think it will be easier to put through more for more increases because people will be more focused on network quality and reliability? Alternatively, do you see a risk of consumers spinning down to cheaper tariffs and newfound brands just given economic pressures? That’s the first question.

And the second question is really just about now that the Sprint deal is complete, can you clarify the dividend policy going forward and talk about your deleveraging profile? I’m just asking because you’ve obviously been a lot more explicit about your ex U.S. free cash flow. So it’s EUR 3.3 billion this year, EUR 4 billion next year, but this more than covers the dividend and minority payments, which are about EUR 3 billion a year. On top of this, you also have your share of the new team of U.S. cash flows. So therefore, how should we think about dividend going forward and your deleveraging profile?

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [7]

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Look, Polo, what we see today is very clear. People are very happy if they have a good service, a good network, and they stay with it. I think they will question how they can improve their home office skills and their tools at home office. We are just using a fraction of what homeworkers can use. Just to give you an example, I’m sitting at home, not in front of my pet or my small screen, I have a big screen. I have the Webex conference, by the way, not so expensive, with a big 4K screen, where I can share documents. I have whiteboard where I can collaborate with people. I have — I could easily collaborate in a way with people working from home. Now not everybody has these capabilities. We have to learn this new tool, Slack and others, to better collaborate and to find solutions in the way how we’re operating.

Now I think people within the next 12 months much more think about what they can do to improve their home office environment, because people like to work from home. By the way, we see that, that moment while taking people back into the office, it’s interesting that especially the middle management, they don’t want to come back. There is a lot of people who like the situation which they are not commuting, more productive time, maybe even sharing a little more of their private life. So any — this is something which is coming. And we will build products around this, because Deutsche Telekom is perfectly positioned for that one. We have the supermarket share on B2B. More than 50% of the traffic is on our network, which worked nicely. We have hardware and software components on our hand, which we can easily use. And we have the skills, which we use internally as well.

The second question is with regards to the B2C side. On the B2C side, what we see is the strength of brands. And by the way, we have always had that. It’s nothing new. In this crisis, the strong brand with a clear proposition and, in our case, service proposition behind is what matters. And I’m very happy that Magenta and Deutsche Telekom is perceived in most of the market’s #1 position, and that’s what we see. We have almost no churn. We get great customer feedback. And that helps us a lot. And therefore, I don’t believe there might be a text here and there that people think with lower prices they can just convince customers to move. But I can tell you, this is not affecting us long-term, because this is a fraction of the market. The biggest bang is on reliability, affordability and the image of a brand.

And the most important part for that one, a superior network. That’s our total conviction of before the crisis, and that matters right now. Do you want to sit at your home and having a home office where you’ve constantly a network problem? Oui. No, no way. I saw a lot of, let’s say, incumbents, other players who had big network issues during the crisis. We didn’t. And I can tell you, this is — we see it already. This is something on the customer satisfaction which will significantly help us to move up. A committed service for us as well. I know incumbents here or players in Europe who had, in the first weeks, 25% sickness rate from their field forces. In our case, due to the commitment to the brand, the people had a higher health rate, so lower sickness rate, since the beginning of COVID. It’s less than — it’s 1%, 1.5% and unbelievable. This is the German civil servant. The moment you know he gets a societal task, he moves like a machine, I’m sorry to make that joke, but there’s some truth in it. But this is working nicely. So my answer is, honestly, this is a big opportunity for us. I see that — I don’t see that there is time for slashing prices. I think there is time for better quality of infrastructure. We are best positioned in this one. I just mentioned the European drive test where we became #1 in Europe with a big distance to the others. And therefore, this is — and the brand, and our Magenta brand is very strong these days. So I think we are well positioned for growth in these areas. And fixed line sees a recovery on top of that in the B2B sector, which gives us opportunity as well.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [8]

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Polo, Christian here. Although you asked the question only on consumer, but let me flesh in another point of view when it comes to B2B and public sector. I think that crisis is an eye-opening event for them that they have to rely way more on digitization infrastructure than they have in the past. And that applies to B2B customers. And we can see that also how many customers basically subscribe to new video services, but also when it comes, for example, to public sector investments, i.e., digitization of schools. I think our schools here in Germany are not equipped in the way how they have to be if you want to go to a remote schooling system, and that obviously offers a lot of opportunity.

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [9]

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On the dividend side. Look, I think it was a very strong commitment. I remember Orange and other companies cutting, for political reasons, the dividend. It would have been an easy one to say, look, there’s a lot of, let’s say, opportunity for us to cut the dividend as well. But we want to be reliable. We want to be that you can rely on us. We have promised EUR 0.60. We went through the COVID situation. There were a lot of arguments against it. But I think we earned the dividend. We have a high income increase even in the first quarter. We see good outlook for the year, and therefore, we said we are committed to the EUR 0.60. And that is what we do and — which we’re going to recommend to the annual meeting at the 19th of June. So that’s, let’s say, what we’re doing. I think this has a long-term value for long-term investors. That’s my — that is our, Christian’s, my conviction that this was the right thing to do. Now with regards to the next dividend increase, we have a policy in the market, and we’re trying to fulfill always what we’re promising. But it’s not the now of the time, the first quarter to talk about, let’s say, what we are paying next year. I hope that all our developments and growth prospects are getting accomplished.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [10]

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D’accord. Thanks, Tim. Next is Andrew from Goldman Sachs.

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Andrew J. Lee, Goldman Sachs Group Inc., Research Division – Equity Analyst [11]

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I wanted to ask a couple more questions on the European free cash flow generation, Slide 15 you gave and also on Slide 31. They are a great help in enabling us to understand the underappreciated strength of your European business that you’ve flagged for a while. And Slide 15 shows you appear on track, as has been mentioned in previous questions, to get to your EUR 4 billion European free cash flow guide for 2021 in 2020, if we strip out the factoring headwind. So first question is, how should we think about your scope to deliver 2021 free cash flow above your guidance? And specifically, what elements of the free cash flow can be better than expected?

And then the second question is, your free cash flow — your European free cash flow hasn’t covered the dividend when we strip out spectrum spend and other costs that you don’t include in your free cash flow definition. But do you think that this could be the case in FY ’21? Or are there any other costs or risk we should be aware of in the next couple of years? And specifically, what factoring headwind should we expect in FY ’21?

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [12]

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So on the free cash flow guidance on ’21, look, I think it’s always been our philosophy that we want to basically deliver promises and aspirations, and that’s the EUR 4 billion. But if we’re performing better, we’re performing better, and you can see that in the revenue development, the EBITDA development over the past years. So I will not rule it out, but I will not basically increase now the guidance for 2021. And on the other factors, are there any extraordinary factors in our free cash flow 2021? I don’t — I’m not aware of this. I don’t know whether anybody is aware of this. But Hannes?

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Hannes Wittig, Deutsche Telekom AG – Head of IR [13]

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I would add if you think about other factors, spectrum, Germany had a big auction in 2019. And you know Germany has big auctions basically every 5 years. Europe has a bunch of auctions coming up but tend to be smaller. We had Hungary done. In terms of factoring, well, I think the word headwind in the context of factoring is wrong. I think although it may be, let’s say, confusing factoring, but factoring, we reduced the factoring this time. So the outstanding factoring balance we did not need to do this. There was no need to do this. There will be no need to do that going forward, right? So this is just the choice that we made, and it is cash flow management, and you don’t have to worry about it, okay?

Next is Christian from HSBC.

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [14]

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Let me say one word. I want to stress, again, how proud I am on what Srini Gopalan did in Europe. 8 consecutive quarters, he’s now growing his EBITDA, he’s growing his free cash flow — sorry, it’s 10 quarters already or 9, sorry, whatever. So Christian’s 9 quarters now. He is delivering on a consecutive EBITDA and free cash flow growth, which is now materializing in the numbers which we showed you for Europe and the strong contribution we get from him for dividend and for the investments. Second, he has not lost market share. He has gained market share, except from every single market. And on top of that, the customer service and the Net Promoter Score or TRIM as we call them have improved significantly as well. On top of that, he found a way that we are going to cover the entire footprint with fiber to the home in the converged markets up to 50% within the next years. So I think this is an impressive result. It’s not on the expense of customer satisfaction. Le contraire est le cas. And we have created a flying wheel here, which I find very impressive, which is materializing in the free cash flow statement.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [15]

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Thanks, Tim. So next, again, is Christian at HSBC.

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Christian Fangmann, HSBC, Research Division – Analyst of Telecoms [16]

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J’ai 2 questions. One is actually on the U.S., which is going to be your most important market going forward. Just high level, how do you actually — so what’s your view now that you have grip on the Sprint asset, the value of the customer profile, the churn rates overall? I mean were you — what surprised you positively maybe or negatively? I would be interested in that. And related to that, I’m a bit worried about the bad debt going forward in the U.S. given the unemployment rates we have seen in the U.S. So what is your expectation on the U.S. market when it comes to bad debt? And my second question is actually on Germany and B2B. It’s clearly an important part of your business and around 30% or so. So what are you seeing in terms of the impact on the business or project delays, fiber to the home delays? So whatever you can share in that respect would be helpful for us to model.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [17]

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With regard to the T-Mobile US guidance and integration, I think, the best thing is just to go back to what the U.S. folks said last week. And I think they have given a clear guidance also on customer numbers as well as some financial figures, which also include bad debt and the assumption and the implication of the COVID crisis. On the German B2B, first of all, what we’re seeing right now is especially on large customers’ project delays. And the question is whether these project delays will basically move into — they’re going to kill a project or they just postpone it? The second one is on the infrastructure business, on the rollout of our FTTH infrastructure, we don’t see a lot of impact right now. So we had a very explicit discussion with our Head of Technology. And he said, on FTTH, I can deliver my numbers as I promised. I don’t see any kind of indication that I have to basically take down that number. That is different for provisioning of new mobile sites, as I said earlier on. So the 2,000 sites which we basically indicated at the beginning of the year, they are not in reach right now, and we’re working together on a new forecast on this number. And other than that, I think what we’re seeing on the German B2B, especially on the infrastructure side, a very robust business so far. And as we have furlough in Germany that helps you also on your bad net number, we don’t see any impact on bad debt so far in the German business, but I have to admit this is a bit early to make that assessment because that takes a longer period of time until it kicks in. But given the fact that we have furlough, you will see a lower unemployment rate in Germany, and you will see lower insolvencies. These are things which may impact bad debt. So, so far, so good, and this is the reason why we’re basically keeping our EBITDA guidance stable at EUR 13.9 billion.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [18]

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And we’re also keeping our CapEx guidance stable, so we are not taking out CapEx in order to achieve any free cash flow number. So that’s not the idea at all.

And next is Steve at Redburn, please.

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Stephen Paul Malcolm, Redburn (Europe) Limited, Research Division – Research Analyst [19]

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Oui. You hear me okay?

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [20]

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Yes, we hear you well.

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Stephen Paul Malcolm, Redburn (Europe) Limited, Research Division – Research Analyst [21]

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A couple of questions. One is on 5G. So I did see your comments on sort of speed of coverage rollout. Could you help us just understand what proportion of your contract mobile base is on sort of the high usage LTE tariffs at the moment that might be interested in a 5G offer? And what’s your plan around this? Are you hoping to take market share from Vodafone and test via the high end through this accelerated rollout? Is it more about defending the existing base? And then second, a question on the pension, which is slightly boring, but I noted your pension provision went up by EUR 1 billion in the quarter. Obviously, you put the BT stake in there. That’s fallen quite a long way. You just lost a couple of hundred million euros of dividend. How worried should we be that more of your cash flow will get consumed by the pension going forward given those movements?

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [22]

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Look, first thing is I said it, I think, last time already in our quarter results. We are very confident about our network leadership on 5G in Germany. And this is due to the spectrum position, which we are holding. This is due to the sites advantage which we have in our country. And especially as well with the speed and the commitment our organization has these days with regard to the rollout, big advantage. We are now refarming and deploying 2.1, which helps us a lot from the propagation of the network. So we are not only covering the cities we are — where we are anyhow, but we have even a good coverage across the country, where we are strong. And the second one in the cities with 3.6, we are going to be able to increase the speed significantly. Now I’m not giving all the details about the rollout because this is the quarter results, and this is not a market launch. But I promise you we will give you more detail in summer around this thing here, a detailed plan about pricing, about handsets, about rollout and about the cities where we are. What we know is that we have 4x more coverage of German citizens than Vodafone, who is our biggest follower in the German market. Now that gives us confidence from speed and from a spectrum position to be there.

When it comes to the acceptance of this new product, who’s better positioned for the early adopters than Deutsche Telekom? Tell me one other player in Germany. Il n’y en a pas. Because the B2B basis is by far the big advantage at Deutsche Telekom. All the big corporates, all the big Mittelstand and with Deutsche Telekom, we have a super advantage here on our market share. And when it comes to the high valuable customers, due to the early start with the iPhone, which we had for 2 years or even longer on an exclusivity basis, we have this high-value customer base in our holdings. 35% of all our customers are on M tariffs, and 15% are on the L tariffs. So these are the ones who will probably immediately where the early movers are sitting. So I think we have a good upselling opportunity within our base. That’s definitely the case. And we hope we get early adopters from — who are not with us as well in this regard. So I’m confident that our existing base is the right thing to address this new opportunity.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [23]

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So on the pension funding, so our coverage in the pension fund is roughly 50%. So we are well funded, and there is no risk to be expected. On the other side, obviously, we’re not happy with the performance of BT, which basically came down by EUR 1 billion. I think Ströer, which is also in the pension fund, recovers to a certain degree in the pension fund and the other assets as well. And obviously, we’re also dependent on the IFRS interest rate in the pension fund. But where — we have a well enough funding from a coverage ratio in the pension funding. However, one has to acknowledge that, obviously, the dividend decision, which BT has taken obviously impacts us on future cash flows, on this 12%.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [24]

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D’accord. Thank you, Christian. And that’s in the context of the EUR 4 billion, but — that we reiterated today.

So Fred at Bank of America, please.

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Frederic Emile Alfred Boulan, BofA Merrill Lynch, Research Division – Senior Analyst [25]

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A couple of questions on my side. So firstly, on Huawei. So you mentioned some clarification coming from — in June. Can you update us on what’s going on in Germany? Is there any political pressure post the current crisis to restricting new potential user of Huawei? And if you can give us a bit of sensitivity and potential risk if there were to be restrictions. And then, secondly, I think you comment from — on Germany and on the fixed strategy. You comment from February where I think that you were not losing sleep over Vodafone pushing harder, gigabit speed, et cetera. So — and you were also talking about requiring some regulatory clarity before pushing a bit faster on fiber. So if you can update us on your thinking right now. You mentioned BT. I mean, they followed now others in pushing harder on fiber. The same time Q1 you had been very solid net adds. Tim, you mentioned a few times, you’re delivering superior network quality. So you seem to be pretty comfortable with the current hybrid strategy and the current 2 million homes a year. So a bit of an update on that would be useful.

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [26]

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D’accord. Thanks, Fred. Bonne question. The Huawei issue is — look, for us — and we always say that security is of the highest priority for us. And having seen the common approach from the EU Commission on this one, we welcome this data fact sheet which they brought out with regard to the 5G. So all vendors, everybody, has to commit and to sign up to security commitments, and we need only that from a single vendor, we need it from all vendors, because a lot of components are not only coming from the 3 network or 4 network providers, but as well from software companies and others. So banning a specific company, I think, doesn’t make sense. We want to have competition in this regard. Now we follow the political recommendation. So far in Germany, it’s not ready or it has not been made. It was scheduled for Q1. Due to COVID-19, it got postponed. But today, the news is full that the government came to a conclusion, which they will announce within the next days. So they came up with an idea.

Now on the U.S., we anyhow have no exposure to this one. So we are talking Germany and our European markets, where we pursue our multi-vendor strategy going forward. And yes, there are ours — very critical thing, voices, who just want to ban every Chinese vendor in the core network and as well in the RAN network. And then there is even a moderate approach, which is focusing very much on the security functionalities of the infrastructure. Now our position has been that we say, first, we always follow recommendations. Second, we are working towards a Chinese free core network infrastructure. That is where all the aggregation is taking place. And that is what we are willing to commit. And this is, for us, the most relevant thing. The second one, what we are doing is we are highly lobbying for an open RAN approach because we believe open RAN, the software, which is giving us the opportunity to combine any kind of access nodes in the infrastructure with all the different bands which we are using from the spectrum position, is the way going forward. It makes us commercially and as well from a security perspective more independent. This is something which we are highly lobbying and which we are committing to. So having a legal enforcement on this one we will heavily support. And I think this approach, including a very balanced multi-vendor strategy, is the way going forward. And recent discussions in Berlin show me that this is very much in line what they are going to be — going to ratify within the next days. So I do not see an additional political risk or any kind of this for us, but let’s see.

Now coming to the German fixed strategy and coming where we are on this one. No, first, I’m getting now tired on telling everybody, wasn’t this a super smart idea from Hannes to say, let’s go for vectoring and super vectoring. I remember he was — once stormed me for hours on this one when I wanted to go into fiber. And then I hired him and I put all the money behind vectoring and super vectoring. Now we are covering more than 80% of the households with bandwidth up to 250 megabit per second. And this was the backbone for the COVID-19 crisis which made Germany workable throughout this difficult times, fantastic. I think it couldn’t have worked better out. But this rollout is coming to an end, and money is free. And you know that we have to push harder on full fiber, so fiber to the home.

I do not go into every detail, but there are areas where we can regain market share from cable. There are areas where we should now only build the newest technologies. And there are areas in the B2B sector, which are in the school or education and governmental area, where we are deploying fiber now with an accelerated momentum. Yes, we are up to 2 million. This requires we call it the fiber factory. So a highly productive BSS and OSS system, a totally new build environment in our IT and in the delivery. This is up and running. I’m very encouraged about what’s there. And so now it’s time to roll up and to improve our FTTH rollout. I’m not worried by BT or other companies are at that point. I don’t want to commit long-term numbers. Let’s now see how we are finding the right spots, where we are making the right profitability and take-up rates with customers. Let’s scale up productivity in this regard and then move forward in the German environment. That’s our approach, and there is money sufficiently available to get up to this 2 million run rate.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [27]

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And from an operational point of view, let me add just one observation. I think many of you were concerned as Vodafone introduced the 1 gigabit offer at EUR 40 here in Germany, that this may be a start of a new price war or that they’re taking massive share from us. I think the quarter 1 has proven that this is not true. I think our net add share is higher than Vodafone’s net add share. And I think it’s also a good explanation that competition is more than just speed. It’s speed. It’s reliability of a network. It’s the service quality which you’re providing, and it’s overall the brand. I think there are many components playing into this. And it’s not only just about speed.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [28]

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Thanks, Christian. Next is Jakob at Crédit Suisse.

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Jakob Bluestone, Crédit Suisse AG, Research Division – Research Analyst [29]

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I’ll keep it to one question. You kindly provided quite a lot of detail, particularly on the revenue side of the impact of COVID-19. I was wondering if you can maybe just expand a little bit more on some of the things you’ve seen on the cost side, so maybe a little bit more color on what’s happened with your commercial costs over that period, maybe some commentary around your outbound, how big the impact was from lower outbound roaming. So just any color around that would be quite useful.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [30]

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So I’m struggling a bit with the question, because we don’t want to give you too much detail. Obviously, what we’re saying is the COVID impact is negative on us, and you can see it on our list. And we have mitigation measures in place which basically makes us confident to keep the guidance. On the roaming cost, I think there are 2 elements on roaming. I can answer that question specifically. Obviously, the wholesale side. And there’s the retail side, where we’re talking about the scope of the retail side. On the wholesale side, basically, the net revenue position which we’re having is almost 0. So we’re basically balancing visitor roaming and roaming cost out, and that was proven in Q1, that’s proven in the last month and this is how we want to run the business. And obviously, on the project delays, there’s also CapEx associated and cost of goods sold associated with this. But I think it’s all baked in into our guidance number of EUR 13.9 billion. And I don’t want to go now into a component level and explain what is going to be kind of every cost element, which we can also save on top.

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [31]

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But Christian, maybe some more flavor. On the roaming side, we are not talking about the roaming in Europe, because this is part of the tariffs and the data volumes anyhow. So the interesting part of the roaming impact which we are seeing is coming from outside of the roaming here in Europe, so more the amount of travel which is going outside of this territory. Now the question is this is something which is hopefully coming back then by the end of the year. When it comes to the handset revenues, I think there’s significantly less more handsets, both on volumes and on price, which is helping us. But the lower churn from a profitability, it’s even better for us in this regard. We are learning a lot about travel. And I can tell you one thing, I will less — I will travel less. We should make more road shows with you guys per Webex than rather being stressed from London or other places and running between the offices. So this is definitely something which is an example how the world is going to change.

So we will see significantly less travel expenses, some cost recoveries, yes, definitely, but not the entire one. We’re sitting here and discussing as well about a hybrid organization. So there will be changes coming that we might don’t need all the office spaces which we have today and that we have more home office available. So we will work in hybrid structures going forward. I do not know what the impact on the retail structure is going to be. We anyhow decided to reduce our shop floor, our shops prospectively. And there are a lot of events which we had in the past which we’re going to either cancel or which we put in digital formats. Our Digital X is taking place next week, fully digital already. So by the way, please feel invited to this conference for our B2B capabilities. But this conference we put into digital, and they have a higher productivity. So we have a constant discussion about how we’re shifting costs at that time in the organization, and it’s helping us a lot to compensate for shortfalls on the revenue side.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [32]

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Thank you, Tim. And I do want to add that on the commercial side, I think others have already highlighted you anyway, IFRS 15. But the bigger point for us is we haven’t seen that much loss of business, because we have compensation. For instance, one thing that people need to realize is call centers are a big channel for customer — for connecting with customers. So you know we have had actually very little, and we have the page in the presentation that shows that very little drop in gross adds, right, even at the time of maximum shop closure. So that doesn’t give us a lot of cost recovery, but the cost recovery is always, let’s say, lots of little things rather than one big thing here. D’accord.

Next is George at Citi, please.

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Georgios Ierodiaconou, Citigroup Inc, Research Division – Director [33]

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The first one is around regulation. And I know you addressed the vendor point. I just wanted to follow up and ask whether the interface — opening of the interfaces for open RAN. Is that something you expect to only get on 5G or whether it could be retrospective and, therefore, allow for a much more dynamic migration? And on the same point on regulation, there was also concerns a few months ago that perhaps Drillisch could call in Bundesnetzagentur in the event that the roaming arrangements were not met. It appears that, that may be turning down that rhetoric now. But I’d be interested to hear if you think there is any risk in your view that we get into this protracted kind of processes. And then my second question is around capital allocation. And I appreciate that already a lot of things have been done in the U.S., Netherlands, Austria, and the balance sheet may not be as flexible as it was a few years ago. But I just wanted to ask a question based on your frame work on returns on capital employed, whether you see opportunities, whether it’s just German fiber or whether there are other opportunities where you think it can create value?

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [34]

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Look, on open RAN, the good thing is that there were 2 — remember, 2 initiatives in our telecommunication industries in the past, O-RAN and open RAN. They were not the same, by the way. And they are now all aligned, and all the big telcos are working on these initiatives going forward. And this open RAN initiatives is not stopping and not be limited to just the integration of 5G. It should be enabling us to entire disaggregate the entire RAN infrastructure going forward. So this is the way we are approaching. Now on this way, technically, there will be steps. So if we can open it up for 5G first, that would be great. That’s the first milestone, which we need. And then going forward, I think for all barriers, this is the way how we are addressing it. Now there will be anyhow a total different way of how the infrastructure is going to be designed in the future. Full disaggregation, cloud-native infrastructure, where we are differentiating between classical infrastructure or network access and where we have all the applications or services on top of that. So — and they will be always software-based and cloud-based. So this is, let’s say, the way how we are reshaping the networks as an industry, not only Deutsche Telekom. And we need these open interfaces. We need this kind of open source APIs to manage the vendors in a new way. That is what we are driving. That’s what we are pushing strategically, what we do anyhow and getting regulatory support on this one to become independent from single vendors. I think this is highly appreciated. On the regulation and the…

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [35]

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Let me try to give an answer and it’s based on our part of this. If it’s related to national roaming, obviously, we’re in good faith talks with 1&1 as prescribed in the German auction obligation. You will hopefully understand that we don’t disclose the current status of the talks. We always said that in principle we’re open for third-party business at reasonable commercial terms. But what we don’t like is free riding. And I think that’s the cornerstone of that current discussion. And again, as we said also prior to the 5G auction, there is no legal obligation to provide national roaming, and this is still the status. There is only an obligation to consult and to negotiate in good faith.

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [36]

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I think with regard to the capital allocation there are always — the capital allocation and portfolio management is always part of our story. It has been and it will be. Now — and opportunities in German fiber, look, I think it’s not a capital or a money issue, which we have. It’s not a funding issue. It is more a commercial situation and a regulatory situation where we feel are challenged. Germany, with their build-out obligations, gold-plated networks, 120-meter deep in the ground, all the construction and planning requirements, approval phases, plus the labor force, on top of that the construction cost, then the question about the layer for infrastructure cost in the houses, who is taking care of that one, then the regulatory environment of wholesale access for everybody, this is very much and big time challenging the commercial logic of this fiber rollout. And we have to learn how we make this a profitable one. And there is no need to rush into something stupid. We take the opportunities which we see in the market. And it’s not a money issue. It is more the question about finding the right keys to unleash the value in the services. Unleashing elsewhere more value, I think, yes. Look, openly, we know that we have this Dutch situation where we always thought it might be a potential IPO. We’re sitting on the best tower portfolio in Europe, which was nothing new, which we can comment on today, but we are totally aware about this market and the business which we have on hand. So there are still opportunities in our portfolio which gives us ways to unleash value beyond the operations.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [37]

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Thanks, Tim. And the broad outline is, of course, what we showed in the Capital Markets Day 2018 and — including the capital allocation that was provided there in 2018.

James at New Street next, please.

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James Edmund Ratzer, New Street Research LLP – Europe Team Head of Communications Services & Analyst [38]

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Had 2 questions. First, congratulations on the, I mean, great set of results. Wanted to like actually follow up on that capital allocation question with a specific point. I mean, SoftBank has talked about a $41 billion asset disposal program. And clearly, some of their shares in T-Mobile could well be part of that. I mean, do you feel you have the balance sheet strength at the moment to be able to buy additional shares in T-Mobile if they wish to sell to you? And then second question, just be really interested to hear a bit more about the kind of current impact you’re seeing in Germany on SMEs and B2B. I hear what you’re saying about 80% of T-Systems revenues for this year being already contracted. But if we see economic weakness, I mean persisting, do you feel this starts to have an impact on the way T-Systems will be reporting their numbers going into 2021?

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [39]

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Oui. I can make SoftBank. So SoftBank currently owns 24.7%. We own 43.6%. SoftBank is subjected to lockups, which are public, so you know them. So there are different phases. The first year, they cannot sell any shares, then 5 years — percent in year 2 and 10% in year 3 and then the remainder. So we are TMUS, committed shareholder. We have control of this company. We have a guaranteed control of this company of 67%. so it’s a great business to have. Big, attractive opportunities going forward. So we believe into the stock. But now going beyond that and speculating about, let’s say, whether this is stock coming to the market or — this is the deal which we have just been made and therefore I cannot speculate on anything around this M&A talks.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [40]

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On the B2B side, James, especially when it comes to bad debt, just to explain the difference in Germany. I think we have this furlough system, where you basically support people that they’re not going into unemployment. And we also have a lot of state-aided help, especially for small companies. So that is quite different to many other countries, so that we don’t expect these amount of insolvencies, which you may see in other markets. Simply right now, we don’t see anything. But as I said earlier on, on the bad debt, it is just too early to make a clear prediction because we basically went through 1 paying cycle, and now we have to see whether there’s kind of a degradation in numbers. What the business segments are basically reporting back to us is very limited increase. But what we have done is we have run some stress tests and said, okay, what if it takes 3x that duration? What if the impact is going to be bigger? So this is something, at least, which is in our equation. But right now, we don’t see anything, and that is, in Germany, different relative, for example, in the U.S.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [41]

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Thanks, Christian and Tim. We take 3 more questions. Now we start with Emmet at Morgan Stanley, please.

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Emmet Bryan Kelly, Morgan Stanley, Research Division – Head of European Telecoms Research [42]

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Oui. Hannes, thank you very much for taking my question. Just in the interest of time, I’ll just keep it to 1 question. Tim, just a big picture question for you, please, about fixed line. I remember when you were CFO under René 10 years ago, you used to say you saw no reason why the fixed line business couldn’t be a grower into perpetuity. Et c’est là que nous en sommes maintenant. And when you look at the COVID crisis, it feels like many of the applications, much of the data volume growth, the demand is coming through from fixed line in particular. So you see the e-schooling, you see the work from home, the entertainment in the evening. It all seems to be quite fixed line centric. And then as you look at your line losses, these have slowed hugely now. If I rewind the clock 10 years ago, line losses were running about 300,000 or 400,000 lines a quarter. Now it’s 100,000 lines. Can you say a little bit about what you think maybe the long-term impact of this crisis is on your fixed line business and maybe whether we’ve reached a final turning point and that fixed line revenue growth could actually become quite a bit more positive than it has been?

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [43]

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So you gave the answer in your question already. So look, what I see is I see a very strong development on fixed line. I see that business customers really appreciate the service which we are offering. They need us. I see that most of the services which we’re having are on great VPNs and secure already and we can now expand significantly in this area into the mid-sized companies in Germany and in other areas across the globe, with new technology, new software. So we are working with Microsoft and some others and Cisco on some new propositions we’re going to bring to the market very soon. So yes, I see the prospects. Look, the issue on the consumer side is, if you would ask me, what do you believe more today, a fixed mobile substitution, so cord cutting for mobile or renaissance of the fixed line infrastructure? I would make my bet on the renaissance of the fixed line side. And that’s what I see for the future. The only thing is every market gets what he deserves and what he’s asking for. And I think we have solved the issue around our European markets. I think the question about how do we improve the rollout of — the German FTTH rollout, prospectively, that’s an open question, which I’m debating heavily. I can tell you one answer. Cable is not the answer, that’s for sure, because that’s the shared medium. I think it’s anyhow a fake news that they call it a gigabit network. It’s not. I just saw the very important connect net test, and it was mentioned in the net test that they said better to have a reliable 250 megabit of Deutsche Telekom than a lost promise on 1 gig from Vodafone. And therefore, I think there is a way of higher bandwidth which we can provide with FTTH, but it has to take place in environment where it’s worth investing. And we will not invest in something which is not paying off.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [44]

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Génial. Next is Simon at Barclays, please.

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Simon Alexander Arulraj Coles, Barclays Bank PLC, Research Division – Research Analyst [45]

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Just back to factoring. I guess we’ve seen a lot of peers actually increase the use of factoring. So I’m just wondering why you’ve decided to reduce it this year, last year and the year before. And I guess linked to that as well. If we look at free cash flow before reducing factoring, it actually covered the previous dividend. So I’m just wondering if you have any thoughts on that.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [46]

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So on the…

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Hannes Wittig, Deutsche Telekom AG – Head of IR [47]

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The question is to — did we actually — did you — could you hear Tim answering the last question because he’s not sure he had the microphone on. That was Emmet’s question. Emmet?

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Emmet Bryan Kelly, Morgan Stanley, Research Division – Head of European Telecoms Research [48]

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Oui je l’ai fait.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [49]

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You did? D’accord. Good. Simon, you can answer that. Je vous remercie.

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [50]

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On the factoring question, that’s very simple. We saved a lot of money by reducing the factoring. And that supports, obviously, our cost base. And if we can afford it, we have taken that opportunity, and we’ll continue to do so. On the second question, what is — I don’t get the second question. Désolé. Free cash flow…

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Hannes Wittig, Deutsche Telekom AG – Head of IR [51]

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Can you repeat the question, please, Simon?

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Simon Alexander Arulraj Coles, Barclays Bank PLC, Research Division – Research Analyst [52]

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Oui. Just looking at free cash flow, if you hadn’t reduced factoring, it looks like it would have covered the previous EUR 0.70 dividend. So I’m just wondering hindsight’s obviously a wonderful thing, but any comments around why you made the moves that you did?

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [53]

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I think we have to go back to the communication as we change the dividend communication. That was back in November. And we said we had a totally uncertain situation in front of us. We were prior to the beginning of the States trial. And we said, okay, there is no clarity on whether we’re getting the deal through or not. And in order to give you more guidance, we basically decided to change our dividend communication, also the payout from EUR 0.70 to EUR 0.60. And at the same time, basically said EUR 0.60 is new minimum. So I think that was the rationale, and it was not the rationale that we couldn’t foresee whether we can cover it with the free cash flow.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [54]

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Thanks, Christian. And next is — and final question is from Ulrich at Jefferies, please.

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Ulrich Rathe, Jefferies LLC, Research Division – Senior European Telecommunications Analyst [55]

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My first question is you alluded to conversations you’re having on Berlin at several points. What is your current expectation on the Telecom Act in terms of timing, but also on the 3 key issues, if you have views on that, on the limitations to contract length, on the service cost privilege — the given cost and privilege and the service provider obligation? Do you have strong views on what will be in there? My second question is you talked about the shops and the impact. Now you almost have a laboratory experiment, have sort of seeing the impact of closed shops on the business, handset sales down, 80%. Would this change your plans that you talked about in January of closing 1/5 of the German shops? I think you were talking about closing 100 shops. Is the learnings from the lockdown — does that mean you might have to scale that back or accelerate it? Or how do you look at that?

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Christian P. Illek, Deutsche Telekom AG – CFO & Member of Management Board [56]

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Ulrich, let me pick up the second question when it comes to the shop closure. First of all, the shutdown with 100 shops, that program remains intact. But what we’re going to do is once we’re moving into more normal territory again, we will basically sit together and take a look at what is the most optimal channel distribution strategy? Because what we’re seeing at the shop closure was that traffic was nicely picked up by our call centers as well as our online channel. And I think this is a picture which we’re actually seeing across the board. So that’s not only true for Germany. And obviously, these learnings have to be factored in. But as we have just finalized the negotiations on the German shop — [Gazelle] shop, we continue to execute against this one. And then we have to see whether we have to change the channel distribution going forward. But it is too early to tell right now. But we have seen a very nice response, as I said earlier on, as we had to close the shops from the call centers and the online channel.

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [57]

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Ulrich, by the way, I think there is no shock, and our idea is to be very close to our customers. Our concept is regionalization. Our team is first-time resolution and a very short ways to surrounding around the — where the customers are living. I think with our footprint, we are covering this. And that is, by the way, not only true for Germany. It’s true for the U.S. and other markets as well. So I think there is an impact, but — and we will see. We always adapted it. I think it was made bigger in the press than it really is. And commercially, we always look on whether it makes sense or not. With regard to the fourth question — first question, maybe to bringing everybody into the loop. End of January, 2 federal ministries, they came up with their own legislation draft related to shortened contract durations and ease in determination options for customers. And there’s this ministry for verbraucherschutz. I don’t know what that is in English.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [58]

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Consumer protection.

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Timotheus Höttges, Deutsche Telekom AG – Chairman of Management Board, CEO & Member of the Data Privacy Advisory Board [59]

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Consumer protection, which aims to shorten contract durations to 12 months. The ministry for economy, who is actually responsible for this decision, wants to stick to the 24 months. We expect to learn more details during the revision of the German telecommunication law, which is the reference and what you’re mentioning, which is expected by mid of next month. It’s a little bit delayed because of the COVID situation. If implemented, this needlessly complicates current subsidation plans, as you know, which have high customer acceptance. And we would have to develop then alternatives to that one. But you have to note that already today’s consumer has the right to conclude a contract with a minimum contract period of 12 months if required. So I think the EU court, which is required for this as well, explicitly allows the conclusion of long-term installment contracts with end users for the construction of physical infrastructure. So therefore, we have the capability of doing so. And according to the new EU court, the automatic renewal of 12 months will no longer apply, and the notice periods will be reduced to 1 month. This is already anticipated in our plans.

So look, at the end of the day, we have opportunities for prepaid services. We have contract periods of 12 months, if required. And we have the 24-month contract. But customers very like — much like are the handset prices being low or being allocated throughout the period. And therefore, the 24-month duration makes a lot of sense. So look, I think — I hope that at the end of the day, customers are considered and not some administrative decisions here. And I don’t see us so threatened on this one, but the discussion is out, and we will — are trying to convince them in the direction of this — of the — how the market is developing this right now.

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Hannes Wittig, Deutsche Telekom AG – Head of IR [60]

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Thank you, Tim. And just to add, we are hopeful to have a sensible ruling regarding the rental privilege as well.

And with that, our conference call today is now ending. Thank you all for participating from the home office presumably in most cases. And should you have further questions, please contact us at the Investor Relations department. Have a great day, keep safe and speak to you soon.

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Opérateur [61]

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We’d like to thank you for participating at this conference. We are looking forward to hear from you again. Au revoir.