Deutsche Telekom Ag S/Adr

Good afternoon and welcome to Deutsche Telekom's conference call. At our customer's request, this conference will be recorded and uploaded to the Internet. May I now hand you over to Mr. Hannes Wittig.

Good afternoon, everyone, and welcome to our live Q3 2021 webcast and conference call. As you can see with me today, our CEO, Tim Hoedges, and our CFO, Christian Illig. Tim will first go through a few highlights and will be followed by Christian, who will take you through the quarter's financials in more detail. After this, we have time for Q&A. And before I hand over to Tim, please pay attention to our usual disclaimer. which you find in the presentation. With that, I hand over to Tim.

Thank you very much, Hannes, and welcome everybody to our quarter results here. After nine months, 2021, it's a pleasure having you here. I hope some of you still remember this year's Capital Markets Day. And at the beginning of the Capital Markets Days, I showed you my all-in-one chart with our strategic priorities. I'm very happy to say that only a few months later, less than six months, we have already made big progress with our strategic agenda. Our commercial growth has continued to be strong on both sides of the Atlantic. We overdelivered against our stated cost saving target, 1.7 billion compared to the 1.5 billion. And we are driving our transformation towards our longer-term ambition to become the leading digital tagger. Once again, we are raising our 2021 guidance for EBITDA and free cash flow on both sides of the Atlantic and for the group as a whole. On the capital allocation, which you find in the middle, we have also been very active. Honestly, you know that I'm always criticizing Deutsche Telekom for sometimes being a little bit slow. But I have to admit that this time, I'm very surprised how many things were able to be executed just in this few months after the capital markets. We took a decisive step towards the majority in the U.S. by securing a 5.2 percent point stake increase. We exited the Netherlands and Romanian fixed line business as promised. Our exit multiple for the Netherlands were 8.7 times EBITDA. And that's after we already monetized the Dutch towers earlier this year. We made great progress towards undistributed network leadership in all of our markets. And as of today, we passed over 2 million new fiber homes so far here in Europe. Of this, 1 million in Germany, 1.3 million in Europe. In Germany, we have already achieved 87% 5G coverage. And in the U.S., we already have almost nationwide 5G coverage. And now we cover 190 million pops with 5G in the 2.5 GHz band. This gives us 10 times faster speeds. Our adjusted earnings per share is up 13% year-to-date, and we are well on track for our greater than €1.75 target in 2024. To reflect the positive developments of our business and consistent with our stated policy, we will propose a dividend increase from 60 cents to 64 cents for 2021. On the next page, you can see that all segments contributed to our organic year-to-date EBITDA growth. Very convincing. 3% growth overall. 1.9% from the U.S. operation. 3.7% from the German operation. 5% from Europe. 5% really record number. Group development grew by 10.6%. And systems grew by 6.5%. Germany has now delivered 20 consecutive quarters of EBITDA growth. That's already five years. Europe is on 15 quarters growth. And our total ex-US business has now grown 13 quotas in a row. In sum, our organic group EBITDA grew by 3% so far this year. If you compare that on a core adjusted EBITDA level, it's 8.7% growth in this quarter. Without the accelerated unwind of handset leases, T-Mobile's core EBITDA grew by 11.9% organically. So, on the most relevant metric for cash flow, our group EBITDA grew by 9%. Our investments are up 12% in the first nine months to almost 13 billion. This is another rocket number. And still, our free cash flow is up 55% year-to-date to over 8 billion. It's nice to see that our flying wheel is still very strongly working. Let's go to the networks. I already referred to the good progress we made with our fiber and our 5G build-out. In Germany, we passed 700,000 homes with FTTH in the first nine months and reached 1 million this week. This brings our total to 2.9 million and shows that we are on track for our 1.2 million target this year. We are also well on track to lower our fibre build cost, as promised, by around one quarter. In Europe, we passed 1.1 million homes as of Q3, bringing the total to 6.7 million new FTTH. In sum, we now pass almost 10 million homes with FTTH across our European footprint. In Germany, we cover 87 of the population with 5G. We are also making good progress with our European 5G networks. And in the U.S., we reached 100 million people with our ultra-capacity 2.5 GHz 5G network on track for our 200 million year-end target. Our customer growth remains strong. In the first nine months, we gained 3.8 million postpaid net ads in the US, 1.2 million postpaid net ads on this side of the Atlantic, 488,000 new broadband customers, of which 276,000 coming from Germany, and 193,000 new TV customers. As already mentioned, today we raise our group guidance for 2021 for the first time in this year. Sorry, for the third time in this year. We are raising our EBITDA and free cash flow guidance. We do so on both sides of the Atlantic. Let's start with the EBITDA. We raise ex-US EBITDA by further 200 millions to 14.6. This is 300 million more than we guided initially. We also raise our US EBITDA again by around 400 million to over 23.2 billion, amounting to an over half a billion increase since the beginning of the year. We raise group EBITDA guidance to around $38 billion. This is, and now carefully listen, $1 billion more than what we have guided at the beginning of this year. When it comes to our free cash flow, we raise our ex-US free cash flow guidance also by $200 million to around $3.8 billion. This is $300 million more than we guided initially. We raise our U.S. free cash flow guidance also by $200 million to over $4.7 billion. And in sum, we now guide for around $8.5 billion free cash flow. This is half a billion more than what we have guided at the beginning of the year. And with this, the great numbers, I hand over to Christian, who will take you through this quarter results in greater detail. Thank you.

Thanks, Tim, and welcome from my side. On page 9, you can see our usual quarterly and year-to-date summary table. Let me also flag that we have provided you with some additional organic disclosure on page 27. The reported year-to-date figures reflect, of course, the merger, the Sprint merger impact starting from April 1, 2020. And it's also impacted by the deliberate wind down. Here's the camera. By the deliberate wind down of the lease revenues in the U.S., which has already been mentioned by Tim. With that in mind, let me move to the quarterly financials. And let's start, as usual, with the revenue. Year-on-year revenue is up on a reported number by 1.8% this quarter. On an organic figure, that's 2.1%. If we take a look at the service revenue in the group, that grew by 2.3%. And if we're just taking a look at our European business, it actually grew by 2.5%. Let's take a look at the EBITDA figures. Reported EBITDA was slightly down on a reported basis, slightly up on an organic basis. Again, the headwind of the handset lease business from Sprint accounted for roughly half a billion euros this quarter. Without the handset leases, and you know that's the core organic EBITDA which the U.S. always reports, we would have grown about 6.7%. Organic XUS EBITDA was very strong with 5.3%. Moving to the bottom line, adjusted EPS was down by 5 cents year-on-year, and that is very much driven by evaluation loss, which we had to face due to our share call options, which we have for T-Mobile US, but also which we have to face on the forward. Excluding the valuation loss, we would have seen an increase in EPS. Free cash flow growth was strong. It grew by 80% this quarter. It was very much driven by the strong EBITDA growth, but there were also some favorable effects on working capital. Finally, on net debt, the net debt number with or without leases is up year over year, and that is very much driven by the C-band auction in the U.S. So let's move over to page 10 to Germany. In Germany, our revenues grew by 2.5%. The organic growth would have been 3.4% on a year-on-year basis. And the sequential acceleration is driven by the handset revenues. The organic EBITDA is up by 3.7%, pretty much the same number which we are facing, which we had in the previous quarter. And Germany is currently tracking above the guided 2.5% to 3% adjusted EBITDA CAGR. But bear in mind, next year we're going to lose the Labara MVNO business, and that alone accounted for a mid-double-digit service revenue and EBITDA figure. Let's move over to the service revenues. The total organic service revenues grew by 1.6%. In the mix, mobile service revenue were pretty stable. Fixed line came down a bit, but not significantly. In the fixed line business, obviously, we're benefiting from a strong B2B, a strong broadband business, while wholesale remains at rack. As mentioned in the previous quarters, we had some extraordinary low-margin public sector business, which came to an end in October, which pretty much accounted for $30 million each quarter or a total of $90 million throughout the year. And that will not recur. uh... in next year's numbers mobile our two percent uh... union your gross was positively impacted by a slight increase on the roaming and the visitor revenues on the other hand we had a negative track which we had to absorb between q three and q four and basically these two effects cancel each other out and finally bear in mind that we have to absorb a o point six uh... point track from uh... determination cuts uh... which we had to face here in Europe. But in any case, we remain confident to keep our 1% to 2% mobile service revenue guidance on the long term. So I think if you take a look at the mobile KPIs, very strong when it comes to the overall number, but also to the churn numbers. Let's move over to the fixed line figures. I like the broadband figures, to be honest. Five quarters now in a row in the vicinity of 90 plus K net ads, which basically gets us to more than 50% market share. The line losses remain almost at the same level, which is around negative 10,000. TV net ads, from my perspective, I think we have to work on this one. That is obviously compared also to the previous years, a softer number. And we had healthy fiber net ads on our retail business, whereas the wholesale business was subdued because of the Vodafone migration from our network onto their cable network. Moving on to page 14, you see that our strong broadband customer growth obviously is responsible for the 5.5% revenue growth which we had this quarter. And if you exclude the one-off effects which we had due to the flood, that number would have been close to 6%. Overall organic fixed revenues grew by 3.1%. Revenues on the other hand, wholesale revenues on the other hand, remain a drag at negative 4.4%. And let me remind you what we told you in our May call. We said it's going to be dilutive in 21. It's going to stay neutral or stable in 22. And it will be accretive thereafter. During the quarter, the German regulator approved the tariffs which we have agreed upon with our wholesale partner in our new commitment model, which actually confirms that they are pursuing a light-touch regulation as they were committing themselves towards. So let me summarize the overall service revenue growth of 1.4%. Very strong broadband growth and associated with strong revenue growth. I think we had some tailwinds from this public sector business, and we are facing an ongoing but a slightly declining negative track from the wholesale business. So what we're seeing is a very strong underlying delivery. But please make sure that you don't extrapolate all numbers into next year because, again, as we said, we're losing Lebara and we're losing the public sector business. So let's move over to page 15 and the usual two charts on T-Mobile. Reported service revenues according to U.S. GAAP grew by 4.1%. As previously noted, the EBITDA L was down due to the planned wind down of the handset lease business in the U.S. And the core EBITDA according to U.S. GAAP grew by 4.5%. Total net ads postpaid were up 1.3 million, and the phone churn remained on a low level. I think what is notable, and I think Mike said it in the call, is the account growth. In Q3, we faced the highest account growth since seven years. And year-to-date, our account growth is double the size it was a year ago. And don't forget, these numbers are happening throughout an accelerated integration effort in the U.S., where still half of the Sprint customers are not fully migrated onto our network, and we are only having one quarter of 5G handsets in the market. So, by all standards, I would say this is a very, very strong result from the U.S. Let's move over to Europe. Organic revenues grew by 1.2%. The quarterly volatility, which you're seeing here, is related to handset and transit revenues. The underlying service revenue growth is pretty much stable here. And while we're seeing some strong roaming recovery in some markets, we're also faced with some significant termination cuts in other markets. So boosted by the strong service revenue growth in the European market, but also due to ongoing cost savings, the adjusted EBITDA grew at a very strong 5.4%. And this is just another strong quarter and compared to the previous quarter where it was 5.3%. So I think we can see the very good commercial numbers on page 18 in Europe, so I don't have to recall them, and move directly to T-Systems. Revenues grew this quarter, but there was also a bit of phasing in there. We expect a slight revenue decline for the remainder, for the whole year in 2021. And the pattern which we're seeing is kind of a recurring pattern. You see that the legacy business, IT business going down, while the digital solution business and the cloud business is actually growing very nicely. EBITDA also grew also on an organic level. So that was a good quarter for T-Systems in Q3. Moving over to GD, Group Development, page 20, strong organic revenue and EBITDA growth. Headline growth benefited from the inclusion of the Austrian Towers. We included the Austrian Towers, but we deconsolidated the Dutch Towers. And let's move over to T-Mobile Netherlands. You see, they performed and continue to perform well. The broadband net ads were at a very good 14K level for this quarter. The mobile net ads are 52K for the given quarter. The organic mobile service revenues grew by almost 5%, and that was driven by the underlying performance, but also by some tailwinds coming from roaming. On the tower business, on the next page, you see that the tower count has changed. We deconsolidated roughly 3,000 towers, which are the Dutch towers. We included 7,000 towers from Austria. And the German tower count increased year over year by 1,100 sites. The recurring rental revenues grew 5.8% this year on an organic basis, and EBITDA grew almost by 5%. on a year-on-year basis So that brings me to an end of the review of the operating settlements, and let me move over to net debt and net income. So both net debt and net income was impacted by the soft bank fixed price options, but also by the floating options, and especially by the forward purchase agreement related all to T-Mobile US shares. On an EPS level, on a quarterly basis, there was a drag of $0.07, as you can see, or roughly $500 million. On a net debt level, that accounted for a drag of 1.2 billion. To repeat again, if you take the year-to-date performance in EPS, that was up by 13%, as Tim already said, and that led to the proposal to increase the dividend. The free cash flow increased, as I said earlier on, 80% year-on-year, driven by strong cash flows from operations. And if you take a look at the net debt, excluding leases, that increased by 2.5 billion. And there is some headwinds or some negative effects in here, which is obviously the options, which is a stronger dollar, which is accounting, if I'm not 100% mistaken, by 1.4 billion euros. And there is the inclusion of the Chantel acquisition. So on my final slide on page 24, you can see the ratios on leverage, including our leases. So IFRS 16 leverage is at 302. And if you exclude the leases, we're at 2.66. So we remain confident that we enter the comfort zone end of 2024. There is no indication whatsoever, which basically brings us to the conclusion not getting there, as we stated at the Capital Markets Day. So I would stop here and move over to Q&A. Thank you.

Thank you very much, Tim and Christian. Now we can start with the Q&A part. I think you know the basic tools of the trade. If you'd like to ask a question, please press star one on your touchtone telephone. And I will announce your name when it's your turn. And should you require to cancel your question, please press the star two. So the first question we have from Polo at UBS, please.

Hi, thanks for taking the questions. I just have two questions. The first one is just on share buybacks. So if you look at T-Mobile US, they'll be on two and a half times leverage, excluding leases, around about the second half of 2022. Therefore, is there any reason why buybacks at T-Mobile US cannot happen in 2022 rather than 2023? Also, you've been clear that you can use some of the proceeds from the T-Mobile US buybacks at the Deutsche Telekom level. But can you maybe just give us a sense of the potential quantum? Because potentially you'll be receiving almost $30 billion at the DT level. So could a significant amount of this be returned to Deutsche Telekom shareholders? And my second question is really just what are your latest thoughts on a mobile network build by one-on-one and how it will impact the German market and Deutsche Telekom markets? And could you maybe just touch on your expectations for the allocation of 800 megahertz spectrum? Thank you.

Hey, Polo. Thanks for the question. Look, we have a share-by-back program which we have laid out together with the merger plan which we are planning to succeed within 2023-2024. And we have the $60 billion program which we are planning then in these three years following that time. So nothing has changed to this commitment which we have laid out officially on the Capital Markets Day. Now, there might be always, you know, circumstances or reasons, you know, to pull that forward. There's nothing, you know, being decided, nothing being formally discussed at that time. We will decide that at the right time. But there's nothing, you know, to be speculated on at that point in time.

So on the mobile build-out question on 101, look, 101 has outlined its plan to collaborate with Rakuten on the build-out. They said that they want to go commercial in 2023. The company has a 25% chance. build out obligation by end of 2025 and 50% by 2030. So we don't expect that they're going significantly beyond that, but there's still a while to go. And what's going to be the impact on the market? Look, what I assume and what we always said is they have to defend a significant back book of 11 million customers. And therefore, we don't expect them to act super aggressively in the market. But obviously, their production model will change from we're procuring from Telefonica towards a model which is obviously provisioning of data based on their own network. This is what we're expecting so far.

Look, I see 1&1 is making a lot of, let's say, very clear and very logical steps towards their build out. It looks like that they are driving an asset light model by finding partners in that industry and not, you know, intensively, you know, extending their CapEx envelope. So they are talking to everybody in this industry to get access to their infrastructure. I think the infrastructure layout is very clever in the way they're doing it. I share Christian's view that we don't see a totally disruptive pricing model coming from that one. But for me, this is a little bit, let's say, the fairy tale of the hedgehog. and the rabbit. And therefore, we are the hedgehog. And when we talk about digital telco, when we talk about, let's say, the change in our infrastructure, when we are talking about the orchestration layer which we are building, and I don't want to repeat what I've laid out at the Capital Markets Day and on our strategy, We are preparing ourselves. Everything will be ready. So this ugly, small, hedgehog Deutsche Telekom will find its way. You will see. It's a good inspiration what 1&1 is doing on their modernization. I think the architecture is very smart. And it's now for us, you know, to be earlier at the destiny than the others.

Okay. And I think you had also a question on the 800 megahertz. So maybe just briefly on that one, there is of course only 60 megahertz of 800 megahertz available at this point. We have therefore proposed, like others in the industry, and its proposal is public, that there would be an extension and a larger auction at a later stage when more low-band spectrum can be auctioned at the same time. The reasoning is clearly all of this 800 MHz spectrum is currently in use. So withdrawing it from one of the operators that using it and giving it to an operator that may not use it for some time in large parts of the territory doesn't seem to be very wise. So therefore, we have stated our proposal. That's where we are right now. The BNES-A is looking at this stuff. Just to say, I mean, you know, the... the BNets A will take a decision. We are open for a number of outcomes. We can even think of an auction, an earlier auction under certain circumstances. But, you know, this is a subject of deliberations currently by the BNets A and we expect some proposals probably sometime next year. Okay, with that, let's move on to the next questions. And those will be from Josh at Exxon, please.

Hi, guys. Thanks very much. I'll keep to two. So the first was on the fiber joint venture with IFM. And I know in the past you've laid out quite a clear grid of criteria you look for in making these deals attractive. But could you just let us know what made this deal more attractive than others in the market and whether you're seeing scope to do similar deals in the next six to 12 months or so in similar areas? The second question was just around the competitive environment in Germany. I think having looked at your results, United, TEF Deutschland, we're still to see Vodafone, but it would appear that your share of retail net ads on the broadband side looks to be quite high still, I think probably above your target. And mobile net ads are very strong as well. So my question is, have you seen any kind of competitive response from Vodafone yet or anything shifting in terms of prices across the fixed and mobile markets? Thanks very much.

Hi, Josh. Christian here. So let me just flesh out a couple of things which is really attractive in the deal. One is there's no minimum commitment which we had to give to the investor. So we're all positive about the build-out figures which we put in the business plan. And we, as Deutsche Telekom, didn't have to commit to a minimum number. The second one is obviously that we preserve the active layer. and can charge for the active layer out of the joint venture, which is an important value element in that deal. And the third one is obviously, look, we get an additional reach of 5%. 4 million customers, but the leverage impact is below a billion. It's actually around 500 million. So I think all in all, this is very good. But also now we have to get it into play, right? This is the first kind of co-investment which we're doing, which is off balance sheet. You have to adhere to certain rules that you keep it off balance sheet. I think now the action is to come and obviously I'm positive that this becomes a success.

Look, with regard to what's going on in the market, it's always a competitive environment in which we are working. But we have not seen major changes to the basic pricing grid now for some time in this environment. So this market is well segmented in its structure. Therefore, I have seen even some step up in promotions, which is normal for the time of the year. Christmas is coming and all this kind of stuff is happening now. All operators have these promotions. We had even some promotions in summer. But Vodafone, six months for free for switches and those out of contract, this is something which stands out at that time. It is available from the beginning of November for three months. And we are looking at it and the impact of this initiative here. But But we are not concerned at that point in time because, look, we have a very clear strategy with Always Best Connected, our superior internet access. We have a clear kind of leadership with service and with our 5G rollout. And we have a very good, healthy intake of 180,000 branded contract net ads online. So why should we change something in our value proposition, which we have out there? So I think this is a reaction on their developments here. And I don't see this as a fundamental change in the market structure.

Great. Thanks, Tim. And the next question is from Ulrich at Jefferies.

Yeah, thanks very much, Tim. I have two questions, please. The first one is with the leverage being high, what made you decide to raise the divvy? I mean, the consensus in the market was for 60, so there would have been no pain to sort of keep it at 60, save the money and work towards the leverage. What specifically made you increase it? And the second question is, I don't want to make this, I don't mean this is a difficult question, just a chance for you to sort of share your thinking about it, but obviously you raised the stake in TIMOS at a point where the share price was sort of peaking out. So could you sort of put that into context, how you think about that timing? Thank you very much.

Let me start with the divvy. I think we have to go back into the year 2019. Look, in 2019, we lowered the dividend from 70 cents to 16 cents because of the uncertainty of the merger. Now we're reporting on a continuous basis that the merger is actually trailing ahead of schedule and that the integration benefits in the U.S. are coming in faster than we anticipated it to be. The second piece is if you take a look at our EPS expectation, we're expecting a number which will grow around 10 to 12 percent. So, therefore, I think it was time to also have a reflection to what extent shareholders should benefit from this forecast. from this EPS growth. And that led to the decision to actually increase the dividend to 64. Actually, if you take a look at the current dividend, we could have gone to 68, but we basically decided to stay in the middle ground in between 60 and 68. But I think it also should... give you an impression how confident we are that the integration process in the U.S. but also that the underlying commercial and financial performance in Europe will allow us to basically pay the Divi. But bear in mind there's no read across. We're going to take a Divi decision every year given the situation which we're currently facing. So if there's now a six and a half percent growth in there, Don't make this kind of a CAGR growth because we decided to take a decision on the DV every year as we're getting towards the third quarter.

Look, with regards to the U.S. timing and the deal here, the first thing is we have said on the Capital Markets Day that we are now heading towards a clear 50% ownership. The second thing is when we look into the business, we are looking on our net present value. We're looking on the business model. We are looking on the value. value which we see inside of the operations than rather looking on a day-to-day share price performance. There is some volatility always in share prices going up and down and therefore this was not the driver for our decision because The pricing which we had on the stock was mainly driven by a fixed price, which we had already agreed much earlier. And by the way, on the 45 million shares, the average price which we paid is $101. This is what we were paying independent from the share price which was trading. Now, for us, it was very important to move quickly because it has a lot of advantages. First, you know, the allocation of proceeds coming from the Dutch sale. Second, the opportunity of getting SoftBank into Deutsche Telekom's shareholding at a share price of 20 euros Deutsche Telekom. the opportunity of not getting it all in one single step and being dependent on the share buyback at one point in time. So we have now much more flexibility in this regard going forward. And thirdly, the win-win situation, which we were able to realize with our partner SoftBank. So I think overall makes totally sense. The valuation of that business we see much higher than, you know, what you see on the current share price just from the merger plan and the discounted cash flows which we receive. And we are long-term investors. So the faster we are, the better it is. I like speed and I was really impressed about what was possible in the last six months.

Thank you, Tim and Christian. So the next question is from Jacob at Credit Suisse, please.

Hi, thanks for taking the question. I'll keep it to one, please. I just had a question around cost. Can you maybe make a little bit of a comment on what are your expectations from the rise in inflation, particularly the impact on labor, upcoming negotiations of labor costs? How do you see those being impacted? And also, if you can help us just sort of understand what actually drove the outperformance on the cost side. What specifically is it you're outperforming on OpEx on? Thank you.

So obviously, Jacob, you can be assured that we have run a stress test given the inflation rate increases right now. And there are basically three areas which you have to take care of. One is obviously the labor cost, and that is always subject to tariff negotiations. And I think in the previous years also, the tariff negotiations were generous. Remember that we have closed a generous deal back at the beginning of the COVID crisis, so I expect that pays off a bit. The second piece is actually energy. The energy costs within our portfolio are hatched for the upcoming year in 2022, so more than more than 80% of the contracted volume is hedged. So from this, we don't expect a lot of impact. And we have a tailwind in Germany, which is the reduction of the renewable energy surcharge, which actually helps us. And the third one is equipment costs, where we have long-term... uh contracts with our vendors and we don't expect a significant deterioration of that of that number so everything is is pretty much in line with the plan with or without an increased inflation rate expectation and the third topic is we expect this to be a temporary effect so that it will come down in 2022 and 2023 onwards and won't stay where it is right now

I'd like to add something to Christian's comment, maybe not only on labour costs, but on the indirect costs as a whole. And the older I get, the more agile I become. So the way of leaner and more agile organisations and the way how we operate this company, is changing every day. We become much flatter in the hierarchies. We have less silos. We have less leadership positions. And we become more flatter in the way how we get organized. And it always impressed me in the way how our organization is now working cross-functionally in clusters, in organization units, which are not always, you know, static. The second thing is this hybrid working, and we mentioned that already earlier, is creating a new setup of how we organize our headquarter buildings or our organizations. So we are heavily working on reducing our real estate, and I think, Christian, it's fair to say that we are making good progress in this regard, so that we make more work and co-working sharing here, that we are bringing more people into the same building, that we really utilize in this more hybrid working world the offices which we have, which is helping us on the cost side. On top of that, we have this comprehensive digitization, which is the head of our strategy. And that is true as well for the internal processes in the way how we operate. So this is another driver of cost saving beyond that one. And then there is a last element that we have questioned in our – what is, let's say, a thing we have to do our own and what can we, let's say, do with partners in a better value chain? And one recent example which is affecting our ERP IT people is that we have structured a deal with Accenture that they're taking over our ERP people because our ERP migration is almost accomplished. But they can use this ERP digital experts for third parties as well. And that is a win-win-win situation for Accenture, for us, and as well for the people working in this organization. There were some headlines in the news recently that we are reducing our IT experts. That's not the case. We are building IT experts. We need more nerds to drive our digitization in this organization. We even can't get enough at that point in time. So this is not something where we are reducing our labor force. That's an area where we build labor force across our footprints. But But with the SLP outsourcing deal, we found a new partner for a specific activity.

Hey, Jacob, Christian here again. Sorry for misinterpreting your number. It looks like I have to go to the ear doctor. I thought you were asking a forward-looking question, not a backward-looking question. Apologies.

Okay, so we are happy with where we are on the costs, made good progress, and there were lots of drivers, lots of very broad-based costing reductions that led us to outperform the target across all the segments, all the categories. IP migration was an important part and so on. But with that, let's move on to the next question. It's from Robert at Deutsche Bank.

Yeah, thank you. Two questions from me. Tim, I think hedgehogs are quite cute rather than ugly, by the way. The first question is, Christian mentioned that the growth recovery of tea systems benefited from some phasing and there was a favorable comp. I think. So does that mean there's no fundamental change in customer demand at this stage? Is that fair? Are you seeing a pickup in orders yet as business confidence returns? And also on the retail side, is growing footfall starting to help you on TV in Germany, for example? And a follow up on the FiberJV in Germany, how does it work with the external investor proceeds? Do you keep put straight back in or do you inject various staging points?

Yeah, I can start with the T-Systems question. So look, first of all, all numbers on Q3 are compared to 2020. And in 2020, obviously, we had a much stronger lockdown than we have it this year. So both on the order entry side, you could see some favorable effects this year. And also on the revenue side, fundamentally, there is demand in the market. But what we're seeing is a current pattern. It's a rundown of the existing IT business, which continues to be there at the same speed where it used to be, because that's all laid down in the contracts to what extent you have to improve your terms and conditions every year. The second one, there is demand in the market, which is very much along other areas, which is public cloud, which is digital solutions. And I think we have to manage that balance. All in all, this market is growing. There's no question. But we are getting dragged down by our legacy IT business every quarter, and that pattern continues to be the same.

Maybe on the T-Systems side, just because we looked into this, you know, we have this transformation which is going on in our T-Systems business where this classical IT outsourcing, which we call MIS business, this business is shrinking, transforming itself into more cloud-based service. So this is something where we are, I would say, more than halfway through transformation. already with our organization. But what I find very encouraging is that, you know, we see some really compensating growth on these new businesses, 18% growth year to date on the cloud, 13% growth on digital solution. Another, you know, 4% growth on the security. And on MIS business, sorry, the MMS business and other entities, you know, we even had double digit growth. So this is a mix. And I'm always saying to systems should, you know, work individually. ambidextrous. You know, it should be, let's say, on the one side, growth. On the other side, you know, the transformation, the classical business. And we have seen that this was working nicely. We have closed some activities globally which were not profitable. This is why we are not having this super high growth ambitious. We have very much focusing on turning around the EBITDA and the free cash flow and growing the margin into a 9% ratio, perspectively. And that is, I think, on a good track. On the Fibre side, look, the... Have you already answered the question? No? Yes, go ahead.

So on your question on Fiverr, yes, we're getting 450 million from IFM in the first place, and we are basically putting equity in a similar amount into the joint venture. So in a way, it's been injected back.

Great. And with that, we move on to the next question. Thank you. To James from New Street.

Yes, good afternoon. Thank you very much indeed. So, two questions, please. The first one was just regarding performance in Germany overall, and you're putting up some very strong numbers across the board. But if I look at the mix reported between consumer and business, I mean, it looks like revenue growth for business is dipped slightly negative this quarter in the German division. I was wondering, is there a specific driver for this? Are you seeing more competition start to come in from some of the alternative carriers? Just interesting kind of thoughts on what's going on within the business line within Germany. And then secondly, if you had anything to say on kind of thinking around your tower assets, It'd be great to hear an update, obviously, six months post the CMD now. Are you getting any stronger preference for one structure or another? I mean, are you still interested in doing a transaction, or could it be that you just keep control of the tower assets in their current form? Thank you.

Let me do the one on the B2B revenues, James, because it's a headline number. It's not an organic number. We have some changes in revenue recognition, which have also explained why we actually talk about organic in the German unit. We have some international businesses. and currency effects and so on. But from a year-to-day perspective, the organic growth was 2.2%. So we are growing in B2B as we have done in the past and as we will do going forward. The drivers for this growth have been outlined in the Capital Markets Day. So you can maybe revert back to the presentation just to recap very quickly. We are seeing growth and digitization, especially in the SME market. in the public domain. We are hopeful we'll see some adoption of digital products, IoT, campus networks, SDX. We're seeing a roaming recovery, of course, although not much yet in this quarter. But going forward, hopefully that will be the case. And then we also have the DT specifics. We moved our T-Systems business over to Germany. We expect synergies from that. And we completed the IP migration, the B2B, which will also give us a tailwind. So we feel confident. And as I say, this year to date, we can take you through the drivers here, but we are organically low single-digit positive. With that, maybe, unless you want to add something, we move. I go to the towers.

Yeah, exactly. But by the way, I'm still struggling with the question, and it might create a perception which we do not have. Because a quarter of a quarter, we had a 3.8% growth on the EBITDA in Germany, which I found very strong. We had super broadband net ads. We had almost no demand. line losses anymore. What I found very encouraging is the growth which we have seen, especially on the consumer side, on the mobile, magenta mobile services. And on top of that, we had a strong service revenue growth as well on the consumer side with almost 2%. So, therefore, this is good. And as Christian laid out already, the challenge which I see is with all this super broadband which we are serving in Germany, we should do a little bit more TV and magenta TV. This is something which I'm focusing on these days. And the fiber net ads weren't that strong as in the past, but this is a normal circumstance on the market development. But, you know, we are very comfortable in our market share relationship, which we are looking for. So I found this from Srini's achievement quite encouraging. Now, coming back to the most hottest question on this call today, which is the question about what is Deutsche Telekom doing with their towers? And look, guys, the answer is simply there's nothing new to say. Everything has been said already. I can tell you what we have achieved in six months was unbelievable and complex from the doing and from the approvals and from making that happen in our numbers here. You know, we are considering opportunities here. We are working on this one, but we will inform you when we have something new to tell.

Thanks, Tim. And with that, we move to Akhil at JPMorgan.

Yeah, hi, good afternoon. I've got two questions, please. Firstly, I just want to go back to the U.S. If we look year-to-date, T-Mobile is down about 20% of its peak, and Verizon AT&T are also down 10%, 15%. And it seems that investors are starting to worry a bit about the longer-term competitive outlook with pretty robust momentum in the cable and who knows, and obviously DISH entering the market too. I just wondered if you could just give us your updated views on the competitive environment in the U.S. and just how you think about that position of T-Mobile U.S. Obviously, Tim, you mentioned that you're very confident long-term, but if you could maybe outline why and obviously why you disagree with the markets pricing in. And then the second question was on regulation. In Germany, we've seen the new German telecoms law, and if I'm right, one of the provisions allows for operators to potentially start to raise pricing with inflation. So I was just keen to understand your thoughts around that, if that is a likely change, and if that goes through whilst you can't preempt what you'll do, what are your thoughts on the potential for operators and the market to accept that sort of shift? Thanks a lot.

Look, I start with the second piece of the question because, you know, before I went to the meeting, I had a discussion with Srini exactly on that topic. And the question is there are two folds. The first one is when it comes to wholesale prices being cost-related, is there an impact from inflation going forward? I believe yes. Have we taken any activities on this one? No. Are we looking into this one? Definitely not. So this is, let's say, on this wholesale regulated environment. Now, when it comes to the indexation of consumer prices, we do not have today any kind of indexation in Germany. As you know that from the UK market, I think we have it in a market like Austria and some smaller Eastern European markets. But in principles, we don't have an indexation for inflation in our retail prices. There's another element which we should always consider. The moment you have an indexation for your existing customer base and you raise the prices but the high street is not following, you create even a bigger back book. And I have seen some of our… competitors in other markets where at the end of the day, the consequence was that their APO was shrinking in this environment, despite the fact that they had the possibility of indexation. So, look, the first one is, I think we are well-positioned with this clever hedging policies and what we have done, even the aggregation of buying power for our build-out, that we have now the inflation risk limited from our cost perspective here and on our cost base. Second, if it is needed, you know, that we have to pass them through, we can do that on the high street and can try to do this prospectively. So this is, let's say, a thing which we are working on it. But this is, I think, too early to say how we are reacting on this one. This is an action which we have internally, but we haven't found a final answer on this one. The second question is about the U.S. And look, I think I will never, by the way, I think the market is very clever. And the market always has their thinkings and how they look at it. But, you know, I think the... The development which we have seen for the whole telco market in the US, including the cable course, was not very encouraging over 2021 so far. This despite the fact that most of the US telcos has performed broadly pretty well. from its operational perspective. So it's more a worry about the future and how this market is working. There is a worry about intensive, higher intensity on the competitive landscape, triggered by maybe the offers AT&T is doing in their market. on their customer base. There is a worry which comes from the idea of fixed mobile convergence and the question about is there a development taking place as we have seen that in the German and the European markets so far. There's as well maybe a concern about the question about the regulatory impact which comes from the administration. Honestly, I always understand concerns which underpinning, let's say, the question about the future, but And for us, you know, our business place is very much built on first on the integration of the sprint infrastructure, which gives us a super high cost advantage, reducing the cost one time by integration, but then having a better economies of scale in the way of reproducing. It very much comes from the idea of expanding into new markets where we haven't been successful in the past, where we see the big uptake, the moment, We are opening up our 5G network, rural, small markets, B2B opportunity as a next. And even our home broadband opportunity in areas where fiber is not available at that point in time is encouraging. So therefore, I'm... I am not as pessimistic as some of the sell-side investors have underlaid that. I think there is a solid growth in this market, and even, you know, it's not as disruptive. It's more focused now on infrastructure, and we are very well positioned on this infrastructure side at that point in time.

And there was an interesting scenario which Mike laid out throughout the call. He said if the Sprint churn would be at the same level like the T-Mobile US churn, actually the net ads would have been 1.2 billion rather than 673. So you see the underlying impact on that migration effect.

And to add the good news is actually that those customers who have migrated have the same churn. And that's evidence that that's a relevant consideration. Next question is from David at Bank of America, please.

Yeah, thank you, Hannes. Thank you to the management team for taking the questions. So a couple, I might just follow up on James's tower question. I know you said very clearly, Tim, no developments to announce. But if you could just remind. us how you are looking at potential partners, what are the priorities for you, and then on the whole Kingmaker topic, have you had any more discussions around your BT stake and how you could see your influence there in a potential evolution with Mr. Drawing? Any insight would be welcome. Thank you.

Next question, please. No, look, David, on Spotify, you can hear my answer, you know, downloaded already 300,000 times. The first question, look, sorry, but look. On BT, I cannot say something at that point in time. We have a stake in this company. I think BT has done a lot of things right, solving a lot of issues which were on their plate, especially we have recently saw their cost reduction coming in earlier. We have seen that a lot of, let's say, this fiber story is is doing well. The BT stock is something which we see as a long-term value creation for us. And it's very interesting now to see what's happening around that asset here. I cannot speculate on Patrick Drey's intention here in this environment. He has a standstill until the 10th of December, so we are very close to this one. And then we will see. We keep all options open. In this regard, it's good to have that stake in this dynamic environment. But please understand that I cannot speculate around, let's say, opening up our hands here to show the market where we are heading to and then suddenly something else is happening. I think it's wise for you as a shareholder of Deutsche Telekom that we are not discussing too much about what we might do. On the towers, I think a good question because, you know, it is the options which you have. First option, sell it. Get the money and run. Second option, you know, sell a piece of that and run the business, you know, like Vantage or whatever, full consolidated in the balance sheet of Deutsche Telekom and develop your business and making the value transparent to the outer community. Third one is find a strategic partner, manage the business, and participate in the value creation over the long term, consolidated or unconsidinated. Look, we do not need the money. We see the deleveraging coming in the U.S. We have stemmed a lot of, let's say, things like Shentel and others in this quarter and Spectrum. And we have our guidance on the debt very well under control. So thanks to Christian and his team. So there is no need for us to urgently sell that asset. Second, the question about, you know, 10 or 20% sale and IPO, you know, I'm not convinced. Because, you know, you are then in a constant conflict. Is the build to suit and the expansion of your tower core affecting your debt burden and your rating at the mother core? So you have two different business models, which it's very difficult to consolidate that in one. Thirdly, you know, finding a partner. We highly prefer the option of having a strong partner who is working with us going forward. And I even prefer the deconsolidation of that asset, that this company is entrepreneurial independent on, let's say, participating in the growth of the business. of the 5G build-out, the edge cloud environments, the infrastructure business, and all this kind of activities, which is driving the value and the growth of this entity. We are participating in that growth these days. You have seen the nice numbers on group development, which are driven by the TowerCourse. And therefore, we are elaborating on these priorities, as I mentioned them. And The moment we find the right solution, we will share that. It's not something which we don't want, but it's too early to comment that to communities here.

Thanks, Tim. And with that, we move on to Ottavio at Soggen, please.

Hi, good afternoon, and thanks for taking the questions. I have a couple on my side. The first is on financials, and the second is a bit more on strategy. Starting with one from financials, I was wondering if Christian can help us in a moving piece of the free cash flow for the next quarter. Look at the numbers you delivered in nine months. You've almost done the free cash flow for the full year, and you would have exceeded if you would have booked an advance payment of $900 million on cash leases. So consider that you prepay these cash leases. Considering that the drag on working capital from the U.S. is decreasing significantly because of the changes, it's a big shift on device financing. And the EBITDA growth compensate broadly for the capital increase. I'm just wondering, is it just a matter of management keeping their traditional prudence, the reason why you haven't upgraded free cash for guidance more, or there is something that we should be aware for the fourth quarter? The second is, as I said, broadly on strategy. Now, you have talked significantly about the one that you want to show, the burden of the rollout of the FTTH, the JVR instrument to do that. But two things basically arise. The first one is that if you basically don't have the asset in your balance sheet, in your perimeter, then you need to use it, and therefore you have to have a contract. So we're just wondering which sort of wholesale agreements you have, and is that wholesale agreements be open to all the third parties, or you have a preferential rate to basically lease back some of these lines? And the second, it's on the options. In the last press release, you basically said that you have the option to acquire one share from IFM to consolidate the company. And I was just wondering if your ambition is just to consolidate, to control, or to own these assets eventually. So I was just surprised about one share. Why you don't want to buy back the full asset and potentially do the same with all the others? Consider that one of the issues going forward, free cash regeneration. So this company will be very significant considering the cash coming from the U.S. So why eventually you don't want to own the full asset? Thank you.

uh... let me let me start with the last question for so first of all this uh... one share to consolidate the business is just creating optionality uh... full consolidation if we would lay out this uh... already in the contract uh... obviously would create a consolidation impact therefore uh... i think we want to keep our options open on this one uh... this is how i would uh... answer the question but we cannot give you details off of off this contract And on the free cash flow question, Ottavio, it's very much around we expect that there's more capex to come in the fourth quarter this year, that we have to pay a little bit more cash taxes, that some of the positive working capital effects which we have seen in the third quarter will pass away. And the fourth one you mentioned yourself, it's prudence.

And with regards to the strategic question on FTTH and our joint ventures, look, our joint ventures, our FTTH infrastructure is always accessible for everybody else. We don't have the contingent model anymore. We have now a commitment model, which is helping us to fill the pipes and to make our fiber platform more financially efficient. um attractive for us and you know that we have before we went into all this um big build out commitments here we have um signed deals with telefonica and with vodafone and with eins and eins so that you know their volume commitments are already helping us um in the build out which uh which we which we have laid out so We had first the contracts and the commitments from these guys, and now we have fulfilled the CAPEX and the infrastructure commitments which we recently announced. Now, that said, our idea is always to have a wholesale agreement. Today, we have no prices for FTTH, which are regulated. It is an ex-post situation, and we are bilaterally negotiating these contracts. Our idea and our ambition is always, you know, asking for reciprocity. That means, you know, that we get the capacity as well to use infrastructure from third parties in an open access model as well. And every week we are signing with municipalities this kind of agreements. Recently, I think we found a way for Hamburg as well. which is bringing us forward. So it's open to all third parties. We want to be open as well to other parties to use their infrastructure, that we do not have this inefficient overbuild. And do we have special rate for leasing back? No, we don't have this kind of special rates for leasing back.

Okay, thanks, guys. And with that, we move on to George at Citi. And then we have two more. I can see two more that have questions. We'll take those and then wrap up. So, George, if we can have your questions, please.

Thank you for taking my questions. It's a couple, but they're linked. So the first one is around the EU regulation around the Artificial Intelligence Act. I'm just curious to hear your comments, whether centralizing some of the antitrust regulation on this front at Brussels level makes sense, whether the initiatives that are taken are in line with what you expect. and if you feel protected from these initiatives. And then my second question is more, and you mentioned Edge Cloud earlier, is more to understand whether it does make sense for you or is necessary in your view for some of the hedgehogs to get together in order to create some differentiation on the Edge Cloud, or whether you think going your separate ways, you can still find... a way to remain relevant within the value chain.

Thank you. So first, by the way, I'm not sure whether I know this AI act. I know the DMA, I know the DSA, and I know this initiative from Thierry Breton and especially from Madame Vestager on the antitrust regulation, which is now in the reconciliation with the regional governments. And by the way, to be very clear, the proposal for the digital market, the so-called DMA, is something which we highly support, highly support. It is very important that the competition law is adapting the dynamics of the digital markets and the geopolitical realities. That means, you know... On the one hand, effective enforcements as far as abuses by dominant platforms are concerned. And on the other hand, enabling companies in our sector to gain the necessary scale via corporations or consolidations, especially when it comes to intermarket consolidation. and therefore we welcome these activities. I have had recently a conversation with Vice President Vestager as well on these things, because I think the dominance of the so-called gatekeeping platforms is visible to everybody of us, and we have to introduce some restrictions on practices like... Here, antitrust laws and the like. I'll give you an example. These big hyperscalers are buying very small companies which we are using to digitize our core infrastructures and the softwareization of our infrastructure services, network services. And the moment we do that, they get bought by the big hyperscalers. I call this killer applications. But due to the size of them, nobody in Brussels is looking to that one. And the second thing, which I mentioned, this one, is the U.S. market has three to four players. China has three players. The big markets, you know, are gaining big economies of scale. And what you have seen in the U.S. since we have merged our activities, there is a super activity of building infrastructure. So the opposite of what everybody is expecting, that now there is no CapEx or... There's a restricting taking place. The opposite is the case. It's better for the consumers and it's better for the country that we have consolidated. Otherwise, we would never have been in the position to catch up to AT&T and Verizon in this environment. And we have seen the same in the Netherlands. It was good for the consumers that we were allowed to merge with Taylor 2. And these are two good examples that our merger control in the telecommunication environment is by far too restrictive. I think one of the answers is that antitrust laws should define in Europe the market not by 27 pieces but by a single one and then looking into whether there is sufficient competitiveness. So this killer application and killer acquisition thing is something which we mentioned. I think the Intra-market consolidation for the European telco sector is something which we mentioned. But overall, the Digital Market Act looks like it's trying to reduce the power of this gatekeeper platforms. And therefore, I think it's a good initiative for our sector. It's not fully addressing everything what we have looked for, but it looks encouraging. Good. On the edge cloud, makes sense or necessary for hedgehogs, ah, the hedgehogs again, to work together, to go separate ways. Look, if hedgehogs make love, they do it very carefully.

Okay, I think we leave it.

No, no, I give you an answer. It's a good day. It's a Friday. Let me say that this way. There are only a few telcos who are still able from an IT competence to build managed services around cloud infrastructures. You know, if I look to who has the IT capability and the digitization services, like we have it under T-Systems, most of the telcos don't have that anymore. So our partners are not the partners which the normal hedgehogs would be, the telco hedgehogs. This is not what is helping me here. This is more the question about are there other system integrators, managed cloud service providers, are there other infrastructure companies who are providing cloud? Look, I think we need an ecosystem here in Europe where we work better together. We are supporting this initiative because we need a sovereign cloud. In Europe, we need as well from a legislation perspective, the Cloud Act and the GDPR, the European is not synchronized at that point in time. So there's a lot of legal uncertainty here with Schramm's two decisions. So we need a kind of solution for the European environment. I think, you know, it is not about only infrastructure. It's as well a platform as a service. And therefore, we are supporting this open source idea based on the Gardner principle to build a kind of cloud edge ecosystem for our infrastructures. I'm open to do this as well with my competitors if they are interested, but I don't see them really investing into this independently. We have seen recently some announcement from telcos to do this with hyperscalers. We are considering doing this more in our ecosystem with our own competence to keep the control about the infrastructure, especially about the edge of our networks. And if we find partners here in Europe who are driving this GaiaX or the open source standard for cloud infrastructure, this might help us as well in the edge environment. So a very complex question. I think we should... dive a little bit deeper into the logic of edge clouds and what it means for fixed and mobile and how we drive that. I think, you know, I keep it here for now and I offer you that we have a deeper discussion on this one soon because there's a lot more to say to this from a time perspective. I cannot handle it right now.

It's nice to have all these animal references. I remember when we were talking about the golden goose and the duck and all these, you know.

This was Massa, wasn't it?

White geese, exactly. The wildlife, the white foal. So now we move on to Emmett at Morgenstern, please.

Thank you, Hannes. I've got two questions, please. The first question is for Christian. Christian, you mentioned a couple of times on the call that we should not extrapolate the current German EBITDA growth rate. due to the loss of Labarra and the public sector contracts. Can you maybe just give us a little bit more detail? What kind of magnitude of EBITDA headwind are we looking at? Maybe I missed it on the call, but are we looking at something like one to two percentage points as an approximation? And then the second question is kind of technology-related, a little bit like the last question. I just saw an interview with Walter Goldenetz a few weeks ago talking about standalone 5G trials in Germany. Can you maybe say a few words about what you're seeing on these standalone 5G trials, and is that taking us closer to these so-called 5G killer apps like virtual augmented reality? And I have to ask as well, do you have any kind of early thoughts or early readings on what metaverse traffic could mean for your networks as well? Thank you.

Okay, Amit, let me try to answer the first question, which is by far easier than the second one. So on the German EBITDA, I think I said it in the call, the Lebrara effect is a middle double-digit service revenue and EBITDA figure, which is going to come as a headwind. And I said something on the fixed-line business with regard to the public sector business, but that is low-margin business, so it's not affecting the EBITDA significantly, but the service revenue. So, look, we have a guidance of 2.5% to 3% for Germany out there. We're happy with the guidance. If we're better, obviously, we will report better figures. But all what I'm saying is the 3.8%, which you have now seen for two quarters in a row – have to be basically adjusted for certain effects and a labora is the biggest one when it comes to EBITDA contribution.

And we, of course, just raised the guidance for XUS by 200 million, and it was solid above consensus, right? So this is not meant to be. This is mainly line item management, right, that this was about. So a standalone 5G, we are working on it, and we will make it live when it will create benefits for our customers. So we are absolutely on it. And at this point in time, it, of course, depends on handset availability and other factors that we don't see yet a significant benefit. In the US, we operate a market-leading standalone network. Last question, maybe from... And now moving on to Usman from Bernberg.

Hi, gentlemen. I've just got one remaining question, please. It's on the FTA JV that's been done. So I was hoping if you could give any kind of details on what kind of debt load the JV is expected to carry or anything about the penetration growth or the penetration on the infrastructure that's assumed or returns or any kind of guidance to the economics of the JV and how much volume telecom has committed to the JV in terms of retail versus wholesale. That would be great. Thank you.

Look, Usman, I'm going to be short on the answer. We said it's about 4 million additional rural homes which we want to connect. We didn't say anything about retail and wholesale. Obviously, the JV has to conduct business with other third parties. Otherwise, If it's just relying on us as the only and sole customer, we're getting into a problem when it comes to consolidation. But we don't declare any details on the financial construct beyond what has been said last week.

And Usman, we can give you sort of some more deep dives to the extent that is possible right now at the IR level. And I think with that, thank you very much for your attention. I'll pass on to Tim for his closing remarks.

Look, guys, we are approaching Christmas and we are late in the year and therefore in Germany it's normal that you have a small rhyme for ending the day. And therefore, thank you for supporting us throughout the year. It was a very exciting year so far. We are on good track on executing everything on the Capital Markets Day. I'm very encouraged and I want to repeat what we are doing and where we are going. I'm a little hedgehog, brown and small. But when I feel frightened, I never crawl or curl into a tiny ball. It's autumn 21 and we build a strong nest. Telekom is still the best. Goodbye, guys.

Okay, that gets us in the right mood for Christmas for sure. And the conference with that, of course, is now drawing to a fitting conclusion. And should you have any further questions, please be kindly asked to contact the Investor Relations Department. And thanks, Tim. Thanks, Christian. And thank you all. And with that, I pass back to the operator.