Deutsche Telekom Ag S/Adr

Good morning, ladies and gentlemen, colleagues here in Bonn. We're reporting today on the Q3 figures. Kristin Illich, the CFO of Deutsche Telekom, and Tim Hudkus, the CEO, and Tim will start as usual.

Thanks, Philip. Good morning, everyone. I think everybody is aware that our market environment is not easy. Every day you can read up on this in the media. Investments are being cut back everywhere. Dividends are cut back or companies are downsizing their workforce. That's no cause for celebration. I've just come back from Tel Aviv. I spent five days in Tel Aviv and the momentum that I saw there, I would wish that we had the same momentum. So, this is not nice generally, but I'm all the more pleased to be able to paint a different picture today and I'm happy that Deutsche Telekom is doing very well. Now, we are delivering and we are acting and that's the most important thing to be reliable. fixated on growth. We're keeping our word. We remain on course in terms of our capital market targets. We're acting. In the first nine months of 2025, we've delivered strong results. 3.7% organic revenue growth in the service business, 4.4% organic growth in EBITDA, 6.8% growth in our free cash flow and 9.5% growth in the adjusted EPS. That's an important metric. So that means we are fully on track in terms of what we promised to the capital market and our investors. Of course, we are benefiting very strongly from T-Mobile US. I mean, that's just a fact. It's our biggest business. Our colleagues across the Atlantic have already raised their guidance and today we are following suit. Our full year guidance for business outside of the United States remains unchanged. And we want our shareholders to benefit too. And this is why we are sharing this success with them. The Board of Management is planning to increase the dividend for the business year 2025 to 1 euro. And this makes it the highest ever dividend payout in our company's history. We will additionally buy back shares worth up to 2 billion euros. Now, in total, this will create a total shareholder return of almost 7 billion euros. Ladies and gentlemen, we have also made good progress strategically across all regions in the United States. We have not only maintained our growth path, but accelerated it with a series of successful acquisitions. In Germany, we continue to invest in the future in a systematic way with a record-breaking fiber build-out. With Europe's first AI factory, we're showing that in Europe, this is possible. And you also attended the press conference with NVIDIA. High-performance technology is being built in Germany as well. Now, in all areas of German telecom, we are now using AI in customer service, in internal knowledge management, in sales, in technology. But coming back from Israel, I can tell you and seeing the momentum there in digitalization, I have come back with a lot of energy and want to accelerate things in our company as well. Our key financials are trending well as well. Our earnings are growing year on year in all segments organically. T-Mobile US adjusted core EBITDA stands at 6.8%. In Germany, while we are growing by 1.4%, we are below our expectations from the capital market day. So following my speech, Christian Illich will comment on this. Growth in Europe is at 5.9%. And our system solution business has developed very well. Growth of 11.7%. And so the total group is definitely on track. Ladies and gentlemen. we are then the network and we are the best network and i think everybody in germany is aware of that we can see it from all of our surveys but we are making the network better every single day in the past 12 months we have reached 3.6 million additional households in europe with our fiber network that's almost 23 million people that can now subscribe to a fiber optic connection from us or have already signed up. A particular focus of our attention is Germany, of course. Here we are approaching the 12 million mark for homes passed and we continue to invest in expanding the network. 2025 has already been a record-breaking year for us. Never have we passed so many households. 1.7 million in the first nine months of this year. Never have we connected so many customers. 474,000 homes connected. And all this thanks to a more efficient build-out. Making use of tools like artificial intelligence to speed up our planning at lower cost. Which means that our strategy is paying off. We are building out faster, smarter and more sustainably. And also... We participate in a tax benefit from the accelerated depreciation expense. Here the federal government really has delivered and we will reinvest these additional funds, this financial gain in its entirety. I think this is a clear commitment that we are showing here that the incentives coming from the federal government are really um a good thing and we we will keep investing these additional funds in the fiber build out at the same time we want to continue adding 2.5 million homes past every year we will focus even more strongly on connecting rural areas that's more expensive when it comes to the build up and that's why we need these additional funds and we want to connect more multi-dwelling units also. We want these lines to be used also. So focus on MDUs and also we want to strengthen our broadband business in the long term. Optical fiber is the technology of the future. These days there are only few skeptics now and the science-backed arguments for this technology speak volumes. Just last week The German Professional Association for Optical Fiber published a comparative study of cable networks versus optical fiber. And the findings are fiber offers up to 20 times faster upload speeds. Data packets travel 2.5 times faster from the terminal equipment to the server and back. More users and more data traffic are no problem because fiber is scalable. But the underlying problem with the fiber build-out is not a fundamental skepticism about the technology itself, but unfortunately the much too low take-up rate for lines. And I mean our vectoring and super vectoring network in Germany is so good and has been accepted so well. Many people are quick to criticize the lack of fiber build-out in various German regions, but once it arrives, the numbers of people signing up are extremely modest. And so the fiber build-out remains incomplete. So this is also a thorn in the side of the Federal Digital Ministry. We therefore explicitly welcome the government's recently launched information campaign. Fiber build-out is a marathon and not a sprint. The more support we receive, the better. For example, it would help us if government would commit itself to using fiber exclusively. Government could also give us a helping hand with legislation. For example, by allowing a build-out in multi-dwelling units by law, or by accelerating approvals. Simpler, more digital. by actually making it possible to do more, we are definitely willing to do that. The United States is a prime example of how different it can be. There, our fiber joint ventures are growing as planned, serving more than 930,000 customers with hyperfast fiber and with Srini Gopalan, T-Mobile US has a new CEO who knows the build-out challenges like nobody else. And what about mobile communications? Here the situation is very clear. We are clearly in the lead, as attested most recently by trusted brands such as Computerbild in Germany, Ukla in Austria, Poland in Greece, Umlaut in Greece, and OpenSignal in the United States. winning all the tests that are supported by their publications and we're very proud of that. But our expectation is to maintain this leadership in all of our markets and even to extend our lead. Project Nemo in Germany, for example, is a prime example of that. Our customers recognize that our networks are first class and they are rewarding us for this. In the United States, we're excited to be setting records in the wireless sector More than 5.4 million people signed up for a plan with us in the first nine months. These are postpaid contracts. And just look at prepaid as well. That's 1.3 million net additions of customers more than in the prior year period. In Germany and Europe, our mobile contract net additions reached more than 1.2 million. You can see that our flywheel, our strategy is really growing. paying off. Broadband business in Europe is growing solidly, although it slowed slightly in Germany. Competition in this field is intense, but as I outlined before, we have a new approach on the fiber build-out and this is how we are going to tackle this now. Ladies and gentlemen, we won't stop. This is one of our guiding principles. which also means we will keep investing in Germany as a place to do business, in the future in artificial intelligence. In January next year we will open an AI factory in Munich. Our new AI industrial cloud is being built in the heart of Munich, deep underground, ultra-modern, state-of-the-art technology and open for startups SMEs industry research and the scientific community powered by 100 percent green electricity with the combined computing power of 2.3 million computers and I can tell you one thing this is what many digital experts in Israel are envious of the kind of capacity we can make available to industry here this project is made for Germany You know, it's a play on words that we're using in our communication. We are bringing together the biggest specialists in this field, Deutsche Telekom, NVIDIA, SAP and other partners. Between the initial idea and the launch of this, just six months have passed. So, This project is the pure embodiment of our can-do mindset. And in gigaspeed, we're making Germany's economy future-proof with AI. This doesn't just apply to manufacturing industry, but also as a service provider for the public sector. We are continually challenging ourselves internally, too. In the area of customer service, for example, our Fragmenta chatbot, supported by AI, now has a first resolution rate of 55%. Now, this helps us save money, and it helps us improve the customer experience. And recently... I dealt with the company that builds the agents that support the chatbots, and there's clearly more to come. This will become even more exciting in the future. For our business outside the US, we expect cost savings of around 800 million euros by 2027, and we're convinced that we can achieve even more. That is also our can-do spirit. With data, with technology, and with the necessary care and responsibility. A further key element of our strategy is sustainability. Here we've also made good progress. Despite rising data volumes, we've been able to reduce our energy consumption Europe-wide. And we've won multiple awards for this. I think this is an excellent result. A lot is going on in the engine room, kind of behind the scenes that not too many people are aware of when it comes to our server architecture and other aspects. Ladies and gentlemen, I will end with a look at our revised guidance. For the third time this year, we are raising our guidance for Abbott AL and the free cash flow AL of the group. Now to around 45.3 billion euros. around 20.1 billion euros as far as the cash flow is concerned. Adjusted earnings per share are expected to increase to around 2 euros. A major driver of this is our acquisition of US Cellular. For our business outside of the US, our guidance remains unchanged at 3.6 billion euros. And so we are sending a clear message We deliver on our promises, we invest in the future, in fiber, in AI, in our people. And we are not waiting for others to act. We act. The best networks that connect people today and tomorrow. Coming from German Telekom. Future technology that strengthens our economy. We want to be as dependable as possible. We will stay courageous. We will keep moving. We won't stop. And with that, I will now hand over to you, Christian. We won't stop.

Thanks, Tim, and good morning from my part. I will keep my usual structure for Q3. First, I'll give an overview of the group's financial metrics. Then I'll look at the operational development of the segments. Then I'll close with a comment on the development of free cash flow, adjusted net profit, and net debt. The group's financials, when you look at the overall development, in Q3 was very positive. Reported net revenue rose by 1.5% to 28.9 billion euros. That's a growth of 434 million euros. And this includes negative exchange rate effects almost entirely from the US dollar, which was down 7 cents over the period. I'll talk about the exchange rate effect on the other metrics as I come to them. Reported service revenue in the group increased by 2.2% to 24.7 billion euros. This increase of 543 million euros was reduced by exchange rate effects here as well, totaling 935 million euros. The group's reported adjusted EBITDA AL rose in the third quarter by 0.2% to 11.1 billion euros. That's up 18 million euros. including the reducing effects from changes in exchange rates of 431 million euros. This brings me to the development in the operating segments. As usual, I'll start with the U.S. They reported on their figures. on October 23rd, as required. T-Mobile U.S. had record customer growth in the Q3. This was driven by the combination of the best network, the best value for money, and the best customer experience. Total postpaid net additions, as Tim mentioned, amounted to $2.3 million in these three months, marking about $700,000 more year on year. And also, with this particularly valuable postpaid phone net ads, that stood at $1.01 million. That was around $142,000 more than in the same period of the prior year. That was also well over the average analyst expectations. The growth in customer. And we're seeing, though, a slight increase in the churn rate to 0.89, up from 8%. 0.86% in the same period of 2024. But we continued to lead the industry with the lowest churn rate. And also in Q3, we saw a combination of high-speed internet and fiber optics rising to 100, rising by 160,000. So for 14 quarters in a row, we've grown by 400,000 customers. And that is absolute record. Our customers stand at almost 9 million customers. So our long-term goal with fixed assets or broadband of 12 million customers by 2028 and fiber optics of 20 million by 2028 is – we're online for that – reported service revenues in U.S. dollar – Under U.S. GAAP, increased by 9.1%. That's service revenue to 18.2 billion euros. That's an increase of $1.52 billion. Looking at postpaid service revenue, it grew by 11.8% year on year. Core adjusted 8 under U.S. GAAP, and this wasn't. due to several factors, increased by 5.6% in the third quarter. That's an increase of $460 million. Here you can see the metrics on the chart here. How do you explain this? It's once again the same drivers as usual, significantly higher revenue per account and increased profitability. So the revenue we make from customers on all customers increased by 3% year-on-year to 149.44 U.S. dollars, and revenue for postpaid phone customers increased by 2% to $50.71. So you see a significant difference between prices you can achieve in the U.S. compared to in Europe. And this brings me to the business in Germany. I'd like to start with the broadband market. There's not a whole lot of new things I can tell you here. Once again, the market growth is very slow, sluggish. We see strong competition and increasing customer growth among alternative network operators. The number of broadband lines in our business declined by $25,000 year on year. In the previous year, in fact, we grew by 38,000. So we don't expend any change in this trend in the near future. We're trying to counter this by increasing our monthly revenue per broadband line, and we've been successful so far, growing 3.6% year on year. We have increased prices here to compensate for the decline in number of customers, but we couldn't do that completely. All in all, we have 5% more customers with connections, high-speed connections. That's a penetration of 54% or 8.1 million customers. FTTH is a great development. We had a record quarter here, increasing by 155,000 customers in the third quarter. That's an increase of 18%. The penetration that Tim just mentioned has risen from 14.6% to 16.1%. We're still not satisfied with that. The FTTH line increased by 41% year-on-year to $1.9 million. So the investment in fiber optics is paying off. It's fast enough. We wish it could go faster, but the trend's in the right direction. In the TV business, we won 27,000 net ads. That's significantly lower than the previous year, but in the previous year, we lost the Nabenkostenprivilege. That's a privilege for property owners to pass on cable TV and Internet service fees to tenants. And also, the UEFA European Championship was on Magenta TV last year. In the mobile business... We had net ads at 314,000 in the third quarter, down from 327,000 net ads in the same quarter of the prior year. This is comparable to our competition, which reported minus 750,000. So the mobile telecommunications market were well positioned there. and especially thanks to our next magenta charge rates. The churn rate is constant and low, 0.8% in the third quarter. That's even a slight improvement year on year where we were at 0.9% with the churn rate. Service revenues on an organic basis, basis in Germany grew by 0.4%. Mobile service revenues increased by 1.8% in organic terms. So we are online with our guidance that we communicated to the capital market. This brings me to the fixed line network. In organic terms, the service revenues fell by 0.3%. There were three main drivers here. First, we had very strong B2B growth in the third quarter of 2024. And in this year, it was just the opposite. We have a relative weak B2B result in the third quarter, mainly due to difficult economic circumstance, which you can read about everywhere, a sharp increase in insolvencies this year. And once again, continued decline in IT revenues in the Germany segment. And this has led to a weak B2B business for us. And this also is accompanied by the other two trends I cited, weaker broadband business and weaker wholesale business. And in sum total, broadband increased by 2.1% year on year. And this Our guidance is between 3% and 4%. Wholesale access revenues are pretty much flat in the third quarter after an increase of 3.6% last year. But here, once again, we have a stable wholesale revenue that we have forecasted for – and that's what we said last year at the capital market days and forecast that – Going to the total segment, total reported revenue declined by 1.8% to 6.3 billion euros. There were two main effects here. Last year we had the UEFA European Championship and also continued terminal device business in Q3 this year. Reported adjusted EBITDA, AL, grew in the third quarter. And here for Germany, it wasn't. unexpected but it's slightly disappointing 0.1 percent to 2.7 billion euros that's a growth of 0.1 percent in organic terms this is for the most part due to what we've already talked about the effects for the last quarters we have the wage increase from October 24 and the monthly wage increase that we've had for employees salaries this year as well, has gone into effect, and that has had a downward effect on ABIT. In Q4, we expect ABIT to rise above, significantly above 4% again. This brings me to Europe. Europe is very solid. It's growing, and it's growing in a very robust way, continuously. Mobile contract net, that stood at $129,000, and this is adjusted to take into account Romania and the divestiture there, where 60,000 inactive customers were subtracted from this. Broadband net ads stood at 57,000, and FMC net ads remained stable against the prior year at 143,000, while TV net ads stood at 38,000. Total reported revenue was up 2.2% organically, 3.3% year on year. And when we break this down to fixed line and mobile, we see that mobile and fixed line service revenue was significantly above the 3% to almost 4%. and that explains the service revenue increase in sum total of 3.3% year-on-year. Reported adjusted AIDA to AL in the third quarter rose by 4.6% to 1.2 billion euros. Organic growth was at the same level, so we don't take into account exchange rate effects there. So we're on the way to meet our forecasts at the capital market days of growth between 4% and 5%. This brings me to T-Systems. Its order entry in Q3 was up 3.7%. T-Systems reported revenue rose by 2.3%. The drivers remain the same. The digital business, the road charging business, and in contrast to the German segment at T-Systems, the public sector is becoming ever more important. and supporting our business there. Reported adjusted EBITDA in this segment was up 23% to 127 million euros. But this is mostly a project business that isn't as constant as the infrastructure business. So in sum total, I'm very satisfied with the development of T-Systems. This brings me to free cash flow and the key financial metrics and liabilities. Free cash flow dropped significantly. 9.2% year-on-year to 5.6 billion years. There are two main effects here. The first was we had a lower operative cash flow, and this was due to the weaker dollar. That accounted for 500 million euros. Plus, we had an increase in CAPEX, especially in the U.S., where cash CAPEX rose 550 million euros. But because of free cash flow, that lessened this effect. After nine months, the development was a growth of 6.8% in free cash flow. So that helped that situation. Adjusted net profit was up 14.3% in the third quarter. That's an increase of 2.7 billion. It rose to 2.7 billion euros. And this is supported by a positive... several positive effects and the equity result was supported by GD Towers. These were the main drivers that led the net profit to rise by almost 295 million euros, factors reducing adjusted net profit. include M&A activities to a tune of €7.9 million, U.S. Cellular and Metronet, and also the increase in the share buyback, €1.2 billion, and on the DTAG share buyback, buyback also and the dividend we paid at as well as acquisition of spectrum for 0.4 billion euros in slovakia as well as payment for free extension of frequencies in germany that was 200 million and also But this was counterbalanced by free cash flow and leasing. The ratio of net debt excluding leasing fell to 2.2.3 at the end of the third quarter. I should mention that, and this is very encouraging, we received a rating upgrade from Moody's from BAA1 to A3. We're very pleased about this, and we hope we can continue to receive rating upgrades. And with that, I'll give the floor to Tim.

Thanks, Christian. And let's come to our Q&A. You know the format. If you want to ask a question, you would help us a lot. If you use the hands-up function of Teams app, then we know that you want to ask a question and we can invite you to the virtual waiting room. So just use the hands-up function and then we'll see that you want to ask a question and can call on you. But you also have the option of using the chat function if you watch us via the stream and can hand in a question in this way. Now, based on my list, Henning Maidt is the first, but I can't see him on my monitor. Mr. Dyke, I can see Mr. von Davids. So let's start with him. Mr. von Davids, can you hear us? Yes, I hear you well. I hope you can hear me as well. Thank you very much for your interesting talk. I have a question on the FTTH business in Germany, which seems to be encouraging. I think you mentioned 16.1% as our take-up rate. And you also mentioned the 14.6%. Was that the number of the past year or three months ago? And how do you assess the 16% and what are you doing to boost that rate? Do you want to lower prices for fiber connections, maybe? And the question about the way forward, what is your target? When are you going to reach 20%, 25%? And what do people actually want? You said that broadband width is relatively low. What is your share of the new FTDA customers that go for 1000 megabit? And another question. How is the sale going of your own AI phone? Can you give us some numbers? Are you happy with that? How is the phone selling? Is it popular in the market? Well, let me start with the 14.6% that you mentioned. That's the penetration in September of the previous year, so 24. The 16.1% is the penetration... End of September 25. So this is the year-on-year comparison after 12 months. What are we going to do? I told you that this is an encouraging development, but it's not enough. Of course, we want to accelerate penetration. That's why we're going to focus on fiber build-out, a special focus on single-family units, because we know that the take-up rate there is much higher than in MDUs. This is a strategic shift. And second topic in the MDUs, we will do more kind of pre-connections, irrespective of contracts, so that people don't have to ask another time for a connection. And hopefully this will drive up penetration. But, of course, generally I would wish a faster ramp-up of the fiber infrastructure because we believe that these two essential issues have led to higher investment and need to be accelerated. How many new customers do we want to gain? We said at the Capital Markets Day we want to win one million new customers in 27. This is our target that we want to achieve and of course it needs to be seen against the background of the infrastructure that we've built but what's important is to me is that the acceleration of new customers new fiber customers will go up quarter by quarter and you've seen that we 155 000 customers this quarter has already been a record so you can see our investment in fiber is right is paying off but monetization is still too slow I have nothing to add to that. Of course, we would hope that government helps us implement this in MDUs. You know, whenever we supply apartments, of course, we shouldn't pay these extra charges. And so we explicitly welcome the initiative of the Federal Ministry of Digitalization so that everybody can use the infrastructure, which allows for more competition, but what should not happen is that we need to pay money for actually funding this infrastructure. So everybody should really help us with this argument really, because If that would actually happen, it would be another obstacle for us to clear. Now, moving on to your question about the AI phone. We're very happy with the uptake. The AI phone is very popular with the middle segment, really, of customers, not just in Germany, but in the typical Android countries. You know that Germany is an iPhone market, high Apple market share. whereas the other countries in the European segment are very much Android driven. The phone is on an Android basis and so in the medium segment it's very popular. What's also interesting is that customers are interested in perplexity. For example, we seem to be the largest distributors of perplexity outside the US. but also PixArt and Eleven Labs. These functionalities are very much in demand. So you can see there is a market where you can see people are getting closer to AI. And what's also encouraging is the development in the portfolio of the tablet. We also have a tablet in the market, phone tablet that supports AI functions and that is significantly more affordable than the product of our competitors. We generally do not report the actual sales figures of terminal equipment. So bear with us for not going into this kind of micromanagement. But now sales pitch. We have the Black Friday coming up, and there will be an interesting offer connected to the AI phone. Now let's move on. Ms. Kesebier, and then Mr. Scheuer, the next one on the list. Ms. Kesebier, your question, please. Thank you very much. First question, you said that you're using AI in different ways. parts of your business, can you give us some figures on the profit you're making with AI, maybe in T-Systems for example, and then the NVIDIA partnerships that you mentioned. To what extent are you shifting your business focus to AI? And just a brief question There was a headcount reduction in Germany recently. To what extent is this attributable to AI? Could you repeat your last question? Because we didn't hear it well. Headcount, you talked about headcount. I think 4.4% headcount reduction. In Germany, if I'm correctly informed, to what extent is this related to AI? Let me start with your first question. AI, our use of AI. I don't think I need to emphasize how important AI is for telecommunications and for Deutsche Telekom and will be in the next few years. There is no area, there's no process that is not changed by AI. But this is not just about efficiency targets, but this is also about providing better service for our customers. And I've just come from the cybersecurity summit in Israel, also in order to protect the company better. So we need to strengthen our resilience, our infrastructure. I don't need to tell you that this is about seconds, and you can't really... do that with humans. You need the corresponding systems to do that. We're using AI in terms of network monitoring. We're using it for our fiber build out. We are using it or have used it for software development. We use it in customer service. I mentioned Frag Magenta and the chatbot, which more and more does scheduling and answers questions automatically. We also have an employee tool, which is very popular, more than 150,000 queries and Agenta AI is our consumer offering, which we have launched in almost all our markets. So the savings effects and the efficiency gains, for example, In mobile communications we have 95% better troubleshooting. We have a 40% savings also in IT. 2.5 million calls were deflected thanks to AI. Also capacity boost when it comes to developing products and marketing by 5%. I could keep talking about this for hours. And so you can see that our EBITDA has improved correspondingly against the trend in the market, against what our competitors are showing. It's not just due to AI, but it's also due to AI. So I'm not calling this an AI efficiency gain. Of course, we look at the total picture, but we are getting more efficient What we want to achieve is savings of more than 1 billion. This helps us with the EBITDA and the profit. And I think we're on the right track, but I think we can do even more. Although I've seen all the developments when it comes to AI agents. I think the day before yesterday, we... presented the guardian angel that the presented at the Mobile World Congress for the first time and we've launched this so to monitor the network using AI. Yes, you've also seen it in the capex reduction. We now have a capex reduction. Our costs per household for fiber connections, we've clearly lowered this and why was this possible? through automation and AI that we're now using for planning as well for documentation and other functions and this is just the start of course it would will also lead to a planned headcount reduction that we've implemented in Germany already to some extent the employment figures are going down of course this also is due to demographic effects You will see some efficiency gains also in headcount, but this is not our major target to use AI to cut jobs. In some areas, we will also have to employ more people. For example, in IT and in sales support, just think of people that we've hired to accelerate our fiber build-out, more than 100,000 people in homes connected or the AI experts that we need in order to use these tools. So all of this is also an opportunity for new employment in the business. And maybe back to the guardian angel, you could say that once you have such a system to monitor the network, you don't need any new employees then. But it will help us also with shortages in the labor market of skilled labor. Yes, when you look at AI, of course, we're going to use agents in the future, but we need better protection for this and better cybersecurity, because these agent models, I mean, we will be attacked, of course, and this requires additional investment in security, definitely. And let me move on to the question about T-systems. Now, when it comes to T-systems, I think, what was your question again? The second question? Headcount redevelopment AI. Did I answer that question, Ms. Kesebier? Yes, you did. So, I don't want to keep talking. I was going to mention the infrastructure that we need, but 10,000 GPUs and the build-up of the AI factory will... lead to a situation where we'll have our own services and infrastructure, our AST, so all the data we need to make a large language model available to all the employees that they can use to query the entire knowledge of the company. end result will be that the answer will come up in 18 seconds and will not take more than one minute or so. So this machine will be our own development and this will help us with the GPUs and to have the necessary capacity utilization.

Then we'll continue with Mr. Scheuer and then Mr. Geigen. Mr. Scheuer, you go first. Good morning. i would like to come back to what you said about the ai factory could you tell us what importance will this have for your overall business overall how much money are you investing in munich and the gigafactory you said it's like a speed boat on the way to the gigafactory we're talking about the group figures could you go into a a little bit more detail and put it in the overall context. And do you think it would be a good idea not to pay out so much money in dividends and share buybacks when you have such an exciting new business area to invest in? The second topic is the market in Germany. And we see some major changes here. We have a new CEO at Telefonica Germany. You know him from GD Towers. And what impetus do you expect this will provide the German market? And also, will you be successful in improving the broadband figures for the business? Will you achieve this 2% to 3% in your guidance that you announced at the Capital Market Days, or do you see a slump taking place here in the market? Well, maybe just briefly to the dividend, I have to comment on that because the dividends, that's 3.5%, and that's at the lower end of the scale by European comparison. And as a result of this, I think that's an adequate dividend for the shareholders. We have 1.3%. million retail shareholders so individuals and that's so that's quite a bit that's a large number and I think we really have to stay in line with the market also the share buyback at DTAG we're doing this because we believe that our business outside the US is undervalued and that's why the return that we can achieve on this through this share buyback is about 8% return and at the current share price, that is, which we think we can achieve. So it's a very rational move to invest in our own share without really having a negative impact on our investment budget. So second topic, broadband, right now. We don't see any need to change our guidance there. We have a guidance of 3% to 4% with broadband. We didn't achieve it this quarter, but we think the guidance is for 27%. And we're sticking to that. So the build-out strategy will lead to greater customer numbers, and we think that will help us monitorize the fiber optic network better. And with regard to Telefonica, I don't know what to say because maybe you can comment on that, Tim. because I want to see what the new Telefonica CEO does in Germany. And as for this announcement, we'll have to wait and see. We have a very strong competition, competitive landscape in mobile and what's happening at Vodafone, but also aggressive offers from Telefonica and also in the fixed line. The price prices have, we've increased them by one Euro in the customer areas. So, um, And we think that the market will calm down here. You know, we hope that people will see that we're exchanging value for volume. That's okay with us. But, Tim, maybe you want to comment on the Telefonica change in the CEO. I think that at Telefonica, we can expect rational behavior there. They're... also investing in infrastructure. In the past few years, our industry hasn't been able to pass inflation, the inflation rate on to customers in terms of prices. That's the only industry that hasn't been able to do that. All other industrial sectors have passed on their increased cost to their buyers, their consumers. We haven't been able to. That's why the investment capability of the entire sector is limited, and I expect some positive impetus also in terms of sales revenue per customer and prices in Germany, but that applies to all the players, including Vodafone. speculate there but i think you see the pressure that telephonic has been under but they're a very good partner of ours and just look at broadband development they market our infrastructure our fiber Infrastructure and Mr. Mota, their CEO, and I are discussing to what extent we can expand this marketing effort. So I think that a good partnership like we had with Mr. Haas will be continued with Telefonica. I understand the financial economic difficulties they have after the one Ainsu Ains customers went to Vodafone, but I can't really help them there. will continue to act rationally in the market and seek a partnership with Telefonica. Yeah, in AI, we have a total invest of $1 billion in GPUs on the Blackthorne architecture. About half of that is being invested by NVIDIA. Our investment share in the data center goes in the software, the connections, the security, also in the cloud infrastructure that we're providing for that. And we expect sales revenue in particular for T-Systems in that system and digital. Variable Hassan will be improved, the revenue intake and sales. We'll be pushing this under the rubric of sovereignty, and I think we're providing an answer to the whole issue of sovereignty. Okay, there's the question of American chips, but the European and German infrastructure depends on that. As long as we don't have a factory, we have to rely on these other chips. And also, the second question is... relates to the public hand and that stands towards the sovereign infrastructure and when they say that when the government says we'll put our data in there we're investing in germany and we have a german solution then that'll make a big difference and i think that'll create an impetus and also it'll have a ripple effect on german medium-sized companies because what's at stake here is mr jensen said Industry 4.0 was a huge concept, but the step towards automation has been missing. Now we have the tools. Now we have the infrastructure. Now we can realize Industry 4.0. And as I've said many times in Israel, we looked at all kinds of companies that showed how through digital twins and robotics and automation, agent models, And all these have to be trained first to work effectively, how they've achieved huge boosts in productivity. And that will be our task, too, in distribution and in the market. In the next few months, together with SAP, we're going to be rolling that out in the market. And we're really optimistic that we have a solution for Germany. And if we see that demand picks up and we're able to have – make our customers satisfied, then we'll continue to invest in this. And we're not limited by any expenditures in the capital market. You heard that with our dividend. You've heard about our debt ratio. We have a good investment rating as a group. We have a very strong free cash flow, which is, of course, boosted by the U.S., and we'll continue to work on the gigabyte factory full steam ahead of course um we want to um sell it and it would help us to get the um the government behind us there And this investment's in the double-digit billions. And we're happy with any help we can get. And we'll work with partners because we want to have a secure footing for this. But distribution and marketing will be mostly in the domain of Deutsche Telekom. That will be the next big step that we take. We're planning that internally right now. And as soon as we have something solid there, We'll inform you about how we want to carry on with our investments. I think in the next two or three months, we'll know a lot more and can come back to you on that. I hope, Mr. Scheuer, I was able to answer your question. And I think this is a huge opportunity for Germany. And next week, with Macron and Merz at the Digitalization Summit, I'll give a presentation on this. We shouldn't just complain about things. We should talk about what we are doing right now, especially here in Germany.

So let's briefly wrap this up with the next question. Mr. Buchmann is next on the list. Well, good morning, Mr. Hotkes. I'm not going to ask a fiber question today. and comment on the take-up rate, but the BOS, are you going to talk them out of their own broadband investment, and could you comment on team mission generally, what you want to achieve? A great question, Mr. Bücken. So, I remember... the criticism only Vodafone is building the only real 5G network and that was standalone 5G as a now today Deutsche Telekom has the only countrywide 5G as a network that we can offer here so the only countrywide 5G SA network. SA is an opportunity to offer a slice with SA. We can enable team mission because the security authorities, we can give them a chance to have an always available, secure system channel with high 5G capability. And we can also save taxpayers money, because the federal government doesn't have to build its own network. Other governments are doing that, like the United States. It's police authorities like in New York and others, or look at the UK. Something similar is happening on the BOS infrastructure. Now the intention, apart from the difficulties, to build a network for mobile communications by the government or so is, I think, completely unthinkable. So the only alternative is to use BOS technology as quickly as possible. And with 5G SA, we have provided to government authorities not just the speech access, but high bit rates that they can use for videos and other content. Now, this offering is really something that we've highlighted. It's in the shop window, as it were. I've talked to the federal chancellor, I've talked to representatives of the federal government, we've presented it to them, we've presented it to police authorities, but also hospitals and disaster relief agencies. Because in an emergency, and I'm not talking about a war, but other emergencies, we need a safe sharing of data and information. This product is finished and ready to be used. We can introduce it very quickly. It's based on a highly encrypted infrastructure in a cloud, which is under government supervision. So we guarantee network stability and resilience in this infrastructure. And by now, with 5G, we have 99% coverage, so high security standard. And we don't need to build a new network. So Team Mission can replace the BT, BOS infrastructure, yes, faster, more cost-efficiently, and it's available right now. If you look at the high investment that we need in Germany now in infrastructure, this would be a very cost-efficient option for the federal government. And Deutsche Telekom is a big player here, of course, in the German market. And we are absolutely capable of doing this. And hopefully we can convince the government And you said you're not talking about fiber, Mr. Buchner, but let's mention fiber anyway. The complex situation, and you said you have a customer case where it took a long time. I mean, we actually tracked that. The customer now has a fiber connection. Why did it take so long? Because it was a multi-dwelling unit, and the in-house connection was difficult. We went through the chimney in that house. But the permit that we needed from the chimney sweep took long. And that's why it was delayed so much. This is the reality of fiber connections in Germany. In other countries, you just go through a wall and then you have the connection. It's not that easy in Germany. But we're happy that we could offer that to the customer in Hamburg. And Mr. Geit is next on the speaker's list. Good morning. So part of my question has already been answered. At the capital market day, it was said there are three network operators in the US, in China and 38 in Europe. Will there be any changes in Germany? And will we be down to two networks or two and a half networks in Germany in the future? Mr. Söder is happy about the AI factory in Munich, but you're relying very much on Microsoft Teams right now. Shouldn't you work on a German solution also? Thank you very much. I can't speculate on market consolidation. You know that we drove the consolidation here in Germany. If we try to... take over anybody in Germany. I think the antitrust authorities would look at this very critically. So European market, intra-market consolidation is much more strongly felt with the Orange and Telefonica and other competitors. I understand Mr. Motte's target. If you want more investment capability like in the US and our markets, our entire success story is based on this really. then he will have to try to you to realize um economies of scale and and other cash advantages his strategy and what he wants for the uk or other markets i think is absolutely plausible and it's right but deutsche telekom currently is not in a situation where we need to consolidate or can even consolidate because we've either sold our stake in markets or have done consolidation within markets and we can't really move any further within Germany. So the cards are really on his table. And I think if you look at the German market, it would be good for the German market if we had some more consolidation. And Mr. Gajek, I'm really, really mad at that. And sometimes I wish I could manipulate you. Why don't you write about this in the press? Because we had a very expensive... action on the 3.5 giga spectrum and we basically generated some competition and we took a hundred megahertz out of it and these 100 megahertz are not used at all I mean we're all citizens of this country how can it possibly happen that The 100 MHz spectrum that's used for campus networks or the industry are not used at all. And the second spectrum was sold with high asymmetrical conditions to a competitor. And this spectrum is not used either. So 200 megahertz of the spectrum are only used by two competitors. So this is an artificial narrowing of the supply side. And so it's not consistently implemented in Germany, and then we're mad at each other. So I would wish a different implementation of, you know, the general welfare, really. I think this... is the perfect cue for our next speaker, who has written an article on this recently. Ms. Guzman, your question. Thank you very much. I'm more interested in the use of your network by the police and the federal armed services, if they were to invest in this. But this very much depends on your way. And now the government seems to be moving now, because they have passed legislation now. So the Federal Ministry of the Interior will have the authority on these decisions. And because these networks are considered to be critical infrastructure. So my question, are you preparing for this? That Huawei will be excluded from the German market here? From this network? And how do you like the Nokia solution that's already used in parts of the network? And what do you expect the costs to be like? And how can you cushion the effect from the cost? Well, first of all, we don't want to speculate on this right now because these things come and go. And of course, we have to do long-term investments here and there at the time in order to be legally secure. We talked to the previous federal government and signed a legally binding agreement. Now, this agreement cost us double-digit millions because we are now about to replace the original software with new software. So this control software, we are making progress and we're investing a lot of money in order to get this right. At the same time, we have 3,000 Oran locations that's being implemented right now and what we see from Nokia right now is very promising. So we're very happy what Nokia is doing right now and we're looking at the testing now we see the first usages now where customers can already use this so this is also on track and this is giving us additional autonomy now third aspect We're not seeing any restrictions or security risks by having an antenna somewhere out there in the infrastructure. That doesn't pose any kind of security risk. Now, all these optical networks, the connection networks and the core network architecture, where a signal turns into information, all of this is free from the Chinese already. So at this point, I don't see any security risk also when it comes to using federal networks or police networks. And here, there are also other countries in Europe that... have already their BOS architecture on the basis of Chinese antenna. Now this is a matter issue really, but there are no details or any kind of technical arguments that would confirm this. Of course we always have a plan B. So if there is the legislation to that effect, the question is do we want this? billions of investment in just a conversion of the network by not having the most modern technology but only having to do the conversion? Do we want the infrastructure and service providers to deal with the removal of such antenna? Well, of course we will always stick to the decisions that are taken by the government in Berlin, but I think the path that we've chosen right now and agreed with the federal government right now is the better option.

Yeah, that brings us to the end of the Q&A. I would like to bid farewell to everyone. We've had several press... conferences today from different companies on their metrics on the third quarter and thank you for all for our colleague who's going into retirement from the press and how you've critically followed us for the years and all the best in your retirement years and thank you for dialing in today and asking your questions by Mr. Kolniewski all the best in retirement bye bye from Vaughn