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.