Please activate JavaScript!
Please install Adobe Flash Player, click here for download

Deutsche Telekom AG - Interim Group report - January 1 to September 30, 2015

27Interim Group management report Deutsche Telekom. Interim Group Report 9M 2015. Total revenue Our Europe operating segment generated total revenue of EUR 9.4 billion in the first nine months of 2015, a year-on-year decrease of 1.7 percent. In organic terms, i.e., assuming full inclusion of the GTS Central Europe group in the prior-year period as well as constant exchange rates, segment revenue decreased by 3.1 percent. Decisions by regulatory authorities continue to have a substantial impact on our segment revenue. Reduced mobile termination rates and in particular roaming regulations in most countries of our operating segment accounted for almost half of our organic revenue decline. In addition, revenue continued to come under pressure from persistently intense competition in the telecommunications markets in the countries of our operating segment. Given our strategy of gradually withdrawing from the Voice Hubbing business (termination of international calls), there was a negative trend in wholesale business. Excluding Voice Hubbing revenues and regulatory effects, our organic revenue remained stable year-on-year. Thanks to the consistent focus on growth areas in the national companies in Europe, we partially compensated the negative revenue effects at segment level. As of September 30, 2015, growth areas accounted for as much as 29 percent of segment revenue. It became clear that mobile data business continues to grow from quarter to quarter: Compared with the prior-year period, it increased by 11 percent to EUR 1.3 billion, with all countries of our operating segment contributing, in particular the Netherlands, Greece, Hungary, and Austria. The majority of revenue from mobile data business was attributable to consumers. Attractive rate plans combined with a broad portfolio of terminal equipment resulted in a substantial further increase in the usage of data services, especially among contract customers. The upward trend of the past few quarters also continued in broadband and TV business: In the first nine months of 2015, broadband/TV revenue increased by 8 percent, such that it now accounts for a quarter of fixed-network revenue. Greece, the Czech Republic, and Hungary, in particular, contributed to this growth. In addition to the acquisition of the GTS Central Europe group in the prior year, our expanded product and service portfolio also resulted in higher revenue in B2B/ICT business with business customers compared with the prior year, especially in the Czech Republic and Croatia. The energy resale business in Hungary also recorded year-on-year revenue growth. In addition to the growth areas, revenues from sales of terminal equipment also improved, increasing by 3.9 percent. This is attributable in part to the alternative model launched in some countries of our Europe operating segment, whereby the customer concludes separate contracts for the service and the device. In terms of organic segment revenue by country, business in the Netherlands was hit hardest by absolute revenue declines in the first nine months of 2015 – due in part to volume- and price-driven declines in voice telephony and in part to regulation in roaming business. Romania also recorded revenue losses, which were attributable, on the one hand, to the reduction in mobile termination rates in the second quarter of 2014, and, on the other, to volume- and price-driven decreases in revenue from fixed-network voice telephony. Slovakia was primarily affected by market-related declines in revenue. In Poland and the Czech Republic, revenues mainly came under pressure from lower mobile termination rates imposed by regulation. Increased revenues, primarily in Hungary, Croatia, and Austria, however, had a positive impact on the revenue trend – as did the positive contribution to revenue in the fixed- network business in Greece. EBITDA, adjusted EBITDA Our Europe operating segment generated adjusted EBITDA of EUR 3.2 billion in the reporting period, a year-on-year decrease of 2.5 percent. Assuming full inclusion of the GTS Central Europe group in the prior-year period and constant exchange rates, adjusted EBITDA declined by 3.7 percent. Overall, the decrease in organic revenue at segment level primarily had a negative impact on the development of adjusted EBITDA. Furthermore, changes in legislation, taxes and duties, national austerity programs, and regulatory decisions put additional pressure on our earnings. As far as earnings by country are concerned, the decreases in adjusted EBITDA were primarily attributable to the Netherlands and Romania, following a decline in revenue. By contrast, increases in adjusted EBITDA generated primarily in Hungary, Austria, and Croatia had a positive impact on the development of adjusted EBITDA at segment level. With efficiency enhancement measures, we were able to reduce indirect costs in a targeted way and thereby partially counteract the negative effect of the revenue decline. Lower personnel costs and savings in costs for purchased goods and services in particular made a positive contribution to this trend. The decrease in direct costs also had a positive effect on adjusted EBITDA at segment level. EBITDA was affected by net special factors of EUR 0.2 billion. They mainly included expenses for staff-related measures and the expense to settle a claim for damages against Slovak Telekom in the first quarter of 2015. For further information on the proceedings, please refer to the section “Risks and opportunities,” pages 33 and 34. As a result, our EBITDA decreased by EUR 0.2 billion to EUR 3.1 billion. Development of operations in selected countries With the aim of becoming the leading European telecommunications provider, we are pursuing the strategy of developing the majority of our national com- panies into integrated all-IP players that provide best customer experience – regardless of their respective market position. To this end, we are establishing a production model with the help of a pan-European, fully IP-based network infrastructure, best network access, and optimized processes and customer interfaces. Most of our national companies already operate in both fixed- network and mobile communications. In addition, our companies in the Netherlands and Austria continue to focus on mobile business as “mobile attackers.” They position themselves as the provider with the greatest focus on customer needs and in this way occupy a niche as mobile-only providers. We present the following national companies by way of example:

Pages Overview