In This Article:
Release Date: May 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Deutsche Telekom AG (DTEGF) reported a strong start to 2025 with 3.5% organic service revenue growth and 5.3% organic EBITDA growth.
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The company achieved a 50% increase in free cash flow and an 11% growth in adjusted earnings per share.
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T-Mobile US, a key segment, showed robust performance with an 8.4% growth in adjusted core EBITDA and a 31% increase in free cash flow.
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Deutsche Telekom AG (DTEGF) continues to lead in network modernization, with significant advancements in fiber and 5G infrastructure.
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The company is leveraging AI and digital transformation to enhance customer experience and drive efficiencies, estimating 800 million in cost savings by 2027.
Negative Points
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The German broadband market is mature, with a slowdown in broadband customer growth and increased competition from aggressive pricing by competitors.
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Deutsche Telekom AG (DTEGF) faces elevated competition in its largest markets, impacting some performance metrics.
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There is a temporary uptick in churn in the US market due to price increases on legacy plans, expected to continue into Q2.
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The company is experiencing pressure from high personnel costs and energy expenses, impacting EBITDA growth.
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Fixed line service revenue in Germany is negatively impacted by federal spending delays, with expected improvements taking several quarters.
Q & A Highlights
Q: Can you provide more details on the Lumos acquisition in the US and your strategy for fixed services? A: (CEO) We are excited about the commercial launch of fiber later this quarter. Lumos passed 475,000 homes at close, and we expect it to be accretive to service revenues but neutral to EBITDA this year. Our targeted footprint is 12 to 15 million US homes by 2030. Fiber remains our core due to its long-term scalability, and fixed wireless is also important. Cable and satellite are not our current focus.
Q: How do you plan to address the challenges in the German broadband market given the current trends? A: (CFO) We are shifting from volume growth to ARPU growth. We have an operational plan to address elevated churn and are focusing on monetizing MDUs. We expect a stable customer base this year and are focusing on increasing ARPU through upselling higher speeds.
Q: What is your approach to the competitive mobile market in Germany, especially with new family plan tariffs? A: (CEO) We focus on quality and customer experience, which is why we are doubling our network speed. Our strategy is not to follow aggressive promotions but to maintain our focus on value and quality. Our family plans are ARPU accretive despite being volume-oriented.