Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deutsche Telekom AG (DTEGF, Financial) reported a strong financial performance with 4% service revenue growth, 7% core EBITDA growth, 28% free cash flow growth, and 16% adjusted earnings growth over the last nine months.
- The company upgraded its full-year guidance, reflecting confidence in its performance across both the US and European markets.
- Every segment contributed to growth, with notable performance in both the US and European segments, particularly in service revenue and EBITDA growth.
- Deutsche Telekom AG (DTEGF) achieved significant progress in its fiber rollout, reaching over 19 million homes, with Germany on track to meet its target of beyond 10 million homes by year-end.
- The company demonstrated strong ESG performance, reducing CO2 emissions and energy consumption by 5% and 3%, respectively, despite increasing data growth.
Negative Points
- There is increased competitive pressure in the German market, particularly from competitors in Munich, which has been ongoing since January.
- The company faces potential macroeconomic challenges, such as elevated insolvency levels, which could impact bad debt.
- There is a sequential slowdown in broadband revenues due to a re-release of an accrual in the previous year, affecting growth comparisons.
- The company anticipates headwinds in energy costs in the European segment for the fourth quarter, following a tailwind in Q3.
- Concerns were raised about the potential impact of political instability in Germany on Deutsche Telekom AG (DTEGF)'s operations, although the company does not foresee immediate regulatory changes.
Q & A Highlights
Q: How will the US election outcome affect T-Mobile US, and what are your thoughts on the German competitive dynamics?
A: It's early to tell, but a Republican administration might mean no tax increases and less onerous regulation, which could be positive. In Germany, competitive pressure has been ongoing, but we remain confident in our growth targets due to our strong brand and network. - Unidentified_2
Q: Are you seeing any macroeconomic impacts on demand in Germany, and can you comment on TV dynamics?
A: We don't see a strong correlation between GDP growth and service revenue. Insolvencies could impact us, but we haven't seen it yet. TV dynamics were strong in Q2 due to specific events, and while Q3 was lower, it was still a 50% increase year-over-year. - Unidentified_2
Q: How do you view the potential impact of political turbulence in Germany on Deutsche Telekom?
A: We don't expect significant changes in regulation or political environment. Our strategy of building out fiber and upgrading mobile networks aligns with government priorities, so we don't foresee major impacts. - Unidentified_2
Q: Can you discuss your preference for T-Mobile stake building versus Deutsche Telekom share buyback?
A: We want to remain flexible. The decision will depend on financial returns and strategic elements. We have a 2 billion share buyback for 2025, but we will evaluate the best use of funds as situations evolve. - Unidentified_2
Q: What are the drivers behind the strong performance in the German mobile market, particularly in the business segment?
A: Our growth is driven by network quality, distribution capability, and bundling products. The business segment is performing well, and we see opportunities for continued growth. - Unidentified_1
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
