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Earnings Call: Q2 2021

Aug 12, 2021

Speaker 1

A very good morning, ladies and gentlemen. Welcome from Bonn. It's nice that you're joining us for today's session. We will be presenting the results for the first half year today, and we are doing this in a very favorable environment. When I look at the share price today, it stands at more than 18/14, which is the kind of level that we saw some 20 years ago last time, which is a nice start to the day.

And we are very pleased to CEO here today. We figured it might be a good idea to no longer use a conference call to actually use a video as well, and we hope that you will also like it. Session. And maybe it even helps you to understand what we are saying even better. Of course, we will have the Q and A session as usual.

Call. You did get some instructions on that in the run up to today's call. So some things are a bit new today, but our speakers are still the same. First of all, Christian Ehlich, the CFO and our CEO, Tim Hotkis, who So ladies and gentlemen, a warm welcome to our conference call at Deutsche Telekom. I will be talking about the excellent financial results from the first half year.

But first of all, let me say a few words about the catastrophic flooding that session. And whenever disaster strikes, telecom really plays a major role, and we are very committed to filling this role successfully. And the mobile network was our first priority. We acted immediately. One reason was because around 300 of our cell sites were down, and we had to act quickly.

We had to reconnect them before long. Call. Our technicians had the entire mobile network back up and running by the 23rd July, as a matter of fact, restoring communications for people in need. And we are also using overlay structures, so we even stepped up capacities cause. A lot of fixed network telephony goes through the mobile network.

Since then, the mobile network has been stable, but the people on the ground need more than working networks. They need devices and access to the power grid, Which is why we stepped in immediately again. In the direct aftermath of the flooding, our volunteers handed out 4,900 robust mobile phones, 5,000 power banks and 2,500 quick start packages across the regions affected. And that was free of charge. With many places impossible to access by car, colleagues from Telecom Service Took backpacks and set out on foot through the towns and villages to reach people.

And we are still out and about in the affected areas in order to rebuild infrastructure and to support those who need help. Telecom is here to help. But while we were able to fix the mobile network quickly, parts of the fixed network will take far longer because the devastation is simply too great. Roads and bridges were carried away, and our cables, which are mostly laid along roads under bridges, event with them. Now we have a couple of photos here to give you an idea of the scale of the damage, including to our infrastructure.

Call. And the cables that you can see here usually are 1 meter 20 below, say, a river or a street. So this gives you an idea of the power of these floods. Restoring lines to all households, repairing cables, street cabinets and control centers will take us many months. In the meantime, we are rolling out temporary solutions to help plug the gap.

And we are doing this in close cooperation with aid organizations, above all, the federal agency for technical relief. And I must say, I think it is quite impressive, in fact, overwhelming, what sector, fixed network infrastructure. That means around 75,000 households have been reconnected, thanks to emergency measures and the nationwide support of countless technicians. For instance, our technical subsidiaries in Rheinland Pfalz have now also stepped up their efforts The sheer scale of the devastation is hampering our efforts to rebuild. And we are mobilizing More Resources in Technical and Service.

We have 500 colleagues out there, 1500 specialists on the ground, 500 back office colleagues and 130 strong service team, staffing a special dedicated hotline. And there are 100 More Volunteers Helping with the Cleaner, 2,000 volunteers collecting donations as part of Sutter Eins being a German broadcaster, telethon. Everyone's supporting where they can to help the people affected by the flooding. Actually, a lot of telecom employees also live in the flood hit regions themselves, call, which means that they are personally affected by the events and we are helping them too swiftly and with no red tape with special leave, release from duties and aid payments, and we've also offered accommodation to those affected. Session.

I would like to use this opportunity today to say thank you call. To everyone at Telecom for their tireless dedication and their personal commitment. Deutsche Telekom will continue working flat out and doing what it does best, which is build networks, connect people, drive forward the reconstruction work for as long as it takes. Hashtag DABEI. We won't stop.

That is our motto, and it applies now more than ever. Session. Ladies and gentlemen, now let me talk about the financial results for the first half year. Christian Ilek will give you all the details on the sales on the figures in a moment. But let me begin with the most important message.

Our growth course continues in a very impressive manner. And that goes for business on both sides of the Atlantic. And it means that we can once again raise our guidance for the full year. So We are showing here that you can count on Deutsche Telekom. That's proof of it.

In a sentence, we might say, we have delivered. Net revenue was up By 12.8% year on year in the 1st 6 months. Let me repeat that, 12.8% year on year to €53,000,000,000 In organic terms, growth was 6.9%. I think this is a major achievement. I mean, 6.9% growth in this difficult industry that really puts us at the very top.

Adjusted EBITDA AL Increased by 14% in the same period. Organic growth here was 4.6% With higher earnings across all operating segments, that to me is more important than anything else. We are growing across all segments. You can see it on the left hand side here. The U.

S, plus 4.6% Germany, plus 3.7% Europe, plus 4.7% Group Development, plus 8.1% NT Systems, plus 1.3%, all of whom are organic growth figures. Adjusted free cash flow AL is also growing by 44.1% at group level in the first half of the year to €5,400,000,000 in the first half of the year, which is more call. Then in the full year 2019, adjusted net profit rose by 29.4 percent to €3,300,000,000 call in the same period. This positive development is mainly down to 2 major factors. First of all, The business combination of T Mobile U.

S. And Sprint in the United States continues to make excellent progress. In fact, I was in the U. S. Last week, adjusted EBITDA AAL came in at €11,400,000,000 In organic terms, it grew by 4.6 percent or €500,000,000 segment.

Secondly, our operations on this side of the Atlantic are also developing very favorably. Adjusted EBITDAAL grew by 4.5% in organic terms in the first 6 months, and I am particularly pleased to see that all group units are contributing to this trend without exception. Segment. In Germany, adjusted EBITDA AL was up organically in the first half by 3.7%. Segment.

Organic growth in the Europe segment was 4.7%, while adjusted EBITDAAL in the TSI Systems Solutions business grew by 1.3% inorganic terms. At 8.1 percent, organic growth in EBITDA AL was particularly marked in the Group Development segment. And these figures impressive testimony to our transatlantic strengths. Ladies and gentlemen, These trends in our key financials are eclipsing even our own expectations. We now expect the United States to contribute higher earnings forecast.

On this basis, we are now raising our full year guidance for the 2nd time for 2021 as a whole, from previously over €37,000,000,000 to over €32,200,000,000 now. I would now like to address 2 points, which are particularly relevant when it comes to the question of how we addressed our economic challenges. Okay, I did praise the company here, but Yes, I just meant to point that out. First, we are winning new customers all the time, month after month, quarter after quarter, call. And we must, without fail, earn the trust of our customers that our customers place in Deutsche Telekom It's simple, really.

The success of our business boils down to customers who trust in and are loyal to Deutsche Telekom. Secondly, that's why we continue to invest in the technologies of the future in building our All our customers will abandon us. And that's why in 2021, we are once again Investing record amounts in our infrastructure, pouring around €18,000,000,000 call largely into building out our networks worldwide. In the first half year alone, session. Ladies and gentlemen, FTTH or fiber to the home is synonymous with future ready fixed network Internet.

Gigabit capable fiber optic lines running directly to residential premises In our home market of Germany, we are pulling out all the stops and sticking to our long term target, which is By 2,030, a fiber optic line to every one of the 41,500,000 households and to every business. Session. We will make a major contribution to achieving this goal, which we've repeated over and over, but It's true that we've announced ambitious plans this year, 1,000,000 FTTH lines in the next few years for Berlin, Another 500,000 each for Hamburg and Munich, plus 3,000,000 lines in rural areas. It's also true that we deliver on our promises. In the first half of the year, we rolled out fiber optic lines to around 300 And 40,000 households in Germany.

So that's FTTH. And our goal is still to achieve 1,200,000 lines by the end of this year, and we are well on track to achieving this. Session. Looking ahead, from 2024, we are set to give a further 2,500,000 households the option of NFTTH line from us. We continue to build out our existing fixed network infrastructure as well in Germany and our European subsidiaries, for example, in Poland and Austria.

Across Europe today, a total of over 50,000,000 households Can get a broadband fixed network line with vectoring, so less than 100 megabytes or super vectoring, which is 2 50 megabytes from us. Over 8,800,000 households in Germany and in our national companies in Europe per second rather. In the first half of the year, we installed 1,000,000 fiber to the home lines across our home continent. In terms of mobile business, our 5 gs networks are leading in Germany and in our national companies in Europe, where they cover 82% of the population. And in Germany, we are even further on with coverage set to reach over 90% bestowed on us the award for the best mobile network in Germany.

We were the only provider to achieve a test score of very good. This is precisely our ambition as the leading European telco. And we continue to blaze trails in the U. S. Mobile industry.

Since the end of 2020, we've expanded our U. S. 5 gs network in the 5.2 gigahertz band by more than 50% to reach 165,000,000 people. So you can tell that our investments really lead to measurable results. 305,000,000 Americans nationwide Our 5 gs coverage is now almost double that of AT and T's and our population coverage is more than Quadruple Verizon's, which means that T Mobile US brings 5 gs to more people than former heavyweights AT and T and Verizon combined.

And this network build out is paying off on both sides of the Atlantic. On our home continent, 328,000 people opted for a fixed network line From Deutsche Telekom in the first half of the year. On top of that, 122,000 new customers Signed up for our Magenta TV product bundles. Both figures are up year on year. In mobile business, We added 738,000 new branded contract customers in Europe in the 1st 6 months.

With more people than ever signing up for a contract with T Mobile US, postpaid net adds were up by 2,500,000 in the first half. Segment. Our customer growth is industry leading. CEO, Mike Sievert, and his team continue to forge ahead with our Un carrier strategy. And our business combination with Sprint is having the desired effect.

We are getting better By the day and are on course to become number 1 on the extremely important U. S. Market, which is a unique opportunity. Or are you aware of any other German company with similar prospects in the United States? Session.

Ladies and gentlemen, one last thing. Our digital infrastructure forms The backbone of our digital society and we are very much aware of it. Throughout the coronavirus pandemic, it has proved to be stable and resilient in times of crisis, but it can do so much more. For example, we could use our mobile network to warn people about imminent natural disasters. This It happens under the buzzword of cell broadcasting.

It works using a text message like early warning system, Which is known as cell broadcasting. Like I said, digitization can help us to ensure we are best prepared for what may come, but we have to use it properly. For this, we are waiting for a sign or a mandate from policymakers. As network operators, as Deutsche Telekom, we are ready to act. Thank you.

And with that, I will now hand you over to Christian Elek. And Tim Rodell? Yes.

Speaker 2

Thanks a lot, Tim. From my part, too, a warm welcome to our conference call. I would like to break down my comments into 3 sections as usual. First, I would like to explain the development of the group's financial results in the Q2. And secondly, I'll talk about development in the operating segments.

And Finally, I'll look at the group's liabilities and net profit as well as net debt. Let's start with the second quarter. For the Q2 of Deutsche Telekom, the story remains intact. The group's net revenue increased by 6.8%, as Tim said, and that breaks down into 9.7% growth in the U. S, €200,000,000 2.2 percent revenue growth in the U.

S. Why am I talking about organic growth, first of all, because we look at 2 factors which were heavily influenced by, 1st of all, currency exchange rates. And in the Q2 of this year, the dollar was $0.10 weaker than in the Q2 of the prior year. And this translates into a negative effect of about €1,450,000,000 The second issue is the consolidated group. In the Q2 of 2020, we had Sprint's prepaid business included and that's been sold in the meantime.

So it had a minus effect of €700,000,000 And the reported net revenue was slightly down by €400,000,000 or 1.7%. If we look at adjusted EBITDA AL here too, we see a substantial effect from the weakness of the dollar exchange rate Having a negative impact on the group's overall performance, and I'll go into that more as well as the Sprint business. The adjusted EBITDA AL in the second quarter was down 4.2% to 9.4 euros 1,000,000,000 had to decline around €400,000,000 And the negative effects comes completely from the U. S. 1st of all through the weak exchange rate and secondly The handset leasing business, which was really important to the Sprint business and that has declined and had a negative effect On the net AL leases from the American visit, but what's encouraging is the growth in the business outside the U.

S. Which grew €150,000,000 year on year in the second quarter. So in some, organic growth It was €400,000,000 better than the previous year. Free cash flow, as we heard in the Q2, increased by 14.1 percent. This was mainly due to the strong operative performance both in the European and in the American business.

In the first half of the year. That was a 44% increase, but there was negative effects from the previous year. The factoring, which Amounted to €700,000,000 and that has to be taken into account too. So that was basically it for Q2. And now I'd like to look at the individual operative segments.

Let's start with Germany. We are Very pleased about the continued growth in broadband in the second quarter. We had net customer growth Of 93,000 that was in the 3 month period. And since 2020, we have seen more than 80,000 broadband net adds in every quarter. So with our market share, we're above 50% for the past quarter as well, and we are Much higher than the target we set for ourself where we said over the long term we want to have more than 40% of net adds Every year fiber optic baselines increased by 291,000.

That's Our own customers are roughly the same year on year, although we've seen a decline in wholesale due to 2 factors. First of all, Competitors are migrating to their own platforms. And in the first half of the year, we had Lower demand from our wholesale partners, but also we were also focusing on the fixed line network in the second half of the year and we hope to see a lot of ads there. In an area of super vectoring, we've had about 400. We have lines of about 460,000 just under to just under 1,000,000.

That was the increase. So super vectoring is Functioning well. Magenta TV net adds were up 37,000. That was because in the second quarter. We had a negative impact through shop closures that led had a dampening effect on new customer business because you have to explain this business summers and we rely on our shops there.

Line losses in the fixed network continued to decline due to 2 effects. 1st of all, conclusion of IP migration, but also strong growth in broadband. In mobile communications, We grew very steadily there year on year by 161,000. Around 62% of our mobile contract customers have now subscribed to a Magenta Iones convergence project and the churn rate for mobile contract customers remained stable at 0.8%. That's a low level.

Service revenues in the German mobile business Increased by 2% in the second quarter and this was supported by 0.6% points effect from the change in mobile communication rates. Fixed network grew 1.7% in organic terms, Primarily driven by the broadband business. So total revenue in the segment rose 0.9 percent to €5,900,000,000 in Germany. We have very stable growth within EBITDA AL. This increase is mainly due to high value revenue growth, But also to sustainable and disciplined cost management.

And this has meant that Germany has had a positive EBITDA growth for 19 quarters in a row. The last time we had a decline was in 2019. So This brings me to T Mobile US. The integration with Sprint and the build out of 5 gs is making huge strides. We already have migrated 33% of Sprint customers to the T Mobile network.

At the end of Q2, this was only 20%. Around 80% of the mobile traffic of Sprint customers is carried on the T Mobile network and that was only 50% at the end of the Q1. This shows you the pace and speed at which We've our colleagues in the U. S. Have been able to drive the integration of Sprint.

The synergy target for the current year Has been increased from US2.9 billion dollars to US3.2 billion dollars Looking at new customers, 1,300,000 branded postpaid numbers were added in the 3 month period. T Mobile also had a very low churn rate. If you break this down And account for the original T Mobile brand. We're leading the industry then total revenue at T Mobile U. S.

Increased by 5.4 percent to US20.1 billion dollars and service revenues AL decreased by 0.4%. If you look once again At the business model and the change that's been made in the U. S, the old Sprint that we acquired Had a business model called based on handset leasing where they listed leasing as assets And depreciated over time. So they didn't have any expenses for terminal devices in there on the cost side, on the liability side And revenue was translated 1 to 1 then into revenue. And we want to change this through the very successful installment rate payment model.

So we're going from handset leasing, moving away from that and we're no longer depreciating these, But we're listing them immediately. That has a negative impact on the after leases revenue. And if you compare that year on year, you'll see that it was about a half a 1,000,000,000 U. S. Dollars having a negative impact.

And this has led to the Americans to say the main Parameter is the Q EBITDA. That's nothing other than the EBITDA growth adjusted for the head handset leasing and you see the result has increased 7.1% year on year. Looking at the Europe segment. We had 177,000 mobile contract net additions and 58,000 more broadband customers. And also, we have a high penetration in the area of TV customers and FMC net adds rose 128,000.

So we have most customers in a fixed convergence model in European comparison with our competitors. Also this trend is bolstered by our network build out at where we added another 700,000 households in the first half of the year. Segment revenue rose by 4.3% in the second quarter. This was a result of increased fixed network services, but also sales of terminal devices And organic growth rose all in sum total 4.0%. Adjusted EBITDA to AL increased 4.4%.

That's an extremely strong performance in my opinion. You see this positive trend In the U. S. Also being reflected in Europe, looking at T Systems, this is very encouraging to see An increase in order entry with 1 major customer being gained €350,000,000 But also continuous growth in digital solutions took place. We still have a negative result here Between 2020 2021, a 5.5% of systems solutions.

This is the decline due to The traditional infrastructure business. As a result of cost management, we've been able to stabilize this though. The next segment is group development and I'll break this down into T Mobile Netherlands. First of all, what we see is very strong increase in mobile contract customers. This is due to the fact that the shops in the Netherlands have been reopened since the end of April.

We also have a very stable broadband growth of 15,000 net adds and this has led sales to rise 5.4% revenue Rather in the Q2 an increase of 2.7 percent. Mobile service revenues have increased by 3 point 5% year on year on an organic basis. And once again, here the recovery is accounted for by roaming and visitor revenues. Adjusted EBITDA AL grew by 3.6% in organic terms. In the cell tower business, there has been several developments.

The number of towers, first of all, we have cell towers in the Netherlands has been deconsolidated After we sold part of this to Cellnex that had a decreasing effect of around 3,100 sites and the consolidation of cell towers The segment since the start of the year has led to an increase in sites. Moreover, the number of sites in Germany increased by around 1200 to 32,800. This has led recurring lease revenues in that cell tower business increasing by 3.3% in organic terms and adjusted EBITDAAL increasing by 9.0 percent in organic terms, primarily due to the high number of management and sell sites at Deutsche Funkturm. In addition to cost reductions, revenue in the Group Development segment rose 8.9% in organic terms in the 2nd quarter. In organic terms, revenue increased by 3.8%.

So much for the overview of the key financials. This brings me now To the group surplus and the debt rate, as you see on the chart, The adjusted net profit grew 65% year on year. This is due to the fact that We had an excellent result with adjusted EBITDA. As I mentioned, the weakness The dollar had a negative impact on the conversion of Sprint's business model leasing model, but we had a very strong financial performance. It rose 800,000,000 Mostly due to the value development of call options that we agreed with SoftBank.

These alone account for €640,000,000 Looking at the financial liabilities and we've changed our accounting method a little bit. Why have we done this? Because a lot of our competitors have already done this. It makes the financials more comparable. So We started in the Q1 of 2021 with €98,000,000,000 liabilities and this declined by the end of the second quarter due to cash flow, free cash flow And also the valuation of the call option and also the dollar weakness helps us here Because the financial liabilities are reduced on the basis of this.

Also the payout of the dividends Of €2,900,000,000 helped us, €2,500,000,000 helped us too. Also the ratio of net debt Without Leasing improved slightly from to 2.59 compared to 2.66 in the middle of 2020, Including the lease liabilities, the ratio net debt to adjusted EBITDA was 2.97 at the end of June. So we have a pretty stable situation with the debt ratio and we'll make sure that we that continues to be the case in the future. The equity ratio has remained stable and we're very pleased that Moody has upgraded our rating and From negative to stable following the announcement of the T Mobile U. S.

Sprint transaction. And we've had 3 major upgrades from 3 different standard and Poor's Moody's and Fitch in the they've all raised our rating by 1 notch session that helps us with financing. And the reason they stated for this was they're all convinced that the business case we presented at the Capital Mark Both for the group as a whole and for the U. S. Is going to be successful and they believe that we will put it into practice.

So Also the total shareholder return has developed positively and outperformed the DAX. The average share price Since the beginning of the year has increased from €19.50 to €21.80 So That's it for my report on Magenda, and we'll be looking forward to your questions.

Speaker 1

Thank you very much, Tim and Christian. Session. Now let's do our Q and A session. Mrs. Henning will explain to you in a moment how you can ask questions in German.

And those who are listening to the English translation, can I ask, if you have a question, then please call? So over to Mrs. Henning for more instructions. Thank you. Iliana Berger from Konner Stadtansager.

Your question, please. Good morning. Thank you. I was just Wondering, can you give us a more precise number on the damage incurred by the flooding? And how much Will it cost to actually rebuild the region affected?

Well, we are still in the early stages of evaluating the situation. And of course, we are trying to fix the damage as quickly as we can. But the first indication would be to say that it is it will be more than €100,000,000 But I mean, we also have insurance cover. And let me be cautious here because at the moment, we are working flat out Thank you. A very good morning to you.

At Capital Market Day, you said that We are in the midst of a transaction or at least talks in the Netherlands, as you were able to gather from the press. There's a very intense bidding process, and I'm afraid I can't comment on it any further. I would ask for your understanding here. As far as our cell tower business in general is concerned, we are evaluating any further options as We said in our presentations, there might be a partnership with 1 with a big cell tower company. Maybe we are selling parts of the business.

Even an IPO would be possible. We are looking into all that. And at the moment, I'm afraid we cannot comment on any final decision yet. Benedikt Muller Arndt from Zuttoutsche Zeitung. Please go ahead.

Thank you, and good morning. My question goes in the same direction. I mean, your organic result at Group Development looks very good. But my question is, is this very good because it leads to higher sales prices. Or doesn't it bring up the question of Whether it might be a shame to actually dispose a business that produced earnings to the tune of 8% over the past few months.

Well, when we included our Dutch business into group development, there were several reasons for that. First of all, we said We will not be selling a business that is not working well, operationally speaking. On the contrary, we will show that we can fix this business. Pursuing the same business model across the board, which makes us stronger and faster. And it also gives us economies of scale in procurement.

It is a complex situation because we are working on a fixed mobile convergence basis everywhere. At the same time, we've been able to reduce complexity considerably as a result of just that business model, and that's the reason why we're Considerably as a result of just that business model, and that's the reason why we can show these excellent business results today. Over the past few years, We have achieved a major turnaround in the Dutch market. Earnings have more than doubled with Tele2. We now have a consolidated business.

We had cost synergies. We also took Simple on board and integrated their customer base. We strategy that has produced very positive results. And we are strategically positioning ourselves in the Netherlands against 2 Yes, it's a shame, but I'm extremely grateful to Thorsten Langhaim and his team for this fantastic turnaround. And I think if you want to sell something, then you should always do it from a strong position.

You always meet twice in life, and we want a potential buyer to get a prospering business from us. But against the backdrop of our strategic decisions, we will now continue this possible sales process. We don't have to sell. The price has got to be right, but we would sell if the price was right. And yes, we are looking at things within group development, and we are consistently pursuing our strategy.

Tour to sign up for the process. Mr. Gein? Good morning. Thank you.

Good morning. The 4th network operator in Germany is looming on the horizon, and there will be a frequency auction before long. And a colleague of yours, Mr. Hetkers, said how do you think will you be able to solve this problem? Well, first of all, We have 3 network operators in Germany at the moment.

And it is quite fascinating to see That we are rolling out the 5 gs network at a speed that we've never seen before. Deutsche Telekom is Spearheading this development. And of course, we want to be market leader. We want to be technology leader. We want to make the most of our strong position and expand it even further.

This is our claim. Needless to say, we are aware of what 1 and 1 are doing. And I must say, I have a lot of respect when it comes to this entrepreneurial decision. Session. When you look at the disaggregation of the access network and the cloudification of the core network architecture, then you will find That it does make sense to work with the right partners.

And they are working with one of the leading technology partners for mobile communications. So it does make sense. We are looking forward to Competing with them in a joint market. And of course, we will do what we can to maintain our strong position. We could argue here Whether it makes sense that the federal network agency only demanded that one in one set up 1,000 cell towers, This is something that ought to be discussed.

And of course, it would have been possible for 1 and 1 to roll out A larger infrastructure without national roaming because one thing is not related to the other. But thank God, this is not my problem. But I would hope that Then you always need to look at how much money will be left for other expenses. We want to have good infrastructure. We want to have a nationwide 4 gs and 5 gs mobile network.

We want to offer a good connection everywhere. And therefore, the question is how much money will actually be spent on mobile spectrum, on mobile licenses? And I understand the auction may be in 2023. And these are licenses which are already being used today, Which means that if somebody were to lose these licenses in an auction, then they would no longer be able to serve their current customer base. So they are making things scarce Resources are becoming tighter, but in an artificial way.

So why can't we extend licenses. Why can't we make the necessary resources available free of charge? The state that is. And In this way, frequencies could be used by our customers. It would mean that We could set up more sell sites improving mobile coverage in Germany.

If we were given all these resources, you can only spend every euro once. And that's why I am supporting what my competitors have been saying. Let's not make resources even tighter in an artificial way. Let's not put one competitor at an advantage. We need the resources.

We need to be given the resources that are required for rolling out the infrastructure. That's good for competition. Right, I think oh, no, there's one more question. Mr. Karntner,

Speaker 2

thank you, Mr. Kundera. I have a question about the build out of the infrastructure in the flooded areas. You've described what's going on there. Will there be a type of are there plans to launch national roaming in this area?

Do you think that would be a good idea to support. The recovery work there. Well, the discussion relating to the flooded areas difficult because 300 network sites were affected. Not I'm not talking about antennas. Some of them were washed away too, but especially fiber optic connections which link up these antennas.

So, they go through these valleys that were hit by the floods and We're doing really, yeah, pioneering work here. And we've Been improvising to link up these antennas now. And at the same time, we've been using radio To link up these antennas, if we had national roaming only on our infrastructure And that was all that was functioning. Everybody would have gone to this infrastructure and the capacities wouldn't have been enough. And Because not only telecom customers, but Telefonica and Vodafone would have been using this and The capacity wouldn't have held up to this.

And that's why I'm of the opinion that we Need alternative infrastructures. We need not only one infrastructure. Everyone has to every company has to get their infrastructure up and running again for the sake of our customers. We have to, of course, take care of our telecom customers, 1st of all, and we've been successful in that. And our infrastructure wouldn't have sufficient capacities for national roaming.

Yes. One problem just to add to that was The electricity power supply and all the network providers had the same problem there. If you don't have any power, electrical power, then you can't operate the antennas. And that makes it all the more hard to Create local roaming. So this is a very complex topic and there is no one fixed solution there.

So that's Well, it was just worth adding that's a very complex issue here. And right now, we're trying to rebuild infrastructure as fast as possible. But the fact that we weren't able to move in with our containers, our replacement containers Very quickly was because the roads were washed away. We used helicopters in some cases in the Ar Valley to supply food that had priority, For example, just food supplies and water supplies. So as Tim mentioned, worked well with the aid of the German Army, and we were able to also provide support quick and effectively.

So I have no more questions. Thank you for listening in today and with Tim and Christian. And thanks for your time. Hi. Hope you have a pleasant day and all the best.

See you soon from at Deutsche Telekom. Bye bye.

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